Driftlake Pty Ltd v Louie [2005] QSC 271

SUPREME COURT OF QUEENSLAND CITATION: Driftlake Pty Ltd v Louie [2005] QSC 271 PARTIES: DRIFTLAKE PTY LTD (ACN 102 378 487) v KIM LOUIE FILE NO/S: BS 4551 of 2005 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court, Brisbane DELIVERED ON: 30 September 2005 DELIVERED AT: Brisbane HEARING DATE: 15 July 2005 JUDGE: Moynihan J ORDER: 1. Statutory demand set aside. CATCHWORDS: CORPORATIONS – PRACTICE AND PROCEDURE – OTHER CASES – application to set aside a statutory demand on the basis that there is a genuine dispute in term s of s 459H of the Corporations Act 2001. Corporations Act 2001 (Cth); Land Sales Act 1984 (Qld); Property Agents and Motor Dealers Act 2000 (Qld). Beeps Pty Ltd v Marketplace Communications Pty Ltd [2003] QSC 347; Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785; MNM Developments Pty Ltd v Gerrard [2005] QCA 230; MP Management (Aust) Pty Ltd v Churven & Anor [2002] QSC 320; Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601; Rohalo Pharmaceutical Pty Ltd v Scherer SpA (1994) 15 ACSR 347; COUNSEL: Miss C Heyworth-Smith for the applicant; Mr N Ferrett for the respondent. SOLICITORS: Hynes Lawyers for the applicant; F G Forde Knapp & Marshall for the respondents. [1] MOYNIHAN J: This is an application to set aside a statutory demand on the basis that there is a genuine dispute in term s of s 459H of the Corporations Act 2001. -- 1 of 4 -- 2 [2] On 20 May 2004 the applicant as purchaser and the respondent as vendor entered into a contract for the sale of proposed lots of land to be subdivided which the applicant intended to develop. [3] The contract was subject to conditions, two of which are relevant for present purposes. First, was a condition of the sealing of a plan of subdivision on terms satisfactory to the applicant; clause 4.1(g)(i). Secondly, on the plan of subdivision being registered on terms satisfactory to the applicant and a separate certificate of title issue on or before 12 months from the date of the contract; clause 4.1(g)(ii). [4] Clause 6 of the contract provided for a “non-refundable” deposit of $193,968 was payable as follows:- “(a) $25,000 on the respondent signing the contract (b) $25,000 after the expiration of the due diligence period (c) $46,984 four months after the contract had been signed (d) $96,984 nine months after the respondent signed the contract.” The applicant paid each of the first three instalments which the contract provided were to be “paid and released immediately to the Seller”, that is paid to the “Deposit Holder” and released to the “Seller” immediately. The Deposit Holder was the designated agent for the sale of the proposed lots. The amount of the fourth instalment, $96,984 is the subject of the statutory demand. [5] On 21 February 2005 the respondent invited the termination of the contract and on 25 February the applicant purported to terminate it on three grounds: (a) the plan of subdivision would not be sealed by the Gold Coast City Council on terms satisfactory to the applicant; clause 4.1(g); (b) there was no Form 30 warning notice attached to the contract as required by sections 366 and 367 of the Property Agents and Motor Dealers Act 2000; (c) the contract was void because there was a condition requiring immediate release of the deposit money to the respondent in breach of s 11 of the Land Sales Act 1984. [6] The respondent did not accept the termination, disputed the grounds and issued the statutory demand the subject of this application. [7] The applicant bears the onus of demonstrating a genuine dispute or offsetting claim; s 459E(1)(a) of the Corporations Act 2001. [8] There is now a considerable body of cases in which the application of the section has been considered. It is sufficient to say that the evidence put forward by the applicant must do more than raise a dispute or offsetting claim; it must enable the court to determine the genuineness of the dispute or claim1 . [9] In my view the respondent’s point that the deposit was payable whether or not the condition in clause 4.1(g) was met is well made and in any event the 12 month 1 Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601 at 605; Rohalo Pharmaceutical Pty Ltd v Scherer SpA (1994) 15 ACSR 347; Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785; Beeps Pty Ltd v Marketplace Communications Pty Ltd [2003] QSC 347 -- 2 of 4 -- 3 period provided for in that subsection had not expired when the applicant purported to terminate it. [10] Section 11 of the Land Sales Act 1984 required the deposit to be paid to a real estate agent duly licensed under the Property Agents and Motor Dealers Act 2000 be held in a trust account and dealt with in accordance with Part 2 of the Act. The agent receiving the money as trustee was obliged to hold it in its trust account until the purchaser became entitled to a refund or the vendor to payment in accordance with that part of the Act or otherwise according to law. [11] Clause 6 of the contract provided for payment of the deposit of Retail Direct who satisfied the requirements of the Act and became obliged to hold the deposit moneys in accordance with its terms. It is therefore not to the point that Retail Direct may have been the agent for the sale of the proposed lots. In any event it is difficult to see that non compliance with s 11 would provide a basis for termination of the contract. [12] I turn to the question of compliance with s 336 of the Property Agents and Motor Dealers’ Act 2000. It is accepted for present purposes that the Act applies. Section 366(1) obliged the respondent to “attach” as the contents “first or top sheet” a “warning statement”. If that was not done the applicant had a right to determine the contract by notice prior to the date of settlement; s 367(2). Any deposit is to be returned within 14 days. [13] The requirement of the sections was considered by Muir J in MP Management (Aust) Pty Ltd v Churven & Anor2 and in MNM Developments Pty Ltd v Gerrard3 . “Attached” connotes physical joinder, e.g. stapling, pinning. The requirement and the right to terminate applies to the concluded contract. [14] The affidavit sworn by the applicant’s director and secretary in support of the application swore the contract was entered into on 20 May 2004 and that it “did not attach a warning statement s required by s 336”. [15] The affidavit filed in support of the application sworn by the sole director and secretary of the applicant, Cameron Neil Davis, deposed that a warning statement in Form 30C as required by s 366 of the Property Agents and Motor Dealers’ Act 2000 was not attached to the contract. [16] The contract was executed under the common seal of the applicant and Davis deposes “the contract did not attach” a warning statement in Form 30C. [17] The respondent deposes that an executed Form 30 was attached to a draft contract first presented to her on 8 April 2004. [18] Her solicitors prepared amended special conditions and that when the applicant’s agent attended to collect them he detached the original warning statement from the draft contract and placed it on top of the contract documents incorporating the special revised conditions stating he would take the documents to his client for instruction. 2 [2002] QSC 320 3 [2005] QCA 230 -- 3 of 4 -- 4 [19] She further deposes that when the agent attended on her on 20 May 2004 he was not accompanied by anybody else, that the original and duplicate of the contract executed on that day had the Form 30 warning attached by clips and had already been executed by the applicant. [20] The agent presented them by removing the warning statement and attached it again by means of the clips when she had executed it. [21] In his second affidavit Davis refers to the respondent’s affidavit and the draft contract and that when the applicant signed the “amended” contract no form was attached. That part of his affidavit is essentially a reiteration of his first affidavit. [22] There is a factual dispute as to whether the Form 30 was attached when the applicant signed the contract. It cannot be dismissed out of hand, it has to be resolved by appropriate proceedings. There is therefore a genuine dispute and the demand should be set aside. I will hear submissions as to costs. -- 4 of 4 --