Surftv v Belmonte

[2002] NSWSC 252

CITATION:	SURFTV v BELMONTE [2002] NSWSC 252
CURRENT JURISDICTION:	4953/2001
FILE NUMBER(S):	SC 4953/2001
HEARING DATE(S):	26/03/2002
JUDGMENT DATE:	28 March 2002
PARTIES :	SURFTV PTY LIMITED v TONY BELMONTE
JUDGMENT OF:	Master Macready at 1

COUNSEL :	Mr Peter McCook in person for the plaintiff Mr Dubler for the defendant
SOLICITORS:	Sally Nash & Co for defendant
CATCHWORDS:	Corporations Law. Application to set aside statutory demand under s 459G of the Corporations Law. Demand set aside. No question of principle.
DECISION:	Paragraph 16

- 1 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER MACREADY

THURSDAY 28 MARCH 2002

4953/2001 SURFTV PTY LTD v TONY BELMONTE

JUDGMENT

1 MASTER: This is an application to set aside a demand under section 459G of the Corporations Act. The demand was dated 19 September 2001 and sought recovery of $40,000 by way of consultancy fees over the period from February to June 2000.

2 The application was made and served within time and was supported by affidavits of Mr Peter McCook of 10 October 2001, a director of the plaintiff, and of Mr Devlin of 10 October 2001, the managing director of the plaintiff. Mr McCook appeared for the plaintiff.

3 The defendant called no evidence and submitted that the plaintiff’s evidence disclosed no genuine dispute as claimed in the originating process and therefore the Court did not have jurisdiction to grant relief.

4 The law in this regard is conveniently set out in the judgment of Sunburg J in Graywinter Properties Pty Limited v Gas and Fuel Corporation Superannuation Fund, 21 ACSR, 581. At 587.8 his Honour had the following to say:

“Is a complying affidavit a condition of jurisdiction?

It seems to me that s 459G(3) makes plain that the Court can entertain an application to set aside only if within the prescribed period an affidavit supporting the application is filed and copies of the application and affidavit are served. The High Court in Grant said that compliance with the subsection is a limitation or a condition upon the authority of the Court to set aside a demand; it is a condition of the jurisdiction that subs (3) be observed; if the condition is not observed there is no application before the Court. I am thus unable to agree with the Senior Master that the failure of an affidavit to satisfy the minimum requirements for an affidavit to be a ‘supporting affidavit’ is not a jurisdictional impediment.

The minimum requirements in a genuine dispute case.

In order to be a ‘supporting affidavit’, an affidavit must say something that promotes the company’s case. An affidavit which merely says ‘I am a director of the company but am too busy at present to make a full affidavit, and I will do so later’ would not support the application. It would in no way advance, further or assist the company’s cause, which is to have the notice set aside. At the other extreme, the affidavit need not detail, in admissible form, all the evidence that supports the contention of a genuine dispute: John Holland. That evidence must be available at the hearing of the application to set aside, because that application is for final and not interlocutory relief: 71 Paisley Street.

In a s 459H1(a) case, the affidavit must in my view disclose facts showing there is a genuine dispute between the parties. A mere assertion that there is a genuine dispute is not enough. Nor is there a bare claim that the debt is disputed sufficient. It follows from the fact that the affidavit need not go into evidence, which is the customary function of an affidavit, that it may read like a pleading.

An affidavit which exhibits an exchange of correspondence between the parties or between their solicitors from which it appears that a claim is made and rejected for reasons given can qualify as a supporting affidavit. And an affidavit verifying the pleadings in an action may qualify.

I am thus unable to accept the respondent’s submission that the affidavit must contain sufficient material to make out a case under s 459H. In reply, that submission was somewhat retreated from. It was said that the affidavit must, as a minimum, contain a statement of the material facts on which the applicant intends to rely to show a genuine dispute – it might read more like a pleading than a story. That accords with what I consider to be the minimum requirement.

.....

A multitude of affidavits?

In several cases, it has been held that an applicant is not restricted on the hearing to the affidavit that is served with the application. See Scanhill at 467 and Mibor Investments Pty Limited v Commonwealth Bank of Australia (1993) 11 ACSR 362 at 368. An applicant whose initial affidavit has satisfied the threshold test must be able to supplement the material, because while the “supporting” affidavit does not have to deploy the evidence, on the hearing only admissible evidence can be relied on. In Louisbridge, Ryan J said that “provided that an affidavit is filed and served within the 21 day period which supports the application by providing grounds for concluding that there is a genuine dispute ... or that the company has an offsetting claim”, supporting affidavits may be filed under the period has expired. Apart from Hire Works, the cases do not support the proposition for which the applicant contended, namely that an affidavit that does not satisfy the threshold test can be supplemented later on. That issue did not arise in Scanhill or Mibor. It did arise in Hire Works but for the reasons I have given, I am respectfully unable to agree that the Court can entertain as an application under s 459G a case in which an affidavit containing the minimum requirements has not been served within time.”

5 Given the fact that the affidavit does not need to be in strictly admissible form, I think it is appropriate to consider the whole of the affidavit, not just the part that was admitted into evidence on the hearing before me.

6 The affidavits show that the plaintiff company commenced business in December 1999 which was the importation and sale of set top boxes which operated in conjunction with TV sets to enable the user to access the internet without using a computer.

7 The evidence shows that the defendant became a director on about 11 July 2000 and was issued with shares of about five percent of the issued share capital of the company. Mr Devlin, the managing director, swore that the defendant had never been an employee of the company in any capacity. Nor had he been engaged by the company as a consultant. The defendant apparently became ill in July 2000 and went to hospital. Obviously he was then a personal friend of Mr Devlin, the managing director, and had been associated with the company for a while. Over the next couple of weeks Mr Devlin kept in touch with the defendant and apparently he convalesced in Canberra. He came back to Sydney and moved into Mr Devlin’s house where he stayed for a couple of weeks and it appeared from discussions with Mr Devlin that the defendant had been suffering from depression and was on Prozac, and needed to be watched because of the depression. A week or two afterwards the defendant left Mr Devlin’s house and on 8 August Mr Devlin received an email and an attachment. The email is important and it is in the following terms:

“ I an

Attached is a letter I need you to put on a letter head and fax back to me so I can try and get assurance cover for my down time.

Thanks in advance

T”

8 That attachment is not relevant but what happened to the attachment is, and this appears in paragraph 11 of the affidavit of Mr Devlin which is in these terms:

“I then printed the said annexure “B” onto the letterhead of the company, signed it, and handed it to the defendant. Annexed hereto and marked “C” is a true copy thereof.”

9 The actual document which Mr Devlin put on letterhead and sent to the defendant is, omitting formal parts, in these terms:\

“Tony Belmonte
6 Discovery Street
Red Hill ACT 2603

1 February 2000

Dear Tony

It is our pleasure to confirm your appointment as a financial consultant of SurfTV Pty Ltd for a monthly consulting fee of $8,000 per month from this month.

Should your relationship become more integral to SurfTV we propose to appoint you as a Director of the company.

As agreed these terms will only change upon mutual consent in writing of the Board of Directors of SurfTV and yourself.

We look forward to a long and beneficial relationship with you.

Yours sincerely

Ian Devlin
Managing Director”

10 Thereafter nothing happened in terms of submitting any invoices, although some letters were sent, being a tax invoice in July 2000 in which a claim was made for the consultant fees. That claim was sent to the company’s accountant but not to the company.

11 There is also evidence that in August 2000, Mr Devlin had a conversation with the defendant in which the defendant indicated that he was short of money and needed some to make payments. He arranged to borrow $8,000 from the Company which was paid to him but not repaid. One is then left with the bold assertion in paragraph 6 that the defendant was never engaged by the company as a consultant and the quite contrary letter, signed by Mr Devlin, which would bind the company, clearly demonstrating that he had been appointed as a consultant.

12 It was pointed out in submissions by the defendant that there was no suggestion in the evidence:

1. That Mr Devlin lacked authority,
2. Mr Devlin signed the letter as a sham document.

3. There was some other reason why the letter did not record the true facts eg. mistake, misrepresentation.

13 The dispute which is identified in the affidavit is whether the defendant was a consultant to the company. He can only be a consultant as a result of some agreement for his appointment. The letter in question would doubt have some evidentiary purpose in relation to the establishment of any agreement. There is no evidence from the defendant and it seems to me that the letter in question goes to the genuineness of the dispute which is asserted in paragraph 6 of the affidavit.

14 The evidence shows that the defendant became ill in July 2000 and was taken to hospital. This illness, which was depression, continued at least up until shortly before 8 August when the email from the defendant was received. The letter of appointment was deliberately backdated and the purpose was “to get assurance cover for my down time”. That, of itself, is consistent with there being some pre-existing agreement as to his appointment as consultant.

15 Merely from that evidence one could not infer that there is some sham being concocted for the purpose of an insurance claim. The words used, however, in that email are not inconsistent with such a state of affairs. If it were the latter the letter may have no evidentiary value in determining the existence of the agreement. The evidence is silent on the purpose of the letter but I am not persuaded that the dispute is not genuine. One has the sworn evidence of no contract and such a case is quite different from a common occurrence where there are different oral accounts of an agreement and contemporaneous documents clearly recognising one version. In such cases the lack of genuineness is obvious.

16 In my view there is a genuine dispute. Accordingly I make orders 1 and 2 in the originating process.

17 The exhibits can be returned except for Exhibit F which is a file document.

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Last Modified: 04/10/2002