Supreme Court New South Wales Medium Neutral Citation: In the Matter of Nahas Pty Ltd [2012] NSWSC 1295 Hearing dates: 19 October 2012 Decision date: 19 October 2012 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Originating process dismissed with costs Catchwords: CORPORATIONS - creditor's statutory demand - whether genuine dispute exists - where court is required to determine a question of contractual construction Legislation Cited: (Cth) Corporations Act 2001, s 459G, s 459H, s 459J Cases Cited: Delnorth Proprietary Limited v State Bank of New South Wales (1995) 17 ASCR 379 BBX Holdings Ltd v American Home Assurance [2007] NSWSC 549 BMDI Tuta Health Care Pty Ltd v CME Medical Australia Ltd [2011] NSWSC 50 In the Matter of Harbour Radio Pty Limited [2012] NSWSC 1290 Category: Principal judgment Parties: Nahas Pty Ltd - Plaintiff Advanced Foundation Solutions (Aust) Pty Limited - Defendant Representation: J T Johnson - Plaintiff S Golledge - Defendant Landerer & Company - Plaintiff Colin Biggers & Paisley - Defendant File Number(s): 12/254563 Judgment (ex tempore) 1HIS HONOUR: By originating process filed on 15 August 2012, the plaintiff Nahas Pty Limited ("Nahas") seeks an order pursuant to (Cth) Corporations Act 2001, s 459G, s 459H and/or s 459J, setting aside a creditor's statutory demand dated 25 July 2012 and served on it by the defendant Advance Foundation Solutions (Aust) Pty Limited ("AFS"), on or about that date. No question has been raised as to the timeliness or adequacy of the originating process. 2The creditor's statutory demand claimed an amount of $250,700.40, described in the schedule as follows: Amount due and payable as at 30 April 2012 under a Deed of Guarantee between the creditor and the debtor executed on 30 March 2012. Under the Deed of Guarantee, the debtor agreed to indemnify Nahas Construction Pty Limited (Nahas Construction) against all liabilities suffered or incurred by reason of any default on the part of Nahas Construction in the performance of a Deed of Settlement and a Deed of Variation between the creditor and Nahas Construction entered into on 27 January 2012 and 30 March 2012 respectively. Nahas Construction has failed to pay the amount of $75,000.00 on or before 30 April 2012 as required by the Deed of Settlement and the Deed of Variation. Further, Nahas Construction has failed to pay the amount of $250,700.40 which became due and payable upon the failure to pay $75,000.00 on or before 30 April 2012. The creditor gave notice of its intention to exercise its right of indemnity provided under the Deed of Guarantee on 2 May 2012. 3On or about 27 January 2012, Nahas Construction Proprietary Limited ("Nahas Construction") and AFS entered into a deed of settlement and release ("the Deed of Settlement"), by which AFS acknowledged that that document comprised the final account statement for a certain subcontract between Nahas Construction and AFS, and Nahas Construction agreed to pay the outstanding balance in the following terms: 6. Payment Plan a) The agreed balance outstanding will be paid as per the below payment plan (failing which the whole of the then unpaid agreed balance outstanding shall become immediately due and payable): Payment No. Payment Amount (in GST) Payment Date Payment 1 $75,000.00 12/02/2012 Payment 2 $75,000.00 27/03/2012 Payment 3 $75,000.00 24/04/2012 Payment 4 $50,000.00 24/05/2012 Payment 5 $25,700.40 26/06/2012 Total $300,700.40 4On 30 March 2012, Nahas Construction and AFS entered into a deed of variation ("the Deed of Variation"), which relevantly provided as follows: 1. On 27 January 2012, [Nahas Construction] and [AFS] entered into a Deed of Settlement & Release, copy of which is attached as Annexure "A". 2. [Nahas Construction] and [AFS] have agreed to vary the terms of the Deed of Settlement & Release, by replacing the payment plan at paragraph 6 of the Deed of Settlement & Release, with the following payment plan: Payment No. Payment Amount (in GST) Payment Date (on or before) Payment 1 $50,000.00 Received on 23 Feb, 2012 Payment 2 $75,000.00 30 April 2012 Payment 3 $75,000.00 31 May 2012 Payment 4 $75,000.00 30 June 2012 Payment 5 $25,700.40 31 July 2012 Total $300,700.40 3. With the exception of the amendment referred to at paragraph 2 above, the terms of the Deed of Settlement & Release remain in full force and effect. 5Also on 30 March 2012, the plaintiff and AFS entered into a deed of guarantee ("the Deed of Guarantee"), which relevantly provided as follows: In consideration of AFS entering into a Deed of Variation ("Deed of Variation") dated on or about the date of this Guarantee with Nahas Construction Pty Limited ("Nahas Construction") varying the terms of the Settlement Deed dated 27 January 2012 ("Deed of Settlement") entered into between AFS and Nahas Construction in connection with certain secant piling and associated work undertaken at 105-109 Anzac Parade, Kensington, NSW by AFS under an agreement AFS entered with Nahas Construction dated 6 May 2011 ("Agreement"), Nahas irrevocably and unconditionally guarantees to AFS as a primary obligation and not as surety, due performance by Nahas Construction of each and all of its obligations and liabilities under and in accordance with the Deed of Variation and the Deed of Settlement. 6Nahas Construction did not make payment 2 referred to in paragraph 6 of the Deed of Settlement as varied by the Deed of Variation; that is to say, a payment of $75,000 on or before 30 April 2012. The plaintiff does not dispute that, pursuant to the Deed of Guarantee, that sum of $75,000 was due and payable by it when the creditor's statutory demand issued on 25 July 2012. However, the plaintiff disputes that the remaining three payments, amounting to a total of $175,700.40, and being the difference between $75,000 and the sum claimed in the statutory demand, were due and payable as at that date. 7That question turns on the effect of the Deed of Variation on clause 6 of the Deed of Settlement. The plaintiff contends that the effect was to replace the whole of clause 6, including the prefatory paragraph (a), so that the matter "failing which the whole of the then unpaid agreed balance outstanding shall become immediately due and payable" was removed. The defendant submits to the contrary. 8Where the existence of a genuine dispute depends on a question of construction, it is accepted that, at least where the question is a relatively simple one, the court may determine it on a s 459G application in order to conclude, in effect, whether the dispute truly exists or there are reasonable grounds for it [Delnorth Proprietary Limited v State Bank of New South Wales (1995) 17 ASCR 379, 384; BBX Holdings Ltd v American Home Assurance [2007] NSWSC 549, [4] - [5]; BMDI Tuta Health Care Pty Limited v CME Medical Australia Ltd [2011] NSWSC 50, [37] (in which although ultimately deciding that that was not an appropriate case in which to determine the question, Barrett J, as his Honour then was, acknowledged that it was no doubt true that in some cases on a s 459G application the court may and should determine a question of construction); In the Matter of Harbour Radio Pty Limited [2012] NSWSC 1290]. 9This is such a case. In the Deed of Settlement, while paragraph 6 is headed Payment Plan, the opening words refer to "the below payment plan", suggesting that what in truth is "the payment plan" is what is set out in the table that appears below subparagraph (a). In the Deed of Variation, provision is made for replacement of "the payment plan at paragraph 6 of the [Deed of Settlement]", suggesting that what is replaced is not the whole of paragraph 6, but the payment plan at that paragraph. The fact that what is inserted is simply a table with no prefatory words indicates strongly that what was intended was to replace the original table with the revised one, leaving the prefatory words intact. Indeed, if the plaintiff's argument were correct, all the prefatory words, including "the agreed balance outstanding will be paid as per the below payment plan", would have been obliterated, removing from the Deed of Settlement any express obligation on the part of Nahas Constructions to make any payment at all, which could not conceivably have been intended. 10In my view, the question of construction is a very straight forward, simple and plain one, and the answer is that the Deed of Variation did not remove from the Deed of Settlement the prefatory words in subparagraph (a), but left them in place - including the words "failing which the whole of the then unpaid agreed balance outstanding shall become immediately due and payable" - and simply substituted the new table for the table subscribed to subparagraph (a). 11Once that conclusion is reached, it is not suggested that there is any remaining dispute as to the claimed indebtedness. Accordingly, I find that there is not a genuine dispute. 12I order that the originating process be dismissed with costs. [Counsel addressed on costs] 13In my view, having regard to the fact that the defendant has had to do no more than file a notice of appearance, appear before the registrar on 28 September 2012, appear in the directions list on 15 October 2012, and appear today, $7,500 could not be inadequate compensation for its costs, even on an indemnity basis. 14Accordingly, I assess the costs in the sum of $7,500, and I am fixing that amount as if on the indemnity basis, having regard to the offer made in the defendant's letter of 14 September 2012. 15The order is therefore that the originating process be dismissed with costs, assessed in the sum of $7,500. ********** 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: 26 February 2013