CMS Civil Mining Pty Ltd v Gunderson [2014] QSC 208

1 SUPREME COURT OF QUEENSLAND CITATION: CMS Civil Mining Pty Ltd v Gunderson [2014] QSC 208 PARTIES: CMS CIVIL MINING PTY LTD (ACN 154 569 785) (applicant) v BRETT JOHN GUNDERSON (respondent) FILE NO: BS6376/14 DIVISION: Trial PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland DELIVERED ON: 7 August 2014 DELIVERED AT: Brisbane HEARING DATE: 7 August 2014 JUDGE: Atkinson J ORDERS: 1. Pursuant to section 459H(4) of the Corporations Act 2001 the statutory demand dated 19 June 2014 from the respondent to the applicant in relation to a debt due by the applicant to the respondent pursuant to an invoice dated 1 March 2014 being the minimum Royalty Payment owing under the Lease for the month of March 2014 be varied by amending the amount of the debt from $17,000.00 to $15,000.00. 2. Pursuant to section 459H(4) of the Corporations Act 2001 it is declared that the statutory demand identified in paragraph 1, as varied, be deemed have had effect as from when the demand was served on the applicant. 3. The application of the applicant filed 10 July 2014 be dismissed. 4. The applicant pay the respondent’s costs of and incidental to the application. CATCHWORDS: CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS – ASSESSING GENUINENESS – GENERALLY – where the applicant applied to set aside a statutory demand pursuant to s 459G of the Corporations Act 2001 (Cth) – where the applicant alleged that there were genuine disputes about the debt due -- 1 of 4 -- 2 to, inter alia, misrepresentations by the respondent – whether there was a genuine dispute about the debt – whether the application to set aside the statutory demand should be allowed Corporations Act 2001 (Cth), s 459G, s 459H(4) COUNSEL: S Hogg for the applicant D A Skennar for the respondent SOLICITORS: M+K Lawyers for the applicant Morgan Conley Lawyers for the respondent . -- 2 of 4 -- 3 HER HONOUR: The applicant, CMS Civil Mining Proprietary Limited (“CMS”), has made an application to the Court to set aside statutory demands made by the respondent, Brett John Gunderson. The respondent accepts that the amounts claimed in the statutory demands will need some adjustment for payments that have been made by the applicant. That is not, it is conceded by both sides, a reason to set them 5 aside. The applicant argues that the statutory demand should be set aside because there is a genuine dispute as to whether or not the debt sought to be recovered by the demand is, in fact, a debt owed by the applicant to the respondent. The parties are parties to a lease which was entered into between the applicant and 10 the respondent, which is exhibited to the affidavit filed by the director of the applicant with the application to set aside the statutory demand. The lease was entered into to commence on 8 December 2013, with an expiry date of 7 December 2023. The consideration for the lease is set out in item 7 of the lease. It provides for certain payments to be made in certain circumstances, which appear to depend on 15 whether or not material to be extracted from the land meets specifications for what is therein described as “Frac Sand”, with greater amounts being payable if there is Frac Sand material extracted from the land, which meets certain specifications. It is unnecessary to go through all of those specifications in detail, except to say that item 7 in the lease clearly envisages different outcomes, depending on precisely what is 20 able to be extracted from the land. There is, however, a minimum amount to be paid, described therein as the minimum royalty, which is that the lessee, who is the applicant, CMS, will pay the lessor, the respondent, Mr Gunderson, a minimum royalty of $20,000 per calendar month, in 25 recognition of the lessor relinquishing to the lessee the existing customers of the lessor for materials on the land. Payments were to commence one month after the commencement date. It is not disputed that payments in accordance with that clause have not been made. Though some moneys have been paid, the payments in accordance with that paragraph have not been made. 30 The applicant alleges three genuine disputes. It alleges that the respondent has not relinquished his existing customers, as required by the paragraph to which I have referred. There is no evidence to suggest that that is the case. Therefore, there is no basis for me to conclude that that is a genuine dispute. 35 The second and third grounds involve alleged misrepresentations by the respondent to the applicant, prior to entering into the lease. The first misrepresentation relied upon in the outline of submissions was not contained in the affidavit filed within the 21 days, where an entirely different alleged misrepresentation was relied upon and, 40 in my view, there is no basis for a new ground of dispute to be set out in the later affidavit, trying to prove a genuine dispute which was not set out in the affidavit filed within time. The alleged misrepresentation referred to in the affidavit filed within time is said to 45 be that there was Frac Sand on the property. It is submitted that, but for this representation, the applicant would not have entered into the lease. In his affidavit, he said he either would have negotiated a lower rate of rent or not entered into the lease. There has been no attempt by the applicant to rescind the lease and, indeed, -- 3 of 4 -- 4 through his solicitors, he has informed the respondent that he has no intention of abandoning the business which he has conducted on the land, which, of course, requires the lease to be valid for him to be present on the land. Further, the manner in which payments are set out in item 7, clearly envisages that 5 there may or may not be Frac Sand and there may or may not be Frac Sand of a certain quality on the land and, further, in clause 5.9.3 of that lease, it is said that: No promise, representation or warranty (including without limitation as to the suitability of the Land to conduct the Lessee’s business or to the fittings fixtures 10 and facilities of the improvements on the Land) has been given or made by or on behalf of the Lessor to the Lessee. That directly contradicts, by contract, any suggestion that there was such a misrepresentation. Accordingly, there does not appear to me to be a genuine dispute 15 about the debt and I make the following orders: 1. Pursuant to section 459H(4) of the Corporations Act 2001 the statutory demand dated 19 June 2014 from the respondent to the applicant in relation to a debt due by the applicant to the respondent pursuant to an invoice dated 1 20 March 2014 being the minimum Royalty Payment owing under the Lease for the month of March 2014 be varied by amending the amount of the debt from $17,000.00 to $15,000.00. 2. Pursuant to section 459H(4) of the Corporations Act 2001 it is declared that the statutory demand identified in paragraph 1, as varied, be deemed have had 25 effect as from when the demand was served on the applicant. 3. The application of the applicant filed 10 July 2014 be dismissed. 4. The applicant pay the respondent’s costs of and incidental to the application. -- 4 of 4 --