Dixon Advisory Group Limited v Darren Austin Howard [2013] NSWSC 1224

Supreme Court New South Wales

Medium Neutral Citation: Dixon Advisory Group Limited v Darren Austin Howard [2013] NSWSC 1224 Hearing dates: Wednesday 17 July 2013 Decision date: 17 July 2013 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Leave to cross examine declined Catchwords: CORPORATIONS - Statutory demands - application to set aside statutory demand - leave to cross-examine Legislation Cited: (Cth) Corporations Act 2001, s 459G Cases Cited: Drillsearch Energy Ltd v Carling Capital Partners Pty Ltd [2009] NSWSC 1192 Edge Technology Pty Limited v Light On Technology Corporation (2000) 34 ACSR 301 Fitness First Australia Pty Limited v Dubois [2011] NSWSC 531 Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1994) 2 VR 290 Montage Group Pty Ltd v Wong [2011] NSWSC 726 Category: Procedural and other rulings Parties: Dixon Advisory Group Limited (ACN 080 207 076) (plaintiff) Darren Austin Howard (defendant) Representation: Counsel: Mr D Sulan (plaintiff) Mr D Raphael (defendant) Solicitors: Watson Mangioni Lawyers (plaintiff) Gibsons Lawyers Pty Ltd (defendant) File Number(s): 2013/ 112729

Judgment (ex tempore) 1HIS HONOUR: The defendant applies for leave to cross-examine two deponents of affidavits sworn in support of the plaintiff's application under the (Cth) Corporations Act 2001, s 459G, to set aside a statutory demand served on it by the defendant. 2As has been said in a number of cases, cross-examination is rarely permitted on applications such as the present, for the reason that the court does not determine the merits of any dispute that may be found to exist, but simply whether there is such dispute and the threshold for that is not high [see Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1994) 2 VR 290 (at 292-293); Edge Technology Pty Limited v Light On Technology Corporation (2000) 34 ACSR 301 (at [43]); Drillsearch Energy Ltd v Carling Capital Partners Pty Ltd [2009] NSWSC 1192, [45] - [47]; Fitness First Australia Pty Limited v Dubois [2011] NSWSC 531; Montage Group Pty Ltd v Wong [2011] NSWSC 726, (at [5] - [8])]. 3Essentially, the defendant wishes to cross-examine the plaintiff's witnesses in order to support an inference that the plaintiff is insolvent, to ascertain the identity of those who, on behalf of the plaintiff, gave instructions for a letter which purports to terminate the agreement under which the debt arises by accepting an alleged repudiation, and to clarify that the dispute was raised after the payment claimed in the creditor's statutory demand was due. 4The solvency of the plaintiff, although not necessarily entirely irrelevant, is of marginal relevance in a s 459G application, where the question is not whether or not the company is solvent, but whether or not there is a genuine dispute in respect of the indebtedness claimed in the creditor's statutory demand. Even an insolvent company is entitled to argue that there is a genuine dispute and have the demand set aside on that ground. 5In circumstances where solicitors, who were apparently the duly authorised agents of the matter, sent a letter purporting to exercise a right to termination arising from acceptance of a repudiation, it seems to me that the identity of who, on behalf of what company, gave the instruction for that to happen is irrelevant as to whether there is a genuine dispute. 6The highest the application for leave to cross-examine really rises is that it might support an argument that the combination of questions as to the plaintiff's solvency and the time when the dispute was raised might support a submission that the dispute was not genuine but created only for the purposes of resisting the defendant's claim. The difficulty with that argument is that the dispute appears to be squarely founded on a letter sent by the defendant's solicitors on 13 February 2013 - which is relied upon as an act of repudiation or perhaps one of anticipatory breach, entitling the plaintiff thereafter to rescind, as it purported to, or at least relieving the plaintiff from the obligation to pay by operation of clause 1.1 of the deed of release, which expresses the company's obligation to be "subject to compliance by the employee with the terms of this deed". 7In those circumstances I cannot see how the cross-examination proposed to be undertaken will inform in any material way the essential question to be decided in this case, namely, whether there is a genuine dispute as to the indebtedness claimed. 8Accordingly, I decline to grant the leave to cross-examine sought.