Como Holdings Pty Ltd v Timbertop Nominees Pty Ltd - [2004] WASC 151

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: COMO HOLDINGS PTY LTD -v- TIMBERTOP NOMINEES PTY LTD [2004] WASC 151

CORAM: MASTER SANDERSON

HEARD: 17 JUNE 2004

DELIVERED : 8 JULY 2004

FILE NO/S: COR 75 of 2004

BETWEEN: COMO HOLDINGS PTY LTD (ACN 009 191 913)
Plaintiff
AND
TIMBERTOP NOMINEES PTY LTD
Defendant

FILE NO/S :COR 76 of 2004

BETWEEN :COMO HOLDINGS PTY LTD (ACN 009 191 913)
Plaintiff
AND
KIMSEED MACHINERY PTY LTD
Defendant

Catchwords:

Corporations Act - Application to set aside statutory demand - Turns on own facts

Legislation:

Corporations Act, s 459G, s 459H

Result:

Demands set aside

Category: B

Representation:

COR 75 of 2004

Counsel:

Plaintiff: Mr N D Paterson
Defendant: Mr B W Duckham

Solicitors:

Plaintiff: Birman & Ride
Defendant: B W Duckham & Co

COR 76 of 2004

Counsel:

Plaintiff: Mr N D Paterson
Defendant: Mr B W Duckham

Solicitors:

Plaintiff: Birman & Ride
Defendant: B W Duckham & Co

Case(s) referred to in judgment(s):

Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 15 ACLC 1001

Case(s) also cited:

L & D Audio Acoustics Pty Ltd v Pioneer Electronic Australia Pty Ltd (1982) 1 ACLC 536

MASTER SANDERSON: In each of these two matters the plaintiff applies to set aside a statutory demand. Although there are two separate demands issued by two separate defendants, the defendants are related. The two matters were heard together and although there are differences between the two applications, those differences are not significant. The reasoning in one case applies to the other. It is convenient then to deal with both matters in the same set of reasons.
In COR 75 of 2004 the plaintiff relies on an affidavit of Gregory William Hill ("Mr Gregory Hill"), sworn 26 March 2004 in support of its application to set aside the statutory demand. The statutory demand itself is found as annexure "GWH5" to Mr Gregory Hill's affidavit. The "Description of the debt" found in the schedule to the demand is best described as cryptic. It reads as follows:
"Loan made by the Creditor to the company and unpaid after demand made 9th December 2003."
The amount of the debt is $30,000.
In COR 76 of 2004 Mr Gregory Hill swore an affidavit on the same date. The statutory demand in that matter is annexure "GWH1" to Mr Gregory Hill's affidavit. The description of the debt found in the schedule to the statutory demand is identical to that set out above. However, the amount claimed is $50,000.
The events leading to these demands, taken from Mr Gregory Hill's two affidavits, can be summarised in this way. The plaintiff is the trustee of the Hill Family Trust. Mr Gregory Hill is a director of the plaintiff, along with his wife Karyn Jennifer Hill. Timbertop Nominees Pty Ltd, the defendant in COR 75 of 2004, is the trustee of the Dean Hill Family Trust. Mr Dean Stephen Hill is the brother of Mr Gregory Hill. Mr Dean Stephen Hill is a director of Timbertop Nominees Pty Ltd. (Mr Dean Stephen Hill is, it appears, known as Stephen. For consistency I will refer to Mr Stephen Hill.) Kimseed Machinery Pty Ltd, the defendant in COR 76 of 2004, is a company controlled by Mr Stephen Hill.
Mr Gregory Hill and Mr Stephen Hill have shareholdings in or are directors of a number of companies which Mr Gregory Hill refers to in his affidavit (in COR 75 of 2004) as "the Group". The Group is said to include both the defendants and other companies styled Australian Revegetation Corporation Pty Ltd, Kimseed Environmental Pty Ltd, Kimseed Pty Ltd and Australian Revegetation International Pty Ltd.
Mr Gregory Hill says in his affidavit that some time prior to July 2003 he attempted to reach agreement with his brother, Mr Stephen Hill, to separate their interests in the companies within the Group. Various offers were made but as at November 2003, no settlement had been reached. In November 2003 Mr Stephen Hill called meetings of various companies within the Group in an attempt to remove Mr Gregory Hill as a director of the companies. As part of the ongoing unhappy relationship, proceedings have been commenced to wind up two of the companies in the Group and, it would seem, these statutory demands were issued. Mr Gregory Hill complains that the demands were not properly served. That issue can, I think, be put to one side for the moment. It is relevant to observe, however, that the statutory demands were issued in the context of unresolved internecine warfare.
In each of the two applications the plaintiff acknowledges that it received the amount in question from the defendant. So far as COR 75 of 2004 is concerned, Mr Gregory Hill says in his affidavit (par 15) that the $30,000, the subject of the demand (which Mr Gregory Hill says was in fact $30,525) was not loaned to the plaintiff but was "advanced" to enable the plaintiff to buy back shares from minority shareholders in one of the companies in the Group. This, it was said, was done pursuant to an agreement between Mr Gregory Hill and Mr Stephen Hill, made on 19 September 1996. This agreement is referred to in Mr Gregory Hill's affidavit as "the 1996 agreement". Mr Gregory Hill goes on to explain why the 1996 agreement was entered into and how certain shareholdings within the Group were rearranged. However, on Mr Gregory Hill's evidence, the 1996 agreement was not fully performed. Mr Gregory Hill says that he does not believe the $30,525 was a loan and he denies that the plaintiff is indebted to the defendant.
The immediate question that arises is this. If the $30,525 was not a loan by the defendant to the plaintiff, then what was it? Mr Gregory Hill describes it as an "advance". Counsel for the plaintiff during his submissions was not able to characterise the funds in any particular way. Rather, he said that it was a payment in the context of a settlement which was being negotiated, but which, it appears, was never finally consummated. Counsel submitted that based upon Mr Gregory Hill's affidavit there was a genuine dispute as to the character of the advance. That was sufficient, so it was submitted, to raise a genuine dispute and require the Court to set aside the statutory demand.
The defendant's position can be summarised in this way. First, it was said that even accepting Mr Gregory Hill's evidence, there could be no real dispute that the $30,525 was repayable to the defendant. If the funds were not a loan, they were advanced in expectation of a settlement. As the evidence from the plaintiff was that the settlement was not effected, the money must be repayable to the defendant. Secondly, and perhaps more importantly, the balance sheet for the Hill Family Trust (which were tendered by consent during the course of the hearing) showed under "Non-current Liabilities" an amount of $30,250 which was described as "Loan - Timbertop Nominees". (It was not in dispute that the $30,250 was the same amount as the $30,000 referred to in the statutory demand and the $30,525 which the plaintiff says was the amount of the advance.) The defendant says that the balance sheet is clear and cogent evidence of the indebtedness of the plaintiff to the defendant and that there is no real or genuine dispute between the parties.
Mr Gregory Hill filed a further affidavit sworn 8 June 2004. In par 4 of that affidavit he deals with the balance sheet. He says that the $30,250 is described as a loan "because I did not know what to label it". He goes on to further deny that the plaintiff is indebted to the defendant as alleged.
The position in COR 76 of 2004 is slightly different. Mr Gregory Hill says in his affidavit that on 12 August 1998 the defendant "transferred" $150,000 to the plaintiff pursuant to an agreement with Mr Stephen Hill. Mr Gregory Hill says that $50,000 was to be retained by the plaintiff in part satisfaction of outstanding rent owed to it by one of the companies in the Group. A further $50,000 was to be paid to a real estate agent as a deposit on a farm being purchased by one of the members of the Group. The remaining $50,000 was transferred to the defendant. On behalf of the plaintiff Mr Gregory Hill denies that the plaintiff is indebted to the defendant at all.
Once again, the defendant has two responses to the plaintiff's submissions. First, it is said that the accounts of the plaintiff make it plain that $50,000 of the $150,000 advance was used to purchase shares in a company known as APF. Second, it is said that at a meeting of the defendant held on 1 December 2002, accounts were passed which show that the plaintiff is indebted to the defendant. It is said that Mr Gregory Hill was present at that meeting and as he is a director of the plaintiff, there is an admission that the $50,000, the amount of the demand, is owing. Mr Gregory Hill has filed an affidavit disputing that he was ever at the meeting. He also denies again that the plaintiff is liable to the defendant as alleged.
There was no dispute between the parties as to the legal principles applicable to a case such as this. The application is brought under s 459G of the Corporations Act and falls to be determined under s 459H of the Act. The question is whether there is a genuine dispute. The cases which deal with the question of what is meant by "genuine dispute" are legion. It is sufficient if I say that the parties were content to rely upon what was said in Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 15 ACLC 1001 at 1011. In other words, it was for the plaintiff to establish that there was a serious question to be tried.
On balance, I am satisfied that in each of these cases there is a genuine dispute. As I mentioned at the outset, Mr Gregory Hill and Mr Stephen Hill are in dispute in relation to their respective holdings in companies in the Group. The statutory demands have to be seen in that light and against that background. Insofar as COR 75 of 2004 is concerned, there is evidence which suggests that the $30,000 is a loan. But it is also clear that the $30,000 was advanced by the defendant to the plaintiff in the context of the rearranging of the affairs of the Group. It is at least arguable that the funds were not a loan but were advanced as part of some form of settlement agreement. That is what Mr Gregory Hill says is the position and I do not see his evidence as inherently incredible. I am therefore satisfied that there is a genuine dispute.
Much the same comments can be made with respect to COR 76 of 2004. Once again, it would appear that $150,000 was advanced pursuant to some form of agreement. To then characterise the advance as a loan is at odds with the evidence of Mr Gregory Hill. There is a dispute as to whether or not Mr Gregory Hill was at the meeting where the defendant's accounts were approved. In my view, taking all of the evidence into account, it is clear that there is a genuine dispute between the parties. The demand ought be set aside.
For these reasons, in each of the two cases I would set aside the statutory demand. I will hear the parties as to the form of orders and as to costs.