Durkan v Sandbank Holdings Pty Ltd
[2008] WASCA 249
•5 NOVEMBER 2008
DURKAN -v- SANDBANK HOLDINGS PTY LTD [2008] WASCA 249
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASCA 249 | |
| THE COURT OF APPEAL (WA) | 09/12/2008 | ||
| Case No: | CACV:162/2007 | 5 NOVEMBER 2008 | |
| Coram: | PULLIN JA BUSS JA MILLER JA | 4/11/08 | |
| 6 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | MONIKA DURKAN MONIKA DURKAN as Administrator of the Estate of the late MARTIN DURKAN SANDBANK HOLDINGS PTY LTD |
Catchwords: | Corporations Application to set aside statutory demand Claim by recipient that it had a genuine offsetting claim relating to costs of interlocutory steps in a District Court Action Statutory demand set aside Appeal not expedited and listed for hearing within one month of the District Court action which was to determine the merit of the offsetting claim 'Other reasons' for setting the statutory demand aside |
Legislation: | Corporations Act 2001 (Cth), s 459G, s 459H, s 459J |
Case References: | Edge Technology Pty Ltd v Lite-On Technology Corporation [2000] NSWSC 471; (2000) 156 FLR 181 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : DURKAN -v- SANDBANK HOLDINGS PTY LTD [2008] WASCA 249 CORAM : PULLIN JA
- BUSS JA
MILLER JA
- MONIKA DURKAN as Administrator of the Estate of the late MARTIN DURKAN
Appellants
AND
SANDBANK HOLDINGS PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : ACTING MASTER CHAPMAN
Citation : SANDBANK HOLDINGS PTY LTD v DURKAN
File No : COR 143 of 2007
(Page 2)
Catchwords:
Corporations - Application to set aside statutory demand - Claim by recipient that it had a genuine offsetting claim relating to costs of interlocutory steps in a District Court Action - Statutory demand set aside - Appeal not expedited and listed for hearing within one month of the District Court action which was to determine the merit of the offsetting claim - 'Other reasons' for setting the statutory demand aside
Legislation:
Corporations Act 2001 (Cth), s 459G, s 459H, s 459J
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
Appellants : Ms R J Lee
Respondent : Mr B Wheatley
Solicitors:
Appellants : Ginbey & Co
Respondent : Mossensons
Case(s) referred to in judgment(s):
Edge Technology Pty Ltd v Lite-On Technology Corporation [2000] NSWSC 471; (2000) 156 FLR 181
(Page 3)
1 REASONS FOR JUDGMENT OF THE COURT: This is an appeal against the order of Acting Master Chapman pursuant to s 459G of the Corporations Act2001 (Cth) (the Act) setting aside the appellants' statutory demand dated 14 September 2007 which had been served on the respondent on the same day. The appeal to this court was heard on 5 November 2008 and dismissed on that day with reasons to be published later. These are our reasons.
2 The acting master found that the company had an offsetting claim within the meaning of s 459H. The two sections of the Act read:
459G Company may apply
(1) A company may apply to the Court for an order setting aside a statutory demand served on the company.
(2) An application may only be made within 21 days after the demand is so served.
(3) An application is made in accordance with this section only if, within those 21 days:
(a) an affidavit supporting the application is filed with the Court …
(1) This section applies where, on an application under s 459G, the Court is satisfied of either or both of the following:
(a) …
(b) that the company has an offsetting claim.
…
(5) In this section:
… offsetting claim means a genuine claim that the company has against the respondent by way of counterclaim, set-off or cross-demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates).
- The application to set aside was filed on 3 October 2007 and was supported by an affidavit of Mr M S O'Sullivan sworn 28 September 2007 and filed on 3 October. The affidavit disclosed that the respondent had
(Page 4)
- been served with a statutory demand by the appellants which was a demand for payment of $6,348.13 being the total of two amounts of taxed costs ordered in District Court action number CIV 1589 of 2004 (District Court Action).
3 Mr O'Sullivan's affidavit referred to the District Court Action which had been commenced in 2004 in which the respondent claimed from the appellants $27,381.74 plus damages. The affidavit exhibited a copy of the book of amended papers for the judge filed on 13 October 2006 in the District Court Action. The book contained an amended statement of claim, further and better particulars of the claim, an amended defence, set-off and counterclaim of the appellants, further and better particulars of the appellants' counterclaim, an amended defence to counterclaim, further and better particulars to the defence to counterclaim and a reply to the defence to counterclaim.
4 Paragraphs 7, 8 and 9 of Mr O'Sullivan's affidavit read:
I confirm that the facts set out in the plaintiff's amended statement of claim, further and better particulars of amended statement of claim, amended defence to counterclaim and further and better particulars of amended defence to counterclaim are true and correct.
The District Court action was entered for trial in 2006 and has been listed for a pre-trial conference on Wednesday, 3 October 2007, while the defendants have recently made an application for security for costs against the plaintiff some 5 1/2 years after the plaintiff's claim was commenced in the commercial tribunal and more than 3 years after the action was remitted to the District Court, which application has yet to be listed for hearing.
I have recently instructed the plaintiff's solicitors to apply to amend the plaintiff's statement of claim in the District Court action to claim that the plaintiff was not in breach of its obligation to pay rent in that the defendants failed to account for payments made by the plaintiff, that rental was not payable until the liquor licence was capable of operation by the plaintiff, being a date after that for which the defendants claimed rent, to include a claim for unjust enrichment as a result of the plaintiff's improvements to the leased premises and to include a claim for damages of $27,000.00 representing the loss of the business acquired by the plaintiff. Annexed hereto and marked 'D' are copies of two receipts totaling $27,000.00 paid to purchase the business.
5 The appellants filed an affidavit of Mr H J Ginbey sworn 29 October 2007 referring to evidence which might lead to a dismissal of the respondent's claim. The solicitor for the respondent, Mr B Wheatley, also filed an affidavit confirming amendments to the statement of claim
(Page 5)
- foreshadowed in Mr O'Sullivan's affidavit referred to above. The respondent filed a second affidavit of Mr O'Sullivan on 27 November 2007, providing some evidence to counter the evidence raised in the affidavit of Mr Ginbey and providing particulars of the way the $27,000 was spent on the premises.
6 The statement of claim pleaded that the respondent purchased a restaurant business from a Mr Yap and took an assignment of lease from Mr Yap and a Mr Tan, with the consent of the appellants as lessors, and did so in reliance upon representations that, in return for the respondent undertaking alteration and renovations upon the leased premises, the appellants would reimburse the respondent for the cost of such alterations and renovations at the rate of $1,000 per month, free of interest, and to be by way of offset against any rental moneys due and owing from month to month. The statement of claim alleged that after the purchase of the restaurant business, the entry into the assignment of lease agreement and after work was carried out on alterations and renovations, the appellants served a default notice on the respondent alleging failure to pay rent in an amount of $2,985.41. The plea was that the calculation did not take the alleged agreed offset into account.
7 The appellants deny that any representation was made. They made no application for summary judgment. The appellants did not obtain an order striking out the statement of claim on the ground that it disclosed no reasonable cause of action. The District Court Action is set down for trial in early December 2008.
8 The acting master held that there was a genuine offsetting claim within the meaning of s 459H. There is no dispute about the relevant principles of law. A mere assertion that there is an offsetting claim is not enough. An offsetting claim must be a genuine claim. That is, it must not be 'spurious, hypothetical, illusory or misconceived'. See Edge Technology Pty Ltd v Lite-On Technology Corporation [2000] NSWSC 471; (2000) 156 FLR 181 [25] (Santow J). The threshold presented by the test to set aside a statutory notice does not require rigorous and in-depth examination of the evidence relating to the offsetting claim (Edge [45]). The mere fact that proceedings have been initiated does not foreclose an examination of the claim to see whether there is a genuine offsetting claim (Edge [47]).
9 In this case, Mr O'Sullivan confirmed the material facts pleaded in the statement of claim. The appellants in effect contended that the alleged offsetting claim was not genuine.
(Page 6)
The grounds of appeal
10 The appellants contend that the acting master erred in concluding that the respondent's claim was genuine because the District Court Action was insufficient, in itself, to determine whether the claim was genuine, the respondent's conduct during the course of the lease was inconsistent with the claim now being made, the timing of the claim gives rise to a suspicion that it was introduced for tactical reasons, and no contemporaneous document discovered supports the claim which, when viewed with the form of the pleading, should have led the acting master to conclude that the claim was not genuine. The appellants also contend that the acting master erred in finding that there was sufficient evidence to show that the respondent had suffered loss of $27,381 and that the master erred by relying on affidavit material filed outside the 21-day period set in s 459G of the Corporations Act.
Reasons for dismissing the appeal
11 For the purpose of determining the appeal, we make the assumption that the appellants' grounds of appeal could be made out. However, if the grounds were made out, this court would have to reconsider the matter and make the decision which should have been made by the acting master. Because this is an appeal by way of rehearing, the court makes that decision based on the situation as it now is. That raises the question as to whether this court should so close to trial, decide whether it was satisfied that the offsetting claim was genuine. It is not in the interests of justice to undertake that exercise when in less than a month (in early December 2008) the District Court is scheduled to hear the District Court Action and determine not merely whether the respondent's claim is genuine but whether the respondent can prove it to the civil standard of proof, after hearing all the evidence the parties wish to lead.
12 Section 459J(1)(b) of the Corporations Act provides that the court may, by order, set aside the statutory demand if there is some 'other reason' why the demand should be set aside. There is an 'other reason' why this court should set aside the demand. It is the reason already given, namely that it is not in the interests of justice for this court to analyse the genuineness of the respondent's claim so close to the time the District Court Action is to be decided on the merits, and in circumstances where the appellants did not seek to expedite the hearing of the appeal, did not apply for summary judgment in the District Court Action and did not obtain an order striking out the statement of claim.
13 For those reasons the court dismissed the appeal.
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