New South Wales Supreme Court CITATION : A.M. Retail Solutions Pty Limited v Hainbury Pty Limited [2008] NSWSC 926 HEARING DATE(S) : 18 August 2008 JUDGMENT OF : Hammerschlag J EX TEMPORE JUDGMENT DATE : 18 August 2008 DECISION : Statutory demand set aside. The defendant to pay the plaintiff's costs. CATCHWORDS : CORPORATIONS – creditor's statutory demand – application to set aside statutory demand under s 459G of the Corporations Act 2001 – claim for rent – plaintiff asserts entitlement to abatement – genuine dispute raised – demand set aside LEGISLATION CITED : Uniform Civil Procedure Rules CASES CITED : Sewmail (Australia) Pty Ltd v Booby Traps Pty Ltd (1997) 23 ACSR 339 Solarite Air Conditioning Pty Limited v York International Australia Pty Limited [2002] NSWSC 411 PARTIES : A.M. Retail Solutions Pty Limited (ACN 103 251 038) Hainbury Pty Limited (ACN 003 811 685) FILE NUMBER(S) : SC 3176/2008 COUNSEL : A. Combe (Plaintiff) A.D Crossland (Defendant) SOLICITORS : Jackson Lalic Lawyers (Plaintiff) Turks Legal (Defendant) - 4 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST HAMMERSCHLAG J 18 AUGUST 2008 3176/2008 A M RETAIL SOLUTIONS PTY LIMITED -V- HAINBURY PTY LIMITED EX TEMPORE JUDGMENT 1 HIS HONOUR: By statutory demand dated 22 May 2008 the defendant demanded from the plaintiff three amounts for rental in respect of premises known as the Fruit Barn. The amount claimed included $12,834.31 for rent for the month of March 2008 and two amounts of $12,175.79 for rent due on 1 April 2008 and 1 May 2008 respectively as well as interest. The total amount claimed was $37,443.65. 2 On 16 May 2008 the defendant obtained default judgment against the plaintiff in the Campbelltown Magistrate's Court for the amount of $12,834.31 and the demand relied on the judgment in respect of it. That judgment has however been set aside. 3 By Originating Process dated 10 June 2008 the plaintiff moved to set the demand aside on the basis that there was a bona fide dispute arising out of circumstances deposed to in the affidavit of Mark Magar of 10 June 2008. Mr Magar describes himself as a loss prevention officer of the plaintiff. 4 Mr Combe of counsel for the defendant objected to the admission of the affidavit because Mr Magar is not on the face of it, nor on the face of the material which he tendered through an affidavit of Mr Douglas Richard George of 8 August 2008, one of the persons described in Uniform Civil Procedure Rules, r 35.3(1)(b), that is a member or officer of the plaintiff corporation. 5 However, the deponent does not depose to matters which are relevantly the subject of authority but rather to factual matters concerning the destruction of the premises by storm and heavy rain damage in early 2007. I admitted that evidence provisionally and then unconditionally. 6 Mr Magar says that in early 2007 the premises were partially destroyed by storm and heavy rain damage. Apart from considerable damage to the premises, there was damage to the plaintiff's stock and equipment on the premises. He says further that by about February 2008 the lessor had failed to repair the storm and heavy rain damage which by that time 50 per cent of the premise were unusable. It was necessary to close the premises during periods of rain because of the leaking roof and water damage to the premises. 7 He also says that there was flood and rain damage to damaged stock in the approximate sum of $15,000 and equipment in the approximate sum of $12,000. Those latter amounts which are intended presumably to be the basis of a cross-claim or countervailing claim. However the plaintiff provides insufficient information in accordance with the authorities to enable me to assess them and I shall accordingly disregard them: see Sewmail (Australia) Pty Ltd v Booby Traps Pty Ltd (1997) 23 ACSR 339 at 343. 8 Clause 4.1 of the lease (which is in evidence) provides that: "4.1 ABATEMENT OF RENT AND SUSPENSION OF COVENANT TO REPAIR In the case of total or partial destruction of or damage to the premises by fire flood storm tempest explosion riot civil commotion war or otherwise by inevitable accident or act of God and without any neglect or default on the part of the Lessee whereby the Premises shall be rendered wholly or partially unfit for occupation or use by the Lessee in the conduct of its business payment of the rent and other monies hereby reserved or a proportionate part thereof according to the extent of the damage sustained and the covenants to repair herein contained so far as they relate to any such destruction or damage shall be suspended until the Premises shall have been restored and again put in a proper condition fit for use by the Lessee for the purpose of its business but nothing herein contained or implied shall oblige the Lessor to restore the Premises or to restore the same according to the former specifications thereof so long as the layout and dimensions of the Premises are not substantially different from the layout and dimensions of the Premises prior to such damage or destruction and the materials employed therein are not inferior quality or aesthetic appearance to the materials formerly used therein." 9 Clause 4.5 of the lease is an arbitration clause. It is in the following terms: "4.5 ARBITRATION OF DISPUTES If any dispute question or difference shall arise between the parties as to the meaning operation or effect of the preceding clauses of this Part or as to the rights or liabilities of either of the parties hereto under such clauses such dispute question or difference shall be referred to the arbitration of an independent arbitrator to be appointed by the President or by the person for the time being fulfilling the office of President of the Law Society of New South Wales whose decision or award shall be conclusive and binding on the parties and any such submission to arbitration shall be deemed to be a submission to arbitration within the meaning of the Commercial Arbitration Act 1984 and subject to the provisions of that Act an award pursuant to a reference to arbitration in accordance with the provisions hereof shall be a condition precedent to any action or other legal proceedings between the parties relating to such dispute question or difference." 10 The plaintiff's case is that there should be an abatement of rent which it says it is not presently able to quantify. It says that if there is a dispute about the amount it is properly to be the subject of an arbitration for which there is provision in cl 4.5 of the lease. 11 Mr Combe puts that the affidavit evidence does not go so far as to put the plaintiff in a position where no rental is payable. That may be so, but at present I accept that an exercise of exactitude in determining the particular abatement of rent, particularly when there is an arbitration provision, is not something to which the plaintiff is to be put at this stage of proceedings of this type. There is a dispute with respect to the amount the defendant claims in its demand. 12 The test has often been stated that a plaintiff must meet in proceedings such as these, and it is not a high one, so long as there is a single issue worthy of further investigation the plaintiff is entitled to succeed. See for example: Solarite Air Conditioning Pty Limited v York International Australia Pty Limited [2002] NSWSC 411 at [23]. 13 It matters not that I might have thought that the plaintiff's claim has certain inconsistencies, deficiencies and infelicities of expression. 14 Additionally, so far as the demand relied on the judgment in the local court at Campbelltown, it now cannot do so because the judgment has been set aside. 15 I am satisfied that in the particular circumstances of this case the plaintiff has met the low threshold required to establish the existence of a genuine dispute. 16 The statutory demand will accordingly be set aside. 17 The defendant is to pay the plaintiff's costs. 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.