Re Peregrine Development Co Pty Ltd

[1998] QSC 175

IN THE SUPREME COURT  

OF QUEENSLAND  No. 6706 of 1998

Brisbane

[Re Peregrine Development Co Pty Ltd]

IN THE MATTER OF THE CORPORATIONS LAW

-and-

IN THE MATTER OF PEREGRINE DEVELOPMENT CORP PTY LTD ACN 058 624 749

CATCHWORDS: CORPORATIONS LAW - ss 459G and 459H - application to set aside statutory demand - whether genuine dispute.

Counsel:Mr A Heyworth-Smith for the respondent

Solicitors:Walsh & Partners for the applicant

Georgeson & Co for the respondent

Hearing Date:   31 August 1998

REASONS FOR JUDGMENT - CHESTERMAN J

Judgment delivered 4 September 1998

1.                 The applicant seeks an order that a creditor’s statutory demand for payment served on it by Ryder Hampton Pty Ltd on 2 July, 1998 be set aside.  The demand seeks payment of $30,680.88 “being the total of the amounts of the debts described in the schedule” which contains six items, namely:

Invoice Date	Description	Amount of Debt
02/08/96	Design Fees	$  2,000.00
30/09/96	Balance of Design Fees	$  2,000.00
08/10/96	Concept Design	$20,000.00
17/02/97	Colour Boards	$     991.15
17/02/97	Joinery	$  4,078.05
18/03/98	Display Furniture	$  1,611.68
$30,680.88

2.                 The applicant is a company which carried on business at the Gold Coast.  It planned to (and perhaps did) develop a resort comprising a residential and commercial complex which was to go by the name of “Portofino Bay” at Hope Island.

3. Section 459G(1) of the Corporations Law provides that a company may apply to the court for an order setting aside a statutory demand which has been served on it. The effect of section 459H is that if the court is satisfied that there is a genuine dispute about the debt demanded between the company and the respondent who served the statutory demand the court must set it aside.

4.                 The role of the court in applications under section 459G is well settled.  As Thomas J explained in Re Morris Catering (Aust) Pty Ltd (1993) 11 ACSR 601 at 605, the sections require:

“... the court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute ... [T]hat is not to say that the court will examine the merits or settle the dispute.  The specified limits of the court’s examination are the ascertainment of whether there is a ‘genuine dispute’ ...

It is often possible to discern the spurious, and to identify mere bluster or assertion.  But beyond a perception of genuineness (or the lack of it) the court has no function.  It is 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”.

In Eyota Pty Ltd v. Hanave Pty Ltd (1994) 12 ACSR 785 at 787, McClelland CJ in Eq said of the expression “genuine dispute”,

“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 ... ‘however equivocal, lacking in precision, inconsistent with undisputed contemporary documents ... or inherently improbable ...’

...

[T]here 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”.

5.                 The only evidence in support of the application comes from Mr Emanouel, one of the applicant’s directors.  His affidavit, filed to comply with section 459G(2) is brief, perhaps to the point of incomprehension.  He denies, in bare terms, that the applicant is indebted to the respondent in the sum claimed and goes on:

“4.I know of no agreement in writing between the parties as a basis for the alleged indebtedness.

5.Now produced ... is a copy of a with compliments slip from [the respondent] dated 19 March 1998 endorsed -

‘These accounts replace accounts sent yesterday.  Many thanks ... ’

6.Now produced ... is a batch of accounts from [the respondent] variously dated -

18 March 1998

19 March 1998

19 March 1998.

7.The work allegedly done the subject of the accounts is said to relate to accounts delivered in the period August to October 1996.  There is no explanation for the substitution of accounts.

8.The accounts themselves give insufficient particularity as to the basis of the amounts claimed and the Schedule to the Statutory Demand is equally insufficient as to description and basis of the alleged indebtedness.”

6.                 The substance of the respondent’s claim is that it carried on business as an interior designer.  In May, 1996 the applicant requested the respondent “to do design concept work” on the applicant’s Portofino Bay development and an office which the applicants had opened on the Southport Mall. 

7.                 The respondent performed design work for what has been called the common areas or common facilities of the resort.  It requested the sum of $20,000.00 as a “start up” payment for this work which, if fully completed, was to result in a payment of $350,000.00.  Work did not progress beyond initial stages and the respondent makes no claim in excess of the $20,000.00 it has been paid. 

8.                 The second aspect of the design work concerned the residential units which were to form part of the development and the applicant’s office.  By letter dated 2 May, 1996 from the respondent to the applicant’s architect, the respondent quoted to “develop three concept designs for the interiors of the villas ... to be arranged through six formats ... ”.  The quoted fee for this work was $20,000.00.  It seemed that the work consisted of creating displays by means of drawings and artefacts to give an impression of how the units would appear when finished and how they might be decorated.  These displays were located at the applicant’s office.

9.                 My description of the respondent’s case is hesitant because its affidavit material is also lamentably sparse.

10.               By letter dated 6 June, 1996 from the respondent to the applicant, Mr Hampton wrote:

“As we are proceeding with work on the Offices, we would appreciate payment of the deposit of $3,000.00 as per our account of 20.5.96.”

The sum of $3,000.00 was duly paid.

11.               As part of the preparation of the displays the respondent bought items of furnishings from a firm, Zozobra Trading, and commissioned a cabinet maker to manufacture display boards and a cabinet.  The former’s invoice for goods supplied came to $1,611.68.  The latter’s invoice for work and labour came to $4,078.05.

12.               On 15 July, 1997 Mr Hampton wrote to Mr Emanouel.  He said:

“It has been some time since we have heard from Peregrine regarding the Portofino development ...

Although we have not billed this on a time basis, but only on the sums as set out in our letters of commission, we are still in a position where our accounts have not been met after some 9 months.

[The respondent] executed the interiors for your offices and $4,000.00 is still outstanding along with the amounts for the interior presentations for the Villas of $20,000.00.

There are still accounts for components in the office refurb and Villa designs outstanding.  We would appreciate your attending to these immediately.  Attached is a summary of the outstanding amounts ...”

13.               The attached summary sets out in detail the amounts which were the subject of the invoices on which the statutory demand was based.  The amounts fall into three categories. $4,000.00 is claimed in respect of design work done for the applicant’s offices; $20,991.15 is claimed in respect of concept design and colour boards for the displays to advertise the residential units:  the third category consists of the accounts from Zozobra Trading and the cabinet maker.

14.               The material does not show that the respondent’s letter and attached schedule were ever disputed by the applicant.  One cannot be dogmatic about the matter because the applicant did not appreciate (because of the respondent’s failure to serve the exhibits to Mr Hampton’s affidavit) that the letter was being relied upon until shortly before the matter came on for hearing.

15.               However, the very same amounts were itemised in the three invoices dated 18 and 19 March, 1998 sent by the respondent to the applicant.  In the four months that elapsed before the applicant moved to dispute the debt by filing its application it did not, on the material put before the court, correspond with the respondent to challenge or even query the amount of the invoices or the respondent’s entitlement to deliver them.

16.               Mr Emanouel replied to the respondent’s affidavit in an abbreviated form.  The points of substance which he asserts are:

·The respondent is not a creditor of the applicant it never having been given a purchase order “except for the decoration of the offices ... for which they have been fully paid.

·The respondent’s retainer was to create “a selection board and design our offices” for a fixed fee of $20,000.00 which has been paid.

·The applicant has a firm accounting policy of contracting only by a signed purchase order.  No such order exists with respect to the respondent’s claim.

·No work could have been done by the respondent with respect to the design of the public areas.  The payment of $20,000.00 cannot have been for that design.  It was in fact for the concept design with respect to the offices and residential units.

17.               Lastly Mr Emanouel asserts that the applicant is solvent and is able to pay its debts which, in the last four months have amounted to more than $300,000.00.

18.               It is curious that Mr Emanouel could not provide more specific evidence of the applicant’s dispute of the respondent’s claim.  His initial affidavit, it will be recalled, relied only upon a lack of writing to evidence the contract and a lack of particularity of the basis of the claim as revealed by the invoices.  The first point is irrelevant.  The contract is not one required by law to be in writing.  The applicant accepts that there was a contract.  It claims it has fully performed its part of the bargain.  The second point loses much of its force when it is realised that the applicant did not contest the invoices until a statutory demand was served upon it and the time allowed for applying to set it aside was about to expire.  Moreover the very claim enunciated by the invoices had been provided to the applicant in July, 1997 and had elicited no response.

19.               The further point raised in Mr Emanouel’s second affidavit is that the respondent has been paid in full for the work it did.  Mr Emanouel in effect denies that there was any contract with the respondent to design the public areas.  He asserts one contract only, to design the offices and interiors of the units for which the respondent has been paid.  This assertion appears to me contrary to the contemporaneous correspondence, in particular the letter of 2 May, 1996, from the respondent to the applicant’s architects, which specified the content of the design work for the public areas for which it required the down payment of $20,000.00.  The letter separately identifies work to be done for the design of the unit interiors.  A letter of 8 May, 1996, from the respondent to the architect, breaks the fee for the common area design into subtotals each applicable to the design of a separate facility in the public area.  It is clear that the respondent was undertaking design work on the common areas and Mr Emanouel’s assertion to the contrary appears to me to be quite erroneous.  Moreover, it is clear from the material that having been paid $20,000.00 the respondent was asserting an entitlement to be paid the amounts presently claimed by reason of work done in designing the offices and unit interiors.  It would have been a simple matter for the applicant to respond to this claim and to point out that the money was not due, the debt having been discharged by the payment of $20,000.00.

20.               That he did not do so and did not advert to the point when the affidavit in support of the application was filed on 22 July makes me doubt the veracity of Mr Emanouel’s denial.

21.               A part payment of $3,000.00 was made pursuant to an invoice in respect of design work for the applicant’s office.  This amount is in addition to the $20,000.00 which was full payment, on Mr Emanouel’s case, for the same work.  This supports the respondent’s position and casts severe doubt on the applicant’s assertion there was no other contract.

22.               There is nothing in the point about the March invoices being replacements.  The contents of those invoices clearly repeat the subject of early invoices and/or requests for payment.  If Mr Emanouel did not understand that he could have asked for an explanation.

23.               It is not necessary to decide questions of credit.  As I have said the affidavit material on both sides is scanty and no deponent has been cross-examined.  It is, however, enough that I can discern no genuine dispute in relation to the respondent’s invoices.

24.               Accordingly I dismiss the application and order the applicant to pay the respondent’s taxed costs of and incidental to the application.