Dowling Constructions Pty Ltd v Ulan Nominees Pty Ltd
[1992] TASSC 128
•6 November 1992
Serial No B51/1992
List “B”
CITATION: Dowling Constructions Pty Ltd v Ulan Nominees Pty Ltd [1992] TASSC 128; B51/1992
PARTIES: DOWLING CONSTRUCTIONS PTY LTD
v
ULAN NOMINEES PTY LTD
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO.: M32/1992
DELIVERED: 6 November 1992
HEARING DATES: 19, 20, 21, 22 October 1992
JUDGMENT OF: Green CJ
CATCHWORDS:
Corporations—Companies—Winding up on ground that company unable to pay its debts—Bona fide cross claim on substantial grounds—discretion to refuse relief.
REPRESENTATION:
Counsel:
Applicant: C Dockray
Respondent: J Dewar
Solicitors:
Applicant: Zeeman Kable & Page
Respondent: Crisp Hudson & Mann
Judgment category classification:
Court Computer Code:
Judgment ID Number: B51/1992
Number of paragraphs: 11
Serial No B51/1992
List B
File No M32/1992
DOWLING CONSTRUCTIONS PTY LTD v ULAN NOMINEES PTY LTD
REASONS FOR JUDGMENT GREEN CJ
6 November 1992
This is an application for an order that the respondent be wound up pursuant to s460 of The Corporations Law on the ground that it is unable to pay its debts. The only allegation which the applicant makes in support of that ground is that the respondent has failed to pay the sum specified in a demand served upon the respondent pursuant to s460(2)(a) of The Corporations Law.
I find that by notice dated 2 June 1992 served upon the respondent on 4 June 1992 the applicant demanded payment of the sum of $2,479.85. I find that the respondent did not within three weeks pay that sum or secure or compound it to the satisfaction of the applicant. I find that the procedural requirements for the making of the order sought have been satisfied.
Counsel for the respondent submits that the respondent has bona fide cross claims against the applicant and that therefore either I should dismiss the application on the ground that it cannot be said that the respondent has failed to pay the sum specified in the demand or that I should refuse the application in the exercise of my discretion.
The first of the two cross claims is for $1,756.00 which the manager of the respondent asserted in an affidavit was “payable under an agreement between the applicant and the respondent for a roller door and installation thereof”. That evidence was not admitted as evidence tending to prove the existence of the debt but only as evidence of the deponent‘s belief that there was such a debt. There was also evidence that the respondent had made a claim for that amount in a letter and that the claim had “never been disputed”. However there was no evidence from which it could be inferred that the applicant had admitted the claim and there was explicit evidence from directors of the applicant that the applicant disputed the claim. I hold that the evidence is quite insufficient to show that this cross claim is advanced on some substantial ground or that the cross claim is such as to show that the debt the subject of the demand is bona fide disputed. As Gibbs J observed in In re QBS Pty Ltd (1967) Qd R 218 at 225 it is insufficient to demonstrate that such a debt is bona fide disputed “simply because the respondent company says that it is disputed” and in this case the respondent’s evidence does little more than that.
The other cross claim is for $2,887.50 for the hire of a crane. I find that in 1991 and early in 1992 the applicant did work for the respondent in connection with construction work which the respondent had contracted to do for Goliath Cement. I find that the applicant would have been entitled to progress payments but that the respondent would have been entitled to deduct retention moneys from the payments due. The applicant claimed that the respondent was indebted to it in the sum of $113,823.00 for that work and pursuant to s460(2)(a) of The Corporations Law served a notice dated 13 February 1992 demanding payment of that amount. By an exchange of letters between the solicitors for the parties it was agreed that the respondent owed the applicant $113,823.00 less 5 per cent for retention money. Agreement was also reached as to the terms of payment and the payment of legal costs by the respondent. No amounts owing by the applicant to the respondent were made the subject of the discussions or negotiations which culminated in that agreement. On the basis of evidence given by directors of the applicant I find that the agreement did not purport to represent a settlement of all claims for debts owing by the applicant to the respondent or all debts owing by the respondent to the applicant. The respondent made total payments of $105,652.00 to the applicant which was $2,479.85 less than was payable by the respondent under the agreement. The last payment was made on 5 May 1992 and was accompanied by a letter in which the respondent showed that it arrived at the amount it paid by deducting $2,887.50 from the balance due which it claimed represented money owing by the applicant to Tasmanian Crane Service Pty Ltd a company closely associated with the respondent. By deed dated 27 August 1992 Tasmanian Crane Service Pty Ltd assigned its interest in the debt of $2,887.50 to the respondent. Notice of that assignment was given to the applicant arguably on 27 August 1992 but certainly on 3 September 1992.
I am not satisfied that on 7 August 1992 being the date of the filing of this application the respondent had a bona fide cross claim against the applicant. I turn to consider whether the respondent had by the date of the hearing a bona fide cross claim against the applicant.
Counsel for the applicant submitted that I should not find that the respondent has a bona fide cross claim against the applicant on the ground that on 5 May 1992 the respondent discharged the applicant‘s liability to Tasmanian Crane Service Pty Ltd so that on 27 August 1992 no debt existed which was capable of being assigned by Tasmanian Crane Service Pty Ltd to the respondent. Counsel also submitted that as the respondent discharged the debt as an intermeddling volunteer the fact of the payment did not entitle the respondent to any quasi contractual remedy against the applicant. I reject that submission. The evidence before me is not sufficient to establish with sufficient certainty what was the legal effect of whatever took place between the respondent and Tasmanian Crane Service Pty Ltd and in particular the evidence is not sufficient to justify a firm finding that the applicant’s indebtedness to Tasmanian Crane Service Pty Ltd was extinguished before the assignment. I am not satisfied that it has been shown that the respondent does not have an arguable case that Tasmanian Crane Service Pty Ltd effectively assigned its chose in action against the applicant to the respondent.
I am satisfied that the respondent has a bona fide cross claim against the applicant on substantial grounds.
Counsel for the applicant submits that even if the respondent has a bona fide cross claim on substantial grounds the existence of such a claim should not avail the respondent as the applicant‘s debt arises out of an account stated which debt should be regarded as analogous to a debt arising out of a bill of exchange and there is authority for the proposition that a bona fide cross claim will not avail a company when the debt claimed against it arises out of a bill of exchange. I reject that submission. No authority has been cited in support of it and I am not satisfied that there is any material similarity between the two causes of action which is such that it could be said that as a matter of logic or principle the rule relating to claims arising out of a bill of exchange can be said to apply to claims arising out of an account stated. It may be the case that for other reasons a bona fide cross claim alleged to be based upon say a debt which existed at the time when the account was stated might not avail a respondent company but that possibility has no application to this case as there is no suggestion that the applicant’s liability to the respondent upon which the cross claim is based arose until after the account had been stated.
In the exercise of my discretion I take into account the following considerations:
1The amount claimed by the applicant is small particularly when it is appreciated that it represents a very small proportion of the amount of $108,131.85 originally owing by the respondent to the applicant.
2I am satisfied that the respondent has a bona fide cross claim on substantial grounds against the applicant for payment of an amount comparable in size to the debt relied upon by the applicant.
3 The materials before me are not sufficient to enable me to properly determine the cross claim.
4 These proceedings are an inappropriate vehicle for determining the cross claim.
5The evidence apart from the evidence of the respondent‘s failure to pay the amount specified in the demand is not sufficient to support a finding that the respondent is unable to pay its debts.
For the foregoing reasons in the exercise of my discretion the application is dismissed.
0
0
0