KID CREW v VINOGRADOV [2001] NSWSC 446

New South Wales Supreme Court

CITATION : KID CREW v VINOGRADOV [2001] NSWSC 446 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 1085/01 HEARING DATE(S) : 29 May 2001 JUDGMENT DATE : 29 May 2001

PARTIES : KID CREW EXPRESS PTY LIMITED v PAULA VINOGRADOV JUDGMENT OF : Master Macready at 1

COUNSEL : Ms R. Winfield for plaintiff Mr J. Duncan for defendant SOLICITORS : Boskovitz & Associates for plaintiff Gillis Delaney Brown for defendant CATCHWORDS : Corporations Law. Application to set aside statutory demand. Genuine dispute established and demand set aside. No matter of principle. DECISION : Paragraph 15

1 MASTER: This is the hearing of proceedings under section 459(G) of the Corporations Law seeking to set aside a statutory demand which is dated 21 December 2000. The defendant seeks repayment for the sum of $12,852.39. That amount is said to be the balance owing pursuant to an agreement between the plaintiff and the defendant concerning the termination of the defendant's employment with the plaintiff company. 2 The employment was terminated on Friday 22 September 2000 and there was then signed a letter of that date signed on behalf of the employer and also the employee. There was a second page of the same date which appears to be a release of some unspecified claims. It is said that there is a genuine dispute in relation to the matter because the agreement which was reached on 22 September 2000 was obtained in some way improperly. Expressions such as "duped" were used in submissions. 3 For the agreement to be set aside, it would seem that there would have to be some fraud or deceit in the process which led to that agreement on 22 September. In other words, to set aside the demand by saying that there is a genuine dispute would seem to me that the plaintiff would have to show that there is some evidence which would go to establishing a genuine dispute in respect of some element of fraud which would vitiate the agreement that was reached on 22 September. 4 Probably the most useful summation of the meaning of "genuine dispute" is that given by McLelland CJ in Equity in Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACLC 669. At page 671 his Honour made the following comments in respect of the expression "Genuine dispute" "It is, however, necessary to consider the meaning of the expression 'genuine dispute' where it occurs in s.459H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the 'serious question to be tried' criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the Court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit 'however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be' not having 'sufficient prima facie plausibility to merit further investigation as to (its) truth' (cf Eng Mee Yong v Letchumanan (1980) AC 331 at 341), or 'a patently feeble legal argument, or an assertion of facts unsupported by evidence' (cf South Australia v Wall (1980) 24 SASR 189 at 194). But it does mean that, except in such an extreme case, a Court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. In Mibor Investments (at ACLC 1066; ACSR 366-7) Hayne J said, after referring to the state of the law prior to the enactment of the Division 3 of Part 5.4 of the Corporations Law, and to the terms of Division 3: 'These matters, taken in combination, suggest that at least in most cases, it is not expected that the Court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the Court conclude that there is a dispute and that it is a genuine dispute.' In Re Morris Catering (Australia) Pty Limited (1993) 11 ACLC 919 at 922; (1993) 11 ACSR 601 at 605 Thomas J said: There is little doubt that Division 3..prescribes a formula that requires the Court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the Court will examine the merits or settle the dispute. The specified limits of the Court's examination are the ascertainment of whether there is a "genuine dispute" and whether there is a "genuine claim". It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it) the Court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another. The essential task is relatively simply - to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it).' I respectfully agree with those statements." 5 I turn to the evidence in the matter to see whether or not there might be some genuine dispute about the agreement, in other words whether there might be some basis suggested for setting aside the agreement which was clearly reached on 22 September. The defendant was employed by the plaintiff and on 20 September 2000 there were discussions between her and Mr Todd Clarke, who was a Chief Executive Officer of the plaintiff company. 6 The first discussion was to the effect that the defendant wished to get out of her position in the purchasing department into sales and that she did not want a junior sales position. She said that she had located another position with a company Bruck Textiles and a Mr Alan Williamson had offered her a position. That salary was more inviting. In response, Mr Clarke said that they did not want to lose her and offered her a junior sales position and said that she had a choice between that and a senior sales position with the other company. 7 The conversation apparently continued and the defendant raised an incident which happened at a Christmas party the previous December involving a brother of Mr Clarke who was apparently a director of the company. That clearly flagged a claim of some kind of sexual harassment. Thereafter, there were a number of discussions between Mr Clarke and Mr Williamson, Mr Clarke then being in Adelaide. There was also obviously discussions between him and his brother. 8 There were two brothers, one was Jonathan and the other was Patrick. Patrick was in Sydney and was ultimately responsible for drawing the document that was signed on 22 September. During the conversations between Todd Clarke and Mr Williamson, Mr Williamson made it plain that he had been advising the defendant that she could have a legal claim for the sexual harassment. He said it would be best to be resolved. The company gave her 10 weeks severance pay. There were also similar discussions with Mr Patrick Clarke. What happened was that a decision was taken by the plaintiff, no doubt with the knowledge of the sexual harassment claim that had been raised, to come to a resolution of the matter and the letter of 22 September and the release were prepared. They were signed by both parties. 9 On Monday morning there was a change of heart on the plaintiff's part. The plaintiff arranged access of a series of emails on the computer which had been operated by the defendant. These emails have been admitted into evidence. What they show is a little bit more than what the plaintiff knew on the Friday when it made the agreement. The emails were between Mr Alan Williamson and the defendant in which she raised the question of the sexual harassment. 10 The other thing that they did show is that there was a personal relationship between Mr Alan Williamson of Bruck Textiles and the defendant. They apparently were seeing each other socially. That was not known to the Clarke brothers and the plaintiff. It was also clear from those emails that Mr Alan Williamson was advising the defendant on how to approach the matter, and to handle what appears to have been a combination of a proposed departure from the plaintiff's employment coupled with a claim for sexual harassment. 11 There has been affidavit evidence filed by Mr Jonathan Clarke particularly paragraphs 4 and 5, in which he swears as to what happened in the incident in question. That clearly is an admission that there was some sexual overtures which were not called for by the defendant. Clearly I would have thought that the plaintiff would have known that there would be something in the claim. How much would be a matter for them to assess. No doubt the brothers would have discussed it before the final decision was made. But a decision was taken and that decision was taken in the knowledge of a claim being made for sexual harassment, a proposal to move to another employment, the details of the claim being well-known to the management of the plaintiff company. 12 It is not as though this is some claim of which management could not have notice or knowledge. It was in a perfect position to judge what steps it should take. Effectively, all the emails disclosed is that the plaintiff did not know that Alan Williamson was a personal friend of the defendant. What is sought to be done to create a "genuine dispute" is to suggest that there is a possibility of setting aside the agreement 22 September. 13 In my view there is no scope in the evidence to suggest that there was some fraud involved in putting forward the claim for sexual harassment. The evidence of the plaintiffs demonstrates that there was that incident and no doubt the plaintiff could have well assessed it and made its response. I am not satisfied that there is a genuine dispute which might lead, if proceedings were taken, to set aside the agreement reached on Friday 22 September. That, however, is not the only issue in the matter because the agreement of 22 September dealt with a number of payments that were to be made to the defendant. Some of these were annual leave entitlement, annual leave loading and normal pay. Those amounts were subsequently paid to the defendant both by way of remittance to her account of the net amount and the payment of her tax liability of $4,190. 14 The amount paid to the plaintiff was $5,198.64. There is a slight difference in the way those figures and the taxes are calculated in the payment that was made on 27 September compared to what was agreed in the letter of 22 September. That left still outstanding severance pay of 10 weeks, which is effectively what the plaintiff refused to pay when it changed his mind after the discovery of the emails. What they had agreed to pay, in my view, on a proper construction of the agreement was $12,115.39, being 10 weeks of what was described as, severance pay. The tax on that was calculated on the basis that it was a redundancy payment and clearly, from the evidence before me, it was not. Accordingly, tax is payable of 31.5 per cent on that amount. It would seem to me that the claim which the plaintiff would have under the agreement would be the net amount due to her under the agreement to pay 10 weeks pay. After deducting tax of $3,816.35 the amount should be $8,299.04. I am satisfied that at least the obligation of the plaintiff to deduct the tax raises an offsetting claim and accordingly ought to be allowed as a deduction. 15 Accordingly, I find the admitted amount to be $8,299.04. Accordingly, I vary the demand by reducing the amount from $12,852.39 to $8,299.04 to take effect as and from 21 days from the date of the service of the demand. 16 In my view, it would be appropriate that I order that the plaintiff pay three quarters of the defendant's costs of the application as the plaintiff has only succeeded in part. 17 MASTER: The exhibits may be returned.