Boriop Pty Ltd v Moussi
[2015] VSC 345
•20 July 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST
S CI 2015 02363
| BORIOP PTY LTD (ACN 006 163 971) | Plaintiff |
| v | |
| SOPHIE MOUSSI | Defendant |
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JUDGE: | Gardiner AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 22 June 2015 |
DATE OF JUDGMENT: | 20 July 2015 |
CASE MAY BE CITED AS: | Boriop Pty Ltd v Moussi |
MEDIUM NEUTRAL CITATION: | [2015] VSC 345 |
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CORPORATIONS - Application to set aside statutory demand - Whether there is a genuine dispute - Plaintiff executed deed prepared by its director in respect of loan advance - Contended that advance not made to plaintiff but by its director - No genuine dispute - Application dismissed, ss 459G, 459H Corporations Act.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Foster, solicitor | Foster Nicholson Jones |
| For the Defendant | Mr J Tsalanidis | Livaditis & Co |
HIS HONOUR:
By an originating process filed 12 May 2015, the plaintiff (‘Boriop’) makes application to set aside a statutory demand dated 22 April 2015 served on it by the defendant, Sophie Moussi on 23 April 2015. The statutory demand was accompanied by an affidavit of Ms Moussi sworn 22 April 2015.
The schedule to the demand describes the debt as ‘moneys lent by the creditor to the company on 8 March 2012 and evidenced by a Loan Agreement deed dated 8 March 2012’ and claims $400,000 as being due and payable.
Boriop relies on affidavits of Sebastian Canzoneri sworn 12 May 2015 and 11 June 2015. Ms Moussi relies on her affidavit of 29 May 2015, an affidavit of Matthew Ravalli sworn 15 June 2015 and an affidavit of her solicitor, George Livaditis sworn 18 June 2015.
Boriop contends that it has a genuine dispute in respect of the debt claimed on the demand. It asserts that the debt the subject of the demand is owed by Mr Canzoneri, not by Boriop.
Boriop’s evidence
Mr Canzoneri is the sole director of Boriop. Boriop is trustee of the MNR Canzoneri Children’s Trust.
Mr Canzoneri states that in February 2012 Ms Moussi’s mother, Nina Moussi, came to his office at Saccuzzo Larsen and Co Pty Ltd (‘Saccuzzo Larsen and Co’), a firm of accountants, in Drummond Street, Carlton to speak to him about a personal matter. Nina Moussi told him that her daughter, Ms Moussi, had funds invested on deposit with National Australia Bank (‘NAB’). Nina Moussi said she was concerned that insufficient interest was being earned on the deposit. Nina Moussi asked him if there was anything he could do to improve the returns to which he responded that if Ms Moussi loaned the money to him, he would pay interest of eight per cent on the loan. Nina Moussi stated that she would consider that proposal.
Mr Canzoneri states that some two to three weeks later, near the end of February 2012, Nina Moussi telephoned him and said that she had discussed his proposal that Ms Moussi lend funds to Mr Canzoneri and that Nina Moussi and Ms Moussi had agreed that it would be an appropriate investment for her to make. He states that in that conversation, Nina Moussi asked Mr Canzoneri who the cheque for the loan should be made out to. He responded that although the loan would be to him personally, the cheque should be made payable to Boriop.
Mr Canzoneri asserts that it was expressly agreed between himself and Nina Moussi that the loan was to be to him personally and that ‘Boriop was simply the corporate vehicle into which I requested the money be paid’.[1] He states that he had no dealings with Ms Moussi prior to the actual making of the loan.
[1]Affidavit of Sebastian Canzoneri of 12 May 2015, para 10.
Mr Canzoneri deposes that by prior arrangement with his assistant, Ms Moussi came to his offices in Carlton on 8 March 2012. He says that on that occasion, Ms Moussi told him that following discussions that she had had with Nina Moussi, she had gone to NAB and obtained a bank cheque for $400,000 made payable to Boriop in accordance with the directions that he had previously provided to Nina Moussi. Mr Canzoneri states that in his discussions with Ms Moussi on 8 March 2012 (which are not further detailed in his affidavit) ‘he made it clear that the loan was to him but the cheque was to be made payable to [Boriop]’.
Mr Canzoneri says that in February 2014, Ms Moussi’s aunt and Nina Moussi’s sister, Rania Baroud, began expressing concern about there being no security for the money that had been loaned to him by Nina Moussi and Ms Moussi (including the 8 March 2012 advance) and some other investments made by Nina Moussi and Ms Baroud. He states that at his own instigation, for the purpose of providing a basis upon which Nina Moussi, Ms Moussi and Ms Baroud could have some security over the land owned by companies Mr Canzoneri controlled, he prepared a series of ‘loan agreements’. In relation to Ms Moussi, he prepared a loan agreement with security clauses in it in the name of Boriop and dated it 8 March 2012, being the original date of the $400,000 advance to him by Ms Moussi.
At the outset of the hearing of this matter Mr Tsalanidis made objections to the admissibility of several paragraphs of Mr Canzoneri’s affidavit, including paragraph 16, which stated as follows:
It was not my intention to substitute the plaintiff as lender under the arrangement but simply as a document by which a security interest could be provided for the loan advanced by [Ms Moussi] on 8 March 2012.[2]
[2]Affidavit of Sebastian Canzoneri of 12 May 2015, para 16.
I ruled in the course of the hearing that certain paragraphs of Mr Canzoneri’s affidavit, including paragraph 16, were inadmissible, on an application of the decision of the High Court in Toll FGCT Pty Ltd v Alpha Pharm Pty Ltd (‘Toll’)[3] in particular in this context at paragraphs 35-36 of the reasons for judgment, where the court observed:
[3][2004] HCA 52.
A striking feature of the evidence at trial, and of the reasoning of the learned primary judge, is the attention that was given to largely irrelevant information about the subjective understanding of the individual participants in the dealings between the parties. Written statements of witnesses, no doubt prepared by lawyers, were received as evidence in chief. Those statements contained a deal of inadmissible material that was received without objection. The uncritical reception of inadmissible evidence, often in written form and prepared in advance of the hearing is to be strongly discouraged. It tends to distract attention from the real issues, give rise to pointless cross-examination and cause problems on appeal where it may be difficult to know the extent to which the inadmissible material influenced the judgment at first instance.
In Codelfa Construction Pty Ltd v State Rail Authority of NSW - 3, Mason J observed:
We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.
(citations omitted)
I shall make further reference at length to Toll later in these reasons.
The document (‘the Deed’) which was prepared is headed ‘Loan Agreement’ and is expressed to be between Ms Moussi as lender, and Boriop as borrower. It is in the form of a deed and is dated 8 March 2012. The recitals state as follows:
A.The lender has lent the borrowers [sic] monies in the sum of $400,000 on or about 8th March 2012.
B.The lender and the borrowers [sic] have agreed that the monies lent shall be repaid at the expiration date 8th March 2013.
C.The parties hereby agree that interest is payable on the monies outstanding at the rate of 8% per annum, paid monthly interest into account NAB 083 121 56 351 7345.
The operative terms of the Deed provide as follows:
1.The Lender hereby agrees that the monies were lent to the borrower on 8 March 2012.
2.The borrowers [sic] hereby acknowledge, by their execution of this document as having received the monies loaned from the lender in the sum of $400,000.
3.The borrowers [sic] hereby acknowledge, that interest is payable on the monies at a rate of 8%.
4.In order to secure the payment of the aforesaid and further to the charge hereinbefore given, the borrowers [sic] hereby authorise the lender to lodge a caveat over the properties aforesaid, or either of them, at the Victorian Land Registry at the expense of the borrower. Property at 52 Newlands Road, Coburg and 70 Lawrie Street, Yarrambat.
5.The borrowers [sic] hereby undertake to execute such mortgages, charges and other assurances and instruments and to execute a mortgage (relating to fixed interest only mortgages) containing the usual terms and conditions applicable thereto for a tem [sic] to coincide with the terms herein contained in order to enable the lender to lodge such other things as may be reasonably required by the lender to give effect to the terms hereof.
The remainder of the Deed deals with matters which have no direct present relevance.
Mr Canzoneri states that he prepared the Deed without any legal assistance from a solicitor and that on reflection he should have prepared a third party security agreement in the name of the owners of the land identified in clause 4 of the Deed. Mr Canzoneri states in paragraph 19 of his affidavit that in preparing the Deed in February 2014 it was not his intention to change the initial loan arrangement between himself and Ms Moussi but was simply to provide security by two companies, Mentrall Pty Ltd and Citek Pty Ltd in respect of property owned by them to allow Ms Moussi to have security for the loan advanced to Mr Canzoneri on 8 March 2012.[4]
[4]Affidavit of Sebastian Canzoneri of 12 May 2015, para 19.
Neither Mentrall Pty Ltd or Citek Pty Ltd are parties to the Deed and Mr Canzoneri does not explain how he perceived the document would provide any security to Ms Moussi. Moreover, it appears that a company by the name of Nickthoula Nominees Pty Ltd owns the property at Newlands Road, Coburg, not Mentrall Pty Ltd. In any event, for the same reason as my ruling in relation to paragraph 16, I ruled in the course of the hearing that paragraph 19 was inadmissible on an application of the reasoning of the High Court in Toll.
Mr Canzoneri asserts that although he provided that document to Ms Baroud on behalf of Ms Moussi, Ms Baroud and Nina Moussi in or about February 2014 ‘it has never been acted upon by [Ms Moussi] prior to 22 April 2015’.[5] Mr Canzoneri makes reference to a letter of 13 March 2014 from Ms Moussi’s solicitors which stated as follows:
[5]Affidavit of Sebastian Canzoneri of 12 May 2015, para 20.
Purported loan agreements with Boriop Pty Ltd
The purported loan agreement of 1 May 2012 permits [Ms Moussi] to lodge a caveat on the Plumpton Road property. However Boriop Pty Ltd does not own that property, Modeca Investments Pty Ltd does.
[Mr Canzoneri] also provided a purported loan agreement to [Ms Baroud] in February 2014, for $400,000 advanced by [Ms Moussi] to Boriop Pty Ltd on 8 March 2012 (unsigned by our client). Clause 4 of that purported loan agreement contains a charging clause over the properties at 52 Newlands Road, Coburg and 70 Lawrie Street, Yarrambat. Title searches reveal an unrelated entity, Nickthoula Nominees Pty Ltd owns 52 Newlands Road, Coburg and the property at 70 Lawrie Street, Yarrambat is owed by Citek Pty Ltd, not Boriop Pty Ltd.
It appears that incorrect dates, sums and properties have been deliberately included in the purported loan agreements to mislead our clients.
At the hearing of this matter, Mr Foster, the solicitor for Boriop, placed much emphasis on the use of the word ‘purported’ on several occasions in this correspondence, contending that it evinced an intention on the part of Ms Moussi to not be bound by the Deed.
Mr Canzoneri states that on 26 March 2015 his solicitors, writing on behalf of himself and Boriop,
clarified that the money advanced by [Ms Moussi] on 8 March 2012 was a loan to me for a return of 8% and that the documents I prepared were simply to provide some security for the loans to improve the position of Nina and Sophie but not to change the arrangement of the loans between myself and [Ms Moussi].[6]
I pause to observe again that Boriop was not the registered proprietor of either of the properties mentioned in clause 4 of the Deed and was in no position to grant Ms Moussi a charge over the properties, but anyone reading the document would assume that Boriop was in a position to grant such a charge.
[6]Affidavit of Sebastian Canzoneri of 12 May 2015, para 22.
Mr Canzoneri says that prior to the letter of 13 March 2015 from Ms Moussi’s solicitors, Ms Moussi had not raised the issue of the Deed and he took the letter of 13 March 2015 ‘as a rejection of the security arrangements’ he had offered. This is despite the fact that the Deed did not provide any security for the debt.
Mr Canzoneri states that he was ‘very surprised’ to find that having rejected the Deed as being acceptable to Ms Moussi on 13 March 2015, on 22 April 2015 Ms Moussi swore an affidavit relying on that document as being evidence of money lent by her to Boriop on 8 March 2012. He states:
That affidavit makes no mention of the true arrangements negotiated between myself and [Nina Moussi] in relation to the loan of $400,000 to me on 8 March 2012, the conversations [Ms Moussi] must have had with [Nina Moussi] and is inconsistent with the rejection of the agreement I prepared in February 2014, as set out in the letter of Livaditis & Co dated 13 March 2015.[7]
[7]Affidavit of Sebastian Canzoneri of 12 May 2015, para 24.
Mr Canzoneri contends that on the basis of this, there is a genuine dispute as to the existence of the loan between Ms Moussi and Boriop. He contends that the loan that took effect on 8 March 2012, following his negotiations and agreement reached with Nina Moussi on behalf of Ms Moussi prior to 8 March 2012 was to him personally. The affidavit then culminates in a contention that the demand should be set aside and that indemnity costs should be ordered against Ms Moussi.
Ms Moussi’s evidence
In her affidavit of 29 May 2015, Ms Moussi states that Mr Canzoneri, through his accounting firm Saccuzzo Larsen and Co at Drummond Street, Carlton, was the accountant for her mother and her from approximately 2010 until late 2013, when her mother passed away. Mr Canzoneri and Mr Larsen provided accounting and financial advice to Ms Moussi and her mother and had an intimate knowledge of their finances.
Ms Moussi states that in or about 2009 she received an inheritance from her father of approximately $3.25 million. After purchasing property and travelling overseas in 2012, she had approximately $2 million in NAB accounts. Ms Moussi states that, by reason of him being her accountant, Mr Canzoneri knew of her financial position, where her money was deposited and what return she was receiving.
In 2012 Ms Moussi was working as a receptionist at a motel next door to Mr Canzoneri’s office in Drummond Street, Carlton. In March 2012, her mother told her that Mr Canzoneri wanted them to lend money to a company and that they would get eight per cent interest on the loan on the loan. She agreed to do this.
On or about 7 March 2012, Ms Moussi’s mother asked her to obtain a bank cheque made out to Mr Canzoneri’s company called Boriop. She asked her mother how the name of the company was spelt but her mother was not aware of how the name of the company was spelt.
On 7 March 2012, Ms Moussi transferred $400,000 via internet banking from her NAB Isaver account, to her NAB cheque account. The bank statement identifies that transaction as ‘Sebastian’, a reference to Mr Canzoneri.
On 8 March 2012 Ms Moussi went to the NAB branch on the corner of Elgin and Rathdowne Streets, Carlton to obtain a bank cheque for the $400,000 loan. Because she was unsure of the spelling of Boriop, she telephoned Mr Canzoneri on his mobile telephone and asked how Boriop’s name was spelt.’[8] He spelt the name to her and Mr Moussi then obtained a bank cheque for $400,000 from her NAB account, payable to Boriop. A copy of the bank cheque is exhibited to her affidavit.[9]
[8]Affidavit of Sophie Moussi of 29 May 2015, para 9.
[9]Exhibit SM-1.
Ms Moussi went to Mr Canzoneri’s offices in Drummond Street, Carlton and handed the cheque to a person there and left. She says that there were no other discussions with anyone else at the offices, including Mr Canzoneri. Ms Moussi denies the allegation in Mr Canzoneri’s affidavit that Mr Canzoneri spoke about a loan to him personally or to his Children’s Trust then or at any time; she states that she would not have agreed to lend money to his children, one of whom is Michael Canzoneri, her solicitor at that time.
From 30 April 2012 to 30 August 2012, Boriop paid interest of $2,666.66 into Ms Moussi’s NAB cheque account on or about the last day of each month. From September 2012 to the present time, Boriop has been paying $2,000 into her cheque account on or about the last day of every month. The difference has been paid to her aunt, Ms Baroud.
Nina Moussi died on 29 September 2013. Shortly before, in August 2013, there was a meeting at her house at which Mr Canzoneri and his personal assistant, Daniella Amore, were present. Ms Moussi walked in on the end of that meeting when she came in from work. At this meeting, Ms Baroud told Mr Canzoneri that ‘we all wanted our money back’ and he stated, ‘You can have it within a year’.[10] Ms Moussi states that she and Ms Baroud have been requesting confirmation of and security for the loan since November 2013.
[10]Affidavit of Sophie Moussi of 29 May 2015, para 13.
In February 2014, Mr Canzoneri provided a number of loan agreements to Ms Baroud in relation to the loans made by Ms Baroud and the Moussis, including the Deed. Ms Moussi notes that neither Mentrall Pty Ltd nor Citek Pty Ltd are parties to the Deed. She observes that the letter of 13 March 2015 from her solicitors merely referred to inadequacies in the security provided under the Deed. It did not question the existence of the loan for $400,000 to Boriop.
Ms Moussi states that on 28 October 2014, after there had been numerous demands for repayment, a meeting took place at Ms Baroud’s house in Richmond at which Mr Canzoneri, his wife Margaret Canzoneri, Ms Baroud, her grandmother Victoria, and herself were present. She says that the lenders asked for their money back. At the meeting, Ms Baroud observed to Mr Canzoneri that there was no ability to put caveats on any of the properties referred to in the Deed.
Ms Moussi deposes that at this meeting Mr Canzoneri acknowledged that they had initially requested return of the monies in August 2013 and that it was agreed that they would be repaid within 12 months. Mr Canzoneri had stated in his affidavit that prior to Ms Moussi’s solicitors letter of 13 March 2015, Ms Moussi had not responded to the provision of the Deed relating to the $400,000 advance in March 2012. Ms Moussi, however, exhibits a letter sent by her previous solicitor, Mr King of Merhi and Associates, making a demand for the return of the $400,000 from Boriop by a letter dated 14 November 2014.[11] A reply was received from Mr Canzoneri’s solicitors on 28 November 2014. It seems clear that efforts were being made on Ms Moussi’s behalf to recover the money from Boriop several months before the letter of 13 March 2015.
[11]Exhibit SM-4.
Boriop’s evidence in reply
In his affidavit of 11 June 2015, Mr Canzoneri rejects Ms Moussi’s evidence that he acted as the accountant for her and Nina Moussi, that he provided accounting and financial advice to them, or that he had an intimate knowledge of their finances. He states the person at Saccuzzo Larsen and Co who provided the accounting services was Matthew Ravalli of that firm and that at no time did he act as the accountant for either of them; to the extent that he was aware of the financial position of the Moussis, it was only as a result of information conveyed to him by Nina Moussi, not as a result of any accounting work done by Saccuzzo Larsen and Co. He states that he was not aware of the inheritance that Ms Moussi had received prior to reading her affidavit.
Mr Canzoneri states that Ms Moussi’s evidence that monthly interest payments of $2,666.66 were paid by Boriop is not correct. He says that eight payments of $2,666.66 were paid by Boriop to August 2012 even though only seven months were due at that time. He says after that time, Boriop paid $2,000 interest per month, the balance being paid in cash by him (he does not state the source) as directed by Nina Moussi until her death in September 2013. Since then, he states the balance, $666.66, has been paid by him or various of his companies to Ms Baroud on behalf of Ms Moussi. He makes reference to Ms Moussi’s solicitors’ letter of 13 March 2015, quoting from that letter as follows:
We are instructed that between March 2011 and June 2012 our clients paid significant amounts to a number of corporate entities at the request of [Mr Canzoneri] (“the period”) totalling $2,940,000 (“the moneys”). These entities include: Modeca Investments Pty Ltd; Boriop Pty Ltd; Dapto Ranges Pty Ltd; Renfro Pty Ltd; Oliana Foods Pty Ltd; Safety Beach Investments Pty Ltd; and Citek Pty Ltd (“the entities”). …
We are instructed that [Ms Moussi], who resided in Canberra during part of the period and was often absent overseas, acted upon her mother’s advice and recommendations concerning advances that were made to or at the request of [Mr Canzoneri].
[emphasis added in Mr Canzoneri’s affidavit][12]
[12]Affidavit of Sebastian Canzoneri of 11 June 2015, para 8 and 9.
Mr Canzoneri contends that the statements emboldened in the paragraphs extracted above ‘correlate with my evidence that I dealt with [Nina Moussi], not [Ms Moussi] and that the loans (advances) were to me.’[13] He says that is also supported by the transaction reference ‘Sebastian’ for the $400,000 paid from Ms Moussi’s Isaver account by the internet banking transaction of 7 March 2012 to her savings account from which the funds for the bank cheque were obtained. He goes on to refer to another passage of Ms Moussi’s solicitors letter where reference is made to a ‘purported loan agreement’ contending that it gives rise to an implication that the document was rejected as a binding loan agreement. His affidavit culminates in a denial that at a meeting at Ms Baroud’s house in Richmond on 28 October 2014 he stated ‘the money wasn’t loaned to me, it was loaned to the company’.[14]
[13]Affidavit of Sebastian Canzoneri of 11 June 2015, para 10.
[14]Affidavit of Sebastian Canzoneri of 11 June 2015, para 13.
Further affidavits filed on behalf of Ms Moussi
In an affidavit sworn 18 June 2015, George Livaditis, a solicitor, deposes that he has the conduct of this proceeding on behalf of Ms Moussi. He exhibits searches obtained from the ASIC data base and title searches of the land at Yarrambat and Coburg The first ASIC extract is in respect of Mentrall Pty Ltd. Mr Canzoneri is not a director of that company and his personal assistant, Ms Amore, is its sole director. He states that Mentrall Pty Ltd does not own the property at 52 Newlands Road, Coburg referred to in clause 4 of the Deed, the registered proprietor being Nickthoula Nominees Pty Ltd. Boriop is the registered proprietor of one property, at 4 Wilburton Parade, North Balwyn which is apparently the residence of Mr Canzoneri. This property is not purportedly charged under the Deed. He deposes that Mr Canzoneri is the sole director of Citek Pty Ltd which is the registered proprietor of the property at 70 Lawrie Street, Yarrambat in Victoria. These matters are all confirmed by the ASIC extracts and title searches which are exhibited.[15]
[15]GML-1 to GML-4.
Affidavit of Matthew Ravalli
In his affidavit sworn 15 June 2015, Mr Ravalli states that he is a certified practising accountant and an employee of SLC Partners Pty Ltd (‘SLC Partners’), previously known as Saccuzzo Larsen and Co. It was formerly situated in Drummond Street, Carlton for over eight years. In December 2013, the firm changed its name to SLC and in January 2014 moved to premises in Moonee Ponds. Mr Ravalli states that Mr Canzoneri was a partner at Saccuzzo Larsen and Co from the time Mr Ravalli commenced working there in approximately 2007, and ceased being a partner of the firm when it changed its name to SLC Partners in December 2013. He believes that Mr Canzoneri ceased to be a partner of the firm when the two other partners, Frank Giannone and Salvatore Gurcillio, bought him out.
Mr Ravalli states that he did the accounting work for Nina Moussi, Ms Moussi and Ms Baroud, however, this was in accordance with the instructions and under the supervision of Mr Canzoneri. Mr Canzoneri had introduced Nina Moussi, Ms Moussi and Ms Baroud as clients to the firm in mid‑2010.
Mr Ravalli deposes that Mr Canzoneri was the principal partner at Saccuzzo Larsen and Co and that the Moussis, Ms Baroud and their associated companies and trusts were Mr Canzoneri’s clients. The other partners in the firm had their own clients and Mr Canzoneri would mainly attend to them, particularly when taking over their matters from their previous accountant in the first months of 2010. Mr Canzoneri would see Ms Moussi and Ms Baroud mainly on his own or with his personal assistant, Ms Amore, either at Saccuzzo Larsen and Co or at MSL Lawyers’ office which was nearby, or speak to them on the telephone. Mr Ravalli says that he would see them or speak with them also if Mr Canzoneri was not available, but this did not happen often. He states that Mr Canzoneri was the Moussis’ and Ms Baroud’s accountant and that he oversaw the work that Mr Ravalli did on their behalf. When it came to their work, he took instructions from Mr Canzoneri and Mr Canzoneri approved the work that Mr Ravalli did for them.
Mr Ravalli states that Nina Moussi also had a self-managed superannuation fund called the Noonoo Superannuation Fund. He exhibits a copy of a letter of 16 March 2012 from Mr Canzoneri’s assistant, Ms Amore, on Saccuzzo Larsen and Co letterhead addressed to Mark Serry of Intralink Wealth Management.[16] Intralink Wealth Management were Nina Moussi’s previous advisers and the letter requested that files of the Noonoo Superannuation Fund be transferred to Mr Canzoneri at Saccuzzo Larsen and Co. He states that Mr Canzoneri, with the assistance of his personal assistant, arranged and handled the transfer of the superannuation fund account and Mr Canzoneri would have advised Nina Moussi to effect this transfer.
[16]Exhibit MR1
Mr Ravalli deposes that at the time of preparation of the taxation returns and financial statements for the year ending 2010 and 2011 for the Noonoo Superannuation Trust and the RBD Trust, there were three partners at Saccuzzo Larsen and Co. As he reported to Mr Canzoneri, the procedure was observed to place the name of the partner responsible for those clients on the financial statements. At that time, it was Mr Canzoneri who had Nina Moussi, Ms Moussi and Ms Baroud as clients and that is why Mr Canzoneri’s name appears on the financial statements. Mr Canzoneri subsequently reviewed the documents before they were sent to the clients for approval and signing.
He states that Nina Moussi was not a businesswoman and relied on Mr Canzoneri’s advice. Ms Baroud also relied on Mr Canzoneri’s accountancy advice and financial guidance, as did Ms Moussi. As to Ms Moussi, she consulted with Mr Canzoneri about the purchase of 296 High Street, Northcote, bought by her in 2010. Mr Ravalli states that Mr Canzoneri was aware of the Moussi family’s respective financial positions.
Mr Canzoneri did not file any affidavit in response to Mr Ravalli’s affidavit.
Genuine dispute – relevant legal principles
Section 459H(1)(a) of the Corporations Act 2001 (Cth) (‘the Act’) requires that the dispute be ‘genuine’. This requirement has been the subject of extensive judicial consideration. In Eyota Pty Ltd v Hanave Pty Ltd[17] McLelland CJ stated:
In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the ‘serious question to be tried’ criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit ‘however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be’ not having ‘sufficient prima facie plausibility to merit further investigation as to [its] truth’ (cf Eng Mee Yong v Letchumanan [1980] AC 331 at 341), or ‘a patently feeble legal argument or an assertion of facts unsupported by evidence’: cf South Australia v Wall (1980) 24 SASR 189 at 194.
But it does mean that, except in such an extreme case, a court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. In Mibor Investments (at 366-7) Hayne J said, after referring to the state of the law prior to the enactment of Div 3 of Pt 5.4 of the Corporations Law, and to the terms of Div 3:
These matters, taken in combination, suggest that at least in most cases, it is not expected that the court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the court conclude that there is a dispute and that it is a genuine dispute.
[17](1994) 12 ACSR 785 at 787.
In United Capital Properties Pty Ltd v Handbury Asset Management Pty Ltd,[18] Stone J of the Federal Court stated:[19]
[18](2011) 86 ACSR 161.
[19]Ibid., at [7].
The authorities all accept the distinction between determining whether a claim is genuine and determining the claim on the merits and that the Corporations Act does not require the court to determine whether the alleged claim will succeed. That, as Northrop J said in Greenwood Manor Pty Ltd v Woodlock (1994) 48 FCR 229 at 233, is quite clear. His Honour elaborated at 234:
Although it is true that the Court, on an application under ss 459G and 459H is not entitled to decide a question as to whether a claim will succeed or not, it must be satisfied that there is a genuine dispute between the company and the respondent about the existence of the debt. If it can be shown that the argument in support of the existence of a genuine dispute can have no possible basis whatsoever, in my view, it cannot be said that there is a genuine dispute. This does not involve, in itself, a determination of whether the claim will succeed or not, but it does go to the reality of the dispute, to show that it is real or true and not merely spurious.
The criteria for determining if a dispute is genuine have been formulated in many ways, such as: the dispute must be ‘bona fide and truly exist in fact’ and that the grounds for alleging the dispute be ‘real and not spurious, hypothetical, illusory or misconceived’, Spencer Constructions Pty Ltd v G&M Aldridge Pty Ltd (1997) 76 FCR 452 at 464, also Giacci Holdings Pty Ltd v Giacci [2007] WASC 187 at [4] and Kirrak Pty Ltd v Compass Scaffolding and Plant Hire Pty Ltd [2007] NSWSC 1002 at [3]; ‘not plainly vexatious or frivolous’, Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 at 39; the dispute is genuine unless the claim is ‘so devoid of substance that no further investigation is warranted’; Roadships Logistics Ltd v Tree [2007] NSW SC 1084 at [24].
Although the onus to show that the dispute is genuine falls on the party on whom the statutory demand is served, it is well accepted that the burden is not heavy. In Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC 411 at [23] Barrett J observed that the task of a company seeking to set aside a statutory demand ‘is by no means at all a difficult or demanding one’. In Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA (1994) 15 ACSR 347, Lindgren J likened the burden of an application to set aside a statutory demand to the burden of a creditor applying for summary judgment. As his Honour expressed it, at 353-4:
The creditor would not be entitled to summary judgment if the company raised a defence or cross-claim deserving of a trial, and, concomitantly, a defence or cross-claim would not be struck out or dismissed if it raised an issue deserving of a trial. … The task confronting a company applying to set aside a statutory demand of establishing the ‘genuineness’ of a dispute or claim is, in my opinion, no more onerous than that which would confront it if it were seeking to meet an application by the creditor for summary judgment.
(citations omitted)
In Powerhouse Australasia Pty Ltd v Viarc Pty Ltd (‘Viarc’),[20] Dodds‑Streeton J (as she then was) stated:
While there is not a very exacting standard, on the other hand, mere assertion of a dispute or offsetting claim, mere bluster or advance in grounds which are illusory or spurious or insufficiently particularised will not suffice. The Court must not enter into the merits of the dispute, but it is not crossing the line in relation to its legitimate role in these applications to consider evidence which ‘bears on whether or not the asserted dispute or offsetting claim is genuine’. Indeed that is its necessary function.[21]
(emphasis added)
[20][2006] VSC 508.
[21]Ibid., at [48].
For a dispute to be a ‘genuine dispute’ within the meaning of s 459H(1)(a) of the Act, what is required is that the dispute be bona fide and truly exist in fact and the grounds for alleging the existence of a dispute must be real and not spurious, hypothetical, illusory or misconceived.[22] In T R Administration Pty Ltd v Frank Marchetti and Sons Pty Ltd,[23] Dodds‑Streeton JA observed that the dispute should have a sufficient objective existence and prima face plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile.
[22]Spencer Constructions Pty Ltd v G and M Aldridge Pty Ltd (1997) 76 FCR 452 at 464.
[23](2008) 66 ACSR 67 at [71].
An applicant setting aside a statutory demand bears the onus of establishing the existence of a genuine dispute. Although the standard of proof required is ‘not a particularly high one’, a rigorous curial approach is essential to the effect of the statutory demand procedure.[24] As Davies J pointed out in LPD Corporation Pty Ltd v Laca Nominees Pty Ltd,[25] the material before the Court must contain the basis for establishing that a genuine dispute exists and be of sufficient probative value that the Court is satisfied that there is a real dispute.
[24]Ibid., at [72].
[25][2010] VSC 313.
Consideration
In my view, Boriop has not discharged the onus which it bears to establish that the dispute which it relies on in this application to set aside the demand is genuine. While the standard required to be met is not high, I do not consider it has satisfied the test. In my opinion the dispute alleged is spurious and Mr Canzoneri’s version of events is implausible and cannot be accepted.
Putting aside for the moment the differences in the evidence referred to above, the most compelling reason to dismiss Boriop’s application is the fact that the transaction the subject of the demand is evidenced by the Deed, the terms of which were prepared and executed by Mr Canzoneri , Ms Moussi’s accountant, at his instigation.
The legal position in regard to signed written instruments is clear and well settled. In Toll),[26] the High Court observed at [42]-[57]:
[26][2004] HCA 52.
[42] Consistent with this objective approach to the determination of the rights and liabilities of contracting parties is the significance which the law attaches to the signature (or execution) of a contractual document. In Parker v South Eastern Railway Company, Mellish LJ drew a significant distinction as follows:
In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents. The parties may, however, reduce their agreement into writing, so that the writing constitutes the sole evidence of the agreement, without signing it; but in that case there must be evidence independently of the agreement itself to prove that the defendant has assented to it.
[43] More recently, in words that are apposite to the present case, in Wilton v Farnworth, Latham CJ said:
In the absence of fraud or some other of the special circumstances of the character mentioned, a man cannot escape the consequences of signing a document by saying, and proving, that he did not understand it. Unless he was prepared to take the chance of being bound by the terms of the document, whatever they might be, it was for him to protect himself by abstaining from signing the document until he understood it and was satisfied with it. Any weakening of these principles would make chaos of every-day business transactions.
[44] In Oceanic Sun Line Special Shipping Company Inc v Fay, Brennan J said:
If a passenger signs and thereby binds himself to the terms of a contract of carriage containing a clause exempting the carrier from liability for loss arising out of the carriage, it is immaterial that the passenger did not trouble to discover the contents of the contract.
[45]It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.
[46]The statements in the above authorities accord with the well-known principle stated by Scrutton LJ in L'Estrange v F Graucob Ltd (‘L'Estrange v Graucob’) that ‘[w]hen a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.’ Scrutton LJ, in turn, was repeating the substance of what had been said by Mellish LJ in Parker v South Eastern Railway Company. The principle was applied in Foreman v Great Western Railway Company. A consignor of cattle sent them for transportation by a railway company. They were put in the charge of a drover, who could not read. The drover signed a contract of carriage which contained an exclusion clause. The drover's employer was held to be bound by the clause. The Exchequer Division said that ‘the plaintiff who sends the [illiterate] servant to sign the document is in no better or worse position than if he had signed it himself without reading it.’ In his lecture published as ‘Form and Substance in Legal Reasoning: The Case of Contract’, Professor Atiyah posed, with reference to L'Estrange v Graucob, the question why signatures are, within established limits, regarded as conclusive. He answered:
A signature is, and is widely recognized even by the general public as being a formal device, and its value would be greatly reduced if it could not be treated as a conclusive ground of contractual liability at least in all ordinary circumstances.
Professor Atiyah added:
However, what is, I think, less clear is what is the underlying reason of substance in this kind of situation. The usual explanation for holding a signature to be conclusively binding is that it must be taken to show that the party signing has agreed to the contents of the document; but another possible explanation is that the other party can be treated as having relied upon the signature. It thus may be a mistake to ask, as H L A Hart once asked, whether the signature is merely conclusive evidence of agreement, or whether it is itself a criterion of agreement.
These themes appeared in the judgment of this Court in Petelin v Cullen. There, the Court upheld a plea of non est factum. Under the common law rules, a plea of non est factum was a plea of the general issue which put in issue that the defendant had executed the deed alleged in its declaration. In their joint judgment in Petelin, Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ said:
The principle which underlies the extension of the plea to cases in which a defendant has actually signed the instrument on which he is sued has not proved easy of precise formulation. The problem is that the principle must accommodate two policy considerations which pull in opposite directions: first, the injustice of holding a person to a bargain to which he has not brought a consenting mind; and, secondly, the necessity of holding a person who signs a document to that document, more particularly so as to protect innocent persons who rely on that signature when there is no reason to doubt its validity. The importance which the law assigns to the act of signing and to the protection of innocent persons who rely upon a signature is readily discerned in the statement that the plea is one 'which must necessarily be kept within narrow limits' ... and in the qualifications attaching to the defence which are designed to achieve this objective.
[47]The importance which, for a very long time, the common law has assigned to the act of signing is not limited to contractual documents. Wilton v Farnworth was not a contract case. The passage from the judgment of Latham CJ quoted above is preceded by a general statement that, where a man signs a document knowing that it is a legal document relating to an interest in property, he is in general bound by the act of signature. Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution. It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief.
[48]In most common law jurisdictions, and throughout Australia, legislation has been enacted in recent years to confer on courts a capacity to ameliorate in individual cases hardship caused by the strict application of legal principle to contractual relations. As a result, there is no reason to depart from principle, and every reason to adhere to it, in cases where such legislation does not apply, or is not invoked.
[49]To speak of the operation of the law of contract with respect to the signature of the document containing cl 6 requires attention both to the significance attached by the law to the presence of the signature and also to the absence of any grounds, such as a plea of non est factum, which at common law would render the contract void and of any grounds, such as misrepresentation, which might attract equitable relief, or which might elicit curial dispensation under a statutory regime. This illustrates the cogency of the statement of H L A Hart that usually it is not possible to define a legal concept such as ‘contract’ merely by specifying certain necessary and sufficient conditions for its application because:
any set of conditions may be adequate in some cases but not in others and such concepts can only be explained with the aid of a list of exceptions or negative examples showing where the concept may not be applied or may only be applied in a weakened form.
……….
[55]In L'Estrange v Graucob, Scrutton LJ said that the problem in that case was different from what he described as ‘the railway passenger and cloak-room ticket cases, such as Richardson, Spence & Co v Rowntree’, where ‘there is no signature to the contractual document, the document being simply handed by the one party to the other.’ His Lordship said:
In cases in which the contract is contained in a railway ticket or other unsigned document, it is necessary to prove that an alleged party was aware, or ought to have been aware, of its terms and conditions. These cases have no application when the document has been signed.
[56]In the same case Maugham LJ, who agreed with Scrutton LJ, referred to three possible circumstances in which the party who signed the document might not have been bound by its terms. The first was if the document signed was not a contract but merely a memorandum of a previous contract which did not include the relevant term. The second was a case of non est factum. The third was a case of misrepresentation.
[57]If there is a claim of misrepresentation, or non est factum, or if there is an issue as to whether a document was intended to affect legal relations or whether, on the other hand, it was tendered as a mere memorandum of a pre-existing contract, or a receipt, or if there is a claim for equitable or statutory relief, then even in the case of a signed document it may be material to know whether a person who has signed it was given sufficient notice of its contents. The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document. L'Estrange v Graucob explicitly rejected an attempt to import the principles relating to ticket cases into the area of signed contracts. It was not argued, either in this Court or in the Court of Appeal, that L'Estrange v Graucob should not be followed.
(citations omitted)
This is not a case in which it could be contended that there has been any misrepresentation on Ms Moussi’s part or that there was no intention to create legal relations when the Deed was executed by Boriop . Nor has it been suggested that a plea of non est factum is available. Mr Canzoneri is seeking to resile from a document which he himself prepared and signed on behalf of Boriop. The position he puts, that he was the borrower, is not supported by any contemporaneous documentary evidence, in fact quite the contrary , and as Mr Tsalanidis points out, any alleged evidence of what his subjective intention was when preparing and executing the Deed is inadmissible on an application of Toll[27] and cannot be accepted.
[27][2004] HCA 52 at [35].
There are several significant features of the evidence that are not the subject of controversy which fortify my conclusion that the dispute is not genuine, that it is spurious and ought not be accepted. These are as follows. Mr Canzoneri requested that a bank cheque payable to Boriop be obtained on or about 8 March 2012. Mr Canzoneri, apparently an experienced accountant, was a director of Boriop, both at the date of the $400,000 advance and at the date that he prepared the Deed. The Deed was prepared at his instigation and Ms Moussi had no involvement in the preparation of the document. The Deed is executed by him as the sole director of Boriop, not in a personal capacity, below the statement ‘being signed by the person being authorised to sign for the company’. To my mind it is inconceivable that, he, an accountant, would not have turned his mind to correctly identifying the borrowing party when he prepared the Deed. Boriop then made numerous interest payments, from 30 April 2012 to 30 August 2012 of $2,666.66 per month and from September 2012 until the present time of $2,000 per month (with the balance being paid to Ms Baroud). So far as it is relevant, I consider that the evidence of Mr Ravalli establishes that Mr Canzoneri was Ms Moussi’s accountant and had a close familiarity with her financial affairs.
Even if evidence as to Mr Canzoneri’s subjective intent when executing the Deed was admissible, I agree with the submissions of Mr Tsalanidis, counsel for Ms Moussi, that the contemporaneously generated documents, including the cheque payable to Boriop, the Deed itself, and the evidence that Boriop made the loan repayments described all point to Boriop being the borrower. In my opinion, Mr Canzoneri’s explanation as to why Boriop was nominated as borrower and not himself, is spurious and cannot be accepted. I consider that to suggest that the use by Ms Moussi of the transaction identifier ‘Sebastian’ when transferring the funds from her Isaver account into an account from which the bank cheque was drawn supports the submission that the loan was to Mr Canzoneri and not Boriop is clutching at straws. His reason for preparing and executing the Deed, ‘to provide security by Mentrall Pty Ltd and Citek Pty Ltd in respect of property owned by them to allow [Ms Moussi] to have security for the loan’ when those parties were not party to the Deed and he must have known it would have no such effect is to my mind also fanciful.
It is the ‘necessary function’ as Dodds‑Streeton JA observed in Viarc for a court ‘considering these types of applications to consider evidence which bears on whether or not the asserted dispute or offsetting claim is genuine’.[28] As her Honour indicates, it is not crossing the line in relation to the Court’s legitimate role in these applications. An application of that approach in this case leads in my view to the conclusion that Boriop has not established that there is a genuine dispute about the debt the subject of the demand.
[28][2006] VSC 508 at [48].
The proceeding is dismissed with costs.
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