Didasko Technologies Pty Ltd (Formerly ESpan Solutions Pty Ltd) v Comtel Services Pty Ltd
[2005] WASCA 54
•24 MARCH 2005
DIDASKO TECHNOLOGIES PTY LTD (FORMERLY ESPAN SOLUTIONS PTY LTD) -v- COMTEL SERVICES PTY LTD & ANOR [2005] WASCA 54
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2005] WASCA 54 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | FUL:151/2004 | 3 FEBRUARY 2005 | |
| Coram: | MALCOLM CJ PULLIN JA | 24/03/05 | |
| 17 | Judgment Part: | 1 of 1 | |
| Result: | Leave to appeal refused | ||
| B | |||
| PDF Version |
| Parties: | DIDASKO TECHNOLOGIES PTY LTD (FORMERLY ESPAN SOLUTIONS PTY LTD) (ACN 080 020 837) COMTEL SERVICES PTY LTD (ACN 059 774 551) CORSER & CORSER (A FIRM) (ABN 90 752 969 495) |
Catchwords: | Corporations Winding up by the Court Application by creditor to be substituted as plaintiff Whether genuine dispute as to debt Exercise of discretion Onus of establishing existence of genuine dispute Civil procedure Rules of the Supreme Court Refusal of leave to amend grounds of appeal |
Legislation: | Corporations Act 2001, s 465B, s 459(2)(a) Rules of the Supreme Court, O 63 r 2(2), (3) |
Case References: | ACP Syme Magazines Pty Ltd v TRI Automotive Components Pty Ltd (1997) 74 FCR 372 Beveridge Holdings Pty Ltd v Greater Pacific Investments Pty Ltd (1990) 3 ACSR 743 David Grant & Co Pty Ltd v Westpac Banking Corp Ltd (1995) 184 CLR 265 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669 Jarena Pty v Sholl Nicholson Pty Ltd (1996) 19 ACSR 425 King v The Queen(2003) 215 CLR 150 Kuligowski v Metrobus (2004) 78 ALJR 1031 Mann v Goldstein [1968] 1 WLR 1091 R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 Re Convere Pty Ltd [1976] VR 345 Re Tweeds Garages Ltd [1962] Ch 406 South East Water Ltd v Kitoria Pty Ltd (1996) 21 ACSR 465 Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) (2004) 22 ACLC 955 Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294 Wilson v Metaxas [1989] WAR 285 Bibby Financial Services v Wolf Industries Australia Pty Ltd (2004) 182 FLR 49 Cadura Investments v Rototek Pty Ltd [2004] WASC 249 Cooloola Dairys Pty Ltd v National Foods Milk Ltd [2004] QSC 308 Currie v Dempsey (1967) 69 SR (NSW) 116 Dickinson v Minister of Pensions [1953] 1 QB 228 Hooker Cockram Ltd v Minesco Pty Ltd (2001) 3 VR 466 Hyams v Elder Smith Goldsborough Mort Ltd (1976) 133 CLR 637 Leda Developments Pty Ltd v Orion Consolidated Pty Ltd [2001] QSC 400 McNair v Press Offshore Ltd (1997) 17 WAR 191 Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1062 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Re Ripon Investments Pty Ltd (1985) 3 ACLC 733 Sentinel Financial Management Pty Ltd v Entercorp Finance Pty Ltd (1996) 15 ACLC 201 Trinity Properties Pty Ltd v Gilles (1996) 20 ACSR 200 Wisewould v Allcorp Pty Ltd [2004] WASC 184 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : DIDASKO TECHNOLOGIES PTY LTD (FORMERLY ESPAN SOLUTIONS PTY LTD) -v- COMTEL SERVICES PTY LTD & ANOR [2005] WASCA 54 CORAM : MALCOLM CJ
- PULLIN JA
- Applicant (Defendant)
AND
COMTEL SERVICES PTY LTD (ACN 059 774 551)
First Respondent (Plaintiff by Substitution)
CORSER & CORSER (A FIRM) (ABN 90 752 969 495)
Second Respondent (Plaintiff)
(Page 2)
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : MASTER NEWNES
Citation : CORSER & CORSER (A FIRM) & ANOR -v- E-SPAN SOLUTIONS PTY LTD [2004] WASC 199
File No : COR 68 of 2004
Catchwords:
Corporations - Winding up by the Court - Application by creditor to be substituted as plaintiff - Whether genuine dispute as to debt - Exercise of discretion - Onus of establishing existence of genuine dispute
Civil procedure - Rules of the Supreme Court - Refusal of leave to amend grounds of appeal
Legislation:
Corporations Act 2001, s 465B, s 459(2)(a)
Rules of the Supreme Court, O 63 r 2(2), (3)
Result:
Leave to appeal refused
Category: B
Representation:
Counsel:
Applicant (Defendant) : Mr J R Ludlow
First Respondent (Plaintiff by Substitution) : Mr J J Hockley
Second Respondent (Plaintiff) : No appearance
Solicitors:
Applicant (Defendant) : Dibbs Barker Gosling
First Respondent (Plaintiff by Substitution) : Zilkens & Co
Second Respondent (Plaintiff) : Corser & Corser
(Page 3)
Case(s) referred to in judgment(s):
ACP Syme Magazines Pty Ltd v TRI Automotive Components Pty Ltd (1997) 74 FCR 372
Beveridge Holdings Pty Ltd v Greater Pacific Investments Pty Ltd (1990) 3 ACSR 743
David Grant & Co Pty Ltd v Westpac Banking Corp Ltd (1995) 184 CLR 265
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669
Jarena Pty v Sholl Nicholson Pty Ltd (1996) 19 ACSR 425
King v The Queen(2003) 215 CLR 150
Kuligowski v Metrobus (2004) 78 ALJR 1031
Mann v Goldstein [1968] 1 WLR 1091
R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45
Re Convere Pty Ltd [1976] VR 345
Re Tweeds Garages Ltd [1962] Ch 406
South East Water Ltd v Kitoria Pty Ltd (1996) 21 ACSR 465
Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) (2004) 22 ACLC 955
Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294
Wilson v Metaxas [1989] WAR 285
Case(s) also cited:
Bibby Financial Services v Wolf Industries Australia Pty Ltd (2004) 182 FLR 49
Cadura Investments v Rototek Pty Ltd [2004] WASC 249
Cooloola Dairys Pty Ltd v National Foods Milk Ltd [2004] QSC 308
Currie v Dempsey (1967) 69 SR (NSW) 116
Dickinson v Minister of Pensions [1953] 1 QB 228
Hooker Cockram Ltd v Minesco Pty Ltd (2001) 3 VR 466
Hyams v Elder Smith Goldsborough Mort Ltd (1976) 133 CLR 637
Leda Developments Pty Ltd v Orion Consolidated Pty Ltd [2001] QSC 400
McNair v Press Offshore Ltd (1997) 17 WAR 191
Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1062
(Page 4)
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Re Ripon Investments Pty Ltd (1985) 3 ACLC 733
Sentinel Financial Management Pty Ltd v Entercorp Finance Pty Ltd (1996) 15 ACLC 201
Trinity Properties Pty Ltd v Gilles (1996) 20 ACSR 200
Wisewould v Allcorp Pty Ltd [2004] WASC 184
(Page 5)
1 MALCOLM CJ: In my opinion, this application for leave to appeal should be refused for the reasons to be published by Pullin JA with which I am in entire agreement. There is nothing that I would wish to add save that the applicant should pay the respondents' costs of the application to be taxed.
2 PULLIN JA: This is an application by the applicant Didasko ("E-Span") for leave to appeal against the decision of Master Newnes who ordered that the first respondent ("Comtel") be substituted for the second respondent ("Corsers") as the plaintiff in these proceedings.
3 There is a broad discretion to grant or withhold leave to appeal, but in general, leave will not be granted unless it can be demonstrated that the decision under review is wrong or attended with sufficient doubt to justify the grant of leave, and that substantial injustice would be done if it remained unreversed: Wilson v Metaxas [1989] WAR 285 at 294.
4 The application made to Master Newnes was made under s 465B of the Corporations Act 2001 which reads:
"(1) The Court may by order substitute, as applicant or applicants in an application under section 459P, 462 or 464 for a company to be wound up, a person or persons who might otherwise have so applied for the company to be wound up.
(2) The Court may only make an order if the Court thinks it appropriate to do so:
(a) because the application is not being proceeded with diligently enough; or
(b) for some other reason.
…"
Facts
5 Corsers applied to wind up E-Span. It is not in dispute that Corsers had served a statutory demand pursuant to s 459E of the Corporations Act and that E-Span did not comply with it. As a result the presumption is that E-Span is insolvent. See s 459C(2)(a). The debt of Corsers was satisfied after the application to wind up was made to this Court. Corsers no longer sought to pursue the application for winding up.
(Page 6)
6 As a result, Comtel applied to be substituted as applicant. Comtel alleged that E-Span was indebted to it in the amount of $225,000 pursuant to a written agreement executed in 2003 ("sale agreement") recording the sale of Comtel's business to E-Span, and a convertible note agreement executed in 2003 ("convertible note") made between Comtel and E-Span. The date when the sale agreement was executed is not clear but it appears to be in April or June 2003. There is no dispute that it was executed. By the sale agreement, Comtel agreed to sell to E-Span certain assets including intellectual property rights in relation to Comtel's business of supplying fibre-optic cabling and providing various associated services. Under the sale agreement Comtel sold the assets to E-Span for $225,000. E-Span was obliged to pay this by an instalment of $25,000 not later than 15 October 2003 and a further instalment of $25,000 within 90 days of first payment. The balance of $175,000 was payable pursuant to the terms of the convertible note. The convertible note required repayment of the $175,000 on the anniversary of the sale agreement. It was a term of the convertible note that an event of default would occur if E-Span did not pay on time any money due and payable under the sale agreement. There was a provision in the convertible note which provided that Comtel could convert the $175,000 into shares by serving a conversion notice on E-Span and which provided that if E-Span's shares were acquired by a publicly listed company, then the $175,000 would convert into shares.
7 As recorded in [8] of the Master's reasons, the instalments of $25,000 were not paid in accordance with the sale agreement and, on 18 February 2004, Comtel served on E-Span a default notice under cl 8 of the convertible note, requiring payment by 19 February 2004 of the sum of $175,000 owing under the convertible note. No moneys were paid to Comtel, and on 17 May 2004 it made its application to be substituted as applicant in the proceedings under review. A director of Comtel deposed in an affidavit that the $225,000 sum was due and owing to Comtel by E-Span. E-Span endeavoured to show via affidavit evidence that there was a genuine dispute concerning this claim.
8 The Master correctly directed himself on the law concerning the meaning of "genuine dispute" by referring to what was said by Owen J in Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294 at [27] and McLelland J in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669 at 671. The Master concluded that E-Span had failed to show that there was a genuine dispute in respect of the $225,000 debt due by E-Span to Comtel.
9 The applicant's proposed grounds of appeal read:
(Page 7)
- "1. The learned Master erred in law in dealing with the First Respondent's application, in that the only question the learned Master considered in detail, alternatively at all, was whether there was a genuine dispute as to the indebtedness of the Appellant to the First Respondent, when that question was merely one of a number of matters relevant to the real question the learned Master was required to consider, namely whether the Court should exercise its discretion to make the order the First Respondent was seeking.
2. Further or alternatively, the learned Master should have dealt with the First Respondent's application on the basis that the onus was on the First Respondent to establish that an order should be made, and therefore also on the basis that no onus rested on the Appellant to establish that there was a genuine dispute between the Appellant and the First Respondent:
(a) about the existence or amount of a debt to which the First Respondent's claim related; nor
(b) as to whether the Appellant had an offsetting claim.
3. In determining whether the Court should make the order the First Respondent was seeking, the learned Master erred in law and in fact in failing to consider, alternatively failing properly to consider, the following relevant matters:
(a) the Second Respondent had decided not to pursue its application against the Appellant, because the Appellant had paid the Second Respondent in full;
(b) the statutory demand issued the by Second Respondent had related to a special type of debt, namely lawyers' fees, which can be challenged at, and in this case have been challenged at, and can be reduced on, a solicitor/client taxation even after they have become due, and/or have been paid;
(Page 8)
- (c) the First Respondent had neither issued a statutory demand specifying an exact total figure alleged to be owing by the Appellant to the First Respondent, nor deposed in its affidavit evidence to any such exact total figure;
(d) the First Respondent was seeking not just the $225,000 the First Respondent had quantified as being allegedly owing by the Appellant to the First Respondent in cash, but also a further, as yet unquantified and therefore uncertain, sum of up to $154,982.60 in respect of liabilities the Appellant had allegedly assumed from the First Respondent;
(e) the First Respondent had made no assertion that it had assigned, or paid over, to the Appellant all of the debts the Appellant would be entitled to receive under the sale agreement under which the First Respondent claimed to be a creditor of the Appellant (as opposed to only some of those debts), and thus there was also uncertainty as to the amount of the offsetting claim the Appellant had against the First Respondent in respect of those debts;
(f) in the premises, there was already sufficient uncertainty as to the exact amount said to be owing by the Appellant to the First Respondent, and also as to the exact amount of any offsetting claim, that it was neither necessary nor appropriate for the Court to require the Appellant to condescend to detail in relation to whether there was a genuine dispute as to the quantum of any amount that might be owing;
(g) there was a substantial body of evidence in Mr Shirren's affidavits to suggest that the First Respondent had been insolvent for a significant period of time leading up to 27 June 2003, and that this had significantly complicated the task of assuming the First Respondent's debts;
(Page 9)
- (h) Mr Shirren's affidavit sworn 20 July 2004 also included evidence that the First Respondent's accounting system was different from the Appellant's accounting system, and that this difference had further complicated the task of assuming the First Respondent's debts;
(i) The Appellant had the full support of its new parent company, Didasko Ltd, which, in particular, had manifested that support by:
(i) transferring funds to the Appellant to pay debts owed by the Appellant;
(ii) issuing the First Respondent with shares to the value of approximately the quantified amount of $225,000 said to be owing to the First Respondent; and
(iii) giving the Court an undertaking in respect of the Appellant's debts;
(j) the status of the shares issued by Didasko Ltd to the First Respondent would be left uncertain if the Appellant were regarded as being indebted to the First Respondent in respect of the quantified amount of $225,000 to which those shares related."
10 The first ground of the proposed appeal is that the Master, in effect, failed to consider relevant considerations in the exercise of his discretion. The ground does not specify what those other relevant considerations might be.
11 The second ground raises a legal issue about who bore the onus in relation to the issue about whether there was a genuine dispute concerning the debt. E-Span contends that the onus was on Comtel to show that there was no genuine dispute.
12 As to the proposed third ground, par 16 of the applicant's written outline of submissions read:
(Page 10)
- "The learned Master having incorrectly stated and applied the law relevant to the exercise of his discretion, this Court should exercise that discretion afresh."
13 Counsel for the applicant was asked whether that submission meant that ground 3 only arose for consideration if E-Span succeeded in showing that leave should be granted in relation to grounds 1 and 2. He said that despite his written submission this ground should be considered even if the applicant failed in relation to proposed grounds 1 and 2. As a result, I will consider all three of the proposed grounds.
14 During the hearing counsel for the applicant attempted to revisit several of the factual issues raised before the Master by E-Span and which were decided against the applicant by the Master in reaching his conclusion that Comtel was a creditor and that there was no genuine dispute about the debt. It was pointed out to counsel for the applicant that this Court would proceed on the basis that there was no need to revisit the arguments which had been raised before the Master and resolved by him, because there was no proposed ground of appeal challenging any of the findings of fact leading to the Master's conclusion that there was no genuine dispute about the debt.
15 Counsel for the applicant then moved to amend the proposed ground of appeal to add a ground 2A reading:
"The learned Master erred in law and in fact in concluding that E-Span had failed to show that there was a genuine dispute in respect of the debt claimed by Comtel, when he should have concluded that Comtel had failed to establish that it was a creditor and/or had failed to establish that there was no genuine dispute as to the debt claimed by Comtel."
16 Comtel objected to this proposed amendment because of the generality of the ground. When E-Span's counsel was asked by the Court to give some particulars, it became clear that E-Span wanted to argue again issues concerning the two instalments totalling $50,000. This became clear from the following portions of the transcript. The first portion follows on immediately from the submission by counsel for the respondent objecting to the proposed ground 2A. Counsel for the applicant said:
"LUDLOW, MR: Perhaps I can reply briefly to that. I have not had time to formulate particulars but I can give an indication
(Page 11)
- as to the nature of the contentions. It relates to the estoppel point that I referred to before lunch."
17 The "estoppel point" that counsel referred to before the luncheon adjournment was as follows:
"LUDLOW, MR: There's a fair bit of discussion in those emails, in particular in the one on page 561, about converting the $50,000 into something else. That discussion didn't breakdown until February, mid-February quite some months after mid-October, and so there may well be an estoppel argument arising from that. In fact the first debt was not going to be pursued until ultimately those discussion [sic] broke down in mid-February and of course the date on which the second debt becomes payable depends on the date payable for the first debt. I can elaborate on that point after the lunch break."
18 Later, after the luncheon adjournment there was further discussion about particularisation of the proposed ground 2A as follows:
"PULLIN J: … master definitely dealt with the argument that instead of payment of money, Comtel was prepared to accept some shares.
LUDLOW, MR: That's correct.
PULLIN J: What - in relation to the 50,000?
LUDLOW, MR: Yes. I will refer your Honours to that.
PULLIN J: The master went into all the evidence.
LUDLOW, MR: Yes.
PULLIN J: Made findings about it and concluded that that didn't absolve E-Span from paying the money.
LUDLOW, MR: The relevant paragraphs of master Newnes' judgment are paragraphs 36 to 40 on pages 14 and 15 I think it is. The next contention of E-Span was that the debt had been satisfied by the conversion of it into shares. That's the $50,000."
19 Paragraphs [36] to [40] reveal that the Master considered the arguments and evidence concerning that issue and concluded that there
(Page 12)
- was no genuine dispute in respect of E-Span's liability for the $50,000. The Master gave detailed reasons for rejecting E-Span's contentions. Those reasons are not the subject of any specific challenge. It appeared that E-Span wished to re-argue de novo points which were argued before the Master, without demonstrating that the Master erred in his findings or in his legal conclusions in relation to that aspect of the case. The Court upheld the respondent's objection, refused the application for leave to amend, and said it would give reasons later.
20 My reasons for refusing the application to amend the grounds of appeal are as follows. Order 63 r 2(2) and (3) require a notice of appeal to state briefly but specifically the grounds relied upon in support of the appeal. Particulars must be given of a ground which alleges that a decision is wrong in law or wrong in fact. The proposed ground 2A is a generalised and unparticularised complaint of error, and is defective for that reason. Furthermore, even if leave had been granted, it is clear that E-Span wished to argue that there was a dispute about $50,000 of the debt. Even if that succeeded, Comtel would still have been a creditor for $175,000. See Re Tweeds Garages Ltd [1962] Ch 406. I should mention however that I am aware that E-Span had argued before the Master, that the $175,000 was also the subject of a genuine dispute but the Master held that not to be so. He held that E-Span's claim that shares to that value had been issued in Comtel's name was a unilateral attempt to vary the method of payment and that the tender of shares by E-Span did not discharge E-Span's contractual liability to pay money. The Master's reasons appear in [42] to [44]. There was no ground challenging those reasons. When asked for oral particulars of proposed ground 2A, no suggestion was made that these paragraphs contained any error. For those reasons the application to amend was refused. No subsequent attempt was made to reformulate any ground complaining about any other particular finding or any particular conclusion of law.
21 I now turn to the proposed grounds of appeal.
Ground 1 - Alleged failure to take into account relevant factors in the exercise of the Master's discretion
22 Section 465B(2)(b) confers a discretion on the Court to order substitution. A discretion without any qualification is unconfined except insofar as it is affected by limitations to be derived from the scope and purpose of the statute. See R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45. In Beveridge Holdings Pty Ltd v Greater Pacific Investments Pty Ltd (1990) 3 ACSR 743 at 746,
(Page 13)
- Wallace J had this to say about a decision under earlier provisions which allowed substitution:
"The order made by the learned Master was discretionary … it is not enough for the appellant to persuade this court that it would have taken a different course had it been in the position of the learned Master: Bond Corporation Holdings v Bell Resources Finance Pty Ltd (1990) 1 ACSR 761 at 763. In order for the court on appeal to overturn the learned Master's discretion, it must be shown that the learned Master acted upon a wrong principle, or allowed extraneous or irrelevant matters to guide him or [that] he mistook the facts or failed to take into account some material consideration: Norbis v Norbis (1986) 161 CLR 513 at 518 - 19."
24 Before deciding whether to exercise the discretion the Court must be satisfied that the applicant is "a person … who might otherwise have so applied for the company to be wound up". In this case the applicant contended that it was a creditor.
25 During oral submissions reference was made to a difference revealed in the authorities about whether an insolvent company can be wound up on the application of a person who claims to be a creditor but whose debt is disputed. See ACP Syme Magazines Pty Ltd v TRI Automotive Components Pty Ltd (1997) 74 FCR 372 and Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) (2004) 22 ACLC 955. There is a full discussion about this issue in Tokich's case where White J concluded after a review of authority, that a company may not be wound
(Page 14)
- up on the application of a person claiming to be a creditor whose debt is disputed. It is not necessary to consider this aspect further in this case because the Master held that Comtel was a creditor and found that there was no genuine dispute concerning the debt. As I have already mentioned, even if the application to amend the proposed grounds of appeal to add ground 2A had been allowed and it could have been shown that there was a genuine dispute about $50,000, Comtel was still a creditor in relation to $175,000.
26 The factors to be taken into account in the exercise of the discretion to substitute an applicant will vary from case to case.
27 Solvency may (not must) be a relevant factor in the exercise of the discretion, but not so in this case. That is because there had been non-compliance with Corsers' statutory demand which meant that E-Span was presumed to be insolvent. See s 459C(2)(a) of the Corporations Act 2001.
28 The written submissions by E-Span and its ground of appeal state that "other questions" were relevant to the exercise of the discretion. However, neither proposed ground 1 nor the written submissions identified the "other questions". If the matters referred to in ground 3 should be treated as the "other questions" then, as will appear later in these reasons, I am of the opinion that they were either factors not relevant to the exercise of the discretion or, in some cases, were taken into account by the Master.
29 I see no merit in this proposed ground.
Onus
30 The applicant contended that Comtel bore the onus of showing that the substitution order should be made and also argued that there was no onus on E-Span to establish that there was a genuine dispute as to the debt. The Master held at [52]:
"In my view, E-Span has failed to show that there is a genuine dispute in respect of the debt claimed by Comtel."
31 Questions about onus are important if there is a lack of evidence in relation to an application. Onus will decide which party will suffer the consequence of a failure to establish a fact. See King v The Queen (2003) 215 CLR 150 at [18]. There was no lack of evidence on any point in this case. Both sides filed lengthy affidavits. Comtel deposed in affidavit
(Page 15)
- evidence that E-Span was indebted to Comtel. E-Span then attempted to show that there was a genuine dispute as to the debt. A finding has been made based on all the evidence that there was no genuine dispute.
32 There was no dispute that the onus was on Comtel to prove it was a creditor. It led evidence that it was a creditor. It proved the sale agreement which proved the amount which was due, proved the default and that the money was due and owing.
33 The onus of establishing that there is a bona fide dispute on substantial grounds concerning a debt is cast on the respondent to the winding up application. See ACP Syme Magazines Pty Ltd v TRI Automotive Components Pty Ltd (supra) at 524; Re Convere Pty Ltd [1976] VR 345 at 350; Mann v Goldstein [1968] 1 WLR 1091 at 1096. E-Span failed to satisfy the Master that there was a genuine dispute. The Master noted at [49] that it was "common ground" that E-Span had to establish there was a genuine dispute and this was based on a concession by counsel for E-Span that this was so. E-Span now argues, in written submissions which were invited after the oral hearing, that the question about whether there was a genuine dispute is inextricably linked with the issue about whether Comtel was a creditor. Those issues may be linked in some cases. If, for example, there had been dispute about whether there was a sale agreement at all, the issues would have been inextricably linked. However, in this case, the sale agreement was proved and the money due under it was deposed to by Comtel. E-Span's claims were all by way of confession and avoidance. In the circumstances, the onus was therefore on E-Span to prove there was a genuine dispute. It is unnecessary to consider the merits of that dispute because this ground only raises the argument about who bore the onus.
34 In my opinion there is no merit in this proposed ground of appeal.
Master's failure to consider matters referred to in the proposed notice of appeal
35 E-Span argues that the Master erred in "failing to consider" or "failing properly to consider" a number of points:
(a) E-Span argues that the Master should have taken into account the fact that Corsers had decided not to pursue its application against E-Span because E-Span had paid Corsers' debt, and he should have considered the fact that the statutory demand issued by Corsers had related to lawyers fees which could be challenged on taxation. In my view these points are irrelevant. There are cases
(Page 16)
- where an application to wind up a company based on an untaxed lawyer's account have been resisted on the basis that there is a genuine dispute. See Jarena Pty Ltd v Sholl Nicholson Pty (1996) 19 ACSR 425 and South East Water Ltd v Kitoria Pty Ltd (1996) 21 ACSR 465. Those cases are distinguishable. In Jarena's case, the applicant for winding up was a solicitor and a successful application was made to set aside the solicitor's statutory demand. In this case no application was made to set aside Corsers' statutory demand. In Kitoria's case the application for substitution was made by a solicitor whose bill had not been taxed. That point and other discretionary factors led the court in that case not to order substitution.
- (b) E-Span then argues that the Master should have taken into account the fact that Comtel had not issued a statutory demand and had not deposed in its affidavit evidence to the amount of its debt. It was not necessary that E-Span to issue a statutory demand. The issue of a statutory demand and non-compliance with it provides a quick resolution of the issue of solvency in the determination of whether the company should be wound up without the interposition of disputes about debts unless they are raised promptly. See David Grant & Co Pty Ltd v Westpac Banking Corp Ltd (1995) 184 CLR 265. Part 5.4 of the Corporations Act does not prevent a creditor from proceeding without relying on the advantages conferred by Pt 5.4. The contention that Comtel had not deposed in its affidavit evidence as to the exact total which was due cannot be borne out. See AB 416 where Mr Shirren deposed that $225,000 was due.
(c) E-Span then argued that Comtel had a further claim over and above its debt of $225,000. In my opinion it does not avail E-Span to say that Comtel was a creditor for a greater sum.
(d) Next E-Span contended that the Master did not consider "uncertainty" as to the amount of the offsetting claim. This contention is incorrect. The Master did consider all issues raised concerning offsetting claims. There is no proposed ground of appeal contending that his conclusions were incorrect.
It might also be convenient to deal at this point with E-Span's contention that it may be estopped from arguing about the extent of its debt or its offsetting claims at the hearing of the winding up application. E-Span referred to Kuligowski v Metrobus (2004) 78 ALJR 1031 at [58] to [63]. Two things can be said about that contention. First, even if an issue estoppel arises by reason of the Master's
(Page 17)
- findings, that is no reason to quash the Master's decision. Error has to be shown before the decision can be quashed. Secondly, as Kuligowski shows, the circumstances in which an issue estoppel arises requires close analysis. It is not necessary to carry out such an analysis on this application.
- (e) E-Span also contended that the Master did not consider evidence that Comtel had been insolvent for some time and did not consider that Comtel's "accounting system was different from the appellant's accounting system and that this difference had further complicated the task of assuming Comtel's debts". In my opinion, these points had no relevance to the exercise of the Master's discretion.
(f) The final two points relate to an issue that was argued before the Master about whether Comtel agreed to accept some shares in place of the debt. Contrary to E-Span's contention that this issue was not considered, it was most carefully considered by the Master in reaching his decision that there was no genuine dispute about the debt.
36 In my opinion the applicant has not demonstrated that there is any doubt about the learned Master's decision. As a result I would refuse leave to appeal.
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