Plaintiff v Defendant

1. The following summary of the background to the matter is sourced from the affidavit evidence filed by the parties. It is largely uncontroversial.
2. Novotel operates the Hotel which has the capacity to function as a conference venue for meetings and events. Conference Planners is an event planning business which arranges, manages and conducts conferences on behalf of its clients. In the course of doing so it contracts with venue providers for its conferences and meetings, such as Novotel. Over the past ten years, Conference Planners booked the Hotel for a number of its events.
3. As stated above, Conference Planners and Novotel executed the Whittlesea Agreement on 19 September 2023 to hold the Whittlesea Conference at the Hotel. The Whittlesea Conference proceeded in accordance with the Whittlesea Agreement.
4. The subsequent Banyule Agreement, executed by Conference Planners and Novotel in April 2024 to hold the Banyule Conference at the Hotel, included terms that:

(a) 100 guests were booked to attend the Banyule Conference;

(b) the estimated total cost of the Banyule Conference was $81,950.00 ('Hotel Charge'); and

(c) payments were due from Conference Planners for the 'first deposit' ($24,585) on 14 March 2024, the second payment ($24,585) on 30 April 2024 and the third payment ($32,780) on 29 June 2024.

1. The Banyule Agreement contains the following statement on the cover page:

This Customer Agreement will commence on Thursday 14 March 2024 and upon payment of the initial, non-refundable deposit as required by this Agreement.

(emphasis added)

1. The main body of the Banyule Agreement provides:

7. Payment

The Hotel accepts payment via Cash, Visa, MasterCard, American Express, Diners Club and Electronic Funds Transfer (EFT) only. No other forms of payment are accepted.

A surcharge of 1.4% applies to all credit card transactions.

All payments are taken via a secure server, but despite reasonable precautions, there is a risk of unauthorised access to, or alteration of, the Customer payment details. The Customer makes payment at its own risk and to the maximum extent permitted by law, we are not liable for any loss or damage which the Customer suffers as a result of unauthorised access to, or alteration of, its payment details.

8. Bookings, Deposits and Payment Terms

All bookings are subject to the payment of a deposit and the return of the executed Customer Agreement ...

...

9. Deposit

Within five (5) business days from the date of the Customer's tentative booking a minimum of a deposit equal to 10% of the total Hotel Charges contained in the Customer Agreement must be paid.

10. Bookings over $40,000

For group accommodation, residential conferences and any other functions where the total Hotel Charges for the booking are over $40,000 [i.e. the Banyule Conference], the following prepayments are required:

First Deposit- 10% deposit plus 20% of the estimated Hotel Charges.

Second Payment - 30% of the estimated Hotel Charges

Third Payment - 40% of the estimated Hotel charges

In the event any amounts payable by Customer in accordance with clause 7 are outstanding beyond ten days after the applicable due date(s), the Hotel may either:

Cancel the booking in accordance with clause 12; or

A late payment fee will be charged on the outstanding amount assessed at 2% over the annual interest rate charged in accordance with Section 2 of the Penalty Interest Rate Victoria 1983 to compensate for any reasonable costs incurred by the Hotel, or Charge the credit card on file.

The Customer acknowledges that the charges in this clause are reasonable costs of the loss and damage suffered by the Owner as a result of any of the late payments.

...

15. Cancellation of Booking

The Customer acknowledges depending on the timing of the cancellation the Owner may suffer the following loss and damage including but not limited to:

Loss of opportunity for the Owner to secure other group accommodation bookings, conferences, banquet and catering and other related event bookings.

Administration charges in preparing the group accommodation bookings, conferences, banquet and catering and other related event bookings;

Administration costs of reselling accommodation bookings, commissions, GDS fees, Tars fees, Accor Live Limitless (ALL) fees etc.

Subject to the Customers refund and remedy rights under the Australian Consumer Law and Clause 21, the following cancellation fees apply:

For group accommodation, residential conferences, and any other situations where the booking are over $40,000, the following cancellation policy is as follows:

Number of Days Prior to the Scheduled Arrival Date

10% deposit plus the Hotel will charge 20% of estimated Hotel Charges

For cancellation of room rental services only, a 75% fee of the total room rental charge will apply.

10% deposit plus the Hotel will charge 50% of estimated Hotel Charges

For cancellation of room rental services only, a 90% fee of the total room rental charge will apply.

10% deposit plus the Hotel will charge for the event 90% of estimated Hotel Charges

... If any part of these Terms is found to be void, unlawful or unenforceable then that provision will be deemed to be severable from these Terms and the severed part will not affect the validity and enforceability of the remaining Terms.

A failure to exercise or enforce any right or provision under these Terms will not constitute a waiver of such right. Any waiver will only be effective if done in writing by the Hotel.

(emphasis added)

1. Conference Planners did not pay the 'first deposit' by 14 March 2024 as required under cl 10 of the Banyule Agreement and the Banyule Conference never proceeded.

1. The parties' specific evidence relating to certain aspects of the matter is discussed below.

1. Ms Jackson states that on 28 April 2024, in response to her demand that Conference Planners pay the first deposit as required under the Banyule Agreement, she received an email from Ms Doyle seeking to reduce the number of attendees for the Banyule Conference from 100 to 'approximately' 60 guests ('28 April request').
2. Ms Jackson states that between 1 and 3 May 2024, she and Ms Doyle had numerous discussions in respect of the 28 April request. During this time, Ms Jackson advised Ms Doyle that 'Novotel would need to carefully consider the 28 April request'.
3. Ms Jackson states that on 19 May 2024, despite considering Novotel to be under no obligation to accommodate the 28 April request, she sent an email to Ms Doyle stating the Banyule Agreement had been signed by the parties and the room rates were based on a minimum of 80 guests for two nights and expenditure of $30,000. Ms Jackson offered an alternative proposal to accommodate the reduced accommodation numbers, requesting, however, that Ms Doyle endeavour to increase the accommodation numbers back to 80 guests. Ms Jackson also advised Novotel could reduce its charges to reflect a reduced attendance from 100 to 80 guests, attaching a revised form of contract reflecting this reduction for Conference Planners to sign and revised tax invoices for the first deposit and the second payment.[3] Ms Jackson requested payment of the first two instalments by 20 May 2024.
4. Conference Planners did not execute the revised form of contract attached to the 19 May 2024 email.
5. The following day, Ms Doyle responded to Ms Jackson by email declining the proposal and stating:

Unfortunately, we find ourselves in a situation where our anticipated number of attendees has decreased. This is the first time we have managed this conference and despite our best efforts, as flagged last month, we do need to adjust the number of rooms and the day attendance originally contracted for our event. We fully understand that this is not an ideal situation and that it poses challenges for you.

I appreciate you have revised the contract, however it's too far from their anticipated numbers and I won't be able to proceed on that basis. Regrettably, we may have to consider alternative venues. I am hoping that, given our past relationship and our desire to maintain future events with your property, a solution can be found. I am working hard to increase the numbers, but I cannot guarantee it.

1. Ms Jackson received a further email from Ms Doyle on 22 May 2024 requesting a response. Ms Jackson states she was unable to do so sooner as Novotel was trying to determine how it could assist Conference Planners.
2. On the same day, Ms Jackson sent an email to Ms Doyle asking for some flexibility on the part of Conference Planners and enquired whether Conference Planners would be willing to hold one day of the Banyule Conference in an alternate conference room as the room originally booked by Conference Planners ('Peninsula Room') may be of interest to another client of Novotel who was seeking to book an event. Ms Jackson states this proposal was put forward in light of the reduction in numbers sought in the 28 April request and as she was attempting to find a mutually acceptable solution for Novotel and Conference Planners. Despite stating there was a possibility that another Novotel client might be interested in the Peninsula Room, Ms Jackson noted the revised contract provided the Banyule Conference was to be held in the Peninsula Room on each day of the conference. According to Ms Jackson, this email was nothing more than a proposal for Ms Doyle to consider and revert to her. The email also attached copies of the tax invoices for the revised deposits.
3. Ms Jackson states that on or about 28 May 2024, she received a telephone call from Ms Doyle advising Conference Planners would not agree to any other alternate rooms and that, on that basis, it sought to terminate the Banyule Agreement.
4. Following this call, on the same day, Ms Jackson sent an email to Ms Doyle attaching a revised contract for 60 guests and stating:

As mentioned, we can keep the client in the Peninsula Room and we have decreased the minimum numbers to 60 people as requested. We have been holding the space since 27 March and it is now two months later, so cancellation charges would apply for this conference.

1. Conference Planners did not execute the revised form of contract attached to 28 May 2024 email.
2. On 29 May 2024, Ms Jackson sent an email to Ms Doyle advising again that Novotel had managed to reduce the number of guests from 100 to 60 guests and also that the Banyule Conference could be conducted in the Peninsula Room as was originally arranged for the duration of the conference.
3. On the same day, Ms Doyle responded by email stating:

As noted, from my client's perspective, when you reduced the numbers you did so with the clear communication that you had a client that may be holding a lunch on the Thursday and the proviso (sic) you gave was that if your client confirmed that you would move my client's conference on the Thursday to another room. This was also reflected in the new contract where it stated Peninsula OR Moorabool. It's important to note that this communication was a month after my correspondence was sent to you re numbers (28/4).

I obviously needed to discuss this with my client as the decision is theirs. As explained, my client did [not] want to be changing rooms, which detracted from their event and also negatively impacted the trade component and therefore decided not to accept the terms of the new contract.

At the point the new contract was issued on 22 May 2024, the old contract became void as it had been superseded, [t]he new contract was not signed.

1. Later that day, Ms Jackson responded by email stating:

The current contract is still valid until if and when a new contract is signed. Therefore, if the conference cancels, this would be subject to a cancellation fee, which we can discuss this with you.

Could you please advise of your client of this and as per their requirements, we are planning to proceed as planned.

1. Ms Doyle responded stating the Banyule Conference would not proceed at the Hotel for the reasons previously outlined and that she was 'happy to leave the matter in the hands of lawyers'.
2. Ms Jackson stated she was informed that John Dickson, the general manager of Novotel, sent an email to Ms Doyle on 30 May 2024, stating that despite Novotel being flexible and adjusting to the demands of Conference Planners, as a result of the cancellation of the Banyule Conference, it was liable for a cancellation fee of $49,170 in accordance with the cancellation clause in Banyule Agreement. This amount is said to constitute 60% of the Hotel Charge ('cancellation fee').
3. The evidence then turned to an alleged misappropriation of property by Ms Doyle which I do not consider to be of any significance in the resolution of this application.
4. Ms Jackson states that because of the acrimonious exchanges between the parties Novotel decided not to pursue the cancellation fee at that juncture.
5. Upon receiving the Demand on 12 August 2024 which made claims in respect of the Whittlesea Conference, Novotel instructed its solicitors, Marshalls Dent Wilmoth Lawyers ('MDW'), to write a letter to the solicitors for Conference Planners, Strongman & Crouch ('S&C'). The letter was dated 21 August 2024 and:

(a) informed S&C of the background to the dispute;

(b) advised Novotel has a set off pursuant to s 459G of the Act and, on that basis, the admitted amount was less than $4,000;

(c) requested the Demand be withdrawn; and

(d) demanded payment of $42,447.17 by no later than 28 August 2024.

1. On 23 August 2024, S&C responded to MDW and stated:

(a) the debt claimed in the Demand related to another conference;

(b) it was Novotel who terminated, repudiated or, alternatively, rescinded the Banyule Agreement by offering to accommodate the 28 April request; and

(c) Novotel should not be seeking to utilise the set off mechanism offered by 'section 459G (sic)[4] of the Act' and should pursue Conference Planners 'in the usual manner, by making a formal demand'.

1. On the same day, MDW responded to S&C stating the Banyule Agreement was never terminated and remained on foot until such time a revised contract was executed by Novotel and Conference Planners. MDW again invited S&C to obtain instructions from its client to withdraw the Demand and make payment of $42,447.17.
2. On 27 August 2024, S&C responded to MDW and stated:

(a) the debt the subject of the Demand and the cancellation fee were two unrelated events;

(b) the parties were not to be bound by the Banyule Agreement until the first deposit was paid and in the circumstance where the first deposit was not paid, there was no legally binding agreement;

(c) Conference Planners never used the Moorabool Room;

(d) it was Novotel who evinced an intention not to be bound by the terms of the Banyule Agreement;

(e) Novotel indicated it had intended to offer the Peninsula Room to another client for another conference; and

(f) the item said to have been misappropriated by Ms Doyle was left in the hotel room where she was staying on 2 and 3 May 2024.

1. On 28 August 2024, MDW responded to S&C and stated:

(a) it did not matter that the disputed debts related to different events and that all claims should be brought into account when considering set offs;

(b) it was the intention of the parties to be bound immediately upon execution of the agreement and it did not matter that the deposit was not paid;

(c) at no point did Novotel repudiate the Banyule Agreement. The repudiating conduct identified by Conference Planners was simply Novotel's attempt to find a resolution in light of Conference Planners' reduced numbers;

(d) at no point did Novotel advise the Peninsula Room was unavailable. It simply posed the question as to whether the other room would be acceptable;

(e) no other conference was booked in the Peninsula Room on the relevant dates and it remained available on 29 and 30 August 2024; and

(f) in these circumstances, Novotel is entitled to utilise the mechanism of the set off provisions in s 459H of the Act.

1. Ms Doyle's affidavit sets out the background surrounding the debt the subject of the Demand and addresses the circumstances surrounding the Banyule Agreement.
2. On 26 March 2024, Ms Doyle emailed Ms Jackson requesting an invoice for the deposit paid for the Banyule Conference. Ms Jackson responded the following day with the details for the deposit payment.
3. On 26 April 2024, Ms Jackson emailed Ms Doyle requesting 'the deposits to be paid for the Banyule Conference' and required at least 'the first deposit by Monday'.
4. Ms Doyle responded on 28 April 2024 stating: 'I just realised I don't think I signed this contract. Can we change the numbers slightly please and I can then pay the two deposits this week[?]'. This email also contains the 28 April request.
5. Ms Doyle also describes email correspondence with Novotel staff between 25 May 2024 and 3 July 2024 relating to the outstanding commission invoice for the Whittlesea Conference the subject of the Demand. That evidence will not be summarized here save for limited reference to it for the purpose of providing context.
6. Ms Doyle states that until receiving the 21 August 2024 letter, she was not aware Novotel had no intention of paying the commission invoice issued on 25 May 2024 for the Whittlesea Conference, as they had always been paid for previous conferences held between the parties.
7. Ms Doyle states she e-signed the Banyule Agreement on 5 April 2024 to make what she understood to be a 'tentative booking' for the Banyule Conference.
8. Ms Doyle states that during her discussions with Ms Jackson prior to making the tentative booking, she informed Ms Jackson that the Banyule Conference was for a new client of Conference Planners and that she was unsure of numbers.
9. Following the e-signing of the Banyule Agreement and discussions with her client, Ms Doyle says it became apparent that the likely attendance numbers for the Banyule Conference would not reach 100 guests, upon which she immediately contacted Ms Jackson to inform her of this.
10. Ms Doyle referred to various provisions of the Banyule Agreement:

(a) '[t]his Customer Agreement will commence on Thursday 14 March 2024 and upon payment of the initial, non-refundable deposit as required by this Agreement';

(b) '[i]n order to secure this booking an initial, non-refundable deposit will be required';

(c) '[a]ll bookings are subject to the payment of a deposit and the return of the executed Customer Agreement including the completed credit card authorisation'; and

(d) '[w]ithin five (5) business days from the date of the Customer's tentative booking a minimum of a deposit equal to 10% of the total Hotel Charges contained in the Customer Agreement must be paid'.

1. Ms Doyle states Conference Planners never paid the initial, non-refundable deposit because she was not sure of the likely attendance numbers at the Banyule Conference until May 2024. It was for this reason that Ms Doyle understood the booking was 'tentative' rather than confirmed. Further, she understood that pursuant to the terms of the Banyule Agreement, the tentative booking was not secured and that Novotel could use any room tentatively booked by Conference Planners should another client of Novotel request to use that room. Ms Doyle states that when she received the 22 May 2024 email from Ms Jackson, she understood Novotel was looking to book the Peninsula Room, which was only tentatively booked, for another client.
2. Ms Doyle states that until she had exhausted all options to recover the commission monies owed to Conference Planners for the Whittlesea Conference and issued the Demand, she had not received any demand for payment from Novotel for the Banyule Conference.
3. There then followed an acrimonious exchange with Mr Dickson concerning the item of property said to have been misappropriated by Ms Doyle but, as I have said, I do not consider that subject to be of any direct relevance to the resolution of this application.

1. In her affidavit in reply sworn 31 October 2024, Ms Jackson rejects the contention that at the time of executing the Banyule Agreement, Ms Doyle understood that she was making a 'tentative booking' at Novotel. In support of this, Ms Jackson refers to the following:

(a) An email from Ms Doyle dated 28 April 2024 in which she stated, among other things:

"Can we change the numbers slightly please and I can then pay the two deposits this week".

(b) An email from Ms Doyle dated 20 May 2024 in which she stated, among other things:

[W]e do need to adjust the number of rooms and the day attendance originally contracted for our event. We fully understand this is not an ideal situation and that it poses challenges for you.

...

I am hoping that, given our past relationship and our desire to maintain future events with your property, a solution can be found.

(c) An email from Ms Doyle dated 30 May 2024 in which she stated, among other things:

If they do not want to take responsibility for their mishandling of this conference (because until they elected to move my clients IF your new clients confirmed, we were proceeding as planned), then that's fine.

(emphasis added)

1. Ms Jackson contends the correspondence demonstrates Ms Doyle's intention was to bind Conference Planners on 5 April 2024, being the date on which Ms Doyle executed the Banyule Agreement. Ms Jackson alleges, however, that Ms Doyle's intentional delay in making payment of the deposit to secure the booking was because she was unable to obtain the final numbers from her client, not because she was of the view that the booking was only a 'tentative booking', as she alleges.
2. In my opinion, the exchanges between the parties after the Banyule Agreement was concluded have no relevance to the resolution of this application as it seems clear there was no variation or re-negotiation concluded as to its terms. I do not consider that Novotel's reference to a possible change in the conference room venue as being anything other than part of an attempt by Novotel to accommodate Conference Planners' approach; I would not regard it as arguably constituting repudiatory conduct on Novotel's part and Ms Doyle's contention that the suggestion of a change of conference rooms was evidence of repudiatory conduct on Novotel's part appears to be pretextual.

1. Novotel's primary submission is that Conference Planners became indebted to it for the cancellation fee under the Banyule Agreement which arose because Conference Planners cancelled the Banyule Conference. Novotel submits the cancellation fee amounts to an offsetting claim against the Demand.
2. Novotel referred the Court to the decision of Ozone Manufacturing Pty Ltd v Deputy Commissioner of Taxation,[5] where the Full Court of the Supreme Court of South Australia described the indicia of what was required to demonstrate an offsetting claim and contended that Novotel's claim met those criteria.[6]

Is the Banyule Agreement binding between the parties?

1. Novotel submitted that upon execution of the Banyule Agreement by Conference Planners on 5 April 2024 and Novotel on 9 April 2024, the Banyule Agreement became immediately binding between the parties. In support of this contention, Novotel refers to cl 8 of the Banyule Agreement which states:

The customer and owner agree that the electronic signature of the customer or owner to this agreement shall be valid as an original signature and shall be effective to bind this agreement.

1. Novotel referred to the decision of the High Court in Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd,[7] which observed that 'when a document containing contractual terms is signed, then, in the absence of fraud, or ... misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.'[8] Further, the High Court also noted 'it is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations'.[9]
2. On that basis, Novotel submits it is irrelevant that Ms Doyle subjectively thought what she was signing was just a 'tentative booking' with Novotel. The fact she signed the Banyule Agreement on behalf of Conference Planners which contained contractual terms meant it was bound by the terms of the agreement, including the cancellation clause.
3. Novotel contends the non-payment of the deposit by Conference Planners did not mean the Banyule Agreement did not come into, or ceased to have, effect. It submitted that, because the Banyule Agreement had been signed and was immediately binding on the parties, Conference Planners was in breach of the agreement when it failed to pay the deposit. This gave rise to a right by Novotel under cl 12 of the Banyule Agreement to either charge a late payment fee on the outstanding amount or cancel the booking and charge related cancellation fees.
4. Novotel submitted that, although the cover page of the Banyule Agreement provides '[t]his Customer Agreement will commence on Thursday 14 March 2024 and upon payment of the initial, non-refundable deposit as required by this Agreement' ('cover page clause'), which appears to create the impression that the Banyule Agreement is not binding until the initial deposit is paid, that has to be read in the context of cl 23 which provides:

The parties hereto acknowledge that the general terms and conditions shall take precedence and prevail over any other terms and conditions, whether imposed by the customer or any other third party.

1. Novotel submitted cl 23 implies that the terms and conditions of the Banyule Agreement prevail over the words and phrases found on the cover page of the agreement.
2. Novotel's counsel also contended that there was a distinction between a condition precedent as to the formation of a contract and a condition precedent as to the performance of a contract. This was made in response to the submission by Conference Planners that the Banyule Agreement was not binding between the parties because the cover page clause required the 'initial, non-refundable deposit' to be paid before the Banyule Agreement was binding.
3. In illustrating the difference between the two concepts, Novotel referred to two authorities on whether a clause in a contract should be construed as a condition precedent. In Perri v Coolangatta Investments Pty Ltd,[10] the High Court stated:

Generally speaking the court will tend to favour that construction which leads to the conclusion that a particular stipulation is a condition precedent to performance as against that which leads to the conclusion that the stipulation is a condition precedent to the formation or existence of a contract. In most cases it is artificial to say, in the face of the details settled upon by the parties, that there is no binding contract unless the event in question happens. Instead, it is appropriate in conformity with the mutual intention of the parties to say that there is a binding contract which makes the stipulated event a condition precedent to the duty of one party, or perhaps of both parties, to perform. Furthermore, it gives the courts greater scope in determining and adjusting the rights of the parties. For these reasons the condition will not be construed as a condition precedent to the formation of a contract unless the contract read as a whole plainly compels this conclusion.[11]

1. Novotel also referred to PCCEF Pty Ltd v Geelong Football Club[12] where the Victorian Court of Appeal described the general principles for the interpretation of commercial contracts and observed:

[A] court construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. The meaning of the contractual terms is to be determined objectively, by reference to what a reasonable business person would have understood the terms to mean. The proper approach involves consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract or lease. Ordinarily, the process of construction is possible by reference to the contract alone. At least where the language of the commercial contract is ambiguous or susceptible of more than one meaning, evidence of the surrounding circumstances is admissible to assist in the interpretation of the contract.[13]

1. Novotel contended an application of these principles in these circumstances requires the Court to construe the cover page clause as being a condition precedent that goes to the performance of the Banyule Agreement and not its formation; that is the only construction of the agreement that would avoid what it contends would be 'a commercial nonsense'.
2. Novotel further submitted that even if the cover page clause was a condition precedent, it is inconsistent with the terms and conditions of the Banyule Agreement and cl 23 deals with the inconsistency. Clause 23 provides 'the general terms and conditions ... take precedence and prevail over any other terms and conditions'. Novotel made the following submissions as to why the cover page clause was inconsistent with the terms and conditions of the Banyule Agreement:

(a) the cover page clause (or something similar to it) is not to be found in the general terms and conditions; and

(b) cl 9 states a deposit must be paid. If a deposit is not paid, under cl 12, Novotel has the right to either charge a late payment fee or cancel the booking and charge related cancellation fees. Novotel submits cl 12 would have no effect if the cover page clause was construed as meaning there was never a binding agreement between the parties.

1. Conference Planners contends that Novotel has failed to established that it has a genuine offsetting claim pursuant to s 459H(1)(b) of the Act.
2. Conference Planners submits the Court can be satisfied that:

(a) the Banyule Agreement was not binding on either party as the initial, non-refundable deposit was a condition precedent to a binding contract being formed and which was never paid as required by the agreement;

(b) where Conference Planners and Novotel were not bound by the Banyule Agreement and cl 15 of the agreement permitted the charging of a cancellation fee, it was not legally enforceable. Novotel did not pursue Conference Planners for the cancellation fee as it knew the Banyule Agreement was unenforceable and therefore the cancellation fee were unrecoverable; and

(c) where the Banyule Agreement and therefore the cancellation fee are unenforceable, Novotel does not have a genuine offsetting claim and the Demand should not be set aside.

1. Conference Planners contended that an offsetting claim means 'a genuine claim that the company has against the respondent by way of counterclaim, set-off or cross- demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates)'.
2. It is Conference Planners' submission that to establish a genuine dispute or offsetting claim, Novotel must satisfy the Court that such dispute or claim exists 'on the balance of probabilities'.[14]
3. Conference Planners submitted that a court called upon to adjudicate an application to set aside a statutory demand will ordinarily decline to decide competing contentions as to contractual interpretation, citing the decision of Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd.[15]
4. Conference Planners does not dispute the Banyule Agreement was executed by it on 5 April 2024 and by Novotel on 9 April 2024,[16] but disputes that it became immediately binding upon execution by the parties.
5. Conference Planners contended that the cover page of the Banyule Agreement contains two conditions precedent that need to be satisfied before the agreement becomes binding between the parties. The first was that the Banyule Agreement was to commence on 14 March 2024. The second was that there needed to be payment of the 'initial, non-refundable deposit as required by the [Banyule Agreement]'. Both had to be satisfied otherwise the Banyule Agreement could not become binding.
6. As Conference Planners did not pay the 'initial, non-refundable deposit', it submitted the Banyule Agreement never came into effect and hence was not binding between the parties. This meant Novotel could not assert its contractual right to cancel the booking nor affirm it and charge a late payment fee pursuant to cl 12 of the Banyule Agreement because that right did not exist until the agreement became binding between the parties.
7. I observe that the submissions do not address the effect of cl 9 of the Banyule Agreement and its requirement that Conference Planners must pay a deposit of 10 per cent within 5 business days of making a tentative booking, which Ms Doyle herself contends was the nature of the booking she made on Conference Planners' behalf.
8. Conference Planners submits the requirement to pay the deposit is fundamental to the contractual relationship between the parties and therefore the cover page clause must be construed as a condition precedent as to the formation of the Banyule Agreement. Conference Planners submits it would not have obtained the benefit of a guaranteed booking until it paid the deposit. Conversely, the non-payment of the deposit also meant Novotel was under no obligation to keep the dates for the Banyule Conference or to honour Conference Planners' booking.

Novotel's offsetting claim manufactured in response to the Demand

1. Conference Planners submits that Novotel's offsetting claim was not made in good faith and has been manufactured for the purpose of defeating the Demand.
2. Conference Planners contends the following evidence supports this assertion:

(a) there is no evidence to support Novotel's assertion that it decided not to pursue Conference Planners for the cancellation fee unless and until Conference Planners took action against Novotel for the commission invoice;

(b) the cancellation fee exceeds the commission invoice. If Novotel had a legal basis to recover the cancellation fee and enforce its right under the Banyule Agreement, it would have done so on or around 30 May 2024 when it was apparent that Conference Planners was not going to pay the cancellation fee;

(c) Novotel gained no legal or strategic benefit in waiting until Conference Planners took legal action against it to seek recovery of the commission invoice. This was because Conference Planners might not have sought to recover the commission invoice from Novotel and Novotel would never have sought to recover the cancellation fee; and

(d) Novotel proceeded with processing the commission invoice even after it had asserted Conference Planners was liable to it for the cancellation fee. Conference Planners submits the two matters are not linked as Novotel would have it.

1. Taking those circumstances into consideration, Conference Planners submits the Court should be satisfied that the offsetting claim based on the cancellation fee has not been raised in good faith and has been manufactured for the purpose of defeating the Demand.[17]

1. An offsetting claim is a creature of statute. Section 459H of the Act relevantly states:

(1) This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:

(a) that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;

(b) that the company has an offsetting claim.

1. Section 459H(5) defines an offsetting claim as meaning:

[A] genuine claim that the company has against the respondent by way of counterclaim, set-off or cross-demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates).

1. Despite the offsetting claim, on which Novotel seeks to rely, arising from a different transaction to that which is the source of the debt the subject of the Demand, the language of the statute explicitly permits a claim of that nature to be raised; Novotel is entitled to raise the offsetting claim in respect of the Banyule Agreement even though it arises from a different agreement (i.e. the Whittlesea Agreement).
2. The principles in relation to what constitutes an offsetting claim are well settled. Section 459(5) requires the offsetting claim to be genuine. It has been accepted that 'the threshold for establishing a genuine offsetting claim is relatively low'.[18] The courts have discussed at length the meaning of the epithet 'genuine' in a broad range of cases concerned with s 459H(1)(a) in relation to a 'genuine dispute' and I consider that the principles developed by the courts of genuineness apply with equal force to offsetting claims.
3. To establish genuineness, the Court must be satisfied, among other things, that the claim 'has sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion'[19] and the evidence demonstrates the offsetting claim has been made in good faith and not merely constructed in response to the pressure represented by a statutory demand.[20]
4. In Panel Tech Industries (Australia) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) ('Panel Tech Industries'),[21] Barrett J observed:[22]

Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow'. The court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger.

1. In Re McKeown Marrs Pty Ltd,[23] I described the rationale of this low threshold to establish a genuine dispute or offsetting claim drawing on the discussion in Assaf's Winding Up in Insolvency:[24]

The approach in some authorities is likened to that of a Court considering an application for summary judgment. Reference was made to the observations of the Queensland Court of Appeal in JJMMR Pty Ltd v LG International Corporation where it was observed that the task of the Court in a genuine dispute case is to decide whether there is a dispute "such as would warrant subsequent adjudication". Put in another way, the Court attempts to ascertain whether the alleged dispute or claim raises a 'triable issue' in relation to the demand.

Assaf makes reference in this context to the decision of Lindgren J in Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA & Pharmagel SpA where it was observed that a creditor will not be entitled to summary judgment if the defendant raised a defence or cross-claim deserving of trial and concomitantly, a defence or cross-claim would not be struck out or dismissed if it raised an issue deserving a trial. An application to set aside a demand involving the extra-curial "remedy" of "presumption of insolvency" under s 459C of the Act is no less draconian than the summary curial remedy of judgment for debt. For this reason, the author observes that the standard of satisfaction which a court requires in being satisfied of the existence of a genuine dispute is not a particularly high one. Mr Assaf states that the task of an applicant to set aside a statutory demand is no more onerous than that which would confront it if it were seeking to meet an application from the creditor for summary judgment.

1. In extraordinary circumstances, when facing 'a short point of law or the construction of documents or agreed facts',[25] the Court might make a determination in respect of such a point of law in a s 459G application and proceed to determine whether or not there is a genuine dispute or offsetting claim.
2. An example of this approach is described by Sackville J in Trecomax Pty Ltd v Prentice ('Trecomax')[26] where his Honour stated:[27]

There are authorities which support the proposition that if the facts are not in dispute, the court can decide the question of law. Thus in Delnorth v State Bank of New South Wales, Cohen J considered that where no further investigations of the facts was required, the court, in an application under s 459G of the Corporations Law could decide, as a matter of law, whether there is a genuine dispute. His Honour thought that the occasions where this is possible might be "few", but he proceeded in that case to resolve the question of law ...

1. However, Sackville J made the point that the above is not the 'ordinary' position:

While this approach is open, in my view the court should take care to ensure that it does not go beyond the role that is appropriate, having regard to the considerations identified by Hayne J in Mibor Investments and the approach endorsed by the Full Court in Spencer Constructions. The procedure established by Div 3 of Pt 5.4 of the Corporations Act is not ordinarily the occasion for final resolution of a dispute, even if the matter in contest rests on a question of law ...[28]

1. In Trecomax, the facts were, as they are here, essentially uncontentious and resolution of the application involved a consideration of whether or not a legal submission by the plaintiff as to the operation of the terms of a partnership deed gave rise to a genuine dispute. After observing the plaintiff's submission faced 'formidable difficulties' and considering the case to be 'close to the borderline of genuine dispute', Sackville J found the ground raised was 'real and not spurious, hypothetical illusory or misconceived' and that it was not appropriate 'to explore the issues further'.[29]
2. Sackville J's approach was upheld by the New South Wales Court of Appeal in Infratel Networks Pty Ltd v Grundy's Telco & Rigging Pty Ltd ('Infratel').[30]
3. In Re Hobash Holdings Pty Ltd,[31] Black J cited Infratel and stated '[t]he Court will not generally determine questions of construction of a contract in an application to set aside a statutory demand, although it may do so rarely and in an appropriate case'.[32]
4. Finally, in Creata (Aust) v Faull ('Creata'),[33] the New South Wales Court of Appeal considered whether the appellant had successfully established a genuine dispute. After finding that the competing constructions of the relevant provisions of a deed were each plausible and cogently arguable, the Court observed:[34]

Neither side's argument was so obviously correct or incorrect as to put the issue of construction beyond the realms of reasonable debate. Ultimate resolution could only come from an objective determination, in appropriately constituted proceedings, of what a reasonable business person would have understood the clauses to have meant. Central to any such determination would be the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract.

This was not a case in which counsel for Creata presented a 'patently feeble argument' as to the true construction of cl 4(b) and cl 4(c). Nor was the answer to the question of construction 'as plain as a pikestaff', to quote again the words used in Spacorp (above). As this Court said in [Infratel] at [46], s 459G proceedings are not ordinarily the occasion for the court to construe a contract where there are competing views about its meaning. This was such a case; and there was nothing to displace the principle ordinarily applicable. Competing but plausible submissions on the question of construction should have led to a finding that there was dispute on that question and therefore dispute as to the existence of the debt the subject of the statutory demand.

1. The authorities make clear that the threshold to establish a genuine offsetting claim is relatively low; the court must be satisfied the offsetting claim sought to be raised is to be distinguished from a 'spurious claim, bluster or assertion';[35] the existence of that claim needs to have a sufficient degree of cogency to be arguable[36] and the dispute in relation to the existence of the claim does not involve a straightforward 'short point of law' susceptible of summary determination in the application to set aside the demand, rather than being one which warrants proper argument and analysis in a conventional inter partes setting.[37]
2. I do not accept the evidence demonstrates, as Conference Planners would have it, that Novotel's offsetting claim which it seeks to raise has been manufactured in response to the Demand. The evidence detailed above indicates the prospect of the offsetting claim was squarely raised in written and oral communications between the parties. Although not formally raised by Novotel's solicitors until after the demand was served, it was clearly foreshadowed and I am satisfied for the purposes of this application that it is raised in good faith.
3. It might be said that the Banyule Agreement is not a particularly satisfactorily drafted document. While the cover page clause to the Banyule Agreement speaks of the agreement commencing upon a certain date and upon payment of an initial non-refundable deposit, in the terms and conditions in the main body of the agreement, there are provisions which are arguably inconsistent with that provision.
4. In this regard, cl 23 provides 'the general terms and conditions take precedence and prevail over any other terms and conditions'.[38] Clause 8 provides that all bookings are subject to the payment of a deposit and return of the executed agreement. Clause 9 creates an obligation to pay a minimum deposit of 10% within five business days of the 'tentative booking'. The expression 'tentative booking' is not defined or otherwise provided for or mentioned in the Banyule Agreement. In her evidence, Ms Doyle characterises her 'understanding' as being that she was contracting tentatively, but of course, as the case law referred to by Novotel indicates, her subjective view in that regard is not relevant.
5. Clause 10, headed 'Bookings over $40,000' (the total cost of the Banyule Conference was $81,950), provides for an obligation for payment of the three instalments to which reference has been made by the dates stipulated. Clause 12 provides that if amounts payable by Conference Planners under 'cl 7 (sic)'[39] are outstanding beyond 10 days after the due dates, Novotel could either charge a late payment fee or cancel the booking and charged related cancellation fees.
6. Novotel submitted that even if payment of a deposit was a condition precedent, it could only have been a condition for Novotel's sole benefit, which Novotel could waive. Novotel's contention is that it entered into a binding agreement with Conference Planners when they both executed the Banyule Agreement in April 2024. While there is a good deal of evidence of further correspondence between the parties about the final number of attendees for the Banyule Conference and forms of revised agreements being sent to Conference Planners (but not executed) to reflect the changing attendance numbers, on the evidence the Banyule Agreement remained the only agreement concluded between the parties for the Banyule Conference.
7. In my view, the controversy concerning the construction of the Banyule Agreement, including whether the cover page clause constitutes a condition precedent that goes to whether the Banyule Agreement is binding, should not be resolved in this application. I do not consider the circumstances are such as to give rise to a 'short point of law'.
8. As has been seen from the authorities mentioned above, a court in this type of application is not required to resolve competing constructions of a contract.[40] I consider, adopting the phraseology of Barrett J in Panel Tech, that the issue as to whether the Banyule Agreement is subject to a condition precedent gives rise to an issue which has a sufficient degree of cogency to be arguable and, as such, a finding of a genuine offsetting claim must follow. This is so even where it might be considered that the case apparently available to be made against Novotel is also arguable. In my view, the position is very similar to that considered by the Court of Appeal in Creata. I consider that both interpretations proffered by the parties are arguable based on the current evidence before the Court. I consider the submissions made by Novotel support a genuine offsetting claim based on the construction of the Banyule Agreement and the position put by Novotel is not spurious and has a sufficient legal foundation to be arguable.
9. The statutory demand should be set aside. If the parties have any submissions in support of an application for other than the ordinary order as to costs, they should be filed and served within seven days from the date of this judgment. Those submissions are not to exceed three pages.

BRIGALOW NOMINEES PTY LTD (T/AS NOVOTEL GEELONG) (ACN 004 931 668)

STRATEGIC CONFERENCES PTY LTD (T/AS THE CONFERENCE PARTNERS) (ACN 613 578 608)

[1] The plaintiff has been erroneously referred to as 'The Conference Partners' on the court file. Its correct name is 'The Conference Planners' and will be referred to as 'Conference Planners' in this judgment.

[2] The written submissions also outlined arguments in relation to a repudiation of what is described in the evidence as the 'Banyule Agreement', whether there had been a waiver of the requirement to pay a deposit and whether the cancellation fees under the Banyule Agreement amounted to a penalty. At the hearing, those arguments were not pressed by the parties.

[3] 'First deposit' and 'second payment' are terms in cl 11 of the Banyule Agreement.

[4] This is intended to be a reference to s 459H of the Act.

[5] [2006] SASC 91; (2006) 94 SASR 269.

[10] (1982) 149 CLR 537.

[12] [2019] VSCA 144.

[14] The onus which an applicant is required to satisfy is better described in para [83] et seq.

[15] [2019] NSWCA 60; (2019) 99 NSWLR 397 [90].

[17] Citing JJMMR Pty Ltd v LG International Corporation [2003] QCA 519 [18].

[18] Farid Assaf, Assaf's Winding Up in Insolvency (LexisNexis Australia, 2021) 472 [7.13].

[19] Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330 [49] ('Malec').

[20] Ligon 158 Pty Ltd v Huber [2016] NSWCA 330; (2016) 117 ACSR 495, 499.

[21] [2003] NSWSC 896 [18] (Barrett J) ('Panel Tech').

[23] [2024] VSC 102 (Gardiner AsJ).

[25] Drillsearch Energy Ltd v Carling Capital Partners Pty Ltd [2009] NSWSC 1192 [45] (Barrett J) ('Drillsearch').

[26] [2004] FCA 1057; (2004) 50 ACSR 314 (Sackville J).

[30] [2012] NSWCA 365; (2012) 297 ALR 372 (Hoeben JA, Young AJA & Ward J).

[31] [2012] NSWSC 1501.

[33] [2017] NSWCA 300; (2017) 125 ACSR 212.

[34] Ibid 220-221 (Gleeson and White JJA and Barrett AJA).

[38] The relevant part of the Banyule Agreement is not headed 'general terms and conditions ' but rather 'Terms and Conditions'.

[39] There are no payment obligations under cl 7; the payment obligations are contained in cl 10.

[40] Re J Build Developments Pty Ltd [2022] VSC 434 [31] (Hetyey AsJ).