Fleuris Pty Ltd v Asian Century Holdings Inc
[1999] WASC 30
FLEURIS PTY LTD -v- ASIAN CENTURY HOLDINGS INC [1999] WASC 30
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [1999] WASC 30 | |
| Case No: | COR:78/1999 | 13 MAY 1999 | |
| Coram: | MASTER SANDERSON | 21/05/99 | |
| 6 | Judgment Part: | 1 of 1 | |
| Result: | Statutory demand set aside | ||
| PDF Version |
| Parties: | FLEURIS PTY LTD (ACN 009 010 495) ASIAN CENTURY HOLDINGS INC |
Catchwords: | Corporations law Application to set aside statutory demand Turns on its own facts |
Legislation: | Corporations Law, s 459G(1), s 459H(1)(a) |
Case References: | Capital Bay Investments Pty Ltd v Richard Szklarz Architects Pty Ltd, unreported; SCt of WA; Library No 980503; 8 September 1998 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669 Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 Commonwealth v Verwayen (1990) 170 CLR 394 John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA (1995) 13 ACLC 94 Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1994) 12 ACLC 111 Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 147 ALR 444 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Applicant
AND
ASIAN CENTURY HOLDINGS INC
Respondent
Catchwords:
Corporations law - Application to set aside statutory demand - Turns on its own facts
Legislation:
Corporations Law, s 459G(1), s 459H(1)(a)
Result:
Statutory demand set aside
(Page 2)
Representation:
Counsel:
Applicant : Mr D H Solomon
Respondent : Mr J C Vaughan
Solicitors:
Applicant : Solomon Brothers
Respondent : Freehill Hollingdale & Page
Capital Bay Investments Pty Ltd v Richard Szklarz Architects Pty Ltd, unreported; SCt of WA; Library No 980503; 8 September 1998
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669
Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290
Case(s) also cited:
Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470
Commonwealth v Verwayen (1990) 170 CLR 394
John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250
Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA (1995) 13 ACLC 94
Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1994) 12 ACLC 111
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 147 ALR 444
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
(Page 3)
1 MASTER SANDERSON: This is the return of an application to set aside a statutory demand. The application is brought under s 459G(1) and falls to be determined under s 459H(1)(a). The applicant says that there is a genuine dispute in relation to the debt, the subject of the demand.
2 The application is supported by an affidavit of Richard Anthony Lukin ("Lukin"), sworn 1 April 1999. Lukin identifies himself as a director of the applicant. Thereafter, his evidence might be summarised in the following way. The applicant was a shareholder of a property development company known as Port Kennedy Resorts Pty Ltd ("PKR"). In February 1998 PKR was undertaking a fundraising of some $4,000,000. The applicant wished to participate in this fundraising by subscribing for shares to the value of $800,000. The respondent was also involved with PKR but the nature of its involvement with the company is not, for present purposes, relevant. The applicant proposed to borrow the money to subscribe for the PKR shares. The way this was to be done was as follows. The applicant would borrow the sum of $800,000. This borrowing is referred to in the evidence as the "Commercial Loan" and I will use that terminology. Originally, the Commercial Loan was to be provided by the National Australia Bank. Subsequently, the lender was changed to the Overseas Union Bank Ltd ("OUB"). Nothing turns on this change of lender. The security for the Commercial Loan was to be a Standby Letter of Credit ("SBLC") arranged by the respondent. In turn, the SBLC would be guaranteed by the applicant and the directors of the applicant. No doubt the SBLC would also have to have been guaranteed by the respondent, but whether or not that is the case is irrelevant to the present application. There is no dispute that this was the framework agreement reached between the parties.
3 Before the Commercial Loan could be arranged the applicant's need for funds became urgent. Discussions took place between the applicant and the respondent. On 6 February 1998 the respondent's Singapore solicitors Tan JinHwee, Eunice & Lim ChooEng wrote to the applicant in the following terms:
"Asian Century Fund Inc ('ACF') is prepared to lend to Fleuris Pty Ltd ('Fleuris') a temporary loan of A$200,000 ... ('Advance') pending the finalisation of Fleuris' loan from National Australia Bank or other financial institution ('Commercial Loan') on the following terms and conditions:
(a) unless a demand for repayment is made, in which case Fleuris will repay the Advance on demand, Fleuris will
repay the Advance from the proceeds of the Commercial Loan; and
- (b) the Advance will be disbursed into the account of Port Kennedy Resorts Pty Ltd and such disbursement shall be treated as disbursement of the Advance to Fleuris.
If you agree to the above, would you please sign below by way of acceptance, fax the same to me and at the same time confirm that the signed copy has been sent to me by post. Please also let me have a copy of Fleuris' board resolutions approving the loan from ACF."
4 A copy of that letter was duly signed by Lukin in his capacity as a director of Fleuris and sent by facsimile to the Singapore solicitors. Furthermore, a meeting was held of the board of directors of Fleuris and the terms of the loan were agreed. These documents appear as Annexures "HSH5 and 6" to the affidavit of Ho Swee Huat ("Huat"), affirmed 16 April 1999 and filed in opposition to this application. As it transpired, there were four further such temporary loans so that by 16 July 1998 the respondent had lent to the applicant $900,000. It is that sum which formed the basis of the statutory demand. It is common ground that the Commercial Loan has not been provided either by the National Australia Bank or by OUB - although there is a sharp difference between the parties as to why the Commercial Loan has not been provided.
5 The position of the respondent is quite straight forward. They say that the full advance of $900,000 was a temporary loan repayable on demand. Demand has been made and the loan has not been repaid. They say that on the evidence there can be no genuine dispute as to whether or not they are entitled to repayment of the $900,000.
6 The applicant says there is a genuine dispute. It says that, properly viewed, the $900,000 advance was part of the overall agreement between the applicant and the respondent and is inseparable from the framework agreement. It says that the temporary loans were made with the intent that they would be repaid from the Commercial Loan. They then say that the reason why the Commercial Loan has not been provided is that the respondent has not arranged the SBLC as they were obliged to do and without the security of the SBLC, OUB will not provide the Commercial Loan. They say they have signed the Commercial Loan documentation and that it has been returned to OUB. The Term Loan Facility Agreement
(Page 5)
appears as Annexure "RAL10" to Lukin's affidavit. They argued that the failure of the respondent to provide the SBLC is directly responsible for their inability to repay the temporary loans. They say that in these circumstances the respondent is estopped from demanding repayment of the loan or, alternatively, has engaged in misleading and deceptive conduct by making representations that it would provide the SBLC. The applicant says it relied on those representations and now has a right of action under the Trade Practices Act. This, it says, gives rise to the genuine dispute.
7 In answer to that, the respondent says that it is the failure of the applicant to provide security for the SBLC which has led to the failure of OUB to provide the Commercial Loan.
8 It is not entirely clear from the documentation which party is obliged to do what to satisfy the terms of the framework agreement. Normal commercial practice would suggest that solicitors acting for the respondent would provide to the applicant a copy of the SBLC and a draft of security documentation they required to comply with the applicant's undertaking to guarantee repayment of the Commercial Loan. The applicant could hardly be expected to prepare the security documentation required by the respondent. But there is no evidence that such documentation has been provided to the applicant by the respondent. There is some evidence that the respondent has asked the applicant to provide the security documentation. Appearing as Annexure "HSH10" to the affidavit of Huat there is a letter from the respondent's Singapore solicitors to the applicant dated 12 January 1999. Attached to this letter is a list of "Outstanding Matters". Clause 4 of that attachment refers to the security documentation as between the applicant and the respondent but it does not establish conclusively that the applicant has declined to provide such documentation and that is the reason why the SBLC has not issued.
9 In an application such as this it is necessary for the applicant to establish that there is a serious question to be tried. This emerges from any number of cases, of which perhaps the best known are Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290 and Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669. In this Court, Murray J restated the position in Capital Bay Investments Pty Ltd v Richard Szklarz Architects Pty Ltd, unreported; SCt of WA; Library No 980503; 8 September 1998. There was no dispute between counsel as to the principles to be applied.
(Page 6)
10 In all the circumstances of this case I am satisfied that there is a genuine dispute. In my view it is not entirely clear that the five separate advances totalling $900,000 stand apart from the framework agreement. It is at least arguable that repayment of these advances, once they had been used to subscribe for shares, was dependent upon the respondent complying with the requirement in the framework agreement that it provide the SBLC. On the evidence, there is clearly a dispute as to who is responsible for the failure to provide the SBLC. Whether this gives rise to a claim in contract, whether an estoppel is raised or whether there is a claim under the Trade Practices Act is not a matter which I have to decide, but I am of the view that there is a serious question to be tried.
11 During the course of these reasons I have not mentioned that a separate argument was raised by the applicant in relation to the last tranche of the temporary loan, being an amount of $100,000. This part of the total sum loaned was the subject of a separate argument by the applicant's counsel. Given the conclusion I have reached in relation to the application as a whole, it is unnecessary for me to deal with this aspect of the application as a separate issue.
12 In all the circumstances I would set aside the statutory demand. The respondent should pay the applicant's costs of the application, including the reserve costs.
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