Gove Sport Fishing and Diving Charter Pty Ltd v Yeend
[2017] QSC 148
•16 June 2017 (ex tempore)
SUPREME COURT OF QUEENSLAND
CITATION:
Gove Sport Fishing and Diving Charter Pty Ltd v Yeend [2017] QSC 148
PARTIES:
GOVE SPORT FISHING & DIVING CHARTER PTY LTD
(Applicant)
v
SHANE ANTHONY YEEND(Respondent)
FILE NO/S:
No 223 of 2017
DIVISION:
Trial
PROCEEDING:
Originating Application
ORIGINATING COURT:
Supreme Court at Cairns
DELIVERED ON:
16 June 2017 (ex tempore)
DELIVERED AT:
Cairns
HEARING DATE:
16 June 2017
JUDGE:
Henry J
ORDERS:
1. The statutory demand dated 12 April 2017 be set aside pursuant to section 459H of the Corporations Act 2011 (Cth).
2. The respondent pay the applicant’s costs of the application.
CATCHWORDS:
PROCEDURE – MISCELLANEOUS PROCEDURAL MATTERS – MONEY COUNTS – ACCOUNT STATED – where the respondent sought to rely on indebtedness on an account stated
CORPORATIONS – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENERALLY – where the respondent sought to rely on indebtedness on an account stated – whether genuine dispute exists –whether statutory demand should be set aside – where held a genuine dispute as to whom an alleged debt was payable exists – where held that a genuine dispute exists
Corporations Act 2001 (Cth) ss 459G, 459H
Executor Trustee and Agency Co of South Australia Limited v Thompson (1919) 27 CLR 162, applied
Lewis v Wilson and Orr (1997) 42 NSWLR 228, cited
Lockyear v MacCready (1965) 66 SR (NSW) 369, citedCOUNSEL:
C J Ryall for the applicant
M A Jonsson QC for the respondentSOLICITORS:
Gayler Cleland for the applicant
EMT Lawyers for the respondent
HIS HONOUR: The applicant charter fishing business seeks to set aside a statutory demand by a disappointed customer of the business seeking payment of $20,000.
The customer, the respondent, Mr Yeend, arranged a fishing holiday for he and others at Gove, chartering the services of the applicant for which the applicant received three electronic funds transfers totalling $34,938.
Of that total there was one payment of $11,646 from what is likely Mr Yeend’s bank account and the balance was paid from an account named Imagination Entertainment. The connection between that account’s holder, which is likely Imagination Entertainment Proprietary Limited, and Mr Yeend may be that he is the controlling mind of that entity and on the materials is likely its CEO. However, the evidence does not establish that. Nor does it address arrangements as between that entity, Mr Yeend and his entourage regarding who was paying for the trip, whether directly or as an agent, a topic to which I will later return.
It appears the five-day charter was cancelled or abandoned on the third day, probably on or about 18 December 2016, by Mr Yeend and his entourage because of dissatisfaction with the charter service. The affidavit of Mr Yeend verifying the amount of the statutory demand of $20,000 as due and payable to him states, inter alia:
“(2) On 18 December 2016 I entered into discussions with the director of the debtor, Kenneth Bruce Ward, in relation to difficulties experienced as part of the chartered fishing trip arranged by the debtor.
(3) The debtor (by its director, Kenneth Bruce Ward) and I reached a verbal agreement that the debtor would repay the sum of $20,000 paid by me for the provision of the fishing trip immediately upon my travelling party leaving premises managed by the debtor.
(4) On 13 January 2017 I wrote to the debtor on a without prejudice basis and (amongst other things) reiterated the terms of the agreement. I did not receive a response to this letter.
(5) The debt of $20,000 has not been paid and remains due and payable by the debtor as set out in the creditor’s statutory demand.
(6) I believe there is no genuine dispute about the existence or amount of the debt referred to in paragraph 3 of this affidavit....”
Mr Yeend’s without prejudice letter was exhibited to the affidavit of the applicant’s sole director, Mr Ward. That letter begins:
“Ken, as per our handshake agreement you would return $20,000 to our bank account by wire, I am disappointed this has not been received. I am now seeking a full refund.”
The letter is on letterhead styled “Imagination”, a likely reference to the corporate entity I have mentioned. While sent electronically it is said to have been authored by Mr Yeend, describing himself as CEO.
The letter included various complaints about the charter before culminating in a request for payment of $34,938 which, it will be recalled, was the total sum paid. It sought the return of that amount to what Mr Yeend described as “our Imagination account below”. The ensuing account numbers match the above mentioned account named Imagination Entertainment.
Mr Ward’s primary affidavit states, inter alia:
“(9) I refer to paragraph 3 of the affidavit of Mr Yeend. I deny that a binding verbal agreement was reached on behalf of the applicant with Mr Yeend that the sum of $20 000 would be repaid to him as a result of him cancelling the fishing charter trip.
(10) On the third day of the five day trip Mr Yeend became verbally abusive towards me on several occasions and made threats towards me including “See that boat, that will be mine”, while gesturing towards the company’s vessel. This arose because a problem had occurred with the GPS on the vessel which meant that favoured fishing spots were not readily ascertainable on the GPS. This problem could have been fixed without great difficulty. Mr Yeend then said that he was cancelling the trip.”
Two points warrant emphasis about those paragraphs. Firstly, contrary to intimations made for the applicant in submissions, Mr Ward does not depose to any causal link between the abuse and threats alluded to in paragraph 10 with his alleged agreement to repay the sum of $20,000. That is, it is not deposed that Mr Ward’s agreement was involuntary or the product of duress by reason of the alleged abuse or threats. Secondly, Mr Ward’s response to the allegation the agreement was reached, was not to deny a verbal agreement was reached, but to deny a “binding” verbal agreement was reached.
The true import of this cute gloss is, as was necessarily acknowledged by the applicant’s counsel, that the applicant does not dispute the allegation deposed to by Mr Yeend, that the parties did reach a verbal agreement, that the applicant would repay the sum of $20,000. The applicant’s evidentiary approach to supporting the application was therefore spartan to say the least.
The application to set aside the demand made pursuant to s 459G Corporations Act 2001 (Cth) is premised on meeting s 459H’s requirement that I be satisfied “there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates”.
The applicant submitted it was unnecessary for its evidentiary material to advance more evidentiary substance. Its bold reasoning is the assertion in effect deposed to, that the verbal agreement was not “binding”, has objective support given the absence of evidence. The absence of evidence is said to be the absence of evidence of consideration as an element of the agreement. An example of such consideration may have been an agreement that the payment of $20,000 was in final settlement of the dispute between the parties.
In any event, the absence of evidence of consideration, it was submitted, is adequate to satisfy the Court there is a genuine dispute of the kind referred to in s 459H. If the only foundation for the debt demanded was that it was owing pursuant to a contract then, despite the paucity of evidence, I would accept the absence of evidence of consideration sufficiently informs the bare denial as to satisfy the Court there is a genuine dispute.
However, the respondent relies on the agreement as founding a quite different basis of liability for debt than contract, namely, indebtedness on an account stated.
It is important to appreciate the class of accounts stated here relied upon. There are two such classes, as was explained by Brereton J in Lockyear v MacCready (1965) 66 SR (NSW) 369, 374:
“It is generally accepted that there are two classes of accounts stated. One involves no more than an admission of liability for a specified sum. An IOU is a simple instance of this type of account stated. The second type which was probably first identified by Blackburn J (as he then was) in Laycock v Pickles was earlier called an insimul computassent. It occurs where several items of claim are brought into account on either side and set against one another. A balance is struck and the consideration for the promise to pay the balance is the discharge of the items on each side. In such a case the claims which were made the subject of the accounts stated merge in it and no independent action can be brought in respect of any such item.” (citations omitted)
The balance spoken of in the latter class was explained by Isaacs J in Executor Trustee and Agency Co of South Australia Limited v Thompson (1919) 27 CLR 162, 170. It is in consideration of the discharge for the payment of a competing balance, that is, the old debt, that the new balance is agreed to be paid.
However, it is not that second class of accounts stated which is said to arise here. The former class, as Isaacs J observed in Executor Trustee and Agency Co of South Australia Limited v Thompson at 170, is separate from the second and when it operates it will not be conclusive or exclusive of the old debt. His Honour explained as to the first class of account stated that the mere admission of a debt provides the evidence of it, to which, in the circumstances, the law attaches a promise to pay. Thus the very existence of the debt may be inferred from the nature of the admission made and relied upon – see, for example, Lewis v Wilson and Orr (1997) 42 NSWLR 228, 231.
That such a mere admission may be readily rebutted is self-evident. For example, in Chitty on Contracts at p 1748, it is observed of the admission:
“This is merely an admission of a debt out of court and is equivalent to a promise from which the existence of a debt may be inferred. Such an admission is only evidence of a debt and can be rebutted; an item in an account stated of this type can be challenged or explained or the admission can be rebutted by evidence that there was no consideration for the promise to pay. In order to have this evidential effect, the admission of liability must be unqualified and must relate to an existing debt.” [1] (citations omitted)
[1] Chitty on Contracts: Volume 1 General Principles, (29th Ed, 2004) at para 29-191. The author’s reference to rebuttal by evidence that there was no consideration, unsupported by expressly cited authority, is an apparent reference to rebutting evidence advanced on the topic, not merely an absence of evidence.
Even allowing for the ease with which the essentially prima facie effect of the admission of debt may be displaced, for example through evidence of mistake or duress, it is insufficient for the applicant to barely assert he is not bound by his admission in order to satisfy the Court that there is a genuine dispute.
In respect of the legal issues discussed thus far, it can be seen it appeared the application was destined to fail. However, there emerged on consideration of the factual detail before me a quite different issue to be considered. In this context I return to the facts earlier mentioned in relation to who paid the amounts in question and to whom they were to be refunded.
The alleged creditor here is Mr Yeend, not the entity, which is likely Imagination Entertainment Proprietary Limited. As the purported creditor for the purposes of the statutory demand it is implicit in what he deposes that the debt was payable to him. Indeed, he deposes the amount being repaid had been “paid by me”.
In fact, the records of payments exhibited by Mr Ward suggest Mr Yeend paid a considerably lesser sum than $20,000 and the larger amount, exceeding $20,000, was paid by the company of which his without prejudice letter suggests he was CEO. Indeed, the same letter suggests that the alleged agreement was to in fact return $20,000 to the same corporate bank account from which the larger combined amount had come. It follows there is a clear conflict in the evidence as to whether the alleged debt is payable to Mr Yeend, the creditor named in the statutory demand brought by him.
True it is one can pay money via an agent and be repaid via an agent, but the evidence is entirely silent as to whether that is what occurred and was agreed to occur here. This evidentiary conflict is sufficient to satisfy me there is a genuine dispute as to whether the alleged debt is, as demanded, payable to Mr Yeend. A genuine dispute as to whom an alleged debt is payable is necessarily a genuine dispute about the existence of the debt here alleged to be payable to Mr Yeend.
It follows, despite the applicant’s spartan evidentiary approach, that his application meets the admittedly low hurdle required by section 459H and the application ought be granted.
I order as per the amended draft, signed by me and placed with the papers.
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