You are here:
AustLII >>
Databases >>
Supreme Court of New South Wales >>
2011 >>
[2011] NSWSC 137
[Database Search]
[Name Search]
[Recent Decisions]
[Noteup]
[Download]
[Context] [No Context] [Help]
Abadeen Group Pty Limited v Bluestone Property Services Pty Limited [2011] NSWSC 137 (23 February 2011)
![[AustLII]](137.1.gif)
Supreme Court of New South Wales Decisions
[Index]
[Search]
[Download]
[Help]
Abadeen Group Pty Limited v Bluestone Property Services Pty Limited [2011] NSWSC 137 (23 February 2011)
Last Updated: 27 May 2011
|
Case Title:
|
Abadeen Group Pty Limited v Bluestone Property
Services Pty Limited |
|
|
|
Medium Neutral Citation:
|
|
|
|
|
Hearing Date(s):
|
|
|
|
|
Decision Date:
|
|
|
|
|
Jurisdiction:
|
|
|
|
|
Before:
|
|
|
|
|
Decision:
|
Application dismissed with costs |
|
|
|
Catchwords:
|
CORPORATIONS - application to set aside statutory
demand - whether genuine offsetting claim - whether court should exercise its
discretion
under s 459J(1)(b) of the Corporations Act - judgment subject to
application for special leave to appeal to High Court - discretion
refused due
to limited prospects of success of application |
|
|
|
Legislation Cited:
|
|
|
|
|
|
|
|
|
|
Texts Cited:
|
R Meagher, D Heydon and M Leeming, Meagher Gummow &
Lehane's Equity Doctrine & Remedies, 4th ed, (2002) |
|
|
|
Category:
|
|
|
|
|
Parties:
|
Abadeen Group Pty Limited (ACN 056 601 640)
(Plaintiff) Bluestone Property Services Pty Limited (ACN 090 597 836)
(Defendant) |
|
|
|
Representation
|
|
|
|
|
Counsel: Mr J P Donohoe (Plaintiff) Mr J T
Johnson (Defendant) |
|
|
|
- Solicitors:
|
Solicitors: Avondale Lawyers (Plaintiff) ERA
Legal (Defendant) |
|
|
|
File number(s):
|
|
|
|
Publication Restriction:
|
|
Judgment
Introduction
- This
is an application under s 459G of the Corporations Act 2001 (the Act) to set
aside a statutory demand dated 23 September 2010 for $740,271.86 which was
served by the defendant, Bluestone, on
the plaintiff, Abadeen.
- The
demand is based on a debt of $600,000 plus interest arising from a judgment
obtained by Bluestone against Abadeen in this court
on 9 April 2008.
- Abadeen
seeks to set aside the demand on two bases. First, it relies on what it says are
three offsetting claims. Second, Abadeen
says that the court ought, in the
exercise of the discretion conferred by s 459J(1)(b) of the Act, set aside the
demand because it (Abadeen) has filed an application for special leave to appeal
to the High Court in respect
of the judgment debt and that application and any
resulting appeal has merit.
Background
- Mr
Justin Brown and Mr Lance Hodgkinson are both property developers. Through their
various companies, and sometimes in conjunction
with Mr Daniel Hausman and
companies associated with him, they were involved in a number of substantial
property developments including
one at 282 Oxford Street, Bondi Junction (
the Oxford Street Development ), one at 519-539 St Kilda Road ( the
Chevron Development ), and one at Miller Street, Cammeray ( the Cammeray
Development ). Abadeen is one of the companies associated with Mr Brown. He
remains a director of it and swore the affidavit in support of the
current
application. Bluestone is a company associated with Mr Hodgkinson.
- In
late 2005, Mr Brown, who was under considerable financial pressure from other
developments in which he was involved, wanted to
sell out of the Cammeray
Development. Eventually he, Mr Hodgkinson and Mr Hausman, who also had an
interest in the development, met
at the Lord Dudley Hotel in Paddington to
discuss the terms on which Mr Brown might be bought out.
- Following
a lengthy discussion, Mr Brown wrote on a single sheet of paper an outline of
what was proposed. The sheet of paper was
signed by each of them, although there
was a dispute about when the document was signed by Mr Hodgkinson. Mr Brown
claimed that the
document gave rise to or evidenced an enforceable agreement.
- Some
of the payments contemplated by the document prepared at the Lord Dudley were
subsequently made. However, a number of the more
complicated transactions
contemplated by the document were not implemented and ultimately Mr Brown and
the companies associated with
him commenced proceedings against Mr Hodgkinson
and Mr Hausman and companies associated with them to enforce the terms of the
agreement
he says was reached at the Lord Dudley. Bluestone served a cross-claim
seeking to recover $600,000, which had been paid by it to
Abadeen following the
Lord Dudley meeting.
- Palmer
J rejected Mr Brown's claim: Brown & Ors v Hodgkinson & Ors
[2009] NSWSC 262. In reaching that conclusion, his Honour preferred the
evidence given by Mr Hodgkinson and Mr Hausman over the evidence given by Mr
Brown, partly, at least, because, although Mr Brown gave an extensive account of
the conversation at the Lord Dudley in his affidavit,
he appeared to remember
very little about it in the witness box. In doing so, his Honour appears to have
accepted (at [58]) evidence
given by Mr Hodgkinson and Mr Hausman that there was
an express statement by Mr Hodgkinson "that he wished Mr Baxter [the parties'
solicitor] to draft an agreement properly". His Honour took the view that no
enforceable agreement was reached at the Lord Dudley.
In reaching that
conclusion his Honour said:
53 In my opinion, it is inherently improbable that Mr Hodgkinson
and Mr Hausman would have said anything to indicate an intention
to be
immediately and unconditionally bound by the terms of the Lord Dudley Agreement.
First, they were clearly having difficulty
raising the finance for the buy-out
of Mr Brown's interest in the Cammeray Development and they had earlier made
known those difficulties
to Mr Brown. Those difficulties had not been resolved
by 12 August.
54 Second, and more importantly, the buy-out of Mr Brown's interest in the
Chevron Development was raised for the first time as an
afterthought at the tail
end of the discussion. It was a complex and very large development and Mr
Brown's interest in it, held through
Greenberg, was far from transparent. Yet,
Mr Brown asserts that, notwithstanding the other parties' difficulties in
securing finance
for the buy-out of his interest in the Cammeray Development,
they agreed almost on the spur of the moment to bind themselves unconditionally
and immediately to buy out Mr Brown's interest in the Chevron Development as
well.
In relation to the subsequent payments his Honour said:
82 I accept, as Mr Durack submits, that what has happened is that those parts
of the Lord Dudley Agreement which were easily performable
... were performed in
anticipation that the complicated parts of the buy-out transaction would be
worked out in detail and embodied
in a legally binding document drafted by Mr
Baxter. There were many complications to be worked out. When the parties tried
to implement
the complicated parts of the transaction ... the transactions
unravelled because their implications had not been properly thought
out and
agreed.
- Palmer
J concluded that there was no enforceable agreement and consequently Abadeen was
liable to repay the $600,000 to Bluestone
as money had and received: [2009]
NSWSC 262 at [88]. It is that amount and interest on it which is the subject of
the statutory demand.
- An
appeal from the decision of Palmer J was dismissed by the Court of Appeal. In
substance, the Court of Appeal accepted Palmer J's
conclusions. The judgment of
the court was given by Sackville AJA with whom Hodgson JA and Campbell JA
agreed: see Abadeen Group
Pty Ltd v Bluestone Property Services Pty Ltd [2009]
NSWCA 386. In dismissing the appeal, Sackville AJA observed that "[t]here was no
dispute between the parties as to the principles to be applied
in determining
whether the parties to the Lord Dudley meeting reached a binding agreement ... "
(at [110]). After reviewing the facts
extensively, his Honour concluded:
148 When the Lord Dudley document is considered in the context of
the commercial dealings between the signatories, including the events
post-dating the Lord Dudley meeting, a reasonable person would conclude that the
parties did not intend to conclude a binding contract.
The primary Judge was
therefore correct to reach the conclusion he did.
And later:
151 In my view, for reasons that have already been explained, the parties did
not reach agreement at the Lord Dudley meeting on all
matters that were
essential to a concluded contract. Basic questions such as the identity of the
parties, the terms on which valuable
properties were to be transferred to Mr
Brown or his companies and the consequences of an inability to secure the
consent of mortgagees
to the proposed arrangements, were left to future
negotiations.
Offsetting claims
- Section
459H of the Act requires the court to calculate the "substantiated amount" of a
statutory demand by deducting from the amount which is
not genuinely in dispute
the total amount of any offsetting claims. If the substantiated amount is less
than the statutory minimum
in respect of which a statutory demand can be made
(that is, $2,000), the court is required to set aside the demand. If the amount
is at least as great as the statutory minimum, the court may make an order
varying the amount of the statutory demand. "Offsetting
claim" is defined in s
459H(5) to mean "a genuine claim that the company has against the respondent by
way of counterclaim, set-off or cross-demand (even if it
does not arise out of
the same transaction or circumstances as a debt to which the demand relates)".
- "Counterclaim"
and "set-off" have their technical meanings: John Shearer Ltd v Gehl Co
[1995] FCA 1789; (1995) 18 ACSR 780 at 786 per von Doussa, Hill and Tamberlin JJ; National
Australia Bank Ltd v Idaport Pty Ltd [2007] NSWSC 1349 at [39]- [56] per
Young CJ in Eq. However, "cross-demand" does not. As von Doussa, Hill and
Tamberlin JJ explained in John Shearer Ltd v Gehl Co [1995] FCA 1789; (1995) 18 ACSR 780
at 786:
It would seem to follow that in the context of [s 459H], a context
similar to that in section 41(7) of the Bankruptcy Act 1966 (Cth), a
cross-demand will include any claim for damages which exists at the time the
application to set aside the statutory demand
is made, which is for a monetary
amount capable of quantification whether or not it arises out of the same
transaction or circumstances
as the debt to which the statutory demand relates.
- In
this case, Abadeen relies on three cross-demands. The first two are said to
arise out of an assignment by Babcock & Brown Real
Estate Finance Pty
Limited (as trustee) ( B&B ) to Mr Brown, his wife, Brooke Brown,
Sharlotte Pty Limited, another company associated with Mr Brown, and Abadeen, of
two debts
that were guaranteed by Bluestone, Mr Hodgkinson, Emily Nominees Pty
Ltd (a company it appears is associated with Mr Hausman) and
Mr Hausman.
- The
first debt is said to arise from a facility agreement between B&B and 519 St
Kilda Road Developments Pty Ltd ( 519 St Kilda Road ), the company
through which Messrs Brown, Hodgkinson and Hausman undertook the Chevron
Development. I will refer to this facility
as the "Chevron facility" and to the
loan made under it as the "Chevron loan". Mr Brown gave evidence that the
facility was originally
for an amount of $8,640,000. He was unable to provide a
copy of the facility agreement, although he gave no explanation of why that
was
the case or of what steps he had taken to locate it. He did, however, exhibit a
copy of a deed of variation dated 15 October
2007 that named 519 St Kilda Road
as "the company", B&B as financier and Bluestone, Emily, Mr Hausman and Mr
Hodgkinson as the
guarantors. That deed of variation purports to vary the terms
of a facility agreement dated 23 December 2004 between the parties
in a number
of minor respects. The deed of variation exhibited to Mr Brown's affidavit was
only signed by B&B.
- I
accept that the deed of variation provides some evidence that B&B granted a
facility to 519 St Kilda Road which was guaranteed
by Bluestone, among others.
It is not unusual that a document such as the deed of variation was signed in
counterparts and, having
regard to the relationship between the parties, it does
not strike me as odd that Abadeen or Mr Brown only has a counterpart signed
by
B&B. In addition, it strikes me as unlikely that B&B would provide a
counterpart signed by it except in exchange for counterparts
signed by the other
parties to be bound. Consequently, I think that, for the purposes of this
application, the deed of variation
provides some evidence that 519 St Kilda Road
was granted a facility by B&B which was guaranteed by Bluestone, among
others.
However, the deed of variation says nothing about the scope of the
guarantee given by Bluestone. I return to this point below.
- The
second debt that is said to have been assigned to Abadeen arises from a facility
agreement between Gorcha Pty Ltd and B&B.
Gorcha was the company through
which Mr Brown, Mr Hodgkinson and Mr Hausman undertook the Cammeray Development.
I will refer to this
facility as the "Cammeray facility" and to the loan made
under it as the "Cammeray loan". The relevant facility agreement is in evidence.
It is an agreement between Gorcha, as borrower, B&B as lender and Bluestone,
Emily and a company known as Greenberg Investment
Development Ltd as guarantors.
The agreement in evidence is undated, but it is signed by all the parties. The
facility is for an
amount of $6,300,000.
- Clause
20.7 of the facility agreement provides:
Despite anything else in this document the following applies:
(a) the maximum amount recoverable from the Guarantors under the Relevant
Agreements will not exceed:
- (i) the total
amount available to the Financier as a result of the sale or disposal of the
Share Security (after payment of enforcement
expenses and any other money which
must or may be paid by the Financier before applying the proceeds against the
Money); or
- (ii) if the
Financier consents to a sale or disposal of the Share Security, the total
proceeds of that sale or disposal after deduction
of the expenses approved by
the Financier.
The Financier may disregard this restriction when
making demands and enforcing the security, but ultimately the Financier can
still
only recover from the proceeds of realisation of the Share Security.
(b) This clause does not apply if:
- (i) a Guarantor
takes any action to prevent the Financier exercising its power of sale or other
rights in relation to the Share Security;
or
- (ii) a
Guarantor has been fraudulent.
(c) This clause does not limit any rights the Financier has under the security
to apply amounts which it receives or recovers in
respect of the Guarantor's
debts to pay off whichever parts of those debts it chooses.
- Te
facility agreement was amended by a deed of variation dated 29 June 2007 in a
way which is not relevant to this case. However,
according to this deed, the
facility agreement was entered into on 30 September 2005.
- On
15 December 2009, B&B as assignor signed a deed assigning to Mr Brown, Mrs
Brown, Sharlotte and Abadeen its rights in respect
of the Chevron and Cammeray
loans.
- Clause
3 of the deed provides:
3.1 The Assignee agrees to pay the Consideration in two
installments [sic] as follows:
3.1.1 the Deposit on the date of this deed; and
3.1.2 the Balance of the Consideration on or prior to 23 December 2009 and in
this respect time is of the essence.
3.2 If the Balance of Consideration is not paid on 23 December 2009 the
Assignor may in its absolute discretion terminate this Deed
and the Deposit will
be forfeited to the Assignor.
3.3 ...
3.4 On the Effective Date, the Assignor assigns and transfers to the Assignee
all of its right, title and interest in and pertaining
to the Debt and the
Securities and all other rights and claims of the Assignor to the Debt and to
the Securities. The Assignee accepts
such assignment.
The "Effective Date" is defined in cl 2.1 to mean "the date the Assignor has
received the Balance of the Consideration in full and
clear funds".
- The
"Consideration" is defined in cl 2.1 to mean $570,000.00 to be paid in two
instalments: $50,000 on execution and $520,000.00 on
or prior to 23 December
2009.
- Mr
Brown in his affidavit asserts that the amount outstanding to B&B in respect
of the Chevron loan as at 23 December 2009 was
$3,434,586.01 and the amount
outstanding in respect of the Cammeray loan at that date was $1,841,850.70. In
support of that assertion,
he exhibits three documents to his affidavit.
However, he gives no explanation of those documents. The first appears to be a
summary
prepared for the purposes of these proceedings. It is clearly not
admissible evidence. The other two documents appear to be computer
print outs of
some sort. Each is described as a "loan schedule as at October 13, 2010". The
schedule in respect of the Chevron loan
records repayments and the accrual of
interest until 23 December 2009. The schedule in respect of the Cammeray loan
records repayments
and the accrual of interest until 29 June 2007. Where the
documents come from, however, is unclear.
- The
deed of assignment was varied by a deed of amendment dated 24 December 2009.
That deed of amendment replaced cl 3.4 with the following
clause:
3.4 On the Effective Date, the Assignor assigns and transfers to
the Assignee all of its right, title and interest in and pertaining
to the Debt,
Debt Documentation, including any guarantees set out in the Debt Documentation
and the Securities and all other rights
and claims of the Assignor to the Debt,
Debt Documentation, including any guarantees set out in the Debt Documentation
and to the
Securities. The Assignee accepts such assignment.
- On
the same date as the deed of amendment was signed (that is, 24 December 2009)
the original assignees signed a deed by which they
assigned to Southern Cross
Constructions (NSW) Pty Limited a 50 per cent interest in the debt documentation
and securities to be
assigned to them by B&B in consideration for half the
amount payable by them to B&B.
- According
to Mr Brown, Southern Cross Constructions reassigned its interest to the
original assignees in or about March 2010. However,
the document exhibited to Mr
Brown's affidavit in support of that assertion is undated and unsigned. The
document purports to annex
the original deed of assignment but no document is
annexed.
- There
is no evidence that the balance of the consideration of $520,000 payable by the
original assignees was ever paid to B&B.
Mr Brown does not specifically
assert that it was, let alone annex any material which would constitute evidence
of the payment.
- The
third off-setting claim is said to arise in relation to the Oxford Street
Development. It appears that that development was owned
by a company known as
282 Oxford Street Pty Limited which held the development as trustee of a unit
trust. Fifty units in that unit
trust were held by Bluestone and fifty units
were held by Sharlotte. Mr Brown says that Sharlotte entered into an agreement
to sell
its units to Bluestone for $450,000 and that Sharlotte then assigned
that debt to Abadeen and Mr Brown.
- A
signed version of the unit sales agreement is exhibited to Mr Brown's affidavit.
Clause 2.1 of that agreement provides:
In consideration of the agreement by Bluestone to pay the sum of
$450,000.00 contained in this deed, Sharlotte agrees to sell all
its interest in
the Sale Units in the Trust to Bluestone and to transfer to Bluestone those 50
units (free of Encumbrances and other
third party rights and interests).
Clause 2.2 sets out a payment schedule. The first payment of $400,000 was due
on 15 November 2006. The balance was payable on 31 March
2007.
- Mr
Brown exhibited to his affidavit a deed of assignment dated 1 October 2010 by
which Sharlotte purported to assign to Mr Brown and
Abadeen for the
consideration of $1 "all of its right, title and interest in and pertaining to
the Debt and all other rights and
claims of the Assignor to the Debt".
- "Debt"
is defined in cl 2.1 to mean:
all moneys owed by the Debtor to the Assignor as referred to in the
Loan Agreement and secured by the Securities.
However, "Loan Agreement" and "Securities" are not defined, although the
expression "Unit Sales Agreement" is defined to mean:
the unit sales agreement dated 15 August 2006 between Bluestone Property
Services Pty Limited, the Assignor and Lance Vincent Hodgkinson.
The deed of assignment exhibited to Mr Brown's affidavit has only been signed
by Mr Brown. His signature has not been witnessed.
- In
order to attract the operation of s 459H, the off-setting claim must be genuine.
In this context, that requirement has two aspects.
- First,
there must be some evidence which supports the factual allegations that go to
make up the claim: see Macleay Nominees Pty Ltd v Belle Property Easts Pty
Ltd [2001] NSWSC 743 at [18] per Palmer J. It is not sufficient simply for
the facts to be asserted either in the supporting affidavit or by, for example,
annexing
a copy of the relevant statement of claim: Endeavour Film Management
Pty Ltd v Fox Studios Australia Pty Ltd [2003] NSWSC 831 per Macready M. The
relevant evidence does not need to be admissible at a final hearing on the
merits of the case: Graywinter Properties Pty Ltd v Gas & Fuel
Corporation Superannuation Fund [1996] FCA 822; (1996) 70 FCR 421; 21 ACSR 581 at 587.
However, the evidence needs to be sufficient to satisfy the court that the claim
has a proper factual basis: John Holland Construction and Engineering Pty Ltd
v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 (a case dealing with whether
there was a "genuine dispute" within the meaning of s 459H(1) of the Act).
- Second,
the claim must have some merit. As Barrett J pointed out in Toorallie Pty Ltd
v Black [2001] NSWSC 1088 at [14], different judges have expressed this
requirement in different ways. So, for example, Santow J in Edge Technology
Pty Ltd v Lite-On Technology Corporation [2000] NSWSC 471; (2000) 34 ACSR 301 at [25], said
that the claim must be "real and not spurious". Some judges have expressed the
requirement in terms of good faith: see, eg,
Jesseron Holdings Pty Ltd v
Middle East Trading Consultants Pty Ltd (1994) 13 ACSR 787 at [791] per
Young J; Macleay Nominees Pty Ltd v Belle Property East Pty Ltd at [18]
per Palmer J, although in Intag Microelectronics Pty Ltd v AWA Ltd (1995)
18 ACSR 284 at 289 Young J expressed the requirement in terms of real chance of
success. Others have said that the requirement of genuineness
raises much the
same issues as the "serious question to be tried" criterion which arises in
relation to interlocutory injunctions:
see Scanhill Pty Ltd v Century 21
Australasia Pty Ltd [1993] FCA 618; (1993) 12 ACSR 341 at 357 per Beazley J; Royal
Premier Pty Ltd v Taleski [2001] WASCA 48 at [63] per Wallwork J. All of
these various formulations help to explain what is intended to be conveyed by
the requirement that the offsetting
claim be "genuine". They are obviously not
intended to be a substitute for that requirement.
Does the guarantee of the Cammeray loan give rise to an
offsetting claim?
- It
is convenient to deal first with the debt which is said to arise from the
assignment of the Cammeray loan and the guarantee of
that loan given by
Bluestone (among others). In my opinion the guarantee of the Cammeray loan
cannot give rise to an genuine offsetting
claim because it is clear from the
terms of cl 20.7 of the Cammeray facility that that guarantee was limited to the
amount of the
security taken by B&B in respect of the loan. The guarantee
was not in respect of any outstanding liability in relation to the
loan. Abadeen
did not assert that B&B had not realised the security it held in respect of
the loan; and, in any event, it is
difficult to see how the assignment of a
limited recourse guarantee of the type in question could give rise to an
offsetting claim.
Mr Donohoe, who appeared for Abadeen sought to answer this
point by saying that cl 20.7(a) provides that the financier (that is,
B&B
and therefore any assignee) may disregard the limitation on the guarantee when
making demands and enforcing the securities.
However, I cannot see how this
helps when the clause goes on to say that "the Financier can still only recover
from the proceeds
of the realisation of the Share Security".
Does the guarantee of the Chevron loan give rise to an
offsetting claim?
- The
position in relation to the Chevron loan is more complicated.
- Bluestone
submitted that the assignment of that loan and the corresponding guarantee were
ineffective or did not give rise to a genuine
offsetting claim for three
reasons. First, it submitted that the assignment was not effective because
notice of the assignment had
not been given in accordance with the requirements
of s 12 of the Conveyancing Act 1919. Second, it submitted that there
cannot be a genuine offsetting claim because the guarantee is a joint guarantee.
Third, it is submitted
that the evidence in support of the offsetting claim is
inadequate.
- I
do not accept the first or second of these submissions.
- As
to the first, there is a question about the scope of s 12 of the Conveyancing
Act 1919: for discussion, see R Meagher, D Heydon and M Leeming, Meagher
Gummow & Lehane's Equity Doctrine & Remedies, LexisNexis,
4th ed, para
[6-025]ff. However, for the purposes of determining whether there is a genuine
offsetting claim, it is at least arguable
that the assignment is effective in
equity even if notice of it has not been given; and there is no reason why
notice of it cannot
be given now. In those circumstances, I do not accept that
absence of notice of the assignment means that the claim is not a genuine
one.
- As
to the second submission, even assuming that the liability of the guarantors is
a joint liability, there is nothing to prevent
one guarantor from enforcing that
liability. It would, of course, be necessary for that guarantor to join the
other guarantors as
parties to the proceedings - either as plaintiffs or, if
they refuse to be joined as plaintiffs, as defendants: see UCPR r 6.20.
But
there is clearly a mechanism by which Abadeen alone could seek to obtain the
benefit of the guarantee; and for that reason it
seems to me that the fact that
the guarantee is given to Abadeen jointly with others does not mean that Abadeen
does not have a genuine
claim. It is true that the value of that claim is not
the whole amount of the debt. However, in the absence of any evidence, I think
that it would be reasonable to infer for present purposes that each assignee is
entitled to an equal share of the guaranteed amount.
- On
the other hand, I accept Bluestone's third submission. In order for Abadeen's
claim in respect of the Chevron loan to be genuine,
there must be sufficient
factual material to support the essential elements that go to make up that
claim. In my opinion, there are
three essential elements that go to make up
Abadeen's claim. First, it must establish that it has a genuine claim that 519
St Kilda
Road owed B&B at the time of the assignment $3,434,586.01 (or some
other amount) and that that amount (or some other amount)
remains owing. Second,
it must establish that it has a genuine claim that Bluestone guaranteed the
repayment of that amount. Third,
it must establish that it has a genuine claim
that the assignment of B&B's rights to Abadeen (and others) took effect.
- As
to whether the amount of $3,434,586.01 remains owing, as I have said, Mr Brown
does not explain where the schedules exhibited to
his affidavit in support of
that amount come from. However, it appears that on the face of it that the
schedule in relation the Chevron
loan is some sort of computerised ledger that
was produced on 13 October 2010 and which records the position of the Chevron
loan
as at 23 December 2009. It seems clear that the Chevron Development faced
considerable financial difficulties and it is not surprising
in those
circumstances that a substantial amount remained owing to B&B in respect of
it, or that B&B was willing to take
a very substantial discount on its
assignment. Consequently, although the evidence is scant, I am prepared to
accept that Abadeen
has a genuine argument that the amount of the debt owed by
519 St Kilda Road is $3,434,586.01.
- I
am not, however, prepared to conclude that Abadeen has a genuine claim that
payment of the $3,434,586.01 was guaranteed by Bluestone.
I accept that the deed
of variation in respect of the Chevron loan establishes that Bluestone provided
some form of guarantee. However,
as the Cammeray facility demonstrates, the
guarantee could be a limited recourse one which does not give rise to an
offsetting claim.
In the absence of any other evidence, it may be possible to
infer that, if a guarantor has provided a guarantee in respect of a facility,
then there is at least a genuine claim that the guarantee extends to all amounts
repayable under the facility. In this case, however,
both the Chevron and
Cammeray loans were provided by B&B to essentially the same parties
approximately a year apart. Both loans
were provided for property developments.
Moreover, the deeds of variation in respect of both facilities were drafted by
Minter Ellison
and, although Minter Ellison's name does not appear on the
Cammeray facility, it seems clear from the layout and font of the document
that
it, like the deeds of variation, was drafted by Minter Ellison. I think
therefore that it can be inferred that Minter Ellison
also drafted the Chevron
facility. It cannot, however, be inferred that the two facility agreements were
in the same terms. That
is because the deed of variation in respect of the
Chevron facility makes amendments to clauses which clearly do not correspond to
similarly numbered clauses in the Cammeray facility. However, given the other
similarities between the two loans, I am unwilling
to infer that the guarantee
in the Chevron facility was not a limited recourse one. All that can be inferred
is that Bluestone gave
some type of guarantee. However, in circumstances where
nothing can be inferred about the nature of the guarantee, I do not think
that
it can give rise to a genuine offsetting claim.
- Nor
am I prepared to conclude that Abadeen has a genuine claim that the guarantee
was assigned to it. In some cases the existence
of an assignment agreement may
be sufficient to establish that there is a genuine claim that the assignment
occurred. Here, however,
the assignment was not to take effect until the payment
of the second tranche of $520,000. That amount had to be paid by 23 December
2009. However, it is clear that that payment was not made by that date. Instead,
the assignees agreed to assign half their interest
in the Chevron loan and
guarantee to Southern Cross Constructions in return for half the consideration
payable to B&B. In my
opinion, where the due date had passed and time was of
the essence, it was necessary in order for Abadeen to establish that it had
a
genuine claim for it to produce at least some evidence that it made the payment
required to make the assignment effective. The
agreement with Southern Cross
Constructions does not do that; nor does any other evidence produced by Abadeen.
Does the transfer of units give rise to an offsetting claim?
- The
last offsetting claim relied on by Abadeen is the claim said to arise from the
assignment of the units in the unit trust relating
to the Oxford Street
Development. In my opinion, there are two reasons why that claim is not genuine.
- First,
there is no evidence that Sharlotte has ever been in a position to transfer its
units to Bluestone free of any encumbrances
and other third party rights and
interests, let alone that it has done so. What evidence there is suggests that
Sharlotte has not
transferred the units to Bluestone and has not been in a
position to do so. Bluestone was due to pay the first instalment of the
purchase
price on 15 November 2006. Despite that, and despite the fact that companies
associated with Mr Brown are facing financial
difficulties, there is no evidence
that Sharlotte has done anything to recover the amount due to it. Instead, it
simply assigned
its rights to Abadeen on 1 October 2010 for $1. In the absence
of any other evidence, the inference is that Sharlotte did not seek
to recover
the money under the agreement because it had not and could not transfer its
units to Bluestone.
- Secondly,
there is no evidence of a valid assignment to Abadeen of Sharlotte's rights. In
particular, the assignment relied on by
Mr Brown is not signed by Sharlotte and
there is no evidence that Sharlotte has signed that document.
Should an order be made under s 459J?
- The
second ground on which Abadeen seeks to set aside the statutory demand is that
it has lodged an application for special leave
to appeal against the judgment
debt on which the demand is based.
- Section
459J of the Act provides:
(1) On an application under section 459G, the Court may by order
set aside the demand if it is satisfied that:
(a) ...
(b) there is some other reason why the demand should be set aside.
- In
Eumina Investments Pty Ltd v Westpac Banking Corporation [1998] FCA 824
(1998) FCR 454 at 459 Emmett J said:
It is, in my opinion, appropriate for a Court to exercise the
discretion conferred by s 459J(1)(b) where the Court is satisfied that
there is
an appeal based on reasonable and arguable grounds which, if successful, would
result in the existence of an offsetting
claim.
In that case, the offsetting claim had failed but was the subject of an
application for special leave to appeal to the High Court.
Emmett J, after
considering the applicant's summary argument in support of the special leave
application and the respondent's summary
argument in response, concluded that
the application was based on reasonable and arguable grounds. Consequently, his
Honour concluded
that there was some other reason within the meaning of s 459J
why the demand should be set aside. However, his Honour, was only prepared
to
set aside the demand on condition that the amount in dispute should be paid into
court or secured in some other way.
- In
Eumina Investments , Emmett J expressed the view that, in exercising the
discretion conferred by s 459J(1)(b), it may be appropriate to draw a
distinction
between an appeal in respect of the debt which is the subject of a
statutory demand and an appeal in respect of an offsetting claim.
In the former
case, it is always open to the judgment debtor to apply for a stay of the
judgment pending an appeal - in which case,
there is no current debt that can be
the subject of a statutory demand. An order under s 459J(1) is, in effect,
simply another means
of achieving that result. However, that is not so in the
case of an offsetting claim. A stay of a judgment holding that there is
no
offsetting claim (even assuming it could be obtained) would not have the effect
of a stay of the judgment debt that is the subject
of the statutory demand. That
result can only be achieved by an order under s 459J(1). Nonetheless, in
Midas v Equator [2007] NSWSC 759, Hammerschlag J took the view that
Emmett J's reasoning applied equally to a claim that was the subject of a
statutory demand; and
in that case, his Honour was prepared to make an order
under s 459J(1) in respect of such a claim even where a stay application had
been refused. Again, his Honour's order was conditional on the amount in dispute
being paid into court.
- On
the face of it, s 459J(1) confers a broad discretion and there is no reason in
principle why it should not apply where there is
an appeal against the judgment
debt which is the subject of a statutory demand. However, in my opinion, a very
relevant factor to
whether the court should exercise that discretion is whether
an application for a stay is available and, if so, whether it has been
made and
refused.
- In
any event, in this case, I do not think that Abadeen's application for special
leave to appeal provides a ground for making an
order under s 459J(1). It is, of
course, a matter for the High Court whether it grants special leave or not - as
Emmett J acknowledged
in Eumina Investments Pty Ltd v Westpac Banking
Corporation (1998) FCR 454. However, in my opinion, the grounds that Abadeen
advances in the Summary of Argument it has filed with the High Court
in support
of its application for special leave are weak. Abadeen does not identify any
error of principle said to have been made
by the Court of Appeal. It appears to
accept that the matters considered by the Court of Appeal were relevant. Its
complaint appears
to be that the Court of Appeal placed too much weight on gaps
in the agreement and inadequate weight on what were said to be substantial
acts
of part performance. That complaint, however, does not strike me as one that is
likely to attract special leave, even assuming
that it could be made out. In
addition, it is clear from the judgments at first instance and the Court of
Appeal that one of the
reasons Abadeen failed was that the courts found as a
fact that the parties did not intend to enter into a binding agreement at the
meeting at the Lord Dudley. That conclusion was supported by evidence given by
Mr Hodgkinson and Mr Hausman (which Palmer J preferred
over the evidence given
by Mr Brown), the circumstances of the meeting and the complexity of the
proposed agreement. In my opinion,
those considerations make it unlikely that
the High Court will conclude that the appeal was a suitable vehicle for any
issue of principle
that Abadeen may be able to identify.
Orders
- The
application is dismissed with costs.
**********
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/137.html
