Computer Support Systems P/L v ANZ Banking Group Ltd

[1993] FCA 1039

1037 43

JUDGMENT No. ........ . ........ . / ........ .. .

IN THE FEDERAL COURT OF AUSTRALIA	)
1
VICTORIA DISTRICT REGISTRY	1 1
GENERAL DIVISION	1

BETWEEN :  COMPUTER SUPPORT SYSTEMS PTY LTD

(Applicant)

AND :  AN2 BANKING GROUP LIMITED

Coram:	Ryan J
Place:	Melbourne
Date:	21 December 1993

EX TEMPORE REASONS FOR

--. . ._ -

Rvan J:  This is an application under section 4596 of the

Corporations Law to set aside a statutory demand dated 13

September, 1993 made by the respondent, Australia and New Zealand Banking Group Limited, ("the Bank"). That demand sought repayment of the sum of $90,869.16 from the applicant. The applicant was one of a group of companies of which Mr Robert John Hellas was a director and of which Roland Communications Pty

was necessary to procure discharges from the Bank of mortgages	granted in its favour by Mr Hellas and his wife over two pieces
Limited, ("Roland"),	was a member.

All the companies in the Roland group were customers of the Bank, as was Mr Hellas himself. In about April 1992 discussions commenced between the Roland group and the Bank with a view to refinancing the group's liabilities. Eventually, alternative accommodation was obtained by the group or some members of it from Barclays bank and to secure a loan from that institution it

-2 -

of real estate, to secure loans to Roland, which at that time
amounted to approximately $480,000.

Other liabilities of companies in the group were secured by guarantees given by Mr Hellas and three other persons. Attempts were made between June and August 1992 to conclude an agreement for discharge or rearrangement of all liabilities of companies in the group. For example, on 3 August 1992, the Bank wrote to the Secretary of Roland in these terms:

"Re: Without prejudice, Roland Communrcatrons Pty Ltd, PDS Holdings Pty Ltd, Computer Support Systems Pty Ltd and International Business

Solutions Pty Ltd.

We refer to recent discussions and correspondence. Your proposal in respect of the debts of the above entrtres as unacceptable. The bank wrll pursue is remedies in respect of PDS Holdrngs Pty Ltd, Computer Support Systems Pty Ltd and International Business Solutions Pty Ltd forthwith.

As you are aware, the Roland Communications Pty Ltd commercral bill will mature tomorrow, 4 August. That bill will be retired to overdraft and the bank will allow 21 days for you to refinance elsewhere, failing

w h ~ c h rt will take action to recover the amount owing."

On 11 August 1992, the Bank issued notices to pay under the guarantees, including those in respect of the debt due from the

applicant, which, at that time, was quantified at $79,965.51.

On 28 August 1992 Messrs McGrath Colman Stewart, the solicitors acting for Mr Hellas and for Roland wrote to the Bank proposing 7 September 1992 as the date for settlement to effect a discharge of the two mortgages. On 10 September 1992 the Bank apparently wrote to the solicitors for Roland and elicited the following reply of the same date:

"Hellas and Roland Communrcations Pty Ltd, your client: ANZ bank.

We refer to your letter dated 10 September, 1992. We advise that our clrent is refinancing the two mortgages held by your client over our client's properties. The refinancing is being done through Barclays bank and rncludes a property settlement pursuant to recent Family Court orders in favour of his wrfe. We are not instructed to deal with any of the matters relatrng to the alleged guarantees referred to in your letter. The refinancing is solely to pay out the mortgages. As our client's bank is now nearly ready to settle this matter, please provide us wrth the following;

(i)   particulars of the outstanding amounts in relation to each mortgage;

( ~ i ) your advice as to when your client will be an a position to
settle. "

On 21 September, 1992 McGrath Colman Stewart wrote to the Bank's

solicitors in these terms:

"Robert Hellas, Roland Communicatrons and ANZ bank.

We refer to our letter to you dated 9 September, 1992 and note that we have not received advice from you on the follow~ng:

(1) The amount outstanding in relation to each of the two mortgages;
(2) Your advice as to when your client will be in a position.

We shall be forced to rely on your letter of 9 September, 1992 wherein you advised that the debt is approximately $490,000. We are instructed to make arrangements to tender the money to your client and intend to do so at the branch which has dealt wrth all these matters at 125 Langridge Street, Collrngwood.

Barclays bank advrse us that they are now ready to settle and can settle at short notice. As we advised vou. our client's frnance also relates to a matrrmonial settlement, which is now overdue. Your failure to res~ond to our corresvondence will leave us with no choice but to tender the amount outstan3ing and then issue legal proceedings agalnst your client for the release of the trtle. In that event we shall also be seeking compensation for damages suffered by our client rn respect of your client's default.

we await your advices by 4.30 pm on Monday, 21 September, 1992."

That letter provoked this reply dated 21 September 1992 from the

Bank's solicitors:

"Roland Communications Pty Limited and Robert Hellas.

We refer to your letter dated 21 September 1992.	You wrote to us on
10 September 1992 adv~sing	that you were not instructed to deal with

any of the matters relating to alleged guarantees. The fact of the matter is that the security which your client seeks to discharge secures debts owing by a number of companies. Details of those companies have already been provided. We shall provide details of the precise debts owed by each company on request. Our client will not forego its security unless your client is addressing the question of his total indebtedness.''

The security there referred to was apparently, in the light of the mortgages which are now in evidence, that which the Bank held

by way of guarantees of the various debts including that owed by

the applicant. On the morning of the date finally appointed for settlement in respect of the discharge of the mortgages, the solicitors for the Bank sent a facsimile message to the solicitors for Roland in these terms:

"ANZ Bank and Roland Communrcations.

We refer to our drscussions wrth you on Wednesday. At settlement of thrs matter this afternoon, we note that you shall provrde us with bank cheques for $492,189.99. In return for which we shall provide you with

duplicate certlflcates of trtle, volume 8348, folio 819 and volume

9765, folro 685, together with discharges of our clrent's mortgages nos. 411565T and P674244U. The duplicate mortgages which will be produced at settlement wrll be made available at the Lands Titles Office on Monday. We are making the mortgages available so as to ensure they are returned to this office following registration of the drscharges. We confirm that acceptance of the funds this afternoon and provrsion of the documents is without prejudice to the bank's rights generally and in partrcular its rrghts under the personal covenants contained rn the mortgages and under varrous guarantees executed in respect of companies in the Roland Group."

In support of the applicant's contention that there is a genuine dispute as to the existence of the debt allegedly due to the

discharged by an accord and satisfaction which occurred when the	Bank, Mr Hellas has asserted, in effect, that the debt was
mortgages were discharged on 25 September 1992. That assertion is succinctly contained as follows in his latest affidavit sworn 20 December 1993.

"In the course of oral conversations from June 1992 to September 1992 between myself and Mr B. Burt and Miss Marie Guzman of the Melbourne central zone branch of the ANZ Bank, it was agreed that subject to my solicitor receiving advice from Messrs Hall and W~lcox, solicitors for the ANZ Bank, as to the exact amount finally settled upon, all debts owing to the ANZ Bank by Computer Support Systems Pty Limited and those other companies in the group operated by myself would be extinguished on payment of that sum. And that titles to properties owned by companies in the group over which the ANZ Bank held mortgages would be released on the tendering of that sum in complete satisfaction of all indebtedness to the ANZ Bank by companies assocrated with myself."

It was conceded in the course of the hearing that the reference in that passage to "titles to properties owned by companies in the group" was mistaken and that the properties over which the two mortgages had been granted were, as I have said, owned by Mr Hellas and his wife. It is perhaps significant that in his original affidavit in support of the present application which was sworn on 4 October 1993 Mr Hellas has deposed:

"(6) From late April 1992 I commenced negotiations with Miss M. Guzman and Mr B. Burt of the respondent wrth a view to arranging the re- f~nancing of the operations of the companies. We srmultaneously discussed the possible settlement of the total liabilrtres of the companies to the respondent bank in the event that the re-financing did not proceed.

(7) The parties were unable to agree on the terms of the proposed re-

financing and in or about August 1992 I secured alternative financial

accommodation for the companies with Barclays Bank.

(8) In vrew of the re-financing wrth Barclays Bank I considered it

appropriate to settle the outstanding liabilltres of the companies to the respondent bank. I therefore requested the respondent to provide a payout figure for the full settlement of the lrabrlities of both companres."

Affidavits by Mr Burt and Miss Guzman have been filed on behalf

of the Bank. Both of those officers deny any concluded agreement

of the kind asserted by Mr Hellas. With some diffidence, I allowed cross-examination of Mr Hellas on his affidavits. He was also re-examined by Miss Dodds of Counsel for the applicant. That oral examination has not dispelled the inconsistencies and deficiencies in the evidence of the applicant which are discussed in these reasons. In the first place, the agreement asserted by Mr Hellas in his latest affidavit is said to have been:

"Subject t o my	s o l i c i t o r receiving advice from Messrs Hall and Wilcox
a s t o t h e exact	amount f i n a l l y s e t t l e d upon."

However, there is no evidence that any exact amount was ever finally settled for discharge of the total liability of the Roland Group. Moreover, on the documentary evidence, the solicitors for the group clearly did not regard themselves as instructed to obtain a discharge of all liabilities, including those secured by the guarantees. It is significant that despite two detailed affidavits having been sworn by Mr Batrouney, the solicitor for the Bank, no affidavit at all has been sworn by Mr Misso, the solicitor who acted for the Roland Group and Mr Hellas during and after August and September 1992.

In addition, the events after September 1992 negative the existence of any agreement of the kind asserted by Mr Hellas. On 23 February 1993, the solicitors for the Bank wrote to Mr Hellas in these terms:

"As you know, w e a c t f o r ANZ.	You have been served with reques ts f o r
payment under var ious guarantees i n respect of companies i n which you

have an i n t e r e s t . W e have ins t ruc taons t o i ssue proceedings but before

doing so,	our c l i e n t has ins t ruc ted us t o determine whether you would
be prepared t o a t t e n d a meeting with us and our c l i e n t w ~ t h	a view t o

discussing a r e so lu t ion of	t h e matter.	I f you	a r e prepared t o a t tend
such a meetlng,	p lease telephone M r N . J .	Batrouney of	t h i s o f f i c e by

3 March	1993.	F a i l i n g which,	proceedings	w i l l be	i ssued without
fu r the r	warning."

A following reply dated 26 February 1993, so far as is relevant, was sent by the solicitors for Mr Hellas and the Roland Group:

"Your letter t o our c l i e n t seeks a meeting t o d iscuss t h e var ious guarantees. The l a s t information w e received from you i n t h e form Of bank statements from your c l i e n t indicated t h a t t h e accounts had a N I L balance. It is our impression t h a t t h e matter had been resolved and

t h a t t h e amounts had been wr i t t en o f f . Our c l i e n t is w i l l i n g t o e n t e r

into discussions and happy to attend a meeting. However, prior to doing so, would you please provide us with further information in relation to the accounts. we would appreciate copies of the appropriate 'guarantees and details of the amounts outstanding in relation to each account."

Then on 4 June 1993 the same solicitors wrote to the solicitors for the bank in these terms:

"Hellas and AN2 Bank.

We refer to previous correspondence herein. We have enclosed a financial statement prepared by our client for Computer Support Systems showrng a balance sheet as at 26 May 1993. Also enclosed is the profit and loss statement for that period. Our client instructs us that PDS Holdings is now in the process of being deregistered. We shall endeavour to provide you with further information shortly."

In addition to the evidence of events after the alleged agreement in August or September 1992, another matter which makes in inherently improbable that the Bankwould have accepted an amount of about $492,000 which was equal to the debt of Roland for which it was fully secured by first mortgages in full satisfaction of a total liability of over $818,000, is the fact that it held personal guarantees from Mr Hellas and two other persons to secure the excess.

For all of these reasons, I am not satisfied that there is a	genuine dispute between the applicant and the Bank about the
existence of the debt to which the bank's demand relates. Accordingly, the application must be dismissed with costs.

I certify that this and the preceding six pages are a true copy of the ex tempore reasons for judgment of his

Honour Mr	Justice Xyan
ssocite:	Nkdl

Date :  /S t7k-t-y W

Counsel for applicants:  MS Dodds

,. .	.SoLicitors for applicants:	McGrath Colman Stewart
Counsel for the respondents:	M r J Gardiner
Solicitors for the respondents:	Hall & Wilcox