Austech Institute for Further Education Pty ltd v Britt

Judgment - EX TEMPORE 1By Originating Process filed on 22 February 2012 the Plaintiff, Hoatson Maxwell (No. 1) Pty Ltd (formerly known as Insite Organisation Pty Ltd) moves to set aside an undated statutory demand ("Demand") served on behalf of the Defendant, Rae's Graphic Signs Pty Ltd, on 2 February 2012. 2The Demand claimed an amount of $77,155.50 ("Debt") being a debt described as monies owed by the Plaintiff to the Defendant for goods sold and delivered at the Plaintiff's request which was identified as due and payable immediately. The Demand was supported by an affidavit sworn on 30 January 2012 by the Defendant's solicitor, Mr Shean Radburn, which deposed to his belief that there was no genuine dispute about the existence or amount of the Debt. 3The Originating Process was, as noted above, filed on 22 February 2012, just within the 21 day period permitted to the Plaintiff to bring an application to set aside a statutory demand under s 459G of the Corporations Act 2001 (Cth). That Originating Process was supported, first, by an affidavit dated 21 February 2012 sworn by the Plaintiff's solicitor, Ms Kennedy, which attached what was described as the "complete document" received by the Plaintiff. Ms Kennedy's affidavit attached an incomplete copy of Mr Radburn's supporting affidavit, which omitted the first page of that affidavit (which had not then, as I will note below, been provided by the Plaintiff to Ms Kennedy). The application to set aside the Demand was also supported by an affidavit of Ronald Cardwell dated 22 February 2012 which deposed to a genuine dispute as to the amount or existence of the Debt. 4Ms Kennedy swore a further affidavit dated 20 February 2012, outside the 21 day period in which an application could be filed to set aside the Demand, which indicated that the incomplete document attached to her first affidavit had been emailed to her by the Plaintiff and attached the complete document including the first page of Mr Radburn's affidavit. 5These circumstances create a significant difficulty with the application to set aside the Demand so far as it turns on the basis of a deficiency in Mr Radburn's supporting affidavit. That is presently the only question before me, because the question whether the Demand should be set aside by reason of a genuine dispute as to the Debt was not able to be heard today as a result of the late service of a substantive affidavit by the Defendant, which would have caused prejudice to the Plaintiff had the application to set aside the Demand on the basis of genuine dispute proceeded today. 6Section 459G of the Corporations Act provides for an application to set aside a statutory demand to be brought within 21 days after that demand is served. Section 459G(3) provides that such an application is made in accordance with that section only if, within the specified 21 day period, an affidavit supporting the application is filed with the Court and a copy of that application and supporting affidavit is served. That affidavit must identify the existence of a dispute and the grounds on which the application to set aside the statutory demand is made, either expressly, by necessary inference or by reasonably available inference: Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund (1996) 70 FCR 452; 21 ACSR 581 at 582; POS Media Online Ltd v B Family Pty Ltd [2003] NSWSC 147; (2003) 21 ACLC 533; Hansmar Investments Pty Ltd v Perpetual Trustees Co Ltd [2007] NSWSC 103; (2007) 61 ACSR 321; Saferack Pty Ltd v Marketing Heads Australia Pty Ltd [2007] NSWSC 1317. 7I should note that o 71 r 36B of the Federal Court Rules (Cth), which was referred to in Graywinter, has been repealed, as was noted in Independent Portable Buildings Pty Ltd v Modular Building Systems Pty Ltd [2011] FCA 511. However, I do not understand that rule to have been essential to the decision in Graywinter, which can also be supported by the requirement or service of a "supporting affidavit" under s 459G(3) of the Corporations Act, which in turn suggests the need for that affidavit to identify the grounds on which an application to set aside the statutory demand is based. The decision in Graywinter has of course been followed on many occasions since the Federal Court (Corporations) Rules 2000 (Cth) and Supreme Court (Corporations Rules) 1999 (NSW) took effect: V & M Davidovic Pty Ltd v Professional Services Group Pty Ltd (t/as Rosier Partners Lawyers) [2012] NSWSC 134 at [25]. There is good reason for the requirement identified in Graywinter, both to give notice to the Defendant of the grounds of an application to set aside the demand, so that the Defendant has a fair opportunity to respond to that application, and also to ensure that applications to set aside statutory demands are not filed where a basis for doing so has not been identified and all that exists is a hope that such a basis might be identified at some point in the future. 8As noted above, Ms Kennedy's affidavit does not expressly identify the grounds on which the Plaintiff relies to set aside the Demand. This is perhaps not surprising, because Mr Cardwell's affidavit does identify another ground to set aside a Demand, namely, that the amount or existence of the debt claimed was genuinely disputed. One basis for setting aside the Demand might emerge by necessary or reasonably available inference from Ms Kennedy's affidavit, namely, that the Demand as served was incomplete, in that it omitted the first page of Mr Radburn's affidavit verifying the Demand. That proposition, if correct, might well have supported an order to set aside the Demand under s 459J of the Corporations Act. However, Ms Kennedy's second affidavit makes clear that proposition was not correct, since the Demand which had been served on the Plaintiff was complete, although the copy of the Demand which had initially been provided by the Plaintiff to Ms Kennedy was not. 9The Plaintiff now contends that there is some other reason to set aside the Demand, for the purposes of s 459J of the Corporations Act, namely, that the affidavit verifying the Demand was sworn by Mr Radburn, who, the Plaintiff contends, had no basis for a belief as to whether the Demand was not genuinely disputed and this creates some other reason that it should be set aside: Faji (Australia) Constructions Pty Ltd v AC Professional Accounting Pty Ltd [2009] NSWSC 180; Austech Institute for Further Education Pty Ltd v Britt [2010] NSWSC 56. That ground is not raised, expressly or by necessary or reasonably available inference, by Ms Kennedy's affidavit. No such inference is available because the one page of the verifying affidavit which might have supported such an inference, namely, the page which indicated that it was sworn by a solicitor who gave evidence of his belief that the Debt was not genuinely disputed, was not attached to Ms Kennedy's first affidavit because the Plaintiff had not provided it to her. 10The Plaintiff relied on the decision in Callite Pty Ltd v Adams [2001] NSWSC 52 to contend that, where there is a fundamental deficiency in the affidavit verifying the Demand, then it may be relied upon to set aside the Demand notwithstanding that deficiency was not identified in the affidavit served in support of the application to set aside the Demand. I do not consider that the decision in Callite establishes that proposition, since Santow J there noted that the relevant omissions emerged from accounts which were annexed to the affidavit supporting the application to set aside the relevant statutory demand. Similarly, in Saferack Pty Ltd v Marketing Heads Australia Pty Ltd, the relevant deficiency was obvious on the face of the affidavit. 11I understand the force of the argument, as a matter of policy, that a serious defect with an affidavit in support of a statutory demand ought, on one view, be able to be raised in such an application. However, there are significant difficulties with that approach, both as a matter of construction and as a matter of policy. As a matter of construction, the difficulty is that s 459J of the Corporations Act is only available on an application under s 459G of the Act, and s 459G(3) provides that an application is only made in accordance with s 459G of the Act if an affidavit supporting it is filed with the Court. An affidavit which does not identify the grounds on which an application is brought does not, in reality, support an application. Second, to adopt that approach would raise the difficulty that defendants might be met with fundamental attacks on the validity of a statutory demand, without having been given notice of those grounds of attack by the affidavit in support of the application to set aside the statutory demand. I cannot adopt that approach, both because it is inconsistent with the authorities and because it seems to me incorrect as a matter of policy and principle. 12The Plaintiff also sought to contend that the argument that the Demand was verified by the solicitor was open to it, where that matter was known to both Plaintiff and Defendant, where it was evident from the form of the relevant affidavit. However, an argument of a similar character was not accepted by White J in Tatlers.com.au Pty Ltd v Davis [2007] NSWSC 835 at [29] where his Honour noted that the fact that a ground should be reasonably apparent to a Defendant from what has passed between the parties is not to the point if the ground is not raised by the affidavit filed with the application to set aside the statutory demand. I consider that I should follow that approach. 13The only basis on which a deficiency in or associated with the Demand could be asserted is that the form of the Demand which was served was incomplete. That contention must fail because Ms Kennedy's second affidavit makes clear that the Demand and supporting affidavit had actually been served on the Plaintiff in a complete form. The other basis put before me, that the affidavit was verified by a solicitor without the relevant form of belief, was not raised in the 21 day period required by s 459G of the Corporations Act and cannot be raised later by reason of the High Court's decision in David Grant & Co Pty Ltd (rec apptd) v Westpac Banking Corporation [1995] HCA 43; (1995) 185 CLR 265; 18 ACSR 225. 14That does not, however, dispose of the application to set aside the Demand. Mr Cardwell's affidavit in support of the application to set aside the Demand identified an alternative basis for that application, namely, that there was a genuine dispute as to the Debt, which would, if established, support setting aside the Demand under 459H of the Corporations Act. That question has not been argued before me today for reasons which I noted above. I will set a date for the matter to continue before me so that that matter may be able to be determined. 15The question of costs should be reserved until the outcome of the application as a whole is known.