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Judgment - ex tempore

1. By Amended Originating Process filed 9 November 2015, the Plaintiff, Urban Solutions Group Pty Limited ("Urban Solutions"), sought to set aside a creditor's statutory demand ("Demand") served by Trevet Property Pty Limited ("Trevet Property") under s 459H of the Corporations Act 2001 (Cth) or s 459J of the Corporations Act, that is on the basis that there is either a genuine dispute or offsetting claims in respect of the Demand or, alternatively, that there was a defect in the Demand that gave rise to substantial injustice or some other reason to set it aside. Those claims are now not pressed because Urban Solutions accepts that it was out of time in serving the application to set aside the Demand. Urban Solutions also initially sought a declaration that the Demand was null and void and, by amendment made today by consent, alternatively seeks a declaration that the Demand was not served as required by s 459E of the Corporations Act and has not come into effect for the purposes of s 459F of the Corporations Act.
2. I have had the benefit of very detailed submissions by the parties in respect of the application but ultimately it seems to me that the application is in relatively narrow scope and may be dealt with relatively briefly.
3. The first issue which arises is whether it is open in proceedings under s 459G of the Act to seek declaratory relief that a creditor's statutory demand is null and void or, relevantly, that it was not served as required by the relevant provisions where the attack on its service is, in substance, an attack upon the content of the Demand or at least on the affidavit verifying it. Section 459G of the Corporations Act provides that a company may apply to the Court for an order setting aside a creditor's statutory demand and such an application may only be made within twenty-one days after the demand is served. An application of that kind may not be made outside the twenty-one day period and that cannot be extended by the Court: David Grant & Co Pty Limited v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 2005. I accept that in exceptional circumstances it may be that the Court may, where a valid application under s 459G of the Act is not before it, make some other form of declaration. In Re International Materials and Technologies Pty Limited [2013] NSWSC 787, Brereton J took that course where there was an issue as to the validity of an address for service specified in a creditor's statutory demand. However, it seems to me that position is the exception rather than the rule, and cannot be permitted to become the rule, lest the time limit within which an application to set aside a creditor's statutory demand under s 459G of the Act must be brought is subverted and the legislative purpose which it is intended to achieve is defeated. For reasons that will emerge below, it does not seem to me that this case engages that exceptional jurisdiction.
4. Mr Sneddon, who appears for Trevet Property, also draws attention to the observations of Mandie J in Emhill Pty Limited v Bonsoc Pty Limited [2004] VSC 322; (2004) 50 ACSR 375, approved by Barrett J in Condor Asset Management Limited v Excelsior Eastern Limited [2005] NSWSC 1139; (2005) 56 ACSR 223 at [13], that an application to set aside a creditor's statutory demand which proceeds on the basis that it has been properly served is a time alternative to an application for a declaration that service was not effected. It seems to me that there is significant force in that view. If that view were taken, then that would be a further reason why the declaration now sought in the Amended Originating Process could not be permitted.
5. The application to set aside the Demand is based, in substance, on two matters. The first, to which Mr Kaufmann who appears for Urban Solutions refers, is that the Demand identifies a claim that Urban Solutions is in debt to Trevet Property in respect of the $49,500 claimed, and the covering letter to the Demand indicates that it is issued by Trevet Property. The Demand in turn refers to a debt owed to Trevet Property; the Demand refers to a debt being for services rendered as set out in invoice 206; and the affidavit verifying the Demand in turn identifies the corporation owing the debt as Trevet Property. The attached tax invoice is on Trevet Property letterhead. Mr Kaufmann points out that invoice 206, to which I have referred, indicates an ABN number for Trevet Property of 21 329 115 032 which, Mr Kaufmann points out, is not that of the Defendant in the proceedings. As matters developed, it appears that the ABN number for Trevet Property is a different number and the ABN number referred to in invoice 206 is the ABN number of a trustee for the Trevet Unit Trust, which is described as "another unincorporated entity". Mr Sneddon from the bar table responds that Trevet Property is the trustee of the relevant trust. However, that proposition appears to be inconsistent with the company search in evidence so far as the ABN number is concerned and is in any event not the subject of evidence.
6. Nonetheless it seems to me that these matters do not support the declaration sought. The Demand is a claim for a debt owed to Trevet Property whether in its own right or its capacity as trustee of a trust, and the fact that an incorrect ABN number may be recorded does not seem to me to deprive it of that character. That matter also does not seem to me to support the declaration now sought that the Demand is either null or void or was not served as required under s 459E of the Act or has not come into effect for the purposes of s 459F of the Act. Had an application to set aside the Demand been made within time, then it may have amounted to a defect in the Demand which may or may not have given rise to substantial injustice so as to set aside the Demand. In the present case, it seems to me that no basis to make the declaration sought is established. If any substantive issue arises from this discrepancy, then it seems to me that it is a matter properly raised in the winding up application and not by declaratory relief at this point.
7. The second and associated proposition is that the affidavit does not verify the debt as it purports to be sworn on behalf of the creditor company, being that company with that ABN number. It does not seem to me that proposition is established. The Demand is verified by an affidavit which does verify the debt described in the way in which it is described in the affidavit. That verification may be accurate or inaccurate and that may have been decided by an application to set aside the Demand to be brought within time. This is not, however, a case where an affidavit verifying the Demand was not served or that the affidavit omitted the words of verification which are contained in the affidavit in this case. If, in fact, the entity which was served the demand is not properly a creditor and the affidavit is incorrect in stating that the debt is owed to that entity, then that may be fatal to a winding up application. It is not, however, a matter that seems to me to have the result that the Demand is not verified, albeit it may be verified incorrectly.
8. A third issue arose so far as paragraph 6 of the Demand specifies an address for service of the application setting aside the Demand, which is an address in Southport, Brisbane, which appears to be the Trevet Property's registered address in Queensland and not an address in New South Wales. It is common ground that this did not comply with the requirements of Form 509H of the Corporations Act and it accordingly did not comply with s 459E(2)(e) of the Corporations Act.
9. In some circumstances, the specification of an address for service of an application outside the jurisdiction may amount to conduct which will mislead or deceive the recipient of a creditor's statutory demand, at least in circumstances that it would subvert its ability to set aside a creditor's statutory demand. The cases that deal with this question include Re International Materials and Technologies Pty Limited above, and I have reviewed them at length in Re Leasing Holdings Pty Limited (formerly Charlie Lovett Pty Limited) [2015] NSWSC 771, to which Mr Kaufmann drew attention. In Re International Materials and Technologies Pty Limited, at the point of an application to set aside a creditor's statutory demand, Brereton J was prepared to make a declaration that the demand was a nullity. However, that occurred in the particular case where the address for service specified outside the jurisdiction was not the company's registered office and accordingly the only avenue for service outside of jurisdiction that would have been available, under the Service and Execution of Process Act 1992 (Cth), could not have been complied with in respect of service upon that other address. His Honour there noted that position had the consequence that the debtor would be entrapped into not making a valid application to set aside the demand.
10. Mr Kaufmann has not drawn my attention to any decision in which the Court has set aside a creditor's statutory demand which specified the address of the creditor's registered office outside the jurisdiction. That is, as I have noted, a matter which may give rise to a defect in the demand. However, Mr Kaufmann also has not identified any case which has treated that defect as one which gives rise to substantial injustice, where it leaves open the possibility of service under the Service and Execution of Process Act at that registered office.
11. In this case there is some evidence that, in the particular circumstances, efforts to serve the application to set aside the Demand were commenced late and were not completed because of difficulties that arose, in part because of the need to serve outside the jurisdiction. That is a matter that may properly have been raised in opposition to a winding up application as, for example, similar issues were raised in Re Leasing Holdings Pty Limited above. It seems that it is not a matter that brings the case into the exceptional situation addressed by Brereton J in Re International Materials and Technologies Pty Limited above, where it would have left open to Urban Solutions, as Mr Kaufmann concedes, to proceed to service of an application to set aside the creditor's statutory demand in compliance with the requirements of the Service and Execution of Process Act at the company's registered office, had Urban Solutions allowed time for that process to be completed and, indeed, may also have left open the possibility of service upon the company's director in New South Wales had it allowed itself more time to take that course. This was not a case, by contrast with Re International Materials and Technologies Pty Limited where the specification of an address outside the jurisdiction had the likely or necessary consequence, apart from Urban Solutions' delay in serving the application, that the application could not adequately have been served.
12. For all these reasons I am not satisfied that the declaration sought may be made. It is common ground that the application to set aside the Demand is otherwise outside time and the Demand cannot otherwise be set aside.
13. I should emphasise that none of the observations which I have made should be treated as creating any issue estoppel as between the parties as to any issue which may be raised as to the Demand, or the service of it, in any winding up application. Indeed, it seems to me that the proper forum for those issues to be addressed is in the context of a winding up application, whether combined with an application under s 459S of the Corporations Act, or possibly without the need for such an application depending upon the character of the particular issue.
14. For all these reasons, the Amended Originating Process should be dismissed. My preliminary view is that costs should follow the event. If Counsel wish to be heard as to costs I will bring them back for such a hearing. If Counsel are content with my preliminary view I will make orders in accordance with my preliminary view. [Discussion as to order that costs be payable as lump sum sought by Urban Solutions.]
15. Subject to hearing from Counsel, it may be appropriate to make a lump sum costs order in this matter, not least because it will avoid the need for the parties to incur costs in the assessment process as to costs. Having said that, I do not think I should make such an order based on a range without allowing Trevet Property an opportunity to undertake its own calculation of the costs that it has incurred in its defence of the application.
16. I make the following orders:
17. Amended Originating Process be dismissed.
18. The Defendant advise the Plaintiff by its solicitor, of the amount claimed by lump sum costs order by 4 pm on 11 November 2015.
19. The parties submit agreed orders as to costs or, if there is no agreement, short submissions and any affidavit evidence as to costs indicating whether an oral hearing is requested by 4 pm on 16 November 2015.