BMG Poseidon Corp Pty Ltd v Technology Leasing Limited [2009] FCA 858

FEDERAL COURT OF AUSTRALIA

BMG Poseidon Corp Pty Ltd v Technology Leasing Limited [2009] FCA 858

Corporations Act 2001 (Cth) BMG POSEIDON CORP PTY LTD (ACN 058 909 256) v TECHNOLOGY LEASING LTD (ACN 071 702 264)

NSD 702 of 2009

EMMETT J

31 JULY 2009

SYDNEY IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 702 of 2009

GENERAL DIVISION

BETWEEN: BMG POSEIDON CORP PTY LTD (ACN 058 909 256)

Plaintiff

AND: TECHNOLOGY LEASING LTD (ACN 071 702 264)

Defendant

JUDGE: EMMETT J

DATE OF ORDER: 31 JULY 2009

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The originating process filed on 13 July 2009 be dismissed. 2. The Applicant pay the Respondent's costs of the proceeding.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 702 of 2009

GENERAL DIVISION

BETWEEN: BMG POSEIDON CORP PTY LTD (ACN 058 909 256)

Plaintiff

AND: TECHNOLOGY LEASING LTD (ACN 071 702 264)

Defendant

JUDGE: EMMETT J

DATE: 31 JULY 2009

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 In this proceeding the plaintiff, BMG Poseidon Corp Pty Limited (BMG), applies for an order setting aside a creditor's statutory demand for payment of debt served on BMG by the defendant, Technology Leasing Limited (Technology Leasing). The proceeding was referred to me earlier today as corporations duty judge by Deputy Registrar Hedge. BMG asks for an adjournment of the proceeding to enable it to file further evidence to demonstrate that there is a genuine dispute between it and Technology Leasing as to the indebtedness claimed in the statutory demand. It is necessary to say something about the debt claimed in the statutory demand. 2 By rental agreement signed on behalf of BMG on 23 July 2004, which was accepted on behalf of Technology Leasing on 26 August 2004, Technology Leasing agreed to hire certain equipment to BMG and BMG agreed to make monthly rental payments to Technology Leasing in respect of that equipment. The rental agreement provided for the making of monthly rental payments of $288.15 for a term of 60 months from 26 August 2004. Pursuant to the rental agreement, Technology Leasing provided equipment to BMG, although it is asserted on behalf of BMG that not all of the equipment was provided. I shall return to that question in a moment. 3 It is common ground that, by reason of that breach, BMG has defaulted in the payment of rental instalments and that Technology Leasing has terminated the rental agreement in reliance upon its terms. Technology Leasing commenced a proceeding in the Local Court of New South Wales against BMG, in which it made allegations along the lines of the matters that I have just stated. Technology Leasing claimed the sum of $8,617.59 from BMG. The statutory demand is for the sum of $10,225.50, which is made up of the amount of the judgment debt in the Local Court, plus interest and costs. 4 It appears that, at the hearing of the proceeding in the Local Court, BMG did not appear when the matter was first called on. However, BMG had filed a defence to the claim made by Technology Leasing in which it made a number of assertions, which may be summarised as follows: (1) BMG signed the rental agreement between Technology Leasing and BMG as part of an arrangement made between BMG and AXiS Telecoms; (2) Under that arrangement, AXiS Telecoms offered BMG better call rates for transferring telephone lines to AXiS Telecoms and offered electronic equipment; (3) The amount of rental payments for the equipment was agreed to be equivalent to the average monthly amount spent by BMG on telephone bills and that amount was to be credited back to the telephone bills raised by AXiS Telecoms. (4) It was agreed that the rental payments to be made to Technology Leasing were inclusive of the telephone calls to the value of $200 per month. (5) While some of the equipment was supplied, other equipment was not received by BMG. (6) BMG continued making the monthly payments of $288.15 to Technology Leasing. (7) AXiS Telecoms issued telephone bills with credit given, thus reducing the amount payable for the telephone bills to zero, but such credits were well below the agreed amount of $200 per month. (8) BMG has paid to Technology Leasing an amount which is much in excess of the cost of the equipment supplied by Technology Leasing to BMG. (9) BMG, being unsatisfied with the service provided, stopped making payments to Technology Leasing. 5 As I have said, judgment was entered by the Local Court in the absence of BMG. BMG then appealed to the Supreme Court of New South Wales. By notice of motion, Technology Leasing applied for summary dismissal of the appeal on the basis that it disclosed no reasonable cause of action. On 18 March 2009 Fullerton J of the Supreme Court of New South Wales ordered that the proceeding be dismissed with costs. 6 Her Honour summarised the proceeding in the Local Court and was satisfied that the evidence established a number of facts, including that the equipment the subject of the rental agreement was supplied, as confirmed by a Delivery and Instruction Acknowledgement signed on behalf of BMG. Although BMG filed a notice of intention to appeal to the New South Wales Court of Appeal, no notice of appeal has in fact been filed. 7 When the matter came on for hearing today, BMG was represented by its only director, Mr Gambhir Watts. Mr Watts appeared on behalf of BMG by leave without objection from Technology Leasing. Mr Watts indicated that he wished to have the proceeding adjourned to enable him to put on further evidence, indicating that, notwithstanding the judgment in the Local Court and the dismissal of his appeal to the Supreme Court, there is nonetheless a bona fide dispute as to whether or not BMG is indebted to Technology Leasing. 8 Mr Watts outlined the two bases upon which he says that, notwithstanding the judgment in the Local Court, BMG does not truly owe any money to Technology Leasing. First, as I have said, he asserts that not all of the equipment that was the subject of the rental agreement was in fact supplied by Technology Leasing. By invoice, dated 25 August 2004, AXiS Telecoms invoiced Technology Leasing for the supply of equipment for a total price of $13,632.91. That equipment is the equipment described in the rental agreement as being the subject of the rental agreement. As I have said, Fullerton J found that there was evidence of acknowledgement of receipt of the equipment signed by Mr Watts on behalf of BMG. 9 Secondly, Mr Watts says that, notwithstanding the arrangement that he says was made between AXiS Telecoms and BMG, AXiS Telecoms has not given BMG credit against telephone calls in respect of the amount of rent paid to Technology Leasing. Mr Watts asserts that, in some way, there was a tripartite arrangement that binds Technology Leasing. The material before me does not support such an assertion. Even if it be the case that AXiS Telecoms agreed to provide or allow credit to BMG in respect of rent paid to Technology Leasing against liability for telephone calls, that was an arrangement as between AXiS Telecoms and BMG. There is nothing in the documentation before the Court to suggest that the rental agreement was anything other than a separate, bipartite arrangement between BMG and Technology Leasing. 10 It may be that BMG has a legitimate claim against AXiS Telecoms. That is not a matter that is presently before the Court. The substantive question that will arise in this proceeding is whether or not there is a bona fide dispute between BMG and Technology Leasing as to whether BMG is indebted to Technology Leasing pursuant to the judgment entered against BMG in the Local Court. 11 It may be that there are circumstances in which a court exercising jurisdiction under the Corporations Act 2001 (Cth) in relating to a statutory demand may go behind a judgment, even if the judgment debtor has unsuccessfully made application to set the judgment aside. That, however, is no more than a discretion. The Court would be slow to go behind a judgment, albeit one entered in absentia, in circumstances where the judgment debtor has unsuccessfully sought to re-litigate that matter in another superior court. 12 I am not persuaded that there would be any utility in granting an adjournment of this application. The material relied upon by BMG in its application to set aside the statutory demand is in effect a repetition of the assertions made in the defence filed in the Local Court, which have been litigated unsuccessfully by BMG. 13 Assuming, and I express no opinion one way or the other, that the Court can go behind the judgment of the Local Court, I am not persuaded, on the material before me, that there would be any utility in granting an adjournment to enable further material to be put on. The rental agreement is, on its face, simply an agreement between BMG and Technology Leasing. Whether or not there was some arrangement between AXiS Telecoms and BMG would not affect the enforceability of the rental agreement according to its terms. As I have said, there was evidence before the Local Court, which was accepted by the Supreme Court, that the equipment that was the subject of the rental agreement was, in fact, supplied to BMG. 14 Having reached the conclusion that there should be no adjournment of the application, because it would be futile, it follows that I am not persuaded that there is a genuine dispute as between BMG and Technology Leasing as to the indebtedness of BMG to Technology Leasing. Accordingly, in my opinion, the present application should be dismissed. I propose to order that the originating process, filed on 13 July 2009, be dismissed and that the plaintiff pay the defendant's costs of the proceeding. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.