Imagebuild Group Pty Ltd v Fokust Pty Ltd [2017] VSCA 131

1. On 30 January 2017 Fokust Pty Ltd ('Fokust') obtained judgment in the County Court against Imagebuild Group Pty Ltd ('Imagebuild') for the sum of $540,453.86. The judgment was obtained under s 28R of the Building and Construction Industry Security of Payment Act 2002 (Vic) and was consequent upon a determination of an adjudicator under that Act.
2. On 10 February 2017 Fokust served a statutory demand under s 459E of the _Corporations Act 2001 (_Cth) ('the Act').
3. On 3 March 2017 Imagebuild filed an originating process seeking an order setting aside the statutory demand under s 459G of the Act. Accompanying that originating process was an affidavit of Joshua Watson, the 'practice manager' at the solicitors' firm then acting on behalf of Imagebuild. The affidavit was sworn on 3 March 2017. I will refer to it as the Watson affidavit.
4. On 19 May 2017 the originating process which had been filed came before an associate judge of this Court. On 24 May 2017 the associate judge dismissed the application and published reasons.
5. Imagebuild has applied for leave to appeal the associate judge's dismissal of the application, and for certain other consequential orders should leave be granted and the appeal be allowed.
6. In view of the possible operation of time limits provided for under the Act, the application for leave to appeal has been brought on and argued urgently. It is desirable that the application be determined today given the potential effect of statutory time limits. For that reason these reasons are briefer than they might otherwise have been.
7. The application for leave to appeal was argued on the basis that if leave were granted the Court would proceed to determine the appeal itself forthwith, and counsel addressed the leave application on that basis. The President of the Court of Appeal has made a determination under s 11(1A) of the Supreme Court Act 1986 permitting two judges of appeal to constitute and exercise all the jurisdiction and powers of the Court of Appeal on this application and the consequent appeal if leave were granted.

1. The associate judge dismissed Imagebuild's application because he determined that an essential requirement of an application under s 459G of the Act had not been met. Section 459G requires that a supporting affidavit be filed and served within a specified 21 day period. The associate judge held that the Watson affidavit was not a supporting affidavit within the meaning of s 459G.
2. In this respect, the associate judge quoted and relied upon a decision of the Federal Court of Australia in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Ltd ('Graywinter'),[1] and upon a decision of the Supreme Court of New South Wales, Equity Division, in Hansmar Investments Pty Ltd v Perpetual Trustee Co Ltd ('Hansmar').[2]

1. It is necessary to set out the Watson affidavit in full. Omitting formal parts, it reads:
   1. I am the Practice Manager at the law firm Ainslie Harding & Wood Solicitors and I am authorised to make this affidavit in support of the Plaintiff's application made under ss 459G, 459H and 459J of the Corporations Act 2001 (Cth). I affirm to the following from my own knowledge save where I state otherwise.
   2. I affirm that all matters contained in this affidavit are true based on my own knowledge and to the best of my knowledge, information and belief based on my inquiries of relevant persons.

1. On 10 February 2017, a Statutory Demand addressed to the Plaintiff dated 7 February 2017 ('Demand') and accompanying affidavit was served on the Plaintiff at the Plaintiff's registered address. The Plaintiff's registered address is the address located at Level 1, 48 High Street, Northcote, in the State of Victoria, 3070.

Now produced and shown to me and marked Exhibit 'JW-1' is a copy of the Statutory Demand.

1. Ainslie Harding & Wood Solicitors have prepared the originating process and the supporting affidavit of the Deponent, Brett Spits, the Director of the Plaintiff, to accompany the Plaintiff's application to set aside or vary the statutory demand.

Now produced and shown to me and marked Exhibit 'JW-2' is a copy of the Current and Historical Company Search.

1. The originating process and a true copy of the supporting affidavit (unsworn) will be filed with the Supreme Court of Victoria today; the Deponent is not available for attendance at our office today as he is working in rural Victoria and due to computer issues isn't able to send us a sworn copy until Monday 6 March 2017.
2. A true copy of the supporting affidavit (unsworn) will be filed with the originating process today.

Now produced and shown to me and marked Exhibit 'JW-3' is a copy of the unsworn supporting affidavit of the Deponent.

1. I have been advised that the Deponent will be express posting the original affirmed supporting affidavit tomorrow.
2. I expect to file the original affirmed affidavit of the deponent in support of the Plaintiff's application on or before 4:00 pm on 6 March 2017. The period for compliance with the statutory demand ends on 3 March 2017.
3. The 'supporting affidavit (unsworn)' exhibited to the Watson affidavit addresses issues which are said to 'reduce the amount being sought', and exhibits a draft County Court writ making claims in relation to defects and liquidated damages for delay.

Section 459G of the Act

1. Section 459G of the Act provides as follows:

(1) [Application to set aside statutory demand] A company may apply to the Court for an order setting aside a statutory demand served on the company.

(2) [Time limit for making application] An application may only be made within 21 days after the demand is so served.

(3) [Requirements for valid application] 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.

Submissions of Imagebuild on the Watson affidavit

1. Counsel on behalf of Imagebuild accepted that the existence of a supporting affidavit is a prerequisite to the Court's jurisdiction under s 459G. Counsel accepted that an affidavit which did no more than say that a supporting affidavit would be done later, as was hypothesised by Sundberg J in Graywinter,[3] would not comply with s 459G. But relying upon Graywinter and Hansmar, and also upon the decisions in Callite Pty Ltd v Adams[4] and NA Investment Holdings Pty Ltd v Perpetual Nominees Ltd,[5] counsel submitted that an affidavit which sufficiently raised the matters to be relied upon in seeking to set aside the demand, even if that were only done in exhibits or by inference, was sufficient. He submitted that the Watson affidavit did those things.
2. When it was put to counsel for Imagebuild that the Waston affidavit appeared to merely explain a delay in swearing, serving and filing the supporting affidavit, he submitted that the relevant issue was the effect of the Watson affidavit, not its purpose, and that if the affidavit did, in effect, raise the relevant matters, then that was sufficient. He emphasised that the supporting affidavit required by s 459G did not need to raise the relevant matters by way of admissible evidence.

1. Counsel for Fokust submitted that the application must be determined by a consideration of the Watson affidavit itself. He submitted it was not a supporting affidavit and that it did not profess to be one.
2. Particular reliance was placed upon the references to the 'supporting affidavit', being the unsworn affidavit yet to come, in paragraphs 4, 6 and 8 of the Watson affidavit. The reference in paragraph 1 of the Watson affidavit to that affidavit having been being sworn 'in support of' the application did not detract from the fact, it was submitted, that the Watson affidavit was an explanation for the delay in providing the required supporting affidavit and was not the supporting affidavit itself.
3. Counsel for Fokust emphasised that the Watson affidavit did not verify the contents of the unsworn affidavit which it exhibited.
4. Counsel submitted that the Watson affidavit was either a product of a misconception that a good explanation for delay could have the effect of extending the 21 day period or was an attempt to circumvent by the 'back door' the strict 21 day time limit provided for by s 459G.

1. In my view the Watson affidavit is not an affidavit supporting the application to set aside the statutory demand. What it is is an affidavit explaining the delay in the swearing, filing and service of what was to be the supporting affidavit.
2. The High Court has held that the requirement that a supporting affidavit be filed and served within the specified period defines the jurisdiction of the Court under s 459G.[6]
3. The High Court has also held that there is no power to extend time after the specified 21 day period has elapsed.[7]
4. An affidavit filed and served within the specified time which asserts that a supporting affidavit will be sworn, or may be sworn, but not within time, and which explains the delay, is not itself a supporting affidavit. Nothing said in the authorities relied upon by Imagebuild suggests that such an affidavit would comply with s 459G.
5. There may be cases where an affidavit directed at explaining delay might nevertheless be sufficient to constitute a supporting affidavit. For example, such an affidavit might verify, on the basis of instructions or otherwise, the contents of the affidavit which is proposed to be sworn. It is significant that the Watson affidavit in this case does not purport to do that. The Watson affidavit does no more than foreshadow what the deponent expects will be sworn, and explains why that has not been done within the required 21 day time frame.
6. The fact that the foreshadowed as yet unsworn affidavit, if it had been sworn and served within the requisite period, may have been sufficient to constitute a supporting affidavit under s 459G is not to the point.
7. If an affidavit of the nature of the Watson affidavit were held to be sufficient, in my view it would be tantamount to permitting extensions of the statutory 21 day time period which the High Court has made clear that the Act does not allow.
8. The decision of the associate judge was correct and leave to appeal should be refused.

1. I agree with the reasons given by Whelan JA.
2. In my opinion, for those reasons, leave to appeal should be refused.

1. The order will be that leave to appeal is refused.
2. (Discussion re costs.)
3. The orders will be that leave to appeal is refused. The applicant is to pay the respondent's costs of the application.

[1] [1996] FCA 822; (1996) 21 ACSR 581.

[2] [2007] NSWSC 103; (2007) 61 ACSR 321.

[3] [1996] FCA 822; (1996) 21 ACSR 581, 587.

[4] [2001] NSWSC 52.

[5] [2010] NSWCA 210; (2010) 79 ACSR 544.

[6] David Grant & Co Pty Limited v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265.

[7] Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corp Ltd [2008] HCA 9; (2008) 232 CLR 314.