New South Wales Supreme Court CITATION : Fifth Estate Holdings Pty Limited v Anthony James Gee [2008] NSWSC 1052 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 19 September 2008 JUDGMENT OF : Hammerschlag J EX TEMPORE JUDGMENT DATE : 19 September 2008 DECISION : The statutory demand dated 20 March 2008 directed by the defendant to the plaintiff is set aside. The defendant to pay the plaintiff's costs of the proceedings. CATCHWORDS : CORPORATIONS – statutory demand – application by plaintiff to set aside the defendant's statutory demand under s 459G of the Corporations Act 2001 (Cth) – the defendant alleges an agreement between the parties under which the defendant is entitled to be paid consultancy fees – the plaintiff denies the existence of any agreement, or alleges a failure of consideration or performance by the defendant –statutory demand accordingly set aside on grounds that genuine dispute established LEGISLATION CITED : Corporations Act 2001 (Cth) CASES CITED : Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 24 ACSR 353 Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC 411 PARTIES : Fifth Estate Holdings Pty Limited ACN 099 306 484 Anthony James Gee FILE NUMBER(S) : SC 2370/2008 COUNSEL : D.A.C. Robertson (Plaintiff) G.B. Carolan (Defendant) SOLICITORS : Osbornes Lawyers (Plaintiff) - 3 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST HAMMERSCHLAG J 19 SEPTEMBER 2008 2370/2008 FIFTH ESTATE HOLDINGS PTY LTD v ANTHONY JAMES GEE EX TEMPORE JUDGMENT 1 HIS HONOUR: This is an application under s 459G of the Corporations Act 2001 (Cth) to set aside a statutory demand dated 20 March 2008 which the defendant directed to the plaintiff claiming $31,680, described in the demand as "Monthly consultancy fees since August 2007 @ $A3,960.00 per month". 2 The origin of this dispute emerges from the affidavits of Mr David Victor Cam on behalf of the plaintiff and Mr Anthony James Gee, the defendant. That affidavit evidence discloses that Mr Gee asserts that an agreement was entered into between him and the plaintiff company under which the plaintiff company would, in the context of an investment which the defendant was making in a related entity called Perfectus, be paid a monthly consultancy fee. 3 The defendant relies on a conversation which is set out in paragraph 5 of his affidavit of 4 June 2008 in which he says that the following exchange took place: Cam: "Hi Tony it is David here. Mate I have sent you an email can you attend to payment." Gee: "Yes, but in relation to the Fifth Estate Holdings investment in Perfectus I would like Fifth Estate to retain me as I can bring skills to the table in relation to the investment and in preparation for a sale or float" Cam: "That is fine, what were you thinking?" Gee: "At your direction I can attend meetings and have input as to the strategy and get paid a small consultancy fee." Cam: "Yes, how much were you looking for?" Gee: "Say, $4,000 per month" Cam: "OK, I'll organise Fifth Estate Holdings to transfer that each month" 4 Shortly after that conversation the defendant sent a letter to Mr Cam at Fifth Estate Holdings attaching the second instalment cheque for the share purchase in Perfectus/Fifth Estate Trust confirming that the balance of $NZ375,000 would be paid on 15 February 2006. The letter went on to say: "The following are the account details for monthly fees and agreed 'special project fees'." 5 Subsequent to that date the share purchase moneys were paid on 23 January 2006. 6 Mr Cam responds to paragraph 5 of Mr Gee's affidavit, denying the conversation. He says that there was no agreement to pay any consultancy fee for services to be provided to the plaintiff and that the plaintiff's name was used simply to facilitate convenience of dealings between the parties. He also says that the plaintiff received no consultancy services from the defendant and no other benefit or consideration from him, nor has the defendant performed any consultancy services for Perfectus or a trust which held the Perfectus investment. 7 It has been said on numerous occasions that the threshold in proceedings such as these in which a plaintiff alleges the existence of a genuine dispute between the parties is a low one. 8 In Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 24 ACSR 353 at 365 the Full Court of the Federal Court said that: "In our view a 'genuine' dispute requires that: · the dispute be bona fide and truly exist in fact; · the grounds for alleging the existence of a dispute are real and not spurious, hypothetical, illusory or misconceived." 9 In Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC 411 at [23] Barrett J said that: "The company will fail … only if it is found upon the hearing of its s 459G application that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted. Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow." 10 In the present case I am satisfied that the plaintiff has met that low threshold both with respect to the existence of the agreement and with respect to the failure of consideration or performance of it which the plaintiff alleges. 11 In those circumstances the Court must set aside the statutory demand and the order of the Court is accordingly that the statutory demand dated 20 March 2008 directed by the defendant to the plaintiff is set aside. 12 The defendant is to pay the plaintiff's costs of the proceedings. ********** 07/10/2008 - typographical error - Paragraph(s) cover page DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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