Re Mammatus Pty Ltd
[2022] VSC 789
•16 December 2022 (revised 17 January 2022)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2021 02785
IN THE MATTER of MAMMATUS PTY LTD (ACN 101 393 435)
BETWEEN:
| MAMMATUS PTY LTD (ACN 101 393 435) | Plaintiff |
| v | |
| PHILLIP JAMES KINGSTON | Defendant |
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JUDGE: | Gardiner AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 8 December 2021 |
DATE OF JUDGMENT: | 16 December 2022 (revised 17 January 2022) |
CASE MAY BE CITED AS: | Re Mammatus Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2022] VSC 789 |
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CORPORATIONS — Application to set aside a statutory demand under s 459G of the Corporations Act 2001 (Cth) by reason of alleged genuine dispute — Finding that the plaintiff had established genuine dispute in respect of the claims made by the defendant in the statutory demand — Statutory demand set aside.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D H Colman | Hadoken |
| For the Defendant | Mr C T Möller | HWL Ebsworth Lawyers |
HIS HONOUR:
By an originating process filed 5 August 2021 the plaintiff, Mammatus Pty Ltd (ACN 101 393 435) (‘Mammatus’ or ‘the Company’), makes an application under s 459G of the Corporations Act 2001 (Cth) (‘the Act’) to set aside a statutory demand dated 13 July 2021 (‘the Demand’) served upon it by the defendant, Phillip Kingston.
The application was made within the time prescribed by s 459G(2) of the Act.
The Demand claims that Mammatus is indebted to Mr Kingston in the sum of $760,827.56. The Demand seeks reimbursement for unpaid costs and expenses incurred in the conduct of the business of Mammatus and a related company, Sargon Capital Pty Ltd (‘Sargon’). In its application, Mammatus contends it has a genuine dispute in respect of the debts claimed in the Demand and that the Demand should be set aside.
Mr Kingston was formerly a director of a number of companies in the Sargon Group, one of which was Mammatus, and the Demand comprises claims for expenses and charges that Mr Kingston paid while undertaking work for Mammatus and Sargon. The schedule to the Demand describes the amount claimed as arising in connection with travel and accommodation expenses incurred by various individuals engaged in tasks for Mammatus and Sargon for the financial years 2016 to 2020. Mr Kingston claims he paid those expenses when they were incurred and now seeks to be reimbursed by Mammatus.
The Demand was accompanied by an affidavit of Mr Kingston sworn 13 July 2021, in compliance with s 459E(3) of the Act.
That affidavit contains particulars of how the amount claimed in the Demand is comprised, broken up into several financial years. It states as follows:
| Airfares | Accommodation | Total | |
| Financial Year 2016 (commencing 7 January 2016) | $53,035.59 | $12,452.66 | $65,488.25 |
| Financial Year 2017 | $104,853.35 | $56,119.77 | $160,973.12 |
| Financial Year 2018 | $132,226.82 | $82,899.75 | $215,126.57 |
| Financial Year 2019 | $183,743.39 | $48,283.92 | $232,027.31 |
| Financial Year 2020 (concluding 19 January 2020) | $74,996.57 | $12,215.74 | $87,212.31 |
| Total | $760,827.56 |
The affidavit accompanying the Demand annexes a letter of demand from Mr Kingston’s solicitors, HWL Ebsworth, dated 28 May 2021, approximately 2,000 pages of invoices, vouchers, and other documents that are said to support Mr Kingston’s claim, and a copy of a document entitled Deed of Access, Indemnity and Insurance dated 29 December 2015 between Como Financial Services Pty Ltd (the former name of Mammatus)[1] and Mr Kingston (‘the Deed’). In the schedule to the Demand, Mr Kingston identifies clauses 3.1, 3.4, and 3.5 of the Deed as the source of his ability to make the amounts claimed in the Demand.
[1]Como Financial Services Pty Ltd changed its name to Mammatus on 29 August 2017.
Mammatus is a wholly owned subsidiary of Sargon Services Pty Ltd (formerly Good Super Pty Ltd), which is in turn a wholly owned subsidiary of Sargon. The ASIC extract identifies its ultimate holding company as Certane Holdings Pty Ltd (‘Certane’). Another company mentioned in the evidence is Trimantium Capital Pty Ltd (‘Trimantium’), an entity associated with Mr Kingston, but not the Sargon Group.
Mammatus relies on two affidavits of its director, Darran Goodger, sworn 5 August 2021 (‘August Goodger affidavit’) and 6 December 2021 (‘December Goodger affidavit’). Mr Goodger became a director of Mammatus on the day that Mr Kingston ceased to be a director, 4 May 2020.
Mr Kingston relies on his affidavits sworn 13 July 2021, which was the s 459E(3) affidavit accompanying the Demand (‘July Kingston affidavit’), 30 October 2021 (‘October Kingston affidavit’), and 8 December 2021 (‘December Kingston affidavit’).
Legal Principles
The principles to be applied in considering what constitutes a genuine dispute in applications to set aside statutory demands are the subject of numerous authorities of Australian courts. In the decision of the Court of Appeal in this State of Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq),[2] the applicable principles in applications to set aside statutory demands were collected and succinctly summarised at paragraphs 47 to 50 of that judgment:[3]
The terms of s 459H of the Corporations Act and the authorities make clear that, on an application to set aside a statutory demand, the applicant is required only to establish a genuine dispute or offsetting claim. The applicant is required to evidence the assertions relevant to the alleged dispute or offsetting claim only to the extent necessary for that primary task. It is not necessary for the applicant to advance a fully evidenced claim. Therefore, the task faced by an applicant is by no means at all a difficult or demanding one.
In determining such an application, it is not necessary or appropriate for a court to engage in an in-depth examination or determination of the merits of the alleged dispute. This is because an application alleging a genuine dispute or offsetting claim is akin to one for an interlocutory injunction and requires the applicant to establish that there is a ‘plausible contention requiring investigation’ of the existence of either a dispute as to the debt or an offsetting claim. It is therefore 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. Further, the determination of the ‘ultimate question’ of the existence of the debt at a substantive hearing should not be compromised.
The court is required to determine whether the dispute or offsetting claim is ‘genuine’. It has been said that the criterion of a ‘genuine’ dispute requires that the dispute be bona fide and truly exist in fact and that the grounds for alleging the existence of a dispute be real and not spurious, hypothetical, illusory or misconceived. It has also been observed that the dispute or offsetting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion. It must also have sufficient factual particularity to exclude the merely fanciful or futile. A rigorous curial approach is essential to the effective operation of the statutory scheme.
The court is not required to accept uncritically 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, as it may not have sufficient prima facie plausibility to merit further investigation as to its truth. The court is also not required to accept uncritically a patently feeble legal argument or an assertion of facts unsupported by evidence, although this should not be read as suggesting that the applicant must formally or comprehensively evidence the basis of its dispute or off-setting claim. Except in such extreme cases, the court should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on by the applicant to set aside a statutory demand.
[2][2015] VSCA 330.
[3]Ibid [47]–[50].
On an application to set aside a statutory demand, the applicant bears the onus of establishing that the dispute is not hypothetical, spurious or misconceived. A number of authorities observe that the threshold for an applicant to establish a genuine dispute or offsetting claim is a low one and is by no means a difficult or demanding one to satisfy.[4]
[4]See, eg, Rhagodia Pty Ltd v National Australia Bank (2008) 67 ACSR 367, [112]; Solarite Air Conditioning Pty Ltd v York International Aust Pty Ltd [2002] NSWSC 411, [23] (‘Solarite’).
In Paneltech Industries (Aust) Pty Ltd v Australian Sky Reach Pty Ltd (No 2),[5] Barrett J observed:
Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The Court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger.[6]
[5][2003] NSWSC 896.
[6]Ibid [18].
In Solarite, Barrett J considered that a company will only fail to have a demand set aside on the genuine dispute ground if the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted.[7]
[7]Solarite (n 4) [23].
The Court of Appeal of this State in SpaCorp Australia Pty Ltd v Myer Stores Ltd, a case concerned with an application to set aside a statutory demand on the basis of a genuine dispute, observed:
[E]xcept in a case in which it is as plain as a pikestaff that there is no debt (where bluntness may be in the interests of both sides), judges should, in general at all events, in dealing, whether at first instance or on appeal, with the question of genuine dispute, be at pains to perform the admittedly delicate task of disposing of that question without expressing a view on what we have called the ultimate question. For otherwise, on an application which resembles if it is not in law an interlocutory one, things may be said which embarrass the judge before whom the ultimate question comes.[8]
[8]SpaCorp Australia Pty Ltd v Myer Stores Ltd [2001] VSCA 89, [4].
The relevant test to be applied as to whether there is a genuine dispute arising from the construction of a contract is identical to where the application involves controversies as to transactions or events. In Creata (Aust) Pty Ltd v Faull (‘Creata’), Barrett AJA of the New South Wales Court of Appeal, observed:
The grounds of appeal raise squarely the question of the extent to which it is open to the court to decide questions of construction in s 459H(1)(a) cases. In every such case, the issue is, of course, merely whether it has been shown that a “genuine dispute” exists. In determining that issue, the court is neither required nor expected to avoid all issues of construction. Where a contract contains a simple and unambiguous promise to pay, the court embarks on a task of construction (albeit not a difficult or controversial one) in determining that that promise creates a debt and no argument to the contrary is plausible. But where the question of construction has any element of rational controversy to it, the court must exercise particular restraint.
That matter was recently addressed by Gleeson JA in both Re Litigation Insurance Pty Ltd [2017] NSWSC 334 and Re Linton Developments (Qld) Pty Ltd [2017] NSWSC 336. In each of those cases, his Honour quoted the following passage in the judgment in Drillsearch Energy Ltd v Carling Capital Partners Pty Ltd [2009] NSWSC 1192 at [45]:
A dispute as to the existence of a debt that is the product of a dispute about construction is not removed from s 459H(1)(a) just because the issue in contention is one of construction. While it has been said that “a short point of law or the construction of documents or agreed facts” may, unlike a disputed question of fact, be determined upon a s 459G application (see Delnorth Pty Ltd v State Bank of New South Wales (1995) 17 ACSR 379 at 384), it does not follow that the court is compelled to make such a determination. In the case of a legal argument, determination might be appropriate if it were, in the words of McLelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, a “patently feeble legal argument”.
…
After referring to a summary of the position in in Broadspectrum (Australia) Pty Ltd v Centauri Business Services Pty Ltd [2016] NSWSC 1045 at [22] and the statement by this Court in Ligon 158 Pty Ltd v Huber (2016) 117 ACSR 495; [2016] NSWCA 330 (Ligon) at [11] concerning the restraint that a court should exercise in considering the “ultimate question” of the indebtedness of a company served with a statutory demand (as distinct from the question whether genuine dispute exists), Gleeson JA said:
The important points to be derived from the authorities are as follows. First, the court dealing with a s 459G application is not compelled to determine questions of construction of documents. Second, s 459G proceedings are not ordinarily the occasion for the court to construe a contract where there are competing views about its meaning. Third, cases in which it will be appropriate for the court to entertain a construction argument on a s 459G application are likely to be few in number. Fourth, the court’s state of mind concerning the existence of a genuine dispute may range from a clear conviction that the debt does not exist to an opinion that the genuine dispute hurdle has only just been cleared.[9]
[9][2017] NSWCA 300, 218–19 [26]–[29}.
Finally, it is appropriate to recall the observations of Austin J in Equipped Constructions Pty Ltd v Form Architects Pty Ltd regarding the statutory demand regime:[10]
[T]he statutory demand procedure is not provided by the law as a mechanism for the recovery of debt. The function of a statutory demand is to facilitate proof of insolvency in a winding-up application by creating a presumption of insolvency if the demand is properly served and not met. Courts have said, time and again, that the statutory demand procedure should not be used as a mechanism to apply pressure on a party who genuinely disputes the existence of the debt that is claimed. The proper procedure for determining entitlement to an amount claimed but genuinely disputed is to take proceedings for recovery of the alleged debt, where defences may be raised and a decision may be made by the court.[11]
[10][2006] NSWSC 500, [24].
[11]See also generally Farid Assaf, Assaf’s Winding Up in Insolvency (LexisNexis, 3rd ed, 2021) [1.39]–[1.40].
Mammatus’ Evidence in Support of Its Application
In the August Goodger affidavit, Mr Goodger describes Mr Kingston’s claims for which he seeks reimbursement as being for travel and accommodation expenses incurred by various persons engaged in tasks for Mammatus and Sargon in connection with due diligence for mergers and acquisitions, client acquisition and retention, investor relations, and capital raisings. The persons other than Mr Kingston who are identified as involved in the incurring of such claims, together with their respective roles were:
(i) Teddy Wasserman (Director of Sargon);
(ii) Fiona Borrelli (Co-Founder & General Counsel of Sargon);
(iii) Zhen (Andy) Wang (Director of Sargon and representative of Taiping Trustees Limited);
(iv) Daniel Wirjoprawiro (Chief Technology Officer of Sargon);
(v) Stephen Conroy (Director of Sargon);
(vi) Kait McCann (Head of Corporate Development of Sargon);
(vii) Andrew Peterson (Chief Operations Officer of Sargon);
(viii) Aron D’Souza (Founder and Managing Director of Sargon); and
(ix)Roderick Thomson (Investor and Board Observer of Sargon).
Mr Goodger describes those claims as the ‘alleged travel costs’ (‘travel costs’). The travel costs were identified in the letter of demand from Mr Kingston’s solicitors annexed to the Demand, in the amounts appearing in the table in paragraph 6 of these reasons.
Mr Goodger says that Mr Kingston was the director of a number of companies in the Sargon Group, one of which was Mammatus. He exhibits a copy of a chart of the Sargon Group structure, identifying the companies in which Mr Kingston was director. Mr Goodger also exhibits an ASIC personal name search of Mr Kingston, which states he is a director of various Trimantium companies that are not related body corporates of Mammatus.
Mr Goodger refers to a number of provisions of the Deed. Clause 3.1 of the Deed, a provision upon which Mr Kingston relies to make his claim, provides as follows:
3.1 Obligation to indemnify
The Company indemnifies the Director to the relevant extent against any Liability incurred by the Director (whether in respect of any Claim or otherwise).
Clause 1 of the Deed defines ‘liability’ as meaning:
[A]ll costs (including any Tax), charges, losses, damages, expenses, penalties and liabilities of any kind (including legal costs incurred in defending any proceeding (whether criminal, civil, administrative or judicial) or appearing before any court, tribunal, Government Agency or other body) incurred by the Director in, or arising out of:
a)the conduct of the business of the Company or of a Related Body Corporate; or
b)any act or omission of the Director in their capacity as a director of the Company or of a Related Body Corporate.
Clause 4 of the Deed is headed ‘Obligations of the Director’. Clause 4.1 is headed ‘Obligations in relation to Claims’. Relevantly, cl 4.1(a) of the Deed provides:
The Director must (to the extent permitted by law and by the terms of any applicable contract of insurance):
(a)advise the Company in writing promptly after the Director becomes aware of any circumstances which could be reasonably expected to give rise to a claim by the Director for indemnification under this Deed.
Clause 4.2 of the Deed provides:
Directors compliance may be a condition to payment
The making of any payment or the provision of any other benefit under this Deed does not in any way affect the right of the Company to require the Director to comply with Clause 4.1 as a condition of making any further payment or providing any further benefit under this Deed.
Mr Goodger identifies the grounds upon which Mammatus relies in contending that it has a genuine dispute in respect of the claims made by Mr Kingston. These are identified as follows:
(x) Mr Kingston has not proven he has paid the alleged travel costs or was liable to pay them and had a right of reimbursement. As such, it is unclear that there is a debt owed by Mammatus to him;[12]
[12]Paragraph 13(a) of the August Goodger affidavit wrongly transposes ‘Defendant’ and ‘Plaintiff’, but it is clear from the context what this is meant to be a reference to.
(xi)Mr Kingston has claimed alleged travel costs dating back to early 2016, however reimbursement was only sought for those expenses in the letter of demand of 28 May 2021 from Mr Kingston’s solicitors and the Demand. Mr Goodger contends this is a breach of cl 4.1(a) of the Deed because such claims for reimbursements were not made ‘promptly’ as that clause requires;
(xii) while both the letter of demand and Demand annex thousands of pages of vouchers for alleged travel costs, none of them actually prove that the alleged travel costs were incurred in respect of the conduct of the business of Mammatus or any related body corporate, so as to be claimable as a “Liability” to which Mr Kingston was entitled to be indemnified under cl 3.1 of the Deed;
(xiii) some of the alleged travel costs were incurred in relation to the Trimantium group of companies; none of the Trimantium companies were related body corporates of Mammatus so as to make such expenses a liability for which Mr Kingston was entitled to be indemnified under cl 3.1 of the Deed;
(xiv) there was a convention by which Mr Kingston submitted claims for reimbursement of expenses directly to Sargon Capital Pty Ltd, rather than to Mammatus (or to it under its former name of Como Financial Services Pty Ltd). Mr Goodger states it is unclear from the letter of demand or the Demand whether some or all of the expenses have been reimbursed by Sargon Capital Pty Ltd and, as that company is in receivership and liquidation, it is impossible to investigate that matter with the external administrators of that company;
(xv) Mr Kingston was, throughout the period in which the alleged travel costs were incurred, together with the other persons mentioned in the list of individuals extracted above, engaged in a capital raising for Trimantium, rather than being involved in the business of Mammatus and any related body corporate, such that any alleged travel costs incurred in that regard would not be covered by the right of reimbursement under cl 3.1 of the Deed;
(xvi) some of the alleged travel costs are said to have been in respect of Fiona Borrelli, who was not only the General Counsel of Sargon Capital, but also the wife of Mr Kingston and it is unclear in what capacity those alleged travel costs were incurred in relation to the claims made in regards to her;
(xvii) Kait McCann, for whom travel costs are claimed, was not an employee of Mammatus, nor any related body corporate, and was engaged solely in relation to Trimantium;
(xviii) Andrew Peterson, for whom travel costs are claimed, was not engaged by Mammatus, but was an employee of an entity with the Sargon Group. Mr Peterson has informed Mr Goodger he does not recall any meetings in which he participated relating to Mammatus or related body corporates. Rather, his involvement was in relation to Trimantium; and
(xix) the Sargon Group had a travel policy that confined the incurring of alleged travel costs and reimbursement of those costs to the provisions of that policy. Mr Goodger states Mr Kingston has not proven that the alleged travel costs were incurred pursuant to the travel policy and therefore compliant with it.
Mr Kingston’s Evidence in Opposition to the Application
The October Kingston affidavit is a lengthy one of some 117 paragraphs. It exhibits a further 720 pages of vouchers and other documentation.
Mr Kingston states that on 30 April 2013, he and Aron D’Souza founded a company called Australian Social Impact Superannuation Pty Ltd, which subsequently changed its name on 8 August 2013 to Good Super Pty Ltd (‘Good Super’). Good Super operated a superannuation fund.
In February 2015, Good Super acquired all the shares in Mammatus, at that time known as Como Financial Services Pty Ltd. The purpose of the acquisition was to expand the operations of Good Super, in particular by bringing into Good Super the public-offer superannuation fund that Mammatus managed, together with being able to benefit from the Australian Financial Services Licence that Mammatus held.
In October 2015, Mr D’Souza and Mr Kingston established Sargon, whose business involved the supply of technology and infrastructure services to superannuation funds in Australia and overseas. From the time of Sargon’s incorporation in October 2015 until it went into voluntary administration on 8 March 2020, Mr Kingston was a director of Sargon and each of its subsidiaries, and he was also its chief executive officer (‘CEO’).
In January 2016, Sargon acquired Good Super and in late August 2017, Good Super was renamed to TPG Services Company Pty Ltd. In October 2018, it changed its name again to become Sargon Services Pty Ltd.
Mr Kingston states that between 3 February 2015 and the termination of his employment with Sargon on 10 February 2020 following the appointment of receivers to Sargon, Mammatus was a wholly-owned subsidiary of Good Super or Sargon. During that period, in his roles as Sargon’s CEO and as a director of Mammatus and Good Super, Mr Kingston was responsible for the business and operations of Mammatus.
On 29 December 2015, Mr Kingston entered into the Deed with Mammatus (then called Como Financial Services Pty Ltd).
The sole shareholder of Mammatus is Certane. Mr Goodger is Certane’s chief financial officer and, after the appointment of receivers to Sargon, Certane (or companies related to it) acquired a significant part of the assets of Sargon and its related companies.
Mr Kingston states that during his tenure as director and CEO of Sargon, he was an employee of Sargon and other entities within the broader Sargon corporate group. He states that in the performance of his duties for Sargon, Mammatus and other entities within the group, he generally used several email addresses and calendars linked to them, which are identified in his affidavit. These included a personal email address of ‘[email protected]’, an address of ‘[email protected]’, which was an email account he used for the business of another company called Trimantium Capital Pty Ltd, and a third email address, ‘[email protected]’. He stated there were several reasons for this, including that various online and business accounts he had with ’bookings.com’ and ‘QANTAS’ were linked to his Trimantium email address. In addition, several business contacts that he had made before Sargon’s incorporation communicated with him on his personal or Trimantium email addresses.
Mr Kingston states that in August 2021, his solicitors wrote to Mammatus’ solicitor requesting production of email records and calendar logs for his Sargon email address for the period between 7 January 2016 and 19 January 2020, for the purpose of preparing his evidence in this proceeding. Mammatus’ solicitor, Mr Dale, produced a hyperlink to a folder of documents containing 5,632 items, including calendar entries and emails. These documents form part of the exhibit to Mr Kingston’s affidavit. He states that the documents in that exhibit are not intended to be comprehensive in respect of evidencing all the duties he was performing as CEO of Sargon.
Mr Kingston states that the Demand relates to invoices he paid for airfares and accommodation for the period between 7 January 2016 and 19 January 2020. He states that these are related to business trips that he took in relation to the business of what he describes as ‘Mammatus Sargon’, in the performance of his duties as CEO.
Significantly, in the present context, Mr Kingston states he did not request reimbursement for the invoices at the time that those expenses were incurred because:
Mammatus and Sargon were in a growth phase and he wanted to minimise the financial impact on them and maximise the amount of available cash to fund that growth.
Mr Kingston states that all of the trips related to the business of Sargon or Mammatus and none were made for the purpose of attending to the business of Trimantium. He states that it is possible that whilst on these trips he attended to Trimantium business from time to time, this was not the primary purpose for that travel and those trips would not have occurred if not for the Sargon or Mammatus business needs.
In his affidavit, Mr Kingston seeks explain the expenses for which he seeks reimbursement in more detail by reference to the invoices. He divides the claim by reference to the several financial years commencing 2016 and following and deposes in somewhat elaborate detail as to why it is said those expenses were incurred.
I do not intend to summarise that affidavit by reference to that elaborate detail or descend into an examination of that voluminous documentation as I consider it to be unnecessary and inappropriate in the context of an application of this type, other than to state that Mr Kingston deposes to various events and meetings, identifying with whom meetings took place, and the nature of the business conducted. A summary of the claims are the subject of a lengthy spreadsheet appended to Mr Kingston’s submissions.
Mammatus’ Evidence in Reply
In Mr Goodger’s December affidavit in reply, he states he was shocked to receive Mr Kingston’s 28 May 2021 letter of demand making the claim he now makes in the Demand. He describes two reasons for that reaction.
First, he states he had no reason to believe that Mammatus’ accounts for the relevant financial years, 2016 to 2020, did not contain accurate figures relating to Mr Kingston’s expenses in any of those years. Mr Kingston had signed off on those accounts, warranting them to be true and correct in the case of each of those five years. Mr Goodger states the Demand, in effect, challenges Mr Kingston’s own disclosures to the Company and the integrity of his warranty to Mammatus, which his signature to the accounts implies to any other person or authority considering the accounts.
Mr Goodger states that having regard to Mammatus’ accounts and Mr Kingston’s warranty provided in each of those financial years, he prefers the figures appearing in the accounts for Mammatus. He states he has reviewed the vast amount of material set out in the exhibit to Mr Kingston’s affidavit and rejects all of Mr Kingston’s claims to the extent that they exceed the sums appearing in the accounts given such expenses have already been reimbursed in full.
Mr Goodger states Mr Kingston’s affidavit provides no credible explanation as to why the warranties he provided to Mammatus over each of those financial years is now open to challenge or why they should be challenged given his own conduct over the years.
Secondly, Mr Goodger states that the claims, having been made so late, have put Mammatus in an impossible position by reason that:
(a) Mr Goodger’s capacity to forensically examine all of the circumstances of the claims, years after they were incurred, is severely hampered by the time that has intervened since the alleged expenses were incurred. Mr Goodger states there are many reasons for this. First, a fresh assessment of the relevance of each of the claims must be made. In this respect, he refers to the several reasons mentioned in his first affidavit why they might not be allowed. He states it is not merely a case of ‘rubber-stamping’ each claim as the Deed itself contemplates there will be circumstances in which Mammatus will not be obliged to reimburse claims and that assessment would need to be undertaken for each claim. Further, Mr Goodger states that the personnel who could assist in that task (particularly for the earlier years) have departed Mammatus;
(b) the payment of any claim, years after the financial years to which it might relate, would create practically insurmountable accounting complications for Mammatus;
(c) making allowances in the current financial year for claims dating from 2016 to 2020, with respect to which Mammatus has been given no notice, and therefore made no allowance for, also creates insurmountable accounting and practical complications for Mammatus. The claims are not spread out over five financial years, but are claimed in one. Mr Goodger states that it was entirely reasonable for Mammatus to have relied upon the financial accounts for the financial years ending 2016, 2017, 2018, 2019, and 2020, signed by Mr Kingston. Those accounts did not disclose any of the claims for accommodation and travel expenses that Mr Kingston now claims;
(d) Sargon, which is now in receivership and liquidation, and in respect of which most of the alleged expenses were apparently incurred, collapsed before Mr Kingston’s letter of demand was received. Mammatus is now unable to look to that company to reimburse Mammatus for any payment of expenses incurred on its behalf; and
(e) the taxation implications caused by the aggregation of claims into a single year that relate to events spread out over multiple years, would create practically insurmountable accounting complications for the Company.
Mr Goodger then moves to the terms of the Deed (described in his affidavit as the contract). Mr Goodger states he does not consider Mr Kingston to be ‘entitled’ to payment by reason of the operation cls 3.10(a)(iv) and 4.1 of the Deed. Clause 3.10(a)(iv) provides:
Repayment by director where not entitled to payment
The Director must repay amounts paid or advanced by the Company under this Deed to or on behalf of the Director in relation to a liability within 30 days after receiving from the Company a written request which specifies the Refund Amount, to the extent: … in respect of the Liability or any Claim relating to the Liability, the Director has failed to perform an obligation referred to in clause 4. 1 or another provision of this Deed to the material prejudice of the Company.
Clause 4.1(a) of the Deed, the terms of which are set out in paragraph 23 above, requires the director to advise the Company, in writing, promptly of circumstances reasonably expected to give rise to a claim under the Deed.
Mr Goodger describes the alleged claims for accommodation and travel expenses as being made ‘demonstrably late’, and in breach of cl 4.1. They range from 7 January 2016, i.e. over six years late, to 2020.
Mr Goodger states Mr Kingston, in making his claims so late and in the face of the accounts he has signed as director, has breached cl 4.1. This is a matter that Mr Goodger says he would wish to press at a the trial of the matter and cross-examine Mr Kingston about, together with the other matters to which reference has been made. Mr Goodger states that Mammatus has been placed in a position of ‘material prejudice’ caused entirely by Mr Kingston’s conduct and not contributed to, in any way, by Mammatus.
Mr Goodger makes reference to the relevant accounts signed by Mr Kingston for the financial years ending 2016 to 2020.[13] Mr Goodger exhibits copies of the accounts for those financial years. In those accounts, the alleged claims for accommodation and travel expenses now made is nowhere disclosed, or even referred to, as a contingent liability, that is to say, contingent on Mr Kingston ultimately making a claim. Mr Goodger states that whilst in some of those financial years (those ending 2018–20), employee expenses are disclosed, Mr Goodger has conducted an investigation in conjunction with the financial controller of Mammatus and determined that the employee expenses, as disclosed, relate solely to employee salaries or wages and not alleged accommodation and travel expenses.
[13]In his affidavit of 8 December 2021, Mr Kingston states he did not sign the financial accounts for 30 June 2020 as he left the company in February 2020.
Mr Goodger states that, in any event, the figures, where applicable for employee expenses, vary markedly with the amounts claimed by Mr Kingston in the relevant years for alleged accommodation and travel expenses. In his affidavit, he sets out, in a table, a comparison of employee expenses and the alleged travel and accommodation expenses claimed in the Demand. That table is as follows:
Financial Year Employee Expenses Original Alleged Travel and Accommodation Expenses Claimed in the letter of demand and Demand FY 2016 Nil $65,488.25 FY 2017 Nil $160,973.12 FY 2018 $146,106.00 $215,126.57 FY 2019 $195,815.00 $232,027.31 FY 2020 $4977.00 $87,212.31 Total $346,868.00 $760,827.56
Mr Goodger observes that whilst Mr Kingston asserts he paid all the relevant accommodation and travel expenses and that they were relevantly incurred in relation to Mammatus’ and Sargon’s businesses, none of the persons whose expenses he claims to have paid have corroborated those claims.
In conclusion, Mr Goodger disputes the claimed accommodation and travel expenses to the extent they exceed the sums disclosed in Mammatus’ accounts, as signed off by Mr Kingston.
Mr Kingston’s Affidavit of 8 December 2021
In this affidavit, Mr Kingston seeks to respond to Mr Goodger’s affidavit of 6 December 2021. He notes that he did not sign Mammatus’ financial accounts for the year ending 30 June 2020 as his employment with the corporate group was terminated on 10 February 2020, with his directorship terminating shortly afterwards. Mr Goodger did in fact sign those accounts. He also states that the accounts for the previous financial year ending 30 June 2019, which are in evidence, are not signed and he does not recall if he signed those accounts.
Mr Kingston states the reason that airfare and accommodation costs and expenses, which are the subject of the Demand, were not disclosed in the financial accounts of Mammatus for the years 2016–18 was because at the time those accounts were prepared, the claims had not been made against Mammatus. In addition, at the time the financial accounts were prepared, it was unknown if and when the claims would be made against Mammatus in circumstances where he was party to a similar deed of indemnity with Sargon Capital. Mr Kingston states he was trying to maximise the amount of available cash to fund the growth of Mammatus and Sargon Capital at the time, as he referred to in his first affidavit.
He then refers to accounting standard AASB137.86, which provides that contingent liabilities do not need to be disclosed where ‘the possibility of any outflow in settlement [of the liability] is remote’. Mr Kingston states that in each of the financial years 2015–16, 2016–17, 2017–18, and 2018–19, the likelihood of the debts he was now demanding, being claimed from Mammatus, was ‘remote’. He states the reason for this is because Mammatus remained in the Sargon Group throughout this period, which was solvent and in a rapid growth phase. He states he did not intend to claim any of the expenses until Sargon was more established and capitally stable.
Mr Kingston states that his best estimate for when these claims stopped being ‘remote’ in respect of Mammatus would be around May 2020, when Mammatus, along with most of Sargon’s operating businesses, were sold to the Certane Group, of which Mr Goodger is now the acting CEO. The entities that were not sold to the Certane Group are, he states for the most part, in external administration.
Mr Kingston states he first notified Mr Goodger’s predecessor, Mr Marcus Price, of his request for reimbursement of his unpaid employee entitlements on 6 October 2020. He states he notified Mr Price of his legal entitlement under the Deed with Mammatus on 13 October 2020. He does not know why no provision was made for this debt (whether as a contingent liability or otherwise) prior to Mr Goodger signing Mammatus’ financial accounts for the financial year ending 30 June 2020 on 1 December 2020.
Mr Kingston states he believes that Mammatus’ accounts that he signed in each of the financial years ending 30 June 2016, 30 June 2017, and 30 June 2018 have been accurately prepared according to accounting standards and the law, including having regard to the claims the subject of this proceeding. He also states that he considers this to be true of the 30 June 2019 accounts, although he does not recall if or when he signed those accounts. Mr Kingston states each of these accounts were prepared by Sargon’s finance team, which was led by Mr Goodger as chief financial officer since late 2018 and were audited by independent auditors.
Mr Kingston states he does not believe that Mammatus’ accounts have any bearing on whether the debts that he is now claiming from Mammatus are genuine. He states he has already provided proof of the costs being incurred through invoices, and of them being paid through his credit card statements, and explained in his previous affidavit (which exhibits supporting documentation, including calendar invitations and emails) how the expenses related to the business of Mammatus and the broader Sargon Group.
Mammatus’ Submissions
In its submissions, Mammatus contends that Mr Kingston’s claims have four striking features:
(a) they are entirely governed by the terms of a relatively simple contract, ie, the Deed;
(b) by reference to the size of the exhibits, the ‘proofs’ of each of them involves consideration of a raft of documentation and explanation;
(c) the claims amount to substantial sums; and
(d) they have been presented to Mammatus in a lump sum and are extraordinarily late.
Mammatus points to Mr Kingston’s obligations under the Deed as being clear; he was obliged to present his claims ‘promptly’ after they were incurred, but he did not do so. It is submitted that because of this, Mr Kingston breached cl 4.1 of the Deed and cl 3.10(a)(iv) operates to disentitle him to reimbursement. It would be fair to describe this ground of dispute as the one given most emphasis by Mammatus’ counsel, Mr Colman, in his written and oral submissions.
In this regard, Mammatus’ submissions refer to the age of the claims, which date back to 2016. It was submitted it could not be sensibly disputed that Mr Kingston was in breach when making all of his claims the subject of the Demand.
Mammatus submits Mr Kingston’s breach is, in effect, conceded in Mr Kingston’s written submissions, where he contends that the fact that he did not claim reimbursement as early as he might have done does not negate his right to indemnity. His failure to do so is said to be ‘explained’ by his evidence, which is referred to in paragraph 37 of these reasons.
Mammatus submits it wishes to cross-examine Mr Kingston concerning the failure to make the claims earlier and even if Mr Kingston were to make good on the assertion without more (such as an implied term), it could not, at law, displace the operation of cl 3.10(a)(iv) of the Deed. Mammatus contends cl 3.10(a)(iv) would operate to disentitle Mr Kingston to reimbursement.
Mammatus contends that, in order to make good the stance it takes under cl 3.10(a)(iv), it will need to establish, at trial, that as a result of Mr Kingston’s late claims, it has suffered ‘material prejudice’ within the meaning of that expression as it appears in cl 3.10(a)(iv). Mammatus submits, by reference to the factors mentioned in paragraph 45 above and the age of the claims, there will self-evidently be prejudice to Mammatus in:
(a) the conduct of its forensic examination of the circumstances of the claims, many years after they were incurred;
(b) its payment of any claim, many years after the financial years to which it might relate;
(c) dealing in the 2021/2022 financial year with claims in respect to which it has been given no notice and therefore made no provision; and
(d) accommodating, in a single year, claims accumulated over multiple years.
Mammatus observes that the Deed does not define the meaning of the phrase ‘material prejudice’, as it appears in cl 3.10(a)(iv), and its meaning will turn on the Court’s analysis of all the evidence and circumstances of the case at trial. It was submitted that the task of assessing the objective intention will be nuanced, following a proper examination of the evidence and answers given by the parties in cross-examination and that it is patently not a matter that can be undertaken in an application to set aside a statutory demand.
Mammatus’ submissions then moved to a closer consideration of cls 3.10(a)(iv) and 4.1.
Clause 3.10(a)(iv), by its terms, obliges the director to ‘repay’ and on one construction, requires a reimbursement of a payment to the Company, after receiving a written request by the Company (which invokes the provision). Mammatus submits that where the director is ‘not entitled to payment’ (see the heading to the cl 3.10(a)(iv)) in the first place, it would be an absurd construction to require payment, followed by a notice, and then repayment. Whilst Mammatus concedes the Deed specifies that the headings ‘do not affect interpretation’, the heading nonetheless obviously reflects the presumed objective intention of the parties, namely that if cl 4.1 is breached, the Company is not obliged to pay the claims at all. It is submitted that this interpretation is entirely consistent with the operation of cls 3 and 4 generally.
Mammatus contends that once a failure by Mr Kingston to comply with cl 4.1 has been established:
(a) Mr Kingston assumes the status of ‘not [being] entitled to payment’ as per the heading to cl 3.10(a)(iv); and
(b) must repay amounts paid or advanced by the Company.
It was observed that the reference, in cl 3.10(a)(iv), to a ‘failure to perform an obligation referred to in clause 4.1 or another provision of this Deed’ makes specific reference to cl 4.1 amongst all of the obligations of Mr Kingston under the Deed.
Reference was made to cl 4.2 of the Deed, which reserves the rights of Mammatus to withhold a further payment in the context of a breach of cl 4.1, notwithstanding that it might have already made previous payments. It is said that, objectively construed, compliance with cl 4.1 was essential, indeed a condition precedent, to a reimbursement claim.
Mammatus submits it follows that Mr Kingston, in making his claims, is in breach of cl 4.1 by not advising the Company, in writing, promptly after becoming aware of any circumstances that could be reasonably expected to give rise to a claim for indemnification. Such conduct, it says, was to the material prejudice of the Company and Mammatus would have a complete defence to Mr Kingston’s claims.
Mammatus submits that in addition to the contractual analysis referred to, Mr Kingston’s actual conduct whilst a director of Mammatus is inconsistent with his claims. He was a director of Mammatus throughout the relevant period and yet, procured the compilation of Company accounts that made no reference to the claims he now makes, either current or contingent.
The submissions make reference to the table that is extracted at paragraph 51 above. Mammatus says it will seek to cross-examine Mr Kingston concerning:
(a) the inconsistencies in the accounts;
(b) in particular, Mr Kington’s explanation as to why he signed off on Mammatus’ accounts, thereby giving a warranty that they were accurate at the time, and contains a position different to his current claims;
(c) how, in each financial year, the Court might go about determining which ‘version’ of his claims is accurate, and what the Court is to make of the other;
(d) how his obligations under s 286 of the Act (i.e. the obligation to keep proper books that correctly record and explain its transactions and financial position) coexist with his claims in this proceeding;
(e) the conduct of his various duties to Mammatus over the relevant financial years; and
(f) his credit generally.
Mammatus contends that over the years, its accounts either specify no contingent liabilities at all (2016–19) or, in the case of 2020, refer to a contingent tax liability that had nothing to do with the unstated $87,212.31 claim, which is now made in the Demand.
Mammatus observes that in this proceeding, Mr Kingston has not disclosed having signed the accounts of Mammatus in the relevant years, in which no reference has been made to these ‘contingent’ claims. It is said that this will also be the subject of cross-examination.
Mammatus’ submissions conclude with a contention that it is difficult to imagine a claim less apt for summary determination than Mr Kingston’s claim in his Demand.
Mr Kingston’s Submissions in Opposition to the Application
After reviewing the relevant procedural and factual background, together with the relevant legal principles to be applied in these types of applications, none of which is controversial, the submissions address the grounds for Mammatus’ contentions concerning the existence of a genuine dispute.[14]
[14]The ten grounds are summarised in paragraph 13 of the August Goodger affidavit.
The first ground is that Mr Kingston has not proven he has paid the alleged travel costs or was liable to pay them and had a right of reimbursement. It is said that this ground cannot be sustained as Mr Kingston’s affidavit demonstrates, by the exhibition of the supporting vouchers and bank statements, that he has paid the costs and expenses that he claims in the Demand.
The second ground is that Mr Kingston has claimed alleged travel costs dating back to early 2016, however he has only sought to be reimbursed for those expenses in the letter of the demand and the subsequent Demand, in breach of cl 4.1(a) of the Deed. Mr Kingston’s submissions respond by contending that the fact he did not claim reimbursement as early as he might have does not negate his right to indemnity under the Deed. It is contended the Deed, by its terms, provides an ‘unlimited’ and ‘continuing’ right of indemnity. Even if Mr Kingston was in breach of cl 4.1 of the Deed, which required him to advise Mammatus in writing promptly after he became aware of any circumstances that could reasonably be expected to give rise to a claim for indemnification under the Deed, the Deed operates such that Mammatus’ remedy would be in damages for breach of contract. It is said that Mammatus does not raise an offsetting claim in that regard and even if it did, it has produced no evidence upon which that claim could be quantified.
The third ground addressed in Mammatus’ submission is that both the letter of demand and Demand annex thousands of pages of vouchers for alleged travel costs, but those documents do not actually prove that the alleged travel costs were incurred in respect of Mammatus or any related body corporate and are therefore properly claimed under the Deed. In response, it is submitted that Mr Kingston has explained the purpose of the trips and confirmed that ‘all of the trips related to the business of Sargon or Mammatus’ in the performance of his duties as CEO and there is no question that Mammatus and Sargon are ‘related body corporates’ as Mammatus is a wholly owned subsidiary of Sargon Services Pty Ltd, which, in turn, is a wholly owned subsidiary of Sargon.
The submissions then address the contention by Mammatus that none of the Trimantium companies were related body corporates of Mammatus and some of the alleged travel costs were incurred in relation to the affairs of the Trimantium Group of companies. In response, Mr Kingston submits that ‘none [of the trips were] … made for the purpose of attending to the business of Trimantium’. He does concede that ‘it is possible whilst on these trips, [he] attended to Trimantium business from time to time’, but this was not the primary purpose of those trips and the trips would not have occurred if not for Sargon’s and Mammatus’ needs. It is said that Mammatus has not adduced any evidence to the contrary.
The next ground addressed is that, by convention, Mr Kingston submitted claims for reimbursement of expenses directly to Sargon Capital Pty Ltd, rather than to Mammatus. Mammatus contends it is unclear from the letter of the demand or the Demand whether some or all of the expenses have been reimbursed by Sargon Capital and as that company is in receivership and liquidation, it is impossible to investigate that matter with the external administrators of the company. In response, Mr Kingston submits he has confirmed in his evidence that he has not been reimbursed for the expenses. It is said that despite the opportunity, including to investigate that matter with the external administrators of Sargon, Mammatus has not adduced any contrary evidence.
The next ground of dispute raised by Mammatus, which is addressed, is that Mr Kingston, throughout the period in which the alleged travel costs were incurred, together with the other persons mentioned in the list of individuals for whom alleged travel costs were incurred, was engaged in a capital raising for Trimantium rather than in the course of the business of Mammatus and any related body corporate such that any alleged travel costs incurred in that regard would not be covered by the right of reimbursement under cl 3.1 of the Deed. In response, it is said these are, in substance, the same grounds that are described in paragraphs 82 and 83 above and cannot be sustained for the reasons that have been described.
The submissions then address the ground that some of the alleged travel costs which were said to have been incurred were in respect of Fiona Borrelli, who was not only the General Counsel of Sargon Capital, but also the wife of Mr Kingston and it is unclear in what capacity those alleged travel costs were incurred. In response, it was accepted that Ms Borrelli was and is Mr Kingston’s wife, but she was also Sargon’s General Counsel. She was also the company secretary for each of Mammatus and Sargon. It is said that in his evidence, Mr Kingston has confirmed each of the trips related to the business of Mammatus and Sargon and that Mammatus has produced nothing to gainsay that evidence, including specification of the relevant travel costs the subject of this ground of dispute.
The next ground of dispute addressed relates to the claims in respect of Kait McCann, not being an employee of Mammatus or any related body corporate and was engaged solely in relation to Trimantium. In response, Mr Kingston submits that Mammatus has not specified the relevant travel costs that are the subject of that dispute and the answer is to be found in Mr Kingston’s unchallenged evidence that each of the trips related to the business of Mammatus and Sargon. It is also observed that the August Goodger affidavit is inconsistent in that contrary to what this ground contends about Kait McCann’s role, Mr Goodger describes her as ‘Head of Corporate Development of Sargon’.
The submissions then address the involvement and claims of Andrew Peterson, whom Mammatus contends was not engaged by it, but was an employee of an entity within the Sargon Group. It will be recalled that in his evidence, Mr Goodger states he has been informed by Mr Peterson and believes that he did not recall any meeting in which he participated relating to the Mammatus or related body corporates, but rather, his involvement was in relation to Trimantium. In response, it is said Mr Goodger’s evidence of what Mr Peterson told Mr Goodger, which Mr Peterson cannot recall, does not outweigh Mr Kingston’s unchallenged evidence that each of the trips related to the business of Mammatus and Sargon.
The final ground of dispute addressed relates to the contention by Mr Goodger that the Sargon Group had a travel policy that confined the incurring of alleged travel costs and the reimbursement of those costs to the provisions of that policy. It was said by Mammatus that Mr Kingston has not proven the alleged travel costs were incurred pursuant to the travel policy and were therefore compliant with it. In response, Mr Kingston contends the travel policy has not been explained and there is no document evidencing its existence, let alone its terms and conditions. There is no explanation of how the costs claimed by Mr Kingston were not ‘compliant’ with the policy.
Consideration
I consider that Mammatus has established it has plausible contentions that warrant further investigation and it has thereby established, to the relevant standard, that it has a genuine dispute in respect of Mr Kingston’s claims. In particular, there is a rational controversy concerning the construction of the Deed and the effect of the failure by Mr Kingston to make his claims promptly.
Mr Kingston’s right to indemnification is to be found in cl 3.1 of the Deed. Clause 4.1(a) obliges him to promptly advise, in writing, after he becomes aware of any circumstances that could be reasonably expected to give rise to a claim by him, for indemnification under the Deed. The claims the subject of the Demand date back to 2016 through to 2020 and by reason of his involvement as a director of Mammatus, Mr Kingston would have been aware of the claims accruing; indeed, he was paying the claims out of his own pocket. He ceased to be a director of Mammatus on 4 May 2020, but did not notify Mr Goodger’s predecessor, Marcus Price, of his claim until 6 October 2020. The letter of demand from his solicitors followed in May 2021. While there is no definition in the Deed of what ‘promptly’ means in this context, it suffices for the purpose of this application to say there is a plausible contention that he has not complied with cl 4.1(a) in that regard and this may give rise to an entitlement to Mammatus to deny him indemnification under the Deed. In regard to the operation of cl 3.10(a)(iv), Mammatus contends it will seek to establish at trial that as a result of Mr Kingston’s late claims, it has suffered ‘material prejudice’. The basis for its contention is described in paragraph 66 above and I consider that its submissions in that regard are clearly arguable.
Mr Kingston’s submissions contend alternative constructions as to how the Deed is to operate, including that Mammatus’ remedy for failure by Mr Kingston to make a prompt claim is confined to one for damages but as the authorities to which I have referred stipulate, questions as to the construction of contractual documents other than those of a straightforward nature are inappropriate for resolution in this type of application. In this regard, I refer, in particular, to the observations of Barrett AJA in Creata, referred to in paragraph 16 above, that s 459G proceedings are not ordinarily the occasion for the Court to construe a contract where there are competing views about its meaning.
Mr Kingston’s claims are substantial and I consider that Mammatus is entitled to test, in a conventional inter partes setting, the circumstances of his failure to bring his claims much earlier than he did. Included amongst such matters that warrant investigation are his signing off of the accounts for the several years he was the director of Mammatus, which made no mention or provision for the claims he now makes. It seems clear he was aware of the extent of the liabilities for the claims that were obliged to be accounted for in the financial records of Mammatus, regardless of whether they were actually paid or not by reason of the obligation of Mammatus to indemnify him for them. He, as a director of company, knew that Mammatus was incurring liabilities for which he claims a right to be indemnified for, but those liabilities were not being recorded in its financial records. The explanation given by Mr Kingston in his evidence, that he regarded the liabilities as being ‘remote’, is unconvincing. By making his demand, he no doubt considers these are real claims; his explanation, that he wanted to minimise the financial impact on Mammatus and Sargon and maximise the amount of available cash to fund their growth, to my mind, clearly warrants investigation and Mammatus is entitled to test that evidence in a conventional trial setting.
The mere exhibition of thousands of pages of receipts for airline travel, accommodation, and other matters is somewhat beside the point. It cannot be expected that, in this type of application, the Court would be required to wade through some 2,700 pages of material. Mammatus is entitled, in my view, to test that material.
There are authorities that liken the task of the Court in these types of applications to a summary judgment application. In Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA & Pharmagel SpA,[15] Lindgren J observed that a creditor would not be entitled to summary judgment if the company raised a defence or cross-claim deserving of a trial. If this matter was brought by way of an application for summary judgment in a proceeding for debt commenced by Mr Kingston by writ, I would have little hesitation in granting Mammatus leave to defend.
[15](1994) 15 ACSR 347.
I will make an order that the statutory demand dated 13 July 2021 and served on Mammatus by Mr Kingston be set aside.
My preliminary view is that costs should follow the event and Mr Kingston should pay Mammatus’ costs of the application, including any reserved costs. If either party wishes to contend that a different order as to costs is warranted by reason of some feature of the matter, they should file short written submissions, not exceeding four pages, by 23 January 2023 and I will decide the outcome in that regard on the papers.
SCHEDULE OF PARTIES
| S ECI 2021 02785 | |
| BETWEEN: | |
| MAMMATUS PTY LTD (ACN 101 393 435) | Plaintiff |
| - v - | |
| PHILLIP JAMES KINGSTON | Defendant |
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