GONE FARMING v LONG [2001] NSWSC 816

New South Wales Supreme Court

CITATION : GONE FARMING v LONG [2001] NSWSC 816 CURRENT JURISDICTION: EQUITY DIVISION FILE NUMBER(S) : SC 2921/2001 HEARING DATE(S) : 06/09/2001 JUDGMENT DATE : 7 September 2001

PARTIES : GONE FARMING PTY LIMITED v PETER JOHN LONG JUDGMENT OF : Master Macready at 1

COUNSEL : Mr J. Duncan for plaintiff Mr C.R. Newlinds for defendant SOLICITORS : Mallesons Stephen Jaques for plaintiff Sally Nash & Co. for defendant CATCHWORDS : Corporations Act. Application to set aside statutory demand. No matters of principle. DECISION : Paras 25 and 27

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1 MASTER: This is an application to set aside a statutory demand dated 9 May 2001 served by the defendants on the plaintiff claiming an amount of $232,405.48 described in the following terms:

Description of the debt Amount of the debt (i) Pursuant to Deed dated 12 December $225,000.00 2000 as approved by Hill J for which payment was made by a third party on the company's behalf but for which the cheque was subsequently dishonoured

(ii) Reimbursement of advertising as $ 7,405.48 required pursuant to Deed dated 12 December 2000 as approved by Hill J for which payment was made by a third party on behalf of the debtor but which cheques were subsequently dishonoured $232,405.48

2 The plaintiff in this action is the defendant in the Federal Court in proceedings in which a number of farmers have brought a class action against it for what is alleged to be faulty agricultural equipment. The defendant in those proceedings cross claimed against some suppliers to it of equipment and also against the insurer HIH who had refused indemnity. Ultimately indemnity was given by HIH on certain terms. The defendants are solicitors who now act for the applicants and other class members in the class action. 3 On 12 December 2000, Hill J in the Federal Court approved a deed dated that day which established a scheme designed to compensate such of the applicants and other class members who suffered a loss. So far 18 claims in the class action have been settled. Those settlements predated the execution and approval of the deed. A further 16 claims remain to be dealt with by litigation or settlement. 4 I turn to the terms of the deed. The first parties are a number of the plaintiffs in the action. The second group of parties are the partners of Long Howard Houston and Healy Pynt. The partners are in fact named in Schedule 1 to the deed. The third party is CSN Pty Limited who is in fact the applicant in these proceedings. The recitals refer to the terms of the litigation and the fact that the parties have agreed to settle the proceedings by means of a scheme. In Clause 1 there are definition provisions and Clause 1(f) defines costs of the proceedings in the following terms: "1(f)'Costs of the Proceedings' means the party and party costs of the Proceedings including the party and party costs relating to the common issues arising in the Proceedings and managing the claims process established pursuant to the Scheme." 5 Clause 2 then gives effect to the scheme and incorporates the relevant obligations. The scheme in Schedule 2 applies after approval and creates the obligations to put in place and run the scheme for settlement of actions. Clause 3 includes various covenants to do various things to implement the scheme. Clause 4, which is relevant to an argument about advertising, is in the following terms: