Hornet Aviation Pty Ltd v Ansett Australia Ltd

[1995] FCA 174

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
TASMANIA DISTRICT REGISTRY        )    No. TG 24 of 1994
  )
GENERAL DIVISION                  )

ON APPEAL FROM A JUDGE OF THE
                FEDERAL COURT OF AUSTRALIA

BETWEEN:HORNET AVIATION PTY LTD

Appellant

AND:ANSETT AUSTRALIA LIMITED

Respondent

CORAM:   JENKINSON, BEAUMONT AND VON DOUSSA JJ.

DATE:    30 MARCH 1995

PLACE:   HOBART

MINUTES OF ORDER

THE COURT ORDERS:

Appeal dismissed with costs.

Note:     Settlement and entry of orders are dealt with by Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA  )

TASMANIA DISTRICT REGISTRY        )    No. TG 24 of 1994
  )
GENERAL DIVISION                  )

ON APPEAL FROM A JUDGE OF THE
                FEDERAL COURT OF AUSTRALIA

BETWEEN:HORNET AVIATION PTY LTD

Appellant

AND:ANSETT AUSTRALIA LIMITED

Respondent

CORAM:   JENKINSON, BEAUMONT AND VON DOUSSA JJ.

DATE:    30 MARCH 1995

REASONS FOR JUDGMENT

INTRODUCTION

By a creditor's statutory demand dated 29 August 1994 for payment of debt ("the demand") addressed to Hornet Aviation Pty. Limited, the appellant, purportedly given under s.459E(2)(e) and Form 509H of the Corporations Law ("the Law"), Ansett International Air Freight, a division of Ansett Transport Industries (Operations) Pty. Ltd. (now named Ansett Australia Limited) the respondent ("Ansett") claimed that Hornet owed it the amount of $47,348.79, being the total of the amounts of the debts described in the Schedule to the demand.  In the Schedule, the following description of debt was given:

"Money owed pursuant to an Agreement between the company ["Hornet"] and the creditor ["Ansett"] whereby the creditor would transport goods on the company's behalf and the company would pay the

creditor's charges of transporting those goods.  Under that Agreement the following debts are owed."

Particulars of the debt in the form of references to dates (between 11 September 1992 and 23 August 1993) invoices and amounts were then given in the total sum of $64,408.94, less several payments made by Hornet between 8 December 1992 and 24 September 1993, giving a balance of $47,348.79.

By application under s.459G of the Law, filed on 20 September 1994, Hornet applied to set the demand aside on several grounds.  It contended that the demand was formally defective in a number of respects.  Hornet also argued that there was a genuine dispute about the debt and that it had an offsetting claim.  The application was contested.  A Judge of the Court (Northrop J.) dismissed the application.  Hornet now appeals from this order.

It will be convenient to deal with the questions argued on the appeal in turn as follows:

CONCLUSIONS ON THE APPEAL

(1)Did his Honour err in refusing to set aside the demand by virtue of its alleged formal defects?

We will take the defects alleged in turn.

(a)  The identity of the creditor
         As has been seen, the creditor was described in the notice as "Ansett International Air Freight, a Division of (Ansett)".  There was evidence before his Honour, which was not challenged, that Ansett traded under "Ansett International Air Freight" as a registered business name.  Although, subsequently, the company changed its name, nothing, as Northrop J. noted, can turn on this.  In the circumstances,
there was not, in our opinion, any misdescription of the creditor.  The demand could only be read as claiming that the debt was owed to Ansett trading as "Ansett International Air Freight".  There was no defect in the demand in this respect.

(b)The omission of the reference to the date of the affidavit

Paragraph 2 of the demand was as follows:

"2.Attached is the affidavit of Christopher John Norman dated    August 1994 verifying that the amount is due and payable by the company."

However, as Northrop J. noted, the affidavit itself was attached and was dated 29 August 1994.

By s.459J it is, in effect, provided that a demand may be set aside because of a defect only if "substantial injustice" will otherwise be caused.

His Honour was of the opinion that it could not be said that this defect could cause substantial injustice.  In the absence of any possible suggestion of injustice, the learned primary Judge was clearly right.

(c)The identity of the "executive officer" signing the demand on behalf of the creditor 

By a note to Form 509H (prescribed under s.459E(2)(e)) it is provided that the form of demand must be signed as follows:

"1.The form must be signed by the creditor or the creditor's solicitor.  It may be signed on behalf of a partnership by a partner, and on behalf of a corporation by a director or by the secretary or an executive officer of the corporation."

The demand was signed by Christopher Joseph Norman, who was there described as Ansett's "Credit Controller".  In his affidavit of debt attached to the demand, Mr. Norman said that he was Ansett's credit controller, that he was authorised by Ansett to swear it and that he had personal knowledge of the state of Hornet's indebtedness.  In an affidavit sworn in these proceedings on 25 November 1994 Mr. Norman said that as Credit Controller he was responsible for processing credit applications, collecting outstanding accounts and instituting legal proceedings to collect outstanding accounts. 

The initial question for his Honour was whether Mr. Norman was an "executive officer" of Ansett.

Northrop J. said:

"The material before the Court shows that Mr Norman is the credit controller and has very wide powers as an officer of, for present purposes, the respondent to the present application.  In my view, even despite the definition contained in the dictionary provision
of the Corporations Law, Mr Norman is an executive officer within the meaning of the note to the form 509H, and the mere fact that the form does not say 'signed for and on behalf of' the creditor is not a defect which in my opinion has caused any injustice to the debtor company."

By the "Dictionary" in s.9 referred to by his Honour, an "executive officer" means -

"...a person, by whatever name called and whether or not a director of the body or entity, who is concerned, or takes part, in the management of the body or entity."

In our view, it was open to Northrop J. to conclude that Mr. Norman fell within this definition and to refuse to set aside the demand on this ground.

(2)Did his Honour err in refusing to set aside the demand on the ground that there was a genuine dispute as to the existence or amount of the debt?

In this respect, Northrop J. made the following finding:

"From the whole of this material, I am prepared to accept that Hornet did admit it owed a sum of money of the order of $51,581.95 and did agree to pay off some of those amounts and did in fact pay off some of those amounts in the period from 19 May 1993 through to 24 September 1993, being a date after which the arrangement between the parties had been terminated and the blank waybills provided by Ansett to Hornet had been returned to Ansett as an illustration of the fact that the arrangement had been brought to an end.

The affidavit filed on behalf of the applicant does dispute some of those invoices but in a manner which is most confusing and difficult to reconcile.  The details are set out in an annexure to the affidavit of Mr Beckerath sworn on 20 September 1994 where two columns are set out which suggest the amounts of disputed items and the amounts to be credited.  I
find it impossible, looking at those figures, to determine just what is owing, what is not disputed, but I am prepared for present purposes to accept, without finally deciding, that an amount of $10,483.98 is disputed and there may be a dispute as to that amount, but even allowing for that there is still an amount owing on the figures by the company to Ansett of some $36,864.81."

As we followed the submissions advanced on behalf of Hornet, these findings are not now challenged.  It must follow that, in this respect, and to this extent, the appeal must fail.  However, Hornet maintains that it had an offsetting claim and that his Honour erred in this regard.  To this we now turn.

(3)Did his Honour err in refusing to set aside the demand on the ground that there was an offsetting claim?

By s.459H(5) it is provided that an "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)."

In support of its contention at first instance that it had an offsetting claim, Hornet sought to rely on two affidavits sworn on 20 September and 11 November 1994 by its director, Anton (Tony) Beckerath.

Paragraphs 13 and 21-24 of the first of these affidavits were as follows:

"13.On or about the 27th May, 1993 it came to my knowledge that Ansett had been advising Hornet's
clients that Hornet was no longer trading such advice being untrue.

...

21.In addition to the aforementioned Hornet has a counterclaim for damages arising out of the breach by Ansett of the agreement entered into between the parties and for breach by Ansett of provisions of the Trade Practices Act relating to unconscionable conduct by Ansett.

22.Hornet has instructed solicitors to institute such proceedings for damages in that Ansett in acting in the manner referred to in paragraphs 13 and 14 hereof did so in breach of agreement and to the financial detriment of Hornet.

23.Ansett further derived the benefit of goodwill in the business created by Hornet from the date of such breach to the date hereof and continuing and Ansett derives a financial benefit from Hornet's goodwill.

24.The quantification of such counterclaim based (in part) on the period of time between the 29th December, 1992 and the 23rd August, 1993 being the time during which Hornet and Ansett conducted business together is substantially in excess of the sum of $100,000.00."

Objection was taken to the form of para.13 and to the last line and one-half of para.24.  Northrop J. ruled, correctly, that this material was inadmissible in that form.

In the second affidavit, para.4 was as follows:

"4.I refer to paragraph 21 of my first affidavit sworn on 20th November, 1994 and say that:-

(a)In or about October 1993 servants or agents of the Respondent herein Ansett International Air Freight ('Ansett') advised Hornet's customers in particular Safcol Pty Ltd, that Hornet had ceased trading;

(b)That in or about November 1993 Ansett in writing advised Hornet's freight handling
agents who operated at Melbourne Airport not to act on behalf of Hornet as freight agents thereby causing loss and damage to Hornet's business;

(c)In or about November 1993 and for several months thereafter Ansett advised Hornet's customers that Ansett would `undercut' Hornet's prices in order to secure business for Ansett from Hornet;

(d)The aforesaid actions by Ansett were false and misleading and intended to be false and misleading and to cause loss and damage to Hornet."

Objection was taken to the form of para.4(a),(b) and (c).  Again, his Honour ruled, correctly, that this material was also inadmissible.

No attempt was made by Hornet at first instance to substitute other evidence for this material.

There was also evidence before his Honour from Ansett arguably at least, disputing the existence of an offsetting claim.

Northrop J. said (of Hornet's claim):

"In my opinion, such a claim is not a genuine claim.  I do not accept that this has been put up on the basis of a genuine claim but I am of the view that it is action taken by Hornet as a means of trying to delay payment of an amount which, on any view, is admitted up an amount of over $30,000 and which has not been paid."

His Honour went on to discuss another matter, which he put to one side, and said:

"However, I do rely upon the fact that no action has been commenced by the company as an indication that the claim being made by it is not a genuine claim.  This conclusion is apart altogether from the lack of material to support the claim.

This is sufficient to dispose of the matter but, in addition, I should indicate that the material does not enable the Court to form a view as to the amount of any offsetting claim.  It is realised that in many cases it is difficult to give an estimation of the amount of such a claim for damages.  In the present case the managing director of Hornet has indicated that the amount of the claim would be over $100,000 but that is a mere assertion and is not substantiated in any way at all.  In the absence of any detailed explanation as to how that amount is calculated, the Court is unable to form any view as to the amount of the offsetting claim.  In similar circumstances, Young J assessed a claim at $1.  In the present case, if there were such a claim I would come to the same conclusion and assess the amount at $1.  The effect of that is that this is not greater than the amount of the admitted total within the meaning of the Act."

The only real evidence before his Honour to support Hornet's contention that it had a genuine offsetting claim was the material in the two affidavits which, as has been said, was properly ruled inadmissible as evidence against Ansett.  That being so, it was at least open to Northrop J. to arrive at the conclusion he did on the very limited material before him.  Subject to one possible matter to which we will now turn, no basis has been demonstrated for our interference with that finding, which is essentially one of fact.

HORNET'S APPLICATION TO ADDUCE FRESH EVIDENCE
          When the hearing of the appeal commenced Mr. Hunniford of counsel for Hornet moved the court for an order that evidence additional to the evidence in the court below be received on the appeal.  Affidavits in support of the motion showed that the additional evidence fell into three categories.  First, evidence was proposed to be adduced of the institution in this court, after the order under appeal had been made, of a proceeding by Hornet against Ansett for damages in respect of misleading conduct alleged to have induced Hornet to enter into the agreement between them and in respect of breaches of that agreement and in respect of unconscionable conduct in connection with the performance and termination of the agreement.  Second, evidence was proposed to be adduced of Hornet's inability, both before and, until 27 March 1995, after the making of the order under appeal, to provide any estimate of what the amount of those damages might be, together with evidence that Hornet's inability was caused by an accountant's failure to provide Hornet with its income tax returns for the years ended 30 June 1993 and 1994.  Third, evidence was proposed to be adduced of the calculation of those damages by one of Hornet's directors.

The nature of an appeal to this court under s.24 of the Federal Court of Australia 1976 has been explained in Duralla Pty. Ltd. v. Plant (1984) 2 F.C.R. 342. The appeal is not by way of re-hearing. The judgment to be given is that which ought to have been given at the original hearing. On the hearing of an appeal stricto sensu, such as s.24 affords, events occurring after the judgment under appeal has been given cannot be taken into consideration in determining what
that judgment ought to have been : Petreski v. Cargill (1987) 18 F.C.R. 68. Accordingly neither the first nor the third category of additional evidence could be received. Evidence in the second category, of Hornet's inability to estimate damages, and the cause of that inability, before Northrop J. gave judgment, could be received. But evidence in that category was available to Hornet at the time of the hearing before Northrop J. : it is not "fresh" in the required sense.

Even if all the proposed additional evidence had been received, it could not have affected the result of the appeal.  The material allegations concerning the claims advanced in the recently instituted proceeding are not verified, except that the director who exhibited to his affidavit his calculation of the damages deposes that the calculation is "[o]n the basis of" the income tax returns.  The returns are not exhibited, nor are their contents verified.

The motion that additional evidence be received must be dismissed.

ORDERS
         In the result, we propose to order that the appeal

be dismissed with costs.

I hereby certify that this and the eleven (11) preceding pages are a true copy of the Reasons for Judgment of the Court.

Associate

Dated:  30 March 1995

Counsel for the Appellant     :    Mr. M.B. Hunniford

Solicitors for the Appellant  :    Hunnifords

Counsel for the Respondent    :    Mr. M.R. Aldridge

Solicitors for the Respondent :    Page Seager

Date of Hearing              :    29 March, 1995

Date of Judgment             :    30 March, 1995