Integrated v Salisbury [2000] NSWSC 1067

New South Wales Supreme Court

CITATION : Integrated v Salisbury [2000] NSWSC 1067 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3487/2000 HEARING DATE(S) : 15/11/2000 JUDGMENT DATE : 15 November 2000

PARTIES : Integrated Credit Solutions Pty Limited v Salisbury Securities Limited JUDGMENT OF : Master Macready at 1

COUNSEL : Mr J.T. Johnson - plaintiff Mr A.J. Thompson - defendant SOLICITORS : Nash O'Neill Tomko - plaintiff Brook Worthington - defendant CATCHWORDS : Corporations Law. Application to set aside statutory demand. Genuine dispute about identify of contracating party. Demand set aside. CASES CITED : Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACLC 669. DECISION : Paragraph 21

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THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER MACREADY

WEDNESDAY 15 NOVEMBER 2000

3487/00 - INTEGRATED CREDIT SOLUTIONS PTY LIMITED v SALISBURY SECURITIES LIMITED JUDGMENT

1 MASTER: This is an application pursuant to s 459G of the Corporations Law to set aside a statutory demand dated 18 July 2000 received by the plaintiff on or about that date. The application is apparently in time. The claim in the demand is a claim for $10,000 and is said to be due by the company to whom it is addressed, which is Integrated Credit Solutions Pty Limited (ACN 064 471 227). 2 In order to understand the genuine dispute which is said to exist in this matter, it is necessary to look at the history of some of the companies that have been operated by a Mr Stewart for the purposes of his business. Two main companies are concerned. The first one is Alder Stewart & Associates Pty Limited, which was registered on 7 January 1993. The second one is Integrated Credit Solutions Pty Limited, which was registered on 27 April 1994. 3 To further complicate matters, on 7 February 1995 a business name Alder Stewart & Associates was registered. The proprietors of that were Mr Stewart himself and his company Alder Stewart & Associates Pty Limited. 4 On 19 October 1998 there was a change in the business name. Alder Stewart & Associates Pty Limited and Mr Stewart ceased using that business name and Integrated Credit Solutions Pty Limited commenced using the business name. On either 29 or 30 October 1998 Alder Stewart & Associates Pty Limited changed its name to TLP Pty Limited. 5 The events concerning the debt which is the subject of the demand then occurred after these changes. In substance they occurred on 1 June when there was a proposal for the preparation of an information memorandum to assist with capital fund raising by the defendants. 6 Thereafter the memorandum was produced both in draft and further final forms. In due course a dispute as to the fees occurred. 7 A notice of demand was served in October 1999 but that was withdrawn. On 7 March 2000 a second demand was served once again, like the present matter, on Integrated Credit Solutions Pty Limited. In response to that on 24 March 2000 there was an offer to secure the debt and the security was the provision by way of a bank cheque for $10,000 to be held by the solicitors for the defendant upon terms that would enable the defendant to commence within sixty days proceedings in the Local Court in order to recover the debt from whichever company was appropriate. 8 That procedure was rejected, but the bank cheque was forwarded on 27 March 2000. Under a letter dated 31 May 2000 the bank cheque was returned. However, the evidence before me shows that that was not received until 29 June and in fact it had been requested by a letter of 21 June as the sixty days period expired on 21 June. Thereafter the third statutory demand was served. 9 Importantly, there was a letter of 1 August 2000 which pointed out that the correct company was TLP Pty Limited, ACN 058 572 357. 10 The matter, however, has continued through to a hearing today and there has been debate before me as to whether in fact there might be a genuine dispute about the correct contracting company. 11 There is sworn evidence from Mr Stewart that in June 1999 he signed a letter which had been sent to him by the defendant Salisbury Securities dated 1 June 1999. That is the proposal for corporate advisory services, which services gave rise to the debt the subject of the dispute. The letter is addressed to Mr John Stewart, Alder Stewart & Associates at the address at York Street. The letter concludes: If you are in agreement with the terms of this letter please sign the attached copy and return it to us." 12 In the copy attached to Mr Stewart's affidavit, he has signed it and under his name he has shown that he has signed it as a director, Alder Stewart & Associates Pty Limited. 13 The problem is, of course, that that company had, by that stage, changed its name to TLP Pty Limited. However, that agreement, with whomever it may have been reached, led to the supply in July 1999 of a draft information memorandum. That draft information memorandum showed on the front page the name Alder Stewart & Associates Pty Limited ACN 058 572 357. That is, of course, the ACN number for the company Alder Stewart & Associates Pty Limited which had changed its name some time prior to that to TLP Pty Limited. 14 Within the document itself there are references to the business name and generic use of Alder Stewart or the initials. 15 A later version of that information memorandum is one that has been sworn to by Mr Scott and that one apparently was supplied in August 1999. On the front page of that one there is no reference to a company but only Alder Stewart; and then throughout the document there are various references to Alder Stewart & Associates, but also reference to companies within the group and the existence of corporate bodies which have directors, shareholders and the like. For instance, at p 17 there is a reference to a shareholder which fits the company TLP Pty Limited, formerly Alder Stewart & Associates Pty Limited. There is also, to confuse matters even more, on p 23 a reference to Integrated Credit Solutions being the operating company only of Alder Stewart & Associates. 16 Clearly there is confusion and the question really is whether there is a genuine dispute in this regard. I had the benefit of having submissions in respect of the principles to be applied and I think probably the most useful summation is that given by McLelland CJ in Eq., as he then was, in Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACLC 669. At p 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 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.'