FEDERAL COURT OF AUSTRALIA

CORPORATIONS - statutory demand - default judgment for non-payment of accounts rendered for supply of electricity - debtor denies any involvement in management or ownership of premises to which electricity supplied - whether debtor party to agreement to supply electricity - whether genuine dispute about existence or amount of debt

Corporations Law - ss 459G, 459H, 459J

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

Delnorth v State Bank of New South Wales (1995) 17 ACSR 379 - considered

Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 147 ALR 444 - cited

NAUDUNDA NOMINEES PTY LTD v FAR NORTH QUEENSLAND ELECTRICITY CORPORATION

VG 3186 of 1998

BEFORE:         RYAN JR

PLACE:           MELBOURNE

DATE:             7 OCTOBER 1998

THE COURT ORDERS THAT:

1.      The application to set aside the creditor’s statutory demand for payment of debt be dismissed.

2.      The applicant pay the respondent’s costs of and incidental to the application.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

THE ISSUE

This is a matter in which the applicant seeks to set aside a creditor’s statutory demand asserting that a default judgment which forms the primary basis of the demand should itself be set aside.

The applicant company contends that there is a genuine dispute as to the identity of the debtor against whom the default judgment issued and that as a company and legal entity it never had any interest in the management or ownership of premises to which electricity was supplied and for which supply the respondent obtained a default judgment in debt for non-payment of accounts rendered.

The respondent resists the setting aside asserting that there is no genuine, substantial or bona fide dispute as to the debt and that the debt is properly owed by the applicant company to the respondent.

THE DEMAND

On 8 April 1998 the respondent issued a statutory demand for debts totalling $20,377.76. The Schedule of the Demand describes two debts:

1.      $16,966.31 pursuant to Judgment ordered on 17 December 1997 for creditor’s claim in Plaint No. 2431 of 1997 out of the Cairns Magistrates’ Registry of the Magistrates’ Court of Cairns for the supply of electricity to the premises described as The Point Resort, Point Tam O’Shanter, Point Road, Mission Beach in the State of Queensland

2.      $3,411.45 being balance outstanding for electricity to 111-113 Williams Esplanade, Palm Cove in the State of Queensland.

On 28 May 1998, by application filed in the Victorian District Registry, the applicant sought to set aside the statutory demand.  By letter also dated 28 May 1998, the solicitors acting for the applicant (and acknowledging the applicant as their client) forwarded a bank cheque to the Melbourne agent of the Queensland solicitors acting for the respondent.  This cheque was for payment of the smaller debt of $3,411.45.

Given the payment of the smaller debt, the hearing of the application to set aside the statutory demand turned on the larger debt and on the applicant’s denial of any interest or involvement in the ownership or operation of The Point Resort.

THE EVIDENCE

Lee Frances Ratcliffe deposed on 28 May that:

·        until 18 November 1996 “The Point” was owned by Kinghurst Pty Ltd (now in liquidation) and operated by Kilnwick Pty Ltd (now in liquidation)

·        an electricity account in the sum of $15,853.90 in respect of the claim made by the respondent in the Magistrates’ Court of Cairns was not addressed to the applicant but to The Jewel Hotel Group

·        the applicant does not have, and never had, any interest or involvement in the ownership or operation of The Point

·        if there be a debt to the respondent it is a debt of Kilnwick.

Marie Ann Langtree deposed on 26 June that:

·        on or about 3 December 1990, at Cairns in the State of Queensland, the applicant and the respondent entered into a written agreement for the supply of electricity to the premises described as The Point (exhibit MAL6)

·        on or about 25 February 1997 the applicant was notified about the outstanding debt to the premises in the form of an “account rendered” (exhibit MAL7).

Exhibit MAL6 is stated to be “a true copy” of the agreement for the supply of electricity. It is in fact an original agreement or a copy of the original agreement with various parts of the Application for the Supply of Electricity Form 45 completed in blue, black and red ink or biro.  A photocopy of the agreement marked exhibit “RG11” was also handed up at the hearing but the original agreement exhibit MAL6 is the document considered by the Court.

Exhibit MAL7 is a printed office copy of an account rendered in the sum of $15,853.90 and this account is in the name of The Jewel Hotel Group.

By affidavit sworn 28 July (his second affidavit) Mr Ratcliffe states that:

·        there is not, and never has been, any legal entity known as “Jewel Hotel Group”

·        he does not recognise the signature purporting to be on behalf of the applicant appearing at the foot of the agreement to supply electricity (MAL6 and RG11)

·        no person had any authority to enter into the agreement on behalf of the applicant in respect of the supply of electricity to The Point Resort

·        he does not know how the alleged debt upon which the respondent relies has been calculated or made up and he does not know the period in respect of which the electricity was allegedly supplied by the respondent

·        a copy of Kilnwick’s report as to affairs (LFR5) lists creditors, as at the time when Kilnwick was placed in liquidation (3 October 1997) and includes the respondent as a creditor in respect of the supply of electricity to The Point

·        in the ordinary course, the liquidator of Kilnwick would have notified the respondent of inclusion as a creditor of Kilnwick

·        he believes that there is a genuine dispute and has instructed his solicitors to apply to the Magistrates’ Court at Cairns to set aside the default judgment upon which the respondent relies.

In an affidavit sworn 18 September 1998, Robin Gordon, an employee of the solicitors for the respondent, deposes that:

·        the respondent has a record of an electricity security deposit in the sum of $2,500 paid on 12 December 1990 for the supply of electricity to The Point

·        the payment was by cheque drawn on account of the applicant through the National Australia Bank Limited at Smithfield Queensland (exhibit RG1)

·        subsequent payments were made in respect of electricity supplied to The Point by cheques drawn on a National Australia Bank Limited account held by the applicant at Smithfield (the records of payment were tendered as exhibits RG2 and RG3)

·        the respondent has records of later payments made in 1994 for this electricity supply made by cheques drawn on account of Kilnwick Pty Ltd at the National Australia Bank Limited Smithfield (exhibit RG4)

·        ASC extracts for the applicant company and for Kilnwick were obtained by searches undertaken on 16 February 1998 and 25 March 1998 (exhibits RG5 and RG6).

The extract of search of the applicant company, Naudunda Nominees Pty Ltd, on 16 February 1998 indicates that the company started under that name on 25 June 1981.

The extract of search of Kilnwick on 25 March 1998 indicates that that company was registered on 27 June 1989 under a different name and did not operate under the name of Kilnwick Pty Ltd until 14 January 1994.

By affidavit sworn 25 September 1998 (his third affidavit) Mr Ratcliffe deposes that:

·        he has instructed his solicitors to engage agents in Cairns to make application to the Magistrates’ Court there to set aside the default order upon which the respondent’s statutory demand is based

·        solicitors have been engaged in Cairns to advise on the procedure involved in applying to set aside the default judgment

·        grounds for an application to set aside the judgment are set out in an affidavit sworn 22 September 1998 which affidavit is intended as an affidavit in support of an application to be made in the Magistrates’ Court in Cairns to set aside the judgment.

THE DISPUTE

There is a dispute between the applicant company and the respondent about the existence of a debt allegedly incurred by the applicant.  There is also a dispute as to whether the dispute is a “genuine dispute” within the terms of s 459H.

In Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601 at 605 Thomas J said:

“There is little doubt that Div 3 is intended to be a complete code which prescribes a formula that requires the court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the court will examine the merits or settle the dispute. The specified limits of the court’s examination are the ascertainment of whether there is a ‘genuine dispute’ and whether there is a ‘genuine claim’.

It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it) the court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another.

The essential task is relatively simple – to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it).”

In Delnorth v State Bank of New South Wales (1995) 17 ACSR 379 at 384 Cohen J stated:

“Section 459H(1) refers to the court finding that there is a genuine dispute. The parties have argued this case on the issue of whether the proper construction of the agreement and the facts results in the plaintiff owing money to the defendant. The facts were not in dispute and there was thus no question of whose evidence would be accepted on a final hearing. Under the previous legislation, when there was a claim that there was a bona fide dispute on substantial grounds as to the debt claimed, the court could decide that dispute if it arose from a question of law or was of short compass. See, for example, Offshore Oil NL v Acron Pacific Ltd (1984) 2 ACLC 8.

I consider that under the provisions of the Corporations Law, the same approach can be taken. Although questions of disputed fact will not be decided on an application to set aside a statutory demand, the issue of whether there is a genuine dispute can be resolved on that application where the question arises on a short point of law or the construction of documents or agreed facts. In Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785; 12 ACLC 669, McLelland CJ in Eq said that the expression ‘genuine dispute’ connotes a plausible contention requiring investigation. Where no further investigaiton is required, I consider that the court on an application under s 459G may decide as a matter of law if there is a genuine dispute. The occasions when this is possible may be few, but in my view this is one of them.”

The applicant’s case turns in no small measure on what is asserted flows from:

·        accounts rendered not in the name of Naudunda Nominess Pty Ltd but in the name of Jewel Hotel Group

·        an alleged agreement to supply electricity not to Naudunda Nominees Pty Ltd but to the Jewel Hotel Group

·        an application for supply of electricity allegedly made by the Jewel Hotel Group and not by Naudunda Nominees Pty Ltd.

THE APPLICATION AND AGREEMENT TO SUPPLY ELECTRICITY

To determine whether there is a genuine dispute it is necessary to consider whether the applicant made the Application for the Supply of Electricity (MAL6) and was a party with the respondent in the Agreement to Supply Electricity to The Point.  The Application was made on a printed Form 45.  Form 45 is a double sided form.  At the top of the front of the form there is provision for entry of various data including:

·        the date the application is received

·        a deposit

·        a reference number

·        a service card number

·        an inspection form number

·        the nature of the installation

·        supply conditions.

Below the data collection section, and still close to the top of the front of the double-sided Form 45, and in large and heavy black type is printed the following:

__________________________________________________________________________________________

                                           THE FAR NORTH QUEENSLAND ELECTRICITY BOARD             Form 45

                                                       HEAD OFFICE: 109 LAKE STREET, CAIRNS

                                                         Operating under the “Electricity Act” 1976

                                               APPLICATION FOR THE SUPPLY OF ELECTRICITY

                                                Mr

NAME OF APPLICANT    Mrs           JEWEL HOTEL GROUP                                                                                          

                                                Miss                        Surname                                         Christian Names

Occupation …………………………………………………… Employed by …………………………………….

                (IF FIRM OR COMPANY, SEE OVER)

Counsel for the respondent contends that the reference to “Mr Mrs Ms” and the direction “IF FIRM OR COMPANY, SEE OVER” are intended to provide an application form where a firm or company completes the rear of the form and does not insert an entry  on the front of the form in the box marked “NAME OF APPLICANT Mr Mrs Miss”.

That may be the intention of the respondent but, if it be so, the form is poorly designed, perhaps in an attempt to capture personal and corporate applicants in the one application form, albeit a double-sided form.

A potential applicant, personal or corporate, may well have entered something in the box “NAME OF APPLICANT Mr Mrs Miss” before reading “IF FIRM OR COMPANY, SEE OVER”. Furthermore, if a person is proposing to make an application on behalf of a company, a firm, an association or a club, there is a wealth of information further down on the front of the form which a corporate applicant is expected to complete including:

·        address of premises to which electricity is required

·        address for accounts

·        purpose for which the premises will be used

·        ownership

·        technical information about mains, existing services and previous use of electricity.

Further down again on the front of the form are six numbered statements which contain advice obviously intended for all applicants. Statements 1 to 4 and 6 deal with:

·        conditions under which electricity may be may be made available

·        delays in installation

·        inspection

·        test notices

·        points of attachment (for supply)

·        tariff schedules.

The fifth statement reads as follows:

“A security deposit may be required from all consumers before supply is given.”

At the foot of the front of the form is the following statement:

TO – THE FAR NORTH QUEENSLAND ELECTRICITY BOARD

I/We the undersigned hereby make application for the supply of Electricity at the abovementioned Premises or point of supply under the terms and conditions of the “Electricity Act” 1976 and Electricity Regulations 1977.

I/We apply to be charged under the Board’s …………………………………………. Tarrif.

Dated this …………………………………day of ………………………………. 19………..

Witnessed by ……………………………………   Signature of Applicant ……………………………………….

                                                                                           (This form must be signed by the Applicant personally or

                                                                                           his/her Legal representative)

x    APPLICANT    Ô                           YOU WILL BE HELD RESPONSIBLE FOR ELECTRICITY

        TO NOTE                          CONSUMED UNTIL YOU NOTIFY THE BOARD THAT YOU NO LONGER REQUIRE SUPPLY OF ELECTRICITY AT THESE PREMISES. TWO CLEAR DAYS NOTICE MUST BE GIVEN WHERE SUPPLY IS NO LONGER REQUIRED.

It seems that a representative of a company, firm, club or association is intended and expected to go to the back of the double-sided Form 45 as soon as that representitive reads the injunction “IF FIRM OR COMPANY, SEE OVER”. Again, this is may be what is intended and it may be what often occurs. It seems likely that the corporate representative would then and there complete the data entry required in the appropriate box on the back of the form, there being separate boxes for a business which is a company, a business which is not a company and a club or association. Unless the corporate representative has already completed all of the required data entry on the front of the form, it is clearly necessary for that representative to return to the front of the form to complete the other information requested and to sign (with a witness present) in the area indicated immediately above the words “this form must be signed by the applicant personally or his/her legal representative”.

The Application under consideration here (exhibit MAL6) has entries on the front of the form in black ink or biro as follows:

·        “Jewel Hotel Group” as name of applicant

·        the town for address of premises as “Mission Beach”

·        the purpose of premises as “Resort”

·        technical information about mains and supply and previous use

·        nominated tariff as “Comm”

·        the date of the application as signed and witnessed as “12…12…90”.

The signatures on the front of the form for the witness and the applicant are in blue ink or biro, so too are the words “The Point” as a designation of the “street” in the address of premises in which electricity is required.

The signature of the applicant is “G.W.” (indecipherable), possibly “May”.

The back of the form is filled out in blue ink or biro as follows:

COMPANY OR

BUSINESS NAME                                    “NAUDUNDA NOMINEES”                                                                               

ADDRESS OF REGISTERED OFFICE  “42 ROSS ST TOORAK”                                                                                        

                        FULL NAME OF DIRECTORS                                      RESIDENTIAL ADDRESS

“BERNARD WALTER TUCK”                                              “37 MONOMEATH AVE CANTERBURY”

“LEIGH FRANCIS RATCLIFFE”                                           “10 EVANS COURT TOORAK”

“JOHN TAYLOR”                                                                    “9 YAR-ORRONG ROAD TOORAK”                                 

DATE                 “3-12-90”                     Signature of Authorised Person “G.W.” (indecipherable) possibly “May”

The signature of the authorised person on the back of the form is the same signature as appears as the signature of the applicant or legal representative on the front of the form.  It is noted that the signature in blue ink on the front purports to have been made on the 12^th of December 1990 with the endorsement “12.12.90” in black. On the back of the form is endorsed “3-12-90” in blue ink (in other words in the same ink as the signature of the authorised person).

FINDINGS

I have concluded that the Agreement to Supply Electricity arising from the Application to Supply Electricity Form 45 was an agreement made between the respondent and the applicant.  Mr Ratcliffe has sworn in his affidavit of 28 July that he does “not recognise the signature purporting to be on behalf of the applicant appearing at the foot of the agreement to supply electricity” and “no person had any authority to enter into the agreement on behalf of the applicant in respect of the supply of electricity to The Point Resort”.

Be that as it may, the same signature is endorsed on the rear of the Form 45 application and the application is there stated to be made by Naudunda Nominees and the registered office and the names and addresses of the three directors are endorsed thereon. Mr Ratcliffe is of course one of those directors. He and his two colleagues, Mr Tuck and Mr Taylor were the directors of Naudunda. They were also the directors of Kilnwick and of Kinghurst Pty Ltd, the owner of The Point. All three companies shared directors and the same registered address.

The application was accompanied by payment of security deposit in the sum of $2,500 which was paid on 12 December 1990 by way of a cheque drawn on the account of Naudunda Nominees Pty Ltd through the National Australia Bank Limited at Smithfield Queensland and a receipt was issued in the name of the applicant on that day (exhibit RG1).

Payments for electricity for The Point were received by cheque in the sum of $2,831.45 on 18 September 1992 and $2,660.65 on 4 January 1993.  Both cheques were drawn on the applicant’s N.A.B. account at Smithfield.

The application completed on or by 12 December 1990 on behalf of Naudunda Nominees, and in the name of that company, and the three payments of $2,500, $2,831.45 and $2,660.65 respectively on 12 December 1990, 18 September 1992 and 4 January 1993, have led me to the conclusion, already stated, namely that the applicant agreed to pay for electricity to The Point from the respondent and made payments in 1990, 1992 and 1993.

There is clear evidence that two cheques for electricity to The Point, both in the sum of $3,500, were received by the respondent, one on 20 July 1994, the other on 17 August 1994. Both those cheques were drawn on the Kilnwick account at the N.A.B. at Smithfield. The fact that the notices of account were all addressed to “The Jewel Hotel Group” and the payments of July and August 1994 were made on the account of Kilnwick, rather than Naudunda Nominees, does not detract from the conclusion that the applicant was the debtor and that the default judgment was correctly issued against the applicant. Having reached such conclusion I likewise conclude that there is no genuine dispute between the creditor and debtor in respect of  the debt.

The assertion that if there be a debt in respect of supply of electricity to The Point it is a debt of Kilnwick cannot be sustained in the face of:

·        three payments by the applicant

·        an initial receipt issued in the name of Naudunda Nominees

·        the inclusion of Naudunda Nominees as applicant in the Application for the Supply of Electricity and in an application signed purportedly as authorised representative of Naudunda Nominees

·        electricity supplied under the agreement for over three years before Kilnwick existed under that name.

It should also be observed that:

·        Kilnwick is in liquidation

·        Mr Ratcliffe deposed on 28 July that the applicant’s solicitors had been instructed to apply to set aside the default judgment

·        on the morning of the hearing on 28 September  no application to set aside the judgment had been filed in the Magistrates’ Court at Cairns.

In terms of Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 147 ALR 444 at 455 and 456 I am not satisfied that:

·        the dispute is “bona fide and truly exists in fact”

·        “the grounds for alleging the existence of a dispute are real and not spurious, hypothetical, illusory or misconceived”.

In the circumstances I propose to dismiss the application to set aside the creditor’s statutory demand for payment of debt.

ORDERS

1.      The application to set aside the creditor’s statutory demand for payment of debt be dismissed.

2.      The applicant pay the respondent’s costs of and incidental to the application.

Associate:

Dated: 7 OCTOBER 1998