Joondalup Country Club Holdings Ltd v Basuki
[2000] WASC 251
•17 OCTOBER 2000
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: JOONDALUP COUNTRY CLUB HOLDINGS LTD -v- BASUKI [2000] WASC 251
CORAM: MASTER SANDERSON
HEARD: 26 SEPTEMBER 2000
DELIVERED : 17 OCTOBER 2000
FILE NO/S: COR 191 of 2000
BETWEEN: JOONDALUP COUNTRY CLUB HOLDINGS LTD (ARBN 060 072 175)
Applicant
AND
JOHNNY BASUKI
Respondent
Catchwords:
Corporations Law - Application to set aside statutory demand - Turns on its own facts
Legislation:
Corporations Law, s 459G, s 459H(1)(a), s 459H(1)(b)
Result:
Application granted and demand set aside
Representation:
Counsel:
Applicant: Mr K J Mony de Kerloy
Respondent: Mr D M Stone
Solicitors:
Applicant: Mony de Kerloy
Respondent: Corsers
Case(s) referred to in judgment(s):
Delnorth Pty Ltd v State Bank of New South Wales [1995] 17 ACSR 379
Eyota Pty Ltd v Hanave Pty Ltd [1994] 12 ACLC 669
Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290
Scanhill Pty Ltd v Century 21 Australasia Pty Ltd [1994] 12 ACLC 111
Case(s) also cited:
Capital Bay Investments Pty Ltd v Richard Szklarz Architects Pty Ltd, unreported; SCt of WA; Library No 980503; 8 September 1998
John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250
Moyall Investments Services Pty Ltd v White (1993) 12 ACSR 320
Niger Merchants Co v Capper (1877) 18 Ch D 557
Novawest Contracting Pty Ltd v Taras Nominees Pty Ltd [1998] VSC 205
Ocean City Ltd (Receiver and Manager Appointed) v Southern Oceanic Hotels Pty Ltd (1993) 10 ACSR 483
Permanent Building Society (In Liq) v Wheeler (1993) 10 WAR 109
Re Bond Corp Holdings Ltd (1990) 1 WAR 465
Re K L Tractors Ltd [1954] VLR 505
Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 24 ACSR 353
The Peninsular Group Ltd v Kintsu Co Ltd (1998) 28 ACSR 632
MASTER SANDERSON: This is the plaintiff's application to set aside a statutory demand. The application is brought under s 459G of the Corporations Law ("the Law"). It falls to be determined under s 459H of the Law. It is the plaintiff's argument first that there is a genuine dispute between the plaintiff and the defendant about the existence of the debt to which the demand relates: s 459H(1)(a). In the alternative, it is said that the company has an offsetting claim and the amount of the statutory demand ought be reduced: s 459H(1)(b).
The statutory demand is to be found as annexure "JC 1" to the affidavit of James Chan Kok Choon ("Chan"), sworn 25 July 2000, and filed in support of the application. The statutory demand is dated 4 July 2000 and it was served on 5 July 2000. The amount of the demand is $12,874,365.33. Filed in opposition to the application was an affidavit of the defendant sworn 29 August 2000. A further affidavit of Chan, sworn 18 September 2000, was filed in reply. These three affidavits comprise the evidence in support of, and in opposition to, the application. (On the day prior to the hearing of this application the defendant filed a further affidavit of Lidia Mager ("Mager"), sworn 22 September 2000. At the commencement of the hearing of the application counsel for the defendant sought leave to rely on this affidavit. There being no objection, leave was granted. However, the affidavit dealt with an issue which was not the subject of submissions and the affidavit of Mager played no part in the application. I have not referred to it in preparing these reasons.)
Although the resolution of this application is, I think, rather straightforward, the circumstances which gave rise to the issue of the statutory demand are somewhat complex. Much of the background factual material is not in dispute but recounting of that background is necessary to fully appreciate matters which, at least on the plaintiff's case, are in dispute between the parties.
Chan is the managing director of the plaintiff, a company incorporated in Singapore but registered under the Corporations Law of Western Australia. (The plaintiff in its written submissions disputed the jurisdiction of this Court to wind up a company incorporated in Singapore. In the event this was not an issue which was pursued. The affidavit of Mager was directed at this issue. As the issue was not pursued, the affidavit was of no relevance.) The plaintiff owns the land upon which is constructed the Joondalup Golf Course. The plaintiff is part of what Chan refers to as "the Joondalup Group of Companies" ("the Group"). Some of these companies are incorporated in Singapore and others are incorporated in Australia. All of the companies were incorporated to develop the Joondalup Resort ("the Resort"), of which the Joondalup Golf Course forms part. There are seven companies in the Group, all of which are involved in different aspects of owning, running and developing the Resort.
The Resort was purchased in December 1991 by a consortium, including the plaintiff, for an amount of $21 million. At the time of the purchase the plaintiff was styled Cremorne Investments Pte Ltd. I mention this only because some of the documents which are relevant to this application refer to Cremorne Investments Pte Ltd. Nothing turns on the change of name.
Chan came to Australia in November 1991 to manage the development of the Resort. Prior to his arriving in Australia he held a meeting in Jakarta with a number of individuals he refers to collectively as "the investors". These investors included one Peter Kwee, T K Low, Henry Liem and the defendant. Chan says that at the meeting development of the Resort was discussed, including the financing of the development. While no written agreement resulted from this meeting, Chan says that each of the participants had a clear understanding of the way in which the Resort was to be developed, what the respective contributions of the parties would be and what funds would be injected into the Resort.
Chan subsequently sought advice in relation to a number of matters relating to taxation and corporate structures from solicitors both in Singapore and Australia. It is unnecessary to go into any detail as to the advice received or the structure of the project. It is enough to say that as a result of this advice the paid up capital of the Group was, and has remained, relatively modest. Capital which has been advanced was designated as loans. Obviously this was seen as the most effective way of advancing funds to the Group.
The loan made to the plaintiff by the defendant was evidenced by a deed dated 8 June 1993. This deed appears as annexure "JC 5" to the first affidavit of Chan. It is a curious document. There is no evidence on its face that it was drawn by solicitors. In fact there is no evidence in any of the affidavits as to the circumstances in which the deed was drawn. The deed itself says that the defendant has agreed to lend the plaintiff the sum of $3,481,264.82. Reference is made to similar loans by Chan, T K Low and Peter Kwee (cl 2). Clause 4 deals with the interest rate applicable to the loan. Clause 5 is in the following terms:
"5(a)The Lender may at any time after 30 November 1997 give to the Borrower one (1) month's notice in writing requesting repayment of the Loan together with the said interest and upon the expiry of such notice and the Borrower shall forthwith pay to the Lender the whole of the Loan and interest accrued.
(b)If the Lender has not at any time within 70 months of the date hereof given the notice in clause 5(a), the Borrower shall at the expiry of 71 months from the date hereof forthwith pay to the Lender the whole of the Loan and interest accrued, provided that the Lender may at any time within the said 70 months agree in writing to extend the period of the Loan.
(c)Notwithstanding clauses 5(a) and (b) the Loan may be repaid; or accrued interests paid prior to 30 November 1997 at the sole discretion of the Borrower.
(d)No repayment of any part of the Loan or payment of any interest shall be made unless similar and/or payments are made on the Similar Loans."
It is the defendant's position that pursuant to cl 5 it was open to the defendant at any time after 30 November 1997 to demand repayment of the loan together with interest. Demand has been made and the loan has not been repaid. Consequently, the statutory demand was issued. The plaintiff, however, relies upon cl 5(d). It says that no repayments or payments have been made in relation to the similar loans and therefore it is not incumbent upon the plaintiff to make repayment to the defendant. In response, the defendant says that cl 5(d) conditions cl 5(c) and not the whole of cl 5. Thus cl 5(d) would only ever have had any force and effect if the plaintiff had decided to make some repayments prior to 30 November 1997. It was submitted that any other interpretation of cl 5 would mean that repayment of the defendant's loan could be deferred indefinitely at the whim of one or other of the other individuals who had made similar loans. This, it was said, was not a reasonable or probable interpretation of cl 5. Counsel for the plaintiff argued that at the very least, the clause was ambiguous and parol evidence would be required as to its proper interpretation. In support of this submission reference was made to what was said by Chan in his affidavit and the nature of the discussions between the investors at the time of the Jakarta meeting.
Further, counsel for the plaintiff referred to cl 11 of the deed. That clause reads as follows:
"This Deed shall be governed by and construed in all aspects in accordance with the Laws of Singapore".
It was submitted on behalf of the plaintiff that it would be necessary to call evidence as to the way in which the deed in general and cl 5 in particular would be interpreted in Singapore. Thus it was said by the plaintiff there was a genuine dispute between the parties and the statutory demand ought be set aside.
There was no dispute between the parties as to the proper approach to be adopted in applications of this nature. Reference was made to Scanhill Pty Ltd v Century 21 Australasia Pty Ltd [1994] 12 ACLC 111; Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290 per Hayne J at 295 and Eyota Pty Ltd v Hanave Pty Ltd [1994] 12 ACLC 669 per McLelland CJ at 671, among other cases. Both parties agreed that it was necessary for the plaintiff to establish that there was a serious question to be tried between the parties before it could satisfy the requirements of s 459H(1)(a) that there was a genuine dispute.
Against that background I turn to the respective arguments of the parties as I have set them out above. Dealing first with the question of the Singapore law clause, it seems to me that the plaintiff has not established an arguable case that the law in Singapore, on interpretation of contracts, differs significantly from the law in this jurisdiction. Were the matter to proceed to trial, it would be up to the plaintiff if it asserted that the law of Singapore differed from the law of Western Australia to provide evidence of that fact. The learned authors of Cross on Evidence put the position as follows (at par 41005):
"The burden of proof rests on the party asserting that foreign law differs from domestic law. This is frequently expressed, rather infelicitously, by saying that there is a presumption that foreign and domestic law are the same. That is, in the absence of satisfactory proof of foreign law, the lex fori will be applied. That 'presumption' is general, but not universal. It has been said to operate against, not in favour, of the party whose obligation it is to prove foreign law. If there is a right or exemption given to a party by the foreign law, but not the lex fori, that party is deprived of its benefit if that party does not establish it."
The plaintiff led no evidence at all as to what the law of Singapore might be in relation to the interpretation of this deed. In those circumstances I could not be satisfied that there is any serious question to be tried on this issue.
The question of the proper interpretation of cl 5 of the deed presents a rather more difficult problem. There are cases where it may be appropriate on the statutory demand procedure to interpret a contract when to do so is a relatively simple matter: see Delnorth Pty Ltd v State Bank of New South Wales [1995] 17 ACSR 379. But I am not satisfied that this is such a case. In my view, the proper interpretation of cl 5 raises a serious issue to be tried between the parties. While I appreciate the strength of the defendant's submissions, in my view it would be inappropriate to determine this issue in the light of the affidavit material filed by the plaintiff. On that basis then I am satisfied that the statutory demand ought be set aside.
Having reached that conclusion I need not deal with other arguments raised by the plaintiff. However, there is one other matter raised by the plaintiff which, in my view, clearly shows there is a genuine dispute between the parties. In about 1995 a dispute arose between the defendant on one hand and Peter Kwee and T K Low on the other. This led to proceedings being issued both in Singapore and in Western Australia. Chan says in his first affidavit (par 44) that on 16 September 1998 he had a telephone call with the defendant who was in Jakarta. Chan says that during the course of this telephone conversation agreement was reached whereby the loans made by the defendant to the plaintiff would be converted to equity in International Golf Resorts Pte Ltd, one of the companies in the Group. As part of this arrangement, the defendant waived his rights in relation to other companies in the Group and agreed to drop all actions then on foot. Chan says that the advantage of this arrangement to the defendant was that he would then have been in a position to sell his equity in International Golf Resorts Pte Ltd and recover his investment.
Subsequent to this telephone conversation, Chan says that he sent a fax to the defendant (annexure "JC 14" to Chan's first affidavit) which begins with the following words:
"As discussed in this morning's telephone conversation, you have now confirmed and agreed to the following … "
The fax concluded by asking the defendant to sign and refax a copy. This was never done. On 24 September 1998 a copy of the original fax, amended slightly, was sent to the defendant. Once again he was asked to sign and refax the document and once again he did not do so. Nonetheless, Chan says he believes that agreement was reached on 16 September 1998 with the effect that the plaintiff is now not indebted to the defendant.
The defendant disputes that any agreement was reached with Chan. That, he says, is the reason why he did not sign and send back the fax. Furthermore, when a comprehensive deed of settlement was subsequently prepared, he did not sign it and indeed there is nothing in writing to evidence the agreement Chan alleges was reached between the parties. Moreover, the audited accounts of the plaintiff for the year ending 31 December 1999, annexure "JB 2" to the defendant's affidavit, show the plaintiff as indebted to the defendant in the terms of the original loan deed. These accounts have been signed by Chan, Peter Kwee and T K Low.
In my view the evidence raises a genuine dispute as to whether or not agreement was reached between Chan and the defendant about the conversion of the defendant's loan into equity. There is clearly a dispute on the evidence which cannot be resolved in proceedings of this nature. It is a matter which would need to be resolved at trial. In my view the issue is one which is a genuine dispute and requires the statutory demand be set aside.
I am satisfied that in all the circumstances there is a genuine dispute in relation to the debt the subject of the demand and that the statutory demand ought be set aside. I will hear the parties as to the precise form of the orders and as to costs.
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