Peel Valley Mushrooms Limited v Corporate Investment Australia Funds Management Limited

Peel Valley Mushrooms Limited v Corporate Investment Australia Funds Management Limited - [2000] NSWSC 958 - NSWSC 2000 case summary — Zoe

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(iii) Corporate Investment Australia Funds Management Limited (ACN 059 438 514) v Peel Valley Mushrooms Limited (ACN 073 691 114) (number 2079 of 1999). 10 Each of these matters were listed for hearing before Master McLaughlin on 15 November 1999. On that day Master McLaughlin made orders in accordance with the Short Minutes of Order filed in each of the proceedings. 11 The Demand relates to the settlement of the last two proceedings and the debt said to arise from the Deed effecting settlement. The Consent Orders in those two proceedings noted that the proceedings had been settled on the basis of the terms of the Deed of Settlement ("the Deed") which was attached to the Order. That Deed (cl 2.1) in turn provided that "unless otherwise stated" (and there was no other statement) "this Deed takes effect upon Settlement". "Settlement" is defined in cl 1.1 as "the date on which exchange of this Deed takes place", making that the critical temporal point. Clause 8 requires the parties to do all things reasonably necessary to perfect the initial promises. The orders further "noted" that a duly executed copy of the Deed, executed by the Plaintiff, was to be supplied to the Defendant on or before 19 November 1999. Finally, the Plaintiff undertakes to provide to the Defendant a number of original letters; there is no dispute in relation to those. 12 On 15 November 1999 the Defendant did execute the Deed under seal. However, the Plaintiff was then unable to do so as Bryan Cook, director of the Plaintiff, was not in Sydney and was unable to sign the document. However, the Defendant accepts that the Plaintiff did execute and deliver the Deed of Settlement on or about 18 November 1999 when its solicitors caused a copy of the Deed executed by the Plaintiff to be couriered from the Plaintiff's solicitors to the solicitors for the Defendant (Defendant's written submissions dated 9 July 2000). The parties do however join issue as to whether the counterparts were ever "exchanged", as required by the Deed. I refer to any other circumstances bearing on that in answering the following questions.

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16 Both parties agreed that this is the relevant test to be applied. The Defendant, however, contends that unusually the Plaintiff fails it. Here the purported genuine dispute arises out of a 'patently feeble legal argument'. If that be shown, the Court can as in interlocutory proceedings resolve that legal argument now. The only other ground of attack under this heading is that the Demand so misdescribes the basis of the debt as to be fatal to the validity of the Demand. This is in referring to a debt asserted to be then "due and payable" as at 2 March 2000, pursuant to "paragraph 3 of a deed of settlement" between the parties "entered into on 15 November 1999". Because the agreement entered into between the parties on 15 November 1999 was not (yet) a binding unconditional Deed, and the Plaintiff only signed and despatched it for delivery later, on or about 18 November 1999, it being conditional on settlement, it is said that this is a misdescription which vitiates the Demand. However, I accept the Defendant's answer, namely that such date, even if it be a misdescription in terms of when the Deed took effect, is not of itself a defect which, if the Demand were not set aside, would give rise to substantial injustice to the debtor. It follows that s459J(1)(a) and s459J(2) would preserve the Demand from being set aside for such a defect of mere description. Certainly, such defect in description, insofar as implying the Deed had taken effect as of 15 November 1999 to found the debt, is not itself fundamental. It does not go to the existence or amount of the debt, always provided the Deed did become binding and unconditional so as to ground the debt before 2 March 2000, being the date of the demand. That question is dealt with below. 17 If there be shown by resolution of any legal issue to be no genuine dispute, that leaves the Demand preserved from the first of the three grounds of attack. That will leave the second ground of attack, abuse of process, and the third basis of attack, alleged non-compliance with the Supreme Court Rules. 18 The starting point is to determine when settlement occurred and then whether what ensued does or does not afford sufficient basis for a genuine dispute as to the debt. That depends upon the Terms of Settlement and whether they took effect by 2 March 2000 so as to render the debt due and payable by that date. I turn therefore to the terms of the Deed and its application in the circumstances.

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(ii) that occurred on or prior to 19 November 1999 and thus before 2 March 2000. 22 I start with the requirements of delivery of a deed at general law, and as to whether actual physical delivery is necessary. The Defendant relies on the words of Lord Denning in Vincent and Anor v Premo Enterprises (Voucher Sales) Limited & Ors [1969] 2 All ER 941 at 944 citing Xenos v Wickham (1866) LR 2 HL 296 that constructive delivery suffices. It occurs where an act is done which evinces an intention to be bound, though falling short of physical delivery: "A deed is binding on the maker of it even though the parts have not been exchanged, as long as it has been signed, sealed and delivered. "Delivery" in this connection does not mean "handed over" to the other side. It means delivered in the old legal sense, namely, an act done so as to evince an intention to be bound. Even though the deed remains in the possession of the maker, or of his solicitor, he is bound by it if he has done some act evincing an intention to be bound, as by saying: "I deliver this my act and deed." He may, however, make the "delivery" conditional: in which case the deed is called an "escrow" which becomes binding when the condition is fulfilled." 23 Winn LJ said at 948, "it might be very helpful in modern life if there were some modification of the law, departing somewhat from the strictness of the old rule the effect of which Lord Denning MR, has indicated, viz., that a man becomes bound when he executes a deed in the form usually adopted; there are evidentiary difficulties which from time to time must be met in establishing whether or not a man did speak or use some words or do some act sufficient to negative the prima facie presumed intention that by executing a document under seal and declaring that it is 'delivered' a man has adopted it as immediately binding on him. I think it might be more realistic to depend on physical movement or legal control of the document after the time when it is sealed, it being the law that some adoptive demonstration is required additionally to the mere affixing of the seal. More concentration on the movement of the deed thereafter would make it easier to solve the question, has the maker, by parting with it to such extent and manner as may be proved, expressed an intention - indicated, demonstrated an intention - for it to be immediately binding, or demonstrated a suspensive intention that it shall not be immediately binding on him but only binding if some particular event does occur?"

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Those were both the necessary and sufficient conditions for the Deed to take effect. 28 Mr Bruce Crossing, director of the Plaintiff, was present at Court on 15 November 1999. Neither the Plaintiff nor the solicitors acting for them, Aitken McLachlan Thorpe, retained on 15 November 1999 a copy of the Deed executed by the Defendant [Affidavit of Bruce Crossing, para 5]. Nonetheless Mr Garry White, for the Defendant, observed the Plaintiff's Mr Crossing and the Plaintiff's solicitors receive and read the deed [my emphasis] before it was attached to the Short Minutes of Order [Affidavit of Gary White, para 8; T, 17.28 - .38]. The Short Minutes of Order were signed by the solicitor for the Plaintiff and then filed with the Court. In those circumstances I consider that it could not be denied with any plausibility, that the Defendant thereby "delivered" the Deed executed by the Defendant on that date to the Plaintiff. This is both for the purposes of carrying out the para 2 noted obligation on the Defendant's part, and also to satisfy the requirements for delivery of the Deed at general law. That delivery is a necessary step in the "exchange" of Deeds for the purposes of effecting "Settlement", being the Deed's own condition for the Deed taking effect and completes what the Defendant is required to do by way of delivery to the Plaintiff. 29 In cross examination Mr White, director of the Defendant, led evidence that he also did not leave the Court with an executed copy of the Deed, but rather, the signed and sealed Deed was left with the Court. [T, 17.20-.23] 30 Importantly, the Plaintiff accepts that the various proceedings were settled on 15 November 1999 by way of filing consent orders and that an understanding was reached between the parties that they would enter into a Deed of Settlement (see paras 1 and 2 of the consent orders). [Plaintiff's written submissions of 21 June 2000, para 12] 31 The para 2 note requires, as I have said, "that a duly executed copy of the Deed executed by the Defendant is to be supplied to Plaintiff on or before 19/11/99". I am satisfied that the word "supplied" did not require the Defendant actually to leave the Plaintiff with such a counterpart, where it is earlier received and read by the Plaintiff and then left by mutual agreement with the court, attached to the signed orders. The Plaintiff as a party retained access to it, and could have picked it up at any time. Hence I conclude that the Deed was thereby executed and delivered, by both parties on or prior to 19 November 1999. This is certainly once the Deed signed by the Plaintiff was couriered to the Defendant's solicitors on 18 November 1999, who can be taken to be the Defendant's agent in receiving it, though lost subsequently; see para 32 and following. This satisfies both the general law requirement for a deed to be delivered to the Plaintiff and the para 2 note on the Terms of Settlement (requiring execution and supply of the Deed to the Plaintiff).

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Manifesting the Plaintiff's intention 32 The Plaintiff claims, and it is not denied by the Defendant [Defendant's written submissions, para 24] that a letter, dated 18 November 1999, was caused to be sent by the Plaintiff's solicitors to the Defendant's solicitors enclosing the original executed Deed signed by the Plaintiff in compliance with the undertaking it gave to the Court on 15 November 1999. This letter also requested the Defendant to forward the original Deed executed by the Defendant for the Plaintiff's files. [Affidavit of Bruce Crossing, Annexure C] 33 On 23 November 1999, Coudert Brothers, solicitors for the Defendant, wrote to the Plaintiff's solicitors confirming that the original Deed signed by the Plaintiff had been misplaced between the offices of Coudert Brothers and the offices of the Defendant. That of course does not alter that, concededly the Deed had in fact already been received by the Defendant by its solicitors and thus ipso facto physically delivered to the Defendant by its agent. Due to this misplacement, the Defendant requested that the Plaintiff execute a further copy of the Deed. [Affidavit of Bruce Crossing, Annexure D] 34 The Plaintiff executed a second Deed and the re-executed Deed was sent by the Plaintiff to the Defendant on or about 2 December 1999. [Affidavit of Bruce Crossing, Annexure E] 35 The Plaintiff relies on this sequence of events to claim that exchange satisfying the conditions of the Deed (Cl. 2.1 and the definition of settlement in cl. 1.1) occurred only on 14 March 2000 when the Defendant sent the Plaintiff a duly executed Deed of Settlement by facsimile transmission. [Affidavit of Bruce Crossing, Annexure G]. This Deed had been signed and sealed by the Defendant on 13 March 2000 [White T, 17.52-.55). I reject that contention. 36 In cross examination Mr White for the Defendant acknowledged that he had read the letter sent by the Plaintiff's solicitors to the Defendant on 18 November 1999 [Annexure C above] and that between the 18 November 1999 and the 14 March 2000 he had not sent the Plaintiff any other executed copy of the Deed despite the Plaintiff's request of 18 November [White T, 20]. 37 Moreover, it is not denied that the Plaintiff had sent the Defendant an executed copy of the Deed and that this occurred on or about 18 November 1999, being received by the Defendant through its agent, Coudert Brothers. That an exchange can be effected by post (which is not to be distinguished from courier delivery) and that an exchange can be non-simultaneous, were affirmed by Lord Greene MR in Eccles v Bryant and Pollock [1948] 1 Ch 93 at 97-98; he concluded that a contract came into existence through that act of non-simultaneous exchange. All that he left open was whether that occurs the moment when the document is actually put in the post, or later when it is received: "The earliest date at which such a contract can come into existence, it appears to me, would be the date when the later of the two documents to be put in the post is actually put in the post.. Another view might be that the exchange takes place and the contract thereby comes into existence when, and not before, the respective parties or their solicitors receive from their opposite numbers their parts of the contract. It is not necessary here to choose between those two views."

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Actions reinforcing intention - payments made 43 Despite not physically having in its possession a duly executed copy of the Deed until 14 March 2000 the Plaintiff commenced making payments to the Defendant [Affidavit of Bruce Crossing, para 6]. 44 On 15 November 1999 at the hearing before Master McLaughlin the Plaintiff handed to the Defendant a cheque for $5,000.00 made payable to CIAFM (the Defendant). 45 Further payments were made after the Plaintiff sent the Defendant their executed Deed on 18 November 1999, despite the Defendant's non compliance with the Plaintiff's request for the Defendant to provide it with an executed copy of the Deed. 46 If the date of settlement be taken as 18 November 1999, payments under the Deed would have fallen due on 18 December 1999, 17 January 2000 and 16 February 2000. 47 Shortly after 15 December 1999 Mr White for the Defendant claims he had a telephone conversation with Mr Crossing to the effect that he was requesting the cheque for $5,000 "which is outstanding in relation to the Deed of Settlement." Mr Crossing replied they would personally deliver it in a few days. (Affidavit of Garry White, para 11). At no stage has the Plaintiff denied that this conversation took place. 48 On or about 29 December 1999 the Plaintiff paid a further $5,000.00 to the Defendant. (Cheque number 1701 from the cheque book of Advanced Management Consultancy Pty Limited "AMC"). This cheque was signed by Bryan Cook on 23 December 1999 and Bruce Crossing handed this cheque to Garry White on 29 December). [Affidavit of Bryan Cook, para 2]. It should be noted that Bryan Cook is a director of both the Plaintiff and AMC. There exists a contractual relationship between the Plaintiff and AMC pursuant to which AMC provides management and consultancy services to the Plaintiff. [T, 7.51 - ,54; Affidavit of Gary White, para 4] 49 Shortly after 15 January 2000 Garry White claims he had another telephone conversation with Mr Crossing saying words to the effect, "Bruce, you are late again on your payment of $5,000.00 under the Deed of Settlement. When can I expect to receive the cheque?" Bruce Crossing replied "I should be able to provide a cheque shortly. I will let you know as soon as I can." (Affidavit of Garry White para 13). At no stage has the Plaintiff denied that this conversation took place. 50 On or about 18 January 2000 the Plaintiff made a third payment of $5,000.00 to the Defendant. 51 The Plaintiff claims that on or around 4 February 2000 Bryan Cook wrote out a cheque payable to the Defendant from the cheque book of AMC, cheque number 1706, on behalf of the Plaintiff. [Affidavit of Bryan Cook, para 3 and Annexure B] On 22 February 2000 Bryan Cook transferred $5,000.00 to the account of AMC to cover the amount of the cheque [T, 8.15 to 9.11 and PX2]. The Plaintiff further claims that Bryan Cook placed this cheque in an envelope addressed to "CIAFM, Level 9, 33 Bligh Street" and placed it in the Crown Street post box on the afternoon of 22 February 2000. [Affidavit of Bryan Cook, para 4] 52 This cheque was never received by the Defendant. 53 After receiving the Demand on 3 March 2000 the Plaintiff cancelled cheque number 1706. This was done verbally on 7 March 2000 and by formal letter on 10 March 2000 sent by Bryan Cook as director of AMC to the manager of ANZ Bank, New South Head Road, Rose Bay branch [Affidavit of Bryan Cook, para 6, Annexure C]. By letter dated 10 March 2000 from Bryan Cook as director of AMC the Defendant was informed that cheque 1706 had been cancelled and that Bryan Cook was holding a replacement cheque for collection or delivery by hand. The letter further requested the Defendant to inform the Plaintiff whether they wished to collect the cheque.[Affidavit of Bryan Cook, Annexure D]. 54 According to Mr Crossing these payments had been made because it had been decided that "the plaintiff should make regular payments to the Defendant in the spirit of the Deed, in order to facilitate the resolution of the dispute and in order to reduce the debt." [Affidavit of Crossing, para 6] The Plaintiff acknowledges that, if the date of settlement was 15 November 1999 [or for that matter 18 November 1999] these payments were not strictly within the 30, 60 and 90 days of 15 November but that no point was taken by either party until the events giving rise to the issue of the statutory demand in March 2000. [Plaintiff's written submissions, para 27] 55 Nonetheless the Plaintiff submits, relying upon Niesmann v Collingridge (1921) 29 CLR 177 at 185, that until the exchange of deeds had actually taken place the above payments were voluntary payments as an exchange of deeds was a condition of the obligation to pay and as a result the Plaintiff could not be compelled to make the CIAFM payment as outlined in clause 3.2(c). That submission must clearly fail, for the reasons earlier, as summed up below.

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SUMMING UP 56 There is no plausible contention requiring further investigation to the contrary of the Defendant's proposition that it was the intention of the parties to be bound by the Deed of Settlement upon both parties executing and delivering the Deed to the other. 57 I further conclude, without room for plausible contention to the contrary, that Defendant's act of attaching an executed copy of the Deed to the Short Minutes of Order on 15 November 1999 and its being read over by the Plaintiff's solicitor in a context where the Court then made orders with the consent of the parties in accordance with para 4 of the Short Minutes dismissing the proceedings, constituted constructive delivery of the Deed by the Defendant to the Plaintiff. That occurred prior to 19 November 1999. I am also satisfied that, though not simultaneously, the parties had, in the events that happened, culminating in the courier delivery from Plaintiff to Defendant via its solicitors, delivered to, and exchanged the Deed each with the other. They did so by 19 November 2000 in accordance with the requirements of the Deed. Simultaneity is not required for delivery of a deed, or actual physical "exchange" as against constructive delivery. Finally, I am satisfied that what did take place satisfied the requirements of the Short Minutes of Order for the Plaintiff to supply the executed Deed to the Defendant on or before 19 November 1999. None of the foregoing conclusions leave room for plausible contention to the contrary, in light of the agreed facts or undeniable inference therefrom. 58 Although I acknowledge that the Plaintiff did request an executed copy of the Deed from the Defendant on 18 November 1999 I am satisfied that the Plaintiff's actions established a common understanding and intention that the Deed had already been delivered and that settlement under the definition of clause 1.1 of the Deed had by then occurred, again without room for plausible contention to the contrary. Though not necessary for that conclusion, this is borne out by the following.

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Compliance with Rules? 62 The combined effect of Corporation Law Rules ("CLR") 1.2 and 1.3 is that, unless the Court otherwise orders, the provisions of the CLR, rather than Pt 80A SCR, are applicable to company proceedings commenced on or after 1 March 2000. 63 The Statutory Demand is dated 2 March 2000 and the accompanying affidavit of Garry White was sworn on the same date. Both were received at the registered office of the Plaintiff on the following day. 64 No order has been made by the Court making Pt 80A SCR applicable to the present proceedings. Accordingly, as the proceedings were commenced after 1 March, the provisions of the CLR are applicable to them. 65 CLR 5.2 provides that the affidavit accompanying the Statutory Demand must be in accordance with CLR Form 7. The affidavit of Garry White sworn 2 March 2000 complies with this form. There is therefore no substance in the Plaintiff's criticisms of the form of the affidavit. 66 Even were Pt 80A r15 SCR applicable to the affidavit of Garry White sworn on 2 March 2000, for the following reasons, I am satisfied that the affidavit nevertheless complies adequately with Pt 80A r15(1)(c) and 15(1)(d). 67 For the purpose of complying with Pt 80A r15(1)(c), I accept that it is sufficient if it is clear from the face of the deponent's affidavit that the source of his knowledge is personal knowledge. See Master McLaughlin in Morrow Marketing Pty Limited v Home Unit Investment Pty Limited [1999] NSWSC 548 at paras 41-44. 68 In the present case, Garry White states in para 2 of his affidavit of 2 March 2000 that he was the person on behalf of the Defendant who had the dealing with the Plaintiff giving rise to the debt. Clearly then, the source of his knowledge is personal knowledge. 69 The decisions of Portrait Express (Sales) Pty Limited v Kodak (Australasia) Pty Limited (1996) 20 ACSR 746 and Kezarne Pty Limited v Sydney Asbestos Removal Services Pty Limited (1998) 29 ACSR 11 that are relied on by the Plaintiff in relation to this issue are clearly distinguishable. In both of these cases, the source of the deponent's knowledge was not apparent from the face of the accompanying affidavit. 70 So far as compliance with Pt 80A r15(1)(d) SCR is concerned, in his affidavit of 2 March 2000, Mr White has stated on oath that the amount of $65,000, being the amount specified in the Statutory Demand, is due and payable by the Plaintiff to the Defendant and that he is the person on behalf of the Defendant who had the relevant dealings with the Plaintiff. 71 In these circumstances, I accept the Defendant's contention that his failure to assert expressly what is set out in Pt 80A r15(1)(d) should be regarded as being merely a technicality: see Goldspar Australia Pty Limited v KWA Design Group Pty Limited (1999) 17 ACLC 456 at 459 and Daewoo Australia Pty Limited v Suncorp-Metway Limited (2000) 33 ACSR 481 at 495.

Parties

Applicant/Plaintiff:

Peel Valley Mushrooms Limited

Respondent/Defendant:

Corporate Investment Australia Funds Management Limited

Cases Cited (5)

CITATION : Peel Valley Mushrooms Limited v Corporate Investment Australia Funds Management Limited [2000] NSWSC 958 revised - 31/10/2000 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 1850/00 HEARING DATE(S) : 5 June 2000 JUDGMENT DATE : 16 October 2000

COUNSEL : G A Seib (Plaintiff) P A Fury (Defendant) SOLICITORS : Aitken McLachlan & Thorpe (Plaintiff) Coudert Brothers (Defendant) CATCHWORDS : CORPORATIONS LAW - Unsuccessful application to set aside statutory demand - Based on whether terms of settlement as later to be reflected in a deed had become effective in accordance with the requirements of the terms of settlement and deed - Simultaneous exchange of deeds not required, if later exchanged - Meaning of delivery - Constructive delivery held sufficient - No substantial injustice from supposed misdescription of debt in the Demand under s459J of Corporations Law. Corporations Law s459G; s459J LEGISLATION CITED : Corporation Law Rules ("CLR") 1.2 and 1.3; 5.2; Form 7 Supreme Court Rules Pt 80A Daewoo Australia Pty Limited v Suncorp-Metway Limited (2000) 33 ACSR 481 Domb & Anor v Isoz [1980] 1 Ch 548 Eccles v Bryant and Pollock [1948] 1 Ch 93 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 Goldspar Australia Pty Limited v KWA Design Group Pty Limited (1999) 17 ACLC 456 Hooker Industrial Developments Pty Limited v Trustees of the Christian Brothers [1977] 2 NSWLR 109 CASES CITED : Kezarne Pty Limited v Sydney Asbestos Removal Services Pty Limited (1998) 29 ACSR 11 Morrow Marketing Pty Limited v Home Unit Investment Pty Limited [1999] NSWSC 548 Niesmann v Collingridge (1921) 29 CLR 177 Portrait Express (Sales) Pty Limited v Kodak (Australasia) Pty Limited (1996) 20 ACSR 746 Sindel v Geogiou & Anor (1984) 154 CLR 661 Vincent and Anor v Premo Enterprises (Voucher Sales) Limited & Ors [1969] 2 All ER 941 Xenos v Wickham (1866) LR 2 HL 296 DECISION : Application to set aside Statutory Demand dismissed.

(1921) 29 CLR 177

(1984) 154 CLR 661

(1980) 24 SASR 189

Cited By (2)

NTT Australia Digital Pty Ltd v Cover Genius Services Pty Ltd

Segboer & Anor v A J Richardson Properties Pty Limited & Anor

At a glance

Court

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Catchwords

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Catchwords

Judgment (52 paragraphs)

Parties

Cases Cited (5)

Cited By (2)