New South Wales Supreme Court CITATION : Land & National Development Corporation Pty Limited v Tatebrook Pty Limited [1999] NSWSC 373 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 1293/99 HEARING DATE(S) : 22 April 1999 JUDGMENT DATE : 22 April 1999 PARTIES : Land & National Development Corporation Pty Limited (P) Tatebrook Pty Limited (D) JUDGMENT OF : Master McLaughlin COUNSEL : Mr. J. Simpkins (P) Mr. D. Leeming (D) SOLICITORS : Rod J. Barnett & Associates (P) Mallesons Stephen Jaques (D) CATCHWORDS : ACTS CITED : Corporations Law DECISION : 14 THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER McLAUGHLIN Thursday, 22 April 1999 1293 of 1999 LAND AND NATIONAL DEVELOPMENT CORPORATION PTY LTD -v- TATEBROOK PTY LTD 1 MASTER: By summons filed on 8 February 1999, the plaintiff Land and National Development Corporation Pty Ltd (referred to in these proceedings as "Land") seeks an order that the statutory demand dated 19 January 1999, served upon it by the defendant Tatebrook Pty Ltd (to which I shall refer to as "Tatebrook") be set aside, pursuant to the provisions of S459G(1) of the Corporation Law, or alternatively pursuant to the provisions of S459J of the Corporations Law. 2 That statutory demand seeks payment by the plaintiff to the defendant of the amount of $1,739,758.56, being the amount of the debt described in the schedule. 3 The schedule contains the following description of the amount of that debt: The moneys outstanding as at 17 September 1997 under a loan and shareholders agreement between the company, the creditor and others, dated 13 January 1995, being $2,339,758.56 less an amount of $600,000 of that debt, which has been assigned by the creditor to Idogear Pty Ltd ACM 008592434. 4 The loan and shareholders agreement entered into between the parties on 13 January 1995 provided for the loan by the defendant to the plaintiff to be repaid by 18 November 1997. However, on 17 September 1997, there was entered into between the parties a further deed described as "Tatebrook Deed of Release." Clause 3 of that deed provides: On and from the date of, but subject to completion of, the Lidoform Share Sale Agreement, Tatebrook releases Land from its obligations to pay to Tatebrook the amount in Item 2 of the schedule release. 5 Also on 17 September 1997, the parties and others entered into a deed described as "Deed of Acknowledgment", which contained provision in clause 13.3 concerning the Lidoform Share sale Agreement. That clause provides, "Notwithstanding any provision of the Lidoform share sale agreement to the contrary, completion of the Lidoform Share Sale Agreement is conditional on and subject to" - and there then follow six subparagraphs, of which those relevant to the proceedings before me are the following: (a) completion of the first stage by the first stage completion date, including the release of the land debt to Viebell. (e) compromise of the tax claims in an amount and on terms satisfactory to contractors by the second stage completion date. 6 Various of the phrases used in those subparagraphs are the subject of definition in the interpretation provisions contained in clause 1 of the Deed of Acknowledgment of 17 September 1997. 7 There have been a number of facts agreed to between the parties to the proceedings, set forth in a document headed "Statement of Agreed Facts", which will be admitted into evidence as an exhibit in the present proceedings. 8 Amongst those agreed facts are the acknowledgment of the loan and the provision for its repayment (to which I have already referred) the release contained in clause 3 of the Tatebrook Deed of Release (which I have set forth) and the fact that completion of the Lidoform Share Sale Agreement was conditional on, and subject to, the satisfaction of each of the six conditions contained in clause 13.3 of the Deed of Acknowledgment. 9 Item 4 of the Statement of Agreed Facts is as follows: The only basis on which it is said that there is a genuine dispute between the parties in relation to the debt the subject of the statutory demand, is in relation to the effectiveness of the release. In these proceedings Tatebrook contends that conditions (a) and (e) of the six conditions in the Deed of Acknowledgment. Have not been satisfied, with the consequence that Land's debt to Tatebrook was not released, and remains payable as alleged in the Statutory Demand. Land contends that conditions (a) and (e) have been satisfied, or that any breach has been waived. 10 It will be appreciated that in the present proceedings it is necessary for the plaintiff only to satisfy the Court that there is a genuine dispute between it and the defendant about the existence or the amount of the debt to which the demand relates. It is not necessary for the plaintiff to satisfy the Court that it must of necessity be successful in ultimately resisting the claim of the plaintiff for the amount of the debt. 11 I would here interpolate that the proceedings have been conducted upon the basis that the entitlement of the plaintiff to have the demand set aside is grounded upon the existence of such a genuine dispute, and that the plaintiff has not, at the hearing of the summons, sought to rely upon the provisions of S459J of the Corporations Law, which relates to the setting aside of a statutory demand if the court is satisfied that, because of a defect in the demand, substantial injustice will be caused unless the demand is set aside, or that there is some other reason why the demand should be set aside. The plaintiff grounds its present claim for relief exclusively upon the existence of a genuine dispute as to its indebtedness to the defendant. 12 Accordingly, it becomes necessary to consider whether the plaintiff has established that the release of the debt has taken effect, or whether there are grounds upon which it can be genuinely argued that that release has taken effect. 13 Unless each of the six conditions set forth in the Deed of Acknowledgment has been satisfied, then it is conceded by the plaintiff, under the terms of the Statement of Agreed Facts, that the release does not take effect. 14 There is no dispute as to the satisfaction of four of those conditions. It is submitted however, on the part of the defendant, that conditions (a) and (e) of those six conditions have not been fulfilled. If that be so, then the release has not taken effect, and there is no genuine dispute as to the indebtedness of the plaintiff. It becomes necessary therefore to proceed to consideration of conditions (a) and (e) in clause 3.3 of the Deed of Acknowledgment. 15 The first of the conditions in subparagraph (a) refers to completion of the first stage by the first stage completion date. I have already referred to the fact that those phrases are defined in the interpretation provisions of the deed contained in clause 1. The first stage completion date as so defined was 31 October 1997. 16 The sale of certain shops, known as the Gordon shops, was one of the matters comprised in the first stage. It is common ground between the parties that the sale of the Gordon shops did not occur until after 31 October 1997. Indeed, it did not occur until 3 December 1997. 17 On its face, therefore, the requirement of condition (a) has not been satisfied. However, it is submitted on behalf of the plaintiff that there has been a waiver in respect to that requirement. That is, the plaintiff submits that the defendant has waived compliance by the plaintiff with the requirement of condition (a). 18 The argument concerning such a waiver is a somewhat complicated and technical one. It relates to the completion of the Idogear Deed of Assignment. Clause 3 of that Deed of Assignment is said to have taken place, even though the requirement relating to the completion of the Gordon shops had not been fulfilled. 19 It is submitted on behalf of the plaintiff that the two requirements were inter-related, being the requirement of the completion of the Gordon shops by a specified date, and the assignment under clause 3 of the Idogear Deed of Assignment. 20 It is submitted on behalf of the plaintiff that the defendant has allowed the completion of the Idogear Deed of Assignment, and by doing so has effected a waiver of the fulfilment of condition (a) of the Deed of Acknowledgment. 21 The evidence upon which the plaintiff relies to support the assertion that the Idogear deed has been completed - a completion which it is submitted would otherwise have been impossible without the waiver by the plaintiff of condition (a) - is grounded upon the letter dated 18 November 1998 from Woden Contractors Pty Ltd to the defendant. 22 That letter is on the letterhead of Woden Contractors Pty Ltd. It is signed by one Doug Fryer, described as director - presumably a "director" of Woden Contractors Pty Ltd. It is addressed to a number of companies, and headed "Attention Alex Brinkmyer." (It should here be recorded that Mr Brinkmyer appears to be the principal of the plaintiff company, and he has sworn the chief affidavits on behalf of the plaintiff in the present proceedings.) 23 It refers to a without prejudice meeting on 13 October 1998, and includes in the penultimate paragraph the following: We summarise the current status of transactions contemplated by the Deed of Acknowledgment and associated documents, using the headings and defined terms used in the Deed of Acknowledgment for convenience on the attachment to this letter. 24 The attachment is headed "Attachment, Deed of Acknowledgment; Summary of Current Status." It includes in Item 12 of the attachment under the heading "Land Loan Deed of Release" the following; "The release in the Land Loan Deed of Release is conditional upon completion of the Lidoform Share Sale Agreement." It contains in Item 4 the following under the heading "Land Group Shares in Lidoform": 4.1 Land AWB and JB entered into the Lidoform Share Sale Agreement as vendors in favour of contractors or its nominee as purchaser on 17 September 1997. In relation to that agreement: (a) Conditions precedent 13.3, (a), (c) (e) and (f) of the Deed of Acknowledgment have not been satisfied. (b) The conditions precedent in completion of the Lidoform Share Sale Agreement set out in clause 13.3 (a) (c) and (e) of the Deed of Acknowledgment can no longer be satisfied, as timing requirements relating to those conditions precedent are not capable of being satisfied. (c) The release in clause 13.4 of the Deed of Acknowledgment has not taken effect. 25 The letter to which that document is an attachment, concludes by saying, "This letter and the attachment do not waive, limit or vary any rights Wodens may have under the Deed of Acknowledgment, or any other document referred to in or contemplated by it". 26 It should be here observed that that letter is not a letter from the defendant. An attempt has been made on the part of the plaintiff to establish some close relationship between the defendant and Woden Contractors Pty Ltd, which company which was a party to a number of the deeds to which I have already referred, and which is the entity referred to in those deeds as "Contractors". 27 Even if the letter and its attachments could be relied upon as somehow binding the defendant, it seems to me that the express terms of the letter and the attachments clearly reveal that there was no waiver by either Contractors, or, if Contractors could speak for the defendant, by the defendant. 28 I have been taken to abundant authority concerning the law of waiver. What is absolutely clear is that waiver is an intentional act, and cannot arise in the face of express opposition by the alleged waiving party to the effecting of such a waiver. 29 It is quite apparent that there has been no waiver by the defendant of compliance by the plaintiff with the condition (a), an essential condition to the release that the plaintiff asserts has taken place. 30 That conclusion of itself is sufficient to dispose of the present proceedings. However, for the sake of completeness I should also refer to condition (e). 31 It is common ground between the parties that the tax claims have not been compromised at all, let alone to the satisfaction of Contractors. However, it is submitted on the part of the plaintiff that condition (e) either ceased to be operative or, if it were operative, compliance with it was waived. The basis of that submission is that the defendant failed to use reasonable endeavours to achieve a compromise with the Australian Tax Office. 32 There has been placed in evidence versions, asserted by deponents on behalf of the plaintiff, and disputed by a deponent on behalf of the defendant, concerning what are said to have been the attempts or efforts made either by the plaintiff or by the defendant to achieve some compromise with the Australian Taxation Office. 33 It does not seem to me however, that those disputed conversations are determinative of whether there has been a waiver by the plaintiff of compliance with the condition (e), which has not been fulfilled. 34 Once again, waiver must be an intentional act on the part of the party or entity which is asserted to have waived, as here, compliance with an express provision in a contract. The conversations which are asserted by one deponent, and disputed by the other deponent, do not of course constitute any evidence that there has been a waiver by the defendant of compliance with condition (e). 35 Indeed, it seems to me that, to the extent that there was an obligation upon anyone to be the moving party in attempting to achieve a compromise of the tax claims, the obligation rested primarily upon the taxpayer itself. That the taxpayer undertook that obligation, emerges from the items of correspondence in that regard, which have been placed in evidence in the present proceedings. 36 It also appears that the original offer put by the taxpayer was for payment of $200,000, whilst the Australian Taxation Office countered with a requirement for payment of $1,665,847.10. 37 Having regard to the great divergence between those amounts, it does not seem to me that the failure of a compromise to be reached can be in any practical sense placed at the door of the defendant, even if, as the plaintiff asserts, the defendant was responsible for not pursuing negotiations with the Taxation Office, or for discouraging the plaintiff from pursuing those negotiations. 38 The taxpayer itself, being neither the plaintiff nor the defendant, was of course the entity which had the primary obligation, if it wanted to compromise the tax claims, to continue its negotiations with the Australian Taxation Office. 39 I not satisfied that the plaintiff has established that the conduct of the defendant in regard to the tax claims had the result which the plaintiff submits, of constituting a waiver of the requirement contained in condition (e). As I have already observed, for the plaintiff to succeed in establishing that the release took effect, the plaintiff must establish that it is somehow absolved from compliance with both of conditions (a) and (e). 40 In my conclusion, it has not established in the case of either of those conditions, that it is absolved from compliance. That being so, the release has not taken effect. 41 It follows therefore that there is, and can be, no genuine dispute as to the liability of the plaintiff to pay the amount in the statutory demand. A accordingly I propose to dismiss the summons. (Mr Simpkins requested that it be noted that there were some arguments which he put in relation to clause 13.3 (E); they being questions of constructions of the agreements, the question of the separate contact of 21 October, and the inability of the party to rely upon its own wrongful conduct.) (Mr Simpkins indicated that he wished to make application pursuant to S419 F for six weeks extended time for compliance.) (Mr Leeming indicated that he would be consenting to the application to extend time by six weeks, provided that the plaintiff gave an undertaking not to dissipate any of its assets during that period. Discussion ensued. Mr Simpkins gave no undertaking.) 42 MASTER: I make the following orders: 1. I order that the summons be dismissed. 2. I order that the plaintiff pay the costs of the defendant. 43 Mr Simpkins, your client will have seven days. Last Modified: DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.