Consolidated Rutile v China Weal - [1998] QSC 170

IN THE SUPREME COURT

OF QUEENSLAND

No. 6335 of 1998
Brisbane

Before White J

[Consolidated Rutile v China Weal]

BETWEEN:

CONSOLIDATED RUTILE LIMITED
(ACN 009 719 902)

Applicant

AND:

CHINA WEAL PTY LTD
(ACN 010 822 661)

Respondent

CATCHWORDS: Winding-up - debt due and payable - claim for price under contract - s.50(2) Sale of Goods Act 1895 - terms of contract - whether action for price intended.

Counsel:Mr M Gynther for company/applicant
Mr J Bond for creditor/respondent

Solicitors:Nicol Robinson Halletts for applicant
Allen Allen & Hemsley for respondent

Hearing Date: 24 August, 1998

REASONS FOR JUDGMENT - WHITE J

Judgment delivered 1 September 1998

The issue to be determined on this application is a narrow one due in large part to the sensible co-operation between counsel that the central question should be focussed upon rather than subsidiary technical matters.
The applicant, Consolidated Rutile Limited (“CRL”) has applied for the respondent company, China Weal Pty Ltd (“the company”) to be wound up on the ground of its presumed insolvency for failure to comply with a statutory demand, s.459C(2) of the Corporations Law 1991 (“the Law”). The demand is for US$1,639,050 being monies due and owing from the company to CRL pursuant to a contract in writing dated 16 April 1996.
The company did not make application to the court to set aside the demand within 21 days as required by s.459G of the Law. The statutory demand was served on 24 March 1998 and an application to set it aside was filed one day late and, after negotiations between the parties, was dismissed by consent. When the application to wind up proceeded a fresh application was filed on 11 August 1998. The grounds in the application for setting aside the statutory demand are that the company is not insolvent and that the sum claimed by CRL is not a liquidated debt and accordingly the appropriate remedy is an action for damages for breach of contract.
The company may not, without leave, oppose the application on either of the grounds referred to in its notice since they go to the question of whether there is a debt presently due and payable, s.459S(1) of the Law. The court may only grant leave to the company to argue these grounds to set aside the application to wind up if it is satisfied that the ground is material to proving that the company is solvent, s.459S(2). The question whether US$1,639,050 is a debt presently due and payable is central to the issue of whether or not the company is solvent. If the amount the subject of the statutory demand is found to be a debt due and payable the company admits that it would properly be regarded as insolvent. In that circumstance, counsel for CRL, Mr J Bond, did not oppose leave being given.
The issue is whether on the proper construction of cl.B(i) of the terms and conditions of the contract between the company and CRL the price for the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1998] QSC 170
Decision Date: 1 September 1998

CaseChat Overview and Summary

Consolidated Rutile Limited (“CRL”) applied for the winding up of China Weal Pty Ltd (“the Company”) on the basis of its failure to comply with a statutory demand for a sum of US$1,639,050, representing the price due under a contract for the sale of zircon sand. The Company did not seek to set aside the demand within the required timeframe and subsequently filed an application to do so, which was dismissed by consent. The Company argued that the sum claimed by CRL was not a liquidated debt but rather a claim for damages for breach of contract. The court held that the issue of whether the amount was a debt presently due and payable was central to the question of whether the Company was solvent. The court found that the parties had not agreed to vary the shipping schedule and that CRL was entitled to invoice the Company for the zircon not shipped, with payment due 28 days after the invoice date. The court concluded that the amount due under the contract was a debt due and payable and that the Company was insolvent as it could not pay that amount.

The court considered whether s.50(2) of the Sale of Goods Act 1895 applied to the case, which would allow the seller to maintain an action for the price if the price is payable on a day certain irrespective of delivery, and the buyer wrongfully neglects or refuses to pay such price. The court found that the provision in the contract that enables CRL to invoice the Company should the shipping schedule be revised and, if it does so, require payment in 28 days does not establish a day certain and therefore CRL had no entitlement under s.50(2) of the Sale of Goods Act to sue for the price. The court held that if there is no entitlement at common law to sue for the price CRL cannot succeed on its application being limited to an action for damages for breach of contract. However, the court found that the parties intended that all of the zircon was to be shipped by the 31 December 1997 and that if it was not, because the Company had revised the shipping schedule, CRL was entitled to be paid before loading the zircon. The court concluded that the amount due under the contract was a debt due and payable and the Company was insolvent as it could not pay that amount.

The Company’s application to set aside the statutory demand was dismissed.

Orders