Kwik and Swift Co Pty Ltd v Shawyer
[2002] WASC 156
KWIK & SWIFT CO PTY LTD -v- SHAWYER [2002] WASC 156
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 156 | |
| Case No: | COR:445/2001 | 15 MAY 2002 | |
| Coram: | MASTER BREDMEYER | 21/06/02 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| B | |||
| PDF Version |
| Parties: | KWIK & SWIFT CO PTY LTD (ACN 079 665 008) ALAN KEITH SHAWYER |
Catchwords: | Statutory demand Offsetting claims |
Legislation: | Corporations Act, s 459H Minimum Conditions of Employment Act 1993 (WA), s 17B, s 17D |
Case References: | Capital Bay Investments Pty Ltd & ors v Richard Szklarz Arthitects Pty Ltd & Ors, unreported; SCt of WA; Library No 980503; 8 September 1998 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 Kwik & Swift Co Pty Ltd v Shawyer [2002] WASC 14 Wylie v ANI Corporation Ltd [2000] QCA 314; [2002] 1 Qd R 320 Bolton Gems Pty Ltd v Gregiore, (1996) Aus Ind Law Rev 5063 Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (1994) 13 ACSR 455 Marrapodi v Smith-Roberts, unreported; SCt of ACT; 16 September 1968 Rowell v Alexander Mackie College of Advanced Education (1988) 25 AR 87 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ALAN KEITH SHAWYER
Defendant
Catchwords:
Statutory demand - Offsetting claims
Legislation:
Corporations Act, s 459H
Minimum Conditions of Employment Act 1993 (WA), s 17B, s 17D
Result:
Application allowed
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr M D Cuerden
Defendant : Mr M C Hotchkin
Solicitors:
Plaintiff : Gary Massey & Associates
Defendant : Hotchkin Hanly
Case(s) referred to in judgment(s):
Capital Bay Investments Pty Ltd & ors v Richard Szklarz Arthitects Pty Ltd & Ors, unreported; SCt of WA; Library No 980503; 8 September 1998
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
Kwik & Swift Co Pty Ltd v Shawyer [2002] WASC 14
Wylie v ANI Corporation Ltd [2000] QCA 314; [2002] 1 Qd R 320
Case(s) also cited:
Bolton Gems Pty Ltd v Gregiore, (1996) Aus Ind Law Rev 5063
Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (1994) 13 ACSR 455
Marrapodi v Smith-Roberts, unreported; SCt of ACT; 16 September 1968
Rowell v Alexander Mackie College of Advanced Education (1988) 25 AR 87
(Page 3)
1 MASTER BREDMEYER: This is an application by the plaintiff to set aside a statutory demand issued by the defendant on 20 November 2001 as follows:
2 SCHEDULE
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4 Mr Shawyer was employed by the plaintiff as its operations manager for about two years. He left that employ on Friday, 2 November 2001. According to his affidavit of 19 November 2001, sworn in support of the demand, when he left he says he was owed 18 days' annual leave. He also says he had not been paid for his final week's work for that week beginning on Monday, 29 October and ending on Saturday, 3 November.
5 The plaintiff's manager, Craig Allan Hughes, has raised a number of offsetting claims in his affidavit of 13 December 2001. Mr Shawyer has responded to that in an affidavit of 5 March 2002.
6 A statutory demand can be set aside because of a genuine dispute as to the existence of the debt, or because of an offsetting claim. By s 459H(5) of the Corporations Act, an offsetting claim means a genuine claim that the company has against the respondent by way of a counterclaim, setoff or cross-demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates).
7 The test of what is a genuine dispute, which I think also applies to a genuine offsetting claim, is set out in Spencer Constructions Pty Ltd v G & M Aidridge Pty Ltd (1997) 15 ACLC 1001, a decision of the Full Court of the Federal Court:
(Page 4)
- (a) the dispute is bona fide and truly exists in fact; and
(b) the grounds alleging the existence of the dispute are real and not spurious, hypothetical, illusory or misconceived.
8 McClelland CJ in Equity of the New South Wales Supreme Court in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 said that a genuine dispute in the section 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 a caveat extension application. I consider that those words can also be applied to a genuine offsetting claim.
9 Murray J set out the position in Capital Bay Investments Pty Ltd & ors v Richard Szklarz Arthitects Pty Ltd & Ors, unreported; SCt of WA; Library No 980503; 8 September 1998 at 4 as follows:
"What is required, in my opinion, is that I discern in the affidavit evidence in support of the application, material of some real substance, more than mere assertion, to show that there is a serious question to be tried as to the existence of a genuine dispute about the debt or a genuine claim which may be put against the respondent, even if not of a kind which could in law or equity be set off against the respondent's claim. If such material is available the application will succeed even though there might in the affidavits filed on behalf of the respondent appear to be a completely contrary view as to the relevant facts. The court will not, indeed may not, and is not required to resolve that kind of factual disputation upon the affidavits. If it genuinely emerges it will be a matter to be resolved at trial or otherwise in the context of litigation or other dispute resolution procedures to resolve the opposing contentions."
10 The first offsetting claim I mention is that Mr Hughes says that Mr Shawyer gave inadequate notice of his resignation. He says, at par 20 of his affidavit, that the defendant gave him verbal notice on 30 October 2001 (a Tuesday) that he would be leaving on 2 November 2001 (the Friday). He said he told the defendant that was insufficient notice for a person in his position, as he had wide-ranging and important responsibilities with the company. He was the operations manager of a company which employed about 40 persons. Mr Hughes said he asked the defendant to put the notice in writing and he, in turn, wrote to the defendant on Wednesday, 31 October, stating, in effect, that he accepted
(Page 5)
- the resignation, but did not accept that the notice period was adequate and requested two weeks' notice.
11 I do not consider that the period of notice was adequate, but neither do I consider that the plaintiff has suffered a monetary loss because of it. The plaintiff did not pay wages to the defendant after 2 November. Neither did it employ someone else to do the plaintiff's work immediately after 2 November and, if it had, that would have been payment of replacement wages for the defendant, as it were. Although the notice was inadequate, and that can cause some concern and inconvenience to the plaintiff, I consider the plaintiff has suffered no loss as a result of it and that this matter is not a genuine offsetting claim.
12 The second claim relates to the defendant's negligence in the performance of his duties in relation to the pallets. I quote from Mr Hughes' affidavit:
"4. The defendant was employed by the plaintiff up until 2 November 2001.
5. He was the operations manager of the plaintiff, and as such was second in charge to me.
6. The plaintiff's company is a courier and warehousing company which operates from premises in Guildford. It employs approximately 40 employees, and as such the defendant had wide ranging responsibility with respect to operations including dealing with clients on a daily basis and overseeing the performance of contract
7. During the period of the defendant's employment with the plaintiff one of the plaintiffs customers was Hi Trans, which is a company which operates out of Adelaide for whom the plaintiff was doing distribution of electrical retail goods and general freight within Western Australia. The position was that we would warehouse their general freight at our premises at 64 Great Eastern Highway Guildford, and distribute that freight throughout Western Australia as and when required.
8. The contract with Hi Trans was worth in the vicinity of $40,000 to $50,000 per month gross to the plaintiff.
(Page 6)
- 9. In May of 2001 an employee of ours, Dave Clarson gave notice that he was to leave our employment. Mr Clarson was an assistant to Mr Shawyer in the performance of his duties.
10. We have a situation in our warehouse where a number of clients deliver freight to us on pellets, and the pallets are on hire from a third party such as Chep. It is our responsibility to forward the pallets to Chep once they have been unloaded in our warehouse or transfer them to the customer from where we took the freight.
11. It is therefore important that we reconcile the number of pallets in our possession regularly.
12. When Mr Clarson gave notice that he was leaving I instructed Mr Shawyer to ensure that the pallets are reconciled by Mr Clarson before he left.
13. One of the customers with whom we operated on that basis was Hi Trans.
14. In May or June 2001 the defendant told me that Hi Trans had advised him that there were about 2,000 pallets missing, but that he and Mr Clarson had reconciled and ascertained that in fact there were only 200 pallets missing.
15. At around about that time the defendant also told me the situation with Hi Trans was all under control, that they had exchanged faxes and that the situation with the missing pallets had been reconciled. He told me that the situation with Hi Trans had been sorted out.
16. As a result of that advice to me by the defendant 1 and the plaintiff made no enquiries into the missing pallets.
17. In about October 2001 I received a [re]conciliation from Hi Trans with relation to outstanding pallets. Annexed hereto and marked 'CAH2' is a copy of the reconciliation statement which I received.
18. That was the first indication I had that the situation with the missing pallets had not been resolved as I had been
(Page 7)
- advised by the defendant. I subsequently raised that issue with the defendant who was unable to assist with any reconciliation as he had no record with respect to the matter.
- 19. I then asked him to provide me with the fax that he had signed off on with Hi Trans when he had told me that the matter had been sorted out, and he was unable to provide that to me. He told me that he couldn't find it."
13 Mr Shawyer's response to that is as follows:
"5. The instruction by Craig Hughes in or about June 2001 to conduct the reconciliation with David Clarson was the first time I had been instructed to do a reconciliation during my employment with Kwik & Swift. In my view I was merely assisting David Clarson in a task that was his primary responsibility.
6. In order to conduct the reconciliation in or about June 2001 we relied on the relevant documentation kept and provided by David Clarson with respect to the movement of pallets.
7. After handing the reconciliation documentation to Craig Hughes in or about June 2001, to the best of my knowledge it was Craig Hughes that was in contact with staff of Hi-Trans with respect to the pallet reconciliation or any outstanding pallets or both.
8. I was never in contact with any member of staff from Hi-Trans in relation to the issue of outstanding pallets or pallet reconciliation or both.
9. The communications and the substance of the communications between Craig Hughes and the staff of Hi-Trans was never brought to my attention by Craig Hughes.
10. I did not conduct any further reconciliations of pallets after the June 2001 reconciliation.
(Page 8)
- 11. I was never questioned about, or made aware of my responsibility for, the pallet reconciliation or any outstanding pallets by Craig Hughes.
12. The amount of outstanding pallets was never brought to my attention by Craig Hughes until his affidavit was provided to me.
13. At no time prior to receiving the Plaintiffs court documents have I ever received a demand in relation to any outstanding pallets."
14 I have no doubt that an employee, such as Mr Shawyer, owes a contractual duty to his employer, the plaintiff, to carry out his duties with reasonable care and skill: Wylie v ANI Corporation Ltd [2000] QCA 314; [2002] 1 Qd R 320. His duty in relation to the pallets was not simply to ensure that the pallets were reconciled by Mr Clarson before he left the plaintiff's employ in about May 2001. His duty to his employer would include a duty to report to the employer on any problems he found in relation to the pallets. Mr Hughes says, at pars 14 and following, that, in May or June 2001, Shawyer told him that Hi Trans had advised that there were about 2,000 pallets missing, but that he and Mr Clarson had done a reconciliation and ascertained that only about 200 pallets were missing. He is also said to have told Mr Hughes that the situation with Hi-Trans was under control, that they had exchanged faxes and that the missing pallets had been reconciled, and that the situation with Hi Trans had been sorted out. All these statements, said to have been made by Mr Shawyer to Mr Hughes, are denied. Mr Shawyer says that he never communicated with Hi Trans about the pallet reconciliation. Those communications were left to Mr Hughes.
15 Mr Hughes says that in or about October 2001, he received a reconciliation from Hi Trans in relation to the outstanding pallets. He has annexed that reconciliation and it appears to be a faxed document, faxed on Friday, 2 November 2001 at 2.37 pm. I consider that there is a simple conflict of evidence between Mr Hughes and Mr Shawyer on whether Shawyer told Hughes in May or June that Hi Trans had advised that about 2,000 pallets were missing, but that he and Mr Clarson had reconciled the pallets and found out that only 200 pallets were missing and that they had exchanged faxes with Hi Trans and that the situation had been sorted out - meaning, I think, that the plaintiff's view that only 200 pallets were missing was accepted by Hi Trans. That is strenuously denied by
(Page 9)
- Mr Shawyer, nevertheless that is a simple conflict of oral evidence. I think it raises a genuine offsetting claim.
16 Mr Hughes says that, in or about October 2001, he received a reconciliation from Hi Trans in relation to the outstanding pallets which he has annexed and that he raised the matter with the defendant, who was unable to assist with any reconciliations as he had no record of it. Hughes asked Shawyer to find the fax that he had signed off on with Hi Trans when he told him the matter had been sorted out and Shawyer was unable to provide it to him. He could not find it. All that, too, is disputed by Mr Shawyer. The reconciliation statement from Hi Trans, which is annexed to Mr Hughes' affidavit, may assist Mr Shawyer on this. As stated, it is dated 2 November 2001, at 2.37 pm. This is in the afternoon of the day on which Mr Shawyer left work and it may be that the matter was not drawn to Mr Shawyer's attention at that late stage. Be that as it may, the conflict of oral evidence mentioned earlier raises, I think, a genuine offsetting claim. I need not quantify that claim. The 2,200 pallets missing totalled about $53,000, according to the statement mentioned of 2 November. Mr Hughes was able to settle with Hi Trans for a figure of $26,000. Mr Shawyer's arguable breach of duty in this regard does not make him liable for this full figure. Neither can it be said, on the brief evidence before me, that the defendant's negligent performance of his duties in relation to these pallets caused the plaintiff to lose the Hi Trans contract, worth approximately $40,000 or $50,000 gross per month. It is arguable, however, that Mr Shawyer made those statements alleged against him in May or June, shortly after he and Mr Clarson did the pallet reconciliation. It is also arguable that his misconduct resulted in a loss of at least several thousand dollars to the plaintiff. That is sufficient, given that the defendant's claim, as set out in the statutory demand, is for only $3,380.70.
17 The third claim raised relates to missing cash. I quote from par 28 of Mr Hughes' affidavit:
"28. Additionally, there is money missing from the plaintiff. There was a cash tin for which the defendant signed as receiving $1,300, but there is no record anywhere as to what that money was used for."
18 This allegation is denied. The allegation is so devoid of detail, for example, the date. It is also devoid of supporting evidence. Mr Hughes could have annexed a copy of the papers signed by Mr Shawyer, showing
(Page 10)
- him as receiving $1,300. This claim is so devoid of supporting detail and documentation that I do not regard it as a genuine offsetting claim.
19 The plaintiff's fourth claim relates to two mobile phones. In the letter to Mr Shawyer of 31 October 2001, already mentioned, in which Mr Hughes said that the three days' notice was unacceptable, Mr Hughes told Mr Shawyer that his request to transfer the company's mobile phone, number 041 9918372, to himself was not acceptable. He was also told in that letter to transfer "your wife's mobile phone to your personal account". The background to this is that both Mr Shawyer's mobile phone and his wife's mobile phone were on the plaintiff's account. Mr Hughes, at pars 26 and 27 of his affidavit, says that the defendant transferred his mobile phone account into his own name, thus taking the telephone number with him. Ultimately, Hughes had the telephone transferred back to the plaintiff company.
20 Hughes said that Shawyer's wife's mobile phone was a company phone provided to the defendant in the course of his employment, but which he allowed his wife to use. Hughes told him that he did not want the telephone back, but now that his employment had come to an end, he should transfer the contract for the mobile phone into his name. Shawyer refused to do this and there is an ongoing liability of the plaintiff as a result. The contract has approximately 18 months to run. I take it that the plaintiff is, thus, paying the monthly account for the telephone used by the defendant's wife.
21 Mr Shawyer, in his affidavit, has not said anything about the phones. He has denied receiving the letter of 31 October 2001, which sets out the plaintiff's instructions in relation to the two phones. Mr Shawyer says he did not see that letter until he received the court papers. Be that as it may, the letter is, I think, arguably a contemporaneous record of what Mr Hughes said to Mr Shawyer. He says in his affidavit that the matter of the phones was specifically discussed with the defendant prior to his leaving and, as I have related above, it was agreed that he would return his mobile phone to the company. He was allowed to transfer his wife's mobile phone into his wife's name. He did neither. He continued to use his mobile phone after his termination at the company's expense. Ultimately, Hughes had the phone transferred back to him. Shawyer's retention of this phone represents a loss to the company. No figure is put on that loss, but it is a loss, nevertheless. Likewise, with the wife's mobile phone. Shawyer was allowed to keep that phone, but the contract for it had to be transferred into his wife's name. This was not done and the plaintiff continued to pay the fees due under that contract. That sum, too,
(Page 11)
- is not quantified. Nevertheless, I think these phone complaints are genuine offsetting claims.
22 In summary, I consider the plaintiff has raised genuine offsetting claims in relation to the defendant's work and statements about the pallets and in relation to the defendant's misuse of plaintiff's the two mobile phones following his resignation. For these reasons, the statutory demand will be set aside.
23 I will hear the parties on the orders and on the question of costs.
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