Broadwater Bungalows Pty Ltd v Westralia Property Management Ltd (ACN 072 899 060) as Responsible Entity for the Broadwater Bungalows Managed Investment Scheme (ARSN 090 521 163)
[2006] WASC 138
BROADWATER BUNGALOWS PTY LTD -v- WESTRALIA PROPERTY MANAGEMENT LTD (ACN 072 899 060) AS RESPONSIBLE ENTITY FOR THE BROADWATER BUNGALOWS MANAGED INVESTMENT SCHEME (ARSN 090 521 163) [2006] WASC 138
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2006] WASC 138 | |
| Case No: | COR:17/2006 | 18 MAY 2006 | |
| Coram: | MASTER NEWNES | 21/07/06 | |
| 16 | Judgment Part: | 1 of 1 | |
| Result: | Statutory demands set aside | ||
| B | |||
| PDF Version |
| Parties: | BROADWATER BUNGALOWS PTY LTD (ACN 085 538 496) WESTRALIA PROPERTY MANAGEMENT LTD (ACN 072 899 060) AS RESPONSIBLE ENTITY FOR THE BROADWATER BUNGALOWS MANAGED INVESTMENT SCHEME (ARSN 090 521 163) |
Catchwords: | Corporations Application to set aside statutory demand Whether genuine dispute as to debt Sufficiency of affidavit in support of application Relevant principles Whether affidavit accompanying statutory demand verifies the debt Principles to be applied Turns on own facts |
Legislation: | Corporations Act 2001 (Cth), s 459E, s 459E(3), s 459J(1)(b) Corporations Law, s 459G Property Law Act 1969 (WA), s 11 Supreme Court (Corporations) (WA) Rules 2004, r 5 |
Case References: | Azed Developments Pty Ltd v Frederick & Co Ltd (In Liq) (1994) 14 ACSR 54 B & M Quality Constructions Pty Ltd v Buyrite Steel Supplies Pty Ltd (1994) 15 ACSR 433 Energy Equity Corporation Ltd v Sinedie Pty Ltd [2001] WASCA 419 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 Financial Solutions Australasia Pty Ltd v Predella Pty Ltd (2002) 26 WAR 306 Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716 Meadowfield Pty Ltd v Gold Coast Holdings Pty Ltd (In Liq) [2001] WASCA 360 Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290 PDR Pty Ltd v Cottesloe Constructions Pty Ltd [2000] WASCA 62 Process Machinery Australia Pty Ltd (t/as DCL Engineering) v ACN 057 260 590 [2002] NSWSC 45 Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601 Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294 Wildtown Holdings Pty Ltd v Rural Traders Company Ltd [2002] WASCA 196 Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 POS Media Online Ltd v B Family Pty Ltd (2003) 21 ACLC 533 Reale Bros Pty Ltd v Reale (2003) 179 FLR 427 Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA (1994) 15 ACSR 347 Verte Pty Ltd v Grisbrook (1997) 15 ACLC 1306 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- COR 18 of 2006
- Plaintiff
AND
WESTRALIA PROPERTY MANAGEMENT LTD (ACN 072 899 060) AS RESPONSIBLE ENTITY FOR THE BROADWATER BUNGALOWS MANAGED INVESTMENT SCHEME (ARSN 090 521 163)
Defendant
Catchwords:
Corporations - Application to set aside statutory demand - Whether genuine dispute as to debt - Sufficiency of affidavit in support of application - Relevant principles - Whether affidavit accompanying statutory demand verifies the debt - Principles to be applied - Turns on own facts
(Page 2)
Legislation:
Corporations Act 2001 (Cth), s 459E, s 459E(3), s 459J(1)(b)
Corporations Law, s 459G
Property Law Act 1969 (WA), s 11
Supreme Court (Corporations) (WA) Rules 2004, r 5
Result:
Statutory demands set aside
Category: B
Representation:
Counsel:
Plaintiff : Mr M H Zilko SC
Defendant : Mr M L Bennett
Solicitors:
Plaintiff : Lewis Blyth & Hooper
Defendant : Lavan Legal
Case(s) referred to in judgment(s):
Azed Developments Pty Ltd v Frederick & Co Ltd (In Liq) (1994) 14 ACSR 54
B & M Quality Constructions Pty Ltd v Buyrite Steel Supplies Pty Ltd (1994) 15 ACSR 433
Energy Equity Corporation Ltd v Sinedie Pty Ltd [2001] WASCA 419
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
Financial Solutions Australasia Pty Ltd v Predella Pty Ltd (2002) 26 WAR 306
Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452
John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716
Meadowfield Pty Ltd v Gold Coast Holdings Pty Ltd (In Liq) [2001] WASCA 360
(Page 3)
Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290
PDR Pty Ltd v Cottesloe Constructions Pty Ltd [2000] WASCA 62
Process Machinery Australia Pty Ltd (t/as DCL Engineering) v ACN 057 260 590 [2002] NSWSC 45
Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452
Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294
Wildtown Holdings Pty Ltd v Rural Traders Company Ltd [2002] WASCA 196
Case(s) also cited:
Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37
POS Media Online Ltd v B Family Pty Ltd (2003) 21 ACLC 533
Reale Bros Pty Ltd v Reale (2003) 179 FLR 427
Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA (1994) 15 ACSR 347
Verte Pty Ltd v Grisbrook (1997) 15 ACLC 1306
(Page 4)
1 MASTER NEWNES: I have before me two applications by the plaintiff to set aside statutory demands dated 20 January 2006 and served on it by the defendant on that day. As the facts and issues were almost identical the two applications were heard together. I will deal with each in turn.
COR 17 of 2006
2 In the statutory demand, the defendant demanded payment of the sum of $18,815.06 said to be due and payable by the plaintiff pursuant to a contract of sale dated 24 March 2003 and made between the plaintiff and Westralia Property Management Ltd as responsible entity for the Broadwater Busselton Property Syndicate. The plaintiff says that there is a genuine dispute as to its indebtedness to the defendant.
The evidence
3 It was not in issue that by a contract in writing dated 24 March 2003, the plaintiff agreed to sell and Westralia Property Management Ltd (then known as Kareelya Investments Ltd) as responsible entity for the Broadwater Busselton Property Syndicate agreed to purchase property known as Bungalows 48, 49, 50 and 51 of the Broadwater Bungalows Beach Resort for the total sum of $1,180,000. The land comprised lot 39 on strata plan 37864.
4 The contract contained a provision in the following terms:
"The amount payable to McMahon Clarke Legal – Trust Account for the Income Equalisation Reserve $18,815.06 to be paid at settlement by the vendor. This amount is calculated by a Family being worth $4,528.11 each, and a family with loft being $4,879.42 each." [sic]
5 There is, relevantly for present purposes, annexed to the contract an "Annexure B" containing, among others, the following provision:
"1. The Vendor agrees to provide a rent guarantee of 6.66% per annum, to a maximum of $600,000 (six hundred thousand dollars) over the three year period, of the amount of the purchase price per annum for a period of 3 years from settlement.
2. The Vendor will pay the amount payable under the rent guarantee by monthly instalments at the end of each month."
(Page 5)
6 It was not in dispute that the plaintiff has not paid the sum of $18,815.06 to the defendant in respect of the income equalisation reserve.
7 It appears from the evidence before me that the background to the present application is as follows.
8 Prior to 1999, the plaintiff owned land adjacent to the existing Broadwater Beach Resort in Busselton. The plaintiff built units on its land in various stages. Initially six strata titled units, referred to as Beachside Bungalows, were built and sold by the plaintiff. Subsequently another 21 strata titled units, referred to as Presidential Bungalows, were built and sold by the plaintiff. There then remained seven strata lots, including lot 39. The plaintiff developed the remaining strata lots by stages and on lot 39 the plaintiff constructed four 2 bedroom units, some with lofts and some without.
9 In 2002 the Broadwater Busselton Property Syndicate was established. Westralia Property Management Ltd (then known as Kareelya Investments Ltd) was the responsible entity for the purposes of the Corporations Act 2001 (Cth) (the "Act").
10 Subsequently the plaintiff entered into the contract with Westralia Property Management Ltd (still then known as Kareelya Investments Ltd) as responsible entity for the Broadwater Busselton Property Syndicate, for the sale of lot 39 containing the four units.
11 A director of the plaintiff, Brett Jackson, says that he was a director of Westralia Property Management Ltd until 14 April 2005. Mr Jackson says that at the time the contract was entered into the parties believed that the payment for the income equalisation reserve was necessary to hedge against revenue fluctuations in the projected rental return from the property. That fluctuation was likely to occur because the property is located in a seasonal tourism precinct.
12 Mr Jackson says he does not have access to many of the settlement documents as he believes they were removed from the plaintiff's offices on 13 May 2005 when the plaintiff and Westralia Property Management Ltd ceased to share offices. They had previously operated out of the same offices and used the same filing and compactus system for storage of documents. He says the plaintiff's solicitors have asked Westralia Property Management Ltd for copies of documents relevant to the settlement of the sale but no documents have been produced.
(Page 6)
13 In an affidavit of 3 May 2006,Mr Jackson says, however, that during the preparation of the contractual documents he, on behalf of the plaintiff, agreed with Messrs Goff and Anderson, on behalf of Westralia Property Management Ltd, that the "vendor finance" of $300,000 provided by the plaintiff would be used by Westralia Property Management Ltd to meet any of the plaintiff's obligations, including in relation to the rental guarantee, the income equalisation reserve and otherwise. Mr Jackson says that Messrs Anderson and Goff decided, on behalf of Westralia Property Management Ltd, that transferring money to the income equalisation reserve and then back again to Westralia Property Management Ltd when it was required was an unnecessary step which would not be undertaken. The moneys owing by Westralia Property Management Ltd to the plaintiff could be used for any amounts payable in respect of income equalisation. The "vendor finance" referred to by Mr Jackson was an amount of the purchase price that was to remain, and remained, unpaid by the purchaser at settlement and was treated as a loan by the plaintiff to Westralia Property Management Ltd as responsible entity for the Broadwater Busselton Property Syndicate.
The plaintiff's submissions
14 It was submitted on behalf of the plaintiff that the demand was flawed. In the first place, it was made by Westralia Property Management Ltd as responsible entity for the Broadwater Bungalows Managed Investment Scheme, whereas the contract on which the defendant relied for the alleged debt was made by Westralia Property Management Ltd as responsible entity for the Broadwater Busselton Property Syndicate. The party making the demand was therefore a different entity to the party with whom the plaintiff made the contract. There was no apparent basis on which the defendant could rely on s 11 of the Property Law Act 1969 (WA).
15 Secondly, there was no provision in the contract requiring the plaintiff to pay the amount in respect of the income equalisation reserve to the defendant or to the purchaser under the contract. The amount was payable to "McMahon Clarke Legal Trust Account". There was no evidence to identify for whom McMahon Clarke Legal was acting. In particular, there was no evidence that the sum claimed was payable to McMahon Clarke Legal on behalf of or for the benefit of the defendant.
16 Thirdly, the affidavit which accompanied the statutory demand was deficient because the deponent, Mr Hinton, could not have verified the plaintiff's indebtedness as he claimed to have done. In the affidavit
(Page 7)
- Mr Hinton says that his knowledge of the plaintiff's indebtedness, and the absence of any genuine dispute as to that indebtedness, was the contract of 23 March 2003 between the plaintiff and Westralia Property Management Ltd as responsible entity for the Broadwater Busselton Property Syndicate, and an examination of the accounting records of Westralia Property Management Ltd as responsible entity for the Broadwater Bungalows Managed Investment Scheme.
17 It was submitted that the contract says nothing about the debt beyond providing for the payment of the sum claimed to the McMahon Clarke Legal Trust Account. As the moneys were payable to that account, a search of the accounting records of Westralia Property Management Ltd as responsible entity for the Broadwater Bungalows Managed Investment Scheme would be of no assistance.
18 In any event, as the contract was made between the plaintiff and Westralia Property Management Ltd as responsible entity for the Broadwater Busselton Property Syndicate, no relevant evidence as to the indebtedness would be found in the accounting records of Westralia Property Management Ltd as responsible entity for the Broadwater Bungalows Managed Investment Scheme.
19 Itwas further submitted on behalf of the plaintiff that there was evidence that Westralia Property Management Ltd, by Messrs Anderson and Goff, had agreed with the plaintiff, by Mr Jackson, that as the amount retained by the purchaser at settlement of the sale was in excess of the amount required for the income equalisation reserve and the rental guarantees provided by the plaintiff, the plaintiff would not be required to pay the sum to the income equalisation reserve fund. Messrs Jackson, Goff and Anderson had filed affidavits to that effect.
20 Senior Counsel for the plaintiff also observed that, although the defendant had every opportunity to deny the claim by the plaintiff that it had been agreed the plaintiff would not be required to make the payment to the income equalisation reserve fund in light of the purchase moneys unpaid by the purchaser at settlement, no material in relation to that had been filed on behalf of the defendant.
The defendant's submissions
21 Counsel for the defendant submitted that Mr Jackson had initially asserted in his affidavit of 9 February 2006 in support of this application that the agreement to pay the money to the income equalisation reserve fund had been varied, or the obligation waived, by the substitution of a
(Page 8)
- rental guarantee. That contention was untenable. In the first place, there was, as appeared from the defendant's evidence, no evidence in the records of the defendant of any variation to the contract and, in any event, the contract had always contained a rental guarantee.
22 Counsel argued that when that was pointed out, the plaintiff's position changed substantially. In his subsequent affidavit of 3 May 2006, Mr Jackson no longer sought to rely on that alleged variation to the original agreement but said that, as the balance of the purchase money remaining unpaid at settlement by Westralia Property Management Ltd as responsible entity for the Broadwater Busselton Property Syndicate was substantially in excess of the amount to be paid by the plaintiff to the income equalisation reserve, it had been agreed that the unpaid purchase moneys would be used for the purposes of the income equalisation reserve if necessary and the plaintiff was not required to make that payment.
23 It was submitted that the affidavits on behalf of the plaintiff were not adequate to make out any such waiver or variation, and the contention sought to be advanced by the plaintiff as to some set-off of the balance of the purchase price not paid by the defendant at settlement against the plaintiff's obligation to make the payment into the income equalisation reserve was incomprehensible and commercially meaningless.
24 Moreover, to the extent the plaintiff sought to rely on such a contention, it sought to rely on a new ground which was not contained within the affidavit served within 21 days of the service of the statutory demand. It was not entitled to do so. It was confined to the claim that the contract had been varied to remove the obligation to make the income equalisation payment in return for the rental guarantee. That was plainly untenable in circumstances where the contract from the outset had the rental guarantee. There was, therefore, no genuine dispute as to the plaintiff's indebtedness.
Does the plaintiff seek to rely on a new ground?
25 Section 459G of the Corporations Law requires that any application to set aside a statutory demand must be made within 21 days after service of the demand and an affidavit "supporting the application" must be filed and served within that time.
26 What is sufficient for such an affidavit where it is contended that there is a genuine dispute as to the plaintiff's indebtedness was considered in John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716, where Young J said (at 718) that:
(Page 9)
- "It is clear that what is required in all cases is something between mere assertion and the proof that would be necessary in a court of law. … What more than assertion is required is something that may differ from case to case … [S]o long as the claim is not fictitious or merely colourable and is genuinely believed to exist one can ordinarily take that as sufficient. That is something more than mere assertion."
27 In Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452, at 459, Sundberg J said:
"… It was said that the affidavit must, as a minimum, contain a statement of the material facts on which the applicant intends to rely to show a genuine dispute - it might read more like a pleading than a story. That accords with what I consider to be the minimum requirement."
28 The Full Court of this Court applied those comments in Meadowfield Pty Ltd v Gold Coast Holdings Pty Ltd (In Liq) [2001] WASCA 360.
29 The grounds upon which an applicant may rely to set aside a statutory demand will be determined by the application and supporting affidavit which is filed within the 21 day period. In Energy Equity Corporation Ltd v Sinedie Pty Ltd [2001] WASCA 419, having reviewed a number of authorities, Wallwork J (with whom Steytler J and Olsson AUJ agreed) said at [185]:
"In my view it now seems to be accepted that an affidavit filed outside the 21 day period which raises a new ground or grounds to set aside a statutory demand (as opposed to an affidavit which expands on grounds in an earlier affidavit which has satisfied the threshold test) cannot be used in an application of this nature."
30 What is sufficient to raise a ground was considered in Process Machinery Australia Pty Ltd (t/as DCL Engineering) v ACN 057 260 590 [2002] NSWSC 45 where Barrett J said (at 22):
"The real point is that the application and affidavit filed and served within the 21 day period must fairly alert the claimant to the nature of the case the company will seek to make in resisting the statutory demand. The content of the application and affidavit must convey, even if it be by necessary inference, a clear delineation of the area of controversy so that it is
(Page 10)
- identifiable with one or more of the grounds made available by s 459H and s 459J. That process of delineation may not be extended after the end of the 21 day period, although it is open to the plaintiff to supplement the initial affidavit by way of additional evidence relevant to the area of controversy identified within the period."
31 I do not consider that the contention that the "vendor finance" was to relieve the plaintiff of the obligation to make the payment specified in the contract to the income equalisation reserve is a new matter raised outside the 21 day period. In par 9 of his affidavit of 9 February 2006 in support of the application Mr Jackson says:
"Prior to the settlement occurring, the Plaintiff provided the Rental Guarantee and at settlement loaned the Defendant $300,000 (being Vendor Finance for the purchase of Lot 39). This loan was available to be used as funding to cover the Rental Guarantee or any required contributions on cost."
32 In par 10, Mr Jackson says that "[f]or the reasons stated in the above paragraphs, the Plaintiff is not indebted to the Defendant for the sum claimed."
33 Although it is certainly not stated as clearly as it might be, I consider that, having regard to the authorities to which I have referred, it sufficiently emerges that, among other things, the plaintiff contended that the loan of $300,000 was intended by the parties to relieve the plaintiff of the obligation to make the payment to the income equalisation reserve.
Is there a genuine dispute?
34 The principles to be applied in determining whether there is a genuine dispute are well known.
35 In Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, McLelland CJ in Eq said (at 787) that the expression "genuine dispute":
"… 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 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
(Page 11)
- in an affidavit ... or 'a patently feeble legal argument or an assertion of facts unsupported by evidence'."
36 That decision was referred to with approval in Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294, where Owen J, with whom Pidgeon and Wallwork JJ agreed, said at [27]:
"From the relevant authorities on the issue of what amounts to a 'genuine dispute' under s 459H there can be discerned an emphasis on two overriding considerations. First, that in determining whether there is a genuine dispute a court is required to undertake an investigation that raises much the same sort of considerations as the 'serious question to be tried' criterion which arises in an application for an interlocutory injunction or for the extension or removal of a caveat: Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669 per McLelland J at 671. Further, to reach a finding that there is a genuine dispute the applicant must satisfy the court that:
(a) the dispute is bona fide and truly exists in fact; and
(b) the grounds alleging the existence of a dispute are real and not spurious, hypothetical, illusory or misconceived: Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 15 ACLC 1001 per Northrop, Merkel and Goldberg JJ.
This formulation has been adopted in a number of recent decisions: see Goldspar Australia v KWA Design Group (1999) 17 ACLC 456per Austin J at 462 and Universal Greening Pty Ltd v Sabine & Anor (1999) 17 ACLC 880 per Kenny J at 885. In the interests of consistency in the various courts that have to apply the Corporations Law, I think this is the approach to be preferred."
37 On an application of this sort the Court will confine itself to the question whether a real dispute exists rather than attempt to determine the merits of the respective positions of the disputants: PDR Pty Ltd v Cottesloe Constructions Pty Ltd [2000] WASCA 62 at [6] - [7]. In that case the Full Court referred with approval to Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290 at 295, where Hayne J said that:
(Page 12)
- "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."
38 In Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601, 605, Thomas J said that: "It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or lack of it) the court has no function."
39 That passage was applied by the Full Federal Court in Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452, 463 - 464.
40 I have earlier referred to the affidavit of Mr Jackson of 9 February 2006. That affidavit was supplemented by the further affidavit sworn by Mr Jackson on 3 May 2006. As I have said, in that affidavit Mr Jackson says that he had discussions with Messrs Goff and Anderson, acting on behalf of Westralia Property Management Ltd, and he agreed with them that the vendor finance could be used to cover any of the plaintiff's obligations, including the income equalisation reserve. Mr Jackson says that given the amount owing by Westralia Property Management Ltd to the plaintiff, Messrs Goff and Anderson decided that transferring money to the income equalisation reserve when it would just be transferred back to Westralia Property Management Ltd was an unnecessary step that would not be taken.
41 I should say that objection was taken by the defendant to, among others, those parts of Mr Jackson's affidavit of 3 May 2006, but only on the ground that they raised new material not contained within the original grounds of the application. For the reasons I gave earlier, I do not consider that they do.
42 The defendant also objected to a great deal of the other affidavit evidence sought to be relied on by the plaintiff, denouncing it as inadmissible and, in many places, incomprehensible. That included much of Mr Jackson's initial affidavit in support of the application, although I did not understand objection to be taken to par 9 or par 10, to which I referred earlier. In any event, in the circumstances, I consider that, consistent with the authorities to which I have earlier referred, those parts
(Page 13)
- of the affidavit are permissible as raising the issue later elaborated upon in Mr Jackson's affidavit of 3 May 2006.
43 I do accept, however, that a significant amount of the affidavits filed on behalf of the plaintiff were not in proper form. So much was conceded by Senior Counsel for the plaintiff. It seems, however, that a number of the relevant records were in the possession of the defendant and were not available to the plaintiff. While that is not a complete explanation for all of the deficiencies in the plaintiff's affidavits, it did limit the evidence available to the plaintiff.
44 The lack of access to the records is, in my view, a relevant factor in considering whether the plaintiff has established that there is a genuine dispute. As Young J said in John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (supra) in relation to the affidavit in support of the application, what more than mere assertion is required may vary from case to case. The fact that relevant records which would, or may, permit the plaintiff to put forward a more comprehensive or cogent case are in the possession of the defendant is a matter which, in my view, the Court is entitled to take into account in considering whether the plaintiff has established there is a genuine dispute.
45 In the end, on the material before me, I am satisfied there is a genuine dispute as to whether there was an agreement that the purchaser could, in effect, set off against the unpaid portion of the purchase price any amount required for the income equalisation reserve and that the plaintiff was not obliged to make any payment to the income equalisation reserve.
46 It is therefore unnecessary for me to determine the other grounds relied upon. I should say, however, that I also consider there is a genuine dispute as to the plaintiff's indebtedness to the defendant on the basis that it is not clear that the special condition gives rise to a debt that is payable to the defendant. The contract with the plaintiff was made by Westralia Property Management Ltd as responsible entity for the Broadwater Busselton Property Syndicate. The demand for payment, on the other hand, has been made by Westralia Property Management Ltd as responsible entity for the Broadwater Bungalows Managed Investment Scheme. Although counsel for the defendant sought to show a relevant connection through an analysis of the prospectus issued by Westralia Property Management Ltd, in the end I consider that there is a genuine dispute as to the defendant's entitlement to claim the money.
(Page 14)
Is the accompanying affidavit deficient?
47 Section 459E(3) of the Act provides that a statutory demand must be accompanied by an affidavit which verifies that the debt is due and payable.
48 In Azed Developments Pty Ltd v Frederick & Co Ltd (In Liq) (1994) 14 ACSR 54, at 56, Hayne J held that to "verify" under s 459E meant to make "a formal affirmation", rather than to "prove or demonstrate by good evidence or otherwise substantiate", the matters referred to.
49 The capacity of the deponent to the accompanying affidavit to depose to the matters required by r 5 of the Supreme Court (Corporations) (WA) Rules2004 is, however, a matter of substance if the affidavit is to serve its intended purpose: see B & M Quality Constructions Pty Ltd v Buyrite Steel Supplies Pty Ltd (1994) 15 ACSR 433, per McClelland CJ at 435, where his Honour considered the comparable New South Wales rule.
50 In Financial Solutions Australasia Pty Ltd v Predella Pty Ltd (2002) 26 WAR 306, criticism was made of an affidavit accompanying a statutory demand relating to debts assigned to the defendant. In the affidavit, the deponent for the defendant said that he made the statements contained in it as to the plaintiff's indebtedness from his own knowledge and from the records of the defendant. Parker J pointed out, at [7], that the debt had been assigned to the defendant and substantial parts of the affidavit referred to the plaintiff's indebtedness arising under loan agreements between the plaintiff and the assignor. There was no evidence that the defendant's records contained anything relevant to those dealings.
51 In the present case, in the affidavit accompanying the statutory demand Mr Hinton's belief that there is no genuine dispute as to the plaintiff's indebtedness is expressed to be based upon the contract (which contains the provision as to payment) and "the accounting records of [Westralia Property Management Ltd as responsible entity for the Broadwater Bungalows Managed Investment Scheme] which disclose that the monies that are the subject of the demand have never been received by [Westralia Property Management Ltd as responsible entity for the Broadwater Bungalows Managed Investment Scheme]".
52 As Senior Counsel for the plaintiff observed, in looking in the accounting records of Westralia Property Management Ltd as responsible entity for the Broadwater Bungalows Managed Investment Scheme, Mr Hinton would appear to be looking in the wrong place. Westralia
(Page 15)
- Property Management Ltd as responsible entity for the Broadwater Bungalows Managed Investment Scheme was not the contracting party and, in any event, the contract provided that the obligation of the plaintiff was to pay the money to the McMahon Clarke Legal Trust Account. Where (if anywhere) the money was to go thereafter was not clear from the documents. Mr Hinton did not depose to the non-payment of the money to the McMahon Clarke Legal Trust Account.
53 In view of the conclusions I have reached as to the existence of a genuine dispute it is, however, unnecessary to consider whether the affidavit is deficient and, if so, whether under s 459J(1)(b) of the Act that constitutes "some other reason" why the demand should be set aside: Wildtown Holdings Pty Ltd v Rural Traders Company Ltd [2002] WASCA 196.
Conclusion
54 I would set aside the statutory demand on the ground that there is a genuine dispute as to the plaintiff's indebtedness to the defendant.
COR 18 of 2006
55 In this case, in the statutory demand the defendant demanded payment of the sum of $84,607 said to be due and payable pursuant to a contract of sale dated 26 April 2002 and made between the plaintiff and Westralia Property Management Ltd as responsible entity for the Broadwater Busselton Property Syndicate. The plaintiff says that there is a genuine dispute as to its indebtedness to the defendant.
56 It was common ground that the only material difference between this matter and COR 17 of 2006 is the particular provision of the contract concerned.
57 In this case, by a contract in writing dated 24 April 2002, the plaintiff agreed to sell and Westralia Property Management Ltd (then known as Kareelya Investments Ltd) as responsible entity for the Broadwater Busselton Property Syndicate agreed to purchase property known as lots 41, 42 and 43 on strata plan 37864 for the total sum of $4,889,500.
58 The contract contained a provision in the following terms:
"The vendor will transfer $84,607.00 into the Income Equalisation Reserve for the Broadwater Bungalows Managed Investment Scheme at settlement."
(Page 16)
59 It was not in dispute that the plaintiff has not paid the sum of $84,607 into the income equalisation reserve.
60 It will be apparent that this contract did not provide for the payment to be made to a solicitor's trust account as the contract did in COR 17 of 2006. The contents of the affidavits filed on behalf of the parties and the submissions that were made were otherwise identical, however.
61 I consider that, for the reasons I gave above in COR 17 of 2006, there is a genuine dispute as to whether there was an agreement that the purchaser could, in effect, set off against the unpaid portion of the purchase price any amount required for the income equalisation reserve and that the plaintiff was not obliged to make any payment to the income equalisation reserve.
62 I would therefore set aside the statutory demand on the ground that there is a genuine dispute as to the plaintiff's indebtedness to the defendant.
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