Peel Valley Mushrooms Limited v Corporate Investment Australia Funds Management Limited

[2000] NSWSC 958

Reported Decision: (2000) 35 ACSR 535

New South Wales

Supreme Court

CITATION:	Peel Valley Mushrooms Limited v Corporate Investment Australia Funds Management Limited [2000] NSWSC 958 revised - 31/10/2000
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 1850/00
HEARING DATE(S):	5 June 2000
JUDGMENT DATE:	16 October 2000
PARTIES :	Peel Valley Mushrooms Limited (Plaintiff) Corporate Investment Australia Funds Management Limited (ACN 059 438 514) (Defendant)
JUDGMENT OF:	Santow J

COUNSEL :	G A Seib (Plaintiff) P A Fury (Defendant)
SOLICITORS:	Aitken McLachlan & Thorpe (Plaintiff) Coudert Brothers (Defendant)
CATCHWORDS:	CORPORATIONS LAW — Unsuccessful application to set aside statutory demand — Based on whether terms of settlement as later to be reflected in a deed had become effective in accordance with the requirements of the terms of settlement and deed — Simultaneous exchange of deeds not required, if later exchanged — Meaning of delivery — Constructive delivery held sufficient — No substantial injustice from supposed misdescription of debt in the Demand under s459J of Corporations Law.
LEGISLATION CITED:	Corporations Law s459G; s459J Corporation Law Rules ("CLR") 1.2 and 1.3; 5.2; Form 7 Supreme Court Rules Pt 80A
CASES CITED:	Daewoo Australia Pty Limited v Suncorp-Metway Limited (2000) 33 ACSR 481 Domb & Anor v Isoz [1980] 1 Ch 548 Eccles v Bryant and Pollock [1948] 1 Ch 93 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 Goldspar Australia Pty Limited v KWA Design Group Pty Limited (1999) 17 ACLC 456 Hooker Industrial Developments Pty Limited v Trustees of the Christian Brothers [1977] 2 NSWLR 109 Kezarne Pty Limited v Sydney Asbestos Removal Services Pty Limited (1998) 29 ACSR 11 Morrow Marketing Pty Limited v Home Unit Investment Pty Limited [1999] NSWSC 548 Niesmann v Collingridge (1921) 29 CLR 177 Portrait Express (Sales) Pty Limited v Kodak (Australasia) Pty Limited (1996) 20 ACSR 746 Sindel v Geogiou & Anor (1984) 154 CLR 661 Vincent and Anor v Premo Enterprises (Voucher Sales) Limited & Ors [1969] 2 All ER 941 Xenos v Wickham (1866) LR 2 HL 296
DECISION:	Application to set aside Statutory Demand dismissed.

REVISED — 31 October, 2000
IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITY

SANTOW J

No. 1850/00
Peel Valley Mushrooms Limited
Plaintiff
Corporate Investment Australia Funds Management Limited (ACN 059 438 514)
Defendant
JUDGMENT

16 October 2000

Table of Contents

Page

INTRODUCTION
FACTUAL BACKGROUND
AGREED FACTS
Elaboration on Agreed Facts
QUESTIONS TO BE ANSWERED
Genuine dispute?
The Deed of Settlement
When did Exchange occur?
How was the intention of the parties manifested?
Manifesting the Defendant’s intention
Manifesting the Plaintiff’s intention
Plaintiff’s request for the Deed
Actions reinforcing intention - payments made
SUMMING UP
Abuse of process?
Compliance with Rules?

CONCLUSION & ORDERS


INTRODUCTION

1 In this case, unusually, the Plaintiff’s challenge to a statutory demand is able to be resolved essentially by the determination of the underlying legal questions. This is because it proceeds from a matrix of agreed fact. Those agreed facts cover the critical issues going to the genuineness of any dispute. They have allowed inferences safely to be drawn from those facts and admissions in the affidavit evidence. That process has shown that the Plaintiff’s contentions disputing the debt are insufficiently plausible to survive further investigation. What follows explains why. 2 This is an application by Peel Valley Mushrooms Limited ("Plaintiff") under s459G of the Corporations Law to set aside a statutory demand dated 2 March 2000 issued by Corporate Investment Australia Funds Management Limited (ACN 059 438 514) ("Defendant") against the Plaintiff. 3    The debt relied upon to ground the Demand depends upon whether the deed which would give rise to that debt had been

(a) delivered in accordance with the general law so as to be binding on the parties, if not physically then by constructive delivery;

(b) exchanged in accordance with its terms, and

(c) supplied by the Plaintiff to the Defendant as required by the court orders which gave rise to the settlement of certain litigation as recorded and implemented by the deed.

Factual Background

4    Before elaborating on the factual background, I set out an agreed statement of facts for purposes of the present proceedings. Of particular importance is the parties’ acceptance that an agreement was entered into between the parties on 15 November 1999 [agreed fact 6A]. Importance attaches also to those agreed facts in 7 through 12.

Agreed Facts

5    These are the agreed facts:

1. Peel Valley Mushrooms Pty Limited ("Peel Valley") is a duly incorporated company.

2. Corporate Investment Australia Funds Management Limited ("CIAFM") is a duly incorporated company.

3. Peel Valley and CIAFM were involved in the following proceedings before this Court:

2147/99 - Polwave v. CIAFM
2064/99 - Peel Valley v. CIAFM
2079/99 – CIAFM v. Peel Valley


4. Each of the proceedings referred to in paragraph 3 above were listed for hearing before Master McLaughlin on 15/11/99.

5. On 15 November 1999 Master McLaughlin made orders in accordance with Short Minutes of Order filed in each of the proceedings referred to in 3 above.

6. The Short Minutes of Order filed in Court with Master McLaughlin on 15/11/99 each had attached a Deed of Settlement signed by CIAFM but not Peel Valley. Refer annexure "B" to the affidavit of Bruce Crossing sworn 23.3.00.

It is accepted for purposes of the present proceedings (under s459G) that an agreement was entered into between the parties on 15 November 1999.


7. Peel Valley handed to CIAFM on 15 November 1999 at Court a cheque for $5,000 made payable to CIAFM.

8. A copy of the Deed signed by Peel Valley was sent by courier from Peel Valley’s solicitors to CIAFM’s solicitors on or about 18 November 1999.

9. The Deed was lost between the offices of CIAFM’s solicitors and CIAFM. On request, Peel Valley executed a second Deed which was sent by its solicitors to CIAFM’s solicitors on or about 2 December 1999.

10. Sealed copies of the consent orders in proceedings 2147 and 2064/99 were served by CIAFM’s solicitors via post by letter dated 6 December 1999.

11. On or about 29 December 1999 Peel Valley paid $5,000 to CIAFM.

12. On or about 18 January 2000 Peel Valley paid $5,000 to CIAFM.

13. On 22 February 2000 Mr Bryan Cook of Peel Valley sent cheque no 1706 by post to CIAFM.

14. CIAFM did not receive the said cheque.

15. On 3 March 2000 Peel Valley received the statutory demand the subject of these proceedings.

16. On 10 March 2000 Peel Valley confirmed its instructions to cancel cheque no 1706.

17. On 14 March 2000 Peel Valley received via facsimile an executed copy of the Deed from CIAFM.
Elaboration on Agreed Facts

6    On 3 March 2000 the Defendant served a statutory demand dated 2 March 2000 (the "Demand") on the Plaintiff. The Demand was supported by an affidavit of Garry White, a director of the Defendant, sworn 2 March 2000. 7    The Plaintiff, by amended summons filed on 5 June 2000, seeks to set aside the Demand. The Summons is supported by an affidavit of Bruce Crossing, a director of the Plaintiff, sworn 24 March 2000, and a further affidavit of Bryan Leonard Cook, Company Director of the Plaintiff, sworn 17 May 2000. 8    The Demand alleges that the Plaintiff owes the Defendant the sum of $65,000.00 for amounts allegedly outstanding in respect of a deed of settlement between the Plaintiff and the Defendant entered into on 15 November 1999. 9    In 1999 the Plaintiff and the Defendant were involved in three proceedings before this Court, namely

(i) Polwave Pty Limited (ACN 077 886 983) v Corporate Investment Australia Funds Management Limited (ACN 059 438 514) (number 2147 of 1999);

(ii) Peel Valley Mushrooms Limited (ACN 073 691 114) v Corporate Investment Australia Funds Management Limited (ACN 059 438 514) (number 2064 of 1999); and

(iii) Corporate Investment Australia Funds Management Limited (ACN 059 438 514) v Peel Valley Mushrooms Limited (ACN 073 691 114) (number 2079 of 1999).

10    Each of these matters were listed for hearing before Master McLaughlin on 15 November 1999. On that day Master McLaughlin made orders in accordance with the Short Minutes of Order filed in each of the proceedings. 11    The Demand relates to the settlement of the last two proceedings and the debt said to arise from the Deed effecting settlement. The Consent Orders in those two proceedings noted that the proceedings had been settled on the basis of the terms of the Deed of Settlement ("the Deed") which was attached to the Order. That Deed (cl 2.1) in turn provided that “unless otherwise stated” (and there was no other statement) “this Deed takes effect upon Settlement”. “Settlement” is defined in cl 1.1 as “the date on which exchange of this Deed takes place”, making that the critical temporal point. Clause 8 requires the parties to do all things reasonably necessary to perfect the initial promises. The orders further “noted” that a duly executed copy of the Deed, executed by the Plaintiff, was to be supplied to the Defendant on or before 19 November 1999. Finally, the Plaintiff undertakes to provide to the Defendant a number of original letters; there is no dispute in relation to those. 12    On 15 November 1999 the Defendant did execute the Deed under seal. However, the Plaintiff was then unable to do so as Bryan Cook, director of the Plaintiff, was not in Sydney and was unable to sign the document. However, the Defendant accepts that the Plaintiff did execute and deliver the Deed of Settlement on or about 18 November 1999 when its solicitors caused a copy of the Deed executed by the Plaintiff to be couriered from the Plaintiff’s solicitors to the solicitors for the Defendant (Defendant’s written submissions dated 9 July 2000). The parties do however join issue as to whether the counterparts were ever “exchanged”, as required by the Deed. I refer to any other circumstances bearing on that in answering the following questions.

Questions to be Answered

13    The Plaintiff contends that the Demand is liable to be set aside on three grounds:

(a) there is a genuine dispute as to the existence of the debt as alleged in the demand;

(b) that in any event the service and prosecution of the demand is an abuse of process; that is, by reason of it being designed or used as a means of obtaining some collateral advantage beyond what the law offers, rather than for the predominant purpose of pressing the demand to a conclusion. and

(c) genuine dispute arises due to the Defendant’s failure to comply with the applicable Supreme Court Rules (SCR); that is by reason of a claimed defect in the accompanying affidavit in its failure expressly to state that the deponent had personal knowledge of the matters to which he attested.

These comprise the questions to be answered, in order to determine if the demand should be set aside.

14    I will deal with these issues in turn. The first issue is whether there is a genuine dispute as to the existence of the debt as alleged in the demand.

Genuine dispute?

15    The test is that stated by McLelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787

"It is, however, necessary to consider the meaning of the expression "genuine dispute" where it occurs in s450H. 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.”

16    Both parties agreed that this is the relevant test to be applied. The Defendant, however, contends that unusually the Plaintiff fails it. Here the purported genuine dispute arises out of a ‘patently feeble legal argument’. If that be shown, the Court can as in interlocutory proceedings resolve that legal argument now. The only other ground of attack under this heading is that the Demand so misdescribes the basis of the debt as to be fatal to the validity of the Demand. This is in referring to a debt asserted to be then “due and payable” as at 2 March 2000, pursuant to “paragraph 3 of a deed of settlement” between the parties “entered into on 15 November 1999”. Because the agreement entered into between the parties on 15 November 1999 was not (yet) a binding unconditional Deed, and the Plaintiff only signed and despatched it for delivery later, on or about 18 November 1999, it being conditional on settlement, it is said that this is a misdescription which vitiates the Demand. However, I accept the Defendant’s answer, namely that such date, even if it be a misdescription in terms of when the Deed took effect, is not of itself a defect which, if the Demand were not set aside, would give rise to substantial injustice to the debtor. It follows that s459J(1)(a) and s459J(2) would preserve the Demand from being set aside for such a defect of mere description. Certainly, such defect in description, insofar as implying the Deed had taken effect as of 15 November 1999 to found the debt, is not itself fundamental. It does not go to the existence or amount of the debt, always provided the Deed did become binding and unconditional so as to ground the debt before 2 March 2000, being the date of the demand. That question is dealt with below. 17 If there be shown by resolution of any legal issue to be no genuine dispute, that leaves the Demand preserved from the first of the three grounds of attack. That will leave the second ground of attack, abuse of process, and the third basis of attack, alleged non-compliance with the Supreme Court Rules. 18 The starting point is to determine when settlement occurred and then whether what ensued does or does not afford sufficient basis for a genuine dispute as to the debt. That depends upon the Terms of Settlement and whether they took effect by 2 March 2000 so as to render the debt due and payable by that date. I turn therefore to the terms of the Deed and its application in the circumstances.

The Deed of Settlement

19    Clause 3 of the Deed provides:

“3.1 PVM hereby agrees to pay the sum of $80,000.00 to CIAFM ("CIAFM Payment").
3.2 PVM agrees to pay to CIAFM the CIAFM Payment in the following manner:
(a) $5,000.00 on the day of Settlement;
(b) $5,000.00 shall be paid on the expiration of 30 days, 60 days and 90 days respectively after the day of Settlement;
(c) the remainder of the CIAFM payment (namely of $60,000.00) by issuing an irrevocable direction to the Trustee so that 10% of the Participants surplus and/or Management Fee payable to PVM, as defined in the Project Deed is remitted to CIAFM. Interest will accrue upon so much of the CIAFM Payment that remains unpaid by PVM from Settlement at the simple interest rate defined in the Deposit Agreement between PVM and Geeset Project Finance Pty Limited.
3.3 With respect to the payments in 3.2(a) and (b), time shall be of the essence.
3.4 In the event PVM does not pay any one or more of the instalments in 3.2(a) and (b) within the time specified, the balance of the CIAFM Payment that remains unpaid shall become immediately due and payable.”

Clause 2.1 states "Unless otherwise stated this Deed takes effect upon Settlement."

"Settlement" is defined in clause 1.1 as "the date on which exchange of this Deed takes place." The Plaintiff’s contention is that settlement in that defined sense had not occurred by 2 March 2000; it is to that question I now turn.

When did Exchange occur?

20    The Plaintiff submitted that for “exchange” to take place by way of settlement so “this Deed takes effect”, what is required is actual physical exchange of counterpart identical contracts. It asserts that it is only this physical exchange which could bring the deed into operation [Plaintiff’s written submissions, para 7]. That physical exchange not having taken place by 2 March 2000, the Plaintiff contends that there is a genuine dispute about whether the Demand debt had come into existence at the date of the Demand. This is said to be fatal to the validity of the Demand. 21    The Defendant, however submits that actual, physical exchange of the documents is not necessary for the Deed to come into effect. Rather it submits that

(i) a constructive delivery suffices, and

(ii) that occurred on or prior to 19 November 1999 and thus before 2 March 2000.

22    I start with the requirements of delivery of a deed at general law, and as to whether actual physical delivery is necessary. The Defendant relies on the words of Lord Denning in Vincent and Anor v Premo Enterprises (Voucher Sales) Limited & Ors [1969] 2 All ER 941 at 944 citing Xenos v Wickham (1866) LR 2 HL 296 that constructive delivery suffices. It occurs where an act is done which evinces an intention to be bound, though falling short of physical delivery:

“A deed is binding on the maker of it even though the parts have not been exchanged, as long as it has been signed, sealed and delivered. "Delivery" in this connection does not mean "handed over" to the other side. It means delivered in the old legal sense, namely, an act done so as to evince an intention to be bound. Even though the deed remains in the possession of the maker, or of his solicitor, he is bound by it if he has done some act evincing an intention to be bound, as by saying: "I deliver this my act and deed." He may, however, make the "delivery" conditional: in which case the deed is called an "escrow" which becomes binding when the condition is fulfilled.”

23    Winn LJ said at 948,

“it might be very helpful in modern life if there were some modification of the law, departing somewhat from the strictness of the old rule the effect of which Lord Denning MR, has indicated, viz., that a man becomes bound when he executes a deed in the form usually adopted; there are evidentiary difficulties which from time to time must be met in establishing whether or not a man did speak or use some words or do some act sufficient to negative the prima facie presumed intention that by executing a document under seal and declaring that it is ‘delivered’ a man has adopted it as immediately binding on him. I think it might be more realistic to depend on physical movement or legal control of the document after the time when it is sealed, it being the law that some adoptive demonstration is required additionally to the mere affixing of the seal. More concentration on the movement of the deed thereafter would make it easier to solve the question, has the maker, by parting with it to such extent and manner as may be proved, expressed an intention - indicated, demonstrated an intention - for it to be immediately binding, or demonstrated a suspensive intention that it shall not be immediately binding on him but only binding if some particular event does occur?”

24    The test to be applied was articulated by Helsham CJ in Hooker Industrial Developments Pty Limited v Trustees of the Christian Brothers [1977] 2 NSWLR 109 at 121 where he posed the question "were the deeds really in fact intended by both sides to be finally executed and binding at the time the trustees put their seal on the deed, or was it intended that they retained a discretion as to whether they would go on with the deal or not?" 25 The notion of constructive delivery was addressed by Buckley LJ in Domb & Anor v Isoz [1980] 1 Ch 548 at 557:

“Exchange of a written contract for sale is in my judgment effected so soon as each part of the contract, signed by the vendor or purchaser as the case may be, is in the actual or constructive possession of the other party or of his solicitor. Such possession need not be actual or physical possession; possession by an agent of the party or of his solicitor, in such circumstances that the party or solicitor in question has control over the document and can at any time procure its actual physical possession will, in my opinion, suffice.”

26    A similar finding was made in Sindel v Geogiou & Anor (1984) 154 CLR 661 at 666-667 were the High Court held the manner in which the contract becomes binding is to be gathered from the real intention of the parties giving due weight to their objective to make a binding contract by means of the exchange of parts.

How was the intention of the parties manifested?

Manifesting the Defendant’s intention

27 It is not disputed that on 15 November 1999 the Defendant duly executed a copy of the Deed under its common seal in accordance with s127(2) of the Corporations Law which was then attached to handwritten Short Minutes of Order in proceedings 2079 of 1999 [Affidavit of Garry White, para 8]. It is agreed that the Plaintiff did not then execute a copy of the Deed [T, 12.20-.31]. The Short Minutes of Order signed on behalf of the Plaintiff nonetheless noted in para 1 that “the proceedings have been settled on the basis of the Terms of the Deed of Settlement attached”. They further noted in para 2 that “a duly executed copy of the Deed executed by the Defendant is to be supplied to the Plaintiff on or before 19/11/99” (“the para 2 note”). “The Plaintiff” referred to in the terms of settlement is in fact the present Defendant in the present proceedings (CIAFM) and the “Defendant” in the Terms of Settlement the present Plaintiff. The noted matters in the Terms of Settlement were therefore twofold:

(a) the present Plaintiff is to execute the Deed on or before 19 November 1999; concededly both parties had in fact executed by then, the Defendant on or about 15 November 1999, and

(b) the Deed so executed “is to be supplied” to the present Defendant on or before 19 November 1999.

Neither of these para 2 noted matters were by the Deed made conditions of the Deed of Settlement taking effect. The better view, in my judgment, is that the imperative “is to be supplied” in the Terms of Settlement simply imposed an obligation on the Plaintiff to supply to the Defendant by 19 November 1999 an executed copy of the Deed; failure to do so would not render the Deed ineffectual or prevent it coming into effect in accordance with its terms. Those terms required the following.
(i) the Deed’s execution and, being expressed as a Deed, this presupposed delivery as well;
(ii) being a deed, this meant delivery in accordance with the general law; and

Those were both the necessary and sufficient conditions for the Deed to take effect.

28    Mr Bruce Crossing, director of the Plaintiff, was present at Court on 15 November 1999. Neither the Plaintiff nor the solicitors acting for them, Aitken McLachlan Thorpe, retained on 15 November 1999 a copy of the Deed executed by the Defendant [Affidavit of Bruce Crossing, para 5]. Nonetheless Mr Garry White, for the Defendant, observed the Plaintiff’s Mr Crossing and the Plaintiff’s solicitors receive and read the deed [my emphasis] before it was attached to the Short Minutes of Order [Affidavit of Gary White, para 8; T, 17.28—.38]. The Short Minutes of Order were signed by the solicitor for the Plaintiff and then filed with the Court. In those circumstances I consider that it could not be denied with any plausibility, that the Defendant thereby “delivered” the Deed executed by the Defendant on that date to the Plaintiff. This is both for the purposes of carrying out the para 2 noted obligation on the Defendant’s part, and also to satisfy the requirements for delivery of the Deed at general law. That delivery is a necessary step in the “exchange” of Deeds for the purposes of effecting “Settlement”, being the Deed’s own condition for the Deed taking effect and completes what the Defendant is required to do by way of delivery to the Plaintiff. 29    In cross examination Mr White, director of the Defendant, led evidence that he also did not leave the Court with an executed copy of the Deed, but rather, the signed and sealed Deed was left with the Court. [T, 17.20-.23] 30    Importantly, the Plaintiff accepts that the various proceedings were settled on 15 November 1999 by way of filing consent orders and that an understanding was reached between the parties that they would enter into a Deed of Settlement (see paras 1 and 2 of the consent orders). [Plaintiff’s written submissions of 21 June 2000, para 12] 31    The para 2 note requires, as I have said, “that a duly executed copy of the Deed executed by the Defendant is to be supplied to Plaintiff on or before 19/11/99”. I am satisfied that the word “supplied” did not require the Defendant actually to leave the Plaintiff with such a counterpart, where it is earlier received and read by the Plaintiff and then left by mutual agreement with the court, attached to the signed orders. The Plaintiff as a party retained access to it, and could have picked it up at any time. Hence I conclude that the Deed was thereby executed and delivered, by both parties on or prior to 19 November 1999. This is certainly once the Deed signed by the Plaintiff was couriered to the Defendant’s solicitors on 18 November 1999, who can be taken to be the Defendant’s agent in receiving it, though lost subsequently; see para 32 and following. This satisfies both the general law requirement for a deed to be delivered to the Plaintiff and the para 2 note on the Terms of Settlement (requiring execution and supply of the Deed to the Plaintiff).

Manifesting the Plaintiff’s intention

32    The Plaintiff claims, and it is not denied by the Defendant [Defendant’s written submissions, para 24] that a letter, dated 18 November 1999, was caused to be sent by the Plaintiff’s solicitors to the Defendant’s solicitors enclosing the original executed Deed signed by the Plaintiff in compliance with the undertaking it gave to the Court on 15 November 1999. This letter also requested the Defendant to forward the original Deed executed by the Defendant for the Plaintiff’s files. [Affidavit of Bruce Crossing, Annexure C] 33    On 23 November 1999, Coudert Brothers, solicitors for the Defendant, wrote to the Plaintiff’s solicitors confirming that the original Deed signed by the Plaintiff had been misplaced between the offices of Coudert Brothers and the offices of the Defendant. That of course does not alter that, concededly the Deed had in fact already been received by the Defendant by its solicitors and thus ipso facto physically delivered to the Defendant by its agent. Due to this misplacement, the Defendant requested that the Plaintiff execute a further copy of the Deed. [Affidavit of Bruce Crossing, Annexure D] 34    The Plaintiff executed a second Deed and the re-executed Deed was sent by the Plaintiff to the Defendant on or about 2 December 1999. [Affidavit of Bruce Crossing, Annexure E] 35    The Plaintiff relies on this sequence of events to claim that exchange satisfying the conditions of the Deed (Cl. 2.1 and the definition of settlement in cl. 1.1) occurred only on 14 March 2000 when the Defendant sent the Plaintiff a duly executed Deed of Settlement by facsimile transmission. [Affidavit of Bruce Crossing, Annexure G]. This Deed had been signed and sealed by the Defendant on 13 March 2000 [White T, 17.52-.55). I reject that contention. 36    In cross examination Mr White for the Defendant acknowledged that he had read the letter sent by the Plaintiff’s solicitors to the Defendant on 18 November 1999 [Annexure C above] and that between the 18 November 1999 and the 14 March 2000 he had not sent the Plaintiff any other executed copy of the Deed despite the Plaintiff’s request of 18 November [White T, 20]. 37    Moreover, it is not denied that the Plaintiff had sent the Defendant an executed copy of the Deed and that this occurred on or about 18 November 1999, being received by the Defendant through its agent, Coudert Brothers. That an exchange can be effected by post (which is not to be distinguished from courier delivery) and that an exchange can be non-simultaneous, were affirmed by Lord Greene MR in Eccles v Bryant and Pollock [1948] 1 Ch 93 at 97-98; he concluded that a contract came into existence through that act of non-simultaneous exchange. All that he left open was whether that occurs the moment when the document is actually put in the post, or later when it is received:

“The earliest date at which such a contract can come into existence, it appears to me, would be the date when the later of the two documents to be put in the post is actually put in the post.. Another view might be that the exchange takes place and the contract thereby comes into existence when, and not before, the respective parties or their solicitors receive from their opposite numbers their parts of the contract. It is not necessary here to choose between those two views.”

38    Here the Deed was both “posted” by the Plaintiff — by courier — and received by the Defendant, both on or about 18 November 1999. There can thus be no dispute that the Plaintiff did “deliver” the signed Deed, and I am satisfied this was by 19 November 1999. Both parties had thus delivered the Deed as their deed, and had done so by 19 November 1999 in conformity with the Short Minutes of Order. I am furthermore satisfied that that exchange which the Deed required (by clause 2.1 and the definition of Settlement) had likewise occurred. Though the exchange was not simultaneous, the intention so to effect exchange was manifest in the steps that were taken. Later events do not cast doubt on that conclusion but in fact, when it comes to the payments made, strengthen it if that were necessary.

Plaintiff’s request for the Deed

39    As noted above, when the Plaintiff sent the Defendant its executed Deed, the covering letter dated 18 November 1999 requested "Could you please forward the original Deeds executed by your clients, for our files." (Affidavit of Bruce Crossing, Annexure C). I note in passing the addition of the words "for our files". Without the benefit of evidence as to why these words were added, the addition of these words may possibly imply that only a copy was requested. However, the word “original” militates against that interpretation. However, in my judgment nothing hangs on that. 40    In a letter sent from Mr Bryan Cook, on behalf of the Plaintiff to the Defendant, dated 10 March 2000, in addition to informing them that a cheque sent to the Defendant in February had been cancelled (see below at para 38) the Plaintiff also requested that the Defendant forward a "Copy of the Deed of Settlement". (Affidavit of Bryan Cook, Annexure D) 41    In cross-examination Mr White gave evidence that whilst he was aware as of 18 November 1999 that the Plaintiff was requesting original copies of the Deed he was at a loss to understand why this was the case, for he was under the belief that the Defendant had already executed the Deed and had handed it to the Plaintiff’s solicitor on 15 November 1999 [T, 19.31—.41]. Regardless of whether or not delivery had already occurred Mr White acknowledged the Plaintiff’s request was not complied with until 13 March 2000 [T, 20.16—.48]. 42    I note, however, that apart from the letter dated 18 November 1999 there was no further correspondence until 10 March in relation to the Plaintiff receiving a Deed executed by Defendant. That is, there was no further request made by the Plaintiff for delivery of the Deed until after the Demand was issued on 2 March 2000.

Actions reinforcing intention - payments made

43    Despite not physically having in its possession a duly executed copy of the Deed until 14 March 2000 the Plaintiff commenced making payments to the Defendant [Affidavit of Bruce Crossing, para 6]. 44    On 15 November 1999 at the hearing before Master McLaughlin the Plaintiff handed to the Defendant a cheque for $5,000.00 made payable to CIAFM (the Defendant). 45    Further payments were made after the Plaintiff sent the Defendant their executed Deed on 18 November 1999, despite the Defendant’s non compliance with the Plaintiff’s request for the Defendant to provide it with an executed copy of the Deed. 46    If the date of settlement be taken as 18 November 1999, payments under the Deed would have fallen due on 18 December 1999, 17 January 2000 and 16 February 2000. 47    Shortly after 15 December 1999 Mr White for the Defendant claims he had a telephone conversation with Mr Crossing to the effect that he was requesting the cheque for $5,000 "which is outstanding in relation to the Deed of Settlement." Mr Crossing replied they would personally deliver it in a few days. (Affidavit of Garry White, para 11). At no stage has the Plaintiff denied that this conversation took place. 48    On or about 29 December 1999 the Plaintiff paid a further $5,000.00 to the Defendant. (Cheque number 1701 from the cheque book of Advanced Management Consultancy Pty Limited "AMC"). This cheque was signed by Bryan Cook on 23 December 1999 and Bruce Crossing handed this cheque to Garry White on 29 December). [Affidavit of Bryan Cook, para 2]. It should be noted that Bryan Cook is a director of both the Plaintiff and AMC. There exists a contractual relationship between the Plaintiff and AMC pursuant to which AMC provides management and consultancy services to the Plaintiff. [T, 7.51—,54; Affidavit of Gary White, para 4] 49    Shortly after 15 January 2000 Garry White claims he had another telephone conversation with Mr Crossing saying words to the effect, "Bruce, you are late again on your payment of $5,000.00 under the Deed of Settlement. When can I expect to receive the cheque?" Bruce Crossing replied "I should be able to provide a cheque shortly. I will let you know as soon as I can." (Affidavit of Garry White para 13). At no stage has the Plaintiff denied that this conversation took place. 50    On or about 18 January 2000 the Plaintiff made a third payment of $5,000.00 to the Defendant. 51    The Plaintiff claims that on or around 4 February 2000 Bryan Cook wrote out a cheque payable to the Defendant from the cheque book of AMC, cheque number 1706, on behalf of the Plaintiff. [Affidavit of Bryan Cook, para 3 and Annexure B] On 22 February 2000 Bryan Cook transferred $5,000.00 to the account of AMC to cover the amount of the cheque [T, 8.15 to 9.11 and PX2]. The Plaintiff further claims that Bryan Cook placed this cheque in an envelope addressed to "CIAFM, Level 9, 33 Bligh Street" and placed it in the Crown Street post box on the afternoon of 22 February 2000. [Affidavit of Bryan Cook, para 4] 52    This cheque was never received by the Defendant. 53    After receiving the Demand on 3 March 2000 the Plaintiff cancelled cheque number 1706. This was done verbally on 7 March 2000 and by formal letter on 10 March 2000 sent by Bryan Cook as director of AMC to the manager of ANZ Bank, New South Head Road, Rose Bay branch [Affidavit of Bryan Cook, para 6, Annexure C]. By letter dated 10 March 2000 from Bryan Cook as director of AMC the Defendant was informed that cheque 1706 had been cancelled and that Bryan Cook was holding a replacement cheque for collection or delivery by hand. The letter further requested the Defendant to inform the Plaintiff whether they wished to collect the cheque.[Affidavit of Bryan Cook, Annexure D]. 54    According to Mr Crossing these payments had been made because it had been decided that "the plaintiff should make regular payments to the Defendant in the spirit of the Deed, in order to facilitate the resolution of the dispute and in order to reduce the debt." [Affidavit of Crossing, para 6] The Plaintiff acknowledges that, if the date of settlement was 15 November 1999 [or for that matter 18 November 1999] these payments were not strictly within the 30, 60 and 90 days of 15 November but that no point was taken by either party until the events giving rise to the issue of the statutory demand in March 2000. [Plaintiff’s written submissions, para 27] 55    Nonetheless the Plaintiff submits, relying upon Niesmann v Collingridge (1921) 29 CLR 177 at 185, that until the exchange of deeds had actually taken place the above payments were voluntary payments as an exchange of deeds was a condition of the obligation to pay and as a result the Plaintiff could not be compelled to make the CIAFM payment as outlined in clause 3.2(c). That submission must clearly fail, for the reasons earlier, as summed up below.

SUMMING UP

56    There is no plausible contention requiring further investigation to the contrary of the Defendant’s proposition that it was the intention of the parties to be bound by the Deed of Settlement upon both parties executing and delivering the Deed to the other. 57    I further conclude, without room for plausible contention to the contrary, that Defendant’s act of attaching an executed copy of the Deed to the Short Minutes of Order on 15 November 1999 and its being read over by the Plaintiff’s solicitor in a context where the Court then made orders with the consent of the parties in accordance with para 4 of the Short Minutes dismissing the proceedings, constituted constructive delivery of the Deed by the Defendant to the Plaintiff. That occurred prior to 19 November 1999. I am also satisfied that, though not simultaneously, the parties had, in the events that happened, culminating in the courier delivery from Plaintiff to Defendant via its solicitors, delivered to, and exchanged the Deed each with the other. They did so by 19 November 2000 in accordance with the requirements of the Deed. Simultaneity is not required for delivery of a deed, or actual physical “exchange” as against constructive delivery. Finally, I am satisfied that what did take place satisfied the requirements of the Short Minutes of Order for the Plaintiff to supply the executed Deed to the Defendant on or before 19 November 1999. None of the foregoing conclusions leave room for plausible contention to the contrary, in light of the agreed facts or undeniable inference therefrom. 58    Although I acknowledge that the Plaintiff did request an executed copy of the Deed from the Defendant on 18 November 1999 I am satisfied that the Plaintiff’s actions established a common understanding and intention that the Deed had already been delivered and that settlement under the definition of clause 1.1 of the Deed had by then occurred, again without room for plausible contention to the contrary. Though not necessary for that conclusion, this is borne out by the following.

(a) The Plaintiff essentially complied with the time schedule for payment as outlined in the Deed. If the date of settlement is taken as 18 November 1999 the Plaintiff provided the Defendant with the initial payment on 15 November 1999 as well as payment 41 days (29th December 1999) and 61 days (18th January 2000) from 18 November 1999. The Plaintiff also attempted to make a final payment about 96 days from 18 November 1999 on 22 February 2000, doing so out of time. Further, as noted above, the Plaintiff has not denied that conversations took place between the Plaintiff and the Defendant outlining that these were payments "under the Deed".

(b) At no stage between 18 November 1999 and 10 March 2000 (after the demand was issued) did the Plaintiff make any further request for delivery of the Defendant’s executed Deed, nor make any statement to the Defendant that it had not yet received the Deed, despite the fact that conversations had allegedly taken place between them during this period in relation to the Plaintiff’s compliance with the provisions of the Deed.

59    The Defendant did not need physically to deliver a copy of the executed Deed into the actual hands of the Plaintiff. I am of the opinion that in executing the Deed and annexing it to the Short Minutes of Order the Defendant evinced an intention to be bound by the Deed dependent upon the Plaintiff executing the Deed by 19 November 1999, as the Plaintiff did. The Plaintiff executed and delivered the Deed to the Defendant and then proceeded, via its actions, to comply with the Deed as if settlement had taken place in accordance with clause 1.1 of the Deed. As such, the evidence before me clearly indicates that both parties intended the Deed to be finally executed and binding, without room for plausible contention to the contrary. I further conclude it was so binding, dismissing any legal submission to the contrary as patently feeble. Finally, the payment required to be made by the Defendant within 90 days of the date the Deed came into effect (19 November 1999 at the latest) was not made in time, with the result that the sum of $65,000 being the then balance of the CIAFM Payment became payable by acceleration, and thus became immediately due and payable, as provided in Clause 3.4 of the Deed. Tender of $5,000 being less than $65,000, was thus not a valid tender, being tendered too late to prevent acceleration. 60    Therefore, settlement occurred on or about 18 November 1999. It follows that the debt grounding the statutory demand is established for present purposes, there being no proper basis for challenge.

Abuse of process?

61    My earlier reasoning leaves no room for any argument based on abuse of process, tested as earlier described. In particular, given my conclusion that the Deed came into force in accordance with its terms, having been duly delivered and exchanged by 19 November 1999, there is no basis for attacking the statement that the debt arises “pursuant to a Deed of Settlement”. The misdescription by date, of 15 November 1999, was not such as to cause substantial injustice.

Compliance with Rules?

62 The combined effect of Corporation Law Rules ("CLR") 1.2 and 1.3 is that, unless the Court otherwise orders, the provisions of the CLR, rather than Pt 80A SCR, are applicable to company proceedings commenced on or after 1 March 2000. 63 The Statutory Demand is dated 2 March 2000 and the accompanying affidavit of Garry White was sworn on the same date. Both were received at the registered office of the Plaintiff on the following day. 64 No order has been made by the Court making Pt 80A SCR applicable to the present proceedings. Accordingly, as the proceedings were commenced after 1 March, the provisions of the CLR are applicable to them. 65 CLR 5.2 provides that the affidavit accompanying the Statutory Demand must be in accordance with CLR Form 7. The affidavit of Garry White sworn 2 March 2000 complies with this form. There is therefore no substance in the Plaintiff’s criticisms of the form of the affidavit. 66 Even were Pt 80A r15 SCR applicable to the affidavit of Garry White sworn on 2 March 2000, for the following reasons, I am satisfied that the affidavit nevertheless complies adequately with Pt 80A r15(1)(c) and 15(1)(d). 67 For the purpose of complying with Pt 80A r15(1)(c), I accept that it is sufficient if it is clear from the face of the deponent’s affidavit that the source of his knowledge is personal knowledge. See Master McLaughlin in Morrow Marketing Pty Limited v Home Unit Investment Pty Limited [1999] NSWSC 548 at paras 41-44. 68 In the present case, Garry White states in para 2 of his affidavit of 2 March 2000 that he was the person on behalf of the Defendant who had the dealing with the Plaintiff giving rise to the debt. Clearly then, the source of his knowledge is personal knowledge. 69 The decisions of Portrait Express (Sales) Pty Limited v Kodak (Australasia) Pty Limited (1996) 20 ACSR 746 and Kezarne Pty Limited v Sydney Asbestos Removal Services Pty Limited (1998) 29 ACSR 11 that are relied on by the Plaintiff in relation to this issue are clearly distinguishable. In both of these cases, the source of the deponent’s knowledge was not apparent from the face of the accompanying affidavit. 70 So far as compliance with Pt 80A r15(1)(d) SCR is concerned, in his affidavit of 2 March 2000, Mr White has stated on oath that the amount of $65,000, being the amount specified in the Statutory Demand, is due and payable by the Plaintiff to the Defendant and that he is the person on behalf of the Defendant who had the relevant dealings with the Plaintiff. 71 In these circumstances, I accept the Defendant’s contention that his failure to assert expressly what is set out in Pt 80A r15(1)(d) should be regarded as being merely a technicality: see Goldspar Australia Pty Limited v KWA Design Group Pty Limited (1999) 17 ACLC 456 at 459 and Daewoo Australia Pty Limited v Suncorp-Metway Limited (2000) 33 ACSR 481 at 495.

CONCLUSION & ORDERS

72    The Plaintiff’s application to set aside the Defendant’s statutory demand fails. Costs should ordinarily follow the event, though I will hear argument if desired. The parties shall submit orders within 14 days giving effect to this judgment. **********

Last Modified: 11/02/2000