Southern Graphtec Systems P/L v Atlantek Australasia P/L

[2001] NSWSC 583

CITATION:	Southern Graphtec Systems P/L v Atlantek Australasia P/L [2001] NSWSC 583 revised - 12/07/2001
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 1589/01
HEARING DATE(S):	09/07/01
JUDGMENT DATE:	9 July 2001
PARTIES :	Southern Graphtec Systems Pty Limited (ACN 003 559 662) (Plaintiff) Atlantek Australasia Pty Limited (ACN 094 035 382) (Defendant)
JUDGMENT OF:	Santow J

COUNSEL :	M W Young (Plaintiff) D S Mitchell (Solicitor) (Defendant)
SOLICITORS:	Forshaws Neill (Plaintiff) Ledlin Partners (Defendant)
CATCHWORDS:	CORPORATIONS — Statutory Demand — Representations relied upon to ground genuine dispute or offsetting claim — Available for former but not latter as damages amount not sufficiently ascertainable given obligation to mitigate loss so should be set at $1.
LEGISLATION CITED:	Corporations Law s459G Trade Practices Act 1974 (Cth) s87(2)(a) or (b) or (ba)
CASES CITED:	Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669 Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No. 1) (1994) 13 ACSR 455
DECISION:	Statutory Demand set aside. Respondent to pay Applicant's costs.

REVISED — 12 July, 2001
IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITY

SANTOW J

No. 1589/01
Southern Graphtec Systems Pty Limited (ACN 003 559 662)
Plaintiff
Atlantek Australasia Pty Limited (ACN 094 035 382)
Defendant
JUDGMENT — ex tempore

INTRODUCTION

1 The Applicant seeks to set aside the Respondent’s Statutory Demand, pursuant to s459G of the Corporations Law by Summons filed 27 February 2001.

2    The essential claim brought by the Applicant is that certain specialised printers ordered by the Applicant were ordered on the essential basis of representations alleged to have been made by the Respondent. Those representations are set out in the affidavit of Mr Barry Grant dated 21 February 2001 from which I quote paragraph 4:

“4. In the course of the conversations referred to above, Mr Williams and I had a verbal exchange to the following effect:

Grant: I am not really interested in reselling your ID printers as it is not possible to sell a printer on its own. We would have to be able to provide the encoding equipment and software as well as the reader, not just the printer. Some customers want to do magnetic reading whilst others want barcode reading, and we need to be able to cater to each customer’s specific requirements.

Williams: Don’t worry, Atlantek has all the contacts. When a customer comes along, give us a call and we will configure the system for you and put you in touch with our partners who can supply what is required. Further, after you purchase demonstration stock from us we will supply you with sales leads you can follow up on.

3    The Applicant contends that there is a genuine dispute as to the Applicant’s liability to pay for these specialised ID printers when there has been a total failure to provide the configuration service and put the Applicant in touch with suppliers of the encoding equipment and software required for the printer to operate. It further contends that there is an offsetting claim at least equal to the cost of the printers as they are unsaleable without the configuration service and associated equipment.

4    The Respondent denies that representations were made which were not met giving a competing account in the affidavit of Russell Williams dated 31 May 2001. Significantly, the representations are not so much denied insofar as the associated equipment is concerned (though not the configuration service) but are said to have been fulfilled in the sense that the Applicant never followed up the contacts which the Respondent had available to provide. The Respondent also relies on the absence of complaint from the Applicant until the statutory demand was served as going to the credibility of the Applicant’s case and invites the Court to conclude that it was spurious.

RESOLUTION OF ISSUES

5    The Applicant’s contention regarding an offsetting claim must fail though I am satisfied there is a genuine dispute.

6    The offsetting claim pre-supposes sufficient ascertainment of the damages as to avoid the consequence that, being unliquidated, their genuine level is to be set a nominal $1; see Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No. 1) (1994) 13 ACSR 455 at 462 per Young J.

7    However, here, there is no evidence from the Applicant that it could not locate the supply of the associated equipment or purchase from another source the configuration service, nor as to the relative cost of so doing. That would mean that under the obligation to mitigate its loss, the Applicant would have to take those steps and the ultimate offsetting claim would therefore be less than the statutory demand amount. How much less was not ascertained leaving the result that the offsetting amount must be set at $1.

8 That leaves the genuine dispute basis. The representations alleged to have been made are not sought to be tested at this stage. If ultimately established on a final basis at trial, they may afford a complete answer to the Respondent’s claim. This could be in one of two ways. This is either by way of an order under s87(2)(a) or (b) or (ba) of the Trade Practices Act 1974 (Cth), or by way of implication of an implied term to that effect in the contract said by the Applicant to represent an essential term whose unfulfilment represented a fundamental breach entitling termination.

9    All the Respondent can say in response was that its account of what was represented differs in that there was no representation as to configuration services and that it fulfilled or was ready to fulfil any requirement for assisting with the sourcing of the associated equipment. Further that the Applicant’s account of matters is recent invention evidenced by its emergence only after the statutory demand. I should note at this point that the written contract purports to exclude warranties but does not have an entire agreement clause. Nor could it exclude liability for misleading and deceptive conduct as may give rise to orders under s87.

CONCLUSION

10    Faced with two conflicting factual accounts, in circumstances where neither account has been tested, it is inevitable that the Applicant must succeed in setting aside the statutory demand. This is when the Respondent has advanced no "knock out punch" as would reduce the Applicant’s case to the merely spurious, in accordance with the well-known test in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669.

ORDERS

11    The Applicant’s application is granted and the Respondent’s Statutory Demand set aside.

12    Costs must follow the event so that I order that the Respondent pay the Applicant’s costs.

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Last Modified: 07/13/2001