In the matter of Leverage Australia Pty Ltd [2012] NSWSC 601

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Leverage Australia Pty Ltd [2012] NSWSC 601 Hearing dates: Thursday 10 May 2012 Decision date: 10 May 2012 Before: Brereton J Decision: Application to set aside statutory demand dismissed with costs Catchwords: CORPORATIONS - Winding up - Statutory demand - application to set aside - (CTH) Corporations Act 2001 s 459G - genuine dispute - COSTS - Statutory demand Legislation Cited: (Cth) Corporations Act 2001, s 459G, s 459H Cases Cited: Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund [1996] FCA 1783 (17 September 1996) Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 787 Category: Principal judgment Parties: Leverage Australia P/L (Applicant) Felicity Gray (Respondent) Representation: Ms Petrie (Applicant) Mr VRW Gray (Respondent) Bruce Horton (Applicant) File Number(s): 2011/ 342089

Judgment (EX TEMPORE) 1HIS HONOUR: The applicant Leverage Australia Pty Ltd applies for an order pursuant to (Cth) Corporations Act 2001, s 459G, setting aside a statutory demand served on it by the respondent Felicity Gray dated 3 October 2011 and served on 5 October 2011, claiming a debt of $55,666 as follows: SCHEDULE Description of the debt Amount of the debt The balance amount due owing and payable by the company as at 1 October 2011 pursuant to the "Terms of Settlement" of proceedings in the Supreme Court of New South Wales No 4222 of 2008 which instrument bears date 30 September 2009 which is payable by company to the creditor as assignee of High Forrest Estate Pty Limited notice in writing of which assignment was given to the debtor by letter date 29 January 2011 which balance is calculated as follows: Principal sum due under clause 1 $200,000 Interest at 10% pa from 3 October 2009 to 1 October 2011 (3 years - $60,000; less 2 days, $109.60) $59,890 ________ $259,890 Less Paid 31 October 2009 $50,000 29 October 2010 $72,000 30 September 2011 Credit interest on $50,000 from 31.10.09 to 01.10.11 (23 months) $9,584 $72,000 from 29.10.10 to 01.10.11 (11 months $6,600 plus 2 days $40) $6,640 _______ $204,224 Balance due 1 October 2011 $55,666 2The application states the grounds relied on as being that there is a genuine dispute between the applicant and the respondent about the amount of the debt, and that there is a defect in the demand which would cause substantial injustice if the demand were not set aside. However, nothing has been advanced in submissions in respect of the second ground. The issue is whether or not there is a genuine dispute between the applicant and respondent about the amount of the debt. 3The debt arises from terms of settlement executed between High Forest Estate Pty Ltd and the applicant on 30 September 2009, which relevantly provided as follows: 1. Subject to paragraph 2, the Defendants will pay to the Plaintiffs $200,000 on 3 October 2009 plus interest under paragraph 3 2. If the Defendants: (a) Before 5.00pm on 7 October 2009 deliver to Smith Hancock by clear readily legible facsimile transmission copies of the First Defendant's profit and loss statements and balance sheet (including all annexures, attachments, notes and related documents) for: (i) the year ended 30 June 2009 (ii) the period 1 July 2009 to 30 September 2009 (b) The Defendants will by 9.00am on 9 October 2009 deliver to Steven Lewis of Slater & Gordon as solicitor for the Plaintiffs duly executed by the First Defendant a fixed and floating charge over the assets and undertakings of the First Defendant to secure to the Plaintiffs due and punctual performance by the Defendants of their obligations under these terms of settlement; (c) If Steven Lewis approves the charge and returns it to the Defendants by 5.00pm on 13 October 2009, the Defendants will by 5.00pm on 16 October 2009 register the charge and deliver to Steven Lewis a certificate of the registration thereof; (d) If the Plaintiffs notify the Defendants in writing by 21 October 2009 that in the reasonable opinion of the Plaintiffs, such a security is not satisfactory, the Defendants will by 28 October 2009 deliver to Steven Lewis of Slater & Gordon a mortgage in registrable form given by the Second Defendant to the Plaintiffs over the property at 24 Candlebush Crescent, Castle Hill, NSW 2154 to secure to the Plaintiffs due and punctual performance by the Defendants of their obligations under these terms of settlement (e) Before 3.00pm on 31 October 2009 deliver to the Plaintiffs a cheque for $50,000 drawn in favour of High Forest Estate Pty Limited (f) Before 3.00pm on 1 October 2010 deliver to the Plaintiffs a cheque for $60,000 plus interest under paragraph 3, $12,000, total $72,000 (g) Before 3.00pm on 1 October 2011 deliver to the Plaintiffs a cheque for $60,000 plus interest under paragraph 3, $6,000, total $66,000. then the Plaintiffs will accept the payments referred to in paragraphs 2(e), 2(f) and 2(g) in full satisfaction of the Defendants' obligations to pay the moneys payable under paragraph 1 and will, on clearance of the cheque referred to in paragraph 2(g), deliver to the Defendants a discharge of the securities held by the Plaintiffs. 3. Where the Defendants are liable or entitled to pay money under paragraph 1 or paragraph 2, the Defendants shall, at the time of payment, pay a further sum equal to interest at the rate of 10% per annum calculated on the amount of the payment made pursuant to paragraph 1 or to paragraph 2(f) or paragraph 2(g) as the case may be from 30 September 2009 to and including the date of payment whether before or after judgment[.] ... 6. The Plaintiffs are entitled to assign their rights under these terms of settlement. 4Although the evidence does not touch on it, there is no suggestion that the requirements of clause 2(a), (b), (c) and (d) were not satisfied. 5On 30 September 2009, Leverage paid the first instalment, referred to in clause 2(e) of the terms of settlement, before the due date referred to in that clause. The second instalment, referred to in clause 2(f), was due on 1 October 2010. Leverage did not pay that sum and on 22 October 2010 High Forest's liquidator, Mr Smith, sent a letter to Leverage, relevantly as follows: I acknowledge receipt of the first instalment of $50,000 which was received by me on 30 October 2009. I note the second payment was due on or before 1 October 2010 in the sum of $72,000 and is now overdue. Please deposit these proceeds into the previously advised liquidation account of High Forrest. The third and final payment of $66,000 is due on or before 1 October 2011. Would you please organise for a remittance advice to be faxed to me as notification of each instalment payment. 6I have rejected, on the principle in Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund [1996] FCA 1783 (17 September 1996), evidence that was sought to be adduced of a conversation said to have taken place on or shortly after 22 October 2010 which the respondent sought to rely on as founding some waiver or release. 7On 29 October 2010, Leverage paid the second instalment of $72,000. On 27 January 2011, notice was given to Leverage in writing that High Forest's rights under the terms of settlement had been assigned to the defendant. On 29 September 2011, Leverage paid the defendant the sum of $66,000 referred to in paragraph 2(g) of the terms of settlement. The statutory demand was served on 5 October 2011, and the present application, together with Mr Compton's affidavit, was filed and served on 26 October 2011. 8For there to be a genuine dispute for the purposes of s 459H, the dispute must be a reasonably arguable one [Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 787]. 9The terms of settlement imposed on Leverage an obligation to pay $200,000 on 3 October 2009 plus interest at 10 per cent per annum calculated from 3 September 2009 to payment. By clause 2, High Forest agreed to accept a lesser sum, namely, a total of $188,000 comprised of the three payments to which I have referred, if Leverage complied with the various conditions set out in clause 2. Those conditions included payment by stipulated times on stipulated days of the three instalments. Although the first and third instalments were paid within the time stipulated, it is not in dispute that the second instalment was not. Mr Sullivan sought, in the material that I have rejected, to say that this was in effect due to a mistake on his part, but a mistake on the part of a party bound does not mean that the document does not operate according to its tenor and effect. In short, Leverage did not satisfy the condition in clause 2(f) and, accordingly, High Forest and its assignee was no longer bound to accept the lesser sum in full satisfaction of Leverage's obligations. 10In the material that was rejected under the Graywinter principle, but which I shall address on the alternative footing, lest my rejection of it be considered incorrect, Mr Sullivan deposed to a conversation said to have taken place on or shortly after 22 October 2010 in which he asserts - and, for present purposes, I will accept is sufficient to raise a triable issue of fact - that one Mr Marshall on behalf of High Forest said "payment by the end of the month would be acceptable". However, there is no evidence, nor suggestion of, any consideration that would support a binding agreement to vary the terms of the settlement agreement or release any obligations under it. It could not be suggested that there was detrimental reliance on any such representation, because the default had already taken place before the alleged representation was made. In those circumstances, I cannot see how, even if the evidence were admitted and accepted, the conversation deposed to by Mr Sullivan could have affected the operation of clause 2 of the settlement agreement. 11Accordingly, neither on the basis of Mr Compton's affidavit, nor even on the basis of Mr Sullivan's affidavit were it admitted into evidence, is it established that there is a genuine dispute as to the amount claimed in the creditor's statutory demand. 12Since announcing the reasons I have just given, counsel for the defendant has drawn attention to a defect or misstatement in the schedule, in that it contains a calculation of interest on the principal sum for three years instead of for two years, resulting in an overstatement of the debt by $20,000. The result is that the Court is satisfied that there is no genuine dispute as to the sum of $35,666, which is therefore taken to be the admitted amount for the purposes of s 459H. There is no suggestion of any offsetting claim. Accordingly, the substantiated amount of the demand for the purposes of s 459H is $35,666. 13Pursuant to s 459H(4), I vary the creditor's statutory demand by varying: the interest claimed from $59,890 to $39,890; the total claim before deduction from $259,890 to $239,890; the balance due from $55,666 to $35,666; and, the total amount from $55,666 to $35,666. I declare the demand to have had effect as so varied as from 5 October 2011, on which date it was served on the company. 14I order that the application be otherwise dismissed, with costs, fixed in the sum of $8,000.