1. On or about 18 December 2008, the defendant (which I shall call “O & H”), served a statutory demand on the plaintiff (“Autolac”). The debt or alleged debt, the subject of the statutory demand is in the sum of $102,598.11 and is described in the schedule to the statutory demand as follows:
“Balance of the Purchase Price in the amount of $102,598.11 due to the Creditor by the Company under a written Business Sale Agreement that is undated between the Creditor as Vendor and the Company as Purchaser of a Business known as Autolac Newcastle as certificate by the Company to the Creditor in a worksheet submitted by the Company to the Creditor by email.”
2. By originating process filed on 5 January 2009, Autolac makes application under s 459G of the Corporations Act 2001 (Cth) for an order setting aside the statutory demand. The affidavit filed in support of the application is the affidavit sworn on 5 January 2009 by Mr McDonald, a director of Autolac and the chief financial officer of its parent company, Allomak Ltd (“Allomak”). It is that affidavit that sets the limits of the plaintiff’s case in accordance with Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452.
3. Mr McDonald’s affidavit says in paragraph 14 that, by reason of the matters stated in paragraphs 12 and 13, “the plaintiff does not consider that it is indebted to the defendant company”. There is thus reliance on
s 459H(1)(a) of the Act and the proposition that there is a genuine dispute as to the existence of the debt to which the demand relates.
4. In paragraphs 16 to 18 of the affidavit, Mr McDonald refers to an “offsetting claim” of $211,697.84 but he describes that claim as a claim that Autolac has against Habost Holdings Pty Ltd and refers to an invoice of 15 February 2008 issued by Autolac as evidencing or embodying the claim. The invoice is addressed to Habost Holdings Pty Ltd. Despite the issue of an invoice, the claim appears to be one for damages for breach of warranties given by Habost Holdings under a share sale agreement made in 2006.
5. There is in this part of the affidavit apparent reliance on s 459H(1)(b) of the Act. It is obvious, however, that if and to the extent that the plaintiff has a genuine claim of $211,697.84 or any other amount against Habost Holdings, that is irrelevant to the operation of s 459H(1)(b). I say this because, having regard to the definition of “offsetting claim” in s 459H(5), a claim can in the present context be an “offsetting claim” only if it is a claim that Autolac has against O & H. The postulated claim is one against another company, Habost Holdings. O & H is not liable in respect of any such claim and this is so even if, as Mr McDonald’s affidavit suggests, Habost Holdings is a shareholder of O & H. It was for these reasons that Mr Baird eventually did not press any offsetting claim case on behalf of Autolac.
6. I turn therefore to the s 459H(1)(a) case and the proposition that there is a genuine dispute as to the existence of the debt the subject of the statutory demand. The first step is to appreciate the way in which the debt is said to arise. The schedule to the statutory demand says that the sum of $102,598.11 is due to O & H by Autolac under a written business sale agreement that is undated between O & H as vendor and Autolac as purchaser relating to a business known as Autolac Newcastle. It is further said that the amount is as certified by Autolac to O & H in a worksheet submitted by Autolac to O & H.
7. The sale agreement is in evidence. It was entered into in June 2007. O & H, then called Autolac Newcastle Pty Ltd, is the vendor. Autolac is the purchaser. Habost Holdings and another company, G J & L A O’Brien Pty Ltd, are also parties. They are described as the “covenantors”. O & H as vendor agreed to sell the various assets of the Newcastle business to Autolac as purchaser for a price calculated and payable in accordance with clause 4.1. The expression “purchase price” is, not unnaturally, defined as the total amount payable by Autolac as purchaser to O & H as vendor for the purchase of the business.
8. The purchase price was expressed to be payable by instalments. The first instalment was to be satisfied by the issue of shares in Allomak, the purchaser’s parent. The second and third instalments were to be satisfied in part by the allotment of Allomak shares and in part by the payment of cash. There was a provision saying that, except as otherwise provided in the agreement, payment was to be made to an account nominated by the vendor O & H.
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