Rockingham Rottnest Ferries Pty Ltd v Pallot
[2008] WASC 252
•4 NOVEMBER 2008
ROCKINGHAM ROTTNEST FERRIES PTY LTD -v- PALLOT [2008] WASC 252
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASC 252 | |
| Case No: | COR:90/2008 | 14 OCTOBER 2008 | |
| Coram: | MASTER SANDERSON | 3/11/08 | |
| 5 | Judgment Part: | 1 of 1 | |
| Result: | Demand set aside | ||
| B | |||
| PDF Version |
| Parties: | ROCKINGHAM ROTTNEST FERRIES PTY LTD KEVIN MICHAEL PALLOT |
Catchwords: | Corporations Act 2001 (Cth) Application to set aside statutory demand Turns on own facts |
Legislation: | Nil |
Case References: | Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
KEVIN MICHAEL PALLOT
Defendant
Catchwords:
Corporations Act 2001 (Cth) - Application to set aside statutory demand - Turns on own facts
Legislation:
Nil
Result:
Demand set aside
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr A J N Aristei
Defendant : Mr P A Nevin
Solicitors:
Plaintiff : Carlo Primerano & Associates
Defendant : Taylor Smart
Case(s) referred to in judgment(s):
Nil
(Page 3)
1 MASTER SANDERSON: This is the plaintiff's application to set aside a statutory demand. The application is supported by two affidavits of Mr John Barron, the first sworn 9 July 2008 and the second sworn 22 September 2008. It is also supported by an affidavit of Nigel John Campbell Barron, sworn 22 September 2008, an affidavit of John Stewart Proctor sworn 22 September 2008 and an affidavit of Dominic Bateman sworn 10 October 2008. In opposition to the application, the defendant relies upon his affidavit sworn 11 August 2008.
2 The statutory demand appears as annexure JB2 to Mr John Barron's first affidavit. The amount of the demand is $106,900. This is broken down into an amount of $99,900 which is said to be a loan for which the plaintiff is liable, but which has not been repaid to the defendant. There is a further amount of $7,000 which is said to be wages due by the plaintiff to the defendant for the period 1 November 2007 to 21 December 2007. At the hearing of this matter, counsel for the defendant conceded that there was a genuine dispute as to the wages claim and, to that extent at least, the statutory demand ought be varied. However, the defendant maintained there was no genuine dispute as to the loan and the liability of the plaintiff to make repayment.
3 The plaintiff's position can be summarised in this way. Mr John Barron is a director and secretary of the plaintiff. The plaintiff intends to run a ferry service between Rockingham and Rottnest Island. For that purpose, a vessel referred to in the evidence as 'the Ferry' has been acquired and refitted. Certain licences have been obtained and it is anticipated that the ferry service will operate in the 2008/2009 season. To date, it has only operated as a charter vessel on a limited number of occasions. But a good deal of money has been spent both in acquiring the ferry and refitting it, and taking other steps to allow the service to commence.
4 Mr John Barron says that as at 10 November 2007 he was the sole director of the plaintiff. As at that date, he appointed three other directors - Mr Proctor, the defendant and Mr Nigel Barron. He also resolved as at that date that each of the three individuals would take up 100 fully paid shares at $1 per share in the plaintiff. He then goes on to say (at par 6):
It was further agreed that all four directors of the Plaintiff would each loan the sum of $99,900 to the Plaintiff. On the advice of the Plaintiff's accountants … we agreed to characterise these payments as a loan to the plaintiff.
(Page 4)
5 It is common ground between the parties that no written loan agreement was executed. A form of loan agreement was prepared. A copy of what might be described as the draft loan agreement appears as annexure JB10 to Mr John Barron's first affidavit. The date on the draft is 13 November 2007. It would appear that this draft was tabled at a directors' meeting held on that day at which all four directors of the plaintiff were present. The minutes of that meeting (which appear as annexure JB9) contain the note:
Resolved that the Company enter into the Loan Agreements and that John Barron be authorised to sign the Loan Agreements on behalf of the Company.
6 In fact, that never happened. The reasons why it never happened are unimportant. As I have said, it is common ground that no written agreement exists.
7 A further meeting of directors took place on 16 November 2007. A copy of the minutes of that meeting appear as annexure JB12 to Mr John Barron's first affidavit. Those minutes note as follows:
It was agreed by all Directors That
(1) On the year beginning on the 1st July 2009 a review of the company will be held and any shareholder may offer to sell their shares at a price determined by the selling shareholder.
(a) The selling shareholder must offer the existing shareholders the first option to purchase the shares at a nominal price.
(b) The selling shareholder will also have the right to purchase all of the existing shares in the company at the nominated purchase price if agreed to by the individual existing shareholders.
… It was orally agreed by all of the Plaintiff's directors that only then (as at 1 July 2009) would any loans made be paid back and this was to be subject to the Plaintiff's ability to repay all the loans from profits made by the Plaintiff.
(Page 5)
9 The defendant's position is quite straightforward. He says that on 5 November 2007, he provided the plaintiff with a cheque for $100,000. Of this amount, $100 was for the purchase of 100 fully paid ordinary shares in the plaintiff and $99,900 was by way of loan. He says (at pars 5 and 6 of his affidavit):
5. My belief was that the loan was repayable on demand.
6. At no time did I agree with the Plaintiff that demand for repayment could not be made until a certain time in the future.
10 Counsel for the defendant conceded during the course of his submissions that there was a dispute as to whether or not any agreement was reached on or about 13 November 2007 as to the timing of the repayment of any loan. However, counsel submitted that as at 5 November, the loan had been made, the contractual arrangement was complete, there was no date for repayment of the loan and therefore the loan was repayable on demand. Any alleged agreement made at a later date was not supported by consideration and was unenforceable.
11 It is clear from the evidence that the arrangement between the defendant and the other directors, and incidentally the plaintiff, was in a state of flux for some time. In my view, it is arguable that as at 5 November 2007, the precise terms upon which the $99,900 were to be advanced was still a matter of discussion between the parties. That, I think, is consistent with the tabling of the draft loan agreement at the directors' meeting held on 13 November 2007. There is nothing in the minutes or the evidence to suggest at that meeting the defendant stated that his position was that the terms of the loan had been settled and that it was repayable on demand. To have resolved with his fellow directors to enter into the draft loan agreement was inconsistent with that view.
12 Once that position is reached, I need say no more about the evidence. I am satisfied that it is arguable that as at 16 November 2007, the terms upon which the defendant loaned money to the plaintiff were still to be resolved. In other words, the contract was still under active discussion. Whether or not agreement was subsequently reached and what the terms of that agreement might be are all matters which would need to be resolved at trial. All I am required to determine is whether there is a serious question to be tried. I am satisfied that there is.
13 The statutory demand ought be set aside. I will hear the parties as to costs.
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