G & V Kanakis Pty Ltd v Pelosi

[2000] VSC 7

SUPREME COURT OF VICTORIA
PRACTICE COURT	Do not Send for Reporting
Not Restricted

No. 5890 of 1997

G. & V. KANAKIS PTY. LTD.	Plaintiff
v.
TONY PELOSI AND ANOTHER	Defendants

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JUDGE:	BEACH, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	14 DECEMBER 1999
DATE OF JUDGMENT:	18 JANUARY 2000
CASE MAY BE CITED AS:	G. & V. KANAKIS PTY. LTD. v. PELONI & ANOR.
MEDIUM NEUTRAL CITATION:	[2000] VSC 7

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CATCHWORDS:      Practice and Procedure – Pleadings – Claim for debt – Statement of claim not pleading material facts establishing the circumstances whereby the debt was created – Statement of claim defective.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr. W. Gillies	Clancy & Triado
For the Defendants	Mr. S. Gardiner	Hall & Wilcox

HIS HONOUR:

1. This is an appeal by the plaintiff from an order made by a Master of the court on 29 November 1999 whereby the Master gave leave to the plaintiff to file and serve a further amended statement of claim by 24 December 1999.

1. The Master's order was made on the hearing of a summons filed in the court on behalf of the defendants on 10 November 1999 whereby the defendants sought an order that the plaintiff's statement of claim dated 3 September 1999 be struck out on the ground that it did not disclose a cause of action, alternatively on the ground that it was embarrassing.

1. The plaintiff's claim is made pursuant to the provisions of s.592 of the Corporations Law. Sub-s.(1) of that section reads:

"1.  Where:

(a)a company has incurred a debt before the commencement of Part 5.7B;

(b)     immediately before the time when the debt was incurred:

(i)there were reasonable grounds to expect that the company will not be able to pay all its debts as and when they become due; or

(ii)there were reasonable grounds to expect that, if the company incurs the debt, it will not be able to pay all its debts as and when they become due; and

(c)the company was, at the time when the debt was incurred, or becomes at a later time, a company to which this section applies;

any person who was a director of the company, or took part in the management of the company, at the time when the debt was incurred contravenes this subsection and the company and that person or, if there are 2 or more such persons, those persons are jointly and severally liable for the payment of the debt."

1. The plaintiff's claim is brought against the defendants as the directors of a company called Pacific Downs Pty. Ltd.

1. To establish such a claim a plaintiff must -

(a)       identify the debt which is sought to be recovered;

(b)plead all the material facts establishing the circumstances whereby the debt was incurred;

(c)plead sufficient facts to establish the time when the debt was incurred; and

(d) plead the material facts to establish the requirements of s.592.

1. By paragraph 4 of its statement of claim the plaintiff alleges that Pacific Downs incurred a debt to the plaintiff on or about 22 February 1998 pursuant to an agreement entered into by the plaintiff and Pacific Downs that same month.

1. The particulars under paragraph 4 make it clear that the agreement was one whereby the plaintiff was to perform building works for Pacific Downs in respect of the construction of a building referred to in the plaintiff's quotation for such work and a letter of acceptance of the quotation forwarded by the defendants on behalf of Pacific Downs to the plaintiff.  The quotation is dated 8 February 1998, the letter of acceptance is dated 22 February 1998.

1. By paragraph 5 of its statement of claim the plaintiff alleges that pursuant to the agreement a debt of $736,477 was incurred by Pacific Downs of which only $663,954.70 was paid, thereby leaving a balance outstanding of $72,522.30.

1. By paragraph 6 to 63 inclusive of its statement of claim the plaintiff alleges that on 57 separate occasions between 15 September 1998 and 6 August 1990 Pacific Downs incurred further debts to the plaintiff.  The dates upon which each of those debts is said to have been incurred are specified, as is the amount of each debt.

1. What is not pleaded in the statement of claim are the facts which establish the circumstances whereby the additional 57 debts were incurred.

1. The reality of the situation is that each of the 57 debts relates to an extra item of work performed by the plaintiff at the request of Pacific Downs during the construction of the building.

1. In my opinion those facts should have been pleaded in the statement of claim.

1. To simply state in respect of the extras that on or about a particular date Pacific Downs incurred a debt to the plaintiff in the sum of X dollars does not plead the material facts establishing the circumstances whereby the debt was incurred.

1. It is not to the point, as counsel for the plaintiff submitted it was, that the defendants must know whether or not Pacific Downs incurred debts on the dates in question.

1. The balance of the plaintiff's statement of claim pleads the material facts in support of the requirements of s.562.  No complaint was made by counsel for the defendants in relation to such matters.

1. In my opinion the Master was correct in taking the view that the plaintiff's statement of claim was defective and in giving the plaintiff leave to deliver a further amended statement of claim.

1. The appeal will be dismissed with costs to be taxed and paid by the plaintiff.

1. I extend the time within which the plaintiff is to deliver its further amended statement of claim to 18 February 2000.

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