New South Wales Supreme Court CITATION : Sturdy Components Pty Limited v Burositzmobelfabrik Freidrich W Dauphin Gmbh & Co [1999] NSWSC 595 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 5137/98 HEARING DATE(S) : 15 June 1999 JUDGMENT DATE : 15 June 1999 PARTIES : Sturdy Components Pty Limited (P) Burositzmobelfabrik Freidrich W Dauphin Gmbh & Co (D) JUDGMENT OF : Master McLaughlin COUNSEL : Mr. T. J. Hancock (P) Mr. R. Margo (D) SOLICITORS : Barker Gosling (P) Morgan Lewis Alter (D) CATCHWORDS : ACTS CITED : Corporations Law DECISION : SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER McLAUGHLIN Tuesday, 15 June 1999 5137/98 STURDY COMPONENTS PTY LIMITED -v- BUROSITZMOBELFABRIK FREIDRICH W DAUPHIN GMBH & CO JUDGMENT 1 MASTER: By summons filed on 24 December 1998 the plaintiff, Sturdy Components Pty Ltd, claims an order that the creditor's statutory demand issued by the defendant, Burositzmobelfabrik Freidrich W Dauphin GMBH & Co to the plaintiff, dated 9 November 1998, and served on 9 December 1998, be set aside pursuant to section 459G of the Corporations Law. Paragraph 1 of that demand is in the following terms: The company owes Burositzmobelfabrik Freidrich W Dauphin GMBH & Co of Pegnitzstrasse 32, D-91217, Hersbrak, Germany (a) the amount of $525,053.41 (which, at an exchange rate selling of $A1 to DM1.0338 as at 9 November 1998, is equivalent to DM542,800.22), being the amount of the debt described in the schedule. 2 The schedule contains under the heading "Description of Debt" the following: Amount owing to the creditor by the company for goods sold and delivered by the creditor to the company during the period 25 September 1997 to 20 May 1998, but not including the amounts alleged by the creditor to be due and payable to the company for interest, as follows: 3 There are then set forth a series of references to invoice numbers, date due since, amount due, the latter column being in Deutschmarks. Under the heading "Amount of Debt", the schedule discloses a total DM542,800.22, being $A525,053.41 at an exchange rate of $A1 to DM1.0338. 4 The plaintiff submits that the demand should be set aside on a number of grounds. Those grounds include the submission that the plaintiff's claim is not a debt due and payable within the meaning of section 459E of the Corporations Law, because, so it is submitted, it is a claim in a foreign currency; that the alleged debt is governed by a joint venture agreement, to which I shall, in due course, make further reference, and under the terms of that agreement the alleged debt is not due and payable; and that the plaintiff has an offsetting claim under the terms of the joint venture agreement, which is equal to or greater than the amount of the claim. 5 For each of the foregoing reasons it is submitted by the plaintiff that there is a genuine dispute between the plaintiff and the defendant about the existence of the debt to which the claim relates. If the Court is satisfied that there is such a genuine dispute, then, pursuant to the provisions of section 459H the Court must set aside the claim. 6 The defendant is a German company which is a maker of office chairs. The plaintiff has been invoiced concerning the sale by the defendant to the plaintiff of a quantity of office chairs. As I understand it, there is no dispute by the plaintiff that it has received the goods the subject of the various invoices referred to in the schedule to the statutory demand. Further, as I understand it, there is no dispute by the plaintiff that the amounts set forth in those invoices accurately reflect the purchase prices of the various items. 7 There has been placed in evidence a considerable quantity of material concerning a joint venture which was entered into by the defendant and other companies associated with it and with certain companies compendiously referred to as the "Sturdy" Group. It would appear that the companies referred to by that latter designation are associated with the plaintiff. Nevertheless, in the contractual documents which, over the objection of the defendant, were admitted into evidence, the plaintiff is not a member of the Sturdy Group and is not a party to any of the various contractual arrangements disclosed by those documents or relevant to the joint venture. 8 It has, in effect, been submitted on behalf of the plaintiff that, although it is not a party to the formal written agreements that have been entered into between the plaintiff and other companies (being the companies described as the Sturdy Group), and although the plaintiff is not a party to the manufacturing licence agreement between the defendant and Sturdy Holdings Pty Ltd, nevertheless, so it is submitted, the contractual arrangement between the plaintiff and the defendant should be governed by the agreement between the defendant and those other parties. 9 I can see no basis for such a conclusion. If the plaintiff wished to have a contractual arrangement with the defendant, then it was entirely open to it to have entered into such an arrangement. The fact that companies under the same general control as the plaintiff entered into a binding contractual arrangement with the defendant does not seem to me to be any ground upon which it can properly be concluded that the plaintiff was bound by a similar contractual arrangement. Presumably, for reasons best known to itself, the plaintiff and those controlling it, chose not to enter into such a contractual arrangement with the defendant. 10 Accordingly, the ground upon which the plaintiff now relies, that the debt claimed in the statutory demand is governed by a joint venture agreement between the defendant and entities other than the plaintiff, with the consequence that, so it is submitted, under the joint venture agreement the debt is not presently due and payable, is not a ground which I consider constitutes a basis of a genuine dispute between the plaintiff and the defendant concerning the amount of or the existence of the debt. 11 The view which I have just expressed is also sufficient to dispose of the submission on the part of the plaintiff that it has an offsetting claim against the defendant under the terms of the joint venture agreement, which is equal to or greater than the amount of the claim. The joint venture agreement gives no rights to the plaintiff. Any claim which might be made against the defendant or against anyone else under the joint venture agreement is not a claim to which the plaintiff is entitled. 12 There remains, however, to be considered the third of the grounds upon which the plaintiff submits that there is a genuine dispute as to the indebtedness of the plaintiff to the defendant, and that is that the plaintiff's claim is a claim in foreign currency. I have had the benefit of being taken by Counsel to a number of decided cases that are relevant to a consideration of this question, and also to submissions in written form by Counsel for the plaintiff. 13 It is clear from the actual invoices which were submitted by the defendant to the plaintiff that the claim of the plaintiff was in German currency, in Deutschmarks, and not in Australian currency, Australian dollars. The parties appear to have acted upon the basis of what are described as the terms of sale, delivery and payment of the defendant in relation to the goods which were sold by the defendant to the plaintiff. But whether or not they did so, there appears to be no doubt that the payment which the parties contemplated should be made for goods sold by the defendant to the plaintiff should be calculated in Deutschmarks. That fact appears to be conceded by the plaintiff. 14 The plaintiff, however, submits that the form of the statutory demand is such that it does not comply with the requirements of section 459E, in particular with subsection (2) of that section. The effect of requirement (e) of that subsection that the demand must be in the prescribed form is that it must comply with the form set forth as Form 509H in Schedule 2 to the Corporations Law. That form contemplates that the amount in Australian dollars must appear in paragraph 1 of the form. 15 It is of interest to note that, apparently, the predecessor to the Corporations Law, being the Companies Code, did not provide, either expressly or by necessary implication, that the amount of the debt specified in the demand was required to be stated in Australian currency. In that regard see International Factors (Singapore) Pty Ltd v Speedy Tyres Pty Ltd [1991] 5 ACSR 250 and Re Ikin [1995] 4 SCR 582. 16 Those two cases were considered by Justice Finkelstein in the Federal Court of Australia in Vehicle Wash Systems Pty Ltd v Mark VII Equipment Incorporated [1997] 25 ACSR 709. His Honour in that case referred to the judgment of Dixon J (as he then was) in the High Court of Australia in Jolley v Mainka [1933] 49 CLR 242 at 254f. 17 It has been submitted on behalf of the plaintiff that an obligation to pay in foreign currency does not create a debt, despite the fact that, as appears to be conceded by the plaintiff, the requirements of the various invoices and of whatever might have been the contractual relationship between the plaintiff and the defendant required any amount payable by the plaintiff to be paid in German currency. 18 It has been submitted on behalf of the plaintiff that in such circumstances there is no debt which is susceptible of being the subject of a statutory demand, but that a party in the position of the defendant should sue in damages and, having obtained a judgment, could then rely upon that judgment (which, presumably, would be in Australian dollars), to be the subject of a statutory demand. 19 It is clear from a careful reading of the judgment of Dixon J in Jolley v Mainka that his Honour drew a distinction between a payment in foreign specie and a payment of an amount which was calculated in accordance with a foreign currency. 20 Finkelstein J in Vehicle Wash also referred to what might be described as "modern commercial transactions of an international nature", and said at 716: In some circumstances a statutory demand will be set aside if it does not contain sufficient information to permit a calculation of the amount due. Delta Beta Pty Ltd v Vissers [1996] 20 ACSR 583 is an example of such a case. There the defect in the demand was that it did not identify the individual components of an alleged debt and the applicant was not able to verify the amount claimed to be due and owing from its own records. Here however the assertion by Vehicle Wash that it will be caused an injustice proceeds on a false premise namely that it is required to convert the US dollar amount into Australian currency in order to discharge its obligation (if any) to Mark VII. The premise is false because no such conversion is required. The facts that are before the Court show that if Vehicle Wash does owe Mark VII the amount in question that amount is to be paid in US dollars. No question of conversion arises and no injustice will result from stating the debt in US dollars. 21 It seems to me that the views therein expressed by Finkelstein J have relevance and application to the circumstances of the instant case. The parties here contemplated that the plaintiff would pay the defendant in German Deutschmarks. The amount of those German Deutschmarks is expressly set forth in the statutory demand. The conversion into Australian dollars is set forth only in order to comply with a requirement which did not exist under the previous legislation and has only existed since the Corporations Law came into effect, that is, that there should be a reference to an amount in Australian currency in the demand itself. 22 It does not seem to me that there can be any confusion in the mind of the plaintiff as to how much it is being required to pay. In regard to this question of payment in foreign currency, I have been taken to a recent decision of Davies J in the Federal Court of Australia in Conley v Deputy Commissioner of Taxation [1998] 152 ALR 467. In that case his Honour referred to what are described in Dr F A Mann's "The Legal Aspect Of Money", 4 ed, p 63 as "monetary obligations". The learned author there states: Monetary obligations primarily exist where the debtor is bound to pay a fixed, certain, specific, or liquidated sum of money. 23 At p 190 the author states, when speaking of foreign currency: Where the payment of a sum of foreign money is promised, a monetary obligation exists, because the foreign money functions as money, the legal character of the obligation being inherently identical with that of an obligation to pay a sum of domestic money. 24 His Honour, having quoted the foregoing passages, continued, at 470: This principle has had application in Australia at least since the Currency Act (Cth), sections 9 and 11 of which authorised transactions to be entered into " according to the currency of some country other than Australia " and payment to be made in that currency. 25 His Honour continued by saying: In chapter VII of his work, Dr Mann discusses the difference between foreign money as money and foreign money as commodity. At pp 189-90 and the learned author concludes: "The only conclusion which can be drawn with safety is that the working principle stated above must be adhered to: foreign money is money where it functions as such; it is a commodity where it is an object of commercial inter-course. In the vast majority of circumstances, however, the former will be the case and Brandon J (as he then was) cannot be criticized for stating categorically: (The Halcyon the Great [1975] 1 WLR 515 at 520) the term 'money' includes 'money in foreign currency as well as in sterling'. And where the words 'money' on the one hand and 'goods', 'commodity', 'merchandise' on the other hand appear in a statute, it is a matter of interpretation whether foreign money is included in the former or the latter phrase." 26 It is quite clear in the instant case that the parties have proceeded on the basis, firstly, that payments by the plaintiff should be made to the defendant in German Deutschmarks, secondly, that the sum in German Deutschmarks should be regarded as a debt and not merely as a claim in damages. 27 Although the plaintiff has sought to rely upon a decision of Senior Master Mahony in the Supreme Court of Victoria in MEC Import Sales Pty Ltd v Iozzelli SRL [1998] 29 ACSR 229 in support of its submission that the form of the statutory demand is such as to cause the recipient of that demand to be in a state of uncertainty as to how much it is required to pay, firstly, it seems to me, that the decision of Senior Master Mahony can be distinguished on its facts, since the demand in that case appeared to contain within it no explanation as to the conversion which had been adopted between Italian currency and Australian currency. But, much more importantly, it seems to me that the question should be approached quite clearly in the context of the relationship which existed between the parties. 28 As I have already observed, there is no dispute between the parties that the plaintiff was required to pay whatever was due in German Deutschmarks. The amount in German Deutschmarks is clearly and expressly set forth and the manner of the calculation of that amount is set forth in the statutory demand. 29 The calculation in Australian currency has been included only for the purpose of satisfying what appears to be a strict requirement, albeit possibly an unintentional one, of the Corporations Law, resulting from the precise wording of Form 459H. It does not seem to me that this question of the form of the statutory demand requiring payment of an amount in Australian currency, being the equivalent to a precisely calculated amount in the currency in which the parties contemplated any indebtedness should be paid, has the result of constituting either a defect in the form of the demand or a basis upon which it can be said that there is a genuine dispute as to the existence or the amount of the debt. 30 In those circumstances, therefore, I am not satisfied that any of the grounds upon which the plaintiff disputes its liability to comply with the demand constitutes a genuine dispute as to the existence or the amount of the debt asserted in that demand. It follows therefore, that I propose to dismiss the summons of the plaintiff. 31 (Counsel addressed on costs.) 32 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. 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