The Verus Group Pty Ltd v Webb [2010] NSWSC 423 | Case summary

1 This is an application under s 459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand served on the plaintiff by the defendant, Mr John Raymond Webb. 2 The application is based on the proposition that there is a genuine dispute as to the existence of the debt the subject of the statutory demand. The plaintiff thus invokes s 459H(1)(a). 3 The debt or alleged debt to which the statutory demand relates is in the sum of $17,516.40 and is said to consist of three separate sums totalling that amount "payable pursuant to a contract dated on or about 20 February 2009". 4 The affidavit accompanying the statutory demand is more extensive than usual. The affidavit makes it clear that, on the defendant's view of matters, there were three separate contracts between the plaintiff and Mr Webb, each dated 20 February 2009 and each importing detailed terms and conditions recorded in a separate document. Further, it is made clear by the affidavit that, on the defendant's view of matters, one of the stated sums became payable under each contract. The subject matter of each contract was the hire of exhibition space at a trade fair with which it appears that the defendant was connected. 5 The case is, I think, one in which a single statutory demand extends to several different or distinct debts so that a description of each debt is required in the statutory demand: see Chippendale Printing Company Pty Limited v Deputy Commissioner of Taxation (1995) 55 FCR 562. That requirement is satisfied. 6 The defendant has proceeded on the footing that the three sums became due and payable to him by the plaintiff and that none has been paid. 7 The supplier named in each of the three documents, which is in the nature of an order or request, is "Australian Industry Exhibitions". The statutory demand was issued by the defendant, describing himself as "John Raymond Webb trading as Australian Industry & Lifestyle Exhibitions". This name (with the inclusion of "& Lifestyle") is registered under the business names legislation of Western Australia in respect of Mr Webb. The start date is shown as 6 May 2008. The relevant transactions took place in 2009. 8 The plaintiff has put into evidence the results of a business names search in respect of "Australian Industry Exhibitions", that is, without the inclusion of "& Lifestyle". The search shows that the name was registered under the Western Australia business names legislation up to 6 May 2008 in respect of one Gregory John Millar. 9 The defendant maintains, as I have said, that three contracts were made by the plaintiff with him. His name does not appear on any of the order documents. The only name that appears is "Australian Industry Exhibitions". In two out of the three cases, this is also the situation in the separately existing terms and conditions document, while in a third case the terms and conditions refer to "Australian Industry & Lifestyle Exhibitions". 10 A number of invoices are also in evidence, all addressed to the plaintiff. Each relates to one of the three trade fairs. The first invoice is an invoice of "Australian Industry Expos", the second is an invoice of "Australian Industry & Lifestyle Exhibitions", and the third is again an invoice of "Australian Industry Expos". 11 I have before me a copy of business names search results for "Australian Industry Expos". It shows that there is no registration of that name. 12 Having regard to the documents to which I have referred, being the three alleged order documents or contracts, the terms and conditions documents and the three invoices, the only connection with Mr Webb comes from the business names registration in relation to "Australian Industry & Lifestyle Exhibitions". There is nothing to suggest that Mr Webb is identified with "Australian Industry Exhibitions" or "Australian Industry Expos". There is thus no demonstrated connection between Mr Webb and any of the three alleged contracts or between Mr Webb and two of the three invoices. 13 If an action for recovery of any of the three debts were to be brought in New South Wales, it would be necessary for Mr Webb to sue in his own name and not under any business name: see Uniform Civil Procedure Rules 2005, rule 7.19. It would then be for Mr Webb to prove that, despite the absence of his name (or any registered business name of his) from the documents associated with three alleged contracts, it was in fact with him that the plaintiff had entered into legal relationships. 14 The onus would be on Mr Webb to establish this by evidence in the debt recovery proceedings brought by him. A bald assertion by him of the kind he makes in his affidavit in these proceedings would not be enough. 15 Mr Meehan of counsel, who appeared for Mr Webb, says that the objective evidence shows that the plaintiff intended to contract with whomever it was that was promoting the relevant trade fairs and that it was Mr Webb who was the promoter. It follows, so it is argued, there must have been a contract, in each case, between the plaintiff and Mr Webb. Mr Meehan referred in particular to the decision of the Court of Appeal in Pethybridge v Stedikas Holdings Pty Limited [2007] NSWCA 154; [2007] Aust Contract R 90-263 and that of Ward J in El-Kazzi v Kassoum [2009] NSWSC 99. 16 The submission really loses sight of the issue in this particular case. The court is not called upon here to examine the evidence and, according to the objective theory of contract formation, to come to a conclusion about who contracted with whom and in what terms. Much less is the court called upon to decide whether, on the evidence, Mr Webb was the promoter or operator of the trade fairs. 17 An inquiry of that kind was made in Pethybridge and a conclusion was reached as to who the contracting party was. The conclusion followed an assessment of a good deal of evidence about the circumstances in which the contract was formed, post contractual communications, inferences to be drawn from a business names registration and the significance of certain Australian company number evidence. Likewise, in the El-Kazzi case, Ward J devoted a considerable part of her judgment to "who made the loan" and eventually reached a conclusion on that question. 18 As Mr Davis of counsel emphasised in his submissions on behalf of the plaintiff, the only question that arises in these proceedings is a simple and very narrow question, that is, whether there is a dispute as to the existence of each of the three debts and, if so, whether the dispute is genuine. 19 According to the formulation in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, the court needs to find no more than a plausible contention that the debt in question is not owing, due and payable. The plausible contention here is concerned with debts owing, due and payable to Mr Webb. Given the lack of connection on the surface of the documents between him and the alleged orders and contracts - and his own acceptance of the reality that there would have to be an inquiry into the role he actually played in relation to the trade fairs - there is a plausible contention and a genuine dispute. 20 Separate and properly constituted debt proceedings are required to resolve the dispute. Only in those proceedings can the process of investigation undertaken in the Pethybridge case and El-Kazzi case be undertaken and a definitive conclusion reached. 21 Such a definitive conclusion is not the objective of these present proceedings. 22 The statutory demand and the circumstances in which it was issued do not constitute a safe basis for the creation of a presumption of insolvency capable of grounding an application for winding up in insolvency. Only clear-cut cases can be allowed to lead on to that next stage. 23 For the reasons I have given, this is not a clear-cut case of that kind. 24 The orders of the court are: (1) Order that the statutory demand the subject of these proceedings be set aside. (2) Order that the defendant pay the plaintiff's costs of the proceedings.

The Verus Group Pty Ltd v Webb

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