Supreme Court New South Wales Medium Neutral Citation: In the matter of Wollongong Truck & Machinery Centre Pty Limited [2012] NSWSC 811 Hearing dates: 3 July 2012 Decision date: 03 July 2012 Jurisdiction: Equity Division Before: Young AJ Decision: The plaintiff's summon is dismissed with costs. Catchwords: CORPORATIONS - Statutory demand - application to set aside - application dismissed Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund (1996) 70 FCR 452; 21 ACSR 581; 14 ACLC 1703 Rowland v Divall [1923] 2 KB 500 Category: Principal judgment Parties: Wollongong Truck & Machinery Centre Pty Limited (Plaintiff) One Steel Recycling Pty Limited (Defendant) Representation: Counsel: J R Young (Plaintiff) G McDonald (Defendant) Solicitors: Good Legal Lawyers (Plaintiff) File Number(s): 2011/301965 Judgment - Ex tempore 1This is an application to set aside a statutory demand made under s 459G of the Corporations Act 2001 (Cth). As is well known, the scheme of Part 5.4 of the Corporations Act is for a speedy resolution of claims made by alleged creditors to companies which appear to be possibly insolvent. That is, a demand is made and if, at the end of the period for compliance with the demand, there is no compliance, the company may be wound up in insolvency: see s 459F. 2Under s 459G, the company that received a statutory demand may, provided it acts within twenty-one days, apply to set aside the statutory demand by filing an application to this court or the Federal Court together with an affidavit supporting the application. 3There is no doubt that an application was made in time. A problem is that the affidavit in support is, with respect, so very poorly drawn that it is hard to see how it comes within the requirements of the statute. I think it just does, but the court does require solicitors who prepare affidavits of this nature actually to make what is there in that affidavit admissible, and not to prejudice the client's position by making statements such as, "The other side knew certain things" rather than setting out the facts and circumstances which would constitute such knowledge. 4In the leading case of Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund (1996) 70 FCR 452; 21 ACSR 581; 14 ACLC 1703, a case which has been followed in this Court constantly, it was made clear that, unless the affidavit fairly and squarely sets out the material by the company that says the statutory demand should be set aside, then there has been no compliance with the preconditions in s 459G(3) of the statute and the application must fail. 5In the instant case the creditor alleges that this affidavit does not comply with the Graywinter principle and, accordingly, the application must fail ab initio. The reason for that is that a fair reading of the affidavit would give one the impression that the point being made is that the plaintiff was involved in the subject transaction merely as agent for an undisclosed principal and, accordingly, the creditor's claim was only against the principal (a company now in liquidation) and not against the agent. 6That matter also seemed to be the prime thrust of the written submissions put in by the company. However it is true there are some very slight indications in the affidavit that there is also another point being made. That other point was the one which Mr Young of counsel, who appeared for the company, enunciated in his oral submissions today, that is that this was not an ordinary contract for the sale of goods. Under an ordinary contract for the sale of goods, payment of the price and delivery of the goods are concurrent conditions. If the concurrent conditions are not satisfied on one side then the other side is entitled, in the case of the purchaser, to get its money back on a total failure of consideration. 7Mr Young said in this particular case delivery of the things were different and I have to spend a little time dealing with the actual transaction to make what I am about to say sensible. 8The dispute is over a truck which was apparently owned by a company, AWS, subject to a charge to the National Australia Bank. The defendant wanted to buy the truck for $156,000 plus GST, which totals $171,600. 9For some unexplained reason, the plaintiff says that AWS asked it to be its agent in the transaction and that the deal between AWS and the plaintiff was that the plaintiff would collect the purchase money, it would pay out the National Australia Bank, the amount involved in this case was $147,738.16, pay the GST of $15,600 and $1,000 to itself as its fee. There was then some $7,261 left over and that was paid to the wife of the proprietor of AWS. So that the defendant paid $171,600 to the plaintiff. The plaintiff then dispersed that money as I have indicated. 10The truck was never in the physical possession of the plaintiff. It was thought to be with people called Yellow Bins or Orange Bins. The argument put forward by Mr Young was it was made clear between the plaintiff and the defendant that the plaintiff never had possession of the truck, the plaintiff was not under any obligation to deliver the truck, but that the defendant had taken the risk of not being able to take delivery. 11There is very little evidence to support that proposition. It is clear that everyone knew the truck was not in the plaintiff's yard and that everyone thought that the truck was with Orange Bins, but the matter does not go any further than that. Even if there was that sort of understanding, it would not make much difference to the liability of the plaintiff. 12It is quite clear that, when there is a contract for the sale of goods, the obligation is to vest the title of the truck in the purchaser. If the plaintiff does not have actual title because it is stolen, and actually hands the physical possession of the truck over to the purchaser, there is still a valid claim in the purchaser for money had and received on the total failure of consideration as is made quite clear by the leading English case of Rowland v Divall [1923] 2 KB 500. 13In the present case, one has a contract for the sale of a truck. The purchase money is paid. Title to the truck is to be transferred by delivery of physical possession of the truck. That never happened. There is thus the clear case of the purchaser being entitled to have its money back. 14Now it is very unfortunate on the part of the plaintiff because the plaintiff seems to have been defrauded by the activities of AWS. I use the word "seems" advisedly because I do not know the full facts. 15The plaintiff has been the conduit of money which has gone to the National Bank or to the Commonwealth Tax Office and it ends up, if I can use the colloquial expression, "holding the bag" and having to refund the money to the purchaser. 16It is obviously very unfortunate that a relatively innocent party should be in that situation, but the way in which the law applies to these sorts of transactions, that is the result. 17I cannot see that there is any genuine dispute within the meaning of s 459H of the Corporations Act which would warrant me setting aside the statutory demand. 18Accordingly, in my view, the plaintiff's summons should be dismissed with 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. Decision last updated: 17 July 2012