Royal Premier Pty Ltd v Taleski
[2000] WASC 55
•10 MARCH 2000
ROYAL PREMIER PTY LTD -v- TALESKI [2000] WASC 55
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 55 | |
| Case No: | COR:15/2000 | 29 FEBRUARY 2000 | |
| Coram: | MASTER SANDERSON | 10/03/00 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| PDF Version |
| Parties: | ROYAL PREMIER PTY LTD (ACN 082 713 479) CANE TALESKI |
Catchwords: | Corporations law Application to set aside statutory demand Turns on its own facts |
Legislation: | Corporations Law, s 459G and s 459H Supreme Court Rules, O 33 r 6(2a) |
Case References: | Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1 Mibor Investments Pty Ltd v Commonwealth Bank (1993) 11 ACLC 1062 Blythe Chemicals v Bushnell (1933) 49 CLR 66 Capital Bay Investments Pty Ltd v Richard Szklarz Architects Pty Ltd, unreported; SCt of WA; Library No 980503; 8 September 1998 Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporises Pty Ltd (1994) 13 ACSR 37 Eden Bay Pty Ltd v Bennett & Co, unreported; SCt of WA; Library No 970533; 23 October 1997 Eyota Pty Ltd v Hanabe Pty Ltd (1994) 12 ACSR 785 Firebird Holdings Pty Ltd v Permanent Trustee Australia Ltd, unreported; SCt of WA; Library No 980430; 3 August 1998 Re Morris Catering (Australia) Pty Ltd (1993) 11 ACLC 919 Scaffidi Developments Pty Ltd v Prolay Constructions Pty Ltd, unreported; SCt of WA (Master Ng); Library No 980127; 23 March 1998 Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1994) 12 ACLC 111 Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
and
ROYAL PREMIER PTY LTD (ACN 082 713 479)
BETWEEN : ROYAL PREMIER PTY LTD (ACN 082 713 479)
- Plaintiff
AND
CANE TALESKI
Defendant
Catchwords:
Corporations law - Application to set aside statutory demand - Turns on its own facts
Legislation:
Corporations Law, s 459G and s 459H
Supreme Court Rules, O 33 r 6(2a)
(Page 2)
Result:
Application dismissed
Representation:
Counsel:
Plaintiff : Mr C P Stokes
Defendant : Mr A Metaxas
Solicitors:
Plaintiff : Chris Stokes & Associates
Defendant : Arthur Metaxas & Co
Case(s) referred to in judgment(s):
Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1
Mibor Investments Pty Ltd v Commonwealth Bank (1993) 11 ACLC 1062
Case(s) also cited:
Blythe Chemicals v Bushnell (1933) 49 CLR 66
Capital Bay Investments Pty Ltd v Richard Szklarz Architects Pty Ltd, unreported; SCt of WA; Library No 980503; 8 September 1998
Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporises Pty Ltd (1994) 13 ACSR 37
Eden Bay Pty Ltd v Bennett & Co, unreported; SCt of WA; Library No 970533; 23 October 1997
Eyota Pty Ltd v Hanabe Pty Ltd (1994) 12 ACSR 785
Firebird Holdings Pty Ltd v Permanent Trustee Australia Ltd, unreported; SCt of WA; Library No 980430; 3 August 1998
Re Morris Catering (Australia) Pty Ltd (1993) 11 ACLC 919
Scaffidi Developments Pty Ltd v Prolay Constructions Pty Ltd, unreported; SCt of WA (Master Ng); Library No 980127; 23 March 1998
Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1994) 12 ACLC 111
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452
(Page 3)
1 MASTER SANDERSON: This is an application to set aside a statutory demand. The application is made under s 459G of the Corporations Law and falls to be determined under s 459H. The application is made on alternative grounds. First, it is said by the applicant that there is a genuine dispute as to the amount claimed in the statutory demand. In the alternative, the applicant says that it has an offsetting claim greater than the demand and the demand should therefore be set aside under s 459H(3). The demand was served on the applicant on 24 December 1999. The application to set aside the demand was filed on 17 January 2000 and is supported by an affidavit of Li Chien (Terrence) Chan, sworn 14 January 2000. (Throughout these reasons I will adopt the name Li Chien in line with the name used by counsel for the applicant during the course of his submissions.) In opposition to the application, the defendant has sworn an affidavit dated 7 February 2000. The applicant has lodged a further affidavit of Cheng Kwee (Albert) Chan ("Albert Chan"), sworn 25 February 2000. These three affidavits, taken together, formed the evidence for and against the application.
2 The facts giving rise to the respondent's claim which led in turn to the statutory demand can be shortly stated. On 20 March 1998 the defendant and Albert Chan entered into an agreement in relation to the plaintiff and its business undertakings. This document is described as "Deed of Purchase of a Controlling Interest in Royal Pty Ltd" and is to be found as Annexure "CKC2" to the affidavit of Li Chien. (Throughout this agreement reference is to Royal Pty Ltd. The proper name of the corporation is Royal Premier Pty Ltd. No issue was taken on this point and it appears that the agreement simply misdescribed the corporation.) The nature and intent of this agreement can be ascertained from the recitals. They read as follows (throughout the agreement Li Chien is referred to as "Chan"):
"A. Taleski is the sole Director and Shareholder in the Company [Royal Premier Pty Ltd] which specialises in the production of replica sports cars and the manufacturing of stretch limousines.
B. Taleski is desirous of obtaining a capital injection into the Company to expand its manufacturing and production facilities and to increase its market penetration both within Australia and for the export market.
C. Chan is desirous of injecting the requisite capital in return for a controlling interest in the Company.
(Page 4)
- D. Chan is to be appointed as a Director of the Company."
3 The agreement goes on to specify certain terms and conditions upon which Li Chien will inject capital into the company. Clause 12 of the agreement sets out the duties and responsibilities of the respective directors of the company, including Taleski. Clause 13 sets out the remuneration of the directors. Taleski was to receive $3,000 per month for "the carrying out of the duties and responsibilities as a full-time working director".
4 The statutory demand is for an amount of $17,500. This is said to be for:
"Monies owed by the company to the Creditor [Taleski] in respect of salary owing to the Creditor pursuant to an agreement between Cane Taleski and the Debtor represented by Cheng Kwee Chan for the period 1 May 1998 until 1 February 1999 in respect of which the sum of $17,500 remains outstanding."
5 It can be seen then that the claim is for payment of remuneration for a period of nine months at the rate of $3,000 per month. Given that the defendant's full entitlement under the agreement was to $27,000 for that period, it follows that he says he has been paid $9,500 but not the rest to which he is entitled. There is no dispute between the parties as to the validity of the agreement, nor is there any suggestion that the agreement does not accurately reflect the bargain reached by the parties.
6 In his affidavit, Li Chien sets out the background which led to the agreement and says (in par 9) that prior to March 1999 the defendant represented to Albert Chan that each Ford Fairlane limousine "would cost $30,000 to purchase and stretch". It is alleged that this representation made prior to the agreement being concluded was relied upon when Albert Chan entered into the agreement with the defendant. In an application to set aside a statutory demand statements of information and belief are permissible because the application is considered interlocutory in nature: see Mibor Investments Pty Ltd v Commonwealth Bank (1993) 11 ACLC 1062 per Hayne J at 1067. But it is incumbent upon a party making statements of information and belief to set out the sources or grounds of that information or belief: see O 37 r 6(2a). That has not been done in par 9 of Li Chien's affidavit and it is a problem which bedevils much of the evidence contained in both affidavits relied on by the applicant. It can perhaps be inferred that Li Chien was told about
(Page 5)
- negotiations prior to the agreement by Albert Chan who is his father. But if that is the case, there should have been a statement to that effect in the affidavit.
7 The affidavit goes on to say that in July 1998 the defendant drew up a business plan for the company. That business plan is Annexure "CKC4" to Li Chien's affidavit. It is then said (by par 11) that in preparing the business plan the defendant represented that he had the skill and experience to ensure fulfilment of the business plan. The applicant then alleges that Taleski was in breach of a number of duties and responsibilities and these are detailed in par 13 of Li Chien's affidavit. They may be summarised in the following way. First, it is said the defendant was in breach of cl 12 of the agreement because the work on stretching two limousines was behind schedule and no other work had been commenced. Second, it is said that the budgeted cost of $30,000 for the manufacture of a stretched Ford Fairlane limousine had blown out to an actual cost of $92,670.45. Thirdly, it is said that licensing approval had not been obtained for three partly manufactured limousines and one limousine which was completed was being improperly used. Fourthly, it is said that the defendant abused his position as a director of the company to assist a third party in relation to immigration matters and, in particular, by offering the individual an occupational traineeship. Finally, it is said that the defendant did not work full-time as a director of the applicant because he was a director and/or shareholder of five other companies. It is said that these matters, collectively or individually, mean the respondent is not entitled to his agreed remuneration or is liable to the applicant in damages. There is an additional claim put against the defendant in relation to a Yellow Pages' advertisement. This allegation is in the following terms (par 12):
"In August 1998 … [the Defendant] represented to my father Royal Premier Pty Ltd paid the costs of a yellow pages advertisement ($18,356.00) a number of smaller limousine operators would promote their services under the umbrella of Royal Premier Pty Ltd, and share the advertisement costs. Royal Premier Pty Ltd relied on this representation to pay the costs of the advertisement on 4 August 1998"
8 Based upon this affidavit, it is very difficult to ascertain what case is being put against the respondent. It is said that there is a genuine dispute as to the respondent's entitlement to remuneration. There is no dispute that the respondent was employed by the applicant for the period between 1 May 1998 and 1 February 1999. Prima facie, then, he is entitled to be
(Page 6)
- paid for that period. It might perhaps be argued that the respondent's entitlement would fall away if there was total failure of consideration - that is, if the respondent had done nothing in relation to the applicant's business. But that is not suggested by Li Chien's affidavit. What is suggested is that the respondent carried out his duties either in breach of the agreement, or negligently, or in some way which led to loss and damage to the applicant. In other words, the applicant says that it has an offsetting claim. It might be argued that, as the respondent was a director of other companies, he was in some way in breach of his fiduciary duties as a director of the applicant. Even assuming that this breach of fiduciary duties could disentitled the respondent to remuneration under the contract, the allegation is entirely lacking in detail. If it can be established that the respondent, while a director of the applicant, was engaged in a business which was in competition with the applicant then he would be liable to account to the applicant for any profits: see Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1. But the mere fact the respondent is a director of five corporations which may or may not be in competition with the applicant is no basis for denying the respondent remuneration under the agreement.
9 Under s 459H(2) a formula is provided for calculation of what is the substantiated amount of the statutory demand. This in turn requires that a figure be put on any "offsetting total". It is not possible, based on Li Chien's affidavit, to ascertain what, if any, amounts comprise what the applicant says is the offsetting total. For instance, it is said that the cost of the manufacture of the stretched Ford Fairlane was budgeted at $30,000 and blew out to $92,670.45. Assuming that to be the case (and there is no supporting documentation at all provided by the applicant), it does not automatically mean that the applicant has a claim against the respondent for $62,670.45. Such a claim would only arise if it could be established that the cost blow out was the result of a breach by the respondent of the agreement or was due to his negligence. Li Chien's affidavit provides no basis for reaching such a conclusion.
10 In relation to the Yellow Pages' advertisement, the allegation is that the respondent represented that certain smaller limousine operators would share the cost of the advertisement with the applicant. It follows, then, the applicant always intended to pay part of the cost of the advertisement. The affidavit does not say how much of the total cost was to be paid by the "smaller limousine operators". Presumably, the claim against the respondent would be brought under s 10 of the Fair Trading Act. If that is the case, any damages payable would be the tortious measure - that is to say the applicant would be put back in the position it would have been in
(Page 7)
- had the false and misleading conduct not taken place. In other words, the damages would be an amount anticipated but not received from the smaller limousine operators. There is no way that amount can be calculated from the evidence provided in Li Chien's affidavit. No calculation of the substantiated amount is possible under s 459H(2).
11 The affidavit of Albert Chan was filed after the respondent's affidavit. It raises certain matters which were not raised in the affidavit of Li Chien. I accept that the applicant is not restricted on the hearing of an application to matters raised in the affidavit filed in support of the application: see Mibor Investments Pty Ltd v Commonwealth Bank (supra) at 1066. However, it is to be expected that in most cases all the grounds upon which it is said the statutory demand ought be set aside should be covered in the supporting affidavit. If that is not done, then a subsequent affidavit should explain why it was not done. The alternative is a multiplicity of affidavits which is at odds with the simple and direct procedure envisaged by the statutory demand regime.
12 The first six paragraphs of Albert Chan's affidavit relate to the manufacture of the Ford Fairlane limousine and the allegation that it was over budget. I am unable to draw anything from these paragraphs which suggest either a genuine dispute as to the debt or an offsetting claim.
13 Paragraph 7.1 refers to licensing of a vehicle. It is irrelevant to the matters in issue. Paragraph 7.2 details drawings of $26,751.70 which is said, by implication, to have been improperly taken by the respondent. The paragraph falls foul of O 37 r 6(2a) and will be struck out. Even if the paragraph had stood, there is nothing in the paragraph itself or elsewhere in Albert Chan's affidavit which would justify a conclusion that the applicant had a claim against the respondent for the amount in question. There is simply nothing in the rest of Albert Chan's affidavit which demonstrates either that there is a genuine dispute about the debt or that there is an offsetting claim.
14 In all the circumstances, I am satisfied that this application ought be dismissed. The applicant should pay the respondent's costs of the application, including the reserved costs.
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