Pakall Industries (Qld) P/L v Jadhill P/L [1998] QCA 55

Court of Appeal (Qld)|1998-03-31|Before: Fitzgerald P, McPherson J, Pincus J, Mr J

This is an appeal against the dismissal of an application to set aside a statutory demand made under s. 459E of the Corporations Law. The respondent was the lessor of premises let to the appellant to enable the appellant to manufacture plastic bags and packaging materials. The claim the subject of the demand related to monies said to be due under that lease for outstanding rental, the cost of repairs and replacements, and interest.

The primary judge found that it was not disputed that rental of "something over $35,000" was outstanding and that it was not in dispute that other obligations of the appellant to the respondent relating to the lease amounted to "something over $14,000". By reason of the provisions of s. 459H of the Corporations Law, then, it was necessary for the appellant, if it wished to obtain an order setting aside the statutory demand to show that it had an "offsetting claim" of an amount which cannot be precisely stated, on the findings mentioned, but must have been about $47,000. That is so because the "substantiated amount" calculated in accordance with s. 459H(2) being, to put it shortly, the difference between the amount due to the respondent and the amount of the appellant's offsetting claim, had to be reduced to less than $2,000 to entitle the appellant to an order setting aside the demand.

To establish its offsetting claim the appellant had to establish its genuineness, by reason of the definition of "offsetting claim" in s. 459H(5). Under s. 459G(3) it was necessary that an affidavit be filed supporting the application; that affidavit had to show not merely that there was a claim by the appellant against the respondent, but that it was a genuine one and that it was one of the required amount.

The affidavits placed before the primary judge in support of the appellant's application included evidence that a parking area, being part of the premises leased by the appellant from the respondent, had been damaged during construction work on neighbouring premises and that despite complaints the damage was not repaired. There was also evidence of difficulty with a drainage system in the parking area. There was, however, no evidence that the matters to which we have referred caused the appellant loss amounting to $47,000, or indeed any loss at all.

When this difficulty was adverted to, in the course of argument before us, senior counsel for the appellant pointed out that the evidence before the primary judge included a plaint issued out of the District Court on behalf of the appellant against the respondent claiming $150,000 damages in respect of the matters to which reference has been made - the damage to the surface of the parking area and the drainage problem. There was also evidence, counsel pointed out, that particulars of that claim had been delivered. There was no evidence as to whether or not the allegations in these pleadings were true. Counsel for the appellant contended, as we understood the argument, that it was enough, in order to show that the appellant had a genuine claim for the requisite sum, to prove that the problem with the damage to the parking surface and drainage of that surface had occurred and then to prove that a particularised claim of a sufficient sum had been made in a court relating to those matters.

It must be conceded that, in some circumstances, a problem might arise as to how far a company applying to set aside a statutory demand must go with respect to proof of the amount of its claim. Plainly, much less than full and complete proof would be sufficient, to establish genuineness. But no such question arises here; there is simply no evidence, it must be reiterated, that the respondent's alleged contraventions of the lease caused the appellant any loss, let alone loss exceeding $47,000. The genuineness of the $150,000 claim is unsupported by evidence; it is one thing to prove that a claim, whether in a court or otherwise, has been made and quite another to prove that the claim is genuine.

To this point, the matter has been discussed on the basis that the appellant has no difficulty with respect to the genuineness of its cause of action, as opposed to the amount; in truth, the appellant faces an obstacle in that area also, but it is unnecessary to discuss it.

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