Golden Plantation Pty Ltd v TQM Design and Construct Pty Ltd

CATCHWORDS : CORPORATIONS - winding up - winding up in insolvency - statutory demand - application for order setting aside - two statutory demands issued by one creditor and addressed to different debtors - both debtors initiate single proceeding seeking a single order that both statutory demands be set aside - held that no valid s 459G application had been made in relation to either demand

LEGISLATION CITED : Civil Procedure Act 2005, ss 64, 65 Corporations Act 2001 (Cth), s 459G

Ambassador At Redcliffe Pty Ltd v Barreau Peninsula Property Pty Ltd [2006] QSC 247; (2006) 58 ACSR 607 Calquid Pty Ltd v A & DR Illes Pty Ltd [2000] NSWSC 558; (2000) 34 ACSR 523 Cooloola Dairys Pty Ltd v National Foods Milk Ltd [2004] QSC 308; [2005] 1 Qd R 12 David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265 CASES CITED : Femley Pty Ltd v Salken Engineering Pty Ltd [1999] NSWSC 334 Filaria Pty Ltd v Carlisle [2004] ACTSC 95 Help Desk Institute Pty Ltd v Adams (1998) 17 ACLC 18 Indigo Financial Money Pty Ltd v Moustrides & Moustrides [2010] SASC 235 Isaco Pty Ltd v Davey [2003] NSWSC 1043; (2003) 47 ACSR 483 Remo Constructions Pty Ltd v Dualcorp Pty Ltd [2008] NSWSC 1172; (2008) 222 FLR 375

Golden Plantation Pty Limited - First Plaintiff PARTIES : KCL Developments Pty Limited - Second Plaintiff TQM Design and Construct Pty Limited - Defendant

COUNSEL : Mr J T Johnson - Plaintiffs Ms V Culkoff - Defendant

SOLICITORS : Proctor Phair Lawyers - Plaintiffs Julie A Orsini - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

2010/146017 GOLDEN PLANTATION PTY LIMITED & ANOR v TQM DESIGN AND CONSTRUCT PTY LIMITED

1 A preliminary question in these proceedings is whether the jurisdiction of the court has been validly and effectually invoked so as to permit the grant of the relief sought. 2 The first plaintiff is Golden Plantation Pty Limited ("GP"). The second plaintiff is KCL Developments Ltd ("KCL"). They together sue a single defendant, TQM Design and Construct Pty Limited ("TQM"). 3 The originating process filed on 10 June 2010 begins by saying: "This application is made under section 459G of the Corporations Act 2001". 4 The substantive claim is then set out. It is a claim for the following order: "An order that the statutory demands, copies of which are annexed hereto, dated 20 May 2010 served by the defendant on the first plaintiff and the second plaintiff, be set aside." 5 In fact there is no annexure to the originating process. It is accepted on both sides, however, that the statutory demands to which the originating process refers are those to be found in exhibits "C" and "D" to the affidavit of Choy Lim Kok of 10 June 2010. 6 One of the statutory demands is addressed by TQM to GP. It relates to a debt or alleged debt of $2,035,000 described as follows: " Description of the debt Amount of Debt

Payment due by the Company on 30 October 2009 pursuant to deed dated 1 October GST $ 1,850,000.00 $ 185,000.00

Total Amount of Debt $ 2,035,000.00 "

7 The other statutory demand is addressed by TQM to KCL and relates to a debt or alleged debt of $2,933,373.64, described in this way: " Description of the debt Amount of Debt

Outstanding variations payment $ 786,609.00

Balance outstanding contract payment $ 188,224.00 plus Miele $ 4,000.00

Payment due by Company 9 November $ 2,000,000.00 2008 pursuant to side deed $ 200,000.00 plus GST

Less paid by you $ 425,000.00

Contract Interest from 10 November 2009 $ 179,540.64 to 20 May 2010

Total Amount of Debt $2,933,373.64 "

8 The descriptions of the debts make it clear that they are separate and distinct debts with separate and distinct sources. In the case of GP, the sole source is a deed of 1 October 2009. That source is not referred to in the KCL statutory demand. 9 In the case of KCL, reference was made in the course of submissions to a series of documents, including a construction contract and a "side deed" between KCL and TQM, under which money was payable by KCL to TQM on the issue of a certificate of completion in respect of certain building work. Those documents are said to be the source of the debt the subject of the KCL statutory demand. In the case of GP reference was made to a separate transaction under which GP agreed to make a payment to TQM in return for TQM's extending the time for payment by KCL under the arrangement between KCL and TQM. 10 It is clear that there is some common substratum of dealings but, at the same time, that there are distinct debts with distinct contractual sources, assuming of course that monies are, in each case, owing, due and payable as alleged. 11 It is well established, having regard to the decision of the High Court in David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265, that the court cannot set aside a statutory demand except in response to an application made in conformity with s 459G and that all elements of a complete and regular application contemplated by the section must be found to have been attended to by the applicant within the period of 21 days the section prescribes. That period has now expired. 12 Section 459G is in the following terms: "(1) A company may apply to the Court for an order setting aside a statutory demand served on the company.

(2) An application may only be made within 21 days after the demand is so served.

(3) An application is made in accordance with this section only if, within those 21 days: (a) an affidavit supporting the application is filed with the Court; and (b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company." 13 In the light of s 459G(1), a company on which a statutory demand has been served may apply for "an order setting aside" that statutory demand. In this case, GP does not seek an order setting aside the statutory demand served on it by TQM; nor does KCL seek an order setting aside the statutory demand served on it by TQM. Both plaintiffs claim a single order, being an order operating upon and in relation to both statutory demands. 14 The approach the plaintiffs have seen fit to take does not contemplate the setting aside of one statutory demand independently of the other. The claim is an all or nothing claim in respect of both statutory demands. 15 I was taken to the various cases in which this kind of issue has been considered, including Help Desk Institute Pty Ltd v Adams (1998) 17 ACLC 18, Femley Pty Ltd v Salken Engineering Pty Ltd [1999] NSWSC 334, Calquid Pty Ltd v A & DR Illes Pty Ltd [2000] NSWSC 558; (2000) 34 ACSR 523, Isaco Pty Ltd v Davey [2003] NSWSC 1043; (2003) 47 ACSR 483, Cooloola Dairys Pty Ltd v National Foods Milk Ltd [2004] QSC 308; [2005] 1 Qd R 12, Filaria Pty Ltd v Carlisle [2004] ACTSC 95, Ambassador At Redcliffe Pty Ltd v Barreau Peninsula Property Pty Ltd [2006] QSC 247; (2006) 58 ACSR 607, Remo Constructions Pty Ltd v Dualcorp Pty Ltd [2008] NSWSC 1172; (2008) 222 FLR 375 and Indigo Financial Money Pty Ltd v Moustrides & Moustrides [2010] SASC 235. 16 The cases allow very little scope indeed for the pursuit of two or more setting aside claims in a single proceeding. To the extent that such an approach might be found to comply with s 459G, it is necessary at the very least (and I do not say this is the only requirement) that there be a separate claim in respect of each statutory demand so that one originating process is, as I put it in Remo Constructions Pty Ltd v Dualcorp Pty Ltd (above) at [34], the vehicle by which each of several distinct applications is made. 17 In other words, a conforming application in respect of one statutory demand might possibly be advanced by an originating process which also advances a conforming application in respect of another statutory demand; but the separateness of the applications so that each application, as it relates to a single and particular statutory demand, has a distinct existence and relates to that demand alone is crucial to compliance with the scheme of s 459G. 18 The distinct existence of each of several applications is not achieved by the originating process in this case. My conclusion therefore is that the plaintiffs did not, by means of the originating process filed on 10 June 2010, make a valid and effectual application under s 459G in respect of either statutory demand and that the court therefore has no jurisdiction to set aside either demand. This case is, in that respect, the same as Filaria Pty Limited v Carlisle (above). 19 I have not to this point mentioned the application of the plaintiffs made at the start of today's hearing for leave to amend the originating process by substituting for the existing claim two separate and distinct claims, each being a claim for an order setting aside one of the two statutory demands. Such an amendment would not change the landscape as it existed at the end of the 21 day period central to the operation of s 459G. The amendment would therefore be futile. 20 Counsel for the plaintiff referred to ss 64 and 65 of the Civil Procedure Act 2005 in this connection and to the point that, in some circumstances, an amendment may relate back to the date of the commencement of the proceedings. That, to my mind, does not assist the plaintiffs for two reasons. First, no basis was articulated on which any relation back might be said to arise in this case. Second, and as I have said, the matters with which s 459G is concerned are to be assessed and found to be in conformity with the section as at the end of the 21 day period. 21 In the result, the originating process must be dismissed. It is dismissed with costs. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.