Trycala Pty Ltd v Aloe Tech Laboratories Pty Ltd

[1998] FCA 1788

FEDERAL COURT OF AUSTRALIA

CORPORATIONS LAW – statutory demand – application to set aside – whether a genuine dispute about existence or amount of the debt to which the demand related.

Corporations Law s 459G

Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 24 ACSR 353 cited

TRYCALA PTY LTD v ALOE TECH LABORATORIES PTY LTD
VG 3185 of 1998

KENNY J
MELBOURNE
9 NOVEMBER 1998

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 3185 of 1998

BETWEEN:	TRYCALA PTY LTD Applicant
AND:	ALOE TECH LABORATORIES PTY LTD Respondent
JUDGE:	KENNY J
DATE OF ORDER:	9 NOVEMBER 1998
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The statutory demand dated 6 May 1998 be set aside.

2. The respondent pay the applicant’s costs of the application.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 3184 of 1998

BETWEEN:	TRYCALA PTY LTD Applicant
AND:	ALOE TECH LABORATORIES PTY LTD Respondent

JUDGE:	KENNY J
DATE:	9 NOVEMBER 1998
PLACE:	MELBOURNE

EX TEMPORE REASONS FOR JUDGMENT

This is an application made pursuant to s 459G of the Corporations Law for an order setting aside a statutory demand dated 6 May 1998 served on the applicant by the respondent. 

There were a number of affidavits filed in support of the application.  These were affidavits sworn on 28 May 1998 and on 16 July 1998 by Nicholas Kritsonis, a director of the applicant, and on 15 September 1998 by Martin Vincent Tulen, the applicant’s general manager.  There were also affidavits in opposition.  These were affidavits sworn on 9 July 1998 and on 17 August 1998 by Philip Reed, marketing director of the respondent.

The applicant operates a warehouse business and sells smallgoods at premises in Moorabbin.  It also sells goods to variety chain stores.  The respondent also apparently carried on business at the Moorabbin premises until early April 1998 and it supplied goods to the applicant, such as All Wash carpet cleaner, car wash, burning crystal and lamp oil.

The applicant contended that there was a genuine dispute as to the debt, the subject of the statutory demand.  Its principal contention was that most of the goods were of unmerchantable quality and unsaleable.  The applicant alleged, amongst other things, that the plastic containers in which some of the goods were supplied were defective and had developed leaks; that the burning crystal had dissolved into water; that the lamp oils caused smoking when they were used; and that the bubble bath containers collapsed.  It suffices to say that the respondent has taken issue with the applicant’s contention regarding the unmerchantable quality of the goods.  The respondent’s case in the affidavits filed on its behalf were in substance that the quality of the containers was a matter for the applicant; that the containers were supplied by the applicant; that the containers leaked because they were negligently stored; and that there was nothing defective in the lamp oil or in the burning crystal.

The respondent’s primary submission on the hearing of the application was that the applicant’s own material showed that there was no genuine dispute in relation to the sum of $39,446.33.  The respondent by its counsel arrived at this figure upon the basis of Mr Kritsonis’s second affidavit.  Paragraph 10 of that affidavit purported to set out “the correct amount of the respondent’s invoice or balances” and arrived at a total of $39,446.33.  The paragraph cannot, I think, be said to constitute an admission by the applicant that it was indebted to the respondent in that sum.  The paragraph constituted no more than a statement by the applicant as to what it considered were the correct figures upon which any arithmetical calculation was to be made.

The respondent also pointed to other inadequacies in the applicant’s affidavit material which, so counsel submitted, showed that whilst the applicant admitted that some of the goods were of merchantable quality, the applicant had failed to show that it had paid anything for them.  In his second affidavit, Mr Kritsonis stated that the applicant had paid, in three amounts, a total sum of $45,000 to the respondent.  These payments were said to have been recorded in bank statements and cheque butts (exhibits NK4, 5 and 10 to Mr Kritsonis’s second affidavit).  The cheque butts and bank statements were, however, for the accounts of Fourth Sarja Nominees Pty Ltd and Trycala Importers and Wholesalers Pty Ltd.  The relationship of the two companies to the applicant was not explained by the applicant in any affidavit material, although it appears from the bank statements that both companies carried on business at the same Moorabbin premises as did the applicant.  In the end, and notwithstanding the able argument of counsel for the respondent, it seems to me that Mr Kritsonis’s affidavit is to be construed as saying that the relevant payments were made on the applicant’s behalf to the respondent.  Whether they were or not is not a matter for me to decide today.

In any event, there is patently a genuine dispute between the parties as to whether the applicant has made payment in the sum of $45,000 for goods of merchantable quality supplied by the respondent.

In his second affidavit, Mr Reed deposes that the three payments (which amounted to $45,000) were made not on behalf of the applicant but on behalf of another company, Trycala Beverages Pty Ltd, in relation to an agreement between that company and the respondent.  I do not regard the applicant’s failure to address the respondent’s claim regarding Trycala Beverages in any affidavit in response to Mr Reed’s second affidavit as fatal to the application to set aside the statutory demand.  It is clear on the affidavits filed on its behalf that the applicant says that the sum of $45,000 was paid by it to the respondent in respect of goods supplied to it by the respondent.  I should add that the affidavit material disclosed that there were other matters in dispute between the parties, but that I have not found it necessary to refer to all of them. 

Counsel referred me to Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 24 ACSR 353, especially at 362-365. Applying the test set out at page 365, I am satisfied, having regard to all the material, that there is a genuine dispute between the applicant and the respondent about the existence or amount of the debt to which the statutory demand relates.

Accordingly I order that the statutory demand dated 6 May 1998 served on the applicant by the respondent be set aside.

I order that the respondent pay the applicant’s costs of the application.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny

Associate:

Dated:             9 November 1998

Counsel for the Applicant:	Mr C R Northrop
Solicitor for the Applicant:	Bazzani Brand
Counsel for the Respondent:	Mr R L Moore
Solicitor for the Respondent:	Mills Oakley
Date of Hearing:	9 November 1998
Date of Judgment:	9 November 1998