Re CMG Automotive Pty Ltd - [2020] VSC 779

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2019 05907

IN THE MATTER of CMG AUTOMOTIVE PTY LTD (ACN 127 915 404)

CMG AUTOMOTIVE PTY LTD (ACN 127 915 404)	Plaintiff
v
EDWARD METZ and ALLAN ALEXANDER STOJANOVIC trading as A’n’E Auto	Defendants

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	27 March 2020
DATE OF JUDGMENT:	23 November 2020
CASE MAY BE CITED AS:	Re CMG Automotive Pty Ltd
MEDIUM NEUTRAL CITATION:	[2020] VSC 779

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CORPORATIONS – Application pursuant to s 459G of the Corporations Act 2001 (Cth) to set aside a statutory demand by reason of alleged disputes and offsetting claims – Parties entered into oral agreement in respect of motor repair workshop – Plaintiff’s conduct during contractual relationship inconsistent with plaintiff’s contentions as to the terms of the agreement reached – Arguable dispute found to be established in respect of one offsetting claim, balance of alleged disputes and claims not established.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr Z de Kievit	Spiliotis Legal
For the Defendant	Mr P R Miller	Kalus Kenny Intelex

HIS HONOUR:

The plaintiff, CMG Automotive Pty Ltd (‘CMG’) makes application by originating process filed 23 December 2019 to set aside a statutory demand dated 4 December 2019 (‘the Demand’), served on it by the defendants Edward Metz and Allan Alexander Stojanovic trading as A’n’E Auto (‘A&E’), pursuant to s 459G of the Corporations Act 2001 (Cth) (‘the Act’).

The Demand claims that CMG is indebted to A&E for $104,871.80. The Demand was accompanied by an affidavit of Edward Metz, sworn 4 December 2019, which is in compliance with s 459E of the Act. The schedule to the Demand describes the debt as

Monies due and payable by [CMG] to [A&E] in the amount of $104,871.80 (Debt). The Debt consists of $104,871.80 in outstanding invoices issued by [A&E] to [CMG] in relation to mechanical works and repairs to vehicles performed by [A&E] at [CMG]’s request.

CMG relies on affidavits of its sole director, Mark Rimanic, sworn 23 December 2019 (‘the 21 day affidavit’) and 10 March 2020 (‘Second Rimanic affidavit’). A&E relies on an affidavit of one of the proprietors of A&E, Edward Metz, sworn 17 February 2020 (‘Metz affidavit’).

Background

CMG is a second-hand vehicle dealer and operates from several locations. At any given time it has approximately 600 vehicles in stock. It purchases second-hand vehicles and prepares them for sale and as part of this preparation process it engages third party mechanics to inspect and repair the vehicles and issue roadworthy certificates. Those mechanics also perform warranty work on the vehicles sold by CMG.

CMG sells approximately 300-400 second-hand vehicles a month and in the course of this is required to spend significant sums on mechanical work.

Messrs Metz and Stojanovic trade as motor mechanics under the name ‘A‘n’E Auto’ and they are collectively referred to in these reasons as A&E. As at November 2018, A&E provided motor repair services…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] VSC 779
Decision Date: 23 November 2020

CaseChat Overview and Summary

The case of Re CMG Automotive Pty Ltd involved a dispute between two parties who had entered into an oral agreement regarding the operation of a motor repair workshop. The defendant, CMG Automotive Pty Ltd, applied to the court to set aside a statutory demand pursuant to section 459G of the Corporations Act 2001 (Cth). The plaintiff alleged that there were disputes and offsetting claims that provided a basis for setting aside the demand. The central issues before the court were whether there were any genuine disputes or offsetting claims that would justify setting aside the statutory demand.

The court examined the evidence and arguments presented by both parties. It found that while there was an arguable dispute in respect of one offsetting claim, the balance of the alleged disputes and claims were not established. The court noted that the plaintiff's conduct during the contractual relationship was inconsistent with their contentions as to the terms of the oral agreement. As a result, the court concluded that the arguable dispute was sufficient to warrant setting aside the statutory demand in part. However, the court did not accept the other claims as valid grounds for setting aside the demand.

In light of the findings, the court made orders setting aside the statutory demand in respect of the one established dispute. The court did not address the final orders in detail as it was not necessary to do so given the outcome of the case. The decision underscores the importance of clear and consistent conduct in contractual relationships, as well as the need for credible evidence to support claims of disputes or offsetting claims when seeking to set aside a statutory demand.

Orders