Integrex Pty Ltd v Charara [2010] NSWSC 1131

New South Wales Supreme Court

CITATION : Integrex Pty Ltd v Charara [2010] NSWSC 1131

HEARING DATE(S) : 28 September 2010

JUDGMENT DATE : 28 September 2010

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : Palmer J

EX TEMPORE JUDGMENT DATE : 28 September 2010

DECISION : Statutory Demand set aside.

CATCHWORDS : CORPORATIONS – STATUTORY DEMAND – whether Plaintiff has demonstrated it has genuine claim to offset whole of Defendant's debt – no question of principle.

LEGISLATION CITED : Conveyancing Act 1919 (NSW) – s 12 Corporations Act 2001 (Cth) – s 459H

CATEGORY : Principal judgment

PARTIES : Integrex Pty Ltd – Plaintiff Jamal Charara - Defendant

FILE NUMBER(S) : SC 2010/152993

COUNSEL : D.P. O'Connor (Plaintiff) In person (Defendant)

SOLICITORS : Mercantile Legal (Plaintiff) In person (Defendant)

2010/152993 Integrex Pty Ltd v Charara

JUDGMENT – Ex tempore

28 September, 2010

1 This is an application under s 459G Corporations Act 2001 (Cth) to set aside a Statutory Demand served by the Defendant, Mr Charara, on the Plaintiff, Integrex. The Statutory Demand was served on 3 June 2010. There is no issue that Integrex's Originating Process and the supporting affidavit of its director, Mr N. Guest, were filed and served within the time prescribed by s 459G(2). 2 By the Statutory Demand, Mr Charara requires payment of a debt of $3,200 which was originally owed by Integrex to a Mr Lyndon Konneh, and which Mr Charara says was assigned to him by Mr Konneh on 29 January 2008. 3 When the application came on for hearing this morning, Mr D.P. O'Connor of Counsel appeared for Integrex and Mr Charara appeared in person. In correspondence with Integrex's solicitors, Mr Charara describes himself on his business letterhead thus: "A high profile & very experienced self represented litigant in the Local Court, District Court, Court of Appeal, The Federal Court and The High Court of Australia." 4 Mr Charara sought to cross examine Integrex's witnesses. I declined to permit cross examination, explaining that cross examination is not usually permitted in applications of this kind which are concerned with whether the plaintiff has shown a genuine dispute as to the existence of the debt or a genuine offsetting claim. These applications are not a final hearing of the issues raised. From prior perusal of the affidavits filed on both sides, it did not appear to me that the question whether there was a genuine dispute or offsetting claim would be assisted by cross examination. 5 At the conclusion of the evidence and submissions, I gave short reasons why the Statutory Demand should be set aside. The reasons incorporated what I had said to Mr Charara in the course of his submissions. Mr Charara then informed me that he wished to appeal. Accordingly, for the sake of more convenient reference, I now set out, with a little more detail, the reasons for judgment, incorporating what was said in the course of submissions and what was said in delivering judgment. 6 Integrex raises several grounds upon which the Statutory Demand ought to be set aside but it is necessary to deal with only one of them, namely, that it has an offsetting claim which extinguishes the debt claimed by Mr Charara. 7 The relevant facts and circumstances are as follows. 8 On 22 January 2008, in proceedings SYG 310/2007 in the Federal Magistrates Court between Integrex and Mr Konneh, Integrex was ordered to pay Mr Konneh's costs of the proceedings. Much later, these costs were taxed at $3,200. 9 On 22 October 2008, in proceedings SYG 1953/2008 in the Federal Magistrates Court between Integrex and Mr Konneh, Mr Konneh was ordered to pay Integrex's costs of the proceedings. Those costs were then taxed at $4,500. 10 In both proceedings Integrex had petitioned for Mr Konneh's bankruptcy, relying upon Mr Konneh's guarantee of a debt owed by Mr Konneh's company to Integrex. 11 On 22 March 2010, according to Integrex, it received notice, although informal, that the debt owing by Integrex to Mr Konneh pursuant to the costs order made on 22 January 2008 had been assigned to Mr Charara. Integrex says that this was the first time it had been informed of the assignment. 12 On the other hand, Mr Charara asserts that the costs debt owing by Integrex to Mr Konneh had been assigned to him by Mr Konneh pursuant to an agreement in writing dated 29 January 2008, and that notice of that assignment for the purposes of s 12 Conveyancing Act 1919 (NSW) was given to Integrex by him on the same day. 13 There is, therefore, a factual issue to be resolved which may well depend upon credit findings, namely, was notice of the assignment given to Integrex for the purposes of s 12 Conveyancing Act on 29 January 2008 or on 22 March 2010. The date of giving notice is important because by s 12 the legal right to a debt or chose in action passes by assignment only from the date of giving notice, and the debt or chose in action assigned is subject to all equities then existing which would have been entitled to priority over the right of the assignee. 14 Integrex says that as at 22 March 2010 it was entitled in equity to set off the debt which Mr Konneh owed to it pursuant to the costs order made on 22 October 2008 against the costs debt it owed to Mr Konneh pursuant to the costs order made on 22 January 2008. If that proposition is correct, then the result would be that as at the date of notice of the assignment, the debt owing by Integrex to Mr Konneh had been extinguished by the debt owing by Mr Konneh to Integrex. If the date of giving notice of the assignment was, in fact, 22 March 2010, then Integrex's proposition is certainly arguable because the two debts arose in proceedings brought by Integrex against Mr Konneh founded upon a guarantee of the same debt. 15 In those circumstances, Integrex has demonstrated that it has a genuine offsetting claim which would extinguish the whole of the debt which is the subject of Mr Charara's Statutory Demand. Accordingly, I ordered that the Statutory Demand be set aside under s 459H(1) Corporations Act. 16 I ordered that the Defendant pay the Plaintiff's costs on the party/party basis.