Ambir Pty Ltd v Perfect Touch Painting Services Pty Ltd [2003] NTSC 21

Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 147 ALR 444, referred to

Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd [1994] FCA 1059; (1994) 51 FCR 446 at 450, referred to

Dolvelle Pty Ltd & Anor v Australian Macfarms Pty Ltd (1998) 145 FLR 129 at 139, applied.

Ambir Pty Ltd v Perfect Touch Painting Services Pty Ltd [2003] NTSC 21

[1] The plaintiff applies, pursuant to s 459G of the Corporations Act 2001, for an order that a statutory demand made upon it by the defendant pursuant to s 459E(1) of that Act and served upon it on 21 January 2003 be set aside. The amount of the debt claimed to be due and payable is $10,950.

[2] Any such demand is required to be accompanied by an affidavit that verifies the debt and complies with the rules (s 459E(3)). The form of the affidavit is prescribed by the Corporations Act Rules of the Northern Territory - form 7. The plaintiff claims that defects in the form of the affidavit are such that the defendant has not complied with the Act and Rules so as to render the demand ineffective. The plaintiff draws attention to two matters:

1. The place at which and date upon which the affidavit was affirmed by the deponent, Mr Sisois, a Director of the defendant, have been left blank. Accordingly, it is put that the date upon which it was affirmed that the debt was due and payable is not known.

2. The affidavit does not bear a certificate as is to be found on later affidavits sworn by the same deponent, signed by the person before whom the same was sworn, in the following form:

"I certify that this affidavit was read in the presence of the deponent. The deponent seemed to perfectly understand it. The deponent made his signature in my presence."

[3] The court may by order set aside a statutory demand if it is satisfied that:

(a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or

(b) there is some other reason why the demand should be set aside (s 459J(1)).

[4] The plaintiff does not contend that the defects attributed to the affidavit amount to a defect in the demand within the meaning of s 459J(1)(a) but, it says that the application falls to be considered under s 459J(1)(b), that is, the defects in the affidavit amount to a reason why the demand should be set aside. In contrast to s 459J(1)(a), the plaintiff says it does not have to show substantial injustice to succeed on this ground. Indeed, it has not advanced any facts or argument going to the question of any injustice.

[5] The Full Court of the Federal Court of Australia held in Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 147 ALR 444 that s 459J(1)(a) and (b) are mutually exclusive, per Hill J in Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd [1994] FCA 1059; (1994) 51 FCR 446 at 450.

[6] In the course of these proceedings there was received an affidavit, sworn by Mr Sisois on 18 February 2003, in which he deposed that the sum of $10,950 specified in the demand remained due and unpaid. There was also an affidavit sworn by Heather May Collins, a solicitor in the employ of the solicitors for the plaintiff, who deposes that on 17 January 2003 she witnessed the affidavit of Mr Sisois and that it remained undated due to her error. The demand is dated 20 January 2003, that date having been inserted by the same solicitor.

[7] The date upon which Mr Sisois verified the debt is now known, but the date upon which he signed the affidavit does not coincide with the date of the demand. It was held by Santow J in Dolvelle Pty Ltd and Anor v Australian Macfarms Pty Ltd (1998) 145 FLR 129 at p 139 that an affidavit sworn two days before a statutory demand was not to be treated as "an essential integer" upon an application for winding up based upon a statutory demand. In that case there was no dispute that the amount remained unpaid.

[8] The certificate appearing on the later affidavits is that prescribed by r 43.02 which is predicated upon it appearing to the person before whom an affidavit is sworn, that the deponent is illiterate or blind. The evidence of Ms Collins is that at the time of swearing the affidavit accompanying the statutory demand, she was not aware that Mr Sisois was unable to read English, but that she had explained the contents of it to him. She swears that she:

"had explained the contents of the affidavits to each of the subcontractors who instructed us to make similar demands because the affidavits were legalistic and I wanted to ensure that they understood exactly what they meant."

[9] The affidavit continues as to the detailed explanation which she says she gave to Mr Sisois in relation to each of the matters of substance contained in the affidavit and she deposes that he seemed to perfectly understand the contents of it and proceeded to swear it in her presence. Counsel for the defendant indicated, when the affidavit was filed in court, that he may wish Ms Collins to attend for cross-examination, but that was not pursued. By his affidavit Mr Sisois confirms that evidence.

[10] It is an agreed fact that Mr Sisois was illiterate at the time he swore the affidavit in support of the statutory demand.

[11] Upon the material now before the court I am satisfied as to the date upon which Mr Sisois verified the debt and that the precondition for the operation of the rule requiring the endorsement of the certificate in respect of an illiterate person had not arisen.

[12] The plaintiff also endeavours to establish that there is a genuine dispute between it and the defendant about the existence of the debt to which the demand relates (see s 459H). The demand is claimed to be for a debt for general painting work as detailed on tax invoice 02/35 dated 5 November 2002 for $3,470 and tax invoice 02/36 dated 25 November 2002 for $7,480. Putting aside GST, the first invoice is made up of two amounts, described as "Variations No 1" and addressed to the plaintiff. The second is described as "Variations No 3" addressed to Nightcliff Builders.

[13] To put the so called dispute within context, it should be noted that the plaintiff was the contractor to Paspalis Hotel Investments Pty Ltd, a company involved in the development of its land in central Darwin. The defendant was a subcontractor to the plaintiff. Mr Bamber was employed as the project manager by the plaintiff and says that the work set out in tax invoice 02/35 was in respect of variations to the original work which the defendant was contracted to perform for the plaintiff. He goes on to say that the paint finish to be applied was in accordance with the tender documents/specifications, but that the superintendent representing Paspalis Hotel Investments Pty Ltd unilaterally varied the paint finish provided for in the tender, which resulted in the imposition of a variation which required a higher degree of preparation prior to painting to achieve the finish demanded. He then says that all claims in respect of variations resulting from the requirements of Paspalis Hotel Investments Pty Ltd were required to be approved by that company and that such approval had not been forthcoming so far as Mr Bamber was aware. No contractual documents were produced to support what Mr Bamber asserted.

[14] The affidavit of Mr Bamber as to invoice 02/35 goes only to variations in respect of the paint finish which does not cover all of the matters claimed by way of extras in that invoice. Mr Bamber says that he offered to pay the defendant $2,398 inclusive of GST, but not the amount of $3,470 inclusive of GST, detailed in the invoice. I infer that the difference between the amount of the offer and the amount of the invoice represents Mr Bamber's estimate of the amount claimed by way of variation arising from the paint finish question. The admission of liability evidenced by the offer stands.

[15] As to the demand based upon the invoice addressed to Nightcliff Builders, Mr Sisois has deposed that that sum was due and payable by the plaintiff to the defendant. There is evidence produced by the plaintiff indicating that there was an assignment of a debt of $32,340, due by the plaintiff to the defendant, to Paspalis Hotel Investments Pty Ltd. The plaintiff's case is that the amount of the demand now made by the defendant was included in the total sum of that assignment. However, apart from the bare evidence of an assignment of a debt, the plaintiff has not demonstrated to the court that the amount claimed by the defendant is included in the amount which was assigned. The amount which the plaintiff owed the defendant as at the time of the assignment was within its knowledge, as were details as to how it was made up. Its mere assertion that the assignment included the amount of the demand is not sufficient to raise a genuine dispute. The means of showing that the amount of the demand was included in the assignment lay within its own knowledge.

[16] I appreciate that the court's function is only to concern itself with whether or not there is a genuine dispute and not to determine the merits. I am not satisfied that the plaintiff has put forward "a plausible contention requiring investigation", see Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787. I am not satisfied that any of the matters which the plaintiff has put forward as constituting a dispute is raised bona fide. It seems to me that the grounds for alleging the existence of the dispute are illusionary or misconceived, see Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 147 ALR 444 at 455 - 456. The plaintiff has relied upon "mere assertions" and something more than that is required, "because if that were not so then anyone could merely say it did not owe the debt".

[17] Although the defendant produced evidence going to the merits of the disputes which the plaintiff put forward (it is doubtful whether that is permissible) I have not paid regard to it. The plaintiff has failed to satisfy me as to the genuineness of the disputes which it has sought to raise.

[18] Undoubtedly the absence of date and place of swearing of the affidavit amounted to a defect in procedure and it may have assumed importance, had there been a genuine dispute about payment prior to service of the statutory demand. That was not the case and in my opinion the defect has been cured by the evidence upon this application. It was the responsibility of the person before whom the affidavit was sworn to ensure that it was properly completed and I do not think that the deponent Mr Sisois, who was later found to be illiterate, should be held to account for that error. That defect is not sufficient in my view to invalidate the statutory demand process. I am not satisfied there is a genuine dispute as to the amount of the debt or any part of it.

[19] The plaintiff's application to set aside the statutory demand is dismissed with costs.