D Club Pty Ltd v Grego

[2009] WASC 24

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   D CLUB PTY LTD -v- GREGO [2009] WASC 24

CORAM:   MASTER SANDERSON

HEARD:   29 JANUARY 2009

DELIVERED          :   17 FEBRUARY 2009

FILE NO/S:   COR 169 of 2008

BETWEEN:   D CLUB PTY LTD (ACN 095 099 639)

Plaintiff

AND

TONY GREGO
Defendant

Catchwords:

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

Legislation:

Nil

Result:

Demand set aside

Category:    B

Representation:

Counsel:

Plaintiff:     Mr J D MacLaurin

Defendant:     Mr K A Dundo

Solicitors:

Plaintiff:     Holborn Lenhoff Massey

Defendant:     Q Legal

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

Nil

1. MASTER SANDERSON:  This is the plaintiff's application to set aside a statutory demand.  At the conclusion of the hearing I indicated to the parties that I would set aside the demand on the grounds that there was a genuine dispute between the parties.  I indicated I would publish reasons at a later date.  These are those reasons.

2. The application was brought under s 459G and s 459H of the Corporations Act 2001 (Cth). There was no dispute between the parties as to the applicable principles. It was accepted on all sides that all the plaintiff needed to do was establish that the dispute was bona fide and that the grounds for alleging the dispute were real and not spurious, hypothetical, illusory or misconceived. What the plaintiff must show is that there is a plausible contention requiring investigation. The court does not weigh the merits of any alleged dispute. All that is required is a finding that the dispute is genuine.

3. A copy of the statutory demand appears as annexure SP1 to the affidavit of Sedick Price sworn 6 November 2008 and filed in support of this application.  The affidavit accompanying the statutory demand was sworn by the defendant.  Paragraph 1 of that affidavit is in the following terms:

   I am the creditor in respect of a debt of $348,288 owed by D Club Pty Ltd to me relating to an unsecured loan made by me to the debtor company and the resultant line account which was established with the debtor company.

4. On the face of it the defendant's claim against the plaintiff is straight‑forward.  The defendant is a share holder in the plaintiff.  He says, as is not uncommon, he has made a loan to the plaintiff.  It is worthy of note that the wording of the paragraph suggests that there was only one loan made by the defendant to the plaintiff.  That in turn suggests that it should be possible to easily identify in the accounts of the plaintiff, the date upon which the loan was made and the amount.

5. In fact, Mr Price says that such identification of a loan by the defendant to the plaintiff is not possible.  In his affidavit sworn 6 November 2008 he says:

   I have conducted a search of the books and records of the plaintiff and can find no record that the defendant ever advanced money to the [plaintiff]. I therefore deny that the defendant advanced the funds which he says he did by way of loans [14].

6. In opposition to the plaintiff's application, the defendant filed an affidavit sworn 21 November 2008.  Annexed to that affidavit (as exhibits 11 ‑ 14) are copies of the plaintiff's financial statements for the years ended 30 June 2002 ‑ 30 June 2005.  The accounts for 30 June 2005 has in Note 9 'Creditors and Borrowings', a reference to a loan from the defendant in an amount of $348,288.  This presumably is the basis upon which the defendant issued the statutory demand.  However, the accounts are by no means clear.  In the June 2005 accounts, the loan in favour of the defendant is shown as being $400,932 in 2004.  That is consistent with the 2004 accounts.  The amount shown for 2003, in the 2004 accounts, is $390,577.  In other words, the amount of the loan increased between 30 June 2003 and 30 June 2004, and then declined between 30 June 2004 and 30 June 2005.  That is hardly consistent with there being one loan made by the defendant to the plaintiff.  Stranger still, the 2003 accounts show a loan from the defendant to the plaintiff of $183,701.  There is a clear conflict between the 2003 and the 2004 accounts.  No explanation is offered in the defendant's affidavit as to how these inconsistencies arose. 

7. As I understand the defendant's affidavit, he does not in fact allege that there was one loan made to the plaintiff for the amount claimed in the statutory demand.  Rather there were a series of loans and a series of transactions which have resulted in his being owed the amount claimed.  In my view, the position as to any alleged indebtedness between the plaintiff and the defendant is complicated and is clearly the subject of a genuine dispute.  In the circumstances then I was satisfied that the statutory demand ought be set aside.

8. There is one further matter which deserves comment.  On 24 August 2007 the defendant issued a writ in the District Court against the plaintiff.  The amount claimed in that writ was $348,288 - the amount in the statutory demand.  In the indorsement of claim on that writ, it is said that the amount is made up of 'monies owing and which are due and payable but which remain unpaid pursuant to the terms of an ongoing verbal agreement whereby (Tony Grego) loaned various amounts of money to the defendant between 2002 and 2005'.

9. The action commenced by the writ was not pursued.  A notice of discontinuance has now been filed.  No application for summary judgment was made in the District Court proceedings.  It is very difficult to see how, in circumstances where the defendant was not sufficiently certain of his position, that he did not seek summary judgment in the District Court, it could be said that there was no genuine dispute in this matter.  The threshold test for summary judgment is well understood and it is higher than the test which applies when application is made to set aside a statutory demand.  But if the plaintiff had no defence to the claim then surely a summary judgment application ought be made.  The fact that it was not and a notice of discontinuance was lodged is, in my view, tantamount to an admission that there was a serious issue between the parties.  I am satisfied that is the case.

10. For these reasons I set aside the statutory demand.  Costs of the application should follow the event.