Viktorija Pty Limited v Kevin Gerard Lindsay

[2005] NSWSC 1274

CITATION:	Viktorija Pty Limited v Kevin Gerard Lindsay & Anor [2005] NSWSC 1274
HEARING DATE(S):	2 December 2005
JUDGMENT DATE :	2 December 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
DECISION:	Application to set aside statutory demand refused.

CATCHWORDS:	CORPORATIONS – STATUTORY DEMAND – Application to set aside – mere assertion of dispute of existence of debt – conclusion stated without sufficient particularity.
LEGISLATION CITED:	Corporations Act 2001 (Cth) – s.459G
CASES CITED:	Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 21 ACSR 581
PARTIES:	Viktorija Pty Ltd – Plaintiff Kevin Gerard Lindsay – First Defendant Peta Anne Lindsay – Second Defendant
FILE NUMBER(S):	SC 4860/05
COUNSEL:	P.O’Loughlin – Plaintiff N.A. Confos – Defendants
SOLICITORS:	Conomos & Spinak – Plaintiff Moore & Associates – Defendants

LOWER COURT JURISDICTION:

Ex tempore

1 The Plaintiff seeks to set aside under s.459G of the Corporations Act 2001 (Cth) a statutory demand served on it on 16 August 2005. The demand seeks payment of a debt which is alleged to have arisen pursuant to an agreement between the parties expressed in an e-mail sent on 4 August 2005 from Mr Steven Brown representing the Plaintiff, Viktorija Pty Limited (“Viktorija”), to Mr Moore, representing the Defendants.

2    The agreement arises out of a Contract of Sale of a property at St Ives whereunder the Defendants agreed to sell certain property to Viktorija. The subject matter of the agreement expressed in the 4 August e-mail was an extension of time to be afforded to Viktorija for the completion of that contract. The terms of the agreement as evidenced in the 4 August e-mail are as follows:

“1. Viktorija Pty Ltd will pay the following amounts on or before Tuesday 9 August 2005 being:

1.1 $164,982.58 to K&P Lindsay [being for release of the $120,000 deposit previously paid by deposit bond, occupation fee of $17,761.29 and interest of $27,221.29]; and

1.2 $15,473.00 to Moore & Associate [for costs] and

2. The vendors agree to extend the current notice to complete until 3:30 pm Tuesday 16 August, 2005 at the Law Society of New South Wales (so as to give Viktorija Pty Ltd ‘reasonable and fair time to comply with the incoming mortgagees solicitors (Kremnizers) requirements’).

Please accept this as evidence of the agreement reached between our respective clients to extend the notice to complete.”

3    Viktorija did not pay the amount referred to in paragraph 1 of the e-mail by 9 August 2005. The defendants, in reliance upon a notice to complete earlier served, terminated the contract for sale on the 25th of August 2005. They now claim that the payment referred to in paragraph 1.1 of the e-mail is a debt presently due to them. That debt is the subject of the statutory demand.

4 Viktorija says that a genuine dispute exists between the parties as to the existence of that debt so that the statutory demand ought be set aside under CA s.459G. There is no dispute that within the time limited by the Act Viktorija commenced proceedings to set aside the statutory demand and served an affidavit by Mr Ian Lazar in support of that application. An affidavit by a solicitor was filed on behalf of Viktorija outside the time limited by the Act. I have earlier ruled that the grounds sought to be relied upon in that affidavit as demonstrating a genuine dispute between the parties is not encompassed sufficiently within the affidavit of Mr Lazar. In accordance with the well known principle in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 21 ACSR 581, I have ruled that the ground sought to be raised in the solicitor's affidavit cannot be relied upon for the purposes of this application.

5    The sole basis for the allegation that there is a genuine dispute as to the existence of the alleged debt is that contained in paragraph five of Mr Lazar's affidavit. That paragraph states that some time shortly after 4 August 2005, being the date upon which the agreement as to the extension of time was made, Viktorija:

“… ascertained that the amount of $50,000 paid to the Defendants pursuant to the taking possession of the property was not paid to the mortgagee, ING Bank (Australia) Pty Ltd Limited and that the mortgagee intended to foreclose on the mortgage and take possession of the property. As a consequence, the Plaintiff vacated the property on or about 5 August 2005 and did not make any further payments to the Defendants.”

6    Affording as much latitude as I can to the content of that paragraph and the dispute which it seeks to raise, I deduce that the point raised is this: that the agreement made on 4 August 2005 was subject to an implied term. The implied term is that the agreement is subject to a condition subsequent, namely that the agreement will come to an end if the vendors’ mortgagee threatens or attempts to take possession of the subject property prior to completion of the Contract of Sale between Viktorija and the Defendants. I am prepared, for the purposes of discussion, to allow that there is a sufficient basis for arguing that such a term is to be implied in the agreement made between the parties on 4 August 2005.

7    However, the existence of such an implied term is not in itself sufficient to raise the dispute for which Viktorija contends. What must be shown is that, at least arguably, there occurred the condition subsequent contained in that implied term so that the agreement between the parties made on 4 August 2005 came to an end and Viktorija was not obliged to pay the amount stipulated by paragraph 1.1. The circumstance that must, at least arguably, be shown is that the Defendants’ mortgagee threatened or attempted to take possession prior to completion of the contract. The only evidence which could arguably support the occurrence of that condition is the statement in paragraph 5 of Mr Lazar’s affidavit which I have earlier set out.

8    In my opinion, the absence of any particularity in the bald allegation that Viktorija had “ascertained” that the mortgagee intended to foreclose is not sufficient to demonstrate that a genuine dispute exists. I take into account that the Defendants have filed an affidavit by their solicitors which deposes to a number of conversations between Viktorija's solicitor and the Defendants’ solicitor at about this time in which Viktorija’s solicitor was inquiring as to whether or not there was any threat or possibility of the vendor's mortgagee taking possession. The Defendants’ solicitor says that he assured Viktorija’s solicitor that he was aware of no such threat to re-take possession.

9    Considerable latitude is afforded to a party asserting the existence of a genuine dispute in an application to set aside a statutory demand. The application is not a trial of the merits of the dispute and evidence which would be inadmissible at a trial is often admitted if it shows with sufficient particularity the issues of a real dispute. However, there are certain essential requirements of the rules of evidence which must be complied with in order to support the support the assertion of a dispute. If those essentials are not complied with and what is asserted is merely a conclusion without any facts given to support it, the Court is entitled to draw the conclusion that the assertion of a dispute is incapable of proper substantiation.

10    The assertion that Viktorija “ascertained” that the mortgagee intended to foreclose is unsupported by any particulars of the source of the information, and any particulars of the time and manner of the intended foreclosure. Viktorija failed to proffer any further evidence to amplify paragraph 5 of Mr Lazar’s affidavit when the Defendant’s solicitor denied in his affidavit of 26 September 2005 that there was any intended foreclosure by the mortgagee. In those circumstances, I do not accept Mr Lazar’s unparticularised assertion that the mortgagee intended to foreclose as sufficient evidence of the occurrence of an event terminating the agreement so as to give rise to a genuine dispute.

11    No sufficient ground has been made out by Viktorija to warrant the setting aside of the statutory demand. The application will therefore be refused.

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