Medussa Enterprises Pty Ltd v Nationwide Concrete Pumping Pty Ltd
[2017] VSC 275
•24 May 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2017 00182
| MEDUSSA ENTERPRISES PTY LTD (ACN 611 831 219) | Plaintiff |
| v | |
| NATIONWIDE CONCRETE PUMPING PTY LTD (ACN 154 123 430) | Defendant |
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JUDGE: | Gardiner AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 21 March 2017 |
DATE OF JUDGMENT: | 24 May 2017 |
CASE MAY BE CITED AS: | Medussa Enterprises Pty Ltd v Nationwide Concrete Pumping Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2017] VSC 275 First Revision: 2 June 2017 |
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CORPORATIONS – Corporations Act 2001 (Cth), s 459G – Application to set aside statutory demand by reason of alleged genuine dispute in respect of the debt – Alleged dispute found to be spurious and implausible - Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms J Lucas | Noble House Lawyers |
| For the Defendant | Mr A Downie | Macpherson Kelley Lawyers |
HIS HONOUR:
The plaintiff, Medussa Enterprises Pty Ltd (‘Medussa’) makes application pursuant to s 459G of the Corporations Act 2001 (Cth) (‘the Act’) by originating process filed 20 January 2017 to set aside a statutory demand served on Medussa by the defendant, Nationwide Concrete Pumping Pty Ltd (‘Nationwide’) on 13 January 2017.
Nationwide had initially contended that the application had not been filed and served within the 21 day period prescribed by s 459G(2) of the Act and that there was therefore no valid application to set aside the statutory demand. A great deal of the affidavit material filed in the proceeding was directed to that issue. The statutory demand was posted from the Melbourne CBD to Medussa on 12 December 2016, but the evidence of Medussa was that it only received it by post at its registered office in East Malvern over a month later, on 13 January 2017.
Despite the somewhat extraordinary period it is said that the document took to arrive at Medussa’s registered office, I observed to Mr Downie, counsel for Nationwide at the outset of the hearing that Medussa had, by its evidence, appeared to displace the presumptions afforded by s 29(1) of the Acts Interpretation Act (1901) (Cth)[1] and s 160 of the Evidence Act 1995 (Cth).[2] Mr Downie, properly in my view, conceded that the application had been made in time within the 21 day period prescribed by s 459G(2) of the Act.
[1]Section 29(1) provides for a presumption that service is effected at the time that the article would be delivered in the ordinary course of post unless the contrary is proved.
[2]Section 160 provides that a postal article sent by pre-paid post addressed to the person at a specified address is presumed to be received that address on the fourth working day after having been posted.
The application then proceeded on the substantive issue as to whether Medussa had established the existence of a genuine dispute in respect of the debt the subject of the demand. Resolution of that issue involved Medussa establishing that it was not the relevant contracting party with Nationwide but rather was an associated company in its corporate group, Ausform Resources Group Pty Ltd. There is no dispute that Nationwide supplied the concrete which is the subject of the invoices upon which the demand was based.
For reasons which follow, I do not consider that Medussa has established that it has a genuine dispute in regard to the debt the subject of the demand and that the proceeding should be dismissed.
Medussa filed several affidavits in support of the application being those of Melissa McMillan, sworn 18 January 2017 and 16 March 2017, Melissa Patterson sworn 18 January 2017 and Dimitrious Likopoulos sworn 20 January 2017 and 16 March 2017.[3] Nationwide relied on affidavits of its solicitor, Jesvinjit Kaur Boparoy, sworn 20 March 2017 and Michael Toh sworn 28 February 2017.
[3]The affidavits of Ms McMillan and Ms Patterson were concerned only with the issue of service of the application and are no longer relevant.
Legal principles
In the decision of the Court of Appeal in this State of Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq),[4] the principles applicable in applications to set aside statutory demands were succinctly summarised as follows (citations omitted):
[4][2015] VSCA 330, [47]-[51].
The terms of s 459H of the Corporations Act and the authorities make clear that, on an application to set aside a statutory demand, the applicant is required only to establish a genuine dispute or offsetting claim. The applicant is required to evidence the assertions relevant to the alleged dispute or offsetting claim only to the extent necessary for that primary task. It is not necessary for the applicant to advance a fully evidenced claim. Therefore, the task faced by an applicant is by no means at all a difficult or demanding one.
In determining such an application, it is not necessary or appropriate for a court to engage in an in-depth examination or determination of the merits of the alleged dispute. This is because an application alleging a genuine dispute or offsetting claim is akin to one for an interlocutory injunction and requires the applicant to establish that there is a ‘plausible contention requiring investigation’ of the existence of either a dispute as to the debt or an offsetting claim. It is therefore 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. Further, the determination of the ‘ultimate question’ of the existence of the debt at a substantive hearing should not be compromised.
The court is required to determine whether the dispute or offsetting claim is ‘genuine’. It has been said that the criterion of a ‘genuine’ dispute requires that the dispute be bona fide and truly exist in fact and that the grounds for alleging the existence of a dispute be real and not spurious, hypothetical, illusory or misconceived. It has also been observed that the dispute or offsetting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion. It must also have sufficient factual particularity to exclude the merely fanciful or futile. A rigorous curial approach is essential to the effective operation of the statutory scheme.
The court is not required to accept uncritically 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, as it may not have sufficient prima facie plausibility to merit further investigation as to its truth. The court is also not required to accept uncritically a patently feeble legal argument or an assertion of facts unsupported by evidence, although this should not be read as suggesting that the applicant must formally or comprehensively evidence the basis of its dispute or off-setting claim. Except in such extreme cases, the court should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on by the applicant to set aside a statutory demand.
Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd involved a demand for payment of a debt alleged to be due under a contract for the supply of goods. The applicant relied on four matters, each of which had the potential to affect the respondent’s entitlement to be paid the entire amount of the debt. Barrett J held that all four matters were sufficiently plausible to raise a genuine dispute. He relevantly stated:
The [applicant] will fail in [the] task [of establishing a genuine dispute] only if … the contentions upon which it seeks to rely … are so devoid of substance that no further investigation is warranted. Once the [applicant] shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the [applicant], it must find that a genuine dispute exists, even where any case apparently available to be advanced against the [applicant] seems stronger.
In Powerhouse Australasia Pty Ltd v Viarc Pty Ltd,[5] Dodds‑Streeton J considered the approach and standard to be applied when dealing with applications of this type:
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.[6]
[emphasis added]
[5][2006] VSC 508.
[6]Ibid [48].
Medussa’s affidavit evidence in support of the application
In his affidavit of 20 January 2017, Mr Likopoulos deposes that he is an authorised representative of Medussa and that he has an intimate knowledge of the matters the subject of this application. He states that on 24 October 2016, Nationwide issued several tax invoices to Ausform Constructions Vic Pty Ltd (‘Ausform Vic’). He states that that company has been deregistered since late 2014. Until it was deregistered Ausform Vic was a member of a group of companies associated with Mr Likopoulos and his family.
Shortly afterwards, on 26 October 2016, Nationwide reissued the tax invoices, this time to Medussa. The invoices noted that Medussa previously traded as ‘Ausform Constructions’ although Mr Likopoulos states that there has never been such an affiliation.
Later the same day, Nationwide reissued the same tax invoices to Medussa at its business address but omitting reference to the ‘Ausform Constructions’ connection. Mr Likopoulos states there is no contract or signed agreement between Medussa and Nationwide.
Mr Likopoulos also asserts that there is a genuine dispute about the value and validity of the amount that Nationwide seeks to recover from Medussa but this assertion was never developed in Medussa’s evidence.
The ASIC search for Medussa which is exhibited to Mr Likopoulos’ affidavit reveals that it was incorporated on 13 April 2016 and its sole director is Argyro Sylvia Barbardonis. The invoices referred to are exhibited and reveal that the demand is in respect of concrete supplied by Nationwide to sites at Northcote and Toorak. The concrete was all supplied in the month of July 2016.
Nationwide’s evidence in opposition to the application
In his affidavit, Michael Toh deposes that he is an accountant employed by Nationwide. Nationwide is a supplier of concrete and concrete pumping services. He states that the trading relationship with Medussa caused some ‘initial confusion’, as the entity that initially approached Nationwide for the supply of concrete on 2 July 2016 was Ausform Constructions Pty Ltd, ACN 167 888 502. Dimitrios Likopoulos is the sole director of that company. Mr Toh states that Nationwide was not aware that that company was in liquidation until Nationwide’s solicitors conducted an ASIC search of that company on 8 December 2016. (The company search reveals that the company was incorporated on 5 February 2014 and went into liquidation on 21 April 2016, a week after Medussa was incorporated on 13 April 2016).
Mr Toh exhibits a purchase order on Ausform Constructions Pty Ltd letterhead, directed to Nationwide, dated 5 July 2016, placing an order for concrete to be delivered to the Northcote site. Nationwide then proceeded to invoice Ausform Constructions Pty Ltd for concrete delivered to the two sites between 2 July 2016 and 30 July 2016.
Mr Toh states that when payment had not been received by August 2016, Nationwide’s accounts department pursued payment with what he describes as ‘Ausform’s accounts department’ on 17 September 2016 and 25 October 2016. Those queries were directed to the email addresses ‘[email protected]’ and ‘[email protected]’. Argyro Sylvia Barbadonis (‘Sylvia’) is the director of Medussa.
On 25 October 2016, shortly after the second email was sent, a Ms Pam Roberts of Nationwide’s accounts department received an email from Mr Aaron Dooley, who indicated that he was the general manager of Ausform, stating that:
The company on your Invoice “Ausform Constructions Vic Pty Ltd” is not our company name. This company was deregistered back in 2014 and further the address you have mailed is not our registered Address.
Our company details are:
Name: Medussa Enterprises Pty Ltd,
Address: 1/11-17 Cyber Loop, Dandenong South VIC 3175
Email: [email protected] , [email protected]Any services you have provided to our company must have the correct details. Please send any relevant Invoices to us with the above company details so we can commence processing.[7]
[7]Exhibit “MH-8” to Mr Toh’s affidavit sworn 28 February 2017.
Mr Toh notes that the email addresses provided were that of both Medussa and Ausform, and the address provided for Medussa is also the same address as Ausform’s at Cyber Loop in Dandenong South. In signing off his email, Mr Dooley used the email signature template ‘Aaron Dooley - General Manager - Ausform Constructions’, without any denotation of it being a proprietary limited company, a business name or otherwise.
On 26 October 2016, Mr Toh sent an email to Mr Dooley with copies of the invoices made out to Medussa as requested.
Shortly afterwards, on the same day, he received a further email from Mr Dooley, thanking him ‘for duly complying with our requirements and instructions regarding invoicing this will enable myself and our accounts department to process your invoices.’[8] He stated ‘I appreciate the works may have been performed in July however I hope Nationwide understand due to no fault of our own we have not received any Invoices until now.’[9] He said that he would make sure payment was made ‘in their next pay run.’ He again signed off as the general manager of ‘Ausform Constructions’; a prominent logo bearing that name also appeared at the footer of the email but the email template did not reveal the identity of the entity trading under that name.
[8]Exhibit “MH-10” to Mr Toh’s affidavit sworn 28 February 2017.
[9]Ibid.
Mr Toh states that he spoke with a John Likopoulos a number of times in November 2016. Mr Likopoulos identified himself to Mr Toh at one point as the finance manager of Medussa and then subsequently as its managing director to Ms Roberts of Nationwide’s accounts department. He understands that John Likopoulos is the father of the director of Medussa, Ms Barbadonis, and Dimitrios Likopoulos, the director of Ausform Constructions Pty Ltd (in liquidation). John Likopoulos informed Mr Toh that he would look into the matter and see what he could do to help. He stated that since the resubmitted invoices had missed the cut-off date of 25 October 2016, they would now be processed in January 2017. These matters were confirmed in an email from Mr Toh to John Likopoulos of 1 December 2016[10]. In that email, Mr Toh stated:
[10]Exhibit “MH-11” to Mr Toh’s affidavit sworn 28 February 2017.
John,
I have spoken to you at length first time on the 8th Nov when you identified yourself as the Finance Manager. Last week when our Pam Roberts spoke to you in details [sic], you informed her you are the Managing Director.
Your defence and continued excuse in delaying our payment until January 17 rest on the premises that we should invoice directly to Medussa Enterprises instead to Ausform Pty Ltd.
This has never been communicated to us clearly when you sought Gordon Hall to provide concrete pumping service to you.
The irony of this issue is your correspondence with us and dealing with our Sales Manager Gordon Hall continues to be Ausform Construction.
Your only consolation to us to date was “I will look into this and see what I can do to help as Nationwide Concrete has invoiced to the wrong company and since your resubmitted invoices miss our cut-off date being 25th Oct 16, you now going to get paid in January 2017.” Such statement from you does not confer nor provide any comfort to us as we are staring into a 150 days overdue account.
The eight pours in July 16 was the only month your company dealt with us.
Since then there have been no further orders or request from you to do concrete pumping work.
Your paper works [sic] and all your correspondence with us including our recorded conversations are now with our lawyers.
Unless I hear from you by close of business day tomorrow to resolve this impasse, we will commence legal action against Ausform, Medussa Enterprises and your associated companies.
That will quickly be followed by a Federal Court Summon [sic] for Payment Default against your Group and its Directors.
Regards.
Michael Toh.
The balance of the documentation exhibited by Mr Toh consists of correspondence passing between the solicitors. The stance taken by Medussa’s lawyers was that there was a genuine dispute and that Medussa would be seeking indemnity costs in any application to set aside a statutory demand which was served on it. Medussa’s solicitors responded contending that Medussa was a phoenix company that was registered on 13 April 2016 just prior to the liquidation of Ausform Constructions Pty Ltd on 21 April 2016.
In an affidavit of Jesvinjit Kaur Boparoy, Ms Boparoy deposes that she is the solicitor for Nationwide in this proceeding. She states that on 16 March 2017 she sent an email to Mr Andrew Wily, the liquidator of Ausform Constructions Pty Ltd, ACN 167 888 582, seeking clarification of whether the liquidator and his staff were aware of the purchase order dated 5 July 2016 which was provided by Ausform Constructions Pty Ltd to Nationwide and whether he had authorised the purchase order.
On 16 March 2017, the liquidator’s office responded, confirming that Ausform Constructions Pty Ltd ceased to trade on 12 April 2016 and that the liquidator had no knowledge of the purchase order referred to.
I note that Ausform Constructions Pty Ltd ceased to trade the day before Medussa was incorporated and that Ausform Constructions Pty Ltd went into liquidation a week later, on 21 April 2016.
Medussa’s evidence in reply
In his affidavit of 16 March 2017, Dimitrios Likopoulos asserts that Ausform Projects Group Pty Ltd owns and trades under the business name Ausform Constructions but he provides no evidence in support of such assertion such as a certificate of registration of business name. He states that he is a director of that company. An ASIC extract reveals that Ausform Projects Group Pty Ltd was incorporated on 17 March 2016 at a time when Ausform Constructions Pty Ltd was still trading as a corporate entity. It is not stated when Ausform Projects Group Pty Ltd assumed ownership of the name Ausform Constructions.
He deposes that he is a director of Ausform Resources Group Pty Ltd which is a project management company that subcontracts work from Ausform Projects Group Pty Ltd. He states that Ausform Resources Group Pty Ltd subcontracts work to Medussa and engages contractors and labour for those works.
He exhibits the ASIC extract for Ausform Constructions Vic Pty Ltd which states that that company was deregistered on 2 September 2015. The extract reveals that, prior to its deregistration, the company was in liquidation as a result of a creditors voluntary winding up.
Mr Likopoulos states that Aaron Dooley is an employee of Ausform Projects Group Pty Ltd and an authorised representative of Ausform Resources Group Pty Ltd and that he is not an employee of Medussa. He states that the email signatures of emails sent by Mr Dooley to Nationwide refer to Ausform Constructions, which is the trading name of Ausform Projects Group Pty Ltd, not the deregistered company as alleged by Nationwide. He asserts that Mr Dooley has no express or implied authority to bind or make any agreement between Medussa and Nationwide.
None of the contemporaneous documentation exhibited in this proceeding mentions Ausform Projects Group Pty Ltd or Ausform Resources Group Pty Ltd. The first reference to those companies is in Mr Likopoulos’ affidavit in reply but the entity in the group which is said to have ordered the concrete is not identified by Mr Likopoulos. Indeed it was only at the hearing of this matter when I asked Ms Lucas, counsel for Medussa, which entity contracted for the delivery of the concrete that Ausform Resources Group Pty Ltd was said to be the contracting party.
A very significant feature of this matter is that neither Mr Dooley, who is apparently still employed by this group of companies, or John Likopoulos, who held himself out at various points to be the finance manager and the managing director of Medussa have gone on affidavit taking issue with Mr Toh’s evidence, explaining their involvement in the matter and their communications with representatives of Nationwide. Mr Toh’s evidence concerning those communications is plausible and uncontradicted. The director of Medussa, Ms Barbidonas, who is the sole director of Medussa and the person primarily responsible for its affairs, has not gone into evidence either as one would expect. Nor is it explained how Nationwide was made aware that its contract was with Ausform Resources Group Pty Ltd. The only evidence pointing to who Nationwide was contracting with is that of the emails from Mr Dooley, who is held out on the emails template to be the general manager of “Ausform Constructions” who indicates that the contract is with Medussa. Despite deposing that he has intimate familiarity with the facts of this matter, it does not appear from the evidence that Dimitrios Likopoulos, who is not a director of Medussa, had any involvement in the subject transactions or, if he did, he does not mention any such involvement.
Ms Lucas contended that a genuine dispute arises on the evidence regarding the ostensible authority of Mr Dooley to make the representations in respect of Medussa being the contracting party. She made reference to the decision of Whelan J as he then was in Flexirent Capital Pty Ltd v EBS Consulting Pty Ltd & Ors[11] where the relevant principles in respect of ostensible authority were summarised as follows:
(a)Apparent authority operates as an estoppel preventing a principal from asserting that the principal is not bound by a contract where the principal has held the agent out as having authority.
(b)The holding out may be of a general character, arising for example out of an office or position in which the principal places the agent, or it may be specific to a particular transaction. The holding out may take the form of the setting up of an organisation or structure which presents to outsiders an appearance of authority in the agent.
(c)The holding out must be conduct by the principal, not the agent. A third party cannot rely upon the agent’s own representation as to authority. But this does not mean that the agent’s conduct is to be ignored. The principal may hold out the agent as having authority by permitting the agent to act in a certain way or to make representations about himself or herself, or the principal may hold the agent out by equipping or arming the agent with a document or thing which enables the agent to assert authority with the hallmark of authenticity.
(d)The holding out may also result from permitting an agent to act in a certain manner, or by equipping or arming the agent, or by a failure to take proper safeguards against misrepresentation by the agent.
(e)The principal’s conduct is to be assessed as a whole and in its totality.
[11][2007] VSC 158 [203].
Here, Mr Dooley was clearly held out as the general manager of the corporate group of which Medussa is a member who responded to demands by Nationwide to address the position regarding payment of the invoices. He is clearly a senior employee in the group of companies and he was permitted to represent himself as the general manager of this group of companies in his email signature template. His response was to identify Medussa as the relevant corporate entity in the group which was the contracting party with Nationwide.
It seems clear that when the concrete was ordered from Nationwide, it could not have been on behalf of Ausform Constructions Vic Pty Ltd, which had been deregistered in 2015 and was therefore non existent. Nor could it have been ordered by Ausform Constructions Pty Ltd, which was in liquidation and had been so for several months prior to the relevant events. Those formerly in control of that company had lost all agency to enter into contracts on its behalf. When I enquired of counsel for Medussa, Ms Lucas, as to who the contracting party was, she stated it was Ausform Resources Pty Ltd, but as I have remarked, nowhere in the contemporaneous documentation is that company mentioned. To my mind, Mr Dooley and Mr John Likopoulos were armed by Medussa with ostensible authority in the communications they had with Mr Toh and Nationwide’s bookkeeper as to whom the relevant invoices should be directed to.
Mr Likopoulos’ second affidavit reveals a corporate labyrinth (some of whose members are deregistered or in liquidation) but nowhere does he explain how it is that Nationwide would have been made aware that it was contracting with Ausform Resources Pty Ltd. Those who had the ostensible authority to speak on behalf of the group of companies indicated that it was Medussa which was the contracting party and they have not gone on oath to explain why they made such representations as they did when demand was being pressed for payment.
Medussa bears the onus of establishing that there is a genuine dispute in this matter and the Court, in considering that question, is entitled to have regard to the contemporaneous documents and the evidence of communications occurring at or about the time the relevant events occurred.
Medussa has not in my opinion established the existence of a genuine dispute. Indeed I regard the position being put up by Medussa as being spurious and implausible. I do not regard the dispute which is raised by it as being genuine and I would dismiss the application with costs.
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