Micha International Pty Limited v Jong Seol Lee [2008] NSWSC 921

New South Wales Supreme Court

CITATION : Micha International Pty Limited v Jong Seol Lee [2008] NSWSC 921

HEARING DATE(S) : 12 August 2008 JUDGMENT OF : Hammerschlag J

EX TEMPORE JUDGMENT DATE : 12 August 2008

DECISION : Statutory Demand dated 16 January 2008 set aside. Defendant to pay the plaintiff's costs.

CATCHWORDS : CORPORATIONS – creditor's statutory demand - application under s 459G of the Corporations Act 2001 (Cth) ("the Act") to set aside statutory demand – plaintiff asserts payment of debt – sufficient evidence to establish genuine dispute

LEGISLATION CITED : Corporations Act 2001 (Cth)

CASES CITED : Solarite Air Conditioning Pty Limited v York International Australia Pty Limited [2002] NSWSC

PARTIES : Micha International Pty Limited (ACN 117 440 098) Jong Seol Lee

FILE NUMBER(S) : SC 1507/2008

COUNSEL : J.R. Young (Plaintiff) M.W. Sneddon (Defendant)

SOLICITORS : Sean Kim Bilias & Associates (Plaintiff) Watson & Watson (Defendant)

- 3 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

HAMMERSCHLAG J

12 AUGUST 2008

1507/2008 MICHA INTERNATIONAL PTY LIMITED -V- JONG SEOL LEE EX TEMPORE JUDGMENT 1 HIS HONOUR: This is an application under s 459G of the Corporations Act 2001 (Cth) ("the Act") to set aside a statutory demand dated 16 January 2008 made by the defendant on the plaintiff for $110,000. That amount is the balance which the defendant says is outstanding by the plaintiff in respect of the sale by the defendant to the plaintiff of a convenience store business for a purchase price of $360,000 of which $300,000 was attributed to the business and $60,000 to the stock. 2 It is not in dispute that the defendant received on behalf of the plaintiff (from the two individuals who stand behind it) $250,000. Hence the balance of $110,000, allegedly, outstanding. 3 By her affidavit of 15 February 2008, the sole director and shareholder of the plaintiff, Kyung Sook Lim, deposes as follows: "17. I met the Defendant in Seoul Korea on or about 5 January 2006. I saw him a number of times after that. On 23 January 2006 I handed the Defendant the amount of 80 Million Won in Korean currency. This is equivalent to $110,000 in Australian currency.

...

23. On or about 22 June 2006 the defendant provided me on my request with a signed receipt for the full amount of the moneys that I paid him under the contract for the purchase of the business. Attached hereto and marked as as [sic] annexure 'C' is a true copy of the receipt."

4 The defendant denies the genuineness of the receipt. 5 Barrett J said in Solarite Air Conditioning Pty Limited v York International Australia Pty Limited [2002] NSWSC 411 at [23] of applications under s 459G of the Act where the plaintiff asserts there is a genuine dispute that: "[23] … The tests of 'plausible contention requiring investigation', 'real and not spurious, hypothetical, illusory or misconceived' and 'perception of genuineness (or lack of it)', applied in the context of a summary procedure where 'it is not expected that the court will embark on any extended inquiry', mean that the task faced by a company challenging a statutory demand on the 'genuine dispute' ground is by no means at all a difficult or demanding one. The company will fail in that task only if it is found upon the hearing of its s 459G application that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted. 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." 6 Mr Sneddon of counsel, who appeared for the defendant, put that the plaintiff's assertions are implausible because there is no documentary evidence establishing either the source of the money paid or the fact of the payment at the time that the payment allegedly took place. He put that there is an entire lack of specificity relating to the alleged payment of the money. 7 He put that in the circumstances the plaintiff has failed to meet the threshold required for these type of applications.

8 I am satisfied however that the plaintiff has met the low threshold required. The affidavit evidence of Kyung Sook Lim provides that the money was paid on a particular date at a particular place and a receipt is in evidence asserted to be the receipt in respect of the payment of that sum. 9 It is not for me at this stage to determine whether that case will or will not ultimately succeed. It does not matter that I might have thought that the case for the defendant might ultimately be the stronger one on a final hearing. 10 The plaintiff need only satisfy me that there is a single issue which has a sufficient degree of cogency to be arguable. In my view the plaintiff has met that threshold. There is a sufficient degree of cogency for me to be satisfied that the assertion that the plaintiff had paid the defendant the $110,000 is arguable. 11 In those circumstances I order that the statutory demand dated 16 January 2008 be set aside. 12 The defendant is to pay the plaintiff's costs. **********

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