Teratrust Pty Limited v Westpac Banking Corporation

Judgment 1By Originating Process filed on 23 May 2012, the Plaintiff, Teratrust Pty Limited ("Teratrust") moves to set aside a statutory demand dated 2 May 2012 ("Demand") served by the Defendant, Westpac Banking Corporation ("Westpac"). The Originating Process refers to s 459H(1)(a) and s 459J of the Corporations Act 2001 (Cth) but the primary basis of the application to set aside the Demand appears to be that there is a genuine dispute as to the debt claimed by Westpac. 2The Demand was for an amount of $23,870.86 and relies on a default judgment given in the Magistrates Court of Queensland on 14 March 2011 in the amount of $29,561.77 against Teratrust, against which a credit has been given for a payment of $5,690.91 in partial reduction of the judgment debt. The Demand was verified by an affidavit sworn 2 May 2012 by Mr Stewart Meager, who is the Manager Legal, Dispute Resolution Group (Qld) of Westpac. 3Following the service of the Demand, Teratrust's solicitors advised Westpac's solicitors by letter dated 21 May 2012 that deposits amounting to $20,000 had been made to Westpac's account by Teratrust's Company Secretary Mr Hinton and proposed monthly payments to pay the balance of the debt of $9,561.77 which Teratrust then acknowledged to be owing. While that letter was marked "without prejudice except as to costs", Teratrust tendered it without objection in this application. Deposit records referred to in that letter show deposits were made by Teratrust of $5,000 on 28 September 2011, 17 October 2011, 16 November 2011 and 15 December 2011 to an account held at Australia and New Zealand Banking Group in the name of Minter Ellison, Westpac's solicitors. 4By letter dated 22 May 2012, Westpac's solicitors responded that the relevant deposits had been made in accordance with an agreement reached with Mr Harry Londy ("Mr Londy"), which provided for a payment to be made on 27 September 2011 and thereafter for monthly payments. That letter indicated that the $20,000 in payments had been allocated toward the debt owed by Mr Londy, interest under a default judgment against him and costs, totalling $15,309.09, and the balance of $5,690.91 had been allocated to the debt owed by Teratrust which had been guaranteed by Mr Londy. Mr Londy was at that time and subsequently a director of Teratrust; the registered office of Teratrust was at Mr Lundy's address; and Mr Londy was also a guarantor of financial arrangements between Teratrust and Westpac. 5By letter dated 22 May 2012, Teratrust's solicitors took issue with Westpac's position and contended that Teratrust had paid the amount of $20,000 towards its debt not Mr Londy's debt, with the funds being paid from an account of Teratrust and by Teratrust's Company Secretary not Mr Londy. Teratrust similarly contends in these proceedings that the entirety of those payments were made by Teratrust for its own benefit and should have been allocated to the debt owed by it. There is no issue in these proceedings as to the manner in which the payments were allocated as between different amounts owed by Mr Londy, who is not party to the proceedings. 6 Dealings between Westpac, Teratrust and Mr Harry Londy 7The background to this dispute turns on the dealings between Westpac, Teratrust and Mr Londy. In summary: