Godfrey Hirst Australia Pty Ltd v Floyd Industries Pty Ltd

[1995] FCA 524

CATCHWORDS

CORPORATIONS - statutory demand - Corporations Law s.459G - whether genuine dispute as to debt - whether statutory demand should be set aside.

Corporations Laws s.459G
Classic Ceramic Importers Pty Ltd v. Ceramica Antiga SA (1994) 12 ACLC 334
Eyota Pty Ltd v. Hanave Pty Ltd (1994) 12 ACLC 669
Chadwick Industries (South Coast) Pty Ltd v. Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37
Cempro Pty Ltd v. Dennis M Brown Pty Ltd (1994) 12 ACLC 501

GODFREY HIRST AUSTRALIA PTY LTD v FLOYD INDUSTRIES PTY LTD VG 3220 of 1995

COURT:Sundberg J.

PLACE:Melbourne

DATE:24 July 1995

IN THE FEDERAL COURT OF AUSTRALIA                 )

VICTORIA DISTRICT REGISTRY  )       No VG 3220 of 1995

GENERAL DIVISION  )

BETWEEN:GODFREY HIRST AUSTRALIA PTY LTD

(ACN 000 849 758)

Applicant

AND:FLOYD INDUSTRIES PTY LTD

(ACN 006 057 549)

Respondent

COURT:Sundberg J

DATE:24 July 1995

PLACE:Melbourne

MINUTES OF ORDER

The Court orders that:

1. The purported statutory demand dated 4 April 1995 served by the respondent on the applicant be set aside.

1. The respondent pay the applicant's costs of the application.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA       )

VICTORIA DISTRICT REGISTRY  )       No VG 3220 of 1995

GENERAL DIVISION  )

BETWEEN:GODFREY HIRST AUSTRALIA PTY LTD

(ACN 000 849 758)

Applicant

AND:FLOYD INDUSTRIES PTY LTD

(ACN 006 057 549)

Respondent

COURT:Sundberg J

DATE:24 July 1995

PLACE:Melbourne

REASONS FOR JUDGMENT

SUNDBERG J:

This is an application under s.459G of the Corporations Law to set aside a statutory demand served on the applicant by the respondent. The matter was argued at length before me on 12 July 1995. In addition to oral submissions, each counsel submitted a 10 page Statement of Contentions. Eleven affidavits were filed: 8 by the applicant and 3 by the respondent. There was also a substantial number of exhibits. There was insufficient court time available on 12 July for me to dispose of the matter, and the affidavits were not read, though counsel highlighted a few select parts of a couple of them. I have now read the affidavits, and am satisfied that there is a genuine dispute between the parties as to the amount of the debt claimed by the respondent. The applicant's affidavits do

more than merely assert a dispute.  I do not think it matters in the present case which of the various "tests" of genuineness is applied.  There is a serious question to be tried as to the amount of the debt: cf. Classic Ceramic Importers Pty. Ltd. v. Ceramica Antiga SA (1994) 12 A.C.L.C. 334, at p.339. In its 8 affidavits the applicant has set forth a plausible contention requiring investigation: cf. Eyota Pty. Ltd. v. Hanave Pty. Ltd. (1994) 12 A.C.L.C. 669, at p.671. The applicant's case is not vexatious or frivolous; it has some substance: Chadwick Industries (South Coast) Pty. Ltd. v. Condensing Vaporisers Pty. Ltd. (1994) 13 A.C.S.R. 37, at p.39.

Having found that there is a genuine dispute about the amount of the debt to which the demand relates, I turn to s.459H(2) which requires the Court to calculate the "substantiated amount" of the demand in accordance with the formula "Admitted total" minus "Offsetting total".  There is no offsetting claim raised here, and so the only question concerns "Admitted total", which is defined as the admitted amount of the debt or the total of the admitted amounts of the debts.  In a case where the Court is satisfied that there is a genuine dispute about the amount of the debt, the "admitted amount" is "so much of that amount as the Court is satisfied is not the subject of such a dispute".  In my view that definition contemplates a case where the Court is able to say that a specific amount of the debt is not disputed.  That is not the case here.  Splitting the amount claimed ($119,229.03) into two parts - one disputed and the other not - would be an exercise of guesswork on my part.

This is a case where, upon the applicant filing its first four affidavits, the respondent would have been well advised to withdraw the notice and sue in the County Court to
recover such part of the amount claimed as it could substantiate.  Cf. Cempro Pty. Ltd. v. Dennis M. Brown Pty. Ltd. (1994) 12 A.C.L.C. 501, at p.503. The longer the oral argument proceeded before me the more clear it became that I was being asked to perform in this Court the task which belongs to the County Court.

The order of the Court is that the statutory demand dated 4 April 1995 be set aside.

The material discloses that the applicant has offered to pay the respondent the full amount owing within 7 days of an inspection of the respondent's supplier invoices.  The respondent did not take up this offer.  The applicant has also suggested the immediate appointment of an independent mediator to settle the quantum in dispute.  The respondent has ignored this offer.  See par.4 of the affidavit of John Paul Ryan sworn 7 June 1995.  In view of these matters I order that the respondent pay the applicant's costs of the Application.

I certify that this and the preceding 2 pages are a true copy of the reasons for judgment of the Honourable Justice Sundberg

........ ........ ........ ........ ........ ........ ........ ..

Associate

24 July 1995

Counsel for the Applicant:                  M L Sifris

Solicitors for the Applicant:      Harwood Andrews

Counsel for the Respondent:     P K Searle

Solicitors for the Respondent:    Byrne & Clark

Date of Hearing:  12 July 1995

Place of Hearing:  Melbourne

Date of Judgment:  24 July 1995