analysis
14 The affidavit must comply with the Act and the Rules: s 459Q(c)(ii) of the Act.
15 First, the identity of the deponent. Rule 5.4(1) of the Rules provides that the affidavit in support of an originating process seeking an order that a company be wound up may be made "by a person with the authority of the plaintiff or plaintiffs". That is unsurprising. It expressly permits persons other than the plaintiff to depose to the necessary facts. On occasions, that is essential - a receiver or, as in this case, an officer of a large plaintiff: see, by way of example, Hamilhall Pty Ltd (in liq) v AT Phillips Pty Ltd (1994) 54 FCR 173 at 174. Moreover, a statement in the affidavit by the deponent that he or she was authorised to make the affidavit on behalf of the creditor is sufficient in the absence of evidence calling in question the authority of the deponent to make the affidavit: see, by way of example, Standard Commodities Pty Ltd v Societe Socinter Department Centragel (2005) 54 ACSR 489 at [7].
16 Next, the substance of the affidavit. Section 459Q requires that the deponent, inter alia, "verifies that the debt, or the total of the amounts of the debts, is due and payable by the company" (emphasis added) and complies with the Rules. Rule 5.4 requires the deponent, inter alia, "to state whether and, if so, to what extent the debt, or each of the debts, to which the demand relates is still due and payable by the company at the date when the affidavit is made" (emphasis added).
17 The express word of the provisions is verification that the debt remains due and payable. The language is one of "a formal affirmation" and not of the need to "prove or demonstrate by good evidence or otherwise substantiate": AZED Developments Pty Ltd v Frederick & Co Ltd (in liq) (1994) 14 ACSR 54 at 56 (in the context of s 459E of the Act). What is required is formal affirmation on oath that a certain amount of money is due and payable: Australian Securities and Investments Commission v Eastlands Pty Ltd (2006) 58 ACSR 658 at [7]-[8] and the authorities cited. Section 459Q does not require the affidavit to prove by evidence the existence of the debt. Indeed, as Hayne J explained in AZED Developments at 57, if more was required, it would be difficult to identify what kind of affidavit would be required.
18 The conclusion that s 459Q requires formal affirmation (and not proof or substantiation) is further supported by the legislative context.
19 What is now Div 4 of Pt 5.4 came into operation in June 1993 as part of the reforms introduced by the Corporate Law Reform Act 1992 (Cth). It established a new regime regulating applications by a company to a court to set aside a statutory demand. The Explanatory Memorandum to the Corporate Law Reform Bill 1992 (Cth) stated at [689] that the provisions were intended to provide:
… a means of dealing with statutory demand disputes in such a way that an alleged defect in the statutory demand does not have the effect of prolonging proceedings leading to the commencement of a winding up, by requiring debtor companies to raise genuine disputes (about, for example, whether a debt is owed) at an early stage, rather than after winding up proceedings have commenced.
See also s 459J of the Act in relation to "defects" and AZED Developments at 57.
20 Consistent with that objective, s 459C(2) provides for a rebuttable presumption of insolvency where a company fails to comply with a statutory demand. That presumption is available in an application under s 459P. If the company does not pay or reach an arrangement with the creditor in relation to a statutory demand and does not move to have the demand set aside within 21 days of service of the demand, the company will bear the burden of proving that it is solvent when the application is heard.
21 The Company was served with the demand and the accompanying affidavit. The demand was signed by or on behalf of the creditor. It is in writing. The demand specifies the debt and the amount of it: s 459E. The demand was accompanied by an affidavit that verified that the debt, or the total of the amounts of the debts, is due and payable by the Company and complies with the Rules: s 459E(3). It was for the Company within 21 days of service of the demand to challenge the demand by alleging, for example, a genuine dispute. It did not do so. When the Company failed to challenge the demand, it was presumed insolvent: s 459C. That presumption was and remained rebuttable: see s 459S of the Act. Then, in accordance with the Act and the Rules, the Company was served with a copy of the originating process and the Affidavit the subject of these reasons for decision. At no time has it sought to rebut the presumption of insolvency.
22 The only issue then remaining is verification (not formal proof) that the debt is still due and payable. As Hayne J noted in AZED Developments at 56-57, the statutory scheme plainly indicates an intention that the verification required by the Act and Rules is different to and less than a requirement to prove or demonstrate the debt by good evidence.
23 In the context of that regime, it is apparent that the role of the affidavit is merely to confirm that the debt "is still due and payable by the company at the date when the affidavit is made" (emphasis added), as spelt out in r 5.4(2)(c). That is, s 459Q is directed to verifying the demand and failure to comply with it. Consistently, s 459Q(c)(i) takes up a matter of timing rather than proof. Accordingly, there is no reason to treat an affidavit under s 459Q as requiring any higher degree of proof than an affidavit under s 459E of the Act.
24 In the present case, the Affidavit complies with the Act and the Rules. It was made by a person with authority of the plaintiff and it verifies the debt the subject of the statutory demand remains due and payable by the Company. Indeed, contrary to the submissions of Mr Gronow, the deponent of the Affidavit identified the basis on which the verification was provided - from within her own personal knowledge and from perusal of records and information in the possession of the Commissioner to which she had access and with which she was familiar in her capacity as an officer of the Australian Taxation Office.
25 Two other matters should be noted. Under s 467A of the Act, the Court may grant a winding up application notwithstanding non-compliance with s 459Q if the company which is the subject of the application has not suffered substantial injustice. In other words, the parliamentary drafters accepted that compliance with these provisions was required but recognised that non-compliance would not necessarily lead to the dismissal of the application.
26 Next, in the present case (and in many other similar applications), the hearing before the Registrar was unopposed. Upon such a hearing, a judge (or Registrar) is at liberty to take into consideration evidence which is neither irrelevant nor prohibited by an absolute rule of law notwithstanding that it could be objected to by an interested party, were the party present, on the ground or grounds of some privilege or available rule of evidence: Re Lilley, deceased [1953] VLR 98 at 101. In other words, even if contrary to the view we have formed, the paragraphs in dispute were inadmissible, that would not have prevented the Registrar considering them.
27 Counsel for the Commissioner also referred to the form of affidavit in support of a winding up application provided in Sch 3 to the Rules. The form of affidavit is in the following terms:
*AFFIDAVIT IN SUPPORT/*AFFIDAVIT IN SUPPORT OF APPLICATION FOR WINDING UP IN INSOLVENCY
I, [name] of [address and occupation], *say on oath/*affirm [or *make oath and say/*solemnly and sincerely declare and affirm]:
1. I am the above-named plaintiff [or if the applicant is a corporation, I am *a/*the director of the above-named plaintiff which is registered or taken to be registered in [specify State or Territory]. I am duly authorised to make this affidavit on its behalf]. Now produced and shown to me and marked A is a copy of the originating process to be filed in the proceeding.
2. Annexed to this affidavit is a current and historical extract of the records maintained by the Australian Securities and Investments Commission with respect to the defendant.
3. [Where the defendant is registered or taken to be registered in a State or Territory other than that of this Registry, state any facts -- apart from the defendant's principal place of business -- which bear upon jurisdiction being exercised in the State or Territory of this Registry, rather than in another State or Territory.]
4. The following facts are within my own personal knowledge save as otherwise stated.
5. The defendant was on [state date of statutory demand or other relevant date] indebted to the plaintiff in the sum of $ [amount] for [state concisely the consideration, for example, goods sold and delivered etc.] which sum was then due and payable.
6. The demand, a copy of which is attached to the originating process, was signed by or on behalf of the plaintiff. I served the demand [or the demand and the accompanying affidavit] as referred to in the originating process [or X.Y. has been instructed to make an affidavit of service of the demand [or the demand and the accompanying affidavit]].
7. The matters stated in the originating process concerning the demand and failure of the defendant to comply with it are true and correct.
8. The sum demanded remains due and payable by the defendant to me [or the plaintiff].
The affidavit currently before the Court is not in dissimilar terms. The parliamentary drafters no doubt considered that the Sch 3 affidavit would satisfy the requirements of s 459Q of the Act.