IMO Hyro Limited
[2010] VSC 667
•2 March 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2009 10339
IN THE MATTER OF: HYRO LIMITED (ACN 081 368 274)
| HYRO LIMITED (ACN 081 368 274) | Plaintiff |
| v | |
| ALBERTROSS INVESTMENT PROPERTIES LIMITED | Defendant |
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JUDGE: | Gardiner AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 March 2010 |
DATE OF JUDGMENT: | 2 March 2010 |
CASE MAY BE CITED AS: | IMO Hyro Limited |
MEDIUM NEUTRAL CITATION: | [2010] VSC 667 |
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CORPORATIONS – Application to set aside statutory demand under section 459G of the Corporations Act 2001 (Cth) – Demand made for payment of debt in New Zealand currency – Claim by defendant under guarantee given by plaintiff for rental of premises in New Zealand – No genuine dispute – Demand varied to take into account concession by defendant but application otherwise dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Campbell | Eales & Mackenzie Melbourne |
| For the Defendant | Mr J Castelan | Carrick Kellow Smyth |
HIS HONOUR:
By an originating process filed 26 November 2009, Hyro Limited (“Hyro”) seeks to set aside a statutory demand which was served on it by the defendant, Albertross Investment Properties Limited (“Albertross”) on 6 November 2009. The application was supported by an affidavit of John Wilks, sworn 25 November 2009.
Albertross filed several affidavits in opposition to the application. These were those of Alan John Sherlock, sworn 11 December 2009, Brian Coburn, sworn 10 December and 18 December 2009, Nicholas Piper, sworn 21 December 2009 and two further affidavits of Mr Sherlock, sworn 26 February 2009 and 2 March 2009. Hyro did not file any affidavits in response to these affidavits.
Mr Wilks states in his affidavit that on 25 September 2007, 92 Albert Street Limited leased the premises at 92 to 96 Albert Street, Auckland (“the property”), to Hyro (NZ) Limited. Hyro guaranteed Hyro (NZ)’s obligations under the lease and an associated car space licence.
On 4 April 2008 the property was sold by the landlord to Albertross. The statutory demand claims the sum of NZ$145,223.28 for unpaid rent and outgoings under the lease for the period January 2009 to 30 November 2009 legal fees and licence fees under the car space licence.
The affidavit of Mr Wilkes sets out several grounds of dispute. It is not disputed by the parties that New Zealand law is the applicable law in these circumstances and the assessment of liability of the parties is to be determined on that basis. Several affidavits have been filed by Albertross stating the position which applies under New Zealand law.
The first ground relied on by Hyro, that the guarantee was unenforceable by reason of there being no notice of assignment, was not pressed by its counsel, Mr Campbell, in argument. Both the guarantee and the licence agreement contemplated liability continuing and not being released or discharged by reason of an assignment. In any event, the covenants to guarantee would “run with the land”. [1]
[1]See generally Lang v Asemo [1989] VR 773.
Mr Wilks asserts that the lease was determined on 13 February 2009 upon the appointment of a liquidator to Hyro (NZ) and Hyro’s liability under the guarantee ceased at that point. In affidavit material filed by Albertross, it is stated that this is not the position under New Zealand law and Hyro did not seek to challenge this.[2] As such, the lease continued in my view until it was effectively surrendered or disclaimed by the liquidator appointed to Hyro (NZ). The only material that Mr Campbell for Hyro could point to in support of the contention that the surrender of the lease had been effected was the handing back of the keys to the premises by the liquidator of Hyro (NZ) in April 2009. In my view, Hyro, which bears the onus in these circumstances, has not established that it is arguable that there was an effective surrender of the lease in April 2009 or indeed at all. Without more, mere abandonment of premises and handing back of keys will not amount to a abandonment or surrender so as to bring to an end a guarantor’s liability under a guarantee.
[2]See the affidavit of Mr Sherlock at p.5 in that regard.
The terms of the guarantee are that Hyro guarantees the obligations of Hyro (NZ) to pay the rent under the lease and otherwise to perform its covenants under the lease and agrees to indemnify Albertross against any loss that Albertross might suffer should the lease be lawfully disclaimed or abandoned by any liquidator appointed to Hyro (NZ). Hyro asserts that there have been no reasonable steps to mitigate the loss and damage post-February 2009. In my view, this assertion, and it is nothing more than that, has been met by evidence from Albertross which in my view overwhelms this. Further the material which has been filed by Albertross has not been responded to, contradicted or attacked and I consider that the position is clear that Albertross has to the degree it is required to in this instance established that there have been reasonable attempts to mitigate the loss, without success.
Albertross’ claim for legal expenses in connection with the enforcement of the lease were not pressed.
The relevant legal principles to be applied when considering applications to set aside statutory demands under s 459G of the Corporations Act have been the subject of numerous authorities. They have been recently collected and considered by the Court of Appeal in the case of TR Administration v Frank Marcetti & Sons.[3] In paragraph 64 of the judgment in that case, Dodds-Streeton AJ, quoted from the decision of McClelland CJ in Equity in the seminal case of Eyota Pty Ltd v Hanave Pty Ltd[4] where his Honour stated at page 787:
“It is, however, necessary to consider the meaning of the expression ’genuine dispute’ where it occurs in s 450H (sic). In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the ’serious question to be tried’ criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit ‘however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be’ not having ‘sufficient prima facie plausibility to merit further investigation as to [its] truth’.”
[3][2008] 66 ACSR 67.
[4][1994] 12 ACSR 785.
Her Honour Dodds-Streeton J as she was in the case of Powerhouse Australasia Pty Ltd v Viarc Pty Ltd[5] observed at paragraph 48 of that judgment.
“While it is not a very exacting standard, on the other hand mere assertion of a dispute or off-setting claim, mere bluster or advancing grounds which are illusory or spurious or insufficiently particularised will not suffice. The Court must not enter into the merits of the dispute, but it is not crossing the line in relation to its legitimate role in these applications to consider evidence which ‘bears on whether or not the asserted dispute or off-setting claim is genuine’. Indeed, that is its necessary function.”
[5][2006] VSC 508.
The dispute or off-setting claim should have, as it has been recognised, some objective existence and Hyro bears the onus of establishing genuineness of the dispute or offsetting claim. In Spencer Constructions Pty Ltd v G&M Aldridge Pty Ltd[6] the Federal Court observed that for a genuine dispute to exist it must be bona fide and truly existing fact and the grounds for alleging its existence must be real and not spurious, hypothetical or misconceived. The dispute must have some sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion and sufficient factual particularity to exclude it from the mere fanciful or futile.
[6][1997] 76 FCR 452
I consider that, save for the claim for legal costs which was not pressed, Hyro has not met the requisite test in these circumstances. The material filed by Albertross in my view overwhelmed the position put by Mr Wilks in his affidavit; further, Hyro did not seek to contradict it. As such, I do not consider that there is any arguable or genuine claim, which warrants the issues raised by Hyro going to trial.
By reason of the deduction of the legal claims of $9,946.75 from the sum of $176,637.02, on my calculations, the demand is an effective demand for NZ$166,690.27 and I will order that the demand be varied so that it is an effective demand for NZ$166,690.27. I also order that Hyro pay Albertross’ costs including the costs of the appearance by the parties for directions on 16 December 2009.
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