Infact Consulting P/L v Kyle House P/L [2005] NSWSC 995

New South Wales Supreme Court

CITATION : Infact Consulting P/L v Kyle House P/L [2005] NSWSC 995

HEARING DATE(S) : 8 September 2005

JUDGMENT DATE : 8 September 2005

JUDGMENT OF : Brereton J

DECISION : Extension of time for compliance with creditors statutory demand pending appeal from Associate Judge's refusal to set aside, refused.

CATCHWORDS : CORPORATIONS - winding up - creditors statutory demand - appeal from Associate Judge's refusal to set aside - application to extend time for compliance pending hearing of appeal - analogous to application for stay pending appeal - where balance of convenience would favour extension - where no arguable case of error.

LEGISLATION CITED : Corporations Act s 459E

CASES CITED : Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589

Infact Consulting Pty Limited (plaintiff) PARTIES : Kyle House Pty Limited (defendant)

FILE NUMBER(S) : SC 2836/05

D Knaggs (solicitor) (plaintiff) COUNSEL : R A Parsons (defendant)

Cross Law (plaintiff) SOLICITORS : Norbert Lipton & Co (defendant)

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BRERETON J

Thursday 8 September 2005

2836/05 Infact Consulting Pty Limited v Kyle House Pty Limited JUDGMENT (ex tempore – revised 19 October 2005) 1 HIS HONOUR: On 18 April 2005 the defendant Kyle House Pty Limited served a creditor's statutory demand under the Corporations Act s 459E on the plaintiff Infact Consulting Pty Limited. Infact made application to set aside the statutory demand, and that application was heard by Associate Justice Macready on 16 August 2005. His Honour decided that there was no genuine dispute as to Infact's indebtedness as claimed in the creditor's statutory demand and no genuine offsetting claim, and dismissed the application. His Honour extended the period for compliance with the demand to a period of twenty-one days after that date. That twenty-one day period expired on Tuesday of this week, 6 September 2005. 2 On 6 September 2005, Infact filed a Notice of Appeal from the judgment of Associate Justice Macready. Although the Notice of Appeal goes into considerably more detail, in substance it alleges that the Associate Judge erred in failing to find that there was a genuine dispute and in failing to hold that there was a genuine offsetting claim. Shortly, it alleges that, as to the first point, the Associate Judge erred in holding that there was no evidence given on behalf of Infact that certain documents, the production of which was said to be a precondition to the operation of the agreement under which Infact's liability arose, had been produced; and, as to the second, that His Honour erred in failing to consider that a claim subsequently brought in the Local Court by Infact against Kyle raised a genuine offsetting claim. 3 Also on 6 September Mr Knaggs, who appears for Infact, appeared before me as duty judge to claim a further extension of the period for compliance with the creditor's statutory demand. I granted that extension up to and including today. Today, Mr Parsons of counsel appears for Kyle and opposes the further extension of the period for compliance. 4 I consider the relevant facts against the background that the Notice of Appeal was initially made returnable on Monday, 12 September 2005, and that were I minded to grant the extension sought, I would do so up until and including 12 September 2005 and place the matter in the Corporations List that day, in the expectation that the appeal could be heard and determined that day and, in the unlikely event that it could not, that the Corporations Judge could then consider whether a further extension should be granted and, if so, what terms should be imposed. 5 Given that without a further extension the utility of the appeal would be much reduced, given the absence of prejudice to Kyle from a further extension, and given the very short time that would be involved in the extension, the balance of convenience wholly favours the grant of an extension as sought, at least until Monday. 6 However, Mr Parsons rightly reminds me that on an application for a stay pending appeal, which is closely analogous to the present application, the balance of convenience is not the only consideration, and that before one considers the balance of convenience, it is necessary to be satisfied that there is at least an arguable case of error. I am prepared, because of where the balance of convenience lies and the short time frame involved, to approach this matter on the basis that only a fairly faintly arguable case of error would be sufficient to justify granting an extension. 7 Mr Knaggs, who as well as his oral submissions provided helpful written submissions which I will leave with the papers, did not address what I have described as the second ground of appeal, which deals with the offsetting demand. In my judgment, he was quite right not to do so. The nature of the original proceedings before the Local Court which resulted in the terms of settlement under which the present claimed debt arises was such that any claim to the effect that Infact had been overcharged rent would have had to be raised by defence or cross-claim in those original proceedings, in accordance with the principles enunciated in cases such as Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589. I consider the proposition that there was a genuine offsetting claim – which, as I have said, has not been agitated before me by Mr Knaggs beyond its statement in the Notice of Appeal – to be quite unarguable. There is no arguable case of error on that ground. 8 That leaves what might be called the first ground of appeal, which is whether the sum of $8,000 plus or minus the debt or credit shown in the reconciliation statement, which sum became the subject of the statutory demand, is the subject of a bona fide dispute. The argument that it is depends upon the construction of the terms of settlement reached between the parties in the Local Court, which were as follows: "1. Statement of claim dismissed.