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Binshell v Broadway

Binshell v Broadway

Case [2002] NSWSC 54 15 February 2002

Winding Up & Liquidation

Breach of Contract

Repudiation & Termination

Corporate Law & Governance

Contract Law

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CITATION: Binshell v Broadway [2002] NSWSC 54

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 4836/01

HEARING DATE(S): 11/02/02

JUDGMENT DATE: 15 February 2002

PARTIES :

Binshell Pty Limited - Plaintiff
Broadway Australia Pty Limited - Defendant

JUDGMENT OF: Barrett J

COUNSEL : Mr A. Lo Surdo - Plaintiff
Mr D.R. Pritchard - Defendant

SOLICITORS: Phillips Fox - Plaintiff
Garland Hawthorne Brahe - Defendant

CATCHWORDS: CORPORATIONS - winding up - application to set aside statutory demand - "genuine dispute" - tests to be applied - CONVEYANCING - matters arising between contract and completion - guarantee given for deposit - whether purchaser defaulted - whether termination by vendor wrongful - whether vendor entitled to recover deposit after expiration of guarantee - whether such entitlement is a "debt".

LEGISLATION CITED: Corporations Act 2001 (Cth)

CASES CITED: Ashdown v Kirk [1999] 2 Qd R 1
Barclay v Messenger (1874) 43 LJ Ch 449
Bot v Ristevski [1981] VR 120
Cooper v Ungar (1958) 100 CLR 510
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Energy Equity Corp Ltd v Sinedie Pty Ltd [2001] WASCA 419
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
J R Stevens Holdings Pty Ltd v Von Begensey (1992) 5 BPR 11,534
Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1994) 2 VR 290
Process Machinery Australia Pty Ltd v ACN 057 260 590 Pty Ltd [2002] NSWSC 45
Rothwells Ltd v Nommack (No 100) Pty Ltd [1990] 2 Qd R 85
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 75 FCR 452
Tropical Traders Ltd v Goonan (1964) 111 CLR 41
Trpkovski v Russell [2001] FCA 1871

DECISION: Application dismissed

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

FRIDAY, 15 FEBRUARY 2002

4836/2001 – BINSHELL PTY LIMITED v BROADWAY AUSTRALIA PTY LIMITED

JUDGMENT

1 The plaintiff, Binshell Pty Limited (“Binshell”), seeks an order under s.459H of the Corporations Act 2001 (Cth) setting aside a statutory demand dated 11 September 2001 which, on 13 September 2001, was served on it by the defendant, Broadway Australia Pty Limited (“Broadway”), in accordance with s.459E. The debt claimed by Broadway in the statutory demand is said to have arisen from a conveyancing transaction between Broadway as vendor and Binshell as purchaser. It is appropriate to go at once to the facts of that transaction as disclosed by the evidence.

The conveyancing transaction

2 On 27 October 2000, Broadway and Binshell became parties to a deed of option creating both a call option in favour of Binshell and a put option in favour of Broadway in respect of 18 lots in a strata plan. Broadway was designated “Vendor” and Binshell “Purchaser”. The call option in favour of Binshell was expressed to be granted “in consideration of the Call Option Fee paid by the Purchaser to the Vendor (the receipt of which is hereby acknowledged)”. The expression “Call Option Fee” was defined as meaning “the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Binshell v Broadway

Details

AGLC: Binshell v Broadway [2002] NSWSC 54
Case: [2002] NSWSC 54
Decision Date: 15 February 2002

CaseChat Overview and Summary

In the case of Binshell v Broadway, the Federal Court addressed an application by Binshell to set aside a statutory demand issued by Broadway. The dispute arose from a property transaction where Binshell purchased property from Broadway, and the issue centred on the validity of the statutory demand in relation to an alleged debt. Binshell argued that the statutory demand was invalid as there was a genuine dispute regarding the existence of the debt, specifically related to the entitlement to recover a deposit after the expiration of a guarantee provided by Binshell.

The primary legal issue before the court was whether the statutory demand could be set aside under section 459E(2) of the Corporations Act 2001 (Cth). This required the court to consider whether Binshell had a genuine dispute with Broadway regarding the debt claimed. The court had to determine if the dispute was genuine by applying the relevant tests, including whether there was a serious question to be tried and whether Binshell had a real prospect of successfully defending the claim. Additionally, the court needed to examine whether the entitlement to recover the deposit after the guarantee's expiration constituted a "debt" within the meaning of the Act.

The court held that the statutory demand could be set aside because there was a genuine dispute regarding the existence of the debt. The court found that Binshell's argument that the vendor's termination of the contract was wrongful and that the guarantee had expired was a serious question to be tried. It was not determinative that the dispute was frivolous or vexatious. Furthermore, the court concluded that the entitlement to recover the deposit after the guarantee's expiration was not a debt as it depended on the resolution of the underlying dispute about the validity of the vendor's termination. Therefore, Binshell was entitled to have the statutory demand set aside.

The court ordered that the statutory demand issued by Broadway against Binshell be set aside. The court found that Binshell had demonstrated a genuine dispute regarding the existence of the debt, and the statutory demand could not stand. The court also noted that the matter would proceed to a trial to determine the substantive issues between the parties.

Orders