GRB Investments Pty Ltd v Kempe Enterprises
[2011] QSC 253
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- Unreported Judgment
- GRB Investments Pty Ltd v Kempe Enterprises[2011] QSC 253
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GRB Investments Pty Ltd v Kempe Enterprises[2011] QSC 253
GRB Investments Pty Ltd v Kempe Enterprises[2011] QSC 253
SUPREME COURT OF QUEENSLAND
CITATION: | GRB Investments Pty Ltd v Kempe Enterprises & Anor [2011] 253 |
PARTIES: | GRB INVESTMENTS PTY LTD ACN 009 893 145 (Applicant) v KEMPE ENTERPRISES PTY LTD ACN 010 498 502 (First Respondent) AND JULIE ANN NUSKE (Second Respondent) |
FILE NO/S: | BS9884 of 2010 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court of Queensland |
DELIVERED ON: | 24 August 2011 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 29 July 2011 |
JUDGE: | Justice Martin |
ORDER: | Application dismissed with costs. |
CATCHWORDS: | CORPORATIONS – STATUTORY DEMAND – APPLICATION TO SET ASIDE – FOR DEFECT OR SOME OTHER REASON – SUBSTANTIAL INJUSTICE – where the debt claimed in the statutory demand is the balance of moneys payable for the purchase of land – where the parties entered into a contract in writing in 2006 which settled in 2007 – where the sum which is the subject of the demand relates to the outstanding instalment payments – where the applicant applies to set aside the statutory demand on the basis that it does not comply with the correct form – where the applicant argues that the statutory demand does not provide a notice provision in accordance with the Corporations Amendment Regulation 2007 (No 13) – whether the absence of a warning statement would cause substantial injustice such that the statutory demand should be set aside CORPORATIONS – STATUTORY DEMAND – APPLICATION TO SET ASIDE – GENUINE DISPUTE AS TO INDEBTEDNESS – where the debt claimed in the statutory demand is the balance of moneys payable for the purchase of land – where the parties entered into a contract in writing in 2006 which settled in 2007 – where the sum which is the subject of the demand relates to the outstanding instalment payments – where the applicant applies to set aside the statutory demand on the basis that there is a genuine dispute about the existence of the debt to which the demand relates – where the applicant alleges that in August 2008 the respondents orally agreed to forego the balance instalments – where the respondents deny these allegations – where the applicant relies on an affidavit filed more than 21 days after service of the demand alleging a further agreement between the parties – whether the applicant can rely on the affidavit filed outside the 21-day period – whether there is a genuine dispute about the existence or amount of the debt to which the demand relates; Corporations Act 2001, s 459E, s 459 J, s 459 G, s 459H Corporations Amendment Regulation 2007 (No 13) Property Law Act 1974 (Qld) s 59. C & E Pty Ltd v Corrigan [2006] 2 Qd R 399; David Grant & Co Pty Ltd v Westpac Banking Corp (1995) 184 CLR 265; Energy Equity Corporation Ltd v Sinedie Pty Ltd (2001) 166 FLR 179; Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 785; Foakes v Beer (1884) 9 App Cas 605; In the Future Holdings Pty Ltd as Trustee for the Norma Jean Semple Trust v Benson and Burnside Holdings Pty Ltd and Anor [2010] QSC 471; Jarpab Pty Ltd v Mark Winter (t/a Bolden Haulage) (1994) 14 ACSR 255; JSBG Developments Pty v Kozlowski [2010] NSWSC 97; McElligot v Boyce & Ors [2011] QCA 117; Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 QCLC 1,062; NQEA Australia Pty Ltd v ADI Ltd (1999) 17 ACLC 927; Pinnel’s Case (1602) 5 Co Rep 117a; 77 ER 237; Spacorp Australia Pty Ltd v Myer Stores Pty Ltd (2001) 19 ACLC 1,270; Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 15 ACLC 1,001; Tweddell v Henderson [1975] 2 All ER 1,096 |
COUNSEL: | L Bowden for the Applicant P D Hay for the First and Second Respondent |
SOLICITORS: | Gateway Lawyers for the Applicant Russells Solicitors for the Respondents |
- The applicant (“GRB”) seeks an order setting aside a statutory demand served on it on two grounds: first, that the statutory demand is defective in that it is not in the prescribed form and secondly, that there is a genuine dispute.
- The debt claimed in the demand, $666,514, is the balance of moneys payable for the purchase of property at West Stapylton (“Yellowood Grove”).
- The parties entered into a contract for the purchase by GRB of Yellowood Grove on 14 September 2006. The relevant conditions of the purchase were:
- A total purchase price of $2,100,000;
- Payment of $1,000 deposit upon signing;
- Payment of $1,199,000 at settlement; and
- Payment of the outstanding purchase price ($900,000) in 17 instalments, payable upon the settlement of each block sold in the proposed subdivision of the land.
- The contract was settled on 25 January 2007. The applicant has not sold all of the subdivided lots and the respondents have only received instalment payments in respect of 5 of the 17 lots sold.
- The sum which is the subject of the demand, $666,514, accounts for the outstanding instalment payments for the remaining 12 lots.
Defect in Justice
- The first issue is whether the statutory demand is valid. Section 459E (2) of the Corporations Act 2001 prescribes mandatory requirements for a valid statutory demand and, in particular, subsection (e) requires that the demand “be in the prescribed form”. One must commence, though, with the provisions in s 459 J(2):
(1)On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:
(a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or
(b) there is some other reason why the demand should be set aside.
(2)Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect.
- Thus, it is not any defect in the statutory demand which will requires that it be set aside. It must either be shown that there is a defect which will cause substantial injustice or that there is some reason apart from a mere defect why the demand should be set aside[1].
- The applicant argues that this is not a case of a mere defect in a demand because the form of demand used had been superseded. The new form pursuant to the Corporations Amendment Regulation 2007 (No. 13) contains a new notice provision as to the consequences of a failure to respond to a statutory demand. GRB argues that the demand is defective in that no notice provision is provided.
The absence of a warning statement would not necessarily lead to an injustice substantial or otherwise[2]. There is nothing else to support a finding that the absence of the warning would occasion substantial injustice
Genuine Dispute
- The alleged dispute is that, in August 2008, GRB complained that it was in financial distress and the respondents orally agreed to forgo the balance instalments. The respondents deny these allegations.
- In these circumstances the demand may only be set aside where the court is satisfied that:
- There is a genuine dispute about the existence or amount of a debt to which the demand relates; or
- The company has an offsetting claim[3].
Time Limitation
- The application, together with an affidavit setting out the grounds for the application, must be filed within 21 days after service of the demand[4]. Although an applicant may file further affidavits supplementing existing grounds raised within time, the court cannot act on new grounds raised in an affidavit outside the 21 day period[5].
- In light of the inadequacy of the grounds contained in the first affidavit, the applicant relies on a further affidavit of Mr McKinnon sworn 27 July 2011 alleging a further agreement. However, Mr McKinnon is out of time to raise any such further grounds to set aside the Statutory Demand.
Substance of allegations
- The application must demonstrate a dispute that is “genuine”[6] and “plausible”[7] as opposed to “spurious” or “misconceived”[8]. The respondents summarised the relevant test as follows:
- the dispute must be bona fide and truly exist in fact; and
- The grounds for alleging the existence of a dispute must be real and not spurious, hypothetical, illusory or misconceived.
- Though the court will not deeply examine the merits or settle the dispute, as Santow J said in Jarpab Pty Ltd v Mark Winter (t/a Bolden Haulage)[9] the court “must not totally abdicate its critical function, in testing attempts to set aside a demand by reference to some claimed dispute or offsetting claim”. In Eyota Pty Ltd v Hanave Pty Ltd[10] McLelland CJ said:
“It is…necessary to consider the meaning of the expression “genuine dispute” where it occurs in s 450H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much of the same sort of considerations as the “serious question to be tried’ criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit “however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbably in itself, it may be” not having “sufficient prima facie plausibility to merit further investigation as to [its] truth”…or “a patently feeble legal argument or an assertion of facts unsupported by evidence[11]
- In C & E Pty Ltd v Corrigan[12] the Court of Appeal adopted the same approach, namely, that spurious claims will not be regarded as genuine. In that case Keane JA concluded that the applicant’s case was “no more than assertion and speculation” and that those assertions were “bereft of any particulars”[13].
- In the present case, the applicant raises the ground of an alleged oral agreement formed between Mr McKinnon and Mr Kempe in August 2008. However, there is no documentary evidence of the alleged agreement. The alleged agreement is denied by Mr Kempe and Ms Nuske. It is also inconsistent with the contemporaneous documents, most of which constitute admissions of the continuing debt by Mr Kempe.
- The applicant has sought to buttress its case by relying on a further affidavit of Mr McKinnon, sworn 27 July 2011, which alleges a further agreement in 2009. The applicant is out of time to do so and I do not take it into account.
- On the evidence, there can be no genuine dispute concerning the enforceability of the statutory demand. Counsel for the respondents has drawn out a number of factors which have led me to this conclusion:
- The contact could only be varied with the agreement of each of the parties: there is no evidence of Julie Nuske’s agreement;
- The matters deposed to by Mr McKinnon in each of his affidavits would not give rise to a binding agreement in the sense of a concluded agreement that was certain in its terms;
- A parol variation of a contract for the sale of land is unenforceable absent any written memorandum signed by the parties to be charged[14], particularly in respect of a material term, in this case the price payable[15];
- The alleged agreement, being unsupported by any valid consideration, is unenforceable.; and
- On a number of occasions subsequent to August 2008, the applicant has made unqualified admissions that the debt that is due and owing
- The application is dismissed. I order that the applicant pay the respondents’ costs of and incidental to the application on the standard basis.
Footnotes
[1] JSBG Developments Pty v Kozlowski [2010] NSWSC 97.
[2] McElligot v Boyce & Ors [2011] QCA 117.
[3] Sections 459G and 459H Corporations Act 2001.
[4] David Grant & Co Pty Ltd v Westpac Banking Corp (1995) 184 CLR 265.
[5] Energy Equity Corporation Ltd v Sinedie Pty Ltd (2001) 166 FLR 179 at [29] per Wallwork J (Steytler J and Olsson AUJ agreeing).
[6] C & E Pty Ltd v Corrigan [2006] 2 Qd R 399 at [19] per Keane JA. See also Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 QCLC 1,062; NQEA Australia Pty Ltd v ADI Ltd (1999) 17 ACLC 927; Spacorp Australia Pty Ltd v Myer Stores Pty Ltd (2001) 19 ACLC 1,270.
[7] Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 785 at 787 per McLelland CJ.
[8] C & E Pty Ltd v Corrigan [2006] 2 Qd R 399 at [19] per Keane JA. See also Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 15 ACLC 1,001; Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1,062; NQEA Australia Pty Ltd v ADI Ltd (1999) 17 ACLC 927; Spacorp Australia Pty Ltd v Myer Stores Pty Ltd (2001) 19 ACLC 1,270.
[9] (1994) 14 ACSR 255 at 261.
[10] (1994) 12 ACSR 785.
[11] Ibid at 787.
[12] [2006] Qd R 299.
[13] Ibid at [18].
[14] Property Law Act 1974 (Qld) s 59.
[15] Tweddell v Henderson [1975] 2 All ER 1,096; In the Future Holdings Pty Ltd as Trustee for the Norma Jean Semple Trust v Benson and Burnside Holdings Pty Ltd and Anor [2010] QSC 471 per McMeekin at [43].