Hopetoun Land Company Pty Ltd v Grant Smith Developments Australia Pty Ltd
[2013] WASC 180
•14 MAY 2013
HOPETOUN LAND COMPANY PTY LTD -v- GRANT SMITH DEVELOPMENTS AUSTRALIA PTY LTD [2013] WASC 180
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 180 | |
| 14/05/2013 | |||
| Case No: | COR:52/2013 | ON THE PAPERS | |
| Coram: | MASTER SANDERSON | 14/05/13 | |
| 5 | Judgment Part: | 1 of 1 | |
| Result: | Demand sit aside | ||
| B | |||
| PDF Version |
| Parties: | HOPETOUN LAND COMPANY PTY LTD GRANT SMITH DEVELOPMENTS AUSTRALIA PTY LTD |
Catchwords: | Corporations Law Application to set aside statutory demand Genuine dispute as to the amount of demand Turns on own facts |
Legislation: | Nil |
Case References: | Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
GRANT SMITH DEVELOPMENTS AUSTRALIA PTY LTD
Defendant
Catchwords:
Corporations Law - Application to set aside statutory demand - Genuine dispute as to the amount of demand - Turns on own facts
Legislation:
Nil
Result:
Demand sit aside
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Ms E Lin
Defendant : Ms S R O'Brien-Smith
Solicitors:
Plaintiff : Jackson McDonald
Defendant : Aherns Lawyers
Case(s) referred to in judgment(s):
Nil
(Page 3)
1 MASTER SANDERSON: This is the plaintiff's application to set aside a statutory demand. The plaintiff says there is a genuine dispute as to the demand and it ought be set aside under s 459H(1) of the Corporations Act (2001). The defendant says there is no genuine dispute. The application is supported by an affidavit of Frank Delanotte sworn 2 April 2013. No evidence was filed on behalf of the defendant.
2 A copy of the demand appears as attachment A to Mr Delanotte's affidavit. The amount of the demand is $742,857.00 The 'description of debt' found in the schedule to the demand puts the demand this way:
As per attached Shareholders Agreement, the debt arises from the Company's failure to repay the loan advanced by the Creditor.
The loan amount of $742,857 was advanced to the Company between 31 May 2007 and 31 August 2007 pursuant to clauses 5.1 and 5.2 respectively of the Shareholders Agreement.
The Shareholders Agreement terminated on 30 April 2012 under clause 13(c) of the Shareholders Agreement by effluxion of time and the Creditor is entitled to demand the immediate payment of the loan.
3 There is indeed attached to the statutory demand a copy of a 'Shareholders Agreement'. The plaintiff and the defendant are parties to that agreement along with a number of other companies and individuals. Before going to the terms of that agreement it is necessary to provide some further background facts. What follows is uncontroversial and is taken from the affidavit of Mr Delanotte.
4 Mr Grantland Smith is the sole director of the defendant. Mr Delanotte met Mr Smith in about 2003. In about 2006 Mr Delanotte became aware of an opportunity to buy real estate located in Hopetoun in the south of Western Australia. Mr Delanotte developed a plan which anticipated acquiring the property, subdividing it and marketing the lots. At the time there was a proposed BHP Nickel mine in the area and Mr Delanotte saw the opportunity to make a substantial return on any investment. He discussed the venture with Mr Wood and others and it was agreed the project would be undertaken.
5 For that purpose two companies were incorporated. One was the present plaintiff and the other was a company called Southwest Eco Developments Pty Ltd. These two companies then entered into what was called a Development Agreement. At around the same time the shareholders in the plaintiff and Eco Developments Pty Ltd entered into two Shareholder Agreements. It is not clear from Mr Delanotte's affidavit
(Page 4)
- why this rather unusual and cumbersome structure was used as the vehicle for the development. In any event for the present purposes it does not really matter. What is not in dispute is the defendant lent the plaintiff an amount of $742,857.00 to undertake the development.
6 As so often happens with property development, the parties anticipated matters would proceed rather quicker than proved to be the case. Clause 6.4 of the Shareholder Agreement under the heading 'Sale of Property' has the following:
If approval for the subdivision of the Property is not obtained by the Approval Date, then unless otherwise unanimously approved by Shareholders the Property will be sold by the Company in such manner and at such time as determined by the Board and failing determination of the Board within two (2) months of the Approval Date, then by public auction within six (6) months after the Approval Date with the auctioneer to be the nominee of the President of the Real Estate Institute of Western Australia and the reserve price as recommended by the auctioneer.
7 The 'approval date' as defined in clause 1.1 was 1 September 2008. In fact the subdivision did not obtain approval until 2 June 2011. But the property was not sold consistent with the terms of the Shareholders Agreement. In fact it is still held by the plaintiff. The evidence does not disclose the prospect of the sale of the property was ever considered by the board or the shareholders. The shareholders simply seemed to have assumed the venture should continue.
8 Clause 13 deals with 'Termination of Agreement'. Clause 13(c) is to the effect the Shareholders Agreement will terminate on 30 April 2012 unless other events have occurred. It is this clause upon which the defendant relies. It says the Shareholders Agreement has come to an end by the effluxion of time and it is now entitled to repayment of its loans.
9 Clause 5.4 which appears under the subheading 'Finance' is relevant to this question of when the loans ought be repaid. It is in the following terms:
Except as otherwise provided in this Agreement all shareholder loans will be interest free and will only be repaid on a pro-rata basis out of sales of lots comprised in the Property after repayment of any monies borrowed under clause 5.3.
10 In my view there is a genuine dispute as to this debt. The contractual position between the shareholders is unclear. The fact the property was not sold pursuant to clause 6.4 must mean the parties continued in a contractual relationship on terms different from what is found in the
(Page 5)
- Shareholders Agreement. What those terms might be is uncertain. The revised contractual position might or might not include the term 'the agreement between shareholders would terminate on 30 April 2012'. But even if the agreement is at an end, it is not certain that the defendant has an immediate entitlement to repayment of its loans. There is nothing in the Shareholders Agreement to that effect. If a term in a contractual relationship between the plaintiff and the defendant operates in that way, it stands apart from the present Shareholders Agreement. There is presently no clear entitlement to repayment and a genuine dispute as to whether or not the amount claimed is payable.
11 There being a genuine dispute about the claim made in a statutory demand the demand ought be set aside. The defendant ought pay the plaintiff's costs of the application including the reserve costs.
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