Trinh Optical Yllusion Pty Ltd v Van - [2012] SASC 125

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
TRINH OPTICAL YLLUSION PTY LTD v VAN
[2012] SASC 125
Judgment of Judge Burley a Master of the Supreme Court
25 July 2012
CORPORATIONS
Application to set aside a statutory demand - amount due under a trust - whether a debt for the purposes of the Corporations Act 2001 - creditor/beneficiary an eight year-old boy - statutory demand served on the instructions of his mother - whether mother had authority to do so.
Held:
1. amount under a trust may be a debt, and
2. mother had no authority to serve demand.
Statutory demand set aside.
Corporations Act 2001 s 459E and 459J, referred to.
Bentham Management Pty Ltd v Union Finance Pty Ltd (2008) 247 LSJS 103; John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250; Chianti Pty Ltd v Leume Pty Ltd (2007) 35 WAR 488; Gusdote Pty Ltd and Another v Ashley and Another (2011) 193 FCR 227; Bridges and Towers Pty Ltd v Surucic [2009] NSWSC 1180, applied.

TRINH OPTICAL YLLUSION PTY LTD v VAN
[2012] SASC 125
JUDGE BURLEY:

The plaintiff has applied for an order that a statutory demand dated 26 April 2012 in the sum of $5666 be set aside. The affidavits respectively filed by the parties were admitted on the application. There is only one material disputed fact between the parties: Ms Anh Trinh, a director of the plaintiff company, says that the plaintiff has already paid the amount referred to in the statutory demand to the defendant.
The plaintiff is a trustee company and is the trustee for the Trinh Family Trust. One of the discretionary beneficiaries of the Trust is the defendant, who is an 8 year-old boy.
At paragraph 9 of her affidavit, Ms Trinh said:
For the year ended 30 June 2010 the defendant asserts in its statutory demand that they[sic] trust distribution was credited but not paid. Exhibited hereto and marked with the letters ‘AT 3’ are true copies of the financial statements of the plaintiff company for the years ended 30 June 2010 and 30 June 2011. The 2010 accounts include a summary of the 2009 accounts. As can be seen from the accounts, the defendant was given a distribution of $2666 for the 2009 financial year and $3000 for the 2010 financial year. In both instances the defendant was paid each amount by way of drawings.
The first question to be decided is whether or not the unsubstantiated assertion in paragraph 9 that each amount has been paid by way of drawings is a plausible basis for the contention that the debt is genuinely disputed.[1] As was pointed out by Young J in John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd,[2] “something between mere assertion and the proof that would be necessary in a court of law” is required. If it were otherwise, his Honour said, “anyone could merely say it did not owe a debt”.
[1] Bentham Management Pty Ltd v Union Finance Pty Ltd (2008) 247 LSJS 103.
[2] (1994) 14 ACSR 250 at 253.
It is for this reason that I have concluded that the plaintiff’s contention that the debt is genuinely disputed has not been made out. There is only the unsubstantiated assertion by Ms Trinh that the amounts have been paid. Nothing has been said about when and to whom the payments were made and whether the payments were by cash, cheque or bank transfer. The only documentary proof of the payments is a balance sheet which shows that the respective amounts have been allocated to drawings. That, in my opinion, does not constitute a plausible case supporting the contention that the amounts have been paid.
The plaintiff did not rely solely upon the alleged genuine dispute. It was contended that the “debt” referred to in the statutory demand was not a debt for the purposes of s 459E of the Corporations Act 2001 (the Act). It was said that the relationship of the defendant and the plaintiff was that of trustee and beneficiary, and that the defendant’s rights of recovery were equitable. This overlooks, in my opinion, the fact that a beneficiary can recover from the trustee for money had and received, in given circumstances. If it is so recoverable, that can constitute a debt for the purposes of the section.
A beneficiary’s entitlement to recover monies from a trustee on the basis of the quasi-contractual cause of action for money had and received was considered by Buss JA in Chianti Pty Ltd v Leume Pty Ltd,[3] a decision of the Court of Appeal. Buss JA, with whom Martin CJ and Pullin JA agreed, said [59]-[61]:
[3] (2007) 35 WAR 488.
59In Meagher Gummow & Lehane’s, Equity Doctrines & Remedies (4^th ed, 2002) it is stated, relevantly:
Frequent attempts were made at law by cestuis que trust to recover, in actions of debt, moneys owing to them by their trustee. The courts again repeatedly held that such actions, prima facie, could not be maintained: if a trustee was accountable, he should be made to account in the Court of Chancery: Pardoe v Price (1847) 16 M & W 451; 153 ER 1266; Phillips v Hewston (1856) 11 Ex 699; 156 ER 1012. But if the trustee admitted to the cestui que trust that he owed the money, he was debarred from setting up his office as trustee as a defence against the cestui que trust, who could then hold him accountable at law: Remon v Hayward (1835) 2 Ad & E1 666; 111 ER 256; Roper v Holland (1835) 3 Ad & E1 99; 111 ER 351; Edwards v Lowndes (1852) 1 E & B 81; 118 ER 367; Howard v Brownhill (1853) 23 LJQB 23; London & North-West Rly Co v Glyn (1859) 1 E & E 652; 120 ER 1054. It is important to note that in these latter cases the plaintiff’s entitlement is simply based on the defendant’s admission of debt: the fact that he made it in his character as trustee is irrelevant, as is the fact that the plaintiff was a cestui que trust [1-215].
60In Edwards v Lowndes (1852) 1 E & B 81; (1852) 118 ER 367, Lord Campbell CJ, who delivered the judgment of the court, said:
It may be taken as settled that, where the parties stand to each other in the relation of trustee and cestui que trust, and the trustee is under no other legal liability than that which arises from that relation, no action at law for money had and received can be maintained against him, though he has money in his hands which under the terms of the trust he ought to pay over to the cestui que trust, but which he still holds in the character of trustee only. It is unnecessary to refer upon this proposition to other authorities than that of the well considered judgment delivered by Baron Rolfe in Pardoe v Price (16 M & W 451). If, indeed, the trustee, by appropriating a sum as payable to the cestui que trust, or otherwise, admits that he holds it to be paid to the cestui que trust, and for his use, the character of the relation between the parties is changed; and the trustee does not hold it as a trustee properly so called, but as a receiver for the plaintiff’s use, who may maintain an action at law for money had and received, founded on the approbation to his use and the liability thence arising. There are many cases that are founded upon this principle, from Allen v Impett (8 Taunt 263), to Roper v Holland (3 A & E 99); and these have reference to earlier decisions (370).
61In R v Brown (1912) 14 CLR 17, Griffith CJ noted:
The action for money had and received lay whenever the defendant had received money which in justice and equity belonged to the plaintiff and when nothing remained to be done except pay over the money. Even in the case of an express trust, if nothing remained to be done but pay over money, the trustee by his conduct, as for instance by admitting that he had money to be paid over, might make himself liable to this action: See Pardoe v Price (16 M & W 451), at p. 458. When money is paid by one person to another to be retained by him until the happening of a given event and no longer, an implied obligation arises to repay it when that event happens. This may be called a ‘trust’ in one sense. But it is none the less a legal obligation to pay the money, and may be enforced as such. I do not know any definition of debt that does not include such an obligation (25).
Such a debt may be the subject of a statutory demand.[4]
[4] Fire and All Risks Insurance Co Ltd v Southern Cross Exploration NL (No 4) (1986) 4 ACLC 447, referred to by Foster J in Gusdote Pty Ltd and Another v Ashley and Another (2011) 193 FCR 227 at 135.
What then is the basis from which the “debt” the subject of the statutory demand is said to arise? The defendant does not rely on contract and, if it did, he would immediately have to deal with his lack of contractual capacity. Specifically, it has not been suggested that the chose-in-action underlying the debt was a contract for necessities.
And so, he is left with a claim based on the existence of a trust and actions taken under the terms of that trust. That, at first sight, may not give rise to the right to serve a statutory demand. However, I agree with the defendant’s contention that the amount of the distribution can be the subject of a statutory demand, for the reasons advanced by Foster J in Gusdote.[5]In both Gusdote and Chianti, a trustee had resolved to distribute the profits of the trust to the respondent. The amount of those distributions were shown in the books and records of the trust as a loan by the beneficiary to the trust. This is the same in principle as the amount being recorded as drawings. The approach taken in those cases is applicable to this case.
[5] At 121-8.
For these reasons, I have concluded that the debt referred to in the statutory demand is one which may be the subject of a statutory demand.
That being the case, can a parent serve a statutory demand on behalf of a minor? Counsel were unable to cite any authority covering the point, nor have my researches revealed any. In the absence of authority to the contrary, I am of the view that the defendant’s mother had no authority to implement the statutory demand procedure on behalf of the defendant. This is not a case where a minor sues by a litigation guardian pursuant to Rules of Court. It is an extra-curial process contained in the Act which does not provide for the situation where the creditor is a minor. The Act does not confer upon a parent or other guardian of a minor who is a creditor the authority to undertake the statutory demand procedures. The claim by the defendant’s mother that she had authority to swear the affidavit in support of the statutory demand has no basis in law. In those circumstances, I consider that the statutory demand was made without authority and ought to be set aside pursuant to s 459J(1)(b).