Goldberry P/L v Traleeridge P/L (Formerly Blackburn & Lockwood Sales P/L)
[1994] FCA 104
•11 MARCH 1994
GOLDBERRY PTY LTD and TRALEERIDGE PTY LTD
No. VG3363 of 1993
FED No. 104/94
Number of pages - 10
Corporations Law
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
OLNEY J
CATCHWORDS
Corporations Law - statutory demand - application to set aside - genuine dispute as to part of debt claimed - offsetting claim - substantiatedamount in excess of statutory minimum - variation of statutory demand.
Corporations Law, s 459G, s 459H.
HEARING
MELBOURNE, 28 February 1994
#DATE 11:3:1994
Mr J. Nolan (instructed by Carew Counsel Pty Ltd) appeared for the applicant.
Mr S.F. Marantelli (instructed by Wisewoulds) appeared for the respondent.
ORDER
THE COURT:
1. ORDERS that the statutory demand served on the applicant by the respondent on 14 October 1993 be varied by substituting for the amount of the debt claimed therein, the sum of
$55,060.
2. DECLARES that the said statutory demand is to have effect as so varied as from the date when the demand was served on the applicant.
3. ORDERS that the applicant pay the respondent's costs of the application including any reserved costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
OLNEY J This is an application pursuant to s 459G of the Corporations Law in which the applicant seeks an order setting aside a statutory demand served pursuant to s 459E on 14 October 1993.
The application and a supporting affidavit were filed on 3 November 1993, within a period of 21 days after service of the demand. There is no evidence as to the service of the application and affidavit on the respondent but as no issue has been taken concerning late service it can be assumed for present purposes that service was effected within the time limited by s 459G(3) and that the application has been made in accordance with s 459G.
The applicant says that the debt claimed by the respondent is disputed and that the applicant is not indebted to the respondent in the amount claimed or at all.
In advance of the return date the respondent filed and served an extensive affidavit in response to the application and to the matters raised in the applicant's supporting affidavit.
Upon the return of the application on 9 December 1993 both parties appeared and by consent orders were made for the filing of further affidavit material on both sides. The matter was adjourned to 9 February 1994 with costs reserved.
When the application came on for hearing on 9 February 1994 the applicant sought an adjournment. The applicant had not filed any further affidavit material in accordance with the order made on 9 December 1993 but its solicitor said in an affidavit that it intended doing so and gave some details of the difficulties that had been encountered. An adjournment was granted to 23 February 1994 and further orders were made for the filing of affidavits. The applicant was ordered to pay the costs of the adjournment.
In order to facilitate the prompt hearing of the application, the hearing date was subsequently altered to 28 February 1994, when the matter was heard in full and judgment was reserved.
THE ISSUES
8. The applicant's case has two arms: first, the applicant says that there is a genuine dispute as to its liability to the respondent for the debt claimed; and second, it is said that even if it is indebted to the respondent, it has an offsetting claim of an amount sufficient to eliminate any liability to the respondent or at least to reduce it below the statutory minimum (presently $2,000).
It will be convenient to demonstrate how these issues arise by reference to the statutory demand and the supporting affidavit filed with the application.
In the statutory demand the respondent claimed the sum of $96,341, a debt which is described in the demand as commission due on the sale of apartments 1-85, 151-155 Fitzroy Street St Kilda between the period 16 November 1992 and 31 July 1993.
The supporting affidavit filed with the application was sworn by Julian Francis Counsel (Counsel) the applicant's solicitor on 3 November 1993. It will be necessary to refer later in more detail to some aspects of this affidavit but for the present it will be sufficient to summarise the general thrust of what is deposed to.
It is said that the respondent's demand is made as a result of an agreement between the parties relating to the sale by the respondent of 86 residential and 4 commercial units under construction by the applicant at its development known as "The Majestic Apartments", 151-155 Fitzroy Street St Kilda (the Majestic project). At the date of the affidavit 37 of the units remained unsold. The deponent says that he is instructed that in about May/June 1993 one Demarco (of the respondent) approached one Richards (of the applicant) and proposed selling the unsold units in Hong Kong. It is said that Demarco represented to Richards that he would be able to sell in excess of 80% of the unsold units in Hong Kong. Richards agreed to the sale of the units in Hong Kong and a subsequent marketing agreement was entered into. Counsel says that Richards instructs him that at all times he (Richards) considered he was dealing with the estate agents engaged by the applicant to sell the units (the respondent). Upon demand being made by the respondent in August 1993 for payment of commission, Counsel replied on behalf of the applicant, disputing the amount of commission claimed and alleging that as a result of the representation made by Demarco concerning the sale of units in Hong Kong the applicant had incurred expenses amounting to $70,150.50 for which sum, together with damages, the applicant intended to hold the respondent liable. In correspondence in reply, the respondent's solicitors re-asserted the claim for commission and denied any misrepresentation. They also pointed out that the agency agreement relating to the sale of units in Hong Kong was with a different entity. On the basis of the foregoing, the issues raised by the application relate to:
(a) the quantum of the applicant's liability for commission,
(b) the question of whether any misrepresentation was made by or on behalf of the respondent, and
(c) whether, if there was any misrepresentation, the respondents are liable to the applicant for any sum by way of an
offsetting claim.
The affidavit material filed subsequent to the original affidavit in support has addressed these various issues and it will be convenient to refer to it in the sequence in which the affidavits were filed.
THE AFFIDAVIT EVIDENCE
14. The main affidavit relied upon by the respondent is that of Anthony Charles Demarco (Demarco) sworn 2 December 1993.
In response to Demarco's affidavit the applicant filed affidavits of Casey James Binns sworn 16 February 1994, Stephen John Briffa sworn 17 February 1994 and a further affidavit of Counsel sworn 16 February 1994.
The respondent exercised its right to file further material in reply which took the form of affidavits of Demarco sworn 21 February 1994 and of Vass Harry Poleri sworn 22 February 1994.
a) Anthony Charles Demarco (2 December 1993)
17. The affidavit asserts the following: Demarco is general manager of the respondent, a company which was incorporated on 27 April 1990 under the name of Provincial Laine Pty Ltd but which has since changed its name first (on 28 May 1990) to Blackburn and Lockwood Sales Pty Ltd, and then (on 1 September 1993) to Traleeridge Pty ltd. The respondent has a current estate agent's licence and Demarco is a licensed sub-agent. On 16 November 1992 the applicant and the respondent executed an exclusive sole agency agreement in respect of the Majestic project. Under the agreement commission was to be charged at the rate of $2,000 for each one bedroom apartment sold, $3,000 for each two bedroom apartment, and $4,000 for each three bedroom apartment. Provision was made for a budget of $68,632 for advertising costs and expenses. The sum of $3,000 per month was to be paid by the applicant in advance by way of a management fee, but the amount so paid was to be rebated against commission. It was further agreed that commission was to be paid as to 25% upon the approval of the purchaser's finance; as to a further 25% in July 1993 and as to the remaining 50% upon settlement of the sale of the apartment in question. (In a subsequent affidavit agrees that his reference to the approval of the purchaser's finance is incorrect). As each apartment was sold the applicant's solicitors prepared a contract of sale in which the respondent (then Blackburn and Lockwood Sales Pty Ltd) was named as the vendor's agent.
Prior to the agreement of 16 November 1992 being signed Richards on behalf of the applicant requested one Briffa (then the respondent's director of sales and marketing) to engage conjunctional selling agents, which the respondent agreed to on the basis that any conjunctional agent would be entitled to the full REIV scale of commission.
In May 1993 the applicant and the respondent agreed to a new fee structure which is set out in a letter dated 28 May 1993. The respondent's claim is for total commissions of $114,341 less $18,000 paid by way of management fees over a period of six months. The commissions claimed have been calculated in accordance with the prevailing agreements between the parties. Full particulars of the sums claimed are referred to in correspondence between the parties exhibited to Counsel's affidavit of 3 November 1993.
Demarco denies that it was ever represented to the applicant that the respondent would sell 80% of the remaining units in Hong Kong. In any event, he says that any representation made in that context would have been made on behalf of Blackburn and Lockwood Project Marketing Pty Ltd, a company of which he is a director. Blackburn and Lockwood Project Marketing Pty Ltd was incorporated on 11 February 1992 under the name of Blackburn and Lockwood Financial Services Pty Ltd and changed to its present name on 24 May 1993.
Early in 1993 Richards showed Demarco an information booklet concerning a new development known as "The George" (the George project) which was a cinema, car park, retail and residential complex at 133-137 Fitzroy Street St Kilda being developed by another company in which Richards was interested. Demarco and Briffa suggested to Richards that the George project might be marketed through their overseas contacts in Hong Kong, and offered to arrange an introduction between Richards and those connections. Later Demarco met Richards and his financial adviser, one Murphy, in Hong Kong and there introduced them to a Mr Yuen and Mr Poon being respectively the managing director and a director of Cosmo King Investments Company Limited (Cosmo King) which traded as "Austwide PRD" and "Austwide Investment Consultancy" in Hong Kong. In discussion with Yuen and Poon, Richards and Murphy said they might also engage Cosmo King to market the unsold balance of the Majestic apartments. Cosmo King later produced a marketing campaign proposal in relation to the Majestic and the George projects. On 13 May 1993 Richards told Demarco and Briffa that he had decided to appoint Cosmo King to market and sell both the Majestic and the George in Hong Kong. On 26 May 1993 at a meeting between the applicant, Cosmo King and the respondent and their respective solicitors a draft project agreement was handed to the applicant's solicitor by the respondent's solicitor. By separate letters dated 10 June 1993 the applicant and Project George Pty Ltd (the developer of the George project) authorised Blackburn and Lockwood Project Marketing Pty Ltd (BLPM) to appoint Austwide Investment Consultancy to be the exclusive consultants involved in the marketing and selling of the Majestic and George projects (respectively) overseas and for Austwide to advertise according to an agreed marketing budget. On 23 June 1993 separate agreements were executed by the applicant and Project George Pty Ltd with BLPM and on the same date BLPM executed separate marketing agreements with Cosmo King in relation to the Majestic and the George projects.
Finally, Demarco says that the marketing and sale of the apartments in Hong Kong had nothing to do with the respondent nor was it ever represented that it had anything to do with it.
b) Casey James Binns (16 February 1994)
23. Binns says he was employed as a sales consultant by the respondent from August 1992 until 31 July 1993 and was predominantly involved during 1993, until his services were terminated, in respect of the applicant's project, by which I take him to mean the Majestic project. In direct response to Demarco's denial that he had said he "would sell 80% of the remaining units in Hong Kong for the applicant", Binns says that he recalls attending a meeting with Demarco at an architect's office at 155 Fitzroy Street St Kilda at which Richards was present. (Presumably, although it is not stated, Demarco was also present). Binns says that at the meeting Demarco said to Richards "I believe I have sufficient contacts to sell 80% of the project in Hong King". He says further that Demarco made the same statement to Richards in his (Binns') presence on other occasions, the precise dates and times of which he is unable to recall.
c) Stephen John Briffa (17 February 1994)
24. Briffa has already been identified in Demarco's affidavit. His present employment is with Blackburn and Lockwood Essendon (which has no connection with the respondent). He worked for the respondent from about 23 March 1991 to 30 July 1993. Briffa disputes Demarco's evidence concerning the payment of commission. He says that 25% of the total commission was to be payable when the applicant obtained its construction finance approval for the construction works to be completed, and that the balance of the commission was payable on the settlement of each apartment. As to the amount of the commission claimed by the respondent, Briffa says that on his calculation the total due for all sales made was $108,310. He exhibits to his affidavit a computer printout showing what he says are the proper calculations of the amount due. It is said that the amount claimed by the respondent fails to take into account shared commission and varying commission rates payable in accordance with the letter of 28 May 1993 referred to in Demarco's affidavit. The balance of Briffa's affidavit touches upon matters which are not relevant to the current proceedings.
d) Julian Francis Counsel (16 February 1994)
25. Counsel's affidavit exhibits what is said to be notification from the Office of Titles in respect of the registration on 20 December 1993 of Stages 1 and 2 of the plan of subdivision relating to the Majestic project. The document exhibited in fact refers only to Stage 2. Counsel further says that Stages 3 and 4 of the plan of subdivision had not been lodged at the Office of Titles at the date of swearing his affidavit. He then gives particulars of the unit numbers of 19 units in respect of which settlement has not been effected and of these he says "the majority are in Stages 3 and 4 of the subdivision and are not anticipated to settle until late March 1994".
e) Anthony Charles Demarco (21 February 1994)
26. Reference will be made only to such parts of this affidavit as touch upon matters relevant to these proceedings. Demarco agrees with Briffa that the first 25% of the selling agent's commission was to be payable on approval of the construction finance and not on approval of the purchaser's finance as stated in his affidavit of 2 December 1993. Apart from that he joins issue with Briffa on the question of when the remaining 75% of the commission is payable. He re-asserts his earlier evidence that the second 25% increment was due in July 1993 and the balance due on settlement. As to the computer printout exhibited to Briffa's affidavit, he says that he had not seen it before reading Briffa's affidavit and that it does not emanate from the respondent's computer or other records. Further, he says that the particulars of commissions from which the calculation of $114,341 was made was in fact prepared by Briffa. Demarco also takes issue with the assertion that the records relied upon to produce the figure of $114,341 did not take into account share commissions and varying commission rates payable. He gives particulars of commissions payable in respect of 29 sales which have been settled to the date of his affidavit and calculates the net amount due (after deducting $18,000 paid by way of management fee) as $55,060. This amount does not take into account any payment in respect of sales which have not been settled.
In response to Binns' affidavit Demarco denies that he gave an assurance that BLPM would sell 80% of the apartments off-shore. He says that he told Richards that on the basis of past experience he believed that Cosmo King may be able to sell up to 70% or 80% of the apartments overseas.
f) Vass Harry Poleri (22 February 1994)
28. Poleri says that during 1993 he attended a luncheon in Hong Kong which was also attended by Counsel, Poon, Demarco and two other males one of whom he believes was Richards. He says that during the luncheon Poon said that he believed Austwide could successfully market the Majestic and the George projects in Hong Kong, however, he also said words to the effect that Austwide had not marketed any Melbourne projects and that he was unsure of how a Melbourne project would sell on the Hong Kong market. The deponent cannot recall any suggestion made in his presence that there was an absolute guarantee or assurance that Austwide would be able to sell any of the apartments in Hong Kong.
FINDINGS
(a) The amount of commissions due:
29. Before serving the statutory demand the respondent sent the applicant a schedule showing details of the total sum of $114,341 which it said was its entitlement for sales completed to that date (10 August 1993). At the time it claimed 25% of that amount less $18,000, i.e. a net sum of $10,585.25.
The amount claimed in the statutory demand is $96,341 which is the difference between $114,341 and $18,000.
Briffa has questioned the accuracy of the total claim for $114,341 and has supplied alternative figures. However, he has not attempted to explain either the source of his figures or the basis of his calculations. On the other hand, Demarco says (and it has not been denied) that the figures the respondent relies upon were prepared by Briffa.
There is a clear dispute as to whether the arrangement for payment of the commission was as the respondent says (25% on approval of construction finance, 25% in July 1993 and the balance on settlement) or as Briffa asserts (25% on approval of construction finance and 75% on settlement). There is no objective evidence that enables me to resolve this dispute, and in the absence of cross-examination I am unable to form a view of the credibility of the witnesses who have sworn affidavits. There is in my opinion a genuine dispute as to the amount of the debt due and payable by the applicant to the respondent for commissions due in relation to the sale of units in the Majestic project. But there is no genuine dispute in respect of the 29 sales that have been settled. The respondent has become entitled to a net sum of $55,060 after allowing credit for $18,000 paid as management fees. This sum is clearly due and payable by the applicant to the respondent.
(b) The Offsetting claim
33. The evidence adduced by the applicant does not support the applicant's assertion concerning the alleged representation made by Demarco.
In Counsel's first affidavit (sworn 3 November 1993) he says that he is instructed by Richards that Demarco represented that he would be able to sell in excess of 80% of the 37 unsold Majestic units in Hong Kong. The only other evidence on the applicant's side on this issue is Binns's statement that Demarco said to Richards "I believe I have sufficient contacts overseas to sell 80% of the project in Hong Kong". Binns is apparently referring to the sale of 80% of the whole Majestic project whereas according to Counsel, his instructions from Richards were that the discussion related to the 37 unsold units. In any event, accepting Binns' evidence on its face value, the mere statement of a belief as asserted by him falls far short of the sort of representation upon which the applicant could hope to mount any claim against either Demarco or the respondent. It is unnecessary to consider whether at the time Demarco was speaking on behalf of the respondent or on behalf of BLPM.
But perhaps the most telling fact against the offsetting claim is the failure of Richards to give evidence in the proceedings. When the applicant sought an adjournment on 9 February 1994 it relied upon an affidavit sworn by Counsel on 8 February 1994 in which he said that further affidavits were to be relied upon including affidavits sworn by Briffa, Binns and Richards. As to the latter he said:
Mr Richards is currently on annual leave and is unable to swear any further affidavits of (sic) behalf of the applicant"
And in his further affidavit (sworn 16 February 1994) Counsel said:
Mr Garry Richards of the applicant is currently on annual leave and I verily believe he does not return to Australia until Monday, 21 February 1994.
Accepting for present purposes that all that Counsel says on the matter is true, it is inconceivable that some attempt was not made to obtain an affidavit from Richards either before he left Australia, or after his return, or indeed during his absence. To suggest, as was suggested on the applicant's behalf, that as Richards' return from overseas was after the date set for the filing of the applicant's affidavits, it was not possible to file an affidavit by him, is to seek to take refuge in a mere technicality. No application was ever made to obtain leave to file such an affidavit. I do not accept the explanation given for the failure of the applicant to adduce evidence from Richards. He was the person best able to testify to the facts which lie at the very basis of the applicant's offsetting claim. In the circumstances I draw the inference that his evidence would not have supported the applicant's case. As the other evidence on this issue does not support the facts alleged against the respondent, I have no hesitation in finding that the applicant has no basis to claim to have an offset against its liability to the respondent. There is therefore no purpose in dealing with the further question of whether the respondent or some other entity is liable.
CONCLUSION
38. I am satisfied that there is a genuine dispute between the applicant and the respondent about the total amount of the debt claimed in the statutory demand but as to part thereof, namely the sum of $55,060 I am satisfied there is no genuine dispute and that the same is due and payable. Accordingly, the sum of $55,060 is to be treated as the admitted amount for the purposes of S 459H of the Corporations Law.
I am further satisfied that the applicant has no offsetting claim against the respondent and accordingly the amount of the offsetting total for the purposes of s 459H is nil.
Applying the formula in s 459H(2) I calculate the substantiated amount of the demand as $55,060. I order, pursuant to s 459H(4) that the statutory demand served on the applicant on 14 October 1993 be varied by substituting for the amount of the debt claimed therein the sum of $55,060 and declare the demand to have had effect as so varied as from when the demand was served on the applicant.
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