Royal Capital Pty Limited v Nece Pty Limited [1999] NSWSC 698

New South Wales Supreme Court CITATION : Royal Capital Pty Limited v Nece Pty Limited [1999] NSWSC 698 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 1890/99 HEARING DATE(S) : 9 July 1999 JUDGMENT DATE : 9 July 1999

PARTIES : Royal Capital Pty Limited (P) Nece Pty Limited (D) JUDGMENT OF : Master McLaughlin

COUNSEL : Mr. B. Burke (P) Mr. J. Sleight (D) SOLICITORS : Shaw McDonald (P) Gilbert & Tobin (D) CATCHWORDS : ACTS CITED : Corporations Law DECISION :

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER McLAUGHLIN

Friday, 9 July 1999

1890/99 ROYAL CAPITAL PTY LIMITED -v- NECE PTY LIMITED JUDGMENT

1 MASTER: By summons filed on 1 April 1999, the plaintiff, Royal Capital Pty Limited ("Royal Capital), seeks an order that the creditor's statutory demand for payment of debt dated 16 March 1999 issued on behalf of the defendant, Nece Pty Limited ("Nece"), be set aside pursuant to the provisions of section 459H(1)(a) of the Corporations Law. 2 That demand seeks payment by the plaintiff to the defendant of the amount of $400,000. That amount is described in the schedule to the demand as follows: "principal outstanding pursuant to loan agreement". 3 In terms of the summons, the plaintiff brings the present proceedings pursuant to the provisions of section 459H(1)(a) of the Corporations Law. That subsection provides, relevantly: This section applies where, on an application under section 459G, the court is satisfied of either or both of the following:

(a) that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates ... 4 In the instant case the plaintiff asserts that there is a genuine dispute as to the existence of the debt asserted by the defendant, that is, the debt alleged to be constituted by the outstanding principal pursuant to a loan agreement. 5 In support of the summons, there was filed an affidavit of Dr Adrian Ong sworn 30 March 1999. He is a director, and also a shareholder, of the plaintiff company and appears to be the person who is essentially in control of the plaintiff. 6 I should also here record that Dr Ong is a director of the defendant company. He became such in 1997. In the affidavit to which I have just referred Dr Ong makes reference to the loan agreement which is the subject of paragraph 3 of the affidavit verifying the statutory demand. That affidavit verifying is sworn by Phillip Graham Sidney on 16 March 1999. In paragraph 3 of that verifying affidavit, the deponent asserts that the plaintiff is party to a loan agreement with the defendant dated 19 August 1997. 7 Dr Ong, in paragraph 5 of his affidavit, says that the purported "loan agreement" referred to in Mr Phillip Sidney's affidavit is contained in a letter from Phillip Sidney on behalf of Nece to Royal Capital of 19 August 1997, and Dr Ong annexes a copy of that letter to his affidavit. 8 He continues in paragraph 6 by saying: There has never been any agreement by Royal Capital in respect to any repayment and that there never will be. The document is and was a "dummy" document and does not evidence a true or real transaction. No amount of $400,000 has been paid by Nece to Royal Capital. 9 Subsequently, there was filed in the proceedings an affidavit by Mr Sidney of 28 May 1999. That affidavit annexes a copy of the document which Dr Ong annexed to his affidavit and which Dr Ong described as the purported loan agreement. However, the annexure to Mr Sidney's affidavit is slightly different, in that it bears an endorsement which does not appear on the annexure to Dr Ong's affidavit. 10 It is appropriate that I should set forth what is contained in that letter, since that letter is relied upon by the defendant as constituting the loan agreement giving rise to the indebtedness, which is the subject of the present proceedings. The letter is addressed: Royal Capital Pty Limited 537 Malvern Road TOORAK VICTORIA AUSTRALIA 3142 11 It says: Attention Dr Adrian Ong