Gulf Heavy Minerals Ltd v Toliver Pty Ltd
[2011] WASC 82
•1 APRIL 2011
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: GULF HEAVY MINERALS LTD -v- TOLIVER PTY LTD [2011] WASC 82
CORAM: ACTING MASTER CHAPMAN
HEARD: 24 JANUARY 2011
DELIVERED : 1 APRIL 2011
FILE NO/S: COR 130 of 2010
BETWEEN: GULF HEAVY MINERALS LTD
Plaintiff
AND
TOLIVER PTY LTD
Defendant
FILE NO/S :COR 184 of 2010
BETWEEN :GULF HEAVY MINERALS LTD
Plaintiff
AND
ALEXANDER NEGOESCU
Defendant
Catchwords:
Corporations Act 2001 (Cth) - Set aside a statutory demand - Turns on own facts
Legislation:
Nil
Result:
Statutory demand set aside
Category: B
Representation:
COR 130 of 2010
Counsel:
Plaintiff: Mr R A C Cullen
Defendant: Mr G R Dean
Solicitors:
Plaintiff: Cullen Babington Hughes
Defendant: Richard Rowick
COR 184 of 2010
Counsel:
Plaintiff: Mr R A C Cullen
Defendant: Mr G R Dean
Solicitors:
Plaintiff: Cullen Babington Hughes
Defendant: Richard Rowick
Case(s) referred to in judgment(s):
Hotncold Pty Ltd v Hawk Construction Services Pty Ltd [2006] WASCA 45
Westrade Pty Ltd v Franchised Food Company Pty Ltd [2010] WASC 231
ACTING MASTER CHAPMAN:
The application - COR 130 of 2010
The plaintiff on 30 July 2010 filed an originating process seeking to set aside a statutory demand dated 9 July 2010. It is fair to say the application has limped along since that date. Several programming orders have been made, the last being on 11 November 2010 requiring the plaintiff to file and serve written submissions by 2 December 2010. The plaintiff failed to do so and did not file the submissions until 29 December 2010 without any explanation for the delay.
The law
The statutory framework in which such an application is to be considered is succinctly outlined in the decision of McLure JA (as she then was) in Hotncold Pty Ltd v Hawk Construction Services Pty Ltd [2006] WASCA 45 [10] ‑ [15] where her Honour said:
Section 459G gives the company the power to apply to a court for an order setting aside a statutory demand under specified circumstances. Section 459H concerns the determination of the application where there is a genuine dispute or offsetting claim. It materially provides:
'(1)This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:
(a)that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;
(b)that the company has an offsetting claim.'
Subsection (2) of s 459H requires the Court to calculate the substantiated amount of the demand in accordance with the formula 'Admitted total' less 'Offsetting total'. Admitted total is relevantly defined as the admitted amount of the debt (s 459H(2)).
Admitted amount is defined in s 459H(5) to mean:
'(a)if the Court is satisfied that there is a genuine dispute between the company and the respondent about the existence of the debt-a nil amount; or
(b)if the Court is satisfied that there is a genuine dispute between the company and the respondent about the amount of the debt-so much of that amount as the Court is satisfied is not the subject of such a dispute; or
(c)otherwise-the amount of the debt.'
Offsetting total is relevantly defined as the amount of the offsetting claim (s 459H(2)). Offsetting claim means a genuine claim that the company has against the respondent by way of counterclaim, set-off or cross-demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates): s 459H(5).
If the substantiated amount (that is, the amount not in dispute) is less than the statutory minimum, the Court must set aside the demand (s 459H(3)). If the substantiated amount is at least as great as the statutory minimum, the Court may make an order varying the demand (s 459H(4)).
Thus, if the Court is satisfied that there is a genuine dispute or an offsetting claim it must calculate the substantiated amount: s 459H(2). However, s 459H is subject to s 459J. Section 459J(1) provides:
'[O]n an application under section 459G, the Court may by order set aside the demand if it is satisfied that:
(a)because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or
(b)there is some other reason why the demand should be set aside.'
The evidence
Counsel for the defendant raised objections to a number of affidavits filed by the plaintiff and I will deal with each in turn.
Affidavit of Brian Michael Moore sworn 29 July 2010
Paragraph 13
Objection is taken to the last four words of this paragraph on the basis that they are a conclusion of law and unsupported. I agree with this submission.
Paragraph 17
The objection is conceded by counsel for the plaintiff.
Affidavit of Brian Michael Moore sworn 3 December 2010
Paragraph 10
The sentence about halfway down which commences with the words 'Mr Spence purported to use' is objected to on the basis that it is either argumentative or speculative. I agree and would uphold the objection.
Paragraph 17
All but the first sentence of this paragraph is objected to. I would uphold the objection.
Affidavit of Brian Michael Moore sworn 24 December 2010
Paragraph 4
Objection was taken to the last sentence of this paragraph. Counsel for the plaintiff conceded this point and those words will be struck out.
Counsel for the plaintiff objected to some of the material contained in the affidavit of Alexander Negoescu sworn on 17 September 2010. The objections related to pars 55 ‑ 63, the main objection is on the basis that this is hearsay. These paragraphs refer to annexures AN20 ‑ AN24. In my view those emails speak for themselves and should stand on their own without comment from Mr Negoescu. I will allow pars 55, 58, 59, 60 and 63 to remain to the extent that they identify certain annexures, otherwise I would strike out these paragraphs.
At the hearing, counsel for the defendant handed up a document which purports to be a Notice of Termination of Joint Venture. The document appears to be dated 29 July 2010 and counsel for the defendant advised this was produced by consent, as the defendant wished to rely upon recital F of that document. Given the way in which this document was presented to the court I consider little weight should be placed upon it.
Evidence and reasons
The statutory demand and the supporting affidavit refer to the funds claimed as a loan by the creditor to the company. Surprisingly, the affidavit filed by the plaintiff in support of the application did not annexe the relevant statutory demand nor the supporting affidavit. The statutory demand and the supporting affidavit is annexed to the affidavit of Mr Negoescu as annexure AN 26.
There is no dispute between the parties that funds were deposited in an account of Mr Moore and possibly his wife. What is far from clear is:
1.who advanced the monies, ie Mr Negoescu or one of his entities;
2.to whom the funds were advance, ie Mr or Mrs Moore or some other entity;
3.for what purpose were the funds advance.
Mr Moore contends the moneys were advanced for the purpose of a joint venture and the funds were not repayable on demand or by the plaintiff.
Mr Negoescu contends the funds were a loan by the defendant to the plaintiff. This does not appear to be consistent with his use of the term investment in his email of 23 June 2010 to Mr Moore. See annexure BM2 of the affidavit of Mr Moore sworn 29 July 2010. Nor does it seem consistent with the emails referred to in annexure AN24 of the affidavit of Mr Negoescu. This annexure consists of an exchange of emails initially between Rose Pin of DFK Port Accounting and Frances Moore. The relevant emails were sent over a period between 29 April and 31 May 2010. These appear to have been copied to Mr Moore and Mr Negoescu. Admittedly the emails were not from Mr Negoescu but it would appear copies were sent to him and there is no evidence that he disagreed with their contents.
Counsel for the defendant argues there is no dispute that monies were paid and received, they have not been repaid and that the joint venture is at an end. He argues that if the monies were advanced to the joint venture they would be repayable as the joint venture has been terminated.
With respect, I think that puts it far too simply. Firstly, on what is before me I am not satisfied any joint venture which may have been entered into has been terminated. Secondly, even if it has, who would be liable for any costs associated with the joint venture whilst it was on foot? On the evidence before me, I do not know the answer to these questions.
In the affidavit of Mr Kathal Kester Spencer sworn 16 August 2010 he states at par 2:
DFK are or were formerly accountants to:
2.1.Alexander Negoescu:
2.2.Toliver Pty Ltd;
2.3.Barcoo Pty Ltd;
2.4.Gulf Heavy Minerals Limited; and
2.5.Brian Moore.
I accept he so acted but it is far from clear on the evidence before me on whose behalf DFK Port Accounting acted at any given time. This evidence is of some importance as it appears to me the interests of the parties may have been in conflict from time to time.
Counsel for the defendant puts forward an alternative argument in relation to a sum of $64,095.47, which he says was sent by the defendant to acquire an interest in a diamond mine. Whilst I accept this money was sent to Mr Moore, it is not clear on the evidence that it was (1) sent by the defendant, (2) received by the plaintiff, (3) loaned to the plaintiff, repayable on demand. Again, I do not consider things are as simple as suggested by counsel for the defendant.
Having considered the evidence before me, I am of the view that there is a genuine dispute as to the total amount claimed in the statutory demand and thus I would set it aside.
The defendant contends that if I were to find there is a genuine dispute about the amount claimed in the statutory demand, then the statutory demand should be set aside on condition by reason of (par 25 defendant's submissions dated 24 December 2010):
25.1the poor quality of Gulf's evidence;
25.2The improbability of Mr Moore's assertions that, notwithstanding that the HOA had not been completed and executed, that Barcoo did not exist as a legal entity, that Newco had not been incorporated, that none of the key provisions of the HOA were effective, he had been sounding out various investment opportunities on behalf of the joint venture he alleges during his time in South Africa between February 2009 and June 2010 if Gulf was not the joint venture company;
25.3the absence of any dispute that the monies claimed were advanced by Toliver to the Moore account;
25.4the failure of Mr Moore to provide, in his affidavit, a full and frank account as to the use of the funds and the 'various investment opportunities' he says he investigated on behalf of the joint venture;
25.5the fact that the consideration for which the funds were provided has wholly failed;
the Court should have significant doubt whether the contest between the parties will eventually be found in favour of Gulf and should not leave Toliver to pursue common law debt proceedings on a speculative basis.
I was referred to the decision of Westrade Pty Ltd v Franchised Food Company Pty Ltd [2010] WASC 231, where I held that the statutory demand in that case should be set aside on condition. There were particular circumstances in that case which I considered warranted such an order. In the case before me now, I do not consider the circumstances are such that would warrant any condition being imposed.
COR 184 of 2010
On 28 October 2010, the plaintiff filed an originating process, seeking to set aside a statutory demand dated 17 September 2010. According to the court record, no affidavit in support has been filed in this matter. I have, however, located a copy of two affidavits of Mr Moore, one sworn on 27 October 2010 and the other on 1 November 2010. They appear to be identical. The affidavits refer to a statutory demand dated 17 September 2010, but no copy is annexed.
Paragraph 1 of the affidavits states:
I swear this affidavit in support of the Plaintiff's application to set aside the statutory demand dated 17 September 2010 and issued by the Plaintiff against the Defendant on or about 7 October 2010.
It is not clear to me when the statutory demand was served and, thus, whether the application to set the statutory demand aside was filed in the requisite time. At the hearing of the special appointment, counsel for the defendant indicated that he did not take this point. As this goes to a question of jurisdiction, it is not clear that counsel could make such a concession and it highlights the unsatisfactory way in which this matter has proceeded.
I was told by counsel that there had been an agreement between the parties that the evidence filed in COR 130 of 2010 would be relied upon in this matter. I would have thought that that is a matter which should have been the subject of an order of the court, but given that neither party was embarrassed or prejudiced by relying upon that evidence, I proceeded to hear the matter on that basis.
On 11 November 2010, Master Sanderson made certain programming orders, including an order that mediation take place. So far as I can tell, none of those orders were complied with, but as the parties came prepared to argue the matter, I have proceeded to hear it, notwithstanding the orders that had previously been made.
The relevant statutory demand and supporting affidavit are annexed to the affidavit of Mr Negoescu sworn 26 November 2010 as AN 1. This also is said to be moneys loaned, but on this occasion by Mr Negoescu to the plaintiff. Again, there is no dispute that the $50,000 was paid, but the plaintiff claims the amount was for the purpose of the defendant investing in shares. Counsel for the defendant contends that par 53 of the affidavit of Mr Negoescu sworn on 17 December 2010 in COR 130 of 2010 supports this. The paragraph reads:
I admit that it was discussed with Brian Moore and agreed that moneys advanced by me to the plaintiff would be repaid on the sale of a project or floating of the company. I never agreed, however, that should there be an unforseen event I would not be able to recover my funds. To the contrary, Brian Moore offered to indemnify me as referred to in paragraph 4.5 above.
It is further submitted that the exchange of emails found at AN 22 of the same affidavit supports this contention. The last paragraph of that email dated 19 November 2009 addressed to, amongst others, Mr Negoescu reads:
After discussions with Kathal, my understanding is that Alex's investment of $50000, currently being presented as a loan, was in fact a capital investment to be represented by ordinary shares. I would be very grateful if you would confirm the shareholdings and numbers and the status of the $50000, so that we can finalise the accounts and submit them for audit.
This would seem to support the plaintiff's position. There is no evidence that the defendant objected to this statement. The following comment is found at AN 20 of the same affidavit, which is contained in an email a copy of which had been sent to Mr Negoescu:
Basically at 30 June 2008 the company had spent all money received on travel. I am looking to claim Alex's payment as a superannuation contribution so it needs to be a share subscription in Gulf.
Again, this tends to support the contention of the plaintiff and there appears to have been no objection taken by Mr Negoescu at the time.
Having considered the evidence, I am of the view there is a genuine dispute as to the existence of the debt. I would set the statutory demand aside without imposing any conditions.
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