Golden Era Investments Pty Ltd v Commonwealth Bank of Australia Limited
[2012] VSC 178
•4 May 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2011 07024
IN THE MATTER OF GOLDEN ERA INVESTMENTS PTY LTD (ACN 103 555 219)
BETWEEN:
| GOLDEN ERA INVESTMENTS PTY LTD (ACN 103 555 219) | Plaintiff |
| v | |
| COMMONWEALTH BANK OF AUSTRALIA LIMITED (ABN 48 123 123 124) | Defendant |
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JUDGE: | Gardiner AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 April 2012 | |
DATE OF JUDGMENT: | 4 May 2012 | |
CASE MAY BE CITED AS: | Golden Era Investments Pty Ltd v Commonwealth Bank of Australia Limited | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 178 | |
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CORPORATIONS – External administration - Corporations Act 2001 (Cth) – Application to set aside statutory demand by reason of existence of genuine dispute – Defendant bank deals with bearer cheques in accordance with mandate without notice of impropriety of bearer who was plaintiff’s accountant – No plausible contention requiring investigation – Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms C Pierce | Frenkel Partners |
| For the Defendant | Mr B Carew | HWL Ebsworth |
HIS HONOUR:
On 7 December 2011, the defendant (CBA) served a statutory demand dated 6 December 2011 on the plaintiff (Golden Era).
The statutory demand claims that the sum of $273,057.54 is owing by Golden Era to CBA. The schedule to the demand describes the debt as being the balance due and payable by Golden Era under a loan facility. The demand is verified by an affidavit of Cheong Lee sworn 6 December 2011.
On 22 December 2011, Golden Era made application by originating process pursuant to s 459G and 459H of the Corporations Act2001 to set the demand aside. The basis of Golden Era’s application is that there is a genuine dispute as to its indebtedness to CBA by reason that CBA was obliged to appropriate certain funds of Golden Era towards discharge of the loan facility. Golden Era also contends, that by reason of the circumstances leading up to the making of the demand, it was not appropriate for CBA to serve a statutory demand.
Golden Era relies on affidavits of James Klapanis, sworn 22 December 2011 and 3 February 2012, together with an affidavit of Rita Klapanis, sworn 3 February 2012. CBA relies on affidavits of Andrew Cameron, Colin Almond, and Cheong Wing Lee, all sworn 31 January 2012 and a further affidavit of Mr Almond sworn 7 February 2012.
Golden Era’s Evidence
In November 2010, Golden Era purchased a café business in Chapel Street, Prahran, known as Angelucci’s. The purchase was funded by a loan of $300,000 from CBA which covered the purchase price of $200,000 and payment of a rental bond of $100,000 which was to be held by CBA. The CBA loan was supported by a guarantee given by Mr Klapanis’ wife, Rita Klapanis. It was also secured by a fixed and floating charge dated 27 October 2010 in favour of CBA. Notice of that charge was lodged with ASIC on 4 November 2010.
In May 2011, Golden Era sold the business to GT22 Pty Ltd for $350,000. The purchaser was also required to provide $100,000 to the rental bond and Golden Era would receive the return of the funds it had deposited with CBA for the bond.
Golden Era had engaged the firm of Zaia Arthur and Associates (“Zaia Arthur”) as its accountants in 2008. On 15 May 2011, after Golden Era had signed the contract for the sale of the business, Mr Klapanis met with Robert Zaia, a principal of Zaia Arthur and Bill Jordanou, a finance broker. At that meeting, Mr Zaia told Mr Klapanis that after settlement he would apply the balance of the funds remaining from the proceeds of sale, which were approximately $60,000, in payment of claims of the creditors of Golden Era.
Mr Geoffrey Dunemann of the firm Dunemann Sutherland Pty, was engaged to act on behalf of Golden Era in relation to the sale of business transaction. In that regard, on 18 May 2011, Mr Klapanis signed an irrevocable authority provided to him by Robert Zaia directing Mr Dunemann to pay the sale proceeds as follows:
Golden Era Investments Pty Ltd hereby irrevocably authorises and requests Dunemann Sutherland Pty to disburse the proceeds of sale arising from the sale of Red Egg as follows:
(a)Costs and Disbursements incurred by Dunemann Sutherland Pty in and about the purchase and sale of Red Egg.
(b)$200,000 to Commonwealth Bank of Australia.
(c)Balance of funds to Zaia Arthur & Associates Trust Account.
Although Mr Klapanis’ affidavit deposes that the Irrevocable Authority directed that $200,000 was to be paid to CBA to discharge the CBA loan to Golden Era, it only provides that it be paid to CBA without any specification as to the identity of the account holder to which those funds were to be paid; it did not specify that the funds be paid into Golden Era’s account to discharge the CBA loan.
At the time when the CBA made the loan advance to Golden Era, two bank accounts were established, respectively described as a Business Transaction Account and a Business Loan Account. At the time of the establishment of those accounts, Rita Klapanis, Robert Zaia and Mr Klapanis each signed an authority enabling each of them to operate the account. It is not clear from the terms of the authority whether it relates to only one or both of the accounts. Because the offices of Zaia Arthur then served as the registered office of Golden Era, the statements for the accounts were sent to that address.
Mr Klapanis states that on 16 June 2011, he was telephoned by Bill Jordanou who stated that Mr Klapanis should attend the Commercial Business Lending Branch of CBA in Burwood to collect some documents which were necessary for settlement of the sale. When Mr Klapanis endeavoured to identify with whom he should deal at the CBA branch, he attempted to contact Mr Jordanou and Mr Dunemann by telephone but he was not able to speak with either of them. He then telephoned Zaia Arthur and spoke with Clint Jordanou, an employee. He informed Mr Klapanis that it was no longer necessary for him to go to the CBA’s office in Burwood as a bank manager from CBA had already left the documents at Zaia Arthur’s office.
He then met Mr Zaia at Zaia Arthur’s office. At that meeting, Mr Jordanou attended with a sealed envelope addressed in Mr Jordanou’s handwriting which he requested Mr Klapanis to deliver to Mr Dunemann as the documentation was required for settlement. Mr Klapanis delivered the document to Mr Dunemann’s receptionist and did not open it before doing so.
The settlement of the sale of business transaction occurred on 16 June 2011. At settlement, the solicitors acting for the purchaser provided Dunemann Sutherland Pty with several CBA bank cheques on behalf of the purchaser. Those included a bank cheque for $101,000 payable to CBA or bearer and a cheque for $134,355.44, which was made payable to the trust account of Dunemann Sutherland Pty. The cheque payable to Dunemann Sutherland Pty was paid into that firm’s trust account on 16 June 2011. A cheque for $99,000 was then drawn by Mr Dunemann on the trust account of Dunemann Sutherland Pty in favour of CBA or bearer.
Following settlement of the transaction, a principal of Zaia Arthur, Scott Arthur, took the cheques from Mr Dunemann and told Mr Dunemann that he was going to bank the cheques at a nearby CBA branch.
Mr Dunemann has provided Mr Klapanis with a file note which he composed in respect of the settlement. A business card of an employee of CBA, Andrew Cameron, is stapled to the file note which states:
16.6.11
At settlement + Zaia Arthur
- settled okay
- left guarantee + $101,000 bank chq to CBA with Scott Arthur.
In early July 2011, Rita Klapanis was telephoned by a person who identified themselves as an employee of CBA who told her that the sum of $100,000, being the funds held by CBA as a bond in favour of the landlord for the restaurant premises, had been released. Rita Klapanis was asked to specify into which of the bank accounts of Golden Era the funds should be deposited. She referred the issue to Mr Klapanis for response.
Mr Klapanis then spoke to Robert Zaia, requesting his advice as to which account the funds should be deposited into. Mr Zaia told him that the funds should be deposited into the company’s business transaction account in order that the funds could be used to repay amounts owed to the company’s unsecured creditors. The funds were deposited on 8 July 2011. Subsequent enquiries have revealed that $93,400 of those funds have been disbursed without Mr Klapanis’ authority to third parties who are unknown to him.
It was contended on behalf of Golden Era that the communication from CBA in relation to the rental bond provided some comfort and confirmation from CBA that the sale transaction had proceeded uneventfully. However, there is no evidence to suggest that the bank was aware of the sale of the business or that settlement had taken place. Although the payment was processed through a CBA account, the rental bond repayment was a transaction which only involved the landlord and Golden Era.
On 14 October 2011, CBA sent a letter of demand to Rita Klapanis pursuant to the guarantee, demanding payment of $269,389.94 for the CBA loan which had gone into default, presumably because Golden Era had ceased serving the loan after the settlement. The statutory demand was served on 7 December 2011 on Golden Era at its registered office, which was then located at the office of Zaia Arthur.
Enquiries have revealed that, rather than the $200,000 being applied to discharge Golden Era’s indebtedness under the CBA loan, the cheques, which were bearer cheques, were deposited into a CBA account in the name of BR Investment Group Pty Ltd. Mr Klapanis deposes that the first time that he or his solicitors became aware of this was when the solicitors received a letter from CBA’s solicitors, HWL Ebsworth, on 23 December 2011. In that letter the solicitors for CBA also state, among other things, that the ASIC form 312 which was lodged with ASIC on or about 29 June 2011 which noted the discharge of the fixed and floating charge to CBA, was not signed by a CBA employee and that the irrevocable authority, dated 18 May 2011, directed to Dunemann Sutherland Pty, was never provided to CBA.
Mr Klapanis exhibits a search of BR Investments. It reveals that Robert Zaia is the sole director of that company and its registered office is located at Zaia Arthur in Scoresby.
In mid‑December 2011, Mr Klapanis made a report to the police in respect of what appears to have been a misappropriation of Golden Era’s funds. Since 2 February 2012, it has been in the hands of the Major Fraud Squad.
In her affidavit, Rita Klapanis confirms the matters deposed to by her husband in so far as they relate to her.
CBA’s Evidence
Chiong Wing Lee, who is an employee of CBA, deposes that on 21 June 2011 the CBA bank cheque for $101,000 and the Dunemann Sutherland Pty trust account cheque for $99,000 were presented by the bearer of them at CBA’s Mountain Gate branch. The bearer had endorsed and deposited them into a CBA account in the name of BR Investment Group Pty Ltd. The cheques are exhibited to that affidavit. The bank cheque is made payable to CBA or bearer. On the reverse side the following notation appears in handwriting:
BR Investment Group Pty Ltd
CBA
BSB 063626
Acc: 10483140
The trust account cheque is also dated 16 June 2011 and is made payable to CBA or bearer. It bears an identical endorsement on the reverse side.
In his affidavit, Andrew Cameron, a home loan mobile lending specialist at CBA whose CBA business card somehow came into the possession of Mr Dunemann at settlement, deposes that his responsibilities at the bank do not involve any business lending. He states that the ASIC form 312 described above has been shown to him and that the handwriting on that document is not his. He states that prior to being shown that document he had not heard of Golden Era, nor does he recall being involved in any home loan lending pertaining to Golden Era. Further, he says that the contact details noted on the form 519 give his home fax number (which does not process telephone calls) as being his business hours telephone number and that the email address provided said to be his is not and has never been assigned to or associated with him. He confirms that the signature on the second page of the form is not his signature.
In his affidavits, Mr Almond, who is a solicitor at HLW Ebsworth Lawyers, exhibits certain correspondence and other documentation which is not controversial.
Legal Principles
In the decision of McLelland CJ in Eyota Pty Ltd v Hanave Pty Ltd,[1] one of the earliest authorities considering the legal principles to be applied in applications under s 459G of the Act the issue, His Honour stated:[2]
It is, however, necessary to consider the meaning of the expression ‘genuine dispute’ where it occurs in s 450H (sic). In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sorts of considerations as the ‘serious question to be tried’ criterion which arise on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit ‘however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be’ not having ‘sufficient prima facie plausibility to merit further investigation as to [its] truth …’.
[1](1994) 12 ACSR 785.
[2](1994) 12 ACSR 785, 787 (citation omitted).
In Powerhouse Australasia Pty Ltd v Viarc Pty Ltd,[3] Dodds‑Streeton J observed at paragraph 49:
The dispute or offsetting claim should, as has been recognised, have some objective existence, and the [plaintiff] bears the onus of establishing the genuineness of the dispute or offsetting claim.
[3][2006] VSC 508.
In the decision of the Full Court of the Federal Court of Australia in Spencer Constructions Pty Ltd v G&M Aldridge,[4] it was observed that: [5]
For a genuine dispute to exist, it must be ‘a bona fide and truly existing fact’, and the grounds for alleging its existence must be ‘real and not spurious, hypothetical or misconceived.’ The dispute should have sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile.
[4](1997) 76 FCR 452 (“Spencer”).
[5]Spencer (1997) 76 FCR 452, 454.
In Panel Tech Industries (Australia) Pty Ltd v Australian Skyreach Pty Ltd (No. 2),[6] Barrett J observed:
Once the [plaintiff] shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The Court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger.
[6][2003] NSWSC 896, [18].
In JJMMR Pty Ltd v LG International Corporation,[7] the Court of Appeal of the Supreme Court of Queensland described the task of the Court as being to decide whether there is a dispute or offsetting claim “such as would warrant subsequent adjudication”.
[7][2003] QCA 519.
In Yoogalu Pty Ltd v Intentia Australia Pty Ltd,[8] Barrett J observed:[9]
[The Court’s] sole function is to determine whether or not the state of account between the parties is (as to the particular matters referred to in s 459H(1)) so clear cut and uncontroversial that non payment of the sum demanded by the defendant should, entirely of itself and without further enquiry, mean that the plaintiff must, in a subsequent winding up proceeding, be regarded as insolvent unless it can itself affirmatively prove its solvency.
[8][2006] NSWSC 278 (“Yoogalu”).
[9]Yoogalu [2006] NSWSC 278, [32].
In my view, despite the submissions of counsel for Golden Era, Ms Pierce, Golden Era has not identified a plausible contention which requires investigation such as to give rise to a genuine dispute within the meaning of s 459G. In particular, I do not consider that there has been a breach of any contractual or tortious duty by CBA. The cheques, which were bearer cheques, enabled the bearer to direct that the funds be paid into the account of BR Investment Group Pty Ltd. Section 22 of the Cheques Act 1986 provides:
Cheques payable to bearer
Where a cheque is not payable to order, the cheque:
(a)is a cheque payable to bearer; and
(b)shall be taken to require the drawee institution to pay the sum ordered to be paid by the cheque to bearer.
The actions of the bearer, apparently Mr Arthur, were not such in my view to put CBA on enquiry and even if the bank queried his identity, an enquiry in that regard would have revealed that Mr Arthur was a principal of Golden Era’s accountants and that his partner, Mr Zaia was a signatory to one or other of Golden Era’s accounts with CBA.
There is no evidence that CBA knew of the settlement, nor was it put on notice of the irrevocable authority directed to Mr Dunemann in respect to disbursement of the funds or that it had any involvement in the subject transactions other than to follow the mandate on the face of the two cheques. Even if it had been provided with notice of the irrevocable authority, it would have merely informed CBA that Mr Dunemann was directed to pay the funds to CBA.
In order for there to be a plausible contention requiring investigation so as to give rise to a genuine dispute in these circumstances, Golden Era must identify some aspect of the bank’s involvement which gives rise to culpability on its part and on the evidence I do not consider it can. So far as Golden Era is concerned, the events are most unfortunate but my task in this application is to identify as to whether there is any basis giving rise to a genuine dispute in respect of the debt the subject of the demand. The factual scenario appears to give rise to potential proceedings against other parties but extraordinary as the circumstances seem to be, they do not in my view give rise to a basis for a genuine dispute between Golden Era and CBA.
Ms Pierce also submitted that by reason of the circumstances leading up to the making of the demand that it was not appropriate for CBA to serve the demand. I do not agree. Under the statutory demand scheme of the Act, her client is afforded the opportunity to demonstrate the existence of a genuine dispute, offsetting claim or other basis to set the demand aside, which it has availed itself of but without success.
The application should be dismissed with costs, including reserved costs.
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