Rescom Asia Pacific Pty Ltd v Reapfield Property Consultants Pty Ltd
[2014] VSCA 92
•2 May 2014
SUPREME COURT OF VICTORIA
COURT OF APPEAL
Revised
No. S APCI 0020 of 2014
| RESCOM ASIA PACIFIC PTY LTD (ACN 132 916 682) |
| v |
| REAPFIELD PROPERTY CONSULTANTS PTY LTD |
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JUDGES: | ASHLEY JA and ALMOND AJA |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 2 May 2014 |
DATE OF JUDGMENT: | 2 May 2014 |
MEDIUM NEUTRAL CITATION: | [2014] VSCA 92 |
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CORPORATIONS – Application for leave to appeal from an order dismissing an application to set aside a statutory demand - Whether there was an error in failing to find that there was a genuine dispute or an off-setting claim – Meaning of “genuine dispute” – No genuine dispute or off-setting claim – Decision not attended by sufficient doubt to warrant the grant of leave – Application for leave refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Dr O Bigos | Acquaro & Co |
| For the Respondent | Ms C G Rome-Sievers with Ms A L Kinda | Baker Jones Lawyers |
ASHLEY JA:
I will ask Almond AJA to deliver the first judgment in this matter.
ALMOND AJA:
The appellant seeks leave to appeal from an order of Randall AsJ dismissing an application to set aside a statutory demand.[1] The applicant, Rescom Asia Pacific Pty Ltd (Rescom) contends that the judge erred in failing to find there was a genuine dispute or an off-setting claim. The respondent, Reapfield Property Consultants Pty Ltd (Reapfield) opposes the application for leave.
[1]Order made 18 February 2014 and amended on 19 February 2014.
The applicable principles are uncontentious and were distilled by this Court in Troutfarms Australia Pty Ltd v Perpetual Nominees Ltd,[2] in the judgment of Osborn JA, (with whom Ashley JA concurred) relevantly as follows:
[2][2013] VSCA 176, [5].
The phrase ‘a genuine dispute’ uses ordinary English words and its meaning in any particular set of circumstances must be a question of fact. Nevertheless its application is illuminated by the authorities referred to by Robson J in Rhagodia Pty Ltd v National Australia Bank:[3]
[3][2008] NSWCA 73; (2008) 67 ACSR 367, [91]-[94] (citations in original); see also, Powerhouse Australasia Pty Ltd v Viarc Pty Ltd [2006] VSC 508; Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452, 464.
In TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd Dodds-Streeton JA (with whom Neave and Kellam JJA concurred) said:[4]
[4][2008] VSCA 70; (2008) 66 ACSR 67 (‘TR Administration’).
[56] The court, in the context of an application to set aside a statutory demand, must determine whether there is a genuine dispute about the existence or amount of the debt or whether the company has a genuine off-setting claim.
[57] No in-depth examination or determination of the merits of the alleged dispute is necessary, or indeed appropriate, as the application is akin to one for an interlocutory injunction. Moreover, the determination of the “ultimate question” of the existence of the debt should not be compromised.
Dodds-Streeton JA further said:
[71] As the terms of s 459H (sic) of the Corporations Act 2001 and the authorities make clear, the company is required, in this context, only to establish a genuine dispute or off-setting claim. It is required to evidence the assertions relevant to the alleged dispute or off-setting claim only to the extent necessary for that primary task. The dispute or off-setting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile. As counsel for the appellant conceded however, it is not necessary for the company to advance, at this stage, a fully evidenced claim. Something “between mere assertion and the proof that would be necessary in a court of law” may suffice…
In Eyota,[5] McClelland CJ of the Supreme Court of New South Wales said:
It is, however, necessary to consider the meaning of the expression “genuine dispute” where it occurs in s 459H. 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 in an affidavit “however equivocal, lacking precision, inconsistent with undisputed contemporary documents or other statements by the same deponent,…
But if it does mean that, except in such an extreme case, a court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There 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. In Mibor Investments[6] Hayne J said, after referring to the state of the law prior to the enactment of Div 3 of Pt 5.4 of the Corporations Law, and to the terms of Div 3:
“These matters, taken in combination, suggest that at least in most cases, it is not expected that the court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the court conclude that there is a dispute and that it is a genuine dispute.”
In Re Morris Catering (Aust) Pty Ltd,[7] Thomas J said:
“There is little doubt that Div 3 ... prescribes a formula that requires the court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That 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” and whether there is a “genuine claim”.
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.
The essential task is relatively simple — to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it).”
[5]Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, 787-8 (‘Eyota’).
[6]Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 270; (1993) 11 ACSR 362, 366-7 (‘Mibor Investments’).
[7](1993) 11 ACSR 601, 605.
It is not contended that the judge applied the wrong test. In the authorities it is clear that in carrying out the task of determining whether a statutory demand should be set aside the court is not to determine the merits of any alleged dispute or off-setting claim. In this case the judge was not satisfied on the affidavit material before him that the applicant had established there was a genuine dispute or offsetting claim arising from the sale of the apartments for the prices for which they were sold.
The test for granting leave to appeal from an interlocutory decision is whether the decision below is attended by sufficient doubt to warrant it being reconsidered on appeal and substantial injustice would be caused if the orders were allowed to stand.[8]
[8]Niemann v Electronic Industries Ltd (1978) VR 431; King v Lintrose Nominees (2001) 4 VR 619, [22] (Calloway JA). A decision to dismiss an application to set aside a statutory demand is by nature an interlocutory decision because it does not finally determine the rights of the parties. See Mibor Investments [1994] 2 VR 290, 296-7; Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corp Ltd [2007] VSCA 121, [5] (Maxwell P and Neave JA), [81], (Chernov JA), [109]-[117] (Nettle JA), [126]-[130] (Ashley JA).
Background
The statutory demand relates to a claim for commission on the sale of various apartments at a property known as Belvedere at 607 Swanston Street, Carlton in Melbourne (‘the apartments’). The vendor of the apartments was TP Melbourne Pty Ltd (‘TP’). TP retained Rescom, the applicant, as the underwriter for the sale of the apartments.[9] Rescom, by one of its directors, Mr Leonard Ng, deposes that it was a term of its retainer as underwriter that in the event that the total sale price of the apartments did not reach a pre-determined level, Rescom would pay the difference to TP.[10]
[9]Affidavit of Leonard Ng, sworn 2 October 2013 [19].
[10]Affidavit of Leonard Ng, sworn 2 October 2013 [19].
In a further affidavit, Mr Ng deposes that in the event the total proceeds from the sale of the apartments exceed the predetermined level, TP would pay the excess amount to Rescom and if the total proceeds exceed the pre-determined level by a certain amount, then the excess would be shared between Rescom and TP.[11]
[11]Affidavit of Leonard Ng sworn 7 February 2014 [11].
Rescom engaged Reapfield as its sole marketing agent in Singapore on terms which include the following:
Commission and Marketing
Reapfield Property Consultants Pte Ltd (Singapore CEA Agency Licence No: L3010026C) of 1 Goldhill Plaza #02-47 Podium Block Singapore 308899 agrees to act as Sole Marketing Agent in Singapore for the term of 60 days from the date hereof for sale of apartments on the basis that Reapfield would receive a commission on all sales made within Singapore at a commission rate equal to 5% of the transacted price. Reapfield will use all due care, skill and due diligence to market the Property and achieve maximum sales of the Property.
Within 30 days after the expiry of the agreement, Rescom Asia Pacific Pty Ltd (known as the underwriter[12]) shall recognize and remunerate the full commission to Reapfield for sales to purchasers that were recommended by Reapfield or have visited the exhibitions organised by Reapfield.
[12]In the original marketing agreement the word “vendor” has been crossed out and replaced by the word “underwriter”. The change appears to have been initialled. Appeal Book 25. It is not clear whether the change is intended to apply to all references to “vendor” but for present purposes nothing turns on this.
Conditions
The Vendor shall provide the following to Reapfield to facilitate in its sales activities:
1) Exclusive sale of the units stated in the price schedule in Annexure A of this Agreement until 22nd April 2013;
2) Selling at the price stated in the price schedule in Annexure A of this agreement;
3) Vendor to offer purchasers reimbursement of their legal fees of up to AUD1,750 and stamp duty for each deal prior to settlement;
4) Vendor to provide sales brochures, contracts, soft copies of images and information needed to facilitate the sale.
Price Schedule
As per attached in Annexure A of this agreement.
…
Marketing Expenses
Reapfield will underwrite the marketing expenses incurred in carrying out its contractual obligations. In the event the vendor did not fulfil the conditions above, he shall be responsible to reimburse Reapfield for the marketing expenses and whatever losses (including loss of sale commission) it has incurred during the sales activities.
No genuine dispute
The judge recognised that there is a dispute between the parties as to identity of Annexure A to the agreement and noted there were two schedules, one referring to lower prices than the other. His Honour stated that he did not need to determine which schedule was incorporated into the agreement for the purpose of determining the application before him. Instead he focused on the terms of the marketing agreement and on contemporaneous conduct.
As to the terms of the marketing agreement, his Honour observed, among other things, that its terms do not impose an obligation on Reapfield other than to use all due care, skill and diligence and do not set out any consequences of failure on behalf of the Reapfield to achieve a particular price.
I agree with the approach taken below and with the analysis and would add that the terms of the marketing agreement, viewed as a whole, support the judge's reasoning.
First, the principal obligations of Reapfield are found under the first section headed Commission and Marketing. In this section the parties set out the nature of the retainer, the identity of the property, the term of the retainer (60 days) and the rate of commission (5%). Notably, the entitlement to commission is expressed as a percentage of the “transacted price”; that is, apparently, a reference to price at large, not to a minimum price or to the prices stated in Annexure A.
Secondly, under the heading “Conditions” the vendor is obliged to provide or do certain things “to facilitate [Reapfield] in its sales activities”. In ordinary usage “facilitate” means to make a task easier; in this context to make the task of selling the apartments easier. To that end, the vendor is required to provide exclusivity to Reapfield with regard to the sale of the apartments (until 22 April 2013), to offer purchasers reimbursement of legal fees (up to A$1,750) and stamp duty and to provide sales brochures, contracts, soft copies of images and information needed to facilitate the sale.
Further, though expressed agrammatically, the vendor is required to provide “Selling at the price stated in the price schedule in Annexure A”. If that expression were construed as proscribing sales below a stated minimum price it would not make the task of selling easier but would introduce a condition which would tend to make the task more difficult. In my view, the overall tenor of the section Conditions tends against a construction that imposes an obligation to sell at a stated minimum price.
In my view, these indicia are consistent with and support a conclusion to the effect that the agreement does not impose an obligation on Reapfield to sell the apartments at a stated minimum price.
As to the contemporaneous conduct, his Honour observed that:
· the vendor accepted offers made by purchasers procured by Reapfield and booking forms that set out the purchase price and were signed on behalf of Rescom [over the caption] “accepted by underwriter”;[13]
· there was email correspondence (subsequent to the sales and receipt of an invoice from Reapfield for commission on the sales) to the effect that Rescom “appreciated the good job” and that Rescom was in the “midst of arranging payment as promised”.[14]
· there were communications by text messages passing between Mr Ng of Rescom and Mr Thng of Reapfield accepting the invoice for the commissions claimed without complaint and advising that payment would be made when Rescom received draw downs “from equity partners.”[15]
[13]Exhibit PT10, Reasons [25].
[14]Exhibit PT14. Reasons [25].
[15]Exhibit PT15, Reasons [25].
In relation to the latter, I note from 27 June 2013 to 30 August 2013, there were over 20 text messages where, in effect, Reapfield sought payment and Rescom repeatedly promised to make payment. No complaint was made about the invoice that set out the prices obtained for each of the apartments or the liability to pay the commission.
In my view this evidence cannot be reconciled with assertions made by Mr Ng in his affidavit of 3 November 2013 to the effect that between June and August 2013, he had said to Mr Thng, a director of Reapfield, that Rescom would not be paying the full amount of the commission and that the two companies should renegotiate the commission.[16]
[16]Affidavit of Leonard Ng sworn 3 November 2013, [23], [25].
Without further explanation, it seems fanciful that these text message exchanges would occur in the terms in which they occurred had there been, simultaneously, an underlying dispute about the selling prices.
In the passage from Eyota referred to above, McClelland CJ observed that the court is not obliged “to accept uncritically as giving rise to a genuine dispute every statement in an affidavit” including those which are “inconsistent with other statements by the same deponent.”
In this case the judge found that the objective evidence before the court was contrary to the assertions made on its behalf to the effect that Reapfield was in breach of any arrangements set out in the marketing agreement[17] and concluded that the applicant had not demonstrated that the dispute was genuine.[18]
[17]Paragraph [23] and [24] reasons of Randall AsJ.
[18]Reasons, [28].
During argument, the applicant sought to raise two additional matters. First, that the language of the marketing agreement, including the reference to maximum sales for the property, supported the argument that Reapfield was obliged to sell the properties at a stated minimum price; and second, that there was an implied term that the apartments would be sold at a stated minimum price.
Neither argument was put before the Court below.
In any event, I find those arguments unattractive. There is no express term to the effect asserted and, prima facie, it seems to me that the implied term contended for is neither obvious nor is it necessary to give business efficacy to the marketing agreement and would be unlikely to be found to be an implied term; the price schedule might simply indicate a willingness on the part of the vendor to sell at the stated prices.
No off-setting claim
In relation to the alleged off-setting claim, his Honour observed:
· that the underwriting agreement and any other attendant documents explaining the relationship between TP and Rescom had not been produced to the Court;
· there was no explanation as to why the documents had not been produced;
· he was left in a position where he was unable to consider the relevant terms and particularly, the requisite pre-determined level of sales and the consequences of failure to meet the same;
· he was left in the dark as to the terms of the arrangements between Rescom and TP (the owner of the apartments);
· there was no objective evidence to establish the terms of the (underwriting) agreement with TP or that reaching a pre-determined value of sales was a requirement, or, that any consequences flow from any such failure.[19]
[19]Paragraphs [12], [15] and [20] Reasons.
Adopting the language of Dodds-Streeton JA in TR Administration Pty Ltd, his Honour found that Rescom had not demonstrated that the purported off-setting claim has “a sufficient objective existence and prima facie plausibility to distinguish it from…assertion.”
I also agree with this analysis. The evidence in relation to the underwriting agreement was extremely general and vague. Conspicuously, Mr Ng did not identify the alleged pre-determined level. If sales were at or above the pre-determined level, such that there was no shortfall, presumably no claim would lie by TP against the underwriter Rescom. Without knowing the pre-determined level and the terms of the underwriting agreement the court was not in a position to determine whether there was an off-setting claim.
Further, as counsel for the applicant conceded, properly in my view, if the sale prices obtained were at the predetermined level, there would be no shortfall to be underwritten and no excess to be shared.
For the reasons given by his Honour and the additional reasons referred to above, in my view, the decision that Rescom failed to demonstrate that there is a genuine dispute or an offsetting claim is not attended by sufficient doubt to warrant the grant of leave.
In the circumstances, in my opinion, the application for leave must be refused.
ASHLEY JA:
I agree in the reasons of my brother Almond and the order which he proposes.
(Discussion re orders and costs.)
The orders we will make are:
1. Set aside para.3 of the orders made by Randall AsJ on 19 February 2014 and in lieu thereof extend the period for compliance with the demand to 16 May 2014.
2. Otherwise dismiss the application.
3. Applicant pay the respondent's costs of the application.
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