WPS Motorsport Pty Ltd v Whitpark Pty Ltd

[2004] QSC 393

SUPREME COURT OF QUEENSLAND

CITATION:

WPS Motorsport Pty Ltd v Whitpark Pty Ltd [2004] QSC 393

PARTIES:

WPS MOTORSPORT PTY LTD

(ACN 107 091 736)

(Applicant)

and

WHITPARK PTY LTD

(ACN 007 242 515)

(Respondent)

FILE NO:

BS8439 of 2004

DIVISION:

Trial

PROCEEDING:

Application to set aside a statutory demand

DELIVERED ON:

15 October 2004

DELIVERED AT:

Brisbane

HEARING DATE:

13 October 2004

JUDGE:

Wilson J

ORDER:

1)   The application to set aside the statutory demand is dismissed;

2)   The applicant is to pay the respondent’s costs of and incidental to the application to be assessed on the standard basis.

CATCHWORDS:

CORPORATIONS – DISPUTED DEBT – STATUTORY DEMAND – APPLCATION TO SET ASIDE – where there was an alleged breach of a confidentiality obligation – whether the alleged defamatory statements constitute an off-setting claim within the meaning of s 459H of the Corporations Act 2001 (Cth)

Corporations Act 2001 (Cth) s 459H

John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250, applied

COUNSEL:

M Byrne QC for the applicant
K Barlow for the respondent

SOLICITORS:

Adamsons Solicitors for the applicant
Macrossans Solicitors for the respondent

1. WILSON J:  This is an application to set aside a statutory demand.  The demand was served in the amount of $55,537.19.  Part of the amount claimed has been paid since the demand was served, leaving a balance of $47,837.19. 

1. A share sale deed between the respondent creditor, as vendor, and the applicant company, as purchaser, and A S and C R Noske, as covenantors, was executed on 25 February 2004.  Pursuant to its terms, the applicant was bound to pay the respondent $290,000, less allowable offsets, on 3 May 2004.  There was dispute as to offsets claimed, leaving the amount of $55,537.19 claimed in the statutory demand.

1. The applicant seeks to have the statutory demand set aside on the ground there is a genuine dispute as to the existence or amount of the debt and the existence of an offsetting claim, within section 459H of the Corporations Act. Under section 459H(5):

"Offsetting claim means a genuine claim that the company has against the respondent by way of counterclaim, set-off or cross demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates)."

1. The company contends that $250,000 damages it claims as a consequence of alleged defamatory publications made by A S Noske (one of the covenantors) constitute an off-setting claim within the meaning of section 459H.

1. The share sale deed related to the sale of the respondent creditor (Whitpark)'s shares in the company Tony Noske Racing Pty Ltd.  By clause 8.1, Whitpark warranted that, as at the date of the deed, it had advanced to Tony Noske Racing Pty Ltd loans between $800,000 and $1 million ("the vendor's loan account"), which were repayable on demand.

1. By clause 8.2, in consideration of the purchaser (WPS Motorsport) agreeing to pay the vendor (Whitpark) $290,000, less allowable offsets, on 3 May 2004, Whitpark assigned the benefit of the vendor's loan account to WPS Motorsport.  The covenantors, the Noskes, were guarantors of the vendor Whitpark's obligations (clause 9.1).

1. By clause 13.10, each party was bound to treat the existence and terms of the deed confidentially, and no announcement or communication relating to the negotiations of the parties or the existence, subject matter or terms of the deed was to be made or authorised by a party without the written approval of the other parties.

1. The vendor (Whitpark) warranted that the trade creditors of Tony Noske Racing Pty Ltd did not exceed $40,000 and that it had no other liabilities (clause 15.3 to schedule 5).  By clause 6.2, the vendor (Whitpark) indemnified the purchaser (WPS Motorsport) against any claim of or against the purchaser to the extent that it arose from or was connected with any breach of any of the warranties or any other term of the deed.

1. The applicant (WPS Motorsport) alleges that on 16 August 2004 A S Noske sent an e-mail to the CEO of AVESCO, the controlling body of the sport, containing the following statements:

"We are still unable to get payment from Gore/WPS, despite legally settling all the issues they say were in dispute"

and:

"I am also told today that David Thexton has a similar problem."

1. It alleges that the statements were defamatory and that they were published of and concerning it (WPS Motorsport) as well as of and concerning Craig Gore.  It claims $250,000 as damages, including exemplary and aggravated damages, for defamation.

1. The applicant, WPS Motorsport, contends that the e-mail was a breach of Noske's confidentiality obligation in clause 13.10, and that by clause 6.2, Whitpark indemnified it against breaches of the deed whether they were breaches by WPS Motorsport or the Noskes.  It contends that under clause 8.2, it is entitled to set off against the $290,000 the damages payable for the defamation as a "claim of the purchaser", arising from or connected with a breach of a term of the deed.

1. I do not accept these arguments.  The e-mail did not disclose the deed, any negotiations leading to it or its subject matter or terms.  The $250,000 damages claimed are claimed for defamation and not for breach of the confidentiality obligation.  Moreover, the offset claimed in clause 8.2 must have been one in existence when the $290,000 was payable - that is on 3 May 2004 - but the e-mail was not sent until 16 August 2004.

1. An offsetting claim under section 459H is necessarily one which the company (WPS Motorsport) has against the creditor (Whitpark). The defamation claim per se is against Noske, not against Whitpark. WPS Motorsport has submitted that it has an offsetting claim against Whitpark, in the nature of a claim for indemnity against a breach of the share sale deed by Noske. However, for the reasons I have explained, the sending of the e-mail on 16 August 2004 was incapable of giving rise to an offset within clause 8.2 of the share sale deed. Further, the content of the e-mail was such that, even if defamatory of the company, WPS Motorsport's claim for damages is not one arising from or connected with any breach of any of the warranties or any other term of the deed within clause 6.2.

1. Finally, there is no more than an assertion that the damages recoverable for the defamation would be $250,000, or otherwise equal or exceed the $47,837.19, which is the otherwise undisputed balance of the amount claimed in the statutory demand. Such a mere assertion is insufficient to give rise to a genuine dispute about the existence of the debt under section 459H(5). See John Holland Construction and Engineering Pty Ltd v. Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 at 253 per Young J.

1. I dismiss the application to set aside the statutory demand.  I order the applicant to pay the respondent's costs of and incidental to the application to be assessed on the standard basis.