Jjes v Sino-Bay [2008] NSWSC 989

New South Wales Supreme Court

CITATION : Jjes v Sino-Bay [2008] NSWSC 989

HEARING DATE(S) : 22/09/08

JUDGMENT DATE : 22 September 2008

JURISDICTION : Equity

JUDGMENT OF : Macready AsJ at 1

EX TEMPORE JUDGMENT DATE : 22 September 2008

DECISION : Demand set aside.

CATCHWORDS : Corporations law. Application to set aside statutory demand under s 459G of the Corporations Act. Genuine dispute about whether debt paid. Demand set aside. No matter of principle.

PARTIES : Jjes Pty Limited v Sino-Bay International Investment Pty Ltd

FILE NUMBER(S) : SC 2371/08

COUNSEL : Mr DC Price for plaintiff Mr RW Tregenze for defendant

SOLICITORS : Angelo Andresakis for plaintiff Griffith Nicholson Lawyers for defendant

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

MACREADY AsJ

MONDAY 22 SEPTEMBER 2008

2371/08 JJES PTY LIMITED v SINO BAY INTERNATIONAL INVESTMENTS PTY LIMITED

JUDGMENT 1 HIS HONOUR: This is an application under section 459G of the Corporations Act in respect of the setting aside of a statutory demand served by the plaintiff on the defendant dated 22 February 2008. The demand was for the sum of $85,400 and the amount claimed was due and arose out of a sale of a 7-11 store between the parties in March 2007. 2 The purchase price of the store was $206,000 and it is common ground that the plaintiff had paid an amount of $120,600 leaving a balance that was owing of $85,400 at the start of July 2007. 3 The plaintiff asserts that that an amount was paid to the defendant in cash either on or about or several days after 9 July 2007. 4 It is important that the parties understand what it is that the Court has to decide on this application. The Court here is not determining whether or not the $85,400 was paid. Under the terms of the section the Court has to decide whether there is a genuine dispute about whether the $85,400 was paid. 5 The nature of this enquiry was carefully elucidated it by McClellan CJ in Eq in Eyota Pty Limited v Hanave Pty Limited 12 ACSR 787 where his Honour said: "Dispute": "It is, however, necessary to consider the meaning of the expression 'genuine dispute' where it occurs in s 459H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the 'serious question to be tried' criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the Court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit 'however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be" not having 'sufficient prima facie plausibility to merit further investigation as to (its) truth' (cf Eng Mee Yong v Letchumanan (1980) AC 331 at 341), or 'a patently feeble legal argument, or an assertion of facts unsupported by evidence' (cf South Australia v Wall (1980) 24 SASR 189 at 194). But it does mean that, except in such an extreme case, a Court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. In Mibor Investments (at ACLC 1066; ACSR 366-7) Hayne J said, after referring to the state of the law prior to the enactment of Division 3 of Part 5.4 of the Corporations Law , and to the terms of Division 3: 'These matters, taken in combination, suggest that at least in most cases, it is not expected that the Court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the Court conclude that there is a dispute and that it is a genuine dispute.' In Re Morris Catering (Australia) Pty Limited (1993) 11 ACLC 919 at 922; (1993) 11 ACSR 601 at 605 Thomas J said: There is little doubt that Division 3 . . . prescribes a formula that requires the Court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the Court will examine the merits or settle the dispute. The specified limits of the Court's examination are the ascertainment of whether there is a "genuine dispute" and whether there is a "genuine claim". It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it) the Court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another. The essential task is relatively simply - to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it).' I respectfully agree with those statements." 6 The question is, as put on behalf of the defendant, that the Court cannot accept uncritically every statement in an affidavit, "however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statement by the same deponent or inherently improbable in itself." 7 The circumstances are that the plaintiff and her husband have sworn as to the handing over of the $85,400 cash. Having sworn that in their affidavits that is an important matter. If at some stage those affidavits turned out to be false, or indeed if the affidavits filed on behalf of the defendant on this particular issue turn out to be false, then there are remedies in the criminal law for making false affidavits. This leads to people being sent to gaol for making false affidavits. 8 Putting that aside, the question is what are the circumstances in which the $85,400 has been paid. 9 A number of circumstances have been advanced on behalf of the defendants to suggest that the testimony is quite improbable. They refer to the fact that in the initial affidavit it was said the payment was made on or about 9 July 2007. It is plain from the plaintiff's affidavit that the sum of $70,000 was withdrawn from the cheque account used by the plaintiffs in the business on 9 July. Once the defendants filed evidence it became apparent that in fact on 9 July 2007 the defendants were out of the country, they were overseas in China, and did not return until 12 July 2007. 10 The affidavits filed on behalf of the defendants referred to the fact that a number of days after July 2007 there was a meeting at which the money was handed over. Strangely at that meeting no receipt was given in respect of the handing over of money, in contrast to the situation on exchange of contracts when a receipt was given to the defendant. 11 There is another letter which has been written by the solicitor then acting for the plaintiff which is dated 9 December 2007 which says that on 9 July 2007 the sum of $70,000 was withdrawn and paid and $15,000 had been paid following the exchange of contracts. There are clear inconsistencies on the second statement made but it is not really the job of this court to resolve such inconsistencies. 12 Another matter put forward as somewhat improbable is that there has been no evidence given yet in the evidence of the plaintiffs as to what prompted either the withdrawal of the sum of $70,000 some days before the actual alleged handing over of the amount or to cause the meeting to occur. 13 In the circumstances, one important matter which seems to be established on behalf of the plaintiffs is the withdrawal of the $70,000 from the bank account. Plainly a large sum amount of money close to the amount in question was withdrawn and that is clear on the bank account statements. This evidence I think goes to support the plaintiffs claim and takes it just outside the suggestion that this was merely as assertion without any foundation. 14 In the circumstances, it seems to me that there is a genuine dispute about the amount owing and claimed in the statutory demand. Accordingly, I make order 1 in the originating process.