Homeward Bound Export Cherry Project Pty Ltd v Farm Working Hands Pty Ltd

Judgment 1ALLSOP P: The applicant, Homeward Bound Export Cherry Project Pty Ltd, seeks leave to appeal from orders made by the Corporations List Judge that varied a statutory demand dated 26 October 2011 that had been served on it by Farm Working Hands Pty Limited. The Corporations Judge otherwise refused to set aside the statutory demand. 2The respondent accepts that there was a clerical error in the orders made and consents to order 1 made on 9 July 2012 being varied from $108,253.06 to $101,873.06. That order will be made in a moment. 3The substance of the complaint of the applicant is that for a number of reasons the primary judge should have set aside the statutory demand under s 459G and 459H of the Corporations Act 2001 (Cth). 4The demand claimed the sum of $109,586.26 and was verified by Mr Cocerhan in an affidavit dated 26 October 2011. The application to set aside the statutory demand was supported by affidavits of a Mr Andrew Gartrell and Ms Angeline Gartrell dated 18 November 2001. For present purposes of this appeal, it is only Mr Andrew Gartrell's affidavit that needs to be referred to. 5The scope of those affidavits was central to the resolution of the dispute below. Application was made to rely upon further affidavits of Mr Gartrell, Mr Smith and Mr Ewins. That application was allowed on condition that the evidence did not expand the factual matters on which the applicant sought to rely by reference to the principle in [16] of the primary judge's reasons as follows: "It is well established that the only grounds of opposition which may be relied on in an application to set aside a statutory demand are those identified in the affidavit supporting that application filed within the 21 day period under s 459G of the Corporations Act or which may necessarily or reasonably be drawn from documents relied on in those affidavits: Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund above at ACSR 581; see also Energy Equity Corporation Ltd v Sinedie Pty Ltd [2001] WASCA 419; (2001) 166 FLR 179; POS Media Online Ltd v B Family Pty Ltd [2003] NSWSC 147; (2003) 21 ACLC 533; Hansmar Investments Pty Ltd v Perpetual Trustee Co Ltd [2007] NSWSC 103; (2007) 61 ACSR 321; 25 ACLC 282; Saferack Pty Ltd v Marketing Heads Australia Pty Ltd [2007] NSWSC 1317; King Furniture Australia Pty Ltd v Higgs [2011] NSWSC 234; Kay Investment Holdings Pty Ltd v North East Developments Pty Ltd (in liq) [2011] NSWSC 1121; (2011) 85 ASCR 610; V & M Davidovic Pty Ltd v Professional Services Group Pty Ltd above." 6No submission was made on appeal that that statement of principle was in any way in error. Reliance was placed upon the Western Australian Court of Appeal decision in Financial Solutions Australasia Pty Limited v Predella Pty Limited [2002] WASCA 51; 167 FLR 106. Reliance was in particular placed on [29], [30] and [35]. 7In debate with the Court, Mr Hourigan, who appears for the applicant, accepted - in my respectful view, correctly - that the principle identified in Financial Solutions was conformable with the principle as expressed by his Honour. What Mr Hourigan put in, if I may respectfully put it, his helpful submissions, was that there were two matters which were sufficiently identified in the affidavits of the Gartrells, and in particular Mr Gartrell's affidavit, which should have been identified by his Honour as the basis of a genuine dispute. Those matters were, first, the finance charges and, second, the question of the existence of some employees for whom charge was made. I will refer to the latter as the so-called phantom employees. 8There were a number of matters raised below which are not pressed on appeal and, to a degree, there are a number of matters in Mr Hourigan's written submissions that were not pressed before us. He identified the two matters to which I have referred as the foundation for the identification of error by the primary judge. 9The test for leave to appeal has been laid down in many cases since Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69. It is as follows: that ordinarily it is only appropriate to grant leave concerning matters that involve issues of principle, a question of general public importance or where it is reasonably clear that there has been an injustice in the sense of going beyond it being reasonably arguable that the primary judge was in error. A recent collection of the cases was made by the Chief Justice in Lee v New South Wales Crime Commission [2012] NSWCA 262 at [12]. 10Thus, ultimately, the application required Mr Hourigan on behalf of the applicant to persuade this Court that the affidavit material sufficiently identified the disputes concerning finance charges and phantom employees for there to be any basis for an argument that his Honour fell into error. I do not repeat the principle as set by his Honour at [16]. 11The relevant paragraphs of Mr Andrew Gartrell's affidavit are paras 6, 7, 8, 9 and 10 of his affidavit of 18 November. They are in the following terms: "6. I became progressively concerned as to the conduct of the defendant employing non-resident workers without working visas, cash payments made to its employees and allowing [a] large number of its employees to knowingly work under false names so as to claim Centrelink benefits. 7. Furthermore the works requested by TCM to be completed by the defendant have not been completed in a satisfactory manner nor at the agreed rate. TCM discontinued with the services of the defendant and the accounts submitted by the defendant are in dispute. 8. In about December 2010 I saw a person whom I knew to be a principal of the defendant, Laurence Cochrane, and a man I understood to be his 'silent partner' who had recently arrived from Romania and known only to me as 'papa George' making payroll payments to their employees who had been harvesting fruit on the Homeward Bound orchard. I observed that certain employees were paid by cheque with a payslip, whilst another group, predominantly foreign workers, were being paid in cash. 'Papa George' had a briefcase which contained a considerable sum of cash money. They appeared to be being paying the pickers an amount that approximately equated the gross salary less an apparent PAYG tax deduction. At the end of the pay run I noticed that Laurence Cochrane tore up a significant number of employment declarations that had been provided by his employees. I then had a conversation with Laurence Cochrane to the following effect: I said: 'Laurence, I am uncomfortable with this situation and in any event you are charging me the gross salary, plus a profit margin and you are billing me a further 15% for workers compensation and superannuation. However most of your employees are simply receiving net cash payment. I would like a proper reconciliation of this account.' He said: 'Don't complain; you are getting your cherries picked aren't you? Best you don't make problems for George - he doesn't need solicitors to sort things out you know - he has lots of friends.' 9. On another occasion during the 2009 harvest I witnessed Laurence Cochrane and one of his employees completing and signing documents on the bonnet of a car. I saw that the forms were ATO Employee Declaration forms. They had a number of different pens and were writing on the forms with different pens and in different handwriting. At one stage I heard Laurence Cochrane say words to the following effect: 'I'm getting writer's cramp filling in these forms, and I'm running out of new names to use.' 10. At the time of swearing this affidavit I am unable to provide copies of the invoices as they are not in my possession. However to the best of my recollection and belief, the said invoices include charges for superannuation, workers compensation and other margins. I dispute that the invoices are accurate or correct." 12The above evidence was substantially objected to before the primary judge in relation to the issue of the ascertainment of a genuine dispute. The underlined passages were rejected; para 9 and the balance of para 8 were admitted subject to relevance. But, as Mr Stephenson accepts, the totality of the affidavit, even in its inadmissible form, was capable of being the subject of consideration by the judge for the Graywinter principle as to whether the affidavit properly identified a basis for an attack on the statutory demand and it is only for those purposes that paras 6 to 10 are relevant. 13As to the finance charge or finance margin, the only reliance that could be made is in para 10 where the words "other margins" are used. That in my view is not any identification of a financing charge. Before saying something more about what it appears to mean, I should make clear what gave rise to the financing charges. Midway through the course of the invoices relied upon, a finance charge began to be applied from 31 May 2011. In effect this was a charge for late payment as I would understand it. His Honour was of the view that if this had been identified in the affidavit material of November within the relevant 21 day period, he would have been of the view that there was a genuine dispute about it. 14Thus the question arises whether his Honour fell into error in concluding that the matter was precluded from being raised before him because it was not identified in the affidavit material. I do not think it is identified in the affidavit material. What Mr Gartrell is referring to in paras 6 to 9 is what he saw as inappropriate and perhaps unlawful conduct in relation to the dealing with the workers retained by the respondent. He was concerned about the matters there identified. In fact, as his Honour makes clear in his reasons, the invoices themselves do not contain references to margins for workers compensation and superannuation. They are informal documents which claim an asserted amount and rate. I think the only proper inference is that the margin referred to in para 10 referred to the kind of margins to which Mr Gartrell has been referring in his affidavit and have got nothing to do with what he might have been able easily to identify - and that is that there was no agreement to pay a financing charge. Thus, in my view, there is no reasonable basis to consider that his Honour fell into error in forming the view that he did about the so-called finance margin. 15As to the phantom employees, Mr Hourigan focused upon the contents of para 9. He submitted that as a matter of reasonable inference it could be said that the contents of para 9 raise an assertion that ATO employee declaration forms were being filled out for people who did not exist. The difficulty with that argument is not the question of principle as to the ability to use reasonable inferences in assessing what is identified in the affidavit material. Rather it is the inference itself. 16Paragraph 6 contains the allegation that Mr Gartrell became concerned as to the defendant employing non-resident workers without visas and cash payment being made to employees who were claiming Centrelink benefits causing the need for those people to have their ATO declarations made under false names. It is within that context that para 9 appears. If Mr Gartrell was making an allegation or an assertion that he was being cheated and charged for people who did not exist, it was a simple thing to say. I am not being critical of him but I do not see him in this affidavit saying that, and I think the inferences should be drawn not merely from the words as disembodied symbols but as the words that he plainly was attempting to use in his evidence to convey meaning - and at para 9 it seems to me is seeking to convey support for the content of para 6 where he says what he does about false names for people to maintain their Centrelink benefits. 17For that reason, in relation to this ground also I do not think that anything has been shown to the effect that his Honour erred in the conclusion he reached as to the matter not arising from the affidavits of 18 November. 18Those were the two matters raised on appeal. The orders that I would make are that: