Trailcorp Pty Ltd v Di Lello - [2017] WASC 196

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: TRAILCORP PTY LTD -v- DI LELLO [2017] WASC 196

CORAM: MASTER SANDERSON

HEARD: 22 MARCH 2017

DELIVERED : 18 MAY 2017

PUBLISHED : 19 JULY 2017

FILE NO/S: COR 182 of 2016

BETWEEN: TRAILCORP PTY LTD
Plaintiff
AND
NICK DENNIS FRANK DI LELLO
Defendant

Catchwords:

Corporations law - Application to set aside statutory demand - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff: Mr M A MacLennan
Defendant: Mr J G Abberton

Solicitors:

Plaintiff: Bennett + Co
Defendant: Lavan

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

Nil

MASTER SANDERSON: This was the plaintiff's application to set aside a statutory demand. After hearing argument I reserved my decision. On 18 May 2017 I gave brief oral reasons for dismissing the plaintiff's application. The parties have been unable to agree as to the ratio of that decision. Having read the transcript of the oral judgment I can understand their difficulties. These reasons effectively expand upon the decision delivered orally.
The plaintiff's application was supported by two affidavits. The first was an affidavit of Barbara Anne Wiszniewski sworn 23 August 2016. On the same day Giulio Domenico Cimetta swore an affidavit in support of the application. The plaintiff also relied on a further affidavit of Mr Cimetta sworn 20 March 2017. The defendant relied on an affidavit he swore on 20 February 2017.
A copy of the statutory demand appears as attachment BAW‑1 to Ms Wiszniewski's affidavit. In the schedule to the statutory demand the debt is described as follows:
Loan advanced to the Company by the Creditor including interest.
The amount of the debt is said to be $116,946.56.
At pars 16 ‑ 28 of the plaintiff's written submissions the relationship between the plaintiff and the defendant is outlined in some detail. The position can be summarised as follows. In or about 2001 the defendant and a number of other people associated with Mr Cimetta, an accountant, entered into a series of transactions through which they became shareholders and partners in two companies (the plaintiff and Skypoint Nominees Pty Ltd), and two partnerships (the Birdwood and Grant Street Partnerships). The purpose of these companies and partnerships was to acquire and operate a backpackers lodge in Highgate. The plaintiff's role was to lease the backpackers lodge from Skypoint and to operate it. The defendant's interest in the partnerships and in the companies was 20%. The parties agree that the operations of the companies and partnerships were financed by a combination of loans from shareholders/directors and debt finance provided by Police & Nurses Bank (P&N Bank). In her affidavit Ms Wiszniewski is not clear as to when the loans were made, the terms of those loans, or indeed any other details which might answer the defendant's claim. All she really says is that, first, she acknowledges that an amount of $55,400 is outstanding of the money loaned by the defendant to the plaintiff and, second, she is unsure how the interest claimed by the defendant is calculated.
Mr Cimetta in his affidavit provides very little information as to the circumstances in which the defendant made the loan to the plaintiff and the terms and conditions upon which the loan was made. It does appear however that the loan was made in or around 2001 and the terms and conditions of the loan were agreed between the parties around that time. There was clearly nothing in writing and based upon the affidavits of Ms Wiszniewski and Mr Cimetta it does not appear as though there was any firm agreement as to the repayment date and interest, if any, payable on the loans. Both in his written and oral submissions counsel for the defendant objected to certain parts of the affidavit of Ms Wiszniewski and the first affidavit of Mr Cimetta. Rather than go through each of the objections made by the defendant it is enough if I give an example of the material to which objection is taken. Paragraph 41 of Ms Wiszniewski's affidavit is in the following terms:
The loans weren't discussed at every meeting but I can clearly recall a number of discussions about them, which were to the effect that we all agreed that they would be repaid when we all agreed that the funds were no longer required, and would focus on repaying the P&N Loans first. It was always understood that they would not attract interest.
The defendant says a paragraph such as that is conclusory in nature and talks of an agreement rather than facts and circumstances which might lead to an agreement. On that basis it was submitted the paragraphs were inadmissible.
I determined the paragraphs complained of should be admitted into evidence. It is always to be borne in mind in an application to set aside a statutory demand that it is not for one party to prove conclusively that there was an agreement. What has to be established is there is sufficient material which in the proper forum could give rise to a conclusion there was an agreement. In other words it is necessary for a party seeking to set aside a statutory demand to establish there is serious question to be tried. That does not mean that every statement no matter how vague and inconsequential will be admitted into evidence. But it seemed to me for what it was worth the evidence of Ms Wiszniewski did give some indications of what she alleged the agreement between the parties might be. The same reasoning applied to the paragraphs of the affidavit of Mr Cimetta to which objection was taken.
The defendant in his affidavit is rather more definite about the nature of the agreement reached. Paragraph 12 of his affidavit reads as follows:
I recall that the loan the subject of the Statutory Demand was advanced by me to Trailcorp on the basis that it would be repaid as soon as possible and 6% per annum would accrue on the principle until it was paid.
So far as repayment of the loan is concerned it is very difficult to see how any binding agreement as to the timing of repayment was reached between the parties. Even taking the evidence of Ms Wiszniewski and Mr Cimetta at its highest there appears to have been some vague non‑specific open‑ended arrangement which could not possibly be said to amount to an enforceable agreement. Furthermore, the defendant in his evidence is rather more direct. In my view the only conclusion that can be reached is that the loan was repayable on demand. The remaining question is whether or not the defendant is entitled to claim interest.
If it were down to a contest between the evidence led on behalf of the plaintiff and the evidence led by the defendant then there may have been a serious question to be tried as to the plaintiff's entitlement to interest. However, appearing as attachment BAW‑2 to the affidavit accompanying the statutory demand is a copy of the 'Financial Report' of the debtor for the period ended 30 June 2015. That report notes the defendant's loan balance and refers to interest at 6%. So accounts prepared by Mr Cimetta, the plaintiff's accountant, clearly show an interest rate of 6% payable on monies owing by the plaintiff to the defendant.
In my view that is conclusive.
By way of completeness I should say that in his first affidavit Mr Cimetta attempts to explain the schedule he prepared. He says he has no recollection of preparing the schedule and can see no reason why the 6% interest rate would have been adopted. But he does not go so far as to say he did not prepare the accounts or they do not represent a true and correct record of the plaintiff's affairs. The accounts are part of the plaintiff's books and records and are at least prima facie evidence of its financial position. It is difficult to see how in the light of those books and records and in the absence of other clear evidence it can be suggested interest at 6% was not payable.
For these reasons I determined the application to set aside the statutory demand ought be dismissed.