Kevlah Pty Ltd v Vic Mix Pty Ltd
[2017] VSC 571
•22 September 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2017 01979
| KEVLAH PTY LTD (ACN 059 928 915) | Plaintiff |
| v | |
| VIC MIX PTY LTD (ACN 149 268 226) | Defendant |
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JUDGE: | Gardiner AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 18 September 2017 |
DATE OF JUDGMENT: | 22 September 2017 |
CASE MAY BE CITED AS: | Kevlah Pty Ltd v Vic Mix Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2017] VSC 571 |
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CORPORATIONS – Application to set aside statutory demand pursuant to s 459G of the Corporations Act 2001 (Cth) – Genuine dispute as to whether debt due and payable at date of service of the statutory demand – Demand set aside – No order as to costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | The plaintiff filed written submissions and indicated that it would not appear at the hearing of the application | |
| For the Defendant | Mr D Didone (solicitor) | Wyndham Law Offices |
HIS HONOUR:
The plaintiff, Kevlah Pty Ltd (‘Kevlah’), applies under s 459G of the Corporations Act 2001 (Cth) (‘the Act’) to set aside a statutory demand served on it by the defendant, Vic Mix Pty Ltd (‘Vic Mix’), dated 3 May 2017. At the hearing of this matter on 18 September 2017, I ordered that the demand be set aside with no order as to costs. I now publish my reasons for making that order.
Kevlah relies on an affidavit of Kevin Schulz, sworn 25 May 2017, and two affidavits of Celia Jane Armstrong, sworn 11 July 2017 and 13 September 2017. In its written submissions filed 13 September 2017, Kevlah indicated that it did not intend to appear at the hearing scheduled for 18 September 2017 on the basis that the costs of doing so were unreasonable, disproportionate, and unwarranted. It states that it relies on its written submissions and its affidavit material filed in the proceeding. In my view, that was a responsible and appropriate course to take in the circumstances of this case.
Vic Mix relies on an affidavit of its solicitor, Mr Didone, dated 6 June 2017, and it also filed and served written submissions.
The debt the subject of the demand was previously the subject of a statutory demand and an application to set aside that statutory demand which was heard before me on 2 May 2017. Kevlah was represented by Mr Predergast of counsel and Mr Didone appeared on behalf of Vic Mix. During the course of the hearing on 2 May 2017, after making certain observations I stood the matter down in order that the parties could negotiate a resolution of the matter, which they apparently did. As such, that earlier statutory demand was spent and any dispute regarding the debt became truncated into the agreement reached between the parties.
There is in fact now some considerable confusion about exactly what agreement was reached at the hearing on 2 May 2017, in particular when it was agreed that Kevlah would be obliged to pay the debt. Kevlah contends that an agreement was reached to pay the debt within 21 days of the hearing which would have made the debt due and payable on 23 May 2017.
In this regard, the transcript of the hearing on 2 May 2017 records the following exchange when the matter was called back for mention:
HIS HONOUR: What is the position, gentlemen?
MR PRENDERGAST: Your Honour, Mr Didone and I have reached agreement in relation to when the undisputed amount should be paid.
HIS HONOUR: Yes.
MR PRENDERGAST: We say 21 days from today. My client can commit to that.
HIS HONOUR: Yes.
MR PRENDERGAST: We had a discussion about costs but neither party is getting anywhere, so we will be grateful for Your Honour’s determination.[1]
[1]Transcript of Proceedings, Kevlah Pty Ltd (ACN 059 928 915) v Vic Mix Pty Ltd (ACN 149 268 226) (Supreme Court of Victoria, S CI 2017 00606, Gardiner AsJ, 2 May 2017) 11 [7]-[17].
The transcript does not record any contrary position being put by Mr Didone in response to the exchange that Mr Prendergast had with me as to what agreement had been reached as to when the debt was due and payable. The transcript then records the ruling I made about costs which was that Vic Mix was to pay half of Kevlah’s costs of the proceeding.
In his affidavit, Mr Didone states as follows:
In the Hearing of the Prior Proceeding, I recall that I indicated to Mr Prendergast my client’s instruction to require payment of the defendant’s invoices, which had been agreed in open court as being “due and payable” in the sum of $19,742.80, within five days. To this, Mr Prendergast responded to me that his instructions were to make payment within 21 days. I maintained my client’s instructions of requiring payment within five days. I do not consider that this discussion took place on a without prejudice on the (sic) basis that the payment sum had already been agreed in open court as $19,742.80, and that the only matters for discussion was the issue of legal costs associated with the proceeding and a payment time frame.[2]
[2]Affidavit of Danny Didone sworn 7 June 2017 [6].
At the hearing of this application on 18 September 2017, Mr Didone made oral submissions on behalf of Vic Mix. He contended that the position was that the debt was due and payable forthwith after the hearing on 2 May 2017 but he led no evidence to support such a contention.
In paragraph 7 of his affidavit, Mr Didone states that:
Consequently, to the best of my recollection, when we returned to open Court before His Honour Associate Justice Gardiner, Mr Prendergast indicated to the Court that the sum of $19,742.80 would be made within 21 days. I am unsure whether I indicated to the Court my client’s instructions that payment was required within 5 days or words to that effect. Perusing my file note of the appearance, I wrote that 21 days was “reasonable”. I wrote this and I believe I may have said this to the Court on the basis of my experience in these types of matters which run to a hearing.
I find it quite remarkable that neither party was able to produce even informal written evidence recording what agreement was reached on 2 May 2017, much lesss formal terms signed by the respective legal representatives. However, even on Mr Didone’s evidence, which is by no means clear, at the earliest the amount demanded was not due to be paid until 7 May 2017, and if one considers paragraph 7 of his affidavit extracted above and Mr Prendergast’s statement recorded in the transcript, 21 days from the date of the hearing i.e. 23 May 2017.
As such, at the date of service of the statutory demand the subject of this proceeding, and indeed when the demand was signed and the affidavit accompanying it sworn, the debt the subject of the demand was not due and payable, infringing a fundamental requirement of s 459E(1) of the Act which provides:
A person may serve on a company a demand relating to:
(a)a single debt that the company owes to the person, that is due and payable and whose amount is at least the statutory minimum; or
(b)two or more debts that the company owes to the person, that are due and payable and whose amounts total at least the statutory minimum.
For that reason, the demand should be set aside.
Mr Didone also made, to my mind, the novel submission in his written submissions (which he developed orally at the hearing of the matter) that, at the hearing on 2 May 2017, he did not have the authority to negotiate a variation to the trading terms between Kevlah and Vic Mix with the result that the debt would have already been due and payable at the date of the hearing and not susceptible to him negotiating any variation as to when the debt was to be paid.
I reject that submission. He was the solicitor appearing in litigation involving recovery of a debt payable to his client and was cloaked with all the necessary ostensible, if not actual, authority to negotiate the matter on behalf of his client as indeed he did when the matter was stood down by me for that very purpose.
In its written submissions, Kevlah contends that there should be no order as to costs and I agree that is the appropriate course in the circumstances.
For completeness, I note that on 18 September 2017 I ordered that the statutory demand dated 3 May 2017 and served on the plaintiff by the defendant be set aside. I made no order as to costs.
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