Sydney Olympic Soccer Football Club Limited v Konstantinidis [1999] NSWSC 329

New South Wales Supreme Court CITATION : Sydney Olympic Soccer Football Club Limited v Konstantinidis [1999] NSWSC 329 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 5078/98 HEARING DATE(S) : 13 April 1999 JUDGMENT DATE : 13 April 1999

PARTIES : Sydney Olympic Soccer Football Club Limited (P) Simon Konstantinidis (D) JUDGMENT OF : Master McLaughlin

COUNSEL : Mr. I. Sanderson (P) Mr. M. Aldridge (D) SOLICITORS : Gaden Lawyers (P) Robinson Creais (D) CATCHWORDS : ACTS CITED : Corporations Law DECISION :

- 10 - SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER McLAUGHLIN

Tuesday, 13 April 1999

5078/98 SYDNEY OLYMPIC SOCCER FOOTBALL CLUB LIMITED -v- SIMON KONSTANTINIDIS

1 MASTER: By summons filed on 21 December 1998 the plaintiff, Sydney Olympic Soccer Football Club Ltd, seeks an order that the creditor's statutory demand served upon the plaintiff by the defendant, Simon Konstantinidis, on about 1 December 1998 be set aside. That statutory demand seeks payment by the plaintiff to the defendant of the sum of $24,500. That sum is described in the schedule to the demand as:- Moneys lent to the company by the creditor as agreed by the company. 2 It would appear that in about mid-1996 there was a proposal made by various members of the plaintiff company - those members being described in the evidence and at the time of the proposal as "the Consortium" - that those members should take over the control of the plaintiff. It would appear that the plaintiff was suffering certain financial problems at the time. It would appear that the members of the Consortium did, in fact, take over the control of the plaintiff for a period from about mid-1996 until about March 1998 and that during that period they exercised control over the plaintiff in their capacity as directors of the plaintiff company. 3 It is the assertion of the defendant, who was a member of the Consortium, that he advanced to the plaintiff amounts totalling $24,500 - I interpolate that, indeed, in some of the items of correspondence he claims a slightly higher amount - and that those amounts so advanced constituted loans by him to the plaintiff; which loans he asserts he is entitled to be repaid. 4 The plaintiff appears now to be under the management of other directors. The plaintiff disputes its liability to repay to the defendant the amount claimed by him or any part of that amount. 5 The plaintiff does not go so far as to assert that the defendant did not make advances totalling $24,500. But the plaintiff, through its Counsel, says that the affairs of the plaintiff are confused, that advances which may have been made by the defendant were advances made not to the plaintiff itself but to the Consortium, or possibly to a company referred to in some of the documentation as the management company (which was a vehicle by which members of the Consortium were proposing to inject funds into the plaintiff and, presumably, to achieve some degree of profit from their involvement with the plaintiff). 6 The hopes which had been held not only by the members of the Consortium but also apparently by the generality of the members of the concerning that the involvement of the Consortium in controlling the plaintiff were not, however, fulfilled. 7 The plaintiff says, through its Counsel, that it may possibly be that the defendant is entitled to recover these moneys, but not from the plaintiff; that the defendant should be looking perhaps to the other members of the Consortium, or perhaps to the management company. 8 The present proceedings are brought pursuant to the provisions of Division 3 of Part 5.4 of the Corporations Law. The plaintiff relies upon section 459 H of that statute. Subsection (1) of that section provides relevantly:- This section applies where, on an application under section 459 G, the Court is satisfied of either or both of the following: (a) that there is a genuine dispute between the the company and the respondent about the existence or amount of a debt to which the demand relates. (b) that the company has an offsetting claim. 9 In the instant case the plaintiff relies only on paragraph (a), and submits that there is a genuine dispute between itself and the defendant about the existence of the alleged indebtedness of the plaintiff to the defendant. 10 The present proceedings are not an appropriate vehicle in which to resolve contested litigation between the parties if there is, in fact, a genuine dispute as to the indebtedness of the plaintiff to the defendant. But it is submitted on the part of the defendant that there is, indeed, no genuine dispute concerning the indebtedness of the plaintiff. 11 The defendant relies upon documentation created by the plaintiff and admissions which, says the defendant, have been made by the plaintiff, in order to support the defendant's submission that there is, in fact, no genuine dispute as to the indebtedness of the plaintiff to the defendant. 12 On 27 August 1997 there was sent on the letterhead of the plaintiff a communication by way of facsimile transmission. That communication was addressed to Kerry Polly (who is revealed by other evidence in the proceedings as having been the chief proponent of and the facilitator of the proposal that the Consortium take over the affairs of the plaintiff). That communication was from Mr Tony Rallis, who is disclosed in minutes of various meetings of the board of the plaintiff (including the board meetings of 2 March 1998 - though a misprint shown as 2 March 1988 - and 9 March 1998; the minutes of which board meetings constitute part of Exhibit 1) to have been a director of the plaintiff. In that facsimile transmission, which is headed "Re: Amount paid by S.K." Mr. Rallis says:- The following amounts were paid by Simon Konstantinidis in the past eight weeks: (1) Canterbury Super League $12,730.04 (2) Chris Kalantzis 7,000.00 (3) Geoff Harcombe trip 5,000.00 $24,730.04 If you require any further information, please call me. 13 That communication is Annexure J to the affidavit of Theophilus Premetis sworn 21 December 1998, which is the substantive affidavit in support of the present claim by the plaintiff to set aside the statutory demand. 14 On 13 January 1998 there was held a meeting of the board of the plaintiff the minutes of which are Annexure H to the affidavit of Mr Premetis. Under the heading "Correspondence" there appears the following item:- Letter from Simon Konstantinidis asking that board apply $44.5k loan to assist in relieving cash flow problems to the Club, that wage payments earlier in season be registered as $20k to meet H.K's Consortium contribution. 15 Shortly after 15 May 1998 the defendant approached one Susie Danias, a director of the plaintiff, who was not a member of the Consortium. The defendant's conversation with Miss Danias is set forth in paragraph 4 of the affidavit of the defendant sworn 17 March 1999. In that conversation the defendant said:- What is going to happen about the money which is owed to me by the Club. The money which I loaned for wages and the like? It is about $24,500.00. 16 Miss Danias said:- Your name appeared on the list of known creditors which Frank Martin prepared and is classified as a supported claim. You will only be paid those moneys which were loaned by you personally to the Club. The Board will not pay the Consortium debt. 17 The defendant said:- How do I know I will be paid. 18 Miss Danias replied:- I will send you a copy of a letter from George (Pashalis) which includes a list of supported and approved creditors. 19 Subsequently, the defendant received a letter dated that same day, 15 May 1998, on the letterhead of Hooton & Perkins, Solicitors, signed by George Pashalis (who is disclosed by that letterhead as being one of the principals of the firm Hooton & Perkins), addressed "Miss Susie Danias." That letter enclosed a copy of creditors, which is stated in the letter to be "forwarded to us by the office for your information." 20 That list which is enclosed is headed "Known creditors at 11 May '98." It consists of four categories. Category 3 is described as "Other supported claims", and includes as one of the items therein "Simon Konstantinidis - wages loan $24,500." 21 It should here be recorded that not only was Mr George Pashalis the solicitor acting for the plaintiff in the sale of the football team of the plaintiff company but he was at the time of the letter to which I have just referred also a director of the plaintiff. 22 The defendant's name also appeared on a further list of creditors of the plaintiff prepared slightly earlier in 1998. At its meeting of 2 March 1998, the board of the plaintiff had requested that a list of creditors be prepared. There is physically annexed to the minutes of the board meeting of 9 March 1998 a list of creditors headed "Outstanding moneys 16 March "98," which includes "Simon Konstantinidis - wages loan $24,500." 23 No evidence has been placed before the Court from Miss Danias disputing the accuracy of the conversation deposed to by the defendant with Miss Danias, or from Mr Pashalis suggesting that the indebtedness of the plaintiff to the defendant was in any way disputed at the time of the letter of 15 May 1998. 24 There has been placed in evidence a list of creditors as at 4 November 1997, which list does not include the name of the defendant. But it is clear from that list and from the documents relevant to the creation of that list that that list of creditors relates to creditors which were in existence before mid-1996, when the Consortium took over control of the plaintiff. 25 It is apparent from the foregoing admissions contained in the plaintiff's own documents, without resorting to the documents emanating from the defendant himself, that the fact that the plaintiff does not now choose to pay this amount claimed by the defendant does not constitute a genuine dispute as to the indebtedness of the plaintiff. 26 I am satisfied that there is no such genuine dispute, my conclusion in that regard being based upon the documents which have been created by the plaintiff and the evidence which has been presented on behalf of the plaintiff. 27 Accordingly, I propose to dismiss the present summons. 28 (Mr Aldridge sought an order for costs) 29 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. (3) The exhibits may be returned. I certify that this and the preceding pages are a true copy of the reasons for judgment of Master McLaughlin