Toma v Kusido Bayswater v Kusido [2008] NSWSC 400 | Case summary

1 HIS HONOUR: [matter 1477/08] This is an application to set aside a statutory demand under section 459G of the Corporations Act. The statutory demand is dated 24 January, 2008 and claims an amount pursuant to three loan agreements totalling in all $180,000, together with interest and other various fees. The total amount claimed is $293,461.62. 2 The only matter which is put forward now is a genuine dispute. It is said there is a genuine dispute in respect of three items in the schedule. As a result of rulings on evidence I have given earlier this is now no defence of an offsetting claim, given that there is no evidence of the amount of any such offsetting claim. 3 The relevant items in respect of which there is said to be dispute are: "Monies agreed to be repaid in relation to Park Regis CTC under the Loan Agreement Amendment Agreement $5,585.75 Management fees and recharges owing in relation to Suite 17 $19,905.00

Management fees and recharges owing in relation to the Barclay Hotel $36.642.00." 4 The same amounts are referred to in terms of their headings in what is described as the second loan agreement between the parties of 27 July 2007. That was an agreement between the defendant as lender and three of the plaintiff companies, being Bayswater Trustees, Bayswater Hotels and Toma Trustees as borrower and Mr Toma in his personal capacity. 5 Paragraph 1.1 of the agreement relates to a further loan of $20,000 and refers to the borrowers agreement to " not demand immediate payment of moneys owing by the Borrower to the Lender (being the moneys set out in Annexure 1) (Additional Funds Owing) and to extend the repayment date of and the interest rate relating to the April Loan on the terms set out below." There is then in paragraph 1.3 in clause (a) provision for interest on the additional moneys as well as the April loan; and in clause(b) the repayment date for "all of the moneys referred to in clause 1.3(a)." 6 Annexure 1 is in the first third of the page said to be in respect of the Kusido Hospitality company, and the last one is Park Regis Pty Ltd and is in the sum of $5,585.75. The one above it is Leisure & Hospitality Management for fees for the Barclay Hotel in the sum of $24,406.26 and the fees for a Suite of $7,418.00. 7 Although different in amounts at the time of the second agreement it is plain that they are the same moneys claimed in the demand although for different amounts. 8 The amounts for management fees and room charges appear to have been amounts which were pursuant to two management deeds. One was for a management support deed entered into between Leisure Hospitality Management Pty Limited and the Bayswater and Toma companies, and the other was a similar deed between the same parties and is described as a management deed. 9 It is suggested that there is a genuine dispute as to whether there is an amount owing to the company issuing the demand. Plainly the original debts at least arguably were due to a different company. 10 I have had the benefit of hearing some submissions in respect of the principles to be applied and the decision which is appropriate I think is the decision of McClelland CJ in Equity in Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACLC 669. At page 671 his Honour made the following comments in respect of the expression "genuine dispute". "It is, however, necessary to consider the meaning of the expression' genuine dispute' where it occurs in section 459H. In my opinion that expression connotes a plausible contention requiring investigation, and raise as much the same sort of considerations as the 'serious question to be tried' criterion which arises on an application for an interlocutory injunction or for the extension or removal of the caveat. This does not mean that the Court must accept uncritically as giving rise to a genuine dispute statement in an affidavit 'however equivocal, lacking precision, inconsistent with undisputed contemporary documents or other statements by the same opponent, or inherently improbable in itself, it may be' not having ' sufficient prima facie plausibility to merit further investigation as to (its) truth' (cf Eng Mee Yong v Letchumanan (1980) AC 331 at 341), or 'a patently feeble legal argument, or an assertion of facts unsupported by evidence' (cf South Australia v Wall (1980) 24 SASR 189 at 194). But it does not mean that, except in such an extreme case, a Court required to determine whether there is a genuine dispute should not embark upon an enquiry as to the credit of a witness rate opponent whose evidence is relied on his giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. In Mibor Investments (at ACLC 1066; ACSR 36607) Hayne J said, after referring to the state of the law prior to the enactment of Division 3 of Part 5.4 of the Corporations Law, and to the terms of Division 3: 'These matters, taken in combination, suggest that at least in most cases, it is not expected that the Court will embark upon any extended enquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the Court concluded that there is a dispute and that it is a genuine dispute.' In Re Morris Catering (Australia) Pty Limited (1993) 11 ACLC 919 at 9212; ;(1993) 11 ACSR at 605 thomas J said: 'There is little doubt that Division 3 … prescribes a formula that requires the Court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the Court will examine the merits or settle the dispute. The specified limits of the Court's examination the ascertainment of whether there is a " genuine dispute" and whether there is a "genuine claim". It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it) the Court has no function. It is not helpful to perceive that one party is more likely than the that to succeed, or that the eventual state of the account between the parties is more likely to be one result than another. The essential task is relatively simple -- to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it).' I respectfully agree with those statements." 11 It is a question, according to the defendants, as to whether there has been a "capitalisation" pf debts leading to an obligation to repay Kusido Hospitality & Property Group Pty Limited. It is plain that the management company to which the debts are owed is not a party to the deed of 27 July 2007, or indeed the later deed. 12 The operative words are to "not demand immediate repayment of moneys" and "extend the repayment date". This is strange coming from a company which is not the lender or the person to whom the funds are due. It seems to me that there is at least an argument that this agreement may not be effective to extend the amounts which are referred to in that part of the annexure. Accordingly, I think there is a genuine dispute in respect of these amounts. This being so, the statutory demand should be varied by reducing the amount by $62,132.75. Accordingly, I vary the payment by reducing the amount to $231,328.87. 13 The plaintiff, which has been successful but only to a very minor extent, failed on the substantive claim and, accordingly, I order the plaintiff to pay the defendant's costs of the proceedings. 14 [matter 1478/08] In this matter the evidence is the same with one omission: in the affidavit of Mr Toma of 13 February 2008 paragraph 14 is the same in each affidavit but in the other proceedings with which I have dealt, namely 1477/08, there was included an additional paragraph to the effect: "I further assert that the interest and fee calculations paid by the defendant are not supported by the loan agreement and are not claimable by the defendant." 15 This one is a case where the affidavit does not draw attention to the genuine dispute and it is a question of whether it, using the words of Barrett J in Saferack Pty Limted v Marketing Heads Australia Pty Limited [2007] NSWSC 1143 " is evident from the supporting affidavit, even if only because it can be discerned from some annexed document the content of which 'reveals' it". 16 It will be recalled in Callite there was said to be a revelation where the invoices were the relevant documents which disclosed on their faces breaches of the Legal Practitioners Act. It seems to me that the matter is a question of the right company and, given the different amounts claimed in the demand, that the relevant documents do reveal the matters I have referred to in the other demand. 17 Accordingly, for the reason I have expressed in matter 1477/08 I believe there is a genuine dispute in respect of that amount. Accordingly, there is a genuine dispute in respect of the demand in the sum of $62,132.75 and I reduce the amount of the demand to $231,328.87. I order the plaintiff to pay the defendants costs of the proceedings. **********

Toma v Kusido Bayswater v Kusido

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