New South Wales Supreme Court CITATION : C.A. Millner Holdings Pty Ltd v Dobb [2007] NSWSC 995 HEARING DATE(S) : 24 August 2007 JUDGMENT OF : Hammerschlag J EX TEMPORE JUDGMENT DATE : 24 August 2007 DECISION : The statutory demand served by the defendants on the plaintiff dated 8 June 2007 is set aside. The defendants to pay the costs of the application. CATCHWORDS : CORPORATIONS – Application to set aside statutory demand – Terms of alleged oral agreement entered into before loan agreement signed sufficient to establish low threshold required for finding of genuine dispute LEGISLATION CITED : Supreme Court (Corporations Rules) 1999 CASES CITED : Melsom v Velcrete (1995) 20 ACSR 291 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 PARTIES : C.A. Millner Holdings Pty Ltd ACN 108 274 460 Peter Francis Dobb and Kerryn Dobb FILE NUMBER(S) : SC 3300/2007 COUNSEL : M.R. Aldridge SC with R.D. Marshall (Plaintiff) J.T. Johnson (Defendants) SOLICITORS : Zabow Lawyers (Plaintiff) Moray & Agnew (Defendants) - 5 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST HAMMERSCHLAG J 24 AUGUST 2007 3300/2007 C A MILLNER HOLDINGS PTY LTD -V- PETER FRANCIS DOBB AND KERYN DOBB EX TEMPORE JUDGMENT 1 HIS HONOUR: This is an application to set aside a statutory demand for $61,600.00 on the plaintiff in the following terms; "The company owes PETER FRANCIS DOBB and KERRYN DOBB as Trustees for the PETER FRANCIS DOBB SUPERANNUATION FUND ABN 68 428 863 879 of C/o CROSBIE WARREN SINCLAIR, CNR WARABROOK BOULEVARDE AND PACIFIC HIGHWAY, WARABROOK 2302 ("the creditor"): the amount of $61,600.00 ,being the total of the amounts of the debts described in the Schedule. The amount is due and payable by the company." 2 Attached to the demand was an affidavit of Peter Francis Dobb in which he says, amongst other things: 1. "I am one of the Trustees of the Peter Francis Dobb Superannuation Fund ABN 68 428 863 879 and as such am authorised to make this affidavit on the plaintiff's behalf…. 7. The total amount of arrears owing to the plaintiff as at 31 May 2007 is $61,600.00." 3 The debt claimed is asserted to be interest payable under a written loan agreement dated 13 January 2005 signed "Cedric Adrian Millner - Director Millner Holdings Pty Ltd" (sic) and "Peter Francis Dobb – Trustee - Peter Francis Dobb Superannuation Fund". In all its dealings with the defendant, the plaintiff was represented by Mr C.A. Millner. 4 It is not in dispute that at the time the instrument was executed by Mr Millner he had in his possession a document entitled "Financial Table" ("the Table") disclosing attributes of the loan transaction. 5 Paragraph 6 of the Table states as follows: "6. Installments (sic) One instalment (sic) of interest of $19,800.00 three hundred and sixty four days after the draw down of the loan, a second instalment of interest of $19,800.00 seven hundred and twenty nine days after the draw down of the loan and the balance plus interest payable one thousand and ninety four days after the draw down of the loan unless otherwise agreed to from time to time in writing." 6 The plaintiff seeks to impeach the demand on three bases, two of which are closely related. 7 The first basis put is that on its face the demand is made by Peter Francis Dobb and Kerryn Dobb as trustees for the superannuation fund. It is put that when one or more trustees are appointed, they are required to act jointly in the exercise of their duties, powers and discretions: see Melsom v Velcrete Pty Ltd (1995) 20 ACSR 291 at 302 and the authorities cited there. 8 Clause 1.3(c)(4) of the Trust Deed is in the following terms: "if a party comprises two or more persons, the covenants and agreements on their part bind and must be observed and performed by them jointly and each of them severally and may be enforced against any one or any two or more of them." 9 The "Trustee" is defined to mean "the trustee named in this Deed or any other trustee of the Fund for the time being". 10 The preamble makes it clear that Peter Francis Dobb and Kerryn Dobb together are the Trustee. 11 Kerryn Dobb is not a signatory to the loan agreement. Hence, it was put by Mr M.R. Aldridge SC (with whom Mr R.D. Marshall appeared) for the plaintiff, that the agreement purportedly executed on behalf of the Trust was, as a matter of law, entered into between the plaintiff and Mr Dobb only (in his personal capacity). 12 It follows, it was submitted, that there is no privity of contract between the plaintiff and Kerryn Dobb, and no debt owing to her in respect of which she could make a demand. 13 The second (related) basis put is that the affidavit supporting the demand fails to comply with the Supreme Court (Corporations) Rules 1999 in that it does not, as is required, state there is an amount which is "due and payable" to the plaintiff, but says rather that there is an amount "owing". That defect on its own may or may not involve substantial injustice to the plaintiff if the demand were allowed to stand. Because of the view that I take of the matter it is not necessary to decide the question. 14 The third submission is that there is a genuine dispute about the existence of the debt because of an oral agreement between Mr Dobb and Mr Millner. 15 Mr Millner says that before the loan was signed the following conversation took place: "Mr Dobbs: I do not require the interest to be paid until the end of the loan in three years time. Mr Millner: The interest is $59,400. It won't be due to be paid until the end? Mr Dobb: Yes. Mr Millner: Good." The oral agreement in those terms is disputed by Mr Dobb. 16 Mr J.T. Johnson, of counsel, who appeared for the defendant, placed reliance on the decision of the High Court in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at 482-483, to the effect that written agreements take primacy over oral ones. When a written agreement has been executed, a party cannot be heard to say that it is not bound by the agreement recorded in it in the absence of fraud, mistake, misrepresentation or some other equitable relief available to it. 17 The difficulty standing in the way of the defendant is that it is precisely such an equity which the plaintiff claims avails it here. However one juridically characterises it, the plaintiff asserts that the terms of an oral agreement or an understanding or convention reached during the course of the conversation was that interest would, notwithstanding the terms of the written documents, not be paid until the end of the three-year term. 18 Mr Johnson made the point that Mr Millner nowhere says that he did not read the Table which he signed. 19 It seems to me that that submission rather than weakening plaintiff's point strengthens it because it provides an explanation for why the conversation may have taken place. Mr Millner's evidence is that he first looked at the documents and that the conversation took place after that occurrence. 20 On a final hearing, the plaintiff may fail to establish an entitlement to any relief based on the oral conversation. However, the test which a plaintiff needs to satisfy in applications of this type is a low one, not at all difficult to meet. It is sufficient if the plaintiff raises one issue worthy of further investigation which will have, and which has, a sufficient degree of cogency to be arguable. In that event a finding of a genuine dispute must follow. 21 In my view the oral conversation alleged is sufficient for the plaintiff to meet that threshold. 22 In addition, and whilst it is not necessary to finally resolve it, it seems to me that the submission that for the repayment to be a debt due to the defendants, the loan agreement needed to be entered into by both of them as joint trustees, is itself sufficiently arguable to get the plaintiff to the low threshold required for applications of this type. 23 In those circumstances the order of the Court will be that the statutory demand served by the defendants on the plaintiff dated 8 June 2007 is set aside. 24 The defendants are to pay the costs of the application. ********** 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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