Re Macquarie Investments Pty Ltd

[1999] QSC 335

SUPREME COURT OF QUEENSLAND

[Re Macquarie Investments Pty Ltd]

File No S 8436 of 1999

IN THE MATTER of the CORPORATIONS LAW

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IN THE MATTER of MACQUARIE INVESTMENTS PTY LTD ACN 058 737  232

MOYNIHAN J – REASONS FOR JUDGMENT

DELIVERED ON:	10 November 1999
HEARING DATE:	28 September 1999
ORDER:	STATUTORY DEMAND SET ASIDE
CATCHWORDS:	CORPORATIONS – STATUTORY DEMAND – Application to set aside statutory demand – whether a genuine dispute between the parties in respect of the respondent’s entitlement to be paid.
APPEARANCES:	Mr S. Guthrie (solicitor) for the applicant. Mr M. Gynther (counsel) for the respondent.
SOLICITORS:	Barwicks Wisewoulds Lawyers for the applicant. Nicol Robinson Halletts for the respondent.

1. Macquarie Investments Pty Ltd applies to set aside a statutory demand of 25 August 1999 by Palmgrove Investments Pty Ltd.  The demand is founded on Macquarie’s dishonouring of a cheque of 19 March 1999 for $10,000 payable to Palmgrove.

1. The material on either side is somewhat lacking in the precision of detail expected in a case of this kind but the following facts sufficiently emerge.  In August 1998, Macquarie contracted with Palmgrove for it to carry out roadworks on a subdivision being developed by Macquarie at Cooroy.  Macquarie’s case is that it was a fixed price contract based on a quote requiring the use of 2,040 cubic metres of gravel supplied by Macquarie.  It seems to be common ground that in fact Palmgrove used in the order of 4,500 cubic metres of Macquarie’s gravel. Macquarie’s case is that it was a fixed price contract and it would ordinarily have sold quantities in excess of 2,040 cubic metres on the market for between $16.50 and $18.00 a cubic metre.  There appears to be a dispute as to whether Palmgrove’s use of the additional material was authorised by Macquarie although it seems clear enough that Macquarie was aware before the works were completed that more than 2,040 cubic metres of its gravel would be used.

1. Palmgrove submitted a progress claim and Macquarie disputed a number of items in it by a letter of 2 February 1999.  The disputed items included the issue about the use of gravel in excess of 2,040 cubic metres.  It seems that the dispute continued and on 19 March, Macquarie gave Palmgrove a cheque for $10,000 to “quieten down rumours” which were circulating in a “relatively small residential and rural town” with consequences potentially adverse to Macquarie.  Shortly after the cheque was delivered, the director of Macquarie who had signed and given it had a change of heart and contacted a director of Palmgrove and told him that he intended to stop payment on the cheque.

1. The dispute seems to have continued because on 13 July 1999 Palmgrove gave Macquarie a statutory notice claiming $38,167.52 as due and payable.  Macquarie’s solicitors responded to the statutory demand by a letter of 14 July.  This put in issue Palmgrove’s entitlement to claim $10,000 for variations on the basis that these had not been approved, raised the issue that Macquarie’s gravel in excess of the 2,040 cubic metres had been used and a further issue in respect to an additional quantity of gravel being taken without authority.  Based on these matters, the letter asserted a genuine dispute and demanded that the statutory demand be withdrawn or an application for it to be set aside would be brought.  There was no response dealing with the issues raised by Macquarie’s solicitors’ letter but the statutory demand of 13 July was withdrawn on the day the solicitors’ letter was received.  The cheque of 19 March, payment on which was stopped, was presented shortly after and upon its not being met, the statutory demand of 25 August was served.

1. It is clear enough to my mind that the course of events outlined evidences a genuine dispute between Macquarie and Palmgrove in respect of Palmgrove’s entitlement to be paid under the contract between them. The ultimate outcome is of course another issue. The dispute includes a dispute about Palmgrove’s entitlement to use without payment in excess of 2,040 cubic metres of Macquarie’s gravel to carry out its contractual obligations. Macquarie’s claim in respect of that constitutes an offsetting claim in terms of Part 5.4, Division 3 of the Corporations Law;  see John Shearer Limited and Anor v Gehl Company (1995) 60 FCR 136. Macquarie’s claim overtops Palmgrove’s claim based on the cheque and as John Shearer Limited demonstrated, it cannot be said Macquarie does not have an offsetting claim because the debt referred to in the statutory demand arises from a bill of exchange.

1. For the reasons canvassed, I set aside the statutory demand of 25 August 1999.