Old Kiama v Cliffshaw [2009] NSWSC 1349

New South Wales Supreme Court

CITATION : Old Kiama v Cliffshaw [2009] NSWSC 1349

HEARING DATE(S) : 17/11/09

JUDGMENT DATE : 7 December 2009

JURISDICTION : Equity Division

JUDGMENT OF : Macready AsJ at 1

DECISION : Paragraph 28

CATCHWORDS : Corporations Law. Application to set aside statutory demand under s 459G of the Corporations Act. No dispute established. Proceedings dismissed. No matter of principle.

PARTIES : Old Kiama Wharf Company v Cliffshaw Pty Ltd

FILE NUMBER(S) : SC 3782/09

COUNSEL : Mr R Freeman for plaintiff Mr N Cotman SC for defendant

SOLICITORS : Colbron & Associates Lawyers for plaintiff Dibbs Barker for defendant

- 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Associate Justice Macready

Monday 7 December 2009

3782 of 2009 Old Kiama Wharf Company Pty Ltd v Cliffshaw Pty Ltd JUDGMENT 1 HIS HONOUR: The plaintiff makes an application under the Corporations Act 2001 (Cth) ('the Act') for an order to set aside a statutory demand served on it by the defendant. The statutory demand is dated 30 June 2009 and seeks recovery of a judgment debt entered in favour of the defendant against the plaintiff on 21 March 2007 in the amount of $1,270,257.53. 2 The plaintiff says that there is a genuine dispute as to whether the debt is due and payable as a result of what is described as a forbearance agreement. In the alternative, the plaintiff seeks to set aside the statutory demand under s 459J(1)(b) of the Act for some other reason, namely, unconscionable circumstances which were said to exist in respect of the creation of the debt and its attempted enforcement. Background 3 In late 2000 the defendant, Cliffshaw Pty Ltd, acquired leases over a property known as "Kiama Wharf" in New South Wales. The defendant carried out renovation work to the existing takeaway premises which included the design and construction of a new restaurant premises. 4 In or about 2001, the then proprietor of the defendant, Mr Garry William Day, had an arrangement with the proprietor of the plaintiff, Christina Jackman, to operate the restaurant business for the plaintiff at the Kiama wharf. 5 By letter dated 23 August 2001, the Department of Lands New South Wales wrote to Mr Day advising him the then leases would expire on 31 July 2009 and that no new leases could be entered into or negotiated prior to the expiry of the lease. 6 The Department of Lands in a letter dated 8 July 2003 reconfirmed its advice to Mr Day that no leases would be entered into or negotiated prior to the expiration of the 31 July 2009 lease, at which time a new lease would be offered by way of public tendering process. 7 In July 2004, Mr Day transferred the leases over the properties to the plaintiff for a sum of $1,060,000. That sum was secured by way of mortgage over the subject leases to the defendant. Thereafter the plaintiff continued to operate the business without Mr Day's involvement. 8 The leases were due to expire on 31 July, 2009. The plaintiff alleges that Mr Day gave a warranty to Christina Jackman that the plaintiff could proceed to negotiate extensions of the leases with the Department of Lands. Some time after settlement of the sale the plaintiff found out that the Department of Lands had already indicated to the defendant in August 2001 and in July 2003 that no new leases would be entered into or negotiated prior to expiry of the lease and that at that time the lease would be offered by way of a public tendering process. 9 After acquiring the leases in July 2004, the plaintiff made submissions to the Minister of the Lands for the grant of a new 20 year lease to commence on expiry of the existing leases on 31 July 2009. 10 In August 2005, the Minister refused to negotiate and he advised that the leases would be put to public tender as and from 31 July 2009. 11 In early 2006, the Crown Lands policy for marinas and waterfront commercial tenures changed to permit negotiations to take place with existing leaseholders without the need for public tender. 12 On 21 March 2007, the defendant obtained a money judgment against the plaintiff in the sum of $1,270,257.53 which is the basis for the statutory demand. The additional sum of $270,257.53 is interest on the original loan. At that stage the defendant obtained orders for possession of the premises at Kiama Wharf with leave to issue writ of possession. 13 The plaintiff has recently been able to obtain a new 20 year lease with the Department of Lands which will run from the expiry of the existing leases. The new lease is not subject to the mortgage that was granted over the old leases. On the basis that the old leases had almost expired and that the new leases had been granted, the Court granted a permanent stay of the defendant's orders for possession and the issue of a writ of possession. The judgment therefore remains in force only as to the money amount. Genuine dispute