Corporations Act 2001 (Cth) - Application to set aside statutory demand - Turns on own facts

Corporations Act 2001 (Cth), s 459G

1 MASTER SANDERSON: This is the plaintiff's application to set aside a statutory demand. The application is brought under s 459G of the Corporations Act 2001 (Cth). The application raises two questions. First, was there proper service of the application to set aside the demand so as to enliven the court's jurisdiction? Second, is there a genuine dispute between the parties which requires that the demand be set aside?

2 A copy of the creditor's statutory demand appears as annexure JRW1 to the affidavit of John Robert Woolf (Mr Woolf) sworn 17 March 2008. Relevantly for present purposes, par 6 of the statutory demand is in the following terms:

The address of the Creditor for service of copies of any application and affidavit is care of Mendelawitz Morton, Commercial Lawyers, 'Gryphon House', 39 Richardson Street, West Perth WA 6005.

3 The registered office of the plaintiff is said in par 1 of the statutory demand to be Suite 1, Level 5, 34 Hunter Street, Sydney, New South Wales. The effect of par 6 then was to relieve the plaintiff of the need to serve the application to set aside the statutory demand out of the jurisdiction. All the plaintiff had to do was serve the defendant's solicitors within the jurisdiction.

4 As I understand the submissions made on behalf of the defendant, it was said that this was not the effect of par 6 of the statutory demand. That submission is answered by what was said by Lander J in Players Pty Ltd v Interior Projects (1996) 20 ACSR 189. His Honour said:

It is readily apparent why the form would provide for an address for service of any application and affidavit, that is because of the onerous requirements of s 459G and so as to make it entirely clear to any party who wished to make an application under that section upon whom and where the document under s 459G ought to be served. As notices under s 459E would often cross State boundaries, and may indeed originate from outside the country, it seems to me to be appropriate that the schedule requires an address for service within the State or territory in which the demand is being made so as to allow for some ease of service on the part of the party to whom the s 459E notice was directed.

It seems to me that the regulations therefore contemplate that the party to whom the s 459E notice is directed will, if that party makes an application under s 459G, serve that application at the address nominated in the Form 509H notice and not be required to serve the creditor either at the creditor's own address or at the registered office of the creditor if the creditor is a company ... It is clear enough to me that the intention is to facilitate the service of an application under s 459G, not to impede service or make service of such an application more difficult (192 - 193).

5 The plaintiff does seem to have had some difficulty getting service right. On 18 March 2008, a process server appeared in the reception area of the solicitors Mendelawitz Morton. He spoke with Mr Cook, a solicitor. The process server gave to Mr Cook a document entitled 'Application to Set Aside a Statutory Demand Pursuant to Section 459G of the Corporations Act' and a copy of an affidavit of Mr Woolf sworn 17 March 2008. This application was filed on 18 March 2008. The following day, a document entitled 'Amended Application to Set Aside a Statutory Demand Pursuant to Section 459G of the Corporations Act' was served on Mendelawitz Morton. Again, that document was handed to Mr Cook. This application was filed on 19 March 2008. It is that document which was moved on in this application. The affidavit of Mr Woolf had been filed a day earlier (18 March).

6 Service of the application on 19 March was within the 21-day period. That being so, and given that Mr Cook accepted the documents, there can, in my view, be no doubt about the adequacy of service. The plaintiff has done everything it is required to do both under the Act and under the regulations. In my view, there is no basis for suggesting that the plaintiff was required to effect service on the registered office of the defendant. It effected service by following the directions set out in par 6 of the statutory demand.

7 That then leaves the question of whether or not there is a genuine dispute which would give rise to the demand being set aside. The facts can be briefly summarised. The plaintiff is a company carrying on the business of professional sign production. The defendant sells printers. In or about October 2007, the plaintiff was interested in purchasing a new printer. In particular, it was interested in a ColorSpan 98 UVX (UVX) printer. The defendant had a UVX for sale and it understood that the plaintiff was interested in such a machine. At all relevant times, the negotiations for the sale and purchase of the UVX were conducted by Mr Woolf on behalf of the plaintiff and by Leonard Ronald Phillip Page (Mr Page) on behalf of the defendant.

8 After some discussion, the plaintiff agreed to buy the UVX from the defendant. The defendant raised a tax invoice and forwarded it to the plaintiff under cover of an email dated 23 October 2007. A copy of that email and the attached invoice appears as annexure JRW5 to the affidavit of Mr Woolf. The invoice gives the total purchase price as $114,064.50. It contains the following notation:

PLEASE NOTE TRADING TERMS

CASH ON DELIVERY

9 There is also a further endorsement at the foot of the page which is in the following terms:

NO CLAIM IS RECOGNISED UNLESS

MADE IN WRITING WITHIN 10 DAYS

QUOTING RELEVANT INVOICE NO.

10 After receipt of this invoice, Mr Woolf realised that the UVX did not come with ink. He discussed the position with Mr Page. Mr Page confirmed that the ink was extra and indicated he would raise a fresh invoice. This he did. On 25 October, Mr Page sent to the plaintiff an email which attached a new invoice. This invoice was for an amount of $118,134.50 (annexure JRW6). It contained the same two endorsements that I have referred to above.

11 Prior to the purchase of the UVX, certain representations were made by Mr Page to Mr Woolf. Essentially, these representations had to do with the capacity to produce a proper print job. Mr Woolf says that he was not familiar with the machine prior to his purchase of it, and he relied upon what he was told by Mr Page. All this is set out in pars 15 to 25 of Mr Woolf's affidavit.

12 The UVX was duly delivered, but due to an oversight on the part of the courier who delivered the machine, the plaintiff did not pay cash on delivery as was agreed. Mr Page says that during the week after delivery of the machine he contacted Mr Woolf regarding payment. Mr Woolf told him that before the plaintiff's bank would release the money, an updated certificate of insurance had to be obtained. Mr Page accepted that assurance and let the matter rest. There has been some further discussions and correspondence about payment, but as of January 2008, the plaintiff refused to pay for the machine.

13 It is the plaintiff's position that the UVX does not function correctly. Without going into details, it is said that there are problems with the ink flow and the quality of the print. The defendant acknowledges that there were some initial difficulties with the machine, but now says that the machine works properly. Clearly, there is a dispute of fact on this point. I am not in a position to resolve that dispute. All that can be said is that I accept that there is evidence put forward by the plaintiff which, if believed, would establish that the UVX is not suitable for the purpose for which it was purchased.

14 It is the defendant's case that irrespective of any faults in the machine the plaintiff is required to pay the purchase price. That, it is said, is the effect of the agreement that payment would be made upon delivery. On behalf of the plaintiff, it is said that it has an actionable misrepresentation under the provisions of the Trade Practices Act 1974 (Cth) - either s 52 or otherwise - and that it wishes to rescind the contract. In those circumstances, it maintains that it is not liable to the defendant.

15 It is clear from the evidence that there is a genuine dispute in this matter. The veracity of the plaintiff's claim that the machine is not fit for the purpose for which it was purchased has to be tested in a court. That then is the end of the matter. There is a genuine dispute and the statutory demand ought be set aside.

16 The orders will be that the statutory demand be set aside and that the defendant pay the plaintiff's costs of the application, including the reserved costs.