Troutfarms Australia Pty Ltd v Perpetual Nominees Limited
[2013] VSC 228
•7 May 2013
| Send for Reporting | ||
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2012 06883
| TROUTFARMS AUSTRALIA PTY LIMITED (ACN 075 400 770) | Plaintiff |
| v | |
| PERPETUAL NOMINEES LIMITED (ACN 000 733 700) | Defendant |
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JUDGE: | GARDINER AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14 March 2013 Last submissions 28 March 2013 | |
DATE OF JUDGMENT: | 7 May 2013 | |
CASE MAY BE CITED AS: | Troutfarms Australia Pty Ltd v Perpetual Nominees Limited | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 228 | |
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CORPORATIONS – External administration – Application to set aside statutory demand pursuant to sections 459G and 459J(1)(b) of the Corporations Act 2001 (Cth) – Plaintiff alleges defendant orally released it from liability upon arrangement of part payment of liability – Dispute not considered to be genuine – Equitable doctrine of exoneration arguably available to plaintiff in respect of part of debt – Application of rule in Pinnel’s case – Arguable that fresh consideration introduced – Demand varied pursuant to section 459H(4).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N. Frenkel | Consult Solicitors |
| For the Defendant | Mr B. Carew | Gadens Lawyers |
HIS HONOUR:
On 10 December 2012 the plaintiff (“Troutfarms”) made application by originating process pursuant to s 459G of the Corporations Act 2001 (Cth) (“the Act”) to set aside a statutory demand dated 8 November 2012 which had been served on it by the defendant (“Perpetual”) on 20 November 2012.
The demand claims the sum of $6,003,919.19. The demand was accompanied by an affidavit of James Gilchrist sworn 8 November 2012. The schedule to the demand describes the debt as follows:
Amount claimed
1.
Amount due pursuant to a Loan Agreement dated 13 July 2010 between the defendant and the plaintiff and Racso Pty Ltd (ACN 007 107 253).
$3,306,881.10
2.
Amount due as guarantor of the obligations of Zido Pty Ltd (ACN 006 520 672) pursuant to a Deed of Cross Guarantee dated 5 August 2009.
$2,697,038.09
Total amount of debt
$6,003,919.19
Troutfarms relies on affidavits of Ian McGoldrick sworn 10 December 2012 and 28 February 2013, together with an affidavit of Adam King sworn 6 March 2013. Perpetual relies on affidavits of James Gilchrist sworn 7 February 2013 and Alison Young sworn 7 February 2013.
Factual background
Perpetual is the custodian of mortgage pool funds on behalf of OnePath Management Pty Ltd (“OnePath”). The amount claimed by Perpetual is comprised of two components. On 29 January 2008, Perpetual advanced $4,450,000 to Troutfarms and a related company, Racso Pty Ltd (“Racso”) (“the Racso Troutfarms transaction”). That advance was refinanced by Perpetual on two occasions after the original advance. The terms of the letter of offer for the second refinance of the Racso Troutfarms advance, which occurred on 13 July 2010, were acknowledged by its then directors (by their signatures) including Mr McGoldrick and rolled that advance over for a further year to 13 July 2011.
The second component of Perpetual’s claim relates to advances made by Perpetual to Zido Pty Ltd (“Zido”) and is evidenced by a deed of 25 October 2005 (“the Zido transaction”). That loan was refinanced by Perpetual on 22 June 2009 and 13 July 2010. Troutfarms guaranteed Zido’s liability to Perpetual arising from the Zido transaction under an unlimited deed of cross-guarantee dated 5 August 2009 (“the guarantee”). The guarantee was executed by Troutfarms (by its director, Dr Frederique Bentley), Racso, Zido, and Mr McGoldrick. Another company, Verrix Pty Ltd, also executed the guarantee. It is a joint and several guarantee given by those parties in respect of Zido’s liability in the Zido transaction and Racso and Troutfarms’ liability in the Racso Troutfarms transaction.
In addition to the guarantee from Troutfarms, among others, the Zido and the Racso Troutfarms transactions were secured as follows:
(i)a first registered mortgage dated 23 December 2003, provided by Zido over a property at Mirrabooka, Western Australia (“the Zido property”);
(ii)a first registered mortgage dated 28 March 2008 given by Racso over a property at Lilydale in Victoria (“the Racso property”);
(iii)a first registered mortgage dated 28 March 2008, provided by Troutfarms over a property at St Paul’s Road, Sorrento;
(iv)a first registered mortgage dated 30 April 2008 from Troutfarms over a property at Pekina Square, Sorrento;
(v)a fixed and floating charge dated 28 March 2008 given by Troutfarms.
Troutfarms does not dispute the authenticity of the loan documents, the guarantee or the quantum of the debt. Rather, its principal basis for contending that it has a genuine dispute in respect to Perpetual’s demand is that it alleges that it has been released from its liabilities to Perpetual by an agreement made on 12 August 2011.
It also contends that there is a genuine dispute in respect of the part of the claim that relates to its liability under the guarantee given by it of Zido’s liabilities, by reason that it is entitled in equity to be discharged and exonerated[1] from liability to Perpetual by Zido and/or Perpetual selling the Zido property and applying the proceeds of sale to extinguish Troutfarms’ liability under the guarantee.
[1]See National Commercial Bank v Wimborne (1978) 5BPR 11,958; Salcedo v Mawarie Mining Co. Ltd (1991) 6 ACSR 197.
In Troutfarms’ supplementary submissions of 21 March 2013, filed pursuant to a direction by me at the conclusion of the hearing of this matter on 14 March 2013, Mr Frenkel, counsel for Troutfarms, concedes that the exoneration argument is not available to Troutfarms in relation to its liability under the Racso Troutfarms transaction, presumably because it is liable as principal in that transaction.
In addition, Troutfarms contends that there is “some other reason”, within the meaning of that expression as it is found in s 459J(1)(b) of the Act, why the demand should be set aside. The basis for this is the existence of a proceeding commenced in this court by Perpetual[2] whereby Perpetual claims against Mr McGoldrick and Dr Bentley in relation to their liability under the guarantee. In that proceeding, Mr McGoldrick and Dr Bentley counterclaim against Perpetual, Zido and Racso in relation to the Racso loan and the Zido loan seeking orders that they be exonerated and discharged from liability to Perpetual by Zido and Racso.
[2]S CI 2012 04476.
Troutfarms asserts that it will commence a proceeding seeking orders against Perpetual, Zido and Racso for:
(i)an order or declaration that Perpetual release or discharge Troutfarms from any or all liability in connection with the Racso loan and the Zido loan;
(ii)an order or declaration that Perpetual provide full discharges of the securities; and
(iii)the same relief as is sought by Mr McGoldrick and Dr Bentley in proceeding SCI 2012 04476.
It was contended by Mr Frenkel that there are a number of significant questions of fact and law common to each proceeding, particularly the contention that Racso, Zido and Perpetual are obliged in equity to realise the Zido property before pursuing Mr McGoldrick, Dr Bentley and Troutfarms. Perpetual, it is said, was aware of Mr McGoldrick and Dr Bentley’s defence and counterclaim by 19 September 2012, yet it elected to serve the statutory demand the subject of this proceeding on or about 20 November 2012 on Troutfarms. It is said that Perpetual must have been aware that its statutory demand would attract the same contentions as were raised in Mr McGoldrick and Dr Bentley’s defence and counterclaim. Troutfarms contends that there is a significant risk of inconsistent findings of fact and law if a “summary” ruling is made against Troutfarms in this proceeding. This gives rise, it is said, to “some other reason” why the statutory demand should be set aside.
Troutfarms’ evidence
In his affidavit of 10 December 2012, Mr McGoldrick deposes that he is authorised by the sole director of the company, Dr Bentley, to make the affidavit on behalf of Troutfarms. He states he has been engaged to act as its representative in operational, day to day matters by Troutfarms. Mr McGoldrick disputes that Troutfarms is liable to pay Perpetual any amount stated to be owing to it as claimed in the demand.
Mr McGoldrick states that in early 2011 he was contacted by Mr Adam King, a finance broker who had conducted negotiations with Perpetual to arrange the facilities and the subsequent rollovers of them. Mr King stated that Perpetual would not rollover the Racso Troutfarms loan again when it was due for repayment because Perpetual was winding up the mortgage pool that it was managing as custodian on behalf of OnePath. As the monies advanced under the loan were sourced from that pool, Perpetual required the funds to be repaid.
Mr McGoldrick deposes that Troutfarms’ only assets at the time were the two properties at Sorrento, which were mortgaged to Perpetual (“the Sorrento properties”). In an effort to organise repayment to Perpetual, Troutfarms sought to refinance the Sorrento properties. Ultimately, National Australia Bank offered to refinance by agreeing to lend $1.6 million on the security of the Sorrento properties. Mr McGoldrick advised Mr King of this and asked him to inform Perpetual of that offer, which he did by email on 5 August 2011.
The subject of Mr King’s email to Mr John Champion of Perpetual of 5 August 2011 was headed ‘Re: Zido and Racso Loans’ and reads as follows:
I have spoken to Ian about this and he has asked me to meet with you next Friday. We will come back to you on the timing of Ian’s flight in order to arrange a time to meet on Friday.
As mentioned to you yesterday, we have received an approval from NAB to refinance the 2 Sorrento properties for an amount of $1.6m and we request your consent to discharge these securities. I will fax or e-mail through to you a copy of the LOO shortly.
From memory I think $1.6m is quite close to your valuation for these properties. We will need to deduct some settlement costs from the $1.6m also for establishment fees and valuation fees, etc.
Can you please advise me if you consent to this release.
We expect to have more concrete and tangible progress in relation to Lilydale and Perth by the time we meet next week.
Mr McGoldrick states that on 7 December 2012 he was informed by Mr King, and believes, that in early August 2011 Mr King spoke with an officer of OnePath (who is not identified) and informed them that one of Troutfarms’ requirements was that Troutfarms be released from any further liability to Perpetual. It is not said by Mr McGoldrick in his first affidavit what Perpetual’s response to such a requirement was.
Mr McGoldrick deposes that on 12 August 2011 he met with Alison Young, John Champion and Jamie Gilchrist, who were commercial portfolio managers working for OnePath, at its offices in Kent Street, Sydney. He deposes that at that meeting he ‘said words to the effect that [Troutfarms] would raise finance from the National Australia Bank in the amount of $1.6 million, and would pay the money to [Perpetual] and OnePath in exchange for a total release of [Troutfarms] from further liability, which included the discharge of the mortgages held by [Perpetual] in respect of the Sorrento properties, and that the transaction must sever any ties between the two entities’.
It will be seen below that Perpetual’s representatives, Mr Gilchrist and Ms Young, depose that Mr McGoldrick did not make this statement. In addition, I consider it significant that Mr McGoldrick does not depose in his affidavit of 10 December 2012 that Perpetual’s representatives agreed to his requirements. In his affidavit in reply of 28 February 2013, he states that Mr Champion, Ms Young and Mr Gilchrist ‘agreed to that proposal’, but he does not elaborate how they did so or provide any particularisation.
In an email from Ms Young to Mr McGoldrick of 15 August 2011, he was advised that the titles to the Sorrento properties would be released subject to a satisfactory valuation being received in respect of the Racso property at Lilydale, one of the other properties securing the guarantee. That email stated relevantly:
Dear Ian,
Thank you for meeting John, Jamie and myself last Friday.
The following is our understanding of the timetable you have proposed in order to facilitate full repayment of your facilities with OnePath by 30 September 2011.
1. Refinance of Sorrento properties by end of August 2011.
OnePath will release titles subject to satisfactory value for our portion of the Lilydale vacant land being confirmed by CKC. Adam King to arrange email confirmation from the Valuer by Tuesday 16 August 2011.
The email then moved on to the subject of refinancing of the Lilydale and West Australian properties and concluded:
Please confirm that you agree with the above schedule of events and will now work towards meeting our requirements in order to prevent recovery action being commenced.
I note that there is no mention in the email of Troutfarms being released from its obligations under the guarantee. Rather, the transaction described is one concerned with refinancing the properties which are given as security and in that process the titles to the Sorrento properties being released.
Mr McGoldrick states that in reliance on the understanding that Troutfarms’ liability would be expunged, Troutfarms procured financing from NAB in the approximate amount of $1.6 million. A partial discharge of the fixed and floating debenture charge given by Troutfarms, discharging the Sorrento properties, was registered after those properties were refinanced through NAB.
As to the guarantee, Mr McGoldrick admits that the document was executed by Troutfarms but states that it was his understanding that the arrangements reached at the meeting of 12 August 2011 resulted in Troutfarms being released from further liability to Perpetual under the guarantee or otherwise.
Mr McGoldrick states that proceedings have been taken on 3 August 2012 by Perpetual against him and Dr Bentley in relation to the same claims made against Troutfarms in the statutory demand.[3] He states that no mention is made in that proceeding about Troutfarms and that Perpetual has only pleaded that Zido (now in receivership) and Racso (now in liquidation) are in default of their arrangements with Perpetual, and that demands to repay those funds were only made in October 2011. Mr McGoldrick contends that it is implicit from the form of those proceedings that Perpetual did not regard Troutfarms as being liable to it.
[3]Proceeding number S CI 2012 04476.
Mr McGoldrick says that Troutfarms is entitled to raise the same defences in resistance to the statutory demand as are raised by him and Dr Bentley in proceeding number S CI 2012 04476. In their defence and counterclaim it is contended that the current market value of Zido’s property in Western Australia is $5.1 million and that Racso’s property at Lilydale is valued at $5,750,000. The defence and counterclaim contend that the defendants are entitled to be discharged and exonerated from any or all of the liability to Perpetual by Zido and Racso Pty Ltd by the selling of Zido and Racso’s property and paying sufficient money from the sale of those properties to satisfy all or any liability of the defendants, Dr Bentley and Mr McGoldrick, to Perpetual.
I note at this juncture that while the exoneration argument might be available to Dr Bentley and Mr McGoldrick in respect of both the Zido and the Racso Troutfarms transactions, it is not available to Troutfarms in respect of the Racso Troutfarms liability as Troutfarms is a principal debtor in that transaction and the doctrine of exoneration has no application. So much is accepted by Troutfarms’ counsel, Mr Frenkel.
Perpetual’s evidence
In his affidavit Mr Gilchrist, who is a Senior Manager, Commercial Mortgages at OnePath, states that he was at the meeting on 12 August 2011 with Ms Young, Mr Champion and Mr McGoldrick. He exhibits a file note dated the same day, composed by Ms Young and signed by him, and confirms this as being a true record of the meeting. The file note stated:
Meeting took place at OnePath offices on 12 August 2011 at 9.30am. In attendance were Alison Young, John Champion, Jamie Gilchrist and Borrower, Ian McGoldrick.
Loans to the Group matured 11 August 2011 and maturity reminder letters were previously sent to the client on 25 March 2011 and 5 July 2011 advising that rollover will not be provided and arrangements should be made for the loan to be paid out at maturity.
Further to the file note dated 8 August 2011, Borrower confirmed the following strategy for repayment of our loans in full:
The memorandum then set out the various steps to be taken, including the refinancing of the Sorrento properties. The memorandum concluded:
Borrower is to be advised in writing of the above requirements and to fully comply in order to prevent recovery action being taken.
Gadens have confirmed review of our loan documentation and are in the process of providing their signoff.
He deposes that Mr McGoldrick did not say words to the effect that Troutfarms would pay $1.6 million to Perpetual in exchange for a total release of Troutfarms from further liability and that the transaction must sever any ties between the two entities.
Mr Gilchrist exhibits a letter that was sent to Troutfarms shortly after the meeting of 12 August 2011, which he describes as a letter of forbearance, entered into between Perpetual, Troutfarms and the other borrowers. The letter, from Gadens, the solicitors for Perpetual, was headed ‘Lender: Perpetual Nominees Limited, Borrower: Zido Pty Ltd, Racso Pty Ltd and Troutfarms Australia Pty Ltd’. The heading to the letter then identified the several security properties, including the Sorrento properties. The letter stated:
We act on behalf of OnePath Funds Management Limited (OnePath) in relation to the above. We refer to your correspondence with Ms Alison Young of OnePath on 18 August 2011, in particular, your proposal to facilitate full repayment of the subject facilities with the Lender by 30 September 2011.
Whilst reserving its rights in relation to the breaches under the facilities, and without being obliged to do so, the Lender is prepared to forebear from taking immediate steps to enforce its Securities strictly on the following conditions:
The author of the letter then set out the various steps to be undertaken, including the refinancing of the Sorrento properties and concluded:
If any of the conditions set out above are not strictly complied with, a further event of default will be deemed to have occurred under the Facility Agreements and the Lender reserves its right to exercise any and all of its rights under its Facility Agreements and supporting Securities immediately and without further notice. Without limitation, those rights include issuing demands and taking further recovery action upon failure to comply with the demands.
The letter concluded with a requirement that the borrowers and guarantors execute a copy of the letter and that it be returned to Gadens. Dr Bentley and Mr McGoldrick signed the copy of the letter (as exhibited) in their capacities as officers of the corporate borrowers and in their own right.
I observe that the terms of the letter of forbearance state that Perpetual agreed to forbear from taking further enforcement action on the conditions set out in the letter. The letter is clear in its terms that the loan facilities were to be repaid in full. There is no mention of any agreement to release Troutfarms as Mr McGoldrick contends was struck at the meeting.
Mr Gilchrist states that on 30 August 2011 the Sorrento properties were sold and Perpetual provided a discharge of its mortgage over those properties at settlement. The remainder of the terms set out in the letter of forbearance were not satisfied, however, and on 4 October 2011, Mr Gilchrist instructed Perpetual’s lawyers to serve a demand on Troutfarms.
That demand demanded payment by Troutfarms of all moneys owing under the loan agreement of 13 July 2010, the guarantee and the fixed and floating charge of 28 March 2008. The demand stated that the liability to Perpetual under the loan agreement, the charge and the guarantee as at 28 September 2011 was $5,350,179.81, together with interest from time to time.
On 30 July 2012, Perpetual appointed receivers over Zido and on 6 November 2012, it appointed administrators over Racso. The other properties securing the transactions in the names of Racso and Zido have not been sold and the facilities have not been repaid in full.
In her affidavit, Ms Young, who is a manager of commercial mortgage investments at OnePath, states in response to Mr McGoldrick’s evidence as to the meeting of Friday 12 August 2011 that Mr McGoldrick did not say words to the effect that Troutfarms would pay $1.6 million to Perpetual in exchange for a total release from its liabilities. She exhibits the file note to which I have already referred, apparently composed by her on the day of the meeting, recording the events of the meeting to which Mr Gilchrist referred. The note stated that the Borrower (Mr McGoldrick) confirmed ‘the following strategy for repayment of our loans in full’ and then set out the requirements of Perpetual if recovery action was to be avoided.
In the memorandum, no mention is made of any release of Troutfarms from further liability; rather, it is noted that ‘the Borrower is to be advised in writing of the above requirements and to fully comply in order to prevent recovery action being taken’.
Ms Young also exhibits an email to Mr McGoldrick of Monday 15 August where she reiterated that the repayment plan agreed on at the meeting was ‘to facilitate full repayment of your facilities’. Mr McGoldrick was asked to confirm the repayment timeframe, which he did in a response dated 19 August 2011. He accepted the timetable. He did not raise any issue regarding the release of Troutfarms’ liability to Perpetual.
Troutfarms’ evidence in reply
Mr McGoldrick responded to Perpetual’s affidavits in his affidavit of 28 February 2013. He states that he was ‘forthright in specifying that an amount of $1.6 million would be paid to fully discharge and release [Troutfarms] from further liability to [Perpetual]’. He states that the three representatives of Perpetual at the meeting agreed to that proposal. He states he would not have arranged for Perpetual to be paid $1.6 million if he knew that it would not honour the agreement made at the meeting. He says that because of the terms of the arrangement, he did not consider it necessary to deal with the specific issue of Troutfarms’ liability in his response to Ms Young.
In his affidavit of 6 March 2013 Mr King, the finance broker, sets out the content of an email which he sent to Mr Champion at Perpetual, as exhibited to Mr McGoldrick’s affidavit of 10 December 2012. That email states in part:
As mentioned to you yesterday, we have received an approval from NAB to refinance the two Sorrento properties for an amount of $1.6m and we request your consent to discharge these securities. I will fax or e-mail through to you a copy of the LOO shortly.
From memory I think $1.6m is quite close to your valuation for these properties. We will need to deduct some settlement costs from the $1.6m also for establishment fees and valuation fees, etc.
Can you please advise me if you consent to this release.
We expect to have more concrete and tangible progress in relation to Lilydale and Perth by the time we meet next week.
Mr King states that in about mid-August 2011 he spoke with a representative of Perpetual by telephone whose identity he is unable to recall, but says it was most likely either John Champion or Alison Young. He deposes that the person was asked to confirm whether it was a consequence of the refinance that Troutfarms’ titles would be discharged and it would be released from any further liability to Perpetual. Perpetual’s officer is alleged to have said ‘yes, that would be the consequence of the refinance’. I note at this point that there seems to be no doubt that Mr King is representing the interests of Mr McGoldrick and the borrowers in the exchange.
Mr King did not confirm this significant exchange in writing with Perpetual, as in my view would be expected of a person professionally engaged in significant financial transactions. He was not able to recall the gender of the person he spoke with at Perpetual, nor did he make a file note of the conversation despite its significance.
I also note that despite the importance of the terms of the alleged agreement to release Troutfarms, it was not reduced to any form of written confirmation, however informal. On the contrary, the contemporaneous communications generated by Perpetual, while descending to detail about the programme for discharging the liabilities in full, make no reference at all to any release of Troutfarms from its obligations under the guarantee or the fixed and floating charge or for the balance of the Racso Troutfarms liability. I regard Mr King’s account of the conversation with an unidentified representative of Perpetual as being so vague and unconvincing that it should not be given any significant probative value even in an application of this type.
Legal principles
In this application Troutfarms bears the onus of establishing that it has a genuine dispute within the meaning of s 459G, which provides:
Company may apply
(1) [Order setting aside demand] A company may apply to the Court for an order setting aside a statutory demand served on the company.
(2) [Time limit] An application may only be made within 21 days after the demand is so served.
(3) [Affidavit and copy of application] An application is made in accordance with this section only if, within those 21 days:
(a) an affidavit supporting the application is filed with the Court; and
(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.
Section 459H of the Act provides:
Determination of application where there is a dispute or offsetting claim
(1) [Court satisfied of dispute or offsetting claim] This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:
(a) that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;
(b) that the company has an offsetting claim.
The principles to be applied in applications of this type were collected and discussed by Robson J in Rhagodia Pty Ltd v National Australia Bank.[4] Robson J stated:
[4](2008) 67 ACSR 367 at [91]-[94].
[91] In TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd[5] Dodds-Streeton JA (with whom Neave and Kellam JJA concurred) said:
[5](2008) 66 ACSR 67 (‘TR Administration’).
[56] The court, in the context of an application to set aside a statutory demand, must determine whether there is a genuine dispute about the existence or amount of the debt or whether the company has a genuine off-setting claim.
[57] No in-depth examination or determination of the merits of the alleged dispute is necessary, or indeed appropriate, as the application is akin to one for an interlocutory injunction. Moreover, the determination of the “ultimate question” of the existence of the debt should not be compromised.
[92] Dodds-Streeton JA further said:
[71] As the terms of s 459H (sic) of the Corporations Act 2001 and the authorities make clear, the company is required, in this context, only to establish a genuine dispute or off-setting claim. It is required to evidence the assertions relevant to the alleged dispute or off-setting claim only to the extent necessary for that primary task. The dispute or off-setting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile. As counsel for the appellant conceded however, it is not necessary for the company to advance, at this stage, a fully evidenced claim. Something “between mere assertion and the proof that would be necessary in a court of law” may suffice. A selective focus on a part of the formulation in South Australia v Wall,[6] divorced from its overall context, may obscure the flexibility of judicial approach appropriate in the present context if it suggests that the company must formally or comprehensively evidence the basis of its dispute or off-setting claim. The legislation requires something less.
[6](1980) 24 SASR 189.
[93] In Eyota,[7] McClelland CJ of the Supreme Court of New South Wales said:
[7]Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ASCR 785, 787-8 (‘Eyota’).
It is, however, necessary to consider the meaning of the expression “genuine dispute” where it occurs in s 450H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the “serious question to be tried” criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit “however equivocal, lacking precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be” not having “sufficient prima facie plausibility to merit further investigation as to [its] truth” (cf Eng Mee Yong v Letchumanan),[8] or “a patently feeble legal argument or an assertion of facts unsupported by evidence”: cf South Australia v Wall.[9]
[8][1980] AC 331 at 341 (PC).
[9](1980) 24 SASR 189, 194.
But if it does mean that, except in such an extreme case, a court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. In Mibor Investments[10] Hayne J said, after referring to the state of the law prior to the enactment of Div 3 of Pt 5.4 of the Corporations Law, and to the terms of Div 3:
[10]Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACSR 362, 366–7 (‘Mibor Investments’).
“These matters, taken in combination, suggest that at least in most cases, it is not expected that the court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the court conclude that there is a dispute and that it is a genuine dispute.”
In Re Morris Catering (Aust) Pty Ltd[11] Thomas J said:
“There is little doubt that Div 3 … prescribes a formula that requires the court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the court will examine the merits or settle the dispute. The specified limits of the court’s examination are the ascertainment of whether there is a “genuine dispute” and whether there is a “genuine claim”.
It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it), the court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another.
The essential task is relatively simple — to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it).”
I respectfully agree with those statements.
[94] In TR Administration,[12] Dodds-Streeton JA (with whom Neave and Kellam JJA concurred) cited this passage with apparent approval[13] and noted it was also cited by the Full Federal Court in Spencer Constructions Pty Ltd v GAM Aldridge Pty Ltd.[14]
[11](1993) 11 ACSR 601, 605.
[12](2008) 66 ACSR 67.
[13]Ibid at [64].
[14](1997) 76 FCR 452.
In Powerhouse Australasia Pty Ltd v Viarc Pty Ltd[15] Dodds-Streeton JA observed at paragraph [48]:
While it is not a very exacting standard, on the other hand mere, assertion of a dispute or off-setting claim, mere bluster or advancing grounds which are illusory or spurious or insufficiently particularised will not suffice. The Court must not enter into the merits of the dispute, but it is not crossing the line in relation to its legitimate role in these applications to consider evidence which “bears on whether or not the asserted dispute or off-setting claim is genuine”. Indeed, that is its necessary function.
[15][2006] VSC 508.
Her Honour went on to say at paragraph [49]:
The dispute or off-setting claim should, as has been recognised, have some objective existence, and the plaintiff bears the onus of establishing the genuineness of the dispute or off-setting claim.
In Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd,[16] the Full Court of the Federal Court observed that for a genuine dispute to exist, it must be “bona fide and truly exist in fact”, and the grounds for alleging its existence must be “real and not spurious, hypothetical, illusory or misconceived”.
[16](1997) 76 FCR 452, 464.
Whether there is a genuine dispute
The documentation generated by Perpetual and its lawyers after the meeting on 12 August 2011, including the file note composed by Ms Young, make no mention of any release of Troutfarms’ liability. The letter from Gadens of 24 August 2011 similarly makes no mention of it. Several months later, when the demand is served on Troutfarms, the demand assumes the liability under the guarantee continues. All of this is consistent with Perpetual’s representatives’ version of events and on no occasion do Troutfarms’ representatives react to such communications by contending that an agreement had been struck to release Troutfarms. On the other hand, at its zenith, the evidence of Mr McGoldrick is that he used ‘words to the effect that’ Troutfarms would be released from all its liability to Perpetual. A similar position applies to the contention by Mr King.
In my view, the scenario described by Mr McGoldrick in respect of the alleged agreement to discharge Troutfarms’ liability to Perpetual that is said to give rise to a genuine dispute is so inherently improbable that it does not have sufficient prima facie plausibility to merit further investigation as to its truth. Perpetual has various securities to resort to, to recover its debt. Two of those securities were over the Sorrento properties. The liabilities were joint and several and supported by a cross-collateralised guarantee. In my view it is implausible and improbable that Perpetual would agree orally to release Troutfarms from its liability under the joint and several arrangements merely because Troutfarms’ properties were sold and the proceeds used to discharge part of the indebtedness to Perpetual. Perpetual’s position in this regard is supported by the emails, memorandum and documents to which I have referred. Troutfarms is not able to point to any contemporaneous documentation which supports Mr McGoldrick’s version of events. Mr Frenkel submitted that it is significant that one of those present at the August meeting, Mr Champion, has not sworn an affidavit confirming, as the others present have done, that Mr McGoldrick did not make the statement he contends was made in respect of Troutfarm’s release. I reject that submission. The author of the memorandum and the senior member of the group representing Perpetual’s interests have confirmed the position reflected in the memorandum. This is to be contrasted with a complete absence of any written confirmation of the alleged agreement by Troutfarms.
As Robson J observed in Rhagodia,[17] the establishment of a genuine dispute requires an explanation of the contemporaneous undisputed documents. There is no explanation from Troutfarms’ representatives as to why there was no rejoinder to the communications making reference to payment in full of the liability nor any explanation as to why such a significant transaction involving the release of millions of dollars would not be the subject of even informal documentation.
[17](2008) 67 ACSR 367 at [131].
Adopting the formulation of McClelland CJ in Eyota, the court is not to accept uncritically as giving rise to a dispute statements in affidavits which are ‘equivocal, lacking precision, inconsistent with undisputed contemporary documents … or inherently improbable …’[18] I consider the evidence that Troutfarms presents in support of its submission regarding the alleged agreement of 12 August 2011 as falling within such formulation. In this regard I refer particularly to
(i)the vagueness of the assertion by Mr McGoldrick that the agreement was struck;
(ii)the complete absence of supporting contemporaneous documentation to evidence such a significant matter;
(iii)the existence of contemporaneous documentation which is completely consistent with Perpetual’s version of events and the inherent implausibility of Perpetual releasing a party from very significant liability in return for that party agreeing to what it was already bound to do.
[18](1994) 12 ASCR 785, 787.
Whether there is consideration for the alleged agreement struck on 12 August 2011
In the course of argument, I asked Mr Frenkel, counsel for Troutfarms, how the alleged agreement which was struck by Mr McGoldrick at the meeting on 12 August 2011 was enforceable given that prima facie it did not appear to be supported by any fresh consideration and would offend what has sometimes been called the rule in Pinnel’s case.
The agreement which Troutfarms contends was struck operated such that, by Troutfarms paying to Perpetual the amount it was able to raise on finance of the Sorrento properties, it obtained a discharge of the much greater liability it had under the cross-guarantee and the Racso Troutfarms transaction. I put it to Mr Frenkel that there was no fresh consideration for the agreement that Troutfarms alleges. I invited him and Mr Carew to file and exchange written submissions in regard to this issue, which they have done. I embark on the following analysis as it is an issue which will warrant consideration if I am found to be incorrect in my finding that there is no genuine dispute arising from the alleged striking of an agreement releasing Troutfarms in August 2011.
In Pinnel’s case the plaintiff sued the defendant in debt for moneys due on a bond. The defence was that at the plaintiff’s request the defendant had paid him part of the debt a month before the full amount was due and that the plaintiff had accepted this payment in full satisfaction of the original debt. Although the plaintiff was successful, the Court made it clear that had it not been for a technical flaw, it would have found for the defendant on the ground that the part-payment had been made on an earlier day than that appointed in the bond. The Court considered that a debt could be discharged through the introduction, at the creditor’s request, of some new element, for example the tender of a chattel instead of the debt or part-payment on a fresh place or on an earlier date, but not by the payment of a smaller sum on the day the debt was due. The Court observed:
Payment of a lesser sum on the day in satisfaction of a greater cannot be any satisfaction for the whole, because it appears to the judges that by no possibility, [can] a lesser sum … be satisfaction to the plaintiff for a greater sum: but the gift of a horse, hawk, or rogue, et cetera in satisfaction is good.[19]
[19]77 ER at 237.
The House of Lords in Foakes v Beer[20] revisited the principle in Pinnel’s case. In this case the plaintiff had obtained judgment against the defendant and the defendant asked for time to pay. The parties agreed in writing that if the defendant paid £500 at once and the balance by instalments, the plaintiff would not take any proceedings whatever on the judgment. No reference was made to the interest that the judgment bore. Ultimately, the defendant paid the whole of the amount of the judgment debt itself but the plaintiff then claimed a further sum of £360 as interest. The defendant refused to pay this sum and the plaintiff applied to be allowed to issue execution on the judgment in respect of the interest. The defendant pleaded the agreement and the plaintiff replied that it was not supported by consideration.
[20](1884) 9 App Cas 605.
The House of Lords observed that the so‑called rule in Pinnel’s case was dicta, that it disregarded commercial convenience and that there was no previous decision by which the House of Lords was bound. To upset what was doubtless a longstanding conception of the law would not, in the circumstances, disturb business confidence. However, the House of Lords unanimously applied the dicta from Pinnel’s case and gave judgment in favour of the plaintiff for the amount of the interest.
The authors of Cheshire and Fifoot[21] in their discussion of the principle assume that the doctrine is still good law, although they suggest that the law in this regard should be changed. Suggestions are made as to how the rule can be avoided, such as providing something to vary the bargain by an agreement to pay a peppercorn or by paying early or at a different place at the request of the creditor. Alternatively, the parties can enshrine their settlement in deed.
[21]N C Seddon and M P Ellinghaus, Cheshire and Fifoot’s Law of Contract (Lexis Nexis Butterworths, 9th ed, 2008) 208-213.
In his submissions on this subject, Mr Frenkel contended that the rule in Pinnel’s case has been distinguished or not applied on many occasions and he refers to a number of authorities. One of those was the decision of Judd J in MP Investments Nominees Pty Ltd v Bank of Western Australia Limited.[22] Judd J referred to the ‘well settled principle in Foakes v Beer’ at [114] but earlier observed:
[112] I accept that there are cases in which a benefit may be obvious even though there are existing contractual obligations and entitlements. The case of a contractor offered an inducement to continue to perform his contract so as to avoid a greater loss is but one example. I also accept that in the case of banker and customer, circumstances may arise in which a bank may compromise its position in order to secure certainty of payment and avoid cost, inconvenience and perhaps loss associated with recovery action. There remains however a question of principle involving the requirement that there be consideration moving from the promisee.
[113] In Amos v Citibank Ltd the Queensland Court of Appeal, referring to the facts in the United Kingdom decision of Williams v Roffey Bros,[23] said,
In circumstances in which a contract of that character remains at least to some extent executory on both sides, it is not difficult to identify as the consideration the commercial benefit which results from having performance in fact carried out, or, conversely, the detriment likely to be suffered if it is not. See also Musumeci v Winadell Pty Ltd (1994) 34 out, or, conversely, the detriment likely to be suffered if it is not. See also Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723, which is a further instance of that kind, where the decision in Williams v Roffey was followed at least in part. But it is a different matter where, as here, the subject matter of agreement is not a contractual obligation which is still to be performed, but simply a debt which has arisen, become due, and is payable forthwith by one party to the other. It may be that, as Peter Gibson LJ has said, “when a creditor and a debtor, who are at arms length, reach agreement on the payment of a debt by instalments to accommodate the debtor, a creditor will no doubt always see a practical benefit to himself in so doing”: see Re Selectmove Ltd [1995] 1 WLR 474, 481, where, the Court of Appeal declined to extend Williams v Roffey to an alleged agreement to pay the whole debt by instalments in the future. Even that is not the case we are now called on to consider. Here the debtor claims no more than that the creditor has agreed, and is consequently bound, to accept a sum less than the amount that was incontrovertibly due to him. In those instances, and in the absence of anything resembling an estoppel, the common law rule continues to prevail that some valuable consideration in law must be shown for the creditor’s promise to release the unpaid balance of the debt. [24]
[22][2012] VSC 43 (‘MP Investments’).
[23](1991) QB 1.
[24]Ibid at [112-3].
Mr Frenkel submitted that fresh consideration arose in these circumstances by the entry into the agreement on 12 August 2011 in which Perpetual received a new benefit over and above what it was entitled to under the Racso Troutfarms loan agreement guarantee. This is because it was agreed to be paid, and was paid, $1.6 million from a secure source (NAB) within 18 days instead of having to seek to enforce its rights as mortgagee of the Sorrento properties, engage a real estate agent and solicitors to seek to compel a sale, find a buyer and deal with related costs and inconvenience. If, he submitted, on the other hand, Perpetual had sought to exercise its rights, the Sorrento properties may not have sold, or they may have sold for less than the $1.6 million it received.
Further, he submitted, when Perpetual and Troutfarms entered into the agreement on 12 August 2011, there was ‘part payment at a fresh place …’[25] This is so, it is said, because the payment of the $1.6 million was made at a settlement meeting involving Perpetual, NAB and Troutfarms on 30 August 2011. It is also said that once the payment of $1.6 million was made on 30 August 2011, an accord and satisfaction crystallised. Moreover, it is said by Mr Frenkel that in this proceeding Troutfarms does not need to establish that there was new consideration for the agreement entered into on 12 August 2011; rather, that it is arguable that there was new consideration for the agreement or that an estoppel arose by reason of Perpetual’s conduct on 12 August 2011.
[25]Seddon and Ellinghaus, above n 21 at [4.36] and [4.39].
Finally, Mr Frenkel contends that even if there was no consideration for the agreement entered into on 12 August 2011, it is at least arguable that Perpetual is estopped from denying that it discharged Troutfarms. He contended that no consideration is required in connection with promissory estoppel.[26]
[26]See Walton Stores Interstate v Maher (1988) 164 CLR 387; ibid at [4.1], [4.35] and [4.39].
In his submissions on this issue, Mr Carew submitted that of recent times parties wishing to avoid the ruling in Pinnel’s case have relied on the decision in Williams v Roffey Brothers and Nicholls (Contractors) Limited.[27] That case related to executory obligations in respect of a building contract as distinct from an obligation that arises in respect of a payment obligation. In Williams v Roffey Brothers the Court found that there was a “practical benefit” in a promise to complete works (though apparently constituting past consideration), that is, a practical benefit in avoiding the result of the project not being completed or having to be completed by another contractor. However, Mr Carew submits, in regard to obligations in debt it is much harder to discern any practical benefit where a debtor just promises, once more, to pay money (albeit a lesser sum in this case). Mr Carew made reference to the revenue case of Re Selectmove Ltd[28] where Gibson LJ had to consider a claim by a taxpayer that its liability to the revenue was compromised by an agreement to pay by instalments. In so doing, the taxpayer relied on Williams v Roffey Brothers but His Lordship expressed difficulty with the argument and said that:
…if the principle of Williams v Roffey Bros and Nicholls (Contractors) Ltd is to be extended to an obligation to make payment, it would in effect leave the principle in Foakes v Beer without any application.[29]
[27](1991) 1 QB 1 (‘Williams v Roffey Brothers’).
[28][1995] 1 WLR 474.
[29]Ibid 481.
He also made reference to Amos v Citibank Limited[30] (to which reference was made by Judd J in MP Investments) where it was said that the point was made clear that any exception to the rule in Pinnel’s case only applies to contracts where there are outstanding executory promises, not where the outstanding obligations is merely to pay an extant debt.
[30](Unreported, Queensland Court of Appeal, 10 May 1996) at [7]-[8].
Mr Carew submitted that on an application of the analysis of Judd J in MP Investments to which reference has been made above, Troutfarms did not offer Perpetual an opportunity to ‘recover all or most of the outstanding debt by a particular date, as against the prospect of realising on its security with the attendant costs, inconvenience and potential loss’. On like facts, Judd J held that the concept of “practical benefit” did not arise for consideration because there was no proposal to pay all or most of the outstanding debt; the borrower was ‘confronted by the well-settled principle in Foakes v Beer’. In this case, Mr Carew submitted, the payment by Troutfarms did not result in anything like the full debt being paid in 2011 and Perpetual was still left to the inconvenience and expense of enforcing it against the other guarantors and the other securities.
If I am not correct in finding that there is no genuine dispute arising in relation to the alleged agreement on 12 August 2011, I consider that it is arguable, although only faintly, for the purposes of this application that such agreement was supported by fresh consideration perhaps consisting of the matters to which Mr Frenkel referred, it received $1.6 million sooner than it otherwise might have if it had to move on its security and exercise its rights as mortgagee of the Sorrento properties. It would then have had to engage a real estate agent and solicitors in connection with the sale, find a buyer either by auction or private treaty. In my view, there is an argument that these elements were advantageous to Perpetual which could give rise to a genuine dispute.
The claim by Troutfarms for exoneration
I now move to the submission by Mr Frenkel that Troutfarms is entitled to be exonerated from liability for the Zido transaction. The equitable doctrine of exoneration, succinctly stated, is that when a creditor has acquired the right to immediate payment of a definite sum or an accrued fixed liability from the surety or guarantor, the surety or guarantor is entitled by a quia timet[31] action in equity to an order that the principal debtor pay the guaranteed debt, so as to relieve the surety from his or her obligation, even though the surety has not paid under the guarantee and the creditor has not demanded payment from the surety or the principal debtor. The right of exoneration can be excluded by express agreement. The relief available in such a proceeding is a declaration that the surety is entitled to be exonerated of his liability to the creditor and discharged on payment by the principal debtor. The order may require the principal debtor to pay the creditor the full amount owing forthwith, and so obtain the cancellation and return of the guarantee and any other steps necessary for the discharge and exoneration of the surety.
[31]quia timet literally means “because one fears”. See also James O’Donovan and John Phillips, The Modern Contract of Guarantee (Thomson Reuters, 2010) at [11-116] and following.
There is not a great deal of authority dealing with the application of this equitable principle. Mr Frenkel took me to several Australian and British authorities. In National Commercial Bank v Winbourne,[32] Holland J held that a guarantor was entitled in equity in a quia timet action to be relieved from liability under a guarantee by appropriate steps on the part of the principal debtor even though (a) the guarantor had not paid the debt; (b) the creditor had not sued the guarantor or the principal debtor; (c) the creditor had not refused to sue the principal debtor; and (d) the creditor had not been joined as a party. Holland J stated:[33]
In my opinion, the authorities which I have listed in Part A of the appendix of cases to this judgment appear clearly to establish that when the liability of a guarantor or surety to pay the debt has arisen, although his only remedy by the common law is to pay the debt and then sue to recover his outlay from the principal debtor, in Equity he is entitled to seek in a quia timet action protection from having first to pay the debt (which might in some cases ruin him) by having the principal debtor whose debt it is, ordered to take steps appropriate to ensure that the debt will be discharged or the guarantor or surety relieved from the liability which he could suffer by the principal debtor’s failure to discharge the debt. In my opinion it is established by these authorities that the guarantor or surety may seek this equitable relief even if he has not paid the debt, the creditor has not sued him or the principal debtor or has not refused to sue the principal debtor, or the creditor is not joined as a party:
As to the form of remedy, there can be no doubt on the authorities that the plaintiff is entitled at least to a declaration that he was entitled to be discharged and exonerated from all liability under the guarantee by payment by the principal debtor of whatever was due and owing to the creditor and an order that the principal debtor pay the same forthwith.
In [Thomas v Nottingham Incorporated Football Club Limited], the order went on to require the defendant debtor to obtain the cancellation and return of the guarantee and take any other steps necessary for such discharge and exoneration of the plaintiff. Such declarations are binding on the parties and, of course, the orders are enforceable by punishment of committal for contempt of court if they are not obeyed.
[32]5 BPR 11,958.
[33]Ibid 11,977.
In Woolmington v Bronze Lamp Restaurant Pty Ltd,[34] Needham J again considered the application of this equitable remedy. Needham J stated:
[243] At first sight the plaintiff would seem to be plainly entitled to the declaration but the order sought certainly aroused some interest when it was first put to me by counsel. It is in effect an order that one of the defendants, as principal debtor, pay forthwith to another defendant, as creditor, the amount of the debt owed by the principal debtor to the creditor. However the application is not by any means unique, and such orders have been made in the United Kingdom on a number of occasions.
Two recent examples: Watt v Mortlock [1964] Ch 84 where Wilberforce J dealt with a case where the plaintiff and the defendant jointly covenanted to repay the balance on the defendant’s account with a bank and the plaintiff had charged her land with the payment. The agreement between the parties provided that as between the bank on the one hand and the plaintiff and the defendant on the other they would each be principal debtors but as between the plaintiff and the defendant, the defendant would be the principal debtor and the plaintiff a surety. The bank, upon the defendant failing to comply with the demand for repayment, gave notice to the plaintiff that it would enforce its security. The plaintiff sought orders similar to the ones sought in this case. Wilberforce J said (at 87):
The action before me, is on its face a quia timet action, and I have some doubt whether the Court is justified in granting the relief in such circumstances. I have, however, been referred to certain authorities which seem to me to establish that such an action can be brought.
[34][1984] 2 NSWLR 24.
In Salcedo and anor v Mawarie Mining Co Pty Ltd and ors,[35] McLellan J, in regard to the application of the doctrine, referred to with approval the passage set out above of the decision of Holland J in National Commercial Bank v Winbourne and went on to hold that the plaintiffs would be entitled to a declaration of their right as against the principal debtor to be discharged and exonerated from all liability under the guarantee to the bank and an order requiring the principal debtor to give effect to that right by payment to the bank.
[35](1991) 6 ACSR 197.
The evidence as regards the value of the Zido property, to which Troutfarms claim that Perpetual is required to have recourse in order to satisfy the liability under the Zido transaction, is scant and consists of the particulars provided in paragraph 24 of the defence and counterclaim filed by the defendants in the proceeding commenced by Perpetual against Dr Bentley and Mr McGoldrick. Mr Frenkel contends that Troutfarms is entitled to bring a proceeding in similar terms in relation to its liability as guarantor under the Zido transaction.
In his supplementary submissions, Mr Carew, counsel for Perpetual, in dealing with the question of exoneration, contends that if the agreement alleged to have arisen on 12 August 2011 did not arise, or is not enforceable, the Court may vary the demand to the sum of $3,306,881.10, being the first amount referred to in the schedule to the statutory demand dated 8 November 2012, that is, the amount associated with Troutfarms’ liability as borrower as distinct from surety.
I am conscious of the comparatively low threshold that an applicant is entitled to meet in applications of this type and, bearing this in mind, I consider that the exoneration argument put by Mr Frenkel in respect of the Zido transaction is arguable within the context of applications of this type and as such can give rise to a genuine dispute as to that part of the amount demanded relating to the Zido transaction. I consider therefore that pursuant to section 459H(4) the demand should be varied to deduct the sum of $2,697,038.09 from the amount demanded and that the demand have effect as so varied so that it is an effective demand for $3,306,881.10.
Whether there is “some other reason” why the demand should be set aside under s 459J(1)(b)
I do not accept the submission that the existence of the proceedings in this Court against the other parties to the subject transactions, and not Troutfarms, should give rise to some other reason why the demand should be set aside. Perpetual’s decision not to sue them in that proceeding but rather to proceed down the path of service of a statutory demand is readily explicable by reason that in order to commence proceedings against Mr McGoldrick and Dr Bentley in bankruptcy, a judgment would need to be obtained against them and be the subject of a bankruptcy notice.
I will order as follows:
1.Pursuant to section 459H(4) the statutory demand dated 8 November 2012 which was served on the plaintiff by the defendant be varied so that it is an effective demand for $3,306,881.10.
2.The demand is to have had effect as so varied from the date of service of the demand.
I will hear the parties on the question of costs.
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