HIS HONOUR: On 26 November 2014, the defendant BSL Australia Pty Ltd issued and therefore caused to be served on the plaintiff company Australian Scaffold & Access Pty Ltd a creditor's statutory demand claiming an amount of $150,677.94, particulars of which were set out at length in the schedule of the demand, but amounted to the balance of account owing by the plaintiff to the defendant on a number of invoices issued over the period June 2014 to October 2014 in connection with the supply and delivery by the defendant to the plaintiff of scaffolding and related equipment.
By originating process filed 16 December 2014, the company applies pursuant to Corporations Act, s 459G, for an order setting aside the demand. Although the originating process contained other claims for relief, the only claim pressed was on the footing of Corporations Act, s 459H(1)(a), to the effect that there was a genuine dispute as to the existence or amount of the debt claimed. At one stage there were issues as to whether the statutory demand was accompanied by the requisite verifying affidavit and was served as required by (CTH) Corporations Act 2001, s 459E, but they were not pressed.
Although initially the rather ample evidence filed in connection with the application suggested that there were disputes as to the way in which the defendant had applied payments made by the plaintiff to particular invoices - the plaintiff contending that the payments ought to have been, but were not, applied to specified invoices, whereas the defendant took the position that payments were applied in order of receipt on a running account basis - ultimately nothing turns on this, because whatever approach is taken, it becomes clear that whether the plaintiff is or is not indebted to the defendant as claimed depends on the status of four invoices, namely invoices 1314234 dated 30 September 2013, 1314323 dated 11 December 2013, 1415123 dated 20 June 2014, and 1415232 dated 26 August 2014. Those four invoices, less a credit note for $462 dated 24 September 2014, amount in total to $96,059.98, and fully account for the remaining disputed amount of the demand. Accordingly, the essential question is whether the plaintiff has raised a genuine dispute as to the existence or amount of the debts claimed in the four invoices to which I have referred.
It is, of course, well-established that, on an application of this kind, the Court is not concerned to determine whether or not a debt exists as if it were a Court trying a suit for the debt in question. The Corporations Court is concerned only, at this stage, to ascertain whether the demand should or should not be set aside on the footing that there is a genuine dispute as to the existence (or amount) of the debt. The burden undertaken by a company seeking to set aside a demand on that basis, is, as has often been said, not a demanding one. All the company needs to do is show that there is some plausible contention requiring further investigation that it might not be indebted as alleged. That said, the company still bears the onus of raising a genuine dispute; that is to say, the creditor does not have to prove that the debt exists. It is for the company to show that there is a genuine dispute as to its existence or, in the frequently used language, to show that there is a plausible contention that it is not liable for the debt as alleged and that that contention is one that warrants further investigation.
The company's evidence was given by its director, Mr Scott Butlin. He deposed that the company had established an internal procedure for purchasing scaffolding material from the defendant, which involved the despatch of an official purchase order to the supplier by email; the receipt of goods into warehouse, or directly by a customer; the checking of goods against the purchase order and supplier invoice, or confirmation by the customer of delivery; followed by entry into the software program, so that when the supplier invoice was received, it was attached to the purchase order and sent to accounts for payment and, when authorised, entered into the accounting software and paid according to payment terms.
In this case, the company disputes the four invoices to which I have referred on the basis that that procedure does not appear to have been followed, because there is no formal purchase order in respect of any of those invoices and, from the company's perspective, no satisfactory proof of delivery. Mr Butlin says that the company directed the defendant to send proof of delivery documents and that the defendant "has not provided the requested proof in all cases". It may be assumed that that is intended to refer at least to the four invoices in question.
Against that, however, the affidavit of Mr Anand, a director of the defendant, exhibits, in respect of each of the four disputed invoices, an email chain originating from the company's then sales manager, Kyle Puckeridge, involving either a request for quote or a request for delivery of the scaffolding equipment in question, a delivery docket in respect of the scaffolding equipment in question, and an invoice addressed to the plaintiff in respect of those goods, being the relevant disputed invoices. That material was also provided by the defendant's accountant to the plaintiff on 16 December 2014, in response to a request for copies for the purchase order and proof of delivery for each of the disputed invoices (and one other).
Insofar as there is not a formal purchase order, the affidavit of Nitin Gupta of 15 April 2015 deposes to conversations with Mr Puckeridge in which he is said to have effectively orally confirmed the order for the equipment referred to in the emails that I have mentioned. Mr Anand's evidence and Mr Gupta's evidence was not the subject of challenge or contradiction and there is no reason, in those circumstances, why it should be doubted. On that basis, the position appears to be that Mr Puckeridge placed orders, albeit not on a formal purchase order form, for the scaffolding equipment the subject of the disputed invoices, and that equipment was delivered in accordance with his directions to addresses at which someone signed the delivery docket as the recipient.
The defendant dealt with Mr Puckridge on behalf of the company extensively over a period of years and, so far as the evidence reveals, it was almost invariably, if not invariably, Mr Puckeridge who placed orders for the plaintiff with the defendant. There is no doubt that Mr Puckeridge had ostensible, if not actual, authority to place orders for scaffolding equipment with the defendant. If there is no record of the subject invoices and orders in connection with them in the company's records as Mr Butlin says, then that is probably attributable to the circumstance that the orders were placed informally by Mr Puckeridge.
Mr Butlin's evidence does not establish that the defendant was instructed by the company that it should only accept orders upon receipt of a written purchase order and that it should never act on an email or oral order. If such an instruction had been given, the position might have been otherwise. But, in the absence of such an instruction, I do not think a supplier, in the position of the defendant, should be taken to be on notice that an oral or email order was outside the scope of Mr Puckeridge's authority.
Moreover, as was submitted for the defendant, even if the invoices did not find their way into the company's records, the monthly statements referred to each invoice, including the disputed invoices, and they did find their way into the company's records.
Although it was not easy to ascertain precisely what was "the plausible contention requiring further investigation" upon which the plaintiff would not have been liable, it seems to me that it must have been to the effect that the subject orders were not authorised by the plaintiff. The legal position is reasonably clear, and involves two well-established propositions. The first is that an act of an agent within the scope of his or her actual or apparent authority does not cease to bind the principal merely because the agent was acting fraudulently and in furtherance of his own interests. Thus, if (as I suspect) the plaintiff wanted to advance a case - which did not emerge from the s 459G affidavit and barely did so subsequently - that Mr Puckeridge was acting fraudulently in making the relevant orders and somehow diverting the goods in furtherance of his own interests, the company would still be bound by his act in placing the order with the defendant, because it was in the scope of his apparent, if not actual, authority to place such orders [see, for example, Hambro v Burnand [1904] 2 KB 10; Navarro v Moregrand Ltd [1951] 2 TLR 674; Bowstead & Reynolds on Agency (16th ed, 1996), art 76].
The other principle is that no act done by an agent in excess of his actual authority is binding on the principal with respect to persons having notice that in doing the act, the agent is exceeding his authority [Lysaght Bros & Co v Falk [1905] HCA 7; (1905) 2 CLR 421; 11 ALR 149; Combulk Pty Ltd v TNT Management Pty Ltd (1993) 113 ALR 214]. What this means is that while, of course, as between the company and Mr Puckeridge, he did not have actual authority to place orders for his own benefit or otherwise than for the benefit of the company - if that is what he did - because of the position in which he was, placing these orders was within the scope of his ostensible, if not actual, authority, so that, but only if, the defendant had notice that Mr Puckeridge was acting fraudulently in excess of his authority, would the plaintiff company not be bound as against the defendant.
The real question is whether the departure from regularity in not using a written purchase order was sufficient notice for that purpose. It is again well-established that in the context of commercial transactions, a Court applies the objective interpretation which one person is entitled to put on another's words and conduct, and a person dealing with another in that context is not expected to be unduly or particularly suspicious. Given that, even in the absence of a formal order form, the orders in question emanated from emails which bore the indicia of the company and its logo, in conjunction with Mr Puckeridge's apparent authority to place such orders on behalf of the company, I do not think that there is a seriously arguable proposition that the defendant should have been alerted to the prospect that these were fraudulent transactions - if they were.
That is really the crux of the case. In other words, even if further investigation were to demonstrate that these orders were placed fraudulently by Mr Puckeridge - and it should be stressed that Mr Puckeridge is not before the Court and I am making no finding in that respect - but even if further investigation established that were the case, unless it were shown that the defendant was on notice of the fraud, the company would have no defence to the defendant's claim, and from such evidence as has been put before the Court, the defendant could not be shown to be on notice of the fraud.
Moreover, the company's evidence does not extend to denying that the goods said to have been supplied were received by it or any customer of it, nor denying that the goods were ordered on its behalf, but relies merely on the absence of a formal order record or order.
In those circumstances, I do not think that the company has discharged the onus of raising a genuine dispute. Accordingly the originating process will be dismissed.
The Court orders that:
1. The originating process be dismissed.
2. The plaintiff pay the defendant's costs assessed in the sum of $17,500.
[3]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 13 July 2017