W & P Reedy Pty Ltd v Macadams Baking Systems (Pty) Ltd
[2007] NSWCA 146
•19 June 2007
NEW SOUTH WALES COURT OF APPEAL
CITATION: W & P REEDY PTY LIMITED v MACADAMS BAKING SYSTEMS (PTY) LTD [2007] NSWCA 146
FILE NUMBER(S):
40082/07
HEARING DATE(S): 28 May 2007
JUDGMENT DATE: 19 June 2007
PARTIES:
W & P REEDY PTY LIMITED (Appellant)
MACADAMS BAKING SYSTEMS (PTY) LTD (Respondent)
JUDGMENT OF: Beazley JA Santow JA Campbell JA
LOWER COURT JURISDICTION: Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S): SC 3566/06
LOWER COURT JUDICIAL OFFICER: Barrett J
LOWER COURT DATE OF DECISION: 14 February 2007
LOWER COURT MEDIUM NEUTRAL CITATION:
[2007] NSWSC 75
COUNSEL:
M J WARD (Appellant)
J E LAZARUS (Respondent)
SOLICITORS:
Home Wilkinson Lowry, Lawyers (Appellant)
Arnold Bloch Leibler (Respondent)
CATCHWORDS:
CORPORATIONS – Challenge to statutory demand on basis of an offsetting claim pursuant to s459H of the Corporations Act 2001 – claim rejected essentially on basis found by trial judge – observations affirming that the intended summary process afforded by statutory demands will not be achieved if appeals are brought having insufficient prospects of success.
LEGISLATION CITED:
Corporations Act 2001 (Cth) s459H
Supreme Court Act 1970 s45(4)
CASES CITED:
Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743
No. 96 Factory Bargains Pty Ltd v Kershel Pty Ltd [2003] NSWSC 146
DECISION:
Leave to appeal granted. Appeal dismissed with costs.
JUDGMENT:
IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 40082/07
SC 3566/06BEAZLEY JA
SANTOW JA
CAMPBELL JA19 JUNE 2007
W & P REEDY PTY LIMITED v MACADAMS BAKING SYSTEMS (PTY) LTD
SHORT REASONS FOR DECISION
Leave to appeal is sought by the claimant W & P Reedy Pty Limited and if granted a concurrent hearing. The Court grants leave and dismisses the appeal with costs. The Court is of the unanimous opinion that the appeal does not raise any question of general principle. Pursuant to s45(4) of the Supreme Court Act 1970 the Court’s reasons for decision in short form are as follows.
This appeal essentially reagitates issues fully dealt with by Barrett J (but see 6 and 11 below). This was in proceedings brought by the claimant as plaintiff to set aside or reduce in amount, the Statutory Demand of Macadams Baking Systems (Pty) Ltd (the opponent and defendant below). The claimant contended that it had an offsetting claim pursuant to s459H of the Corporations Act 2001 (Cth) (“the Act”). Barrett J correctly dismissed the claimant’s contention that the claimant had such an offsetting claim, thus upholding the opponent’s statutory demand in its amount of an aggregate sum of $109,568.55.
The claimant was a distributor of the opponent’s wall ovens. It asserted offsetting claims for:
(a)commission payments said to be owed to it; and
(b)alleged faulty workmanship in the opponent’s goods.
The relevant facts and circumstances are sufficiently set out in Barrett J’s judgment.
For the faulty workmanship element, the claimant on appeal relied only on its written submissions. That part of the claim was correctly rejected by Barrett J for the reasons set out in his Honour’s judgment at [33] to [35].
So far as the offsetting claim was based on a supposed entitlement to commission, the Court finds no error in Barrett J’s statement as to the applicable principles. His Honour clearly recognised the relatively low threshold namely that the claim rise to the level of a serious question to be tried or be based on a cause of action advanced in good faith for an amount claimed in good faith such as not to be frivolous or vexatious.
In further support of the approach taken by Barrett J is the need for particularity in an offsetting claim. This calls for at least some evidence to be adduced by the plaintiff to show the basis for the claim in justifying its amount and demonstrating its bona fides. The narrower the margin between the alleged debt and the plaintiff’s estimate or initial quantification, the greater will be the need for particularity in assessing the amount of the offsetting claim; see Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743 per Palmer J at [18]; Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560 per Barrett J at [19] and earlier No. 96 Factory Bargains Pty Ltd v Kershel Pty Ltd [2003] NSWSC 146. Here, depending on which of the varying amounts be attributed to commission (see claimant’s 5 schedules put by way of submission), the margin may not be great ($2,296.64 at its lowest).
Barrett J concluded, correctly, that the plaintiff (claimant) had failed to establish to the level of substantiation required for an offsetting claim that the commission payments:
(a)were owing to the claimant as distinct from Mr Bryndum the sole shareholder or his other company European Bakery Importers Pty Limited (“EBI”); and
(b)to the extent commission was payable. that it had not been satisfied by a transaction of 26 June 2002 involving an “adjustment” of $51,807.30 paid in satisfaction of the claimant’s longstanding overdue account as recorded in paras 17-20 of Mr Hodgson’s affidavit of 16 October 2006 on behalf of the opponent.
The conclusion in (b) above was sufficient of itself to dispose of “any plausible contention requiring further investigation” (Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787 per McLelland CJ in Eq) concerning there being any offsetting claim. While the commission credited in the amount of $51,807.30 was for the period between December 1997 to December 2000, there was no plausibility attaching to any further claim for commission for any period prior to December 1997 going back to 1994, when commission first became payable. This was for the reasons correctly stated by Barrett J at [30] and [31] of his judgment, namely:
(a)at no point, but particularly on 31 January 2006 when pressed for payment, did the claimant ask the opponent to set-off the debt against the greater sum supposedly owed to the claimant for commission;
(b)the claimant’s Financial Controller’s ignorance in the first part of 2006 of any commission entitlement; and
(c)the total failure of Mr Bryndum when expressing in January 2006 his embarrassment and humbleness about non-compliance with promises to pay the claimant’s indebtedness, to assert the very substantial entitlement to commissions asserted in the proceedings only a few months later.
Thus even were it the case that there was room for a genuine dispute as to the identity of the party entitled to commission and in particular that it could be said as a plausible contention requiring further investigation that the claimant rather than Mr Bryndum or EBI were entitled to the commission, the claimant had not shown that there was any plausible basis for contending that there was any further commission payable beyond the amount already credited of $51,807.30. Moreover there was no plausible contention requiring further investigation that the commission was other than 5%, for the reasons stated by Barrett J.
Barrett J found further support for his conclusion in 7(a) above in the letter of 15 March 2000 from EBI signed by Mr Bryndum as Managing Director to Mr Hodgson which states, “I authorise you to use my account that is held in South Africa, containing an amount of approximately AU$42,000 as security”. The relevant credit notes, invoices and the machine generated tax notes analysed by reference to the summary of payments made (see pages 5 to 38 of the annexures to Mr Hodgson’s affidavit of 16 October 2006) when read with the opponent’s statement for 26 June 2002 (see Mr Bryndum’s affidavit of 4 July 2006 at page 37 of the annexures) supports the conclusions reached by Barrett J at [15], [28] and [29] of his judgment. They justify the conclusion that the amount in Bryndum’s account represented commissions belonging not to the claimant but to Mr Bryndum, such amount being thereby made available to pay off part of the outstanding debt owed by the claimant to the opponent.
It is not necessary to consider the opponent’s Notice of Contention to the effect that any claim for commission would be statute barred. The claimant must fail irrespective of whether such claim could succeed.
This appeal on analysis, must fail. Without in any way detracting from the arguments ably presented by Counsel in support of the appeal the Court affirms that the intended summary process afforded by statutory demands will not be achieved if appeals are brought having insufficient prospects of success.
…………………………………
Beazley JA…………………………………
Santow JA…………………………………
Campbell JA
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LAST UPDATED: 19 June 2007
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