Anchez Pty Ltd v Dragon Corporation Pty Ltd
[1997] QCA 254
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- Unreported Judgment
- Anchez Pty Ltd v Dragon Corporation Pty Ltd[1997] QCA 254
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Anchez Pty Ltd v Dragon Corporation Pty Ltd[1997] QCA 254
Anchez Pty Ltd v Dragon Corporation Pty Ltd[1997] QCA 254
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 9706 of 1996
Brisbane
[Anchez P/L v. Dragon Corp P/L & Ors.]
BETWEEN:
ANCHEZ PTY LTD ACN 056 124 102
(Defendant/ Applicant) Appellant
AND:
DRAGON CORPORATION PTY LTD ACN 010 969 258
(First Plaintiff) First Respondent
AND:
DEIRDRE ELLEN STEGMAN and GREGORY NORMAN STEGMAN
(Second Plaintiffs ) Second Respondents
Davies J.A.
Moynihan J.
de Jersey J.
Judgment delivered 15 August 1997
Joint reasons for judgment of Davies J.A. and Moynihan J.; separate reasons of de Jersey J., concurring as to the orders made.
APPEAL DISMISSED WITH COSTS.
CATCHWORDS: CORPORATIONS LAW - Statutory Demand - Appeal against order to set aside statutory demand on conditions.
Counsel: Ms Cheryl Knight (not of counsel) for the appellant.
Mr F.L. Harrison Q.C. with Mr C.L. Francis for the first and second respondents.
Solicitors: Ms Cheryl Knight (not a solicitor) for the appellant.
F.G. Forde Knapp & Marshall for the first and second respondents.
Hearing Date: 22 May 1997
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 9706 of 1996
Brisbane
Before Davies J.A.
Moynihan J.
de Jersey J.
[Anchez P/L v. Dragon Corp P/L & Ors.]
BETWEEN:
ANCHEZ PTY LTD ACN 056 124 102
(Defendant/ Applicant) Appellant
AND:
DRAGON CORPORATION PTY LTD ACN 010 969 258
(First Plaintiff) First Respondent
AND:
DEIRDRE ELLEN STEGMAN and GREGORY NORMAN STEGMAN
(Second Plaintiffs ) Second Respondents
JOINT REASONS FOR JUDGMENT - DAVIES J.A. AND MOYNIHAN J.
Judgment delivered 15 August 1997
Anchez Pty Ltd appeals against an order of a chamber judge setting aside a statutory demand under the Corporations Law served on it by the respondents which was made conditional upon it paying the respondents $36,500.
The statutory notice was founded on a summary judgment obtained by the respondents against the appellant and the $36,500, the subject of the conditional order to set aside, was the discounted balance of money due under that judgment.
The litigation between the parties arises out of transactions involving land at Proserpine and the Proserpine Motor Lodge which is erected on it. It is sufficient for present purposes to note that the appellant entered into a lease of the motor lodge dated 24 May 1993. The lease provided for an annual rental of $200,000 for the first four years and for three renewal options each for a period of five years. Rent was to be varied in line with the C.P.I. index from the beginning of the fifth year of each lease period.
The appellant entered into possession, conducted the business and paid the rent until the December 1994 instalment fell due. By this time the business was in financial difficulties essentially because the rent was far in excess of that which could be paid given the gross turnover of the motor lodge business. Put shortly the business was not economically viable if the rent remained at $200,000 per year.
The appellant was unsuccessful in renegotiating the terms of the lease, particularly the rent with the respondents and ceased to pay the rent. The respondents brought the action in which the summary judgment, previously referred to, was obtained. The appellant brought a cross-claim in that action to have the lease varied and the rent reduced pursuant to the Trade Practices Act 1974 (Cth). The cross-claim was based on allegations of false and misleading statements about the motor lodge business which induced the appellant to acquire the business and enter into the lease.
The respondents brought an application for summary judgment and the appellant appeared to show cause against that. It was given leave to defend on terms which the appellant did not comply with and the respondents obtained the judgment on which the statutory notice was founded.
The leave to defend the summary judgment application on terms reflected an evaluation by the judge who heard it that it was "possibly unlikely" but "not unconceivable" that the appellant would succeed in its cross-claim and that "stringent conditions" were warranted if leave to defend was given. There was no appeal from the decision.
The conditions on the setting aside of the statutory notice imposed by the judge below reflect a conclusion that the respondents had an arguable claim to recover a total of $227,500 from the appellant. The appellant relied on its cross-claim to argue that it had an offsetting claim, essentially the cross-claim earlier referred to. The judge was not persuaded that the appellant had a "serious sustainable off-setting claim". This was essentially because of reservations he had about a valuation of the motel business which was relied on by the appellant. The judge below effectively took the view that a valuation should reflect the lease as it presently stands rather than treating it as having been set aside (or at least the rent reduced) as a result of the successful outcome of the appellant's cross-claim. There is little attraction in purchasing a business which can only be conducted at a substantial loss with its current rental obligation. This has the consequences that the furniture in the lodge is of value to someone who can operate it profitably, but that is dependent on a rent reduction which in turn depends on a successful cross-claim by the appellant. The judge below took account of the evaluation of that occurring arrived at by the judge who heard the summary judgment application. The amount ordered to be paid into court is a 15% discount on the summary judgment debt and reflects the judge below's evaluation of the position. This appeal is not the place to deal with the issues raised by the cross-claim which remains to be pursued by the appellant. If it goes into liquidation, it will be for the receiver to determine whether it should be pursued.
It has not been demonstrated that the judge below erred and the appeal should be dismissed.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 9706 of 1996
Brisbane
Before Davies JA
Moynihan J
de Jersey J
[Anchez P/L v. Dragon Corp P/L & Ors]
BETWEEN:
ANCHEZ PTY LTD ACN 056 124 102
(Defendant/Applicant) Appellant
AND:
DRAGON CORPORATION PTY LTD ACN 010 969 258
(First Plaintiff) First Respondent
AND:
DEIRDRE ELLEN STEGMAN and
GREGORY NORMAN STEGMAN
(Second Plaintiffs) Second Respondents
REASONS FOR JUDGMENT - de JERSEY J
Judgment delivered 15 August 1997
I agree that the appeal should be dismissed, and with the joint reasons given by Davies JA and Moynihan J.