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  4. Six Appeal Pty Ltd v Medical Corporation Australia Ltd (Receivers & Managers appointed) (in Liq) - [2007] QSC 122

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Six Appeal Pty Ltd v Medical Corporation Australia Ltd (Receivers & Managers appointed) (in Liq)[2007] QSC 122

Six Appeal Pty Ltd v Medical Corporation Australia Ltd (Receivers & Managers appointed) (in Liq)[2007] QSC 122

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Six Appeal Pty Ltd v Medical Corporation Australia Ltd (Receivers & Managers appointed) (in Liq) [2007] QSC 122

PARTIES:

DON’T MISS PTY LTD (FORMERLY IBN HOLDINGS PTY LTD) ACN 111 856 172

(applicant)

THE RESCUE PARTY PTY LTD (FORMERLY WESTIDE WEEKLY PTY LTD) ACN 100 917 833

(applicant)

SIX APPEAL PTY LTD (FORMERLY IPSWICH’S OWN PTY LTD) ACN 100 917 833

(applicant)

V

MEDIA CORPORATION AUSTRALIA LTD (RECEIVERS & MANAGERS APPOINTED) (IN LIQUIDATION) ACN 003 072 455’

(respondent)

FILE NO/S:

BS11364/06

BS11368/06

BS11370/06

DIVISION:

Trial Division

PROCEEDING:

Application to set aside notice of statutory demand

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

1 June 2007

DELIVERED AT:

Brisbane

HEARING DATE:

14 February 2007

JUDGE:

Moynihan J

ORDER:

1.  Statutory demand served upon the applicant by the respondent be set aside.

CATCHWORDS:

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENT – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENERAL DISPUTE AS TO INDEBTEDNESS – where statutory demand made for payment of debt - whether there is a genuine dispute between the parties as to the existence or amount of the debt.

Corporations Act 2001 (Cth)

Mandarin International Developments Pty Ltd v Growthcorp (Aust) Pty Ltd (1998) 143 FLR 408, considered.

Moyall Investment Services Pty Ltd v White (1993) 12 ACSR 2, considered.

Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601, considered

Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC 411, considered.

WEC Pty Ltd v Cypriot Community of Queensland Inc [2002] QCA 507, considered.

COUNSEL:

CD Coulsen for the applicant.

GJ Handran for the respondent.

SOLICITORS:

Hall Lawyers for the applicant.

Rostron Carlyle for the respondent.

  1. Each of Six Appeal Pty Ltd (formerly Ipswich Own Pty Ltd, referred to in these reasons as Six Appeal), Don’t Miss Pty Ltd (formerly INB Holdings Pty Ltd (Don’t Miss) and Rescue Party Pty Ltd (formerly Westwide Weekly Pty Ltd (Rescue) apply to set aside statutory demands served on them by Media Corporation Australia Ltd (Receivers and Managers appointed) (in liquidation), referred to as Media Corporation.
  1. The question on each application is whether there is a genuine dispute. The relevant issues are similar or the same in each case, the applicants and the respondents and their affairs were interrelated. The applications were argued on this basis rather than as separate applications. It is to be noted that similar claims were made in demands served on 15 June 2006 but were withdrawn.
  1. Each of the creditor’s statutory demands is based on an account transaction found in the records of Media Corporation by the Receiver.  The deponent of the affidavit in support of the demand in each case does not have personal knowledge of the transaction but relies on those financial records.
  1. The relevant provisions of the Corporations Act 2001 (Cth) have been widely considered in a wide range of cases.  The court’s role is to determine whether there is a bona fide dispute rather than one that is spurious, illusory or misconceived.  The court is to determine whether there is a genuine dispute and a genuine claim not to examine the merits or resolve the dispute.  Beyond the perception of genuineness or the lack of it the court has no function: Re Morris Catering (Australia) Pty Ltd;[1] WEC Pty Ltd v Cypriot Community of Queensland Inc.[2] 
  1. In Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd[3] Barrett J noted that a company challenging a statutory demand:

will fail in that task only if it is found … [that] its challenge [is] so devoid of substance that no further investigation is warranted.  Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow.  The court does not engage in any form of balancing exercise between the strengths of competing contentions.  If it sees any factor that, on rational grounds, indicates an arguable case … it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger.

  1. Where issues of credit enter into consideration the court’s task is particularly constrained: Mandarin International Developments Pty Ltd v Growth Corp (Aust) Pty Ltd.[4]  There must however be something beyond a mere assertion of dispute: Moyall Investment Services Pty Ltd v White[5]. The time to determine whether or not the disputes exist in cases such as these is the time at which the accounts were struck: Moyall Investments[6] (ante).
  1. The applications to set aside the notices have been filed by affidavit by a former director of each company and the original controlling shareholder in each until other interests acquired a majority of holdings.
  1. The deponent (Malcolm Quinn – Quinn) deposes to tensions with the new management and his resignation.  He deposes to dissatisfaction with the conduct of the businesses and the financial statements of the companies.  He also claims to the effect that the transactions reflected in the accounts were not to the benefit of the companies and that the companies have reciprocal claims over topping the claims against them. 
  1. There has been a flurry of affidavits in response to the applicants’ material. The respondent submits that in cases of accounts between related entities it is generally difficult to show a genuine dispute in respect of debts reflected in loan accounts and that where offsetting claims are relied on there must be an arguable case in support of the claim.
  1. The respondent relied on the decision of Ryan J in Moyall Investments[7] where a number of companies had common directors and shareholders and were administered from the same premises.  Another company provided administrative staff and accounting services and paid the operating expenses for which the other companies in the group paid a management fee.
  1. The debt founding the statutory demand was outstanding fees quantified by entries in the books of account of Moyall Investments.  In that case there was no suggestion that at the time the accounts on which the statutory demands were founded were struck there was any influence or lack of knowledge leading to error and no explanation, as distinct from assertion, as how the entries relied on to found the demand came about.  In those circumstances Ryan J was not satisfied that there was a genuine dispute.
  1. The position with the Media Corporation’s demands against the three companies is as follows.  There is a claim for a debt of $22,485.22 in respect of Six Appeal and Quinn deposes that the transactions did not occur or were not made for the benefit of the companies.  He further claims that $22,000 was removed from Six Appeal’s bank account to Media Corporation in June or July 2005.  It is further claimed that there are offsetting claims in respect of advertisements not paid for by Media Corporation and in respect of the set up costs of a call centre owned by that company.
  1. The demand in relation to Don’t Miss is for $3,000 and there is a claim of a genuine dispute in respect of the amount of $2,000 in respect of which no benefit was ever received and an offsetting claim of $200,000 for marketing services provided but never invoiced ‘at the request of the director of Media Corporation’.
  1. The demand claims an amount of $51,574 against Rescue.  It is said that $4,400 related to payments not to the benefit of or received by the company.  It is clear that each of the applicants and Media Corporation were related entities with common directorships and there were a series of transactions between the companies over a substantial period of time with each of the applicants and Media Corporation being treated as one group.
  1. It is the case, as the respondent points out that the four companies, and others, were related entities and the applicants’ claims are inconsistent with the respective applicants’ balance sheets and ledgers.  There is no suggestion of the irregularities being raised when or after the accounts were struck until the notices were served.
  1. It is clear from the exchange of affidavits that there are credibility and other factual issues relevant to the consideration of whether there is a bona fide dispute.  It is for example submitted on the respondent’s behalf that some of the offsetting claims are recent invention.  There is criticism of the particularity of aspects of the issues raised by the applicants but these do not take place in isolation.  Quinn for example deposes to a working relationship with Norris (the controlling shareholder) and refers to Norris borrowing or diverting large amounts of cash to other companies and refusing to supply financial information and the likes.
  1. Quinn also raises a number of queries relating to the details of the accounts.  It is unnecessary to canvas these issues in details for the purposes of this application – they cannot be resolved here - but they provide a context for what are referred to as assertions by Quinn. 
  1. The respondent’s criticism of the applicants’ material is not without some basis so far as the absence of detail is concerned.  They are however not such as to found a conclusion that the applicants’ claims are ‘spurious, illusory or misconceived’. 
  1. The applicants’ material raise disputes which, at least potentially, bear on the determination of whether the applicants are indebted to the respondent.  It does so in sufficient detail to satisfy the requirements of the cases referred to earlier in establishing a genuine dispute in respect of the claims made against each of the applicants in the notices of demand and raising issues of over topping the contra claims.  These are genuine disputes.
  1. I therefore order in respect of each of the applications that the statutory demand for payment of debt dated 4 December 2006 be set aside.

Footnotes

[1] (1993) 11 ACSR 601, 605.

[2] [2002] QCA 507,10-11.

[3] [2002] NSWSC 411, 23.

[4] (1998) 143 FLR 408.

[5] (1993) 12 ACSR 2, 320.

[6] Ibid.

[7] Ibid.

Close

Editorial Notes

  • Published Case Name:

    Six Appeal Pty Ltd v Medical Corporation Australia Ltd (Receivers & Managers appointed) (in Liq)

  • Shortened Case Name:

    Six Appeal Pty Ltd v Medical Corporation Australia Ltd (Receivers & Managers appointed) (in Liq)

  • MNC:

    [2007] QSC 122

  • Court:

    QSC

  • Judge(s):

    Moynihan SJA

  • Date:

    01 Jun 2007

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Mandarin International Developments Pty Ltd v Growthcorp (Aust) Pty Ltd (1998) 143 FLR 408
2 citations
Jump To
Cite 1 - (1998) 143 FLR 408
Cite 2 - (1998) 143 FLR 408
Moyall Investment Services Pty Ltd v White (1993) 12 ACSR 2
2 citations
Jump To
Cite 1 - (1993) 12 ACSR 2
Cite 2 - (1993) 12 ACSR 2
R v Conway; ex parte Attorney-General [2002] QCA 507
2 citations
Jump To
Cite 1 - [2002] QCA 507
Cite 2 - [2002] QCA 507
Re Morris Catering (Australia) Pty Ltd (1993) 11 AC SR 601
2 citations
Jump To
Cite 1 - (1993) 11 AC SR 601
Cite 2 - (1993) 11 AC SR 601
Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC 411
2 citations
Jump To
Cite 1 - [2002] NSWSC 411
Cite 2 - [2002] NSWSC 411

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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