Gardner Corporation Pty Ltd v Crosswood Investments Pty Ltd
[1999] WASC 121
GARDNER CORPORATION PTY LTD -v- CROSSWOOD INVESTMENTS PTY LTD [1999] WASC 121
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [1999] WASC 121 | |
| Case No: | COR:157/1999 | 3 AUGUST 1999 | |
| Coram: | MASTER SANDERSON | 11/08/99 | |
| 6 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| PDF Version |
| Parties: | GARDNER CORPORATION PTY LTD (ACN 008 911 055) CROSSWOOD INVESTMENTS PTY LTD (ACN 082 955 253) |
Catchwords: | Corporations law No genuine dispute as to debt No offsetting claim Turns on its own facts |
Legislation: | Corporations Law s 459G and s 459H (1) and (4) |
Case References: | Eyota v Hanave (1994) 12 ACSR 785 Perlake Pty Ltd v Finance and Mortgage Corporation (NSW) Pty Ltd (1997) 15 ACLC 76 Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporizers Pty Ltd (1994) 13 ACSR 37 Jarpab Pty Ltd v Winter (1994) 14 ACSR 255 Le Grog Holdings Pty Ltd v Roofview Pty Ltd (1995) 18 ACSR 313 Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1062 Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 24 ACSR 353 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Applicant
AND
CROSSWOOD INVESTMENTS PTY LTD (ACN 082 955 253)
Respondent
Catchwords:
Corporations law - No genuine dispute as to debt - No offsetting claim - Turns on its own facts
Legislation:
Corporations Law s 459G and s 459H (1) and (4)
Result:
Application dismissed
(Page 2)
Representation:
Counsel:
Applicant : Mr A J Prentice
Respondent : Mr C F McLeod
Solicitors:
Applicant : Mossensons
Respondent : Talbot & Olivier
Case(s) referred to in judgment(s):
Eyota v Hanave (1994) 12 ACSR 785
Perlake Pty Ltd v Finance and Mortgage Corporation (NSW) Pty Ltd (1997) 15 ACLC 76
Case(s) also cited:
Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporizers Pty Ltd (1994) 13 ACSR 37
Jarpab Pty Ltd v Winter (1994) 14 ACSR 255
Le Grog Holdings Pty Ltd v Roofview Pty Ltd (1995) 18 ACSR 313
Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1062
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 24 ACSR 353
(Page 3)
1 MASTER SANDERSON: This is an application to set aside a statutory demand. The application is made under s 459G of the Corporations Law. The applicant's primary argument is that there is a genuine dispute as to the debt and the demand ought therefore be set aside under the provisions of s 459H(1)(a). As an alternative, it is submitted that the applicant has an offsetting claim such that the substantiated amount is not equal to or greater than the statutory minimum and that the demand should therefore be set aside under s 459H(4). There was a further argument that there was "other reason" why the demand should be set aside under the provisions of s 459J. This was a subsidiary argument and one which I will deal with while dealing with the application under s 459H.
2 The application was supported by two affidavits of Charles Daniel Gardner ("Gardner"). The first sworn 14 June 1999, the second sworn 20 July 1999. In opposition to the application, the respondent filed an affidavit of Brian Milton Featherby ("Featherby") sworn 21 July 1999 and an affidavit of Gerard Burns ("Burns") sworn 8 July 1999. Taken together, these four affidavits were the evidence for and against the application.
3 The statutory demand itself appears as Annexure "CDG2" to the affidavit of Gardner sworn 14 June 1999. The amount of the demand is $16,895.95. It is alleged in the demand that this amount is due for goods sold and delivered by the respondent to the applicant between November 1998 and February 1999. In compliance with the provisions of s 459E of the Corporations Law an affidavit of Featherby (Annexure "CDG2") accompanied the statutory demand. By par 4 of that affidavit Featherby says:
"To my knowledge the Company has not ever disputed its liability for the sum of $16,895.95 referred to in the Statutory Demand which I believe to be due and payable by the Company to the Creditor."
4 This fairly standard statement of the respondent's position formed the basis of the submissions in relation to s 459J. Essentially it was the applicant's position that it had always disputed this debt and this fact was well-known to the respondent. It was on this basis that the applicant sought to rely on s 459J. It was said by the applicant that Featherby's statement was misleading and was a sufficient basis for setting aside the statutory demand. Before dealing in detail with this submission it is appropriate that I first consider the question of whether or not there is indeed a genuine dispute as to the amount claimed by the respondent.
(Page 4)
5 The applicant carries on business as a retailer of electronic equipment and its main place of business is 1359 Albany Highway, Cannington. However, it appears that the applicant has a number of franchised businesses spread throughout the metropolitan area. In the course of its business the applicant dealt with a company known as Lufkin Pty Ltd ("Lufkin"). Lufkin supplied the applicant with various electrical components, including motor vehicle immobilisers and car alarms. It is not disputed that in July 1998 Lufkin sold its business to the respondent who thereafter traded under the business name of Lufkin International. Gardner says that he was not aware of the change in ownership of the business until sometime after the changeover occurred. Quite when that may have been is unclear. Appearing as Annexure "CDG4" to Gardner's affidavit of 14 June 1999 is a document entitled "A Friendly Reminder" which alerts customers, including the applicant, to the change of ownership. The document is undated and Gardner does not indicate when it was received. This issue is not addressed by either Burns or Featherby in their affidavits.
6 It is not in dispute that between November 1998 and February 1999 the applicant acquired from the respondent goods to the value of $28,131.95. Against that sum, payments were made or amounts were credited to a total of $11,236. This leaves a balance of $16,895.95 - the amount referred to in the statutory demand. It is also not in dispute that these goods were sold and delivered by the respondent to the applicant. There is no suggestion that Lufkin was involved in any way. These uncontested facts put paid to any suggestion that there is a genuine dispute about this debt. It is the case that the parties have been arguing about certain warranty claims and claims for defective equipment which the applicant says should be offset against the respondent's claim. But that is a matter which falls for consideration under s 459H(4) and does not in any way lead to a conclusion that there is a genuine dispute about the debt. The applicant cannot succeed in its application under s 459H(1).
7 Turning then to the question of any offsetting claim it is the applicant's position, first, that there are "warranty claims" or claims for defective goods which ought be set off against the amount owed to the respondent. It is somewhat difficult to ascertain from Gardner's affidavits and the attached correspondence precisely what complaint the applicant has with defective stock. From Annexure "CDG5" to Gardner's affidavit of 14 June 1999 it would appear that certain car immobilers supplied by Lufkin have been found to be defective. It is plain that the defective immobilisers were supplied by Lufkin. They were not supplied by the respondent through Lufkin International. In other words, they were all
(Page 5)
- supplied prior to July 1998 when the business changed hands. Consequently, any "warranty claim", or any other damages claim, is the responsibility of Lufkin. It is not the responsibility of the present respondent. That point was repeatedly made by the respondent in correspondence passing between the parties. It does not appear to have been grasped by the applicant. In an effort to resolve the differences between the parties the respondent did issue a credit in relation to certain immobilisers. It appears to have taken this step in an attempt to resolve the dispute on a commercial basis, rather than because it was under any legal obligation to take responsibility for the defective components. After initially appearing to accept the compromise offered by the respondent, the applicant changed tack and declined to make payment of the amount now demanded.
8 The applicant's case in relation to this aspect of the application was based on two grounds. First, it was submitted that as it is commonly the case when a business is sold the purchaser takes over responsibility for warranty claims, it is reasonable to expect that consequent upon the sale of the business from Lufkin to the respondent, responsibility for the defective equipment may now rest with the respondent. With respect, there is no evidence at all to support that submission and it amounts to nothing more than speculation. Secondly, it was argued that because the respondent did not advise the applicant of the change of ownership of the business an estoppel may have arisen such that the respondent could not now decline to deal with any defects in equipment supplied before it acquired the business. Although that submission was put, it was not developed. What is more, there is no evidence to support such a submission. There is, for instance, no evidence at all that the applicant altered its position consequent upon any representation made by the respondent. On the evidence, no estoppel can arise and such a claim cannot amount to an offsetting claim.
9 The second aspect of the applicant's submissions in relation to the offsetting claim was that the defective goods supplied by Lufkin had resulted in disgruntled customers which in turn had led to a reduction in the goodwill of the applicant's business. There are a number of difficulties with this submission. First, and fatally, the defective goods were supplied by Lufkin and it is they who would be responsible for the consequences of any adverse effect on the applicant's business. Secondly, even if some responsibility for loss of business could be sheeted home to the respondent, there is no detail at all as to what damage the applicant may have suffered. In an application under s 459H(4) it is incumbent upon a party to produce something more than speculation: see Eyota v
(Page 6)
- Hanave (1994) 12 ACSR 785 at 787. In my view, the applicant has not made out that there is any offsetting claim and the application on that ground must fail.
10 Having reached the conclusion that there is no genuine dispute about the debt and that the applicant does not have any offsetting claim, it can be seen at once that the statement by Featherby in his affidavit accompanying the statutory demand was factually correct. It may be the case that where a party knows that a debt is disputed and nonetheless claims on oath that there is no dispute this could provide the basis for setting aside of a demand: see Perlake Pty Ltd v Finance and Mortgage Corporation (NSW) Pty Ltd (1997) 15 ACLC 76. But this is not one of those cases. There is no basis for setting aside this statutory demand under s 459J.
11 The application to set aside the statutory demand will be dismissed. Under the provisions of s 459F(2)(ii) the time for compliance with the demand is extended to seven days after the date of this judgment. The applicant ought pay the respondent's costs of the application including the reserved costs.
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