Aerospace Aviation v Deshmukh

Background

1. It will be convenient first to refer to the background facts, before identifying the affidavits which were read in the proceedings.
2. By an Asset Sale and Purchase Agreement dated 22 June 2017 ("Asset Sale Agreement"), Mr Wood and Mr Kemp, each described as "Seller", agreed to sell a mining lease, ML 5470, and certain "assets" to ATG. The "Background" set out in the Asset Sale Agreement recorded that the "Sellers" were the legal and beneficial owners of that mining lease and the assets set out in the Asset Sale Agreement and they agreed to sell, and ATG agreed to buy, those assets on the terms set out in that agreement. Clause 2.1 of that agreement provided that possession of, and title to, rights and property in and all risks concerning ML 5470 and the assets passed to ATG upon it making the full payment. Clause 3.1 specified the purchase price payable for the assets (as specified in cl 8) as $500,000 plus any applicable stamp duty and other associated costs for the transfer of the assets. Clause 4.1 provided that the purchase price must be paid by a 10% ($50,000) non-refundable holding deposit on the date of signing the Asset Sale Agreement, which was paid, and then the remaining 90% ($450,000) on or before 45 days from the date of signing of the Asset Sale Agreement, by electronic transfer to accounts nominated by the Seller in writing or as otherwise agreed to by the parties in writing. ATG did not pay the latter amount.
3. Clause 5.1.1 relevantly provided that, on the date of full payment, the Seller must deliver or make available to ATG, inter alia, ownership of all assets set out in the Asset Sale Agreement, free from third party interests. Clause 8 specified the assets sold to ATG under the Asset Sale Agreement, including tenement ML 5470 and certain other assets, including two caravans, an accommodation shed and three motor vehicles and other assets. A notice provision recorded the addresses at which notices would be given to Mr Wood, who was described as "Tenement Seller #1" and Mr Kemp, who was described as "Tenement Seller #2". Mr Wood signed the agreement as "Seller #1" and Mr Kemp signed it as "Seller #2". Mr Klooster, who appears for ATG, accepts in submissions that ATG paid the $50,000 deposit due under the Asset Sale Agreement on or around 26 June 2017 but failed to pay the balance of $450,000 by 4 July 2017, within the 45 days contemplated by that agreement, or at all.
4. A document submitted to RevenueSA in respect of stamp duty on the transfer of ML 5470 recorded the transferors as being Mr Wood and Mr Kemp each with a 50% share. That language is consistent with tenancy in common rather than with joint tenancy. A direction as to payment dated 15 July 2017 given by Messrs Wood and Kemp (CB 4, 1068-1069) stated that payment was required on or before 10 August 2017 to Mr Wood in the amount of $275,000 and to Mr Kemp in the amount of $175,000 (CB 4, 1069).
5. By an email dated 17 August 2017 from Mr Hillam to Mr Wood, ATG agreed to pay a $50,000 late payment fee in consideration for further time to settle the agreement relating to ML 5470 and proposed paying that fee between 25 and 29 August 2017. By an email also dated 17 August 2017, Mr Wood sent Mr Hillam a "Variation to Original Asset Sale and Purchase Agreement" and a direction to pay the late payment penalty contemplated by that agreement to Mr Wood in the amount of $25,000 and to Mr Kemp also in the amount of $25,000 (Ex P1).
6. By an agreement titled "Variation to Original Asset Sale and Purchase Agreement" dated 18 August 2017 ("Variation Agreement") (CB 1, 25-26), Messrs Wood and Kemp and ATG agreed that the purchase price payable for the assets was $500,000 plus any applicable stamp duty and other associated costs and amended the provision relating to time of payment of the purchase price to record that the 10% non-refundable holding deposit had been paid; that a further 10% ($50,000) described as a "Late Penalty Payment" was to be paid on 28 August 2017; that 50% ($250,000) was to be paid on or before 9 October 2017; and 40% ($200,000) was to be paid on or before 8 January 2018, again by electronic transfer to accounts nominated by the Seller in writing or as otherwise agreed to by the parties in writing. The Variation Agreement was also signed by Mr Wood and Mr Kemp; and they were respectively described as "Seller #1" and "Seller #2". ATG also did not pay the instalment amounts on the dates stated in the Variation Agreement.
7. By letter dated 25 January 2018 (CB 4, 1079-1080), the solicitors acting for Messrs Wood and Kemp referred to fees payable under a consultancy agreement between ATG and Mr Wood and to the amounts payable under the Asset Sale Agreement and the Variation Agreement and stated that: "We are instructed that [ATG] has failed to pay any of the agreed instalments, all of which are now past the date on which they were due for payment. On that basis, [ATG] is indebted to our clients in the sum of $500,000, which entire sum is now due and payable. We are instructed to demand that [ATG] pay the sum of $500,000 to our clients within 21 days from the date of this letter."
8. ATG subsequently proposed a further variation agreement dated 13 September 2018, which was not accepted by Messrs Wood and Kemp. That agreement provided for the payment of $100,000 within 7 days of execution, five-eighths of which would be payable to Mr Wood and three-eighths to Mr Kemp; a further amount of $400,000 constituting the balance of the purchase price payable under the agreement by instalments, commencing in the first month in which gold was produced from the tenement; and an additional "bonus" of $50,000 in the month following the final payment of such instalments, five-eighths of that amount to be paid to Mr Wood and three-eighths to Mr Kemp.
9. As noted above, Mr Wood and Mr Kemp then claimed the amount of $500,000 in the Demand, being the amount of the debt described in a schedule and, in accordance with Form 509H, required ATG, within 21 days after service of the Demand, to pay to them the amount of the debt or secure or compound for the amount of the debt to the creditors' reasonable satisfaction. The debt was described in the schedule to the Demand as follows: "Outstanding amount due in relation to a default by [ATG] in failing to pay money due under an Asset Sale and Purchase Agreement dated 26 June 2017 as varied by a Variation to Original Asset Sale and Purchase Agreement dated about 23 August 2017."
10. The Demand was verified by Mr Wood's affidavit dated 11 October 2018. That affidavit referred to the Asset Sale Agreement in relation to the sale and purchase of ML 5470 and associated assets; the entry into the Variation Agreement and referred to cl 4 of the Variation Agreement, by which ATG acknowledged and agreed that it would pay specified amounts totalling $500,000 by specified dates; and affirmed Mr Wood's belief that there was no genuine dispute about the existence or amount of the debt claimed.

Affidavit evidence

1. Turning now to the affidavit evidence, ATG relied on an affidavit of Mr Hillam affirmed 7 November 2018, significant parts of which were admitted subject to a limiting order under s 136 of the Evidence Act 1995 (NSW) as identifying the basis of ATG's claim to set aside the Demand and as submission, and not as proof of the asserted facts. That affidavit identified contentions, inter alia, that ATG owed no debt to Messrs Wood and Kemp jointly, or at all, and that Messrs Wood and Kemp were tenants in common of ML 5470 and their entitlements under the Asset Sale Agreement, if and when such entitlements arose, were entitlements as tenants in common in unequal shares, and the Demand had claimed a single debt which could only be a composite debt owed to multiple separate creditors. I will address that contention below.
2. Mr Hillam also referred, at length, in that affidavit to discussions with Mr Wood prior to the entry into the Asset Sale Agreement and to statements that Mr Wood and Mr Kemp "own the tenement 50% each" and that Mr Wood owned all of the equipment sold under that agreement (Hillam 7.11.18 [10]). Mr Hillam also identified matters relating to a claim for breach of duty and negligent performance of works against Mr Wood, which was not pressed at the hearing since it could not establish an offsetting claim against Mr Kemp.
3. Mr Hillam also identified a contention that the Asset Sale Agreement had not yet completed, and that neither of the Defendants had delivered to ATG any of the items of equipment described as "Assets" in that agreement (Hillam 7.11.18 [30]). Mr Hillam's evidence (Hillam 7.11.18 [35]-[36]), to which no objection was taken, was that: "Neither of the defendants has ever delivered to ATG any of the items of equipment described in clause 8.3 of the Agreement for Sale. Nor has either of the defendants ever provided ATG with any keys to any of the vehicles, or to any of the sheds which form part of the equipment. Neither the Nissan 4 x 4, the landrover 4 x 4, the ford sedan, nor the Fowler Tractor is on EL 5470, and noone has ever delivered any of them to ATG, [or any] of the keys or any documents of title to any of them. Noone has given ATG the registration papers or transferred registration to ATG's name. The 2 caravans are locked in the Accommodation shed, and ATG cannot access them. The tool shed, the generator shed and the trailer disappeared from the site approximately 6 months ago."
4. ATG relied on a second affidavit dated 15 February 2019 of Mr Hillam, which referred to further conversations with Mr Wood said to have taken place prior to the entry into the Asset Sale Agreement. Part of that affidavit, seeking to establish an allegation of reliance in support of a misleading or deceptive conduct claim was rejected, where that claim was not raised within the 21 day period specified in s 459G of the Act. Other parts of the affidavit, relating to matters including damage to a Bedford truck and shaker screen and various items of equipment were not read. That affidavit repeated the claim that a Nissan four wheel drive, Land Rover four wheel drive and Ford sedan were not present at the site and had not been made available to ATG. Mr Hillam's evidence in respect of a cross-demand relating to the performance of Mr Wood's obligations under a consultancy agreement was not read and further evidence relating to allegedly unauthorised works and to ATG's funding arrangements was not read.
5. By a third affidavit dated 28 February 2019, Mr Hillam replied to aspects of Mr Wood's affidavit affirmed 15 February 2019. Substantial parts of that affidavit were not read. Several further affidavits of Mr Hillam, which were largely not in admissible form, were not read, where they were not filed in accordance with directions made by the Court and an application for leave to rely on them was not pressed.
6. Messrs Wood and Kemp relied on Mr Wood's affidavit dated 15 February 2019, parts of which were also admitted with limiting orders under s 136 of the Evidence Act. Mr Wood there described his and Mr Kemp's interest in ML 5470 as owned "in a 50/50" share, which is again consistent with their holding that interest in joint tenancy rather than as tenants in common. Messrs Wood and Kemp also relied on Mr Kemp's affidavit dated 15 February 2019, Mr Wood's affidavit dated 4 May 2019 and on an affidavit dated 6 May 2019 of an electrical contractor, Mr Higham.

Whether there is a genuine dispute as to the debt claimed in the Demand

1. The Court has power to set aside a creditor's statutory demand under s 459H(1)(a) of the Corporations Act where there is a genuine dispute between a company, relevantly, ATG and the issuer of the creditor's statutory demand, relevantly, Messrs Wood and Kemp, about the existence or amount of the debt to which the demand relates.
2. In Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452 at 464, the Full Court of the Federal Court observed that a genuine dispute must be bona fide and truly exist in fact, and the grounds for the dispute must be real and not spurious, hypothetical, illusory or misconceived. In Panel Tech Industries (Australia) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896 at [18], Barrett J formulated that proposition as follows, which has been frequently applied in subsequent cases: "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."
3. In TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd [2008] VSCA 70; (2008) 66 ACSR 67 at [71], Dodds-Streeton JA observed that a company which seeks to establish a genuine dispute or offsetting claim: "… is required to evidence the assertions relevant to the alleged dispute or off-setting claim only to the extent necessary for that primary task. The dispute or off-setting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile … [I]t is not necessary for the company to advance, at this stage, a fully evidenced claim. Something 'between mere assertion and the proof that would be necessary in a court of law' may suffice."
4. In Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344; (2013) 85 NSWLR 601, the Court of Appeal, in summarising the case law applicable to the threshold to demonstrate an offsetting claim, conducted a comprehensive review of the cases referable to establishing whether a genuine dispute was established. Their Honours there emphasised (at [36]) that the Court must be satisfied that there is a serious question to be tried or an issue deserving of a hearing or a plausible contention requiring investigation but also emphasised that the evidence necessary for that purpose "need not conclusively prove the claim or otherwise be incontrovertible or substantially non-contestable". Their Honours also observed (at [46]) that: "In determining whether there is evidence of a genuine dispute as to the debt, or that there is an offsetting claim, except in extreme cases, the court is not concerned to engage in an enquiry as to the credit of the deponent of the affidavit filed in support of the application."
5. The Court also summarised the position (at [47]) as being that the Court's role is: "to determine whether there was plausible evidence to establish the existence of a genuine dispute, not whether the evidence was disputed or even likely to be accepted on a final hearing of any such claim."
6. I also summarised the applicable principles in Re Wollongong Coal Ltd [2015] NSWSC 1680; (2015) 110 ACSR 134 at [9]-[22], and they were summarised by Gleeson JA in Re AMP Life Ltd [2018] NSWSC 855 at [35]-[37] as follows: "The approach which the court should take to the assessment of a genuine dispute is well-established. It is for an applicant to prove the existence of such a dispute, but the burden of proof is analogous to that which confronts a party on an application for an interlocutory injunction or summary judgment. The function of the court is merely to determine the existence of a genuine dispute; it is not to determine whether the debt exists. The court does not weigh the merits of the dispute or engage in a balancing exercise in relation to competing contentions … The bar for establishing a genuine dispute is not set high; a "plausible contention requiring investigation" will suffice … Other expressions to similar effect can be found in the authorities including that the dispute is "real and not spurious, hypothetical, illusory or misconceived" and "perception of genuineness (or lack of it)"… The court's state of mind concerning the existence of a genuine dispute may range from a clear conviction that the debt does not exist to an opinion that the genuine dispute hurdle has only just been cleared …" [citations omitted]
7. Mr Klooster also refers to the observation of White JA in Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd [2019] NSWCA 60 at [90] that: "It is usually inappropriate on an application to set aside a statutory demand that the court attempt to decide competing contentions as to contractual interpretation, partly because to do so might embarrass a judge before whom that issue arises and fundamentally because if the disputed question of contractual interpretation is arguable there will be a genuine dispute as to the existence of the debt, albeit one that does not depend upon a disputed matter of fact. But where the legal argument propounded in support of a particular construction is "patently feeble" (Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787 (McLelland CJ in Eq), or where it is "as plain as a pikestaff" that it has no basis (Spacorp Australia Pty Ltd v Myer Stores Ltd [2001] VSCA 89; 19 ACLC 1270 at [41]) then there will be no genuine dispute (Creata (Aust) Pty Ltd v Faull [2017] NSWCA 300; 125 ACSR 212 at [26]-[29] ("Creata")."
8. Plainly, White JA did not there exclude the possibility of the Court finding that, in a particular case, a contractual argument has so little basis that it does not establish a genuine dispute, because it is, for example, "patently feeble" or without basis or plainly wrong, since he referred to earlier decisions that reach such findings. The contrary approach would mean that any statutory demand depending upon a contract would likely be set aside, since the meaning of many contractual provisions would be contestable, if no regard is had to whether the contest has any plausibility.
9. ATG contended that there is a genuine dispute as to ATG's obligation to pay the amount of $500,000 claimed in the Demand by reason of the Defendants' failure to deliver some of the assets to ATG under the Asset Sale Agreement and Variation Agreement. I have referred above to Mr Hillam's evidence that several motor vehicles and other assets had not been delivered to ATG, and there was no dispute as to that matter. Mr Klooster also relied on s 28 of the Sale of Goods Act 1895 (SA) which relevantly provides that: "Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller must be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer must be ready and willing to pay the price in exchange for possession of the goods."
10. Mr Klooster submitted that that section reflects the common law position that delivery of goods and payment of the price would generally be concurrent obligations, and fairly recognised that the parties are free to contract out of the general rule, including under s 54 of the Sale of Goods Act. Mr Klooster nonetheless submitted that it would be a rare case where the price was payable on a specified day irrespective of delivery: Martin v Hogan (1917) 24 CLR 234 at 266-267. Mr Klooster submitted that s 28 of the Sale of Goods Act raised arguable alternatives as to the meaning of the relevant provisions of the Asset Sale Agreement, and that no attempt should be made to determine that question in an application to set aside a creditor's statutory demand. Mr Klooster also submitted that it is arguable that no debt is due and payable as the obligation to pay is concurrent with delivery of the chattels.
11. Mr Spinak, who appears for Messrs Wood and Kemp, relies on cl 5.1 of the Asset Sale Agreement for the proposition that the Sellers are only bound to make available the plant and equipment to be sold with the mining lease to ATG on the day of "full payment" under the Asset Sale Agreement, and submits the suggested non-delivery of such equipment is in accordance with the terms of that agreement, where a condition precedent to the requirement for delivery of equipment, namely full payment, has not occurred.
12. I proceed on the basis that the test for a genuine dispute is not a particularly demanding one and the Court would not embark upon any extended inquiry as to the claims in determining whether a genuine dispute exists. I am unable to accept Mr Klooster's submission as to this matter, even to the low standard that would be required to establish a genuine dispute in respect of the debt claimed in the Demand. As I noted above, cl 2.1 of the Asset Sale Agreement provided that possession of and title to, and rights and property in, the relevant assets passed to ATG upon it making full payment. Clause 5.1 relevantly provided that: "5.1 On the date of full payment the Seller must deliver or make available to [ATG]: 5.1.1. Ownership of any Assets set out in the agreement…"
13. It seems to me that there is no real room for dispute as to the effect of cll 2.1 and 5.1 of the Asset Sale Agreement. Those clauses provide that, when full payment is made (which was to occur as specified in the Asset Sale Agreement), Messrs Wood and Kemp must make available the relevant assets to ATG. That provision is not inconsistent with s 28 of the Sale of Goods Act, although it makes clear that it is the payment of the full price that triggers the obligation to deliver the relevant goods. It seems to me plain that the Asset Sale Agreement, as varied by the Variation Agreement, provides for payment of the purchase price by specified instalments on specified dates, and that possession of the equipment (as distinct from the mining lease) would not be provided until the full purchase price was paid. A submission that the purchase price was not due until the equipment was delivered is wholly inconsistent with the structure for payment by instalments, where earlier instalments would necessarily be due before the full purchase price was paid and the equipment was to be delivered. I cannot, with respect, see how a claim that the motor vehicles and assets were required to be delivered prior to payment of the full purchase price could be regarded as anything other than feeble or hopeless, when the Asset Sale Agreement and Variation Agreement plainly provided the contrary.
14. Mr Klooster also submitted that the debt was not payable, because there was no evidence that the Defendants have delivered or are ready, willing and able to deliver all of the relevant equipment. That submission also does not establish a genuine dispute where there is no serious basis for a claim that they are bound to do so until the full purchase price is paid, and in fact none of the instalments beyond the initial deposit have been paid.
15. In these circumstances, Mr Hillam's evidence as to non-delivery, prior to full payment, of the several motor vehicles and items of equipment does not give rise to a genuine dispute as to the debt claimed in the Demand.

Whether an offsetting claim is established

1. ATG also contends that an offsetting claim is established. An offsetting claim, for the purposes of s 459H(1)(b) of the Corporations Act, is the amount of a claim or claims that a company has against the person who served a creditor's statutory demand by way of counter-claim, set-off or cross-demand, whether or not the amount arises out of the same transaction or transactions as the debt to which the demand relates. Mr Klooster referred to Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd above as authority as to the relatively low minimum requirements for demonstrating such a claim. Mr Klooster referred to the Court of Appeal's observation (at [30]) that: "It is settled law that s 459H requires the Court to be satisfied that there is a "serious question to be tried" … or "an issue deserving of a hearing" as to whether the company has such a claim against the creditor: see Chase Manhattan Bank Australia Ltd v Oscty Pty Limited [1995] FCA 1208; 17 ACSR 128 at [42] per Lindgren J; Eumina Investments Pty Ltd v Westpac Banking Corp [1998] FCA 824; 84 FCR 454 per Emmett J (as his Honour then was). The claim must be made in good faith: Macleay Nominees v Belle Property East Pty Ltd. In that case, Palmer J observed, at [18], that good faith, in this context, meant that the offsetting claim was arguable on the basis of facts that were asserted "with sufficient particularity to enable the Court to determine that the claim is not fanciful"."
2. Mr Klooster relied on the same failure to deliver some of the assets to give rise to that offsetting claim, as ATG had relied on to establish a genuine dispute, and contended that ATG was entitled to bring an action for damages for non-delivery under s 50 of the Sale of Goods Act. Mr Klooster referred to the estimates of the value of the assets which were implicit in the amounts of the purchase price payable under the Asset Sale Agreement to Mr Wood and to Mr Kemp, and to Mr Hillam's estimate of the value of the undelivered equipment. There is a dispute as to whether one item of equipment included in Mr Hillam's estimate fell within the Asset Sale Agreement, which is not necessary to resolve for present purposes.
3. It seems to me that no serious question to be tried is established in respect of an offsetting claim, even to the low standard at which that question is to be assessed in this context, because an obligation to put ATG in possession of the equipment did not arise, under the express terms of the Asset Sale Agreement and Variation Agreement, until the full purchase price was paid. The full purchase price was not paid. A claim for damages could not arise until, at the earliest, the point at which the full purchase price was paid and the equipment was not then put in ATG's possession.
4. It is therefore not necessary to address the further question identified by Mr Spinak, as to whether the non-delivery of equipment could establish an offsetting claim for the purposes of s 459H(1)(b) of the Act in respect of the Demand issued by Messrs Wood and Kemp, where Mr Wood rather than Mr Kemp was selling the relevant equipment to ATG: compare Re Statewide Developments Realty Pty Ltd [2016] NSWSC 154 at [14].

Application to set aside the Demand by reason of a "defect" in the Demand

1. ATG alternatively seeks to set aside the Demand under s 459J(1)(a) of the Corporations Act on the basis that it is issued and served by "multiple creditors", namely Messrs Wood and Kemp, and any debt that may be due and payable is not a joint debt. Section 459J(1)(a) of the Act provides that the Court may by order set aside a creditor's statutory demand if it is satisfied that, because of a "defect" in the demand, substantial injustice will be caused unless the demand is set aside. The term "defect" is defined in s 9 of the Act as including an irregularity; a misstatement of an amount or total; a misdescription of a debt or other matter; and a misdescription of a person or entity.
2. Mr Klooster here relies on a line of authority that is summarised in Mr Assaf's text, Statutory Demands and Winding Up in Insolvency (LexisNexis Butterworths, 2nd ed, 2012) at [2.20] as follows: "Multiple creditors cannot join their separate debts in one demand. In First Line Distribution Pty Ltd v Whiley [(1995) 18 ACSR 185], three separate creditors issued and relied upon a single statutory demand claiming one composite amount in respect of three separate debts allegedly owed to them. The Court held that a statutory demand having three separate creditors claiming a composite debt constituted a defect, within the meaning of s 9 of the Corporations Act, which was capable of causing substantial injustice to the company if not set aside." [citation omitted]
3. In Aerospace Aviation v Deshmukh [2009] NSWSC 659 at [4], White J (as his Honour then was) treated the decision of First Line Distribution Pty Ltd v Whiley (1995) 18 ACSR 185 as authority that multiple several alleged debts owed to nine different persons could not be joined in the one demand. In Re Amy Holdings Pty Ltd [2014] NSWSC 1176; (2014) 102 ACSR 150 at [35], Brereton J in turn observed that: "The applicants submitted that the demand was defective because it was issued and served by multiple creditors, citing First Line Distribution Pty Ltd v Whiley (1995) 18 ACSR 185. However, that case stands only for the proposition that multiple creditors cannot joint their separate debts in one demand, and says nothing as to a joint debt … it is undoubted that multiple joint creditors can - and indeed prudently should - join in issuing a single joint demand for their joint debt [Bentham Management Pty Ltd v Union Finance Pty Ltd, [28]; Australian Workers Union v Bowen (1946) 72 CLR 575, 583 (Latham CJ), 590 (Dixon J)]."
4. I invited submissions as to the concept of a "joint debt" for the purposes of this principle and Mr Klooster draws attention, at least by way of analogy, to the consideration of the concept of a joint promise in MMI General Insurance Ltd v Baktoo [2000] NSWCA 70. In that case, the Court held that, although some of the property insured was the separate property of two individual insureds, an insurance policy was a joint policy since it applied indifferently to both separately owned and jointly owned property. Sheller JA (with whom Mason P and Beazley JA agreed) there noted that a promise would be construed as a joint promise if the interests of the persons to whom it were made were joint interests, and would be construed as several promises if their interests were several. That observation in turn reflects the view expressed in Slingsby's Case (1586) 77 ER 77 and approved in Lombard Australia Ltd v NRMA Insurance Ltd (1968) 72 SR (NSW) 45 that, where a promise is made to several persons, it will be moulded according to the interests of the promisees and will be construed as joint if their interests are joined.
5. Mr Klooster in turn points out that Messrs Wood and Kemp have (as I noted above) claimed to each hold a 50% share in the lease, although they do not expressly describe that holding as that of tenants in common in equal shares; and that Messrs Wood and Kemp were each listed as a "Seller" in the Asset Sale Agreement, although I have referred above to the inconsistent usage of the terms "Seller" and "Sellers" in that agreement, and cl 4 of the Asset Sale Agreement required payment to be made to accounts nominated by the Seller in writing. Mr Klooster also submits that the fact that Messrs Wood and Kemp directed ATG to pay $275,000 to Mr Wood and $175,000 to Mr Kemp and, I should add, subsequently directed ATG to pay $25,000 from the late payment fee to each of them; that the equipment, as distinct from the mining lease, was owned by Mr Wood alone and not jointly with Mr Kemp; and that the purchase price was not apportioned between the equipment and the mining lease are surrounding circumstances supporting a conclusion that the amount payable by ATG is not a joint debt but a separate debt of $275,000 owed to Mr Wood and $175,000 owed to Mr Kemp (and, I should add, a further $25,000 owed to each of them under the Variation Agreement). Mr Klooster also relies on the contra proferentem principle, so far as the Asset Sale Agreement was prepared by Messrs Wood and Kemp, but it is not necessary to consider that principle further in order to determine this aspect of the case.
6. In oral submissions, Mr Spinak responds that ATG seeks to disaggregate elements of the Asset Sale Agreement and the Variation Agreement, and submits that Mr Wood and Mr Kemp are not selling the assets separately under those agreements and that the reference to the "Seller" in the Asset Sale Agreement would be understood as including both Mr Wood and Mr Kemp, under ordinary principles of construction, and that the Asset Sale Agreement is directed to the sale of the entire mining lease to ATG, and not either Mr Wood or Mr Kemp's interests in that lease separately. Mr Spinak also submits (T32) that there is here one debtor, ATG, who owes money to joint creditors. He distinguishes First Line Distribution Pty Ltd v Whiley above as directed to separate debts arising out of separate transactions, rather than to a common claim, common transaction or common instrument, and contrasts the position where Mr Wood and Mr Kemp were Sellers bound together as co-promisees under an obligation to transfer an interest in the mining lease.
7. It seems to me unlikely that the debt owed to Mr Wood and Mr Kemp was a joint debt in a strict sense, by reason of joint ownership of property. It is not necessary to decide, for the reasons noted below, whether it was a joint debt on the basis that it arose from a contract which applied indifferently to both property owned in common and the separately owned assets of Mr Wood. It seems to me that, as Mr Spinak put in submissions for the Defendants, the decision in First Line Distribution Pty Ltd v Whiley above stands for the proposition that the aggregation of separate creditors' claims into a composite debt creates a "defect" (within the meaning of s 9 of the Act) in a creditor's statutory demand which may lead to substantial injustice. That case does not, however, address the position where the debts that are claimed in a single demand arise from a dealing between a debtor on the one hand and co-promisees or co-venturers in a single transaction on the other, or establish any principle that the inclusion of such debts in a demand will create such a defect, still less that such a defect will necessarily give rise to substantial injustice.
8. Even if such a defect existed in respect of the Demand in this case, it seems to me that it would not here give rise to any substantial injustice so as to support an order that the Demand be set aside under s 459J(1)(a) of the Act. I recognise that there might have been more than one alternative available to ATG as to how to pay the amount claimed in the Demand. One possibility, in accordance with the terms of the Demand, would have been to make a payment to both Mr Wood and Mr Kemp in the total amount of $500,000, for example, by drawing a cheque made out to both of them. No doubt, Mr Wood and Mr Kemp may have practical difficulties in dealing with such a cheque if they do not hold a joint account in which it could be deposited. That difficulty should not be of concern to ATG, since there seems to me to be no real risk that Messrs Wood and Kemp could successfully contend that payment of that amount did not comply with the requirements of the Demand, even if they had practical difficulty in taking the benefit of that payment. A second possibility would have been for ATG to make payments to Mr Wood and Mr Kemp in the manner contemplated by the directions given in respect of each of the Asset Sale Agreement and the Variation Agreement, and it seems to me that that would also have complied with the requirements of the Demand. A third possibility may have been to make payment to the solicitors who issued the Demand, presumably after first confirming that they had authority to receive that payment.
9. I recognise that, if ATG was faced with real uncertainty as to how it could comply with the Demand, or was exposed to the risk that a course which it might reasonably have adopted would not be effective to do so, that might well give rise to substantial injustice so as to require the Demand to be set aside, and I was troubled by that possibility in the course of oral submissions. That is not the case here, where ATG had more than one means of making payment to comply with the Demand, and each of them would have complied with the Demand and avoided a presumption of insolvency arising. In my view, that does not give rise to any substantial injustice in respect of the Demand.
10. I note, for completeness, it is not necessary to address any question whether substantial injustice could arise from the possibility (identified above) that service of the Demand by both Mr Wood and Mr Kemp could deprive ATG of the ability to assert an offsetting claim that would have been available for non-delivery of equipment in response to a statutory demand issued by Mr Wood alone. First, ATG did not make any submission to that effect. Second, no substantial injustice could arise from that possibility in this case, because no arguable offsetting claim was available to ATG for the other reasons noted above.

Orders

1. For these reasons, the Originating Process must be dismissed, and ATG must pay the Defendants' costs of and incidental to the application, as agreed or as assessed.

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