STERLING v BRADLEY [1999] NSWSC 924

New South Wales Supreme Court CITATION : STERLING v BRADLEY [1999] NSWSC 924 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 1052/99 HEARING DATE(S) : 30/08/99 JUDGMENT DATE : 23 September 1999

PARTIES : Sterling Estates (SA) Pty Limited v Michael Bradley JUDGMENT OF : Master Macready at 1

COUNSEL : Mr C.R.C. Newlinds for the plaintiff Mr N. Cotman for the defendant SOLICITORS : Kemp Strang for the plaintiff Conway Maccullum for the defendant CATCHWORDS : Corporations Law. Application to set aside statutory demand based upon admission that amount was owed. Demand set aside.; Evidence. Admissions. Whether s 87 of Evidence Act affects the common law rule that an admission by an agent requires publication to some one other than the principal. Held it does change the common law rule. DECISION : Para 37

- 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER MACREADY

Thursday 23 September 1999

1052/99 STERLING ESTATES (SA) PTY LIMITED v MICHAEL BRADLEY JUDGMENT 1 MASTER: This is an application under s 459G of the Corporations Law to set aside a statutory demand dated 19 December 1998 served by the defendant upon the plaintiff. The demand seeks the repayment of the sum of $110,000. 2 The application is an unusual one in that the parties have been in dispute since 1997 about payments due to the defendant from the plaintiff. The defendant's case in support of the statutory demand is one which relies, inter alia, upon a number of alleged admissions on behalf of the plaintiff that the defendant is owed at least $110,000. The admissions are said to arise in a document dated 19 December 1997 signed at a meeting held on that day to discuss issues between the parties and in a letter dated 20 January 1998. 3 The plaintiff and the defendant in this matter are developers of real estate and have been involved in a number of projects together. The plaintiff is a 50 percent shareholder in a company called Setpave Pty Ltd ("Setpave"). The other 50 percent holder is a company known at Fapodu Pty Ltd ("Fapodu"). Setpave is a joint venture vehicle which operates as the trustee of the Carlton Trust a unit trust in which the units are owned equally by the plaintiff and Setpave. The plaintiff in respect of its share or entitlement from Setpave entered into subsidiary joint venture arrangements with the defendant which apparently required contributions of capital by the defendant in projects undertaken through Setpave. The defendant was a director of the plaintiff from 1991 until January 1998. He is also a director of Setpave. 4 Setpave the joint venture vehicle between the plaintiff and Fapodu entered into a number of real estate development projects in the period 1993 to 1998. As part of the joint venture arrangements between the plaintiff and Fapodu in relation to Setpave, Fapodu was to contribute the bulk of the funds required for each development with the plaintiff providing the remaining funds, management and supervision of the projects. After a return of capital Fapodu and the plaintiff were to share equally or as otherwise may be agreed in any instance any profits or losses on each project. There was apparently no formal joint venture instrument or written agreement recording the terms of the joint venture. Three of the projects which were undertaken concerned properties at Cromer, Cammeray and Mona Vale. 5 The precise terms of the oral arrangements in respect of the subsidiary joint venture arrangement which was entered into between the defendant and the plaintiff in respect of the plaintiff's share of the development being carried out by Setpave are not in evidence. There is, however, sufficient evidence to indicate that the projects required capital contributions from the defendant and that these would be repaid in due course. In addition there would also be a payment between the plaintiff and the defendant in respect of profits or losses. The parties are in dispute as to the method of calculating any such profits particularly whether it should include administration charges claimed by the plaintiff to be deductable before arriving at the net profits of any venture. There also seems to be a dispute about the number of projects in which the defendant participated with consequent liability for losses. However, the evidence in this area is uncertain given that the main evidence sought to be led on this aspect was in inadmissible form and was rejected. 6 The first project was the Cromer project to which the defendant alleges that he contributed $86,000 in capital. That project was completed in December 1994 and distributions were made. 7 The Cammeray and Mona Vale projects. These are more recent and apart from the sale of one or two units have been substantially completed. 8 It is useful at this stage to turn to the admissions which are the foundation for the claim in the statutory demand. They arise out of a meeting held on 17 December 1997 to discuss the contributions. The defendant gave evidence in paragraph 46 of his affidavit of the terms of the conversation which he had with Mr Yu of the plaintiff. Mr Yu gave his evidence of what occurred in the discussions in paragraph 32 of his affidavit. There is, not unnaturally, a difference between what is alleged. In essence Mr Bradley's conversation includes what can be said to be admissions that at least $110,000 was owed for return of capital while Mr Bradley maintained that the correct amount was about $180,000. Mr Bradley indicated in his conversation that payment of $110,000 would be paid no later than 15 March 1998. When one looks at Mr Yu's version he in effect asserts that Mr Bradley's contribution would not be more than $100,000 but that did not take account of money paid back to him or shares of overheads or project losses. He gives no indication of a time for payment. 9 On 19 December 1997 here came into existence a note signed by Mr Davey and Mr Yu which is attached to the affidavit verifying the demand. There is also attached to that demand a letter of 20 January 1998 addressed to the defendant, the author of which on the face of the document is Mr Yu. However, the document is not signed and there is a dispute as to how this got into the possession of Mr Bradley. There has also been located a further amendment of that letter of 20 January which appears at page 37 of the affidavit of Mr Davey, a director of the plaintiff. It appears to be slightly more detailed than the one attached to the affidavit in support of the demand but likewise it is not signed. In the first draft of the letter of 20 January 1988 there was included the following:- "The following was agreed:- 1. The equity contribution currently contributed by Bradley is in the region of $110,000 (SESA) to $180,000 (Bradley), the actual amount will be computed by Justin Davey as soon as he has been able to produce a financial audit of our accounts."