Mainlink Developments Pty Limited v BAM (Australia) Pty Limited

[2003] NSWSC 832

CITATION:	Mainlink Developments Pty Limited v BAM (Australia) Pty Limited [2003] NSWSC 832
HEARING DATE(S):	09/09/03
JUDGMENT DATE:	9 September 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Master Macready at 1
DECISION:
CATCHWORDS:	Corporations Law. Application to set aside demand under s 459G of the Corporations Act. Demand set aside. No matter of principle
PARTIES :	Mainlink Developments Pty Limited v BAM (Australia) Pty Limited
FILE NUMBER(S):	SC 3655/03
COUNSEL:	J.T. Johnson for plaintiff. A.S., Patterson for defendant
SOLICITORS:	Dennis and Company for plaintiff Access Legal Pty Limited for defendant

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THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER MACREADY

TUESDAY 9 SEPTEMBER 2003

3655/03 - MAINLINK DEVELOPMENTS PTY LIMITED v BAM (AUSTRALIA) PTY LIMITED

JUDGMENT

1 MASTER: This is an application to set aside a statutory demand dated 23 June 2003 claiming a sum of $31,713.60, being a balance due for performing brickwork at properties at Cheltenham and Fairfield between July 2002 and November 2003. The plaintiff says that a genuine dispute exists for two reasons: one, the company to whom the demand was addressed was not the contracted party, two, there was a compromise for the amount owing for $25,000 which amount was paid.

2 I think the appropriate principles in considering what is a genuine dispute are given by McLelland CJ in Equity in Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACLC 669. At page 671 his Honour made the following comments respect of the expression "Genuine dispute":

"It is, however, necessary to consider the meaning of the expression 'genuine dispute' where it occurs in s.459H. 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' (cf Eng Mee Yong v Letchumanan (1980) AC 331 at 341), or 'a patently feeble legal argument, or an assertion of facts unsupported by evidence' (cf South Australia v Wall (1980) 24 SASR 189 at 194).

But it does mean that, except in such an extreme case, a Court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. In Mibor Investments (at ACLC 1066; ACSR 366-7) Hayne J said, after referring to the state of the law prior to the enactment of Division 3 of Part 5.4 of the Corporations Law, and to the terms of Division 3:

'These matters, taken in combination, suggest that at least in most cases, it is not expected that the Court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the Court conclude that there is a dispute and that it is a genuine dispute.'

3 In Re Morris Catering (Australia) Pty Limited (1993) 11 ACLC 919 at 922; (1993) 11 ACSR 601 at 605 Thomas J said:

'There is little doubt that Division 3 . . . prescribes a formula that requires the Court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the Court will examine the merits or settle the dispute. The specified limits of the Court's examination are the ascertainment of whether there is a "genuine dispute" and whether there is a "genuine claim".

It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it) the Court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another.

The essential task is relatively simply - to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it).'

I respectfully agree with those statements."

4 I turn to the question of who was the contracting party. The evidence is that it was in July 2002 which is when these projects commenced. There have been two companies. One is Mainlink Developments Pty Limited and the other is Mainlink Constructions Pty Limited. That latter company had formally been called Mainlink Developments Pty Limited. In the affidavit of Peter Birch of 22 August 2002 he identifies the former company, Mainlink Developments, as a developer who did no building work. In para 3 he clearly identified the second company, Mainlink Constructions, as the one who entered into the arrangement with the defendant.

5 It is necessary, of course, to see what other evidence there might be touching on the question of identity. In Mr Day's affidavit of 8 August 2003 he annexes a number of invoices which he sent for the brickwork he had done. They were addressed to Mainlink Pty Limited, a company which is totally unrelated to either of the relevant companies in this matter.

6 In Mr Day's affidavit of 8 September 2003, in para 8, he says that he had a conversation with a Mr Flora of RSB Property Group Number 5 Pty Limited. How that company relates to the matter I do not know. It may well have been the owner of the project. The conversation which he had with that person indicates that Mr Day did not know precisely which company, but he was told it was Mainlink Developments Pty Limited.

7 The problem about that evidence is that it does not clearly date as to when the relevant contract occurred and what time the person is actually speaking of when he refers to hiring Mainlink Developments Pty Limited. Be that as it may, but assuming perhaps a favourable construction on the evidence that it was at the relevant time, it seems to me that there is thus perhaps two pieces of evidence which might suggest one way from one piece of evidence and one way from another.

8 It was submitted that para 3(a) of the affidavit in support of Peter Birch of 3 July 2003 was an admission that Mainlink Developments Pty Limited was the builder. In my view, there is no possible way of construing that as an admission that the plaintiff was the builder. The plaintiff was, in fact, a plaintiff because it was the one who received a notice of demand and has to take steps to set it aside. Just because it makes reference to payment of an amount that certainly does not identify who was the actual contracting party. It is very likely, of course, that if Mainlink Development was the developer that it may have been providing the finance.

9 In my view, I am satisfied on the evidence there is a genuine dispute as to whether the plaintiff was a relevant contracting party.

10 I turn to the question of the compromise. There was a meeting between Mr Birch and Mr Day to discuss payment and the next day a meeting between them again at the solicitor's office where Mr Hocking, the solicitor, participated. Annexure D to Mr Birch's affidavit of 3 July appears to be a calculation of what was then an amount owing of some $32,500 which appears to have been in initialled by both parties.

11 It is clear from the evidence that there were other discussions about whether there should be a payment of a lesser sum than this in order to compromise the matter. That information appears in para 25 of Mr Day's affidavit of 8 August 2003. He states that when he got to the meeting with the solicitor, Mr Birch placed in front of him a cheque for $25,000 and a document. The document which was placed before him was in the following form:

“We BAM (Australia) Pty Limited acknowledge receipt of $25,000 in full payment of all and any money due and payable to us on any job with Mainlink Developments Pty Limited and Mainlink Constructions Pty Limited or Paul Birch or Peter Birch or Brett Deres, on this 21 day of January 2003.
No further monies are owed to us by the above parties. For and on behalf of BAM (Australia) Pty Limited.”

12 He was told he had to sign it and was asked if he did that whether he could get the rest of his money back and he was told he could not. He then refused to sign it and it seemed to be a stalemate. He had another look at the document and then signed it in a particular way. He signed it not by his name but using "No way". He then indicated he was a director. He was given the cheque. He left the meeting with the cheque and banked it in due course.

13 The actual matters that arise, I think, on the question of the compromise is certainly whether or not by signing in the way that he did he did mean and intend to bind himself or his company on whose behalf he was signing. If he did not then clearly it was a deception that was practised because he went away with the cheque. That is, I think, a debatable issue as to whether or not he did, in fact, bind the company to the compromise.

14 The other matter is the question of consideration for the compromise and the only evidence that there might be consideration appears in the evidence of what happened in the discussions the day before. There are allegations, according to Mr Day, that Mr Birch said any payment from Mainlink would be worthless because a liquidator would claim it back. He ultimately provided a third party cheque, made out to cash to make the payment.

15 I think it is certainly arguable that there is consideration for the $25,000 and that consideration is the prompt payment, and the payment by the particular form of cheque in the circumstances where the relevant building company was in financial difficulties.

16 In the circumstances, I think the question of a compromise does raise a genuine dispute which is another ground for setting aside the demand. Accordingly, I order that the statutory demand served by the defendant on the plaintiffs dated 23 June 2003 be set aside. I order the defendant to pay the plaintiff's costs.

17 There has been an application for indemnity costs in this matter. The basis is that before the demand expired there was an attempt to have the matter withdrawn. The defendant obviously did not withdraw the demand and was given notice that indemnity costs were to be sought. Although I have come to a conclusion about whether or not there is a genuine dispute, I do think the matters were arguable and accordingly I do not think there is a relevant delinquency. Costs will be on a party and party basis.

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Last Modified: 10/07/2003