BRADENTON Nominees Pty Ltd v Australian Foods Company Pty Ltd
[2003] WASC 123
•23 JUNE 2003
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BRADENTON NOMINEES PTY LTD -v- AUSTRALIAN FOODS COMPANY PTY LTD [2003] WASC 123
CORAM: MASTER NEWNES
HEARD: 18 JUNE 2003
DELIVERED : 18 JUNE 2003
PUBLISHED : 23 JUNE 2003
FILE NO/S: COR 167 of 2003
BETWEEN: BRADENTON NOMINEES PTY LTD (ACN 008 834 982)
Plaintiff
AND
AUSTRALIAN FOODS COMPANY PTY LTD (ACN 081 404 686)
Defendant
Catchwords:
Corporations Law - Application to set aside statutory demand - Turns on own facts
Legislation:
Corporations Act, s 459G
Result:
Statutory demand set aside
Category: B
Representation:
Counsel:
Plaintiff: Mr R Montes
Defendant: Mr P Mendelow
Solicitors:
Plaintiff: Michael Whyte & Co
Defendant: Gavin Wells
Case(s) referred to in judgment(s):
Eyota Pty Ltd v Hanabe Pty Ltd (1994) 12 ACLC 669
Meadowfield Pty Ltd v Goldcoast Holdings Pty Ltd (In liq) [2001] WASCA 360
Case(s) also cited:
Olsson v Dyson (1970) 120 CLR 365
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 24 ACSR 353
MASTER NEWNES: I heard this application by the plaintiff to set aside a status demand as a matter of urgency on 18 June 2003. I granted the application. I said I would deliver reasons later. The defendant has since asked that the reasons be made available as soon as possible. These are those reasons.
On 15 May 2003, the defendant served on the plaintiff a statutory demand and supporting affidavit demanding payment of the sum of $50,000. That amount was said to be an overpayment to the plaintiff by the defendant as the result of a mistake of fact made by the defendant on 17 April 2003 "when washing out previous contracts 105361 and 105262 between the Creditor and the Company". The affidavit accompanying the statutory demand was sworn by Mr Wells, the corporate solicitor of the defendant, but does not elaborate upon the grounds upon which the debt is said to be owing.
In support of the current application, however, an affidavit was sworn by Wendy Eaton, a director of the plaintiff, detailing the events that preceded the service of the statutory demand. On this application, no issue was taken with any of the events deposed to by Mrs Eaton.
It appears that on 31 October 2002 the plaintiff entered into a written contract with the defendant by which the defendant agreed to purchase approximately 200 tonnes of lupin grain for $295 per metric tonne, plus GST. It was an express term of the contract that the defendant would pay the purchase price to the plaintiff within 30 days from the end of the month in which the grain was delivered by the plaintiff. The grain was to be delivered to the Co‑operative Bulk Handling facility at Mingenew. This contract was referred to as contract number 105262.
On 2 October 2002, the plaintiff entered into a further written contract with the defendant by which the defendant agree to purchase 1000 to 1200 tonnes of lupin grain for $280 per metric tonne, plus GST. Once again, it was an express term of the contract that the defendant would pay the purchase price within 30 days from the end of the month in which the grain was delivered and that the grain would be delivered to the CBH facility at Mingenew. That contract was referred to as contract number 105361.
The plaintiff delivered 210.6 tonnes of grain to the CBH facility in November 2002 under contract 105262. The purchase price was $67,709.11 (inclusive of GST and deducting a primary industries levy).
The plaintiff also delivered to CHB in November 2002 a total of 1002.11 tonnes of grain for a purchase price of $305,565.57 (inclusive of GST and deducting a primary industries levy). That grain was delivered pursuant to contract 105361.
The total amount payable by the defendant to the plaintiff was said to be $373,174.68 and it was payable by 30 December 2002. In fact the correct amount appears to be $373,274.68.
In February 2003, the defendant paid to the plaintiff the sum of $50,000. The payment was not specified to be in respect of a particular contract. That, it is said, left an overall balance of $323,086.53. It would seem, however, that the actual amount is $323,274.68. In any event, in February 2003, the defendant gave to the plaintiff a cheque in the sum of $250,000, post‑dated to 15 March 2003. Endorsed on the cheque was a notation "not to be banked until 15‑3‑03".
On about 14 March 2003, the defendant advised the plaintiff not to bank the cheque for $250,000 as the defendant did not have the funds to meet it.
By letter dated 18 March 2003, the defendant advised that it would pay the full purchase price outstanding by 30 April 2003.
On 1 April 2003, the plaintiff served a statutory demand on the defendant, demanding payment of the outstanding balance of $323,086.53.
On 15 April 2003, the defendant wrote to the plaintiff by facsimile making an offer to settle the plaintiff's claim. The salient parts of that letter were as follows:
"With the greatest respect to you, the Demand is totally unnecessary, as Australian Foods has always looked after the interests of its Growers.
The Demand makes it obvious that despite the written assurance I gave you on 18 March 2003, you still feel insecure. We do respect your feelings. To repeat, you are a valued customer.
In previous discussions with us you have asked for lupins to be returned as an alternative to receiving payment. While that is not completely possible due to some sales that have taken place, we offer to immediately transfer to you whatever lupins we have in stock and to make monetary compensation this very week.
After that transfer and payment we hope you will feel much reassured so that we can do business with you in the future.
We again apologise for the past inconvenience.
1.Return of lupins:
953.56 tonne of the Lupins are still stored in Mingenew. We propose to retransfer that to you.
Altogether we presently have a further 172.96 at other sites which we can freight to Mingenew at our expense.
2.Makeup payment:
This leave a shortfall of 86.19 tonne for which we will pay at GST exclusive $280 per tonne, totalling $24,133.20.
3.Interest on late payment:
We also propose to pay interest at 7% on the total of the GST exclusive contract prices of both contracts after crediting the $50,000. We also propose to pay interest @ 7% pa on the total of the GST exclusive contract prices of both contracts after crediting the $50,000. Thus:
Quantity supplied under both contracts: 1212.71 tonnes:
Contract 105262: 210.6 tonnes @ $295 per tonne = $62,127
Less paid $50,000
Balance owing under contract 105262 total $12,127
Plus
Contract 105361: 102.11 tonnes @ $280 per tonne = $280,590.80
Balance owed under both contracts: $292,717.80
Interest at 7% pa on $292,717.80 from 1 February 2003 to 17 April 2003 is 56.14 (rounded) per day at 76 days = $4266.64.
To summarise, we are offering ('the Offer') that by 5 pm Thursday 17 April 2003:
1.We will execute a retransfer of the Mingenew lupins to you;
2.we will transfer the remaining lupins over, and arrange freight and pay freight charges associated with them;
3.we will directly pay into your bank account $28,399.84 ($24,133.20 and $4266.64).
The Offer is open for acceptance no later than 5 pm tomorrow, Tuesday, 15 April 2003. After then it lapses and is withdraw unless accepted in the interim.
Upon fulfilment of those conditions your solicitors are to communicate written confirmation of withdrawal of the Demand.
If the matter is unresolved after 5 pm tomorrow we cannot ignore the demand. We must then apply to the Supreme Court to have it set aside. Among the many submissions we will make to the court is that the Demand is seriously defective both formally and substantially. If any one or more of those submissions is accepted the application will succeed and you will be required to pay our costs.
As resources we intend to apply to paying you will need to be diverted to engaging a legal team, it may be many months more before you will get paid, which is the exact opposite of what, in all sincerity, we want for you. We therefore recommend you accept the Offer as the swiftest and most amicable means to bring this matter to finality."
There was no evidence before me as to the earlier discussions referred to in the letter.
On 15 April 2003, the plaintiff's solicitors wrote to the defendant in the following terms, so far as is material:
"Our clients accept the offer, save that in the event that the offer is not honoured in its terms our clients reserve the rights to continue with enforcement action to recover all moneys owing to them and pursue all legal redress arising out of the two grain contracts."
The defendant wrote direct to Mr Eaton, on behalf of the plaintiff, the same day. In that letter, the defendant said as follows:
"Thank you for accepting our Offer.
We have since been working out the details of transferring Lupins we hold elsewhere than Mingenew. In light of the locations where some of the Lupins are stored we propose the following that we trust you will see as to our mutual benefit:
1.In addition to $28,399.84 we will now pay an additional $2,772 for 9.90 Tonnes, which we will now retain (valued at $280 per tonne), totalling $31,176.84.
2.We will transfer the 41.8 tonnes of lupins we currently have at Yuna and contribute $5 per tonne for freight charges from Yuna to Mingenew. This freight component accounts to a total of $209.
3.We will transfer 121.26 tonnes at CBH Forrestfield after deducting $22 per tonne cost of freighting them from Mingenew to Perth, totalling $2,560.56. We will of course be prepared to freight the Lupins at Forrestfield to Mingenew at our expense if you so require.
Provided you accept the above, the total payout will now be as follows:
Payout as per yesterday's fax: $28,399.84
Plus value of 9.9 tonnes lupins $ 2,772.00
$31,176.84
Plus Yuna freight allowance $ 209.00
$ 31,385.84
Less MGC freight -$ 2,650.56
Final Payout Figure $ 28,735.28
Please urgently advise if the above calculations are acceptable.
Today we have put a stop payment request on ANZ cheque No 2703 for the $250,000.00, as the present arrangement supercedes [sic] the original contract.
Payment of the $28,735.28 will be by bank cheque payable to AT Eaton & Son. We will deliver this to Michael Whyte & Co by 5 p.m. Thursday 17 April 2003.
When presenting Michael Whyte & Co with the bank cheque we will require Michael Whyte & Co to simultaneously:
1.Deliver up the cancelled cheque;
2.Provide us with a letter on their letterhead acknowledging receipt of the bank cheque; treating the bank [sic] as full and final satisfaction of all claims AT Eaton & Son has against Australian Foods, and withdrawing the Statutory Demand.
Please sign and return the enclosed CBH Transfer of Ownership form."
It appears that there were subsequently telephone conversations between the plaintiff's solicitors and a representative of the defendant. They are referred to in a letter from the plaintiff's solicitors to the defendant of 17 April 2003, but there is no evidence of what was discussed in those conversations. In any event, on 17 April 2003 the plaintiff's solicitors wrote to the defendant confirming that the plaintiff accepted the proposal set out in the defendant's facsimile of 15 April 2003 and enclosing the signed transfer form. The letter went on:
"We confirm that our acceptance of the bank cheque made payable to AT Eaton & Son in the sum of $28,735.28 later today will constitute full and final satisfaction of all claims AT Eaton & Son has against Australian Foods.
We further confirm that our client has requested that the cancelled cheque made payable to our client in the sum of $250,000 be provided to our client by the bank as soon as possible. We hereby undertake that upon our receipt of the cheque we will provide it to you.
We further confirm that upon our receipt of the cheque and confirmation that the grain has been transferred to our client, we will forthwith withdraw the statutory demand."
The same day the plaintiff's solicitor obtained the cheque for $28,735.28. On 30 April 2003, the defendant's cancelled cheque in the sum of $250,000 was returned to the defendant. I understand that the defendant duly transferred the agreed quantity of lupins to the plaintiff.
On 12 May 2003, Mr Wells, on behalf of the defendant wrote by facsimile to Mrs Eaton to say that he had made an error in the calculation of the adjustment required "when retransferring the Lupins". He said that he had overlooked the $50,000 paid in February. Mr Wells said that the defendant had transferred to the plaintiff an amount of lupins equivalent to all but 96.09 tonnes of the amount of lupins delivered by the plaintiff, and in respect of the 96.09 tonne it had compensated the plaintiff at the original contract price. The defendant had also paid interest for the period that the purchase price had remained outstanding. Mr Wells said that the plaintiff therefore had been overpaid under the April settlement agreement in an amount of $50,000 and he sought payment of that sum within 48 hours.
The plaintiff, by its solicitors, denied any liability to the defendant. It said that a concluded contract had been entered into which settled all outstanding matters between the parties. The plaintiff's solicitors went on to say that the defendant's offer had been accepted by the plaintiff although the offer did not compensate the plaintiff for its loss due to the falling market price for lupins. In elaboration of that, in her affidavit Mrs Eaton says that the plaintiff must now sell the grain in a market where the price has fallen to, or below, $260 per tonne. She says the plaintiff also had to wait a significant amount of time to receive any payment or supply of grain from the defendant and now has to negotiate a fresh sale of the grain to another buyer and pay GST on the moneys received for it. Mrs Eaton says it was agreed pursuant to the two contracts with the defendant that the defendant would pay any amount payable by way of GST.
The only question on this application is whether or not there is a genuine dispute between the parties in respect of the defendant's claim for payment of the sum of $50,000.
In Eyota Pty Ltd v Hanabe Pty Ltd (1994) 12 ACLC 669 at 671, McLelland CJ in Equity said:
"It is, however, necessary to consider the meaning of the expression 'genuine dispute' where it occurs in s 459H. 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 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 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 ACLC 1066) Hayne J said:
'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'."
At 672 McLelland CJ quoted the remarks of Thomas J in Re Morris Catering (Australia) Pty Ltd (1993) 11 ACLC 919 at 922 where his Honour said, among other things:
"This is not to say that the court will examine the merits that will settle the dispute. The specified limits of the court's examination are the ascertainment of whether there is a genuine dispute and whether there is a genuine claim. It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it) the court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another."
Those passages were cited with approval by the Full Court in Meadowfield Pty Ltd v Goldcoast Holdings Pty Ltd(In liq) [2001] WASCA 360.
On this application the defendant submitted that the settlement agreement made in April and set out in the exchange of correspondence on 15 April and 17 April ("April Agreement") was intended to supersede the original contracts and to discharge all of the defendant's liabilities in respect of them. Counsel for the defendant argued that what had occurred was a novation by which the April agreement was simply substituted for the original contracts. Accordingly, he said, the April agreement had extinguished all of the defendant's liabilities to the plaintiff under the original contracts, not merely the defendant's outstanding liability, and all that the plaintiff was entitled to was the amount of the consideration expressly stated in the April agreement. As a result of the defendant inadvertently overlooking the earlier $50,000 payment, the plaintiff had therefore been overcompensated under the April agreement to the value of $50,000. It followed that the plaintiff was entitled to recover that sum.
Although it did not emerge as clearly as it might from the affidavit of Mrs Eaton, as I understood the submissions on its behalf the plaintiff's contention was that the April agreement was only a compromise of the plaintiff's claim for the balance of the purchase price of $323,086.53, for which the statutory demand had been issued and which was then outstanding. The plaintiff agreed to accept the terms offered on that basis. It would never have agreed to accept the defendant's offer in complete substitution for the original contracts because that would not have provided adequate compensation. That is because since the original contracts were entered into there had been a substantial fall in the market price for lupins so the plaintiff would now have to resell the lupins at a lower price. In addition, the plaintiff had had to wait a significant amount of time to resolve the matter and was now put to the trouble of finding a new buyer. It would also incur a liability for GST that it did not have under the original contracts.
The difficulty, of course, is that neither party made any reference to the $50,000 payment in the course of reaching the April agreement. Although the defendant set out the terms of its offer to the plaintiff with some particularity in the correspondence, and moreover was careful to insist that the stopped cheque for $250,000 was returned to it, it made no reference at all to the $50,000 that it had paid two months earlier. It is not difficult to understand how the parties might have been at cross‑purposes.
In any event, I do not consider, on the limited (and, I must say, not altogether satisfactory) evidence that was before me, it is clear that the effect of the agreement entered into by the parties in April is as contended for by the defendant, rather than as contended for by the plaintiff. I do not consider it is plain that the defendant is entitled to recover the amount claimed in the statutory demand. There is, in my view, a genuine dispute as to the defendant's claim and it was on that basis I ordered that the statutory demand be set aside.
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