FTL Publishing Pty Ltd, Re [1992] QSC 115

( ' ( \ '·. A TRANSCRIPT OF ~ PROCEEDINGS State Reporting Bureau. 4th Floor. The Law Courts. George Street. BRJSBANE. 0. 4000 Tel. (Oi) 227.4360 (Copyright in this transcript is vested in the Cro"Ml. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION COOPER J No 84 of 1992 IN THE MATTER of The Corporations Law and IN THE MATTER of FTL Publishing Pty Ltd (ACN 051 113 403) BRISBANE .. DATE 03/03/92 JUDGMENT 1 -- 1 of 13 -- ( 10 20 30 40 50 60 030392 JUDGMENT HIS HONOUR: This is an application to wind up the respondent company pursuant to the provisions of Corporation Law. The applicant claims the sum of $241,579.46 as the balance due for work and labour done under a contract entered into in Queensland for the construction of an exhibition at the Gold Coast described as a space shuttle exposition. On 2 January 1992 the applicant served on the respondent a demand pursuant to s 460 of the Corporation Law for the said amount. The respondent has not paid in accordance with the said demand or the sum demanded or any sum. The respondent alleges that there exists a bona fide and substantial dispute as to its indebtedness for the whole sum. Accordingly, it submits that it was excused from compliance with the notice and that I ought, in the exercise of my discretion, dismiss the application. The dispute alleged, briefly put, is that the respondent did not contract with the applicant for the alleged or any work and that the relevant contract was between the applicant and a company FTL Shuttle Promotions Pty Ltd. Certain facts are not in dispute. On 7 October 1991 a Mr Pearson, the managing director of the applicant, was introduced to Robert MacNab and Roger Blackford as directors of F1'L Publishing Pty Ltd. At that meeting business cards were handed to Mr Pearson identifying MacNab and Blackford as directors .of the respondent and Pearson was given a document described as a corporate profile of the respondent (Exhibit 1). Pearson was also given a photograph of a space shuttle exhibition-in 2 • 1 10 20 0 0 30 ()40 u 50 60 -- 2 of 13 -- ( ( .030392 JUDGMENT Japan which is endorsed "With compliments FTL" (Exhibit MP-2). On 23 October 1991 the applicant, by letter to the respondent, tendered a price of $1,140,175 for the construction work in accordance with certain identified drawings. Pearson deposes that at a meeting on 28 October 10 1991 with MacNab and Blackford the quote was discussed and 10 that MacNab told Pearson that they accepted the quotation and for the applicant to start work. On 30 October 1991 the applicant received a fax on the letterhead of FTL Shuttle Promotions Pty Ltd advising the applicant to cease 2o production because of difficulties with the Gold Coast.City 20 30 40 50 60 Council. Later, on 30 October 1991, MacNab advised the applicant to proceed with the work. The applicant, by letter to the respondent dated 31 October 1991, wrote in the following terms: "The Directors FTL Publishing Pty Ltd Level 4 Corporate House 68 Ferny Avenue SURFERS PARADISE QLD 4217 Attention: Mr Robert MacNab Dear Sir REF: THE SHUTTLE EXPOSITION FERNY AND PALM AVENUE, SURFERS PAP~DISE Further to our telephone conversation Wednesday last, we confirm your directive to proceed with the site preparation and construction of the exposition development contrary to your correspondence dated 29th October 1991 received in this office by fax 30th October 1991 at 00:22 a.m. In addition we acknowledge the placement of all orders and subcontracts have been initiated in an endeavour to complete the construction for Sunday 24th November 1991. As agreed $iOO;OOO.OO (One hundted thousand dollars) shall be deposited into our account (details below) , 'on Friday November 1 ~ and Monday 3 30 40 50 60 -- 3 of 13 -- 10 20 30 40 50 60 030392 JUDGMENT November 4, 19.91 prior to the close of business. Bank of Queensland BSB No 124 022 Account Number 10-187441 Further, progress payments are requested of $200,000.00 (Two hundred thousand dollars) each week ·to be deposited on Monday 11th, 18th and 25th November, and the balance of the Contract sum be paid twenty eight (28) days from the opening day, therefore due and payable on 24th December 1991. The attached information is a brief computer summary of the subtrade costing previously offered in a handwritten format together with our first two invoices for payment. We intend to sUmmarise each week's work completed and or items purchased in a similar format. Following your directive this Company has attended to the purchase of a disabled persons' access vehicle especially fitted with a secondary lift device, thus eliminating any ramped areas, at the quoted price of $38,600.00 (Thirty eight thousand six hundred dollars). The Council fees have been attended to, as. per theattachment, in addition to the originally submitted quotation. For your information we offer our preliminary program. Please note the critical path and theimportance that must be insisted by our Company to control all.and any site coordination, to this means, all and any of your staff or suppliers must be made aware for the project to be complete on time they be requested to submit their details to,or arrange a meeting with the writer. In trusting your acknowledgement in return, we request your attention to the matter of the third paragraph of this script as agreed. Yours faithfully CLIPLYN GROUP CONSTRUCTIONS M J PEARSON Managing Director" This letter was in no way disputed by the respondent. In terms it asserts that the applicant is.under the.clear understanding that its arrangements are with the respondent, that the directives are coming from the respondent, and that 4 -··-- ---- ··-- '1 10 20 0 0 30 0 40 0 50 60 --·- ·- . ---- -- 4 of 13 -- ( / \ / ' 10 20 30 40 50 60 .030392 JUDGMENT the respondent is responsible for pa~ertt of the work and draws particular reference to an agreement as to payment (see para 3 of the letter) and requesting attention to the question of payment by way of deposit as appears from the final paragraph of the letter. Pearson deposed that on 4 November 1991 he was advised by Blackford that a company, FTL Shuttle Promotions, was going to run the shuttle exposition. Pearson sent a letter on 4 November 1991 recording his understanding of the advi~e given to him that day by Blackford. The letter said: "The Directors FTL. Publishing Pty Ltd .. FTL Shuttle Promotions · 4th FloorCorporate House 68 Ferny Avenue Surfers Paradise QLD 4217 Attention: Mr Robert James MacNab Mr Roger Bruce Blackford Mr Steven Frank McLean Further to your advice this day, we confirm you intentions are to place the financial structuring·of the exposition site with the above two companies, represented by the above directors, and recorded as the sole shareholders. It is further understood that Mr McLean· is providing the majority of finance for the entireproject. As our knowledge of Mr McLean of BistoleCorporation Pty Ltd is limited, together with your acknowledgement of your acceptance to offer personal guarantees, we request your inclusion of Mr McLean's personal guarantee to accompany delivery when executed. Further, we shall proclaim to address both Companies until advice is forthcoming from your solicitors of your representative accountants: Mr Graham Cash, Peat Marwick, Bundall Gold coast. Yours ·faithfully CLIPLYN GROUP CONSTRUCTIONS M J PEARSON Managing Director" 5 10 20 30 40 50 60 -- 5 of 13 -- 10 20 30 40 030392 JUDGMEN'I This letter was in no way disputed by the respondent. At some stage the respondent gave to the applicant a copy of a publication entitled "Endeavour Mission." On the front page it bears the logo "FTL Publishing" and inside contains the following: "FTL wishes to acknowledge the support of thefollowing: ADVANCED FLOORING AITKIN CRANES ARMAGUARD BENNETT & BENNETT SURVEYORS CJC SIGNS CLIPLYN GROUP CONSTRUCTIONS PTY LTDCOCA COLA D A MANUFACTURING COMPANY PTY LTD DENIS .RITCHIE CONSTRUCTIONS DRIZA-BONE EUPHORIA OFFICE FURNITURE FIDDLY BITZ MARKETINGFRANK O'NEILL LOCKSMITH COLD COAST BULLETIN COLD COAST CITY COUNCIL GOLD COAST INTERNATIONAL HOTEL HEADLINE GLASS HILLS BUSINESS EQUIPMENT HORIZON SAIL MAKERS INSTANT JUNGLES KROQ LIVERMORE ELECTRICSMAGNETIC AUTOMATION PTY LTD MIKE PETROFF CONSTRUCTIONS MR KIM LEWIS (DRAFTING CONSULTANT)NASA NIGHT WATCH SECURITYNRTV 8 PARKINSON AIR CONDITIONING RETROCOM PTY LTD SOUTHCOAST PLUMBINGSUN NEWSPAPERS WHYBIRD, BROWN & FARR FTL PUBLISHING PTY LTD COPYRIGHT 1991." '1 10 20 30 40 50 on 22 November 1991 the .applicant tendered a certificate of 50 practical completion. The client was shown as "FTL Shuttle Promotions Pty Ltd & FTL Publishing Pty.Ltd". 60 60 6 0 0 () 0 -- 6 of 13 -- ( ( \ ( \ .030392 JUDGMENT The certificate provides: "CLIENT: DIRECTORS: FTL Shuttle Promotions Pty Ltd & FTL Publishing Pty Ltd Level 4 Corporate House 68 Ferny Avenue SURFERS PARADISE QLD 4217 1. Mr Robert James MacNab 2. Mr Roger Bruce Blackford 3. Mr Stephen Frank McLean CONTRACTOR: Cliplyn Group Constructions 7 Hilldon Court NERANG QLD 4211 PRINCIPLES: Maxwell John Pearson Judith Cecilia Pearson 20 :o 30 CONTRACT DESCRIPTION: To design and construct the Space ShuttleExposition Site, Palm and Ferny Avenue, Surfers Paradise. * Contract acceptance date : * Site commencement date * Practical completion date: 23 October 1991 4 November 1991 22 November 1991 COUNCIL: Gold coast City council BA No. 91/3959 20.11.91 FIRE SERVICES:Certificate of approval No. A56570 Marked interim certificate of approval No.GCA 56570 Acknowledgement of Practical Completion, ·this day .. Twenty Second (22nd) of November, 1991". Importantly the certificate was signed on behalf of FTL Publishing and FTL Shuttle Promotions by Roger Blackford (Director) . On 6 December 1991 the applicant tendered its account to FTL Publishing Pty Ltd; FTL Shuttle Promotions Pty Ltd. The account included claims for extras for variations. The invoices are dated 9 December 1991. On 16 December 1991-the applicant wrote to the Directors FTL Publishing Pty Ltd and FTL Shuttle pressing fo·r payment and seeking an appointment 7 3C -- 7 of 13 -- 2.C .30 --- r 030392 JUDGMENT to receive a bank cheque. On 16 December 1991 by fax, under the letterhead of FTL Shuttle Promotions Pty Ltd to "D A Manufacturing" under the signature "Robert MacNab" the following statements were made. Firstly, the letter commences:- "I refer to the copy materials which Roger and I received as to the work carried out by your company for this company at Surfers Paradise." The bulk of the letter complains about the cost and concludes in the final paragraph:- "Whilst both Roger and I appreciate your concern we are confident that we can work through this matter and resolve it satisfactorily to both parties however we would make the point again that at no time was an 'open ended' commitment ever either contemplated or entered into." The facts did not clearly assert that the respondent was not a contracting party and not liable for the amount claimed . The document, however, is the first document where, obliquely, the assertion is made that ·the work was to be undertaken for FTL Shuttle Promotions Pty Ltd. On 18 December 1991 the applicant again wrote to the respondent and FTL Shuttle Promotions. The letter refe~s back to the letter of 31 October 1991 which provided for payment schedules and.which letter was addressed to the respondent alone. The letter of 18 December 1991 also refers back to payments in fact already made on account. The letter demanded payment of the balance of the agreed contract price, then indicated as being $340,000, by 23 December 1991. on 23 December 1991, Under letterhead of FTL Shuttle 8 l c 20 C) () 0 -- 8 of 13 -- i• 030392 JUDGMENT 20 I Promotions Pty Ltd, MacNab faxed to the applicant referring to the applicant's letter of 18 December 1991. The letter deals with various contentions as to the variations claimed in extras and concludes with the following:- "We are this day arranging for the deposit of funds totalling $100,000 to your company's account as a further payment in good faith. We also point out to you that FTL Publishing Pty Ltd was not and is not a contracting party to the contract with your company." The letter is signed "Robert MacNab". This is the first time that the respondent (under the letterhead of FTL Shuttle Promotions Pty Ltd) has disputed in writing that it c) was a contracting party. In paragraph 8 of Mr MacNab's affidavit, Mr MacNab deposes ( i as to his subjective belief as to the arrangements between the parties and the applicant's understanding, save for the 30 words "the initial contact was made with myself and Roger Blackford as Directors of the applicant. However, I certairily explained to Max Pearson the role of each entity ( and the fact that FTL Shuttle Promotions Pty Ltd was the contracting party". The balance of the paragraph is objectionable and inadmissible as being merely an assertion ( ' of the subjective belief of the deponent. Save for the material I have indicated, I have ignored the balance of the paragraph. This also applies ._to paragraph .10 which is inadmissible as. hearsay. The assertion by MacNab that Pearson had had the role of each entity explained to him is vague and non-specific. Blackford, who filed an affidavit in the 9 30 -- 9 of 13 -- ---~------ 030392 JUDGMENT application: opposing .the orders sought, does not make the allegation that Pearson was told that FTL Shuttle Promotions Pty Ltd was to ·be the contracting party. The respondent, in order to establish the existence of a iC bona fide dispute, relies· upon a series of documents. The first is a letter to Pearson dated 11 October 1991. It is on letterhead "FTL Shuttle Promotions" The letter is entit.led "re: Space Shuttle Exhibition". It :.o refers.to an early meeting and refers to the design. In small print at the bottom of the page with the common address of both the respondent and FTL Shuttle Promotions Pty Ltd appear the words "FTL Shuttle Promotions Pty Ltd, ACN 053 565 405''. The letter is not signed by or for any 30 company. It is simply signed "Robert MacNab." The next letter is to the Gold Coast City Council dated 24 October 1991. It is on the same letterhead. It is signed by MacNab as Managing Director. There is no evidence that the letter ever came to the attention of the applicant, or that_, if it did, when and in what circumstances the letter came to the applicant's attention. The next letter is- a copy of the letter from the applicant to the Gold Coast City Council dated 7 November 199L The letter refers to the applicant •·s principals as "FTL Promotions". This,· it is submitted, is an acknowledgement: that the applicant contracted with FTL Shuttle Promotions Pty Ltd. ~he letter,. it will be noted, was written after ,,(. ' ·--- j 10 3Ci \ \ () (J u.I I I -- 10 of 13 -- 030392 JUDGMENT 4 November 1991 and after the applicant had, in writj_ng, i confirmed that its understanding was that FTL Shuttle Promotions was to be the financier, and that thereafter the applicant would "proclaim to address both companies". Pearson says that the reference in the letter was a mistake. :c It is clear to my mind that after 4 November 1991 the applicant regarded FTL Shuttle Promotions Pty Ltd as an entity fulfilling the role of financier in the Gold Coast project, and determined that it would claim against it in addition to the respondent, and that after that time the 2.0 applicant treated FTL Shuttle Promotions Pty Ltd as having 20 ( some interest in the project. The next communication relied upon by the respondent is again on the FTL: Shuttle Promotions letterhead dated 30 29 October 1991. The letter advises that work is'to cease. It is not signed by or for any company and is simply signed "Robert Mac Nab" . / \ The next document relied upon is a claim and analysis for payment directed to the respondent and FTL Shuttle Promotions Pty Ltd. The claim includes variation summary claims numbered 1-47 inclusive and each of these variation summary claims is directed specifically to the respondent alone. There is included in the bundle of documents constituting the claim and analysis a computer printoutwhich includes the words, "Client: FTL Shuttle". Such : words, in my opinion, are innocuous. They are equally, ifnot more so, descriptive of the project as referring to FTL Shuttle Promotions Pty Ltd as contended for-by the 11 -- 11 of 13 -- 1-----..--------.~-- ------- 10 30 ··•., 030392 JUDGMENT respondentt The format of the claim as a whole is consistent with the applicant's letter of 4 November 1991 to both the respondent and FTL Shuttle promotions Pty Ltd. The material relied upon by the respondent does not, in my view, raise a bona fide substantial dispute as to the identity of the contracting parties. I do not accept that Mr Pearson was ever advised that FTL Shuttle Promotions Pty Ltd was the contracting party. The whole course of correspondence, and in particular the letter of the applicant of 4 November 1991, is totally against such a conversation having occurred and is inconsistent with it. The respondent never disputed the correspondence with it, which correspondence prima facie names it and deals with it as the contracting party until such time as the respondent is pressed for payment on the outstanding balance on the original contract price excluding extras and variations. The use of different letterhead by MacNab was not, in my view, intended to have any contractual significance until, perhaps, the two faxes of December 1991. At the outset the respondent, by MacNab and Blackford, promoted to the applicant the respondent as the corporate vehicle undertaking the project and the entity with which the applicant was dealing. The applicant, until 4 November 1991, also purported to deal with the respondent and thereafter with the respondent and FTL Shuttle Promotions Pty Ltd, the latter in the capacity of financier. The signed certificate of practical completion is totally 1.: .•. ,. ;_,.,.;!·· - 12 2.0 0 0 (~): (J -- 12 of 13 -- iO ( ( 3() ( 030392 JUDGMENT inconsistent with the factual situat1on now contended for by the respondent. The respondent has failed to discharge the onus on it to make out a bona fide dispute of a substantial nature excusing it from compliance with the statutory demand. In consequence, the respondent is deemed unable to pay its debts. I am satisfied that the sum claimed in the demand was at that time and remained thereafter due and owing to the applicant. There is also evidence before me as to the existence of other creditors of the respondent, including a substantial judgment creditor supporting the winding up, and one creditor claiming in excess of $70,000 has given notice of its support of the winding up in these proceedings. Accordingly, I propose to order in terms of the draft initialled by me and placed with the papers. 13 ·,c .v -- 13 of 13 --