National v Parsa

[2003] NSWSC 282

CITATION:	National v Parsa [2003] NSWSC 282
HEARING DATE(S):	03/04/2003
JUDGMENT DATE:	4 April 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Master Macready at 1
DECISION:	Paragraph 15
CATCHWORDS:	Corporations Law. Application to set aside statutory demand. Demand set aside. No matter of princiiple.
PARTIES :	National Building Maintenance Pty Ltd v Ahmad Parsa & Anor
FILE NUMBER(S):	SC 1469/2003
COUNSEL:	Mr M. Rogers for plaintiff Miss T. Middleton for defendant
SOLICITORS:	Michael Rogers & Co for plaintiff Macquarie Legal Practice for defendant

- 1 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER MACREADY

THURSDAY 3 APRIL 2003

1469/03 - NATIONAL BUILDING MAINTENANCE PTY LIMITED v AHMED PARSA & ORS

JUDGMENT

1 MASTER: This is the hearing of an application to set aside a statutory demand under s 459(2) of the Corporations Law. The statutory demand was dated 21 January 2003 and was in the sum of $50,000.

2 The demand seeks the recovery of what was described as a loan advanced to the plaintiff company, which was made on 28 November 2001, for the term of twelve months. It refers to the payment of the sum of $50,000.

3 There is no doubt that the defendants paid the plaintiff $50,000, but the circumstances in which it came to be made are the circumstances which the plaintiff suggests, gives rise to a genuine dispute as to whether or not the money was paid to it by way of loan, or whether it in fact was a payment made by Mr Minotti, then a solicitor of this Court, for his own outstanding building work.

4 I have had submissions in respect of the principles as to what is a genuine dispute, and I think the most useful summation of that is that given by McLelland CJ in EQ in Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACLC 669. At page 671 his Honour made the following comments in 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 ass to (its) truth’ (cf Eng Mee Yong v Letchumanan (1980) APPLICANT 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.’

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 simple – 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.”

5 The plaintiff’s case is that the company is a building company. It carries on business primarily dealing with concrete repair and waterproofing. The company’s solicitor used to be Mr Minotti and at one stage in 1998 he was a director of the company. The holding company of the plaintiff is a company Arlett Pty Limited and in that company Mr Minotti had a minority shareholding interest. The present director of the plaintiff company is Mr Wensemius and he holds shares in the company and shares in the holding company, and indeed a majority interest.

6 It is clear that Mr Minotti resigned as a director of the holding company at some stage in September 2002. That is likely to be about the time that he ceased to be a solicitor for the plaintiff company, because he went out of practice and apparently a manager has been appointed to that practice by the Law Society.

7 The events, however, surrounding the advancing of the money in this matter took place in November 2001. According to the affidavit of Mr Wensemius, the director of the plaintiff, the company carried out various building works for Mr Minotti in August 1998, and they were invoiced in the amount of $49,336.14. Apparently, prior to the events in question, Mr Wensemius had been pressing Mr Minotti for payment and he indicated to him he was able to obtain a loan. He then on 27 November 2001 gave a cheque in favour of the company, which was a cheque drawn obviously by the defendants.

8 In paragraph 9 the director swears to the fact that he was at no time informed by Mr Minotti or by the lender that the money had been borrowed by the company. Indeed, it would be hard to see how it could have been if Mr Minotti was no longer a director of the company. He had not been a director since 1998, according to the plaintiff company’s records.

9 Mr Wensemius agreed to pay interest on Mr Minotti’s loan so that he could get hold of the principal funds. He has also sworn to the fact that there were no security documents, loan documents or mortgage or any discussions regarding the loan prior to the funds being paid by Mr Minotti.

10 Mr Minotti had, however, been dealing on a different basis with the lenders and it is apparent from the defendants’ affidavits that they wanted to lend $50,000 and they wanted interest at 10% because they were borrowing the money on their home loan and had to pay 9% or 10% on that. They agreed to advance to an unidentified lender that Mr Minotti suggested provided Mr Minotti guaranteed the repayments and interest would be 20%.

11 At Mr Minotti’s request they provided a cheque in favour of National Building Maintenance Company Pty Limited for $50,000. According to the defendant Mr Minotti promised that he had received some mortgage security to secure the loan. Clearly, he had done nothing of the sort.

12 There is nothing in the circumstances that would give Mr Minotti any authority to contract for a loan on behalf of the plaintiff company. The explanation of pressing for past building services performed for Mr Minotti is also consistent with him having at an earlier time, some years before, an interest in the company. It is probably likely that the company did work for him.

13 In the circumstances, it seems to me that there is in fact a genuine dispute as to whether or not the moneys provided were provided pursuant to an agreement between the defendant and the plaintiff. Although Mr Minotti purported to be borrowing for a client, there is no evidence to show that in any way he was an agent of the plaintiff and could have bound the plaintiff, at least on the evidence before me.

14 What transpires when the parties argue this matter out fully in the Local Court, which they no doubt will have to do, no doubt will depend on whether Mr Minotti appears and gives evidence. In any event, I am satisfied there is a genuine dispute.

15 Accordingly, I order that the statutory demand dated 20 January 2003 be set aside. I order the defendant to pay the plaintiff’s costs.

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Last Modified: 04/09/2003