The Ritz Jeweller's Pty Ltd v Australian Artimports Pty Ltd

[2001] WASC 51

THE RITZ JEWELLER'S PTY LTD -v- AUSTRALIAN ARTIMPORTS PTY LTD [2001] WASC 51

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2001] WASC 51
Published:	27/02/2001
Case No:	COR:326/2000	Heard:	20 & 23 FEBRUARY 2001
Coram:	MASTER BREDMEYER	Delivered:	23/02/01
No of pages:	8	Judgment Part:	1 of 1
Result:	Application dismissed Demand varied
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Parties:	THE RITZ JEWELLER'S PTY LTD (ACN 009 076 368) AUSTRALIAN ARTIMPORTS PTY LTD (ACN 071 496 887)
Catchwords:	Corporations Statutory demand No genuine dispute except  as to amount Whether debt due and owing at the date of the demand
Legislation:	Corporations Law, s 459G, s 459J
Case References:	Crescendo Management v Westpac Banking Corporation Ltd (1988) 19 NSWLR 40 L'estrange v Graucob [1934] 2 KB 394 Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 14 ACLC 1095 Turner Corporation (WA) Pty Ltd v Blackburn & Dixon Pty Ltd [1999] WASCA 294 Equuscorp v Perpetual Trustees WA Ltd (1998) 16 ACLC 12 First State Computing Pty Ltd v Kyling (1995) 13 ACLC 939 NT Resorts Pty Ltd v Deputy Commissioner of Taxation (1998) 153 ALR 359 Perlake Pty Ltd v Finance & Mortgage Corporation (1997) 15 ACLC 76 Re Morris Catering (Australia) Pty Ltd (1993) 11 ACLC 919 Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA (1995) 13 ACLC 94 Scandon Pty Ltd v Dome Supplies Pty Ltd (1995) 13 ACLC 1,256

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : THE RITZ JEWELLER'S PTY LTD -v- AUSTRALIAN ARTIMPORTS PTY LTD [2001] WASC 51 CORAM : MASTER BREDMEYER HEARD : 20 & 23 FEBRUARY 2001 DELIVERED : 23 FEBRUARY 2001 PUBLISHED : 27 FEBRUARY 2001 FILE NO/S : COR 326 of 2000 MATTER : Section 459G of the Corporations Law

and

AUSTRALIAN ARTIMPORTS PTY LTD (ACN 071 496 887)

BETWEEN : THE RITZ JEWELLER'S PTY LTD (ACN 009 076 368)

Plaintiff

AND

AUSTRALIAN ARTIMPORTS PTY LTD (ACN 071 496 887)
Defendant

Catchwords:

Corporations - Statutory demand - No genuine dispute except as to amount - Whether debt due and owing at the date of the demand

(Page 2)

Legislation:

Corporations Law, s 459G, s 459J

Result:

Application dismissed

Demand varied

Representation:

Counsel:

Plaintiff : Mr M S Macdonald
Defendant : Mr B P Wheatley

Solicitors:

Plaintiff : Macdonald Rudder
Defendant : Murfett & Co

Case(s) referred to in judgment(s):

Crescendo Management v Westpac Banking Corporation Ltd (1988) 19 NSWLR 40
L'estrange v Graucob [1934] 2 KB 394
Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 14 ACLC 1095
Turner Corporation (WA) Pty Ltd v Blackburn & Dixon Pty Ltd [1999] WASCA 294

Case(s) also cited:

Equuscorp v Perpetual Trustees WA Ltd (1998) 16 ACLC 12
First State Computing Pty Ltd v Kyling (1995) 13 ACLC 939
NT Resorts Pty Ltd v Deputy Commissioner of Taxation (1998) 153 ALR 359
Perlake Pty Ltd v Finance & Mortgage Corporation (1997) 15 ACLC 76
Re Morris Catering (Australia) Pty Ltd (1993) 11 ACLC 919
Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA (1995) 13 ACLC 94
Scandon Pty Ltd v Dome Supplies Pty Ltd (1995) 13 ACLC 1,256

(Page 3)

1 MASTER BREDMEYER: This is an application by the plaintiff to set aside a statutory demand served by the defendant on the plaintiff, the operative part of which is in these terms:

"Description of debt:

Monies owing for goods sold and delivered by the creditor to the company between 1 July 2000 and 25 September 2000 full particulars of which have been provided in invoices numbered 33504, 33506, 33514, 33546, 33567, 33735, 34105, 34134 and 34748 (as revised) ... $246,391.75."

The demand was served on 17 November 2000.

2 The application is made under s 459G of the Corporations Law that there is a genuine dispute about the debt or the amount of the debt set out in the demand. It was not argued that the plaintiff had an offsetting claim.

3 In argument, the plaintiff also relies on s 459J which reads:

"245J (1) On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:

(a) because of the defect in the demand, substantial injustice will be caused unless the demand is set aside; or

(b) there is some other reason why the demand should be set aside."

4 On what is a genuine dispute, I quote from our Full Court decision in Turner Corporation (WA) Pty Ltd v Blackburn & Dixon Pty Ltd [1999] WASCA 294 per Owen J, with whom the other Judges agreed:

"To reach a finding that there is a genuine dispute the applicant must satisfy the court that:

(a) the dispute is bona fide and truly exists in fact; and

(b) the grounds alleging the existence of a dispute are real and not spurious, hypothetical, illusory or misconceived."

5 Was the sum of $246,391.75 due and owing by the plaintiff to the defendant as at 17 November 2000 when the demand was served? To answer that question requires a consideration of the contract between the parties. The plaintiff's version of that contract for the supply of goods

(Page 4)

from the defendant to the plaintiff is very different from the defendant's version.

6 The goods were selected by the plaintiffs (I am here referring to their directors) at the end of August 2000, two days before the Jewellers' Trade Fair held in Melbourne. According to the plaintiffs, an oral contract was reached with the defendant:

(1) The goods were selected by the plaintiffs.

(2) They were to be invoiced by the defendant to JGBS (an intermediary between the plaintiff and the defendant).

(3) The prices per gram were set out in a handwritten list.

(4) JGBS was to be billed for them as follows:


$50,000 billed 18 - 30 October

$20,000 billed 20 November

$50,000 billed 20 December

Balance billed 20 January 2001.


(5) The goods were to be delivered to the plaintiff very shortly, as soon as invoiced. Clint Buis would being the stock with him in a few days time.

(6) The plaintiff was to pay $10,000 to the defendant off the June account; that is for goods collected by Mrs Rogala in Sydney in June. This sum was paid to the defendant at the Trade Fair.

7 The defendant has not, on affidavit, disputed that version of the contract. The defendant says the oral contract was replaced by a written one set out in a letter of 20 September 2000 from the defendant to the plaintiff, signed by Mr Rogala for the plaintiff on 25 September 2000. I will refer to that as the agreement of 20 September. As I explain in more detail later, I consider the oral agreement was replaced by that written agreement and that there was no duress on the plaintiff and the plaintiff should be bound by it.

8 The letter agreement of 20 September 2000 is headed "Confirmation of Payment Arrangements". Mr Rogala added two conditions in handwriting at the bottom:

"PROVIDING that the stock be invoiced at the prices agreed and supplied by you to me while in Melbourne."

(Page 5)

With reference to the second condition, Mr Rogala said he phoned Mr Mandie:

"R: I am going to fly to Melbourne straightaway to collect the balance of the August order and the new invoices.

M: No. We have just sent another parcel to you.

R: Is that the full order?

M: No.

R: What about the invoices?

M: We have still not done them.

R: I need them before the end of the month because the GST segment finishes at the end of the month.

M: You are not our only client. We will do them when we can."

9 I am satisfied that the first condition was met. The goods sent were re-invoiced. The original invoices sent showed the wrong prices. That was corrected by new invoices and credit notes supplied 20 October 2000. A summary of that is shown at 82 of Rogala's affidavit. Seven invoices and goods had been sent in September. The revision of the invoices meant a reduction of $5,253.05 on approximately $200,000 worth of goods.

10 The second condition was breached. The goods not yet sent were not available in Melbourne to be picked up. Having said that, when Mr Rogala wrote that condition on 25 September some goods were on the way and some more were sent a few days later. I refer to:

"26/9 Invoice 34748 $26,913.93

30/9 Invoice 414489

page 62 affidavit $16,354.51"

I have mentioned that approximately $200,000 worth of goods had been supplied by the defendant by 25 September. By 30 September it was approximately $216,000 worth. They were the goods that had to be paid for directly to the defendant. In addition, as the letter of 20 September indicates, approximately $45,000 worth of stock was to be invoiced to the

(Page 6)

plaintiff through JGBS. Those goods were sent on 21 September - Invoice No 34267 (page 75 of the affidavit).

11 So, adding them all up, about $260,000 worth of goods had been sent by the end of September or the first few days of October. What part of the August selection of goods was not sent? How serious was the breach of the second condition? The plaintiffs did not have an order form, so they had no list of the goods they had ordered. The goods were selected physically and put into trays for the defendant to invoice and send. What goods were not supplied? At par 60 of Mr Rogala's affidavit he states:

"9 carat chains and bracelets, handmade bracelets, chains and bangles."

At 67, he states:

"The balance of the August order was never sent. This included a lot of 9 carat chains and bracelets ... and all of the handmade chains and bracelets he and his wife had selected."

12 That is hard to believe as the plaintiff had no list of what he had selected in August at the Trade Fair and Invoice No 34267 of 21 September 2000 (at 75 of affidavit) sent $47,105.27 of goods, all 9 carat, including many chains and bracelets, and Invoice No 34748 of 25 September 2000 sent $26,903.00 worth of goods, all 9 carat, including many chains and bracelets. It is likely that when he wrote that condition on the letter he had not yet received the goods in Invoice 34267 of 21 September. He said all the stock received in September came four or five days after the invoice concerned. I consider it likely that he had not received the 9 carat stock in these two invoices when he annotated the letter of 20 September on 25 September.

13 I consider the plaintiff got most of the stock it ordered and it is unable to say what it did not get. The amount of stock ordered but not delivered, is unproved and I consider the breach of this condition is minor and does not justify a voiding of the contract.

14 I consider the contract of 20 September stands. It replaces the oral contract made at the Trade Fair. The protestations of Mr Rogala that he did not appreciate this, or that he overlooked one or more terms, should be ignored: see L'estrange v Graucob [1934] 2 KB 394 that a person is normally bound by the terms of a written contract, even if he failed to read it or appreciate some of the terms.

(Page 7)

15 The plaintiff says the agreement could be avoided because of economic duress. A definition of that is given by McHugh JA in Crescendo Management v Westpac Banking Corporation Ltd (1988) 19 NSWLR 40 at 45:

"The law will not give effect to an apparent consent which was induced by pressure exerted by one party on another which the law regards as illegitimate."

16 I do not consider the plaintiff has raised a bona fide dispute here. By 25 September he had received most of the goods ordered. He could have stuck to the oral agreement and not signed the revised terms of payment set out in the letter. He had other sources of supply. He could get goods from Italy or from other Australian suppliers. Commercially, I think his hands may well have been full. He had already taken possession of a very large stock from the defendant which he needed to sell in order to pay the bills.

17 On 2 November 2000 Lewis Walker, the defendant's Melbourne solicitors, sent a letter of demand to the plaintiff stating that the plaintiff had failed to pay: $41,299.68 by the end of September (this was the balance of the June Sydney order) and $50,000 due on 20 October as per the written agreement of 25 September 2000. The letter said:

"Our client also reserves its right (upon default of the above payment requirements) to call up the whole of the balance of the account due and outstanding: $246,391.75."

As a matter of law, that is wrong. It was not a term of the agreement and no court would imply such a term. But it is not economic duress. That defence must relate to the agreement, not to the enforcement action.

18 The plaintiff sought legal advice on that letter of demand but failed to show its solicitors the written agreement of 20 September (referred to in the letter of demand as the agreement of 25 September). Its solicitors wrote back to the defendant's solicitors on 8 November referring to the prior oral agreement.

19 As at 17 November, the date of service of the statutory demand, $50,000 and $41,299.68 were owing. The demand, as threatened in the prior letter of demand, purported to call up all the moneys outstanding - $246,391.75. That was wrong. The other sums were not due.

20 Is that a reason for setting aside the whole demand? The demand refers to a number of invoices. It does not refer to the agreement of 20 or

(Page 8)

25 September. Neither does the supporting affidavit. But, in this case, the demand was preceded by the letter of demand mentioned and that letter sets out details of the written agreement. It said that, under the agreement of 25 September 2000, $41,299.68 was due by the end of September (I add that with GST that sum somehow grew to approximately $46,000) and $50,000 due on 20 October, and it said the client reserves the right upon default of those two payments to call up the whole debt due and outstanding of $246,391.75. A reference of that agreement to the plaintiff's solicitors would have put the plaintiff's mind at rest that the whole sum was not due and owing and that the whole sum could not be called up.

21 I consider, in these circumstances, that because the prior letter of demand which referred to the written agreement, which contained no acceleration clause, the overstatement in the demand did not cause substantial injustice and is not an abuse of process so that it should be set aside under s 459J. It is that letter which distinguishes this case from a case with similar facts: Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 14 ACLC 1095. In that case, the demand for $200,000 included approximately $44,000 which was not yet due and owing under the terms of trade. The Judge set aside the demand on that basis. I decline to set aside this demand because it is overstated.

22 In the 21 days of the demand, from 17 November onwards, the second payment under the September agreement of $20,000 fell due. I think it fair to add that sum. Since then two further payments have fallen due, namely $50,000 on 20 December 2000 and the balance on 21 January 2001. I do not think it fair to add them. By analogy with a writ, it is quite difficult to amend a writ to add post writ debts.

23 I do not consider that the plaintiff has raised any bona fide dispute or given any other reason why this demand should be set aside. It is good for $41,299.68, which has somehow grown to about $46,000 with GST, plus $50,000, plus $20,000. The former sum has been paid. $46,429.65 was paid on 22 December 2000. I will dismiss the application but reduce the demand to $70,000.