New South Wales Supreme Court CITATION : Reale Bros Pty Ltd v Reale [2003] NSWSC 666 HEARING DATE(S) : 16/07/03 JUDGMENT DATE : 24 July 2003 JURISDICTION: Equity Division Corporations List JUDGMENT OF : Young CJ in Eq DECISION : Appeal allowed. Application for statutory demand to be set aside dismissed. CATCHWORDS : CORPORATIONS [212]- Statutory demand- Application to set aside- Requirement to state grounds of dispute with evidence within 21 days- Whether also requirement to provide hearing with admissible evidence as to each element of cause of action in order to demonstrate genuine dispute- What is an equitable debt?- Whether company or another person principal debtor- What is meant by substance of guarantee transaction? WORDS & PHRASES- "Genuine dispute"- "Is satisfied"- "Debt". LEGISLATION CITED : Corporations Act 2001, ss 459G, 459H(1), 459J Evidence Act 1995, s 136 AGC (Advances) Ltd v West (1984) 5 NSWLR 590 (C/A (1986) 5 NSWLR 610) British Thomson-Houston Co Ltd v British Insulated and Helsby Cables Ltd [1924] 2 Ch 160 Edwards v Lennon (1866) 6 SCR (NSW) (Eq) 18 Energy Equity Corp Ltd v Sinedie Pty Ltd (2001) 166 FLR 179 Ex parte Adamson; Re Collie (1878) 8 Ch D 807 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 FAI v Southern Cross Exploration NL (No 3) (1986) 4 ACLC 447 Financial Solutions Australasia Pty Ltd v Predella Pty Ltd (2002) 167 FLR 106 Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452; 21 ACSR 581 Greenough v McClelland (1860) 2 El & El 429; 121 ER 162 Hollier v Eyre (1842) 9 Cl & Fin 1; 8 ER 313 John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 CASES CITED : Manley v Boycot (1853) 2 El & Bl 46; 118 ER 686 Manzo v 555/225 Pitt Street Pty Ltd (1990) 21 NSWLR 1 Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601 Re Steel Wing Company Ltd [1921] 1 Ch 349 Reale v Reale [2003] NSWSC 293 Rouse v Bradford Banking Co [1894] AC 586 Saunders v Smith (1838) 3 My & Cr 711; 40 ER 1100 71 Paisley Street Footscray Pty Ltd v Vineyards Estate Pty Ltd (Olney J, Federal Court, 18.8.1995) SMEC International Pty Ltd v CEMS Engineering Inc (2001) 38 ACSR 595 South Australia v Wall (1980) 24 SASR 189 Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Wickstead v Browne (1992) 30 NSWLR 1 PARTIES : Reale Bros Pty Limited (Plaintiff/Respondent) Ludmilla Marika Reale (Defendant/Appellant) FILE NUMBER(S) : SC 6004/02 COUNSEL : G O Blake SC (Plaintiff/Respondent) V R W Gray (Defendant/Appellant) SOLICITORS : N J Papallo & Co (Plaintiff/Respondent) Lang Gellert & Noonan (Defendant/Appellant) LOWER COURT Supreme Court (Master) JURISDICTION : LOWER COURT 6004/02 FILE NUMBER(S) : LOWER COURT Master Macready JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST YOUNG CJ in EQ Thursday 24 July 2003 6004/02 – REALE BROS PTY LIMITED v REALE JUDGMENT 1 HIS HONOUR: This is an appeal from a decision of Master Macready given on 21 March 2003 in which he ordered that a statutory demand served by the defendant on the plaintiff be set aside. The decision is noted as Reale v Reale [2003] NSWSC 293. The learned Master made an order for costs against the defendant in a subsequent judgment delivered on 29 April 2003. 2 The statutory demand was served on or about 28 November 2002. It claimed $252,820.89 being the amount paid by the defendant, Ludmilla Reale to the Commonwealth Bank of Australia because of the default by the plaintiff company in meeting its obligations to that bank. The defendant and her then husband, Rocco Reale had mortgaged their home at Strathfield as a security for the company's debt. 3 The defendant was thus demanding that the company as principal borrower indemnify her for the money that she had paid to the bank as surety. 4 On 18 December 2002, within the 21 day period allowed by the Corporations Act 2001, the plaintiff company filed an application under ss 459G and 459J of the Corporations Act to set aside the statutory demand. This was supported by two affidavits of Nicola Reale, the brother of Rocco Reale. 5 The company is a proprietary company with two issued shares. Both are currently held by Nicola Reale. The company is a trustee of a trading trust which carries on the business of a shoe repairer and seller. The trading trust has issued ten units, five to the Rocco Reale Family Trust and five to the Nicola Reale Family Trust. In other words, the company has no beneficial interest in any assets of its own; its sole worth is the value, if any, of the right of indemnity from some other set of trustees. 6 The affidavits say that the plaintiff borrowed from the Commonwealth Bank. The security for the facilities were a first mortgage over the real estate of Rocco and Ludmilla Reale at Strathfield and a joint and several unlimited guarantees by the company and Nicola Reale. 7 The affidavit then says that on sale of the Strathfield property, the mortgage in favour of the Commonwealth Bank was discharged, the loans to the bank being paid out by Ludmilla Reale. 8 A second affidavit was filed by Nicola Reale on the same day. This merely annexed various accounts. 9 There would not appear from the affidavits to be any ground for setting aside the statutory demand at all. However, before the hearing before the Master commenced, though well out the 21 day statutory period, Nicola Reale filed a further affidavit in which he said that in 1995 the Nicola Reale Family Trust had lent the company $300,000 and that when the company needed more working capital in 1997, the brothers agreed that he would get a loan from the bank and would on lend a matching $300,000 and that "if everything goes alright I will be able to repay the bank $300,000 and you will get your $300,000 back from the business." 10 This is rather odd evidence, because if accepted, it means that Nicola will be repaid his loan from the business, but that Rocco's loan would not be repaid. But I need not dwell in this point. However, there were further conversations among the brothers in 2001 which went contrary to this. Ludmilla was never said to be privy to any of these arrangements. 11 When the hearing commenced before the learned Master, counsel for the plaintiff (who was not the counsel who appeared for the respondent on the appeal) read the three affidavits and tendered four exhibits, only one of which, a document which was marked Exhibit "A" had been referred to in the December affidavits. The defendant called no evidence and there was no cross examination. 12 The learned Master noted in his judgment that there were seven grounds of attack on the statutory demand, viz: (1) A formal defect in the demand; (2) An express agreement that the right of indemnity was waived; (3) Waiver of right to indemnity as a result of the settlement of proceedings 1430 of 2002; (4) Estoppel arising from that settlement; (5) Anschun estoppel; (6) Whether the principal debtor was the company or Rocco Reale; and (7) An offsetting claim. 13 It is surprising that these claims were permitted to be raised as it is most difficult to see how they can be found in the affidavits filed on 18 December 2002. However, no objection about this seems to have been made to the learned Master, nor is it a ground of appeal. I will pass over the point, though I wonder whether, as there can be no estoppel in the face of a statute, I am really entitled to do so. 14 The learned Master found that there was no genuine dispute raised by items (1), (2), (3), (5) or (7), but found that claims (4) and (6) were such that there was a genuine dispute as to whether the debt was payable. He thus set aside the statutory demand. 15 The defendant appealed against the decision alleging that the learned Master had erred in finding the two matters against her. There was no notice of contention or cross appeal. 16 The appeal raised the following matters for decision: A. Whether on the true construction of s 459H(1) of the Corporations Act the court may only set aside a statutory demand if it is satisfied by proper evidence that a genuine dispute exists about the debt in question? B. Whether there could truly be said to be a genuine dispute about the identity of the debtor? C. Whether the Master was in error in finding that there was a genuine dispute about the debt based on estoppel? D. What is the result of the appeal? 17 On the appeal, which I heard on 16 July 2003, Mr V R Gray appeared for the appellant and Mr G O Blake SC appeared for the respondent. I am indebted to both of them for their learned written and oral submissions. 18 I will now deal with each of these matters in turn. 19 A. Section 459H(1) of the Corporations Act 2001 provides that it applies "where … the Court is satisfied … that there is a genuine dispute between the company and the respondent about the existence … of a debt to which the demand relates." It seems to follow that the court can only set aside the demand if it is so satisfied (except for cases where the amount of the alleged debt is in dispute). 20 Mr Gray submits that the vital words of s 459H(1) are "satisfied" and "is". He says that the court must be satisfied by proper evidence that there is a genuine dispute. A plaintiff who merely hints at a dispute should lose the case. 21 Mr Gray relies on a passage from the judgment of Sundberg J in the Federal Court in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452, 459; 21 ACSR 581, 587: "the affidavit need not detail, in admissible form, all the evidence that supports the contention of a genuine dispute. … That evidence must be available at the hearing of the application to set aside, because that application is for final and not interlocutory relief." 22 Sundberg J refers to 71 Paisley Street Footscray Pty Ltd v Vineyards Estate Pty Ltd, an unreported decision of Olney J in the Federal Court delivered on 18 August 1995. I have not been favoured with a copy of that judgment, nor is it readily accessible electronically. 23 Mr Blake says that such an approach runs quite counter to the accepted wisdom from leading cases such as Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, 787, which he reminds me has been approved by more than one Full Court throughout Australia; see eg Financial Solutions Australasia Pty Ltd v Predella Pty Ltd (2002) 167 FLR 106; 26 WAR 306. 24 One must be quite clear to differentiate between the strictures imposed by s 459G of the Act and those that apply to the hearing of the application to set aside a statutory demand. 25 As to the former, it is now quite clear that the affidavit that must be filed within the 21 day period must go beyond assertion and disclose facts or at the very least a statement of the material facts which disclose a genuine dispute as to the debt claimed. The affidavit delimits the case that can be brought, though supplementary evidence can flesh it out; see eg John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250, 253; SMEC International Pty Ltd v CEMS Engineering Inc (2001) 38 ACSR 595, 599; Energy Equity Corp Ltd v Sinedie Pty Ltd (2001) 166 FLR 179, 185 and Financial Solutions Australasia Pty Ltd v Predella Pty Ltd at 112-3. 26 In refusing special leave to appeal in the Energy Equity case, the High Court affirmed that no new grounds can be relied on which are not contained in the material filed within the 21 days; see (2003) 77 ALJ 435. 27 However, on the actual trial, although the limits of the case will have been defined, the judge or master does not determine whether the debt is due but only as to whether there is a genuine dispute as to whether it is due. 28 The dispute may be one of fact or of law or a mixture of the two. 29 In Eyota Pty Ltd v Hanave Pty Ltd at 787, M H McLelland CJ in Eq said that the expression "genuine dispute" - "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 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 … or 'a patently feeble legal argument or an assertion of facts unsupported by evidence.' " The passage last quoted by his Honour comes from South Australia v Wall (1980) 24 SASR 189, 194. 30 With respect, the two examples given are not a real analogy. The way in which a court approaches an interlocutory application may differ from the way in which a final injunction is considered even if the final injunction is only a step along the way in the complete litigation. 31 In John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd at 253, I noted that if proof of the claim made by the company was required, "then one would be doing the very thing that one is not to do, and that is to try this sort of dispute in the Companies Court." 32 Mr Gray says that there is a distinction between proving the case to establish who is correct in the dispute and the fact as to whether there is indeed a genuine dispute. That proposition must be so, but it is too easy to blur the distinction in practice. 33 In this court, the usual practice is merely to look at the affidavits filed by the plaintiff seeking an interlocutory injunction in conjunction with affidavits filed by the defendant, not permitting cross examination unless some special feature is present and asking whether there is shown an arguable case. This is in accordance with ancient practice; see eg Saunders v Smith (1838) 3 My & Cr 711, 728; 40 ER 1100, 1107, that is that (before 1873) the case was so clear on the affidavits that relief should be given to the plaintiff immediately rather than wait for determination of the legal issues by a trial at law. 34 Sundberg J seems to suggest in the passage I have quoted that there must be evidence on each and every element needed to be proved by the company when the trial of the merits of the issue eventually takes place. I think that goes beyond the practice in this court. There are a number of cases where the evidence on a vital element is not readily available in the plaintiff's camp and the court has to exercise some imagination and determine whether it is more likely than not on the evidence produced and the additional material which might be gathered by interrogatories and otherwise in the course of an orderly preparation for trial, it is in the interests of justice to grant an interlocutory injunction. 35 The same consideration must apply when a company is disputing a debt. 36 I have consulted the cases which my records show have considered the Graywinter case and also the article by Lee Aitken and Serena Armstrong on that case in (2003) 77 ALJ 353. There does not appear to be any support for the passage quoted and, indeed, cases such as SMEC International Pty Ltd v CEMS Engineering Inc (2001) 38 ACSR 595, 600, indicate that it is too strict. It is also noticeable that Parker J in Financial Solutions Australasia Pty Ltd v Predella Pty Ltd at 112, when quoting from the Graywinter case omits this passage, one assumes deliberately. 37 In Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601, 605, Thomas J in the Queensland Supreme Court said that: "It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or lack of it) the court has no function." This passage was applied by the Full Federal Court in Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452, 463-4. 38 Thus the bulk of authority puts the basal test that the court must be satisfied on the evidence before the court, the company has shown that it has a plausible contention requiring investigation; see SMEC International Pty Ltd v CEMS Engineering Inc at 600. 39 Mr Gray says that on the evidence before the learned Master, including the exhibits and the affidavit by Nicola Reale of February 2003, the evidence never reached the stage where the Master could be satisfied that there is a genuine dispute about the debt on the Graywinter test or even on the SMEC test. I will examine this submission as I look at each of the next two heads of argument. 40 However, it follows from what I have said above that it is insufficient that the court feels that there might be an arguable case or that there may be room for argument about a point. The onus is on the plaintiff to prove by evidence that there is a genuine dispute, that is that there is a plausible contention requiring investigation. 41 B. The argument as to the identity of the debtor, in simple form, is that the two brothers, Nicola and Rocco agreed that the borrowing from the Commonwealth Bank was Rocco's matching contribution of finance for the company and that he would be solely responsible for its repayment. In the divorce settlement between Rocco and Ludmilla, Rocco took the interest in the company whilst Ludmilla took the Strathfield house subject to the mortgage. She then paid the mortgage out of the proceeds of sale. The debt to the bank was thus not the company's debt, but Ludmilla's debt. 42 The contention is that the evidence is that in the divorce, a solicitor for Ludmilla made statements to this effect and that the terms of settlement were approved by a Registrar of the Family Court contained in a notation to this effect. 43 Mr Gray says that the solicitor's affidavit, which was tendered as Exhibit "A" is merely evidence that the solicitor said those things, not of their truth. There is nothing to be found in the paragraph of the affidavit referring to Exhibit "A" as to why it was tendered, it was admitted without objection and seems to me thus to have been in evidence for all purposes. 44 I always entertain some doubt about this proposition and, when I am the trial judge, usually ask counsel the status of statements of fact in correspondence annexed to affidavits and, if appropriate, make an order under s 136 of the Evidence Act 1995 to define their status. During the argument on the appeal Mr Gray asked me to make an order under s 136 of the Evidence Act. I reserved on this, but I am of the view that I should not do so in view of the way the material was tendered before the Master. 45 I should note that there was no exploration as to the effect of the rule in British Thomson-Houston Co Ltd v British Insulated and Helsby Cables Ltd [1924] 2 Ch 160. That rule is that evidence given by a witness for X in one piece of litigation relied upon by X in that litigation is not admissible as an admission against X in other litigation. 46 Once the Graywinter argument is put to one side, the point does not matter too much as the court assumes that the affidavit contains the evidence that that solicitor would give at the ultimate trial if called upon to give evidence. 47 I may then pass to the substantive part of the argument on this point. 48 A good place to commence is with the judgment of Hodgson J in AGC (Advances) Ltd v West (1984) 5 NSWLR 590 affirmed in the Court of Appeal as West v AGC (Advances) Ltd (1986) 5 NSWLR 610. In that case, Mrs West borrowed $68,000 from AGC secured on her home the bulk of which was paid to a company, The World of Quiche Pty Ltd (Quiche). On the facts, the judge held that all parties including the lender knew that the real transaction was a borrowing by Quiche secured on Mrs West's home and that it was not intended that the loan be repaid by anyone except Quiche or its guarantors. He held at p 603 that "in substance" Quiche was the principal borrower and the other parties including Mrs West were guarantors. 49 His Honour noted that his decision was in accordance with Hollier v Eyre (1842) 9 Cl & Fin 1; 8 ER 313; Greenough v McClelland (1860) 2 El & El 429; 121 ER 162 and Rouse v Bradford Banking Co [1894] AC 586. 50 The House of Lords in Hollier's case stated the law in the case of an annuity, that as between the grantee and the person named as the grantor, the documents are conclusive and no evidence can be received to the contrary. This was also the view taken by the Full Court in this State in Edwards v Lennon (1866) 6 SCR (NSW) (Eq) 18, 29-30. (Hodgson J appears to have departed from this and applied what O'Donovan & Phillips, Modern Contract of Guarantee 3rd ed (Law Book Co, Sydney, 1996) p 20 call "a more modern, flexible approach to the admissibility of extrinsic evidence"). 51 This difference matters very little as it is clear that as between the persons named as grantor and guarantors inter se, extrinsic evidence may be admitted to show that there were equities which enabled a court of equity to decree inter se the real and substantive position between them. 52 Greenough's case was a decision of the Exchequer Chamber which again plainly applied equitable principles. However, Atherton SG argued that, at law, not only has the principal creditor to have knowledge of the arrangement, but he must expressly agree at the time of the contract to treat a party as a surety only and cited Manley v Boycot (1853) 2 El & Bl 46; 118 ER 686 which indeed does support that submission. The Exchequer Chamber did not rule on this submission. Manley's case was not cited to Hodgson J who appears to have reached a contrary viewpoint. 53 The Rouse case was quite a different matter. The question was whether after a guarantee had been given a dissolution of partnership and an alleged agreement of the principal creditor released one of the guarantors. It is irrelevant to the present case. 54 Hodgson J returned to the subject in Manzo v 555/225 Pitt Street Pty Ltd (1990) 21 NSWLR 1. In that case, 555 agreed to borrow $120,000 from Custom Credit. Manzo and Oehm gave secured guarantees for this loan. The money was used to pay creditors of companies associated with Manzo under a scheme of arrangement. The security was sold and Custom Credit paid out. Manzo then made a statutory demand on 555 based on the implied promise of the principal debtor to indemnify a surety who had paid the debt. His Honour applied his decision in West and said that there was a bona fide dispute as to who, in equity, was the principal debtor. 55 Before dealing with the facts, I should note that there is some difficulty with the terminology of s 459H(1). The section does not define "debt". Is the situation where at law X owes Y a debt, but X has a right in equity to have Z pay the debt to Y a dispute about the existence of a debt, or has X merely a personal equity against Z? 56 In Re Steel Wing Company Ltd [1921] 1 Ch 349, 355, PO Lawrence J held that "debt" in the corresponding section of the English 1908 Act meant debt at law or in equity as those words had been used in s 80 of the 1862 Act and were only omitted from the 1908 consolidation because of the English Judicature Act which made them unnecessary. The case concerned an equitable assignment of part of a debt and the assignee was held to be a creditor who could seek winding up. 57 The Companies Act 1899 (NSW) s 86 followed English 1862 s 80 and described a creditor as a person who was indebted "at law or in equity". The 1936 Act, s 209 followed the then English section and omitted those words. Even though there was no Judicature Act in NSW at the time, the probabilities are that the legislature, in the light of Re Steel Wing Company did not intend to change the law. Thus, as Hodgson J held in FAI v Southern Cross Exploration NL (No 3) (1986) 4 ACLC 447, 455 and again in Manzo v 555/225 Pitt Street Pty Ltd (1990) 21 NSWLR 1, 8, a creditor in equity is a creditor for the purposes of the Corporations Act. It must follow that a debt due in equity is a debt for the purposes of that Act. 58 However, what is a debt in equity? The Steel Wing case involved an imperfect assignment. That was held to be an equitable debt. Another example is where a defaulting trustee is obliged to restore money abstracted in breach of trust: Ex parte Adamson; Re Collie (1878) 8 Ch D 807, 819; Wickstead v Browne (1992) 30 NSWLR 1, 14. The two cases before Hodgson J are unclear as to the exact nature of the claim, but it would appear that the petitioner was owed a sum of money recoverable only in equity. 59 As Hodgson J pointed out in the Manzo case at p 8, there can only be one creditor in respect of any debt. Thus, if A owes B money at law, the fact that A is a nominee for C or that C is bound to indemnify A, is no answer to the question whether A owes money to B. The only exception may be where A could obtain against B a perpetual injunction to prevent A suing B on the basis of B's unconscionable conduct in seeking to sue A in all the circumstances of the case. 60 Thus, if the only dispute is whether the company has a claim in equity that it be indemnified (or indeed a cross claim against a third person) is not a matter that is relevant to whether there is a dispute about the debt. 61 Mr Blake says, and there is considerable truth in the statement, that it does not really matter what precise analysis one makes of the proposition that at least in equity, the court can between the alleged principal debtor and the alleged sureties work out who, in substance, is the principal debtor, Manzo's case is sufficiently analogous to show that the company has shown that a genuine dispute exists. 62 The facts of the present case are not in the same plight as they were in Manzo's case. Here there was no doubt that when the loan was taken out and when the loan was later increased, the principal debtor was either the company or Rocco: it was not Ludmilla. Furthermore, Ludmilla was never a party to the alleged conversation in which Rocco said that he would borrow and repay the money. Thirdly, there is no evidence that what Rocco said was every carried out. Fourthly, Ludmilla never got any benefit from the loan. 63 Indeed, it would seem that the way the company was structured, there was never any possibility of Rocco lending the company money, any loans would have been by the trustee of the Rocco Reale Family Trust. There is no evidence as to who that trustee is. There is no evidence that Rocco ever lent any money to that trustee. Indeed such of the bank documents that are in evidence show that the money was provided by the bank to the company directly. Indeed there was no evidence from Rocco before the Master at all. 64 As the Master found in [30] of his judgment, there is absolutely no suggestion in the documents that the company was the principal debtor. 65 Furthermore, there is no doubt that the whole of the money that came from the bank was used for the company's business as so-called working capital. 66 The company sought to rely on marrying conversations between the brothers in 1997 to which Ludmilla was not a party with the divorce settlement between Ludmilla and Rocco to which the company and Nicola were not parties and then saying that in some way or other, everyone assumed that the substance of the matter was that Ludmilla assumed the debt with the Strathfield property and that she had no right of indemnity against the company. 67 The Master held that there was sufficient for him to hold that there was a genuine dispute on this ground. 68 The finding of the Master, even in a case where there is no oral evidence must be accorded great weight and respect, but the judge is conducting an appeal by way of rehearing and must address the issues raised. 69 The Master deals with this aspect of the case in [28]-[32] of his reasons. In [28] he cites West's case as authority for the proposition that the court can have regard to extrinsic evidence. This is true, but whether one should prefer the House of Lords' decision in Hollier is a good question. The Master also does not differentiate between the position qua the principal creditor and that as between the sureties inter se. 70 The Master then says that the recital in the property settlement was equivocal. He then notes that there is nothing in the company accounts to suggest that Rocco was the principal debtor. 71 The gravamen of the judgment is in [32]: "However, when one has regard to the arrangements between the brothers to the effect that Rocco Reale was to personally repay the loan and that it was for the purpose of him providing a similar level of funds to the company as had been provided by his brother, the truth and substance of the transaction would tend to suggest that the principal debtor was Rocco Reale." 72 With respect, to reach the view that the material would "tend to suggest" is insufficient for the company's purpose. However, putting semantics aside, the Master, with respect, does not fully analyse the evidence and does not take into account the factors I have set out above which point in the opposite direction, particularly the lack of evidence of acquiescence of Ludmilla in any such arrangement. 73 The onus was on the company to satisfy the court. I do not consider it did so. 74 C. The estoppel is said to arise out of proceedings 1430 of 2002. These were proceedings commenced by Ludmilla and Rocco against the company. The company submits that the settlement of these proceedings was on the basis that the defendant would not enforce any right of indemnity in respect to the bank loan. 75 The Master rejected that there was any waiver or conventional estoppel or estoppel in pais involved. He then turned to equitable estoppel. He referred to the judgment of Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, 428-9, where his Honour set out six elements of the equitable estoppel relied on in that case. 76 The Master refers to the statement of the solicitor in Exhibit "A" that Ludmilla would have $268,000 to support herself and four children as a representation that she had no other assets and thus that she recognised that she had no right to any indemnity. 77 The learned Master said at [24]: "Although I accept that minds may differ I would have thought that the statement was not too ambiguous and that there may be room for an argument for promissory estoppel. Detriment is obvious and reliance would be arguable." 78 Mr Gray is very critical of this statement. First, he says that the learned Master has not addressed the real question which is not whether there is room for argument about a point, but whether the court is satisfied that there is a genuine dispute, or at least a plausible contention requiring investigation. 79 Next he says that there could never be a promissory estoppel as Ludmilla never made any promise. The type of estoppel spoken about by Brennan J in the Waltons case was rather an extended version of proprietary estoppel. This could not exist in the instant case as there had been no acquiescence by Ludmilla on which the company could or did rely to its detriment. Indeed none of the six elements referred to by Brennan J exist. 80 Next he submits that it is most significant that the Master actually found that no-one turned his or her mind at the relevant time to whether there was a right of indemnity. This being so, it is difficult to conclude that a representation was made. In any event, it is difficult to see how any representation that was made in the terms of settlement was made to the company. 81 Mr Blake valiantly submitted that the learned Master had stated the relevant legal principles and applied them. However, with respect, the submissions of Mr Gray are to my mind almost entirely valid. 82 D. It follows that the appeal should be allowed and the orders of the Master set aside. The respondent company must pay the appellant's costs both before me and before the Master, but may, if qualified, have a certificate under the Suitors Fund Act 1951 with respect to the costs before the Master. I extend the time for compliance with the statutory demand to 8 August 2003. The exhibits should remain with the file. ********************** Last Modified: 07/28/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.