FEDERAL COURT OF AUSTRALIA
Gusdote Pty Limited v Ashley; In the Matter of Gusdote Pty Limited
[2011] FCA 250
Citation: Gusdote Pty Limited v Ashley; In the Matter of Gusdote Pty Limited [2011] FCA 250 Parties: GUSDOTE PTY LIMITED (ACN 089 937 253) v JANETTE LINDA ASHLEY; IN THE MATTER OF GUSDOTE PTY LIMITED (ACN 089 937 253)
MADEAS PTY LTD (ACN 108 819 316) V JANETTE LINDA ASHLEY; IN THE MATTER OF MADEAS PTY LTD (ACN 108 819 316)
GUSDOTE PTY LIMITED (ACN 089 937 253) v EMILIOS DEMETRIOU; IN THE MATTER OF GUSDOTE PTY LIMITED (ACN 089 937 253)
MADEAS PTY LTD (ACN 108 819 316) v GEORGINA DEMETRIOU; IN THE MATTER OF MADEAS PTY LTD (ACN 108 819 316)
File numbers: NSD 36 of 2010
NSD 37 of 2010
NSD 47 of 2010
NSD 49 of 2010Judge: FOSTER J Date of judgment: 21 March 2011 Catchwords: CORPORATIONS – whether applications made pursuant to s 459G of the Corporations Act 2001 (Cth) (the Act) to set aside two Creditor’s Statutory Demands were made within the time limited by s 459G(2) of the Act – discussion of the effect of s 29 of the Acts Interpretation Act 1901 (Cth) and s 160 of the Evidence Act 1955 (Cth) on the Court’s determination of the date of service of several Creditor’s Statutory Demands – whether there is a genuine dispute about the existence or amount of the debts claimed in several Creditor’s Statutory Demands – whether the lawyers for the plaintiff in two sets of proceedings were validly retained – whether lawyers whose retainer is successfully challenged should pay the costs of the proceedings Legislation: Acts Interpretation Act 1901 (Cth) s 29 and 36
Corporations Act 2001 (Cth) ss 105, 109X, 446A, 459E, 459F, 459G, 459H, 459J, 491, 497, 1322(4)(a)
Evidence Act 1995 (Cth) s 160Cases cited: Demetriou and Ors v Gusdote Pty Limited and Ors (2010) 78 ACSR 566 related
Australian Forest Managers Ltd (In Liq) v Bramley (1996) 65 FCR 13 followed
Chianti Pty Ltd v Leume Pty Ltd (2007) 35 WAR 488 followed
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 applied
Derma Pharmaceuticals Pty Ltd v HSBC Bank Australia Ltd (2005) 188 FLR 373 followed
Euroasian Holdings Pty Ltd v Ron Diamond Plumbing Pty Ltd (In Liq) (1996) 64 FCR 147 distinguished
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 followed
Fire and All Risks Insurance Co Ltd v Southern Cross Exploration NL (No 4) (1986) 4 ACLC 447 cited
Harry S Bagg’s Liquidation Warehouse Pty Ltd v Whittaker (1982) 44 NSWLR 421 followed
Manzo v 555/255 Pitt Street Pty Ltd (1990) 21 NSWLR 1 followed
Nece Pty Ltd v Ritek Incorporation (1997) 24 ACSR 38 followed
Reale Bros Pty Ltd v Reale (2003) 179 FLR 427 followed
Re Steel Wing Co Ltd [1921] 1 Ch 349 cited
Scope Data Systems Pty Ltd v Goman (2007) 70 NSWLR 176 followed
Wickstead v Browne
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- AGLC
- Gusdote Pty Ltd v Ashley [2011] FCA 250
- Case
- [2011] FCA 250
- Decision Date
CaseChat Overview and Summary
Gusdote Pty Ltd and Madeas Pty Limited, the appellants, brought proceedings against their respective debtors, Mrs Ashley and Mr Demetriou, the respondents, to recover debts claimed under creditor's statutory demands. The appellants sought to enforce the statutory demands and, in the alternative, to recover the debt in a sum greater than that claimed in the statutory demand. The appellants also sought an order that the respondents pay the costs of the proceeding. The primary issue for determination was whether the statutory demands were served within the time prescribed by s 459G(2) of the Corporations Act 2001 (Cth). Another issue was whether there was a genuine dispute as to the existence or amount of the debt claimed in the statutory demand. The court considered the evidence and submissions of the parties and concluded that the statutory demands were served outside the prescribed time limit. The court also found that there was no genuine dispute as to the existence or amount of the debt claimed in the statutory demand. The court dismissed the proceeding and made an order varying the amount of the debt claimed in the statutory demand served by Gusdote on Mrs Ashley. The court did not make any order as to the costs of the proceeding.
The reasoning of the court was based on the evidence and submissions of the parties, as well as the relevant provisions of the Corporations Act and other Acts. The court held that the time of service of the statutory demands was a question of fact, which could be inferred from the circumstances of the case. The court rejected the argument of the appellants that the statutory demands were served on 30 December 2009, or at the latest on 31 December 2009, and accepted the evidence of Mr and Mrs Demetriou that the statutory demands were posted on 23 December 2009. The court also held that the appellants were not entitled to rely on s 160 of the Evidence Act or s 29 of the Acts Interpretation Act to deem the statutory demands to have been served earlier than they actually were. The court further held that there was no genuine dispute as to the existence or amount of the debt claimed in the statutory demand served by Gusdote on Mrs Ashley, as the debt was substantiated as at 28 February 2006 and no evidence was adduced to suggest that the debt had been paid or discharged.
The reasoning of the court was based on the evidence and submissions of the parties, as well as the relevant provisions of the Corporations Act and other Acts. The court held that the time of service of the statutory demands was a question of fact, which could be inferred from the circumstances of the case. The court rejected the argument of the appellants that the statutory demands were served on 30 December 2009, or at the latest on 31 December 2009, and accepted the evidence of Mr and Mrs Demetriou that the statutory demands were posted on 23 December 2009. The court also held that the appellants were not entitled to rely on s 160 of the Evidence Act or s 29 of the Acts Interpretation Act to deem the statutory demands to have been served earlier than they actually were. The court further held that there was no genuine dispute as to the existence or amount of the debt claimed in the statutory demand served by Gusdote on Mrs Ashley, as the debt was substantiated as at 28 February 2006 and no evidence was adduced to suggest that the debt had been paid or discharged.
Orders
Orders of the court
1. Pursuant to s 459H(4)(a) of the Corporations Act 2001 (Cth) (the Act), ORDERS that the Creditor’s Statutory Demand dated 23 December 2009 served by the defendant upon the plaintiff be varied by deleting the amount of $678,500 specified therein and substituting therefor the amount of $303,500.
2. Pursuant to s 459H(4)(b) of the Act, DECLARES that the said demand has had effect, as so varied, as and from the date when the demand was served upon the plaintiff.
3. ORDERS that the proceeding be dismissed.
4. MAKES no orders as to the costs of the proceeding.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
Background
Background to the litigation
At [2]–[23] (pp 568–570) of his Reasons, his Honour said: The Facts2The relevant facts are set out below. They are contained in the affidavits of Emilios Demetriou sworn 25 January 2010, Janette Linda Ashley sworn 22 January 2010 and Stephen Brian Swaine sworn on 11 February 2010. 3Prior to 2003 Gusdote was the registered proprietor of land located at Townsville. Such land was primarily used for the purpose of a golf course, known as ‘Willows Golf Course’ with the remainder being a portion of land which was undeveloped (‘the 5.02 hectares’).4Prior to August 2003, the sole Director of Gusdote was Mr Matheson. The sole shareholder of Gusdote was the sixth respondent, namely Susan Rose Matheson (‘Mrs Matheson’) to whom one share was allocated. 5A meeting took place in Townsville on 29 August 2003 at the offices of Mr Jeffrey Dickens (‘Mr Dickens’), the solicitor of Mr Matheson. It was attended by the first applicant (‘Mr Demetriou’), the second applicant (‘Mrs Ashley’), her husband the late Robert Ashley (‘Mr Ashley’), Mr Matheson, Mr Dickens and Mr Stephen Swaine, accountant to Mr Demetriou. At such meeting an agreement was concluded by Messrs Ashley and Demetriou with Mr Matheson (‘the initial agreement’). The initial agreement was intended to provide Gusdote with sufficient capital to subdivide and develop the 5.02 hectares of land.6Pursuant to the initial agreement, Mr Demetriou and Mr Ashley were to pay an amount of $250,000 each to Gusdote by way of loan. In addition, they were to guarantee an outstanding debt of Gusdote to the National Australia Bank (‘the NAB’) of approximately $960,000. 7In consideration of such payments and guarantee, Mr Matheson was to arrange for the appointment of Mr Ashley and Mr Demetriou as directors of Gusdote. Further, Mr Matheson was to arrange for the share capital of Gusdote to be increased by the issue of one share each to Mrs Demetriou, Mrs Ashley and Mrs Matheson. By virtue of this share allocation Mrs Ashley and Mrs Demetriou would each hold 25% of the issued capital of Gusdote with Mrs Matheson holding the remaining 50%.8It was also a term of the initial agreement that Mr Matheson would attend to the lodgement of all documentation with the Australian Securities and Investments Commission (‘ASIC’) necessary to record the change in directors, the increase in the share capital of Gusdote and the allocation of shares to Mrs Ashley, Mrs Demetriou and Mrs Matheson. The initial agreement was not recorded in writing. 9Pursuant to this agreement, on 29 August 2003 Messrs Ashley and Demetriou each signed consents to act as directors of Gusdote. Further Messrs Ashley and Demetriou each paid the amount of $250,000 to Gusdote and on 1 September 2003 Messrs Ashley and Demetriou signed the guarantee to the NAB in respect of Gusdote’s debt. Accordingly, Messrs Ashley and Demetriou fulfilled their part of the initial agreement. 10Despite the signing by Messrs Ashley and Demtriou of their consents to act as directors, no documents were ever lodged by Mr Matheson with ASIC recording their appointment as directors of Gusdote. As a consequence, neither Mr Demetriou nor the late Mr Ashley have ever been recorded as directors of the company. 11On 29 August 2003 Mr Matheson caused Gusdote under its common seal to issue share certificates to Mrs Ashley and Mrs Demetriou, signed by Mr Matheson. However, ASIC was never notified by Mr Matheson of the increased shareholding.12In or about April 2004 another agreement was made in Townsville between Messrs Ashley, Demetriou and Matheson (‘the Madeas agreement’). Pursuant to the Madeas agreement, a new company was to be formed known as Madeas Pty Limited (‘Madeas’), the purpose of which was to develop the 5.02 hectares of undeveloped land owned by Gusdote. Under the terms of this agreement, the shareholding of Madeas was to be allocated as to 50% to third parties who were acting as trustees for the Matheson interests and the remaining shares were to be held as to 25% by Mrs Ashley and 25% by Mrs Demetriou. Further, Messrs Matheson, Demetriou and Ashley were to be appointed as directors of Madeas. Simultaneously a trust known as the Willows Unit Trust was to be established which created an interest of one third each for Mrs Ashley, Mrs Demetriou and the trustees of the Matheson interests. 13Madeas was duly incorporated, Messrs Ashley, Demetriou and Matheson were appointed directors and all shares were issued as proposed by the Madeas agreement.14After the meeting which gave rise to the Madeas agreement, no meetings either of Gusdote or of Madeas were attended by Mr Ashley or Mr Demetriou. The 5.02 hectares of the undeveloped land owned by Gusdote was transferred by Gusdote to Madeas. The land was subdivided and all lots were sold. As a result a recorded profit of $387,000 nett became payable to each of the shareholders in Madeas in 2006. In fact, no payment representing such shareholder profit has ever been received by either Mrs Ashley or by Mrs Demetriou.15A further agreement (‘the further agreement’) was entered into by Messrs Ashley and Demetriou with Mr Matheson by telephone in or around May 2004. The actual sequence of the Madeas agreement and the further agreement was not established at the hearing. Nevertheless, it is common ground that pursuant to this agreement both Mr Ashley and Mr Demetriou agreed to invest an additional $75,000 each in Gusdote. In consideration for such payment Mrs Demetriou’s and Mrs Ashley’s shareholding in Gusdote was to be increased from 25% to a one third share each. 16Mr Demetriou and Mr Ashley duly paid $75,000 as provided by the further agreement. Mr Matheson however again neglected to notify ASIC of such variation in the shareholding of Gusdote. 17Mr Ashley died on 23 December 2005 and Mrs Ashley duly became the legal personal representative of the late Mr Ashley’s estate.18On 17 May 2007 Gusdote executed a transfer of its remaining land (‘the golf course land’) to NQLD. Neither Mr Demetriou nor Mr Ashley (or his representative) had been consulted in respect of such transfer. The transfer was signed by Mr Matheson on behalf of Gusdote. The mortgage to the NAB over the land had by that time been discharged on a date not disclosed by the evidence and accordingly Gusdote was able to provide an unencumbered title to NQLD as the purchaser.19The sale of the golf course land was expressed to be for a consideration of $3,000,000, of which $200,000 was stated to have been paid in cash while the balance of the purchase price ($2,800,000) was identified in the memorandum of transfer as ‘Assumption of Liabilities’. The ‘Assumption of Liabilities’ consisted of a mortgage given by NQLD to Gusdote over the golf course land. Such mortgage provided for repayment of the principal sum to Gusdote on 17 May 2009. During the term of the mortgage an interest rate of 8% per annum was to be paid calendar monthly on the first day of each preceding calendar month during the continuance of the mortgage.20The sole director of NQLD was Mr Matheson. Mr and Mrs Matheson held (and continue to hold) a 50% interest each in NQLD.21Neither Mr Ashley during his lifetime nor Mrs Ashley, nor Mr and Mrs Demetriou had any knowledge of the transfer of the golf course land by Gusdote to NQLD. There has been no account to the applicants of any monies received from the operation of the golf course which was managed initially by Mr Matheson then apparently sub-let under some form of licence agreement. Nor has there been any accounting relating to the repayment of the principal secured nor of the interest payable to Gusdote in respect of the $2,800,000 secured by the mortgage granted by NQLD over the golf course land. Neither has there been any account to the applicants of the $200,000 which was paid to Gusdote by NQLD at the date of the transfer of the land from Gusdote to NQLD.22On 1 April 2010 NQLD was placed in administration. Ian David Jessup and Moira Kathleen Carter were appointed voluntary administrators on that date. On 7 April 2010 the applicants sent an email to the administrators enquiring as to the position that the administrators would take in these proceedings. Correspondence received from Ms Carter dated 13 April 2010 established that the administrators held no funds and would not be in a position to pay for any legal advice or representation for NQLD in these proceedings.23On 11 May 2010 the applicants filed a Notice of Motion seeking leave to proceed against NQLD. By order of the Court made on 17 May 2010, leave was granted pursuant to s 440D(1) of the Corporations Act 2001 (Cth) (‘the Corporations Act’) for the applicants to proceed against NQLD.
Evidence
Evidence Before The Court
Mrs Ashley and the Demetrious submitted that the Statutory Demands had all been served at the registered office of Gusdote and Madeas by no later than 30 December 2009. They submitted that I should find that this was so as a matter of fact or, alternatively, that I should make this finding by reason of the combined presumptive and deeming effect of s 160 of the Evidence Act 1995 (Cth) (the Evidence Act) and s 29 of the Acts Interpretation Act 1901 (Cth) (the Acts Interpretation Act). They accepted that the proceedings commenced by each of Gusdote and Madeas against Mrs Ashley (both of which were commenced on 19 January 2010) had been commenced within time. However, as I have already mentioned at [36] and [41] above, Mr and Mrs Demetriou argued that the proceedings commenced by Gusdote against Mr Demetriou and by Madeas against Mrs Demetriou were both out of time. Those proceedings were not commenced until 22 January 2010. If, as the Demetrious contended, their Statutory Demands were served by no later than 30 December 2009, the proceedings against them were commenced outside the time limited by s 459G(2) of the Act. The Demetrious would still succeed in their argument if I were to find that the Demands were served by no later than 31 December 2009. In order for the time requirement laid down in s 459G(2) of the Act to be met in the present case, the Court would have to be satisfied that the Demetriou Statutory Demands had not been served any earlier than 1 January 2010 (see s 105 of the Act and semble s 36 of the Acts Interpretation Act). It was, of course, the case of both Gusdote and Madeas that the Demands were all served on 1 January 2010 (and not before). Uncontested evidence was led on behalf of Mr and Mrs Demetriou that all four Statutory Demands were posted into the Australia Post street post box located on Chapel Road Bankstown at or about 5.00 pm on Wednesday 23 December 2009. Each Statutory Demand was in a separate envelope. A 55c postage stamp was affixed to each envelope. That was the correct postage. The items were, therefore, prepaid. Each envelope was addressed, as appropriate, either to Gusdote or Madeas at 569 Ross River Road, Kirwan, QLD 4817. That address was the address of the registered office of both Gusdote and Madeas as at 23 December 2009 as disclosed in the records of the Australian Securities and Investments Commission. That address is the business address of Hunter Partners, who are the accountants for both Gusdote and Madeas. There were no covering letters sent with the Statutory Demands. Posting the Statutory Demands in this way was a permitted mode of service under the Act (see s 109X(1) of the Act). Section 109X(1) of the Act specifies the manner by which service of documents may be effected on a corporation but does not address the question of when service is effected or deemed to be effected in the event that one of the statutorily endorsed methods of service is adopted. The time at which service is effected in any particular case is a question of fact.
Decision
Reasons for decision
The liquidation of Gusdote does not affect any of the orders which I propose to make.CONCLUSIONS For a number of reasons, the proceedings before me will be dismissed. I will make s 459H(4) orders in the proceeding brought by Gusdote against Mrs Ashley (NSD 36 of 2010). However, those orders will not preclude Mrs Ashley from proving in the liquidation of Gusdote for a different and larger sum if the present debt due to her is greater than the amount which I have found was substantiated as at 28 February 2006. I will make costs orders on the basis indicated at [146]–[149] above.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.