R2M Pty Ltd v Gourlay

Case [2011] FCA 168

FEDERAL COURT OF AUSTRALIA

R2M Pty Limited v Gourlay [2011] FCA 168

Citation: R2M Pty Limited v Gourlay [2011] FCA 168
Parties: R2M PTY LIMITED v ROBERT CLYDE GOURLAY
File number: ACD 32 of 2010
Judge: BUCHANAN J
Date of judgment: 3 March 2011
Catchwords:

CORPORATIONS – application to set aside a statutory demand – genuine dispute – whether a statutory demand should be set aside pursuant to s 459J of the Corporations Act 2001 (Cth) on the basis that the affidavit accompanying the statutory demand was sworn or affirmed prior to the date of the statutory demand

COSTS – indemnity costs – whether any realistic prospect of denying the existence of a genuine dispute

Legislation: Corporations Act 2001 (Cth) ss 459E, 459G, 459H, 459J, 459S
Cases cited: Australian Securities Commission v Marlborough Gold Mines Ltd  (1993) 177 CLR 485
Chadmar Enterprises Pty Ltd v IGA Distribution Pty Ltd (2005) 190 FLR 466
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
Ri-Co Holdings (Australia) Pty Ltd v Allied Sandblasters Pty Ltd (2009) 231 FLR 139
Wildtown Holdings Pty Ltd v Rural Traders Co Ltd (2002) 172 FLR 35
Date of hearing: 28 February 2011
Place: Sydney (via video link to Canberra)
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 44
Counsel for the Plaintiff: Mr B F Katekar
Solicitor for the Plaintiff: Williams Love & Nicol
Counsel for the Defendant: Mr P A Walker
Solicitor for the Defendant: Goodman Law

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY

GENERAL DIVISION

ACD 32 of 2010
BETWEEN:

R2M PTY LIMITED
Plaintiff
AND:

ROBERT CLYDE GOURLAY
Defendant

JUDGE:

BUCHANAN J

DATE OF ORDER:

3 MARCH 2011

WHERE MADE:

SYDNEY (VIA VIDEO LINK TO CANBERRA))

THE COURT ORDERS THAT:

1.The statutory demand served by the defendant dated 16 August 2010 be set aside.

2.The defendant pay the plaintiff’s costs (including reserved costs) of and incidental to the application on an indemnity basis, such costs to be taxed if not agreed.

3.The defendant pay Williams Love & Nicol’s costs of complying with the subpoena issued to that firm on 21 September 2010, such costs to be assessed if not agreed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY

GENERAL DIVISION

ACD 32 of 2010
BETWEEN:

R2M PTY LIMITED
Plaintiff
AND:

ROBERT CLYDE GOURLAY
Defendant

JUDGE:

BUCHANAN J

DATE:

3 MARCH 2011

PLACE:

SYDNEY (VIA VIDEO LINK TO CANBERRA)

REASONS FOR JUDGMENT

  1. On 6 September 2010, the plaintiff commenced proceedings in this Court seeking an order setting aside a statutory demand served upon it on 17 August 2010.  The defendant, Mr Gourlay, who served the statutory demand, is a former director of the plaintiff company, which was incorporated 19 August 2009.   He is also a shareholder.

  2. At the time of filing the application, the…

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Details
AGLC
R2M Pty Ltd v Gourlay [2011] FCA 168
Case
[2011] FCA 168
Decision Date

CaseChat Overview and Summary

The case of R2M Pty Ltd v Gourlay involves a dispute over a statutory demand, with the plaintiff, R2M Pty Ltd, seeking to set it aside. R2M Pty Ltd, a company involved in research and product development, had entered into an Intellectual Property Licence Agreement with Mr Gourlay. The agreement required Mr Gourlay to provide certain intellectual property within three months of the agreement's commencement. When Mr Gourlay failed to deliver the intellectual property, R2M Pty Ltd issued a statutory demand, seeking payment of a debt. Mr Gourlay applied to set aside the statutory demand on various grounds, including the argument that the affidavit accompanying the statutory demand was sworn prior to the date of the statutory demand. The case was heard in the Federal Circuit Court of Australia.

The primary legal issue before the court was whether the statutory demand should be set aside pursuant to section 459J of the Corporations Act 2001. Specifically, the court had to consider whether there was a genuine dispute concerning the existence or amount of the debt, and whether there were any other circumstances that made it just to set aside the statutory demand. Another issue was whether Mr Gourlay was entitled to indemnity costs if the court found there was no realistic prospect of denying the existence of a genuine dispute.

The court found that there was a genuine dispute concerning the existence or amount of the debt owed by Mr Gourlay to R2M Pty Ltd. The court held that the affidavit accompanying the statutory demand was sworn prior to the date of the statutory demand, which was a procedural irregularity. Despite this irregularity, the court found that the genuine dispute test was satisfied, and thus the statutory demand should be set aside. The court also found that there was no realistic prospect of denying the existence of a genuine dispute, and therefore Mr Gourlay was entitled to indemnity costs.

The court ordered that the statutory demand served by Mr Gourlay be set aside, that Mr Gourlay pay R2M Pty Ltd’s costs of the application on an indemnity basis, and that Mr Gourlay pay the costs of Williams Love & Nicol in relation to a subpoena issued to that firm. These costs were to be taxed or assessed if not agreed.

Orders

Orders of the court

1. The statutory demand served by the defendant dated 16 August 2010 be set aside.

2. The defendant pay the plaintiff’s costs (including reserved costs) of and incidental to the application on an indemnity basis, such costs to be taxed if not agreed.

3. The defendant pay Williams Love & Nicol’s costs of complying with the subpoena issued to that firm on 21 September 2010, such costs to be assessed if not agreed.

Note:

Background

Background to the litigation

For the purpose of the present application it has not been necessary to determine contested issues of fact and, having regard to the tests to be employed and the fact that further litigation is possible, it would be inappropriate to do so. The distillation of the facts which appears hereunder must be read with that qualification in mind.The Facts According to the affidavit of Mr Cooke, the plaintiff is a company which conducts research and product development into various technologies to support food, water and energy security and develops those technologies into products and services for the Australian and International market. An example of this is the creation of microbial treatments to soils to promote soil health. On 21 December 2009 the plaintiff and Mr Gourlay entered into an “Intellectual Property Licence Agreement”, expressed as commencing on 1 December 2009, whereby Mr Gourlay was to provide intellectual property to the plaintiff (“the licence agreement”). Clause 1.1 of the licence agreement defined “intellectual property” as follows:Intellectual Property means all of the Licensor’s methods, techniques, specifications, procedures, manuals, trade secrets, Confidential Information, knowledge and experience, prototypes, information imparted to R2M in confidence by the Licensor, any trademarks, service marks, trade names, copyrights, designs, patents and written or visual material relating to the technology and/or research as specified in Item 1 of Schedule 2. (Emphasis added) Item 1 of Schedule 2 of the licence agreement listed the following matters:•Recipes relating to development of new microbial formulations for soil, plants, animals and humans;•Procedures relating to microbial fermentation;•Procedures for extraction of ORMUS from sea water or other materials for addition to microbial formulations;•Reports and findings relating to the measurement of life force energy form [sic] a Beale device;•Findings relating to tests with the Booker water conditioning device;•Expertise and intelligence relating to:оthe development of baseline data for trials and experiments of microbial formulations, including soil carbon mapping and measurement;оthe application rates and timings for microbial formations to soil, plants and animals;оbio-conversion of organic wastes into soil, conditioners and liquid fertilisers;оthe mapping and detection of primary water, earth generated water in fractured rock systems;оsubtle energy research;оwater structure/disassociation;оtrace mineral application;оseawater processing and applications;оbiological farming;оprimary water;оbio-conversion;оfermentation technologies; andоORMUS production. Under the terms of the licence agreement Mr Gourlay was required to deliver the intellectual property within 3 months of the commencement date (i.e. by 1 March 2010). Clause 6 of the licence agreement provided (in part):6.1Delivery of Intellectual Property to R2M(a)The Licensor must, within three (3) months of the Commencement Date, provide to R2M the Intellectual Property including, but not limited to:(i)any and all documents recording the Intellectual Property including methods, techniques, manuals, procedures;(ii)any and all prototypes, designs, patterns;(iii)any other written or visual material relating to the Intellectual Property; and (iv)if part of the Intellectual Property is the provision of knowledge, experience or intelligence then the Licensor must document that knowledge, experience or intelligence to the best of their abilities and provide a copy of that document to R2M.(b)The Licensor warrants to R2M that it will provide R2M with all the Intellectual Property within the time frame specified in subclause 6.1(a) and will not withhold any information.(Emphasis added)

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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