Joadja Whiskey v Abraham

CATCHWORDS : CORPORATIONS - Application brought under one of ss 459H(1)(a), 459J(1)(a) or 459J(1)(b) of the Corporations Act 2001 (Cth) ("the Act") for an order that a statutory demand be set aside - Statutory demand addressed to and served on two judgment debtor companies - Whether genuine dispute as to existence of debt where judgment initially unclear as to whether given against plaintiff but subsequently amended under the "slip rule" to affirm this - Corrections under "slip rule" speak from date of original judgment - Where debt is a judgment debt there cannot be genuine dispute as to its existence within meaning of s 459H of the Act - Uncertainty of terms of judgment nonetheless constitutes "some other reason" why demand should be set aside under s 459J(1)(b) of the Act - Prescribed form 509H makes no provisions for a demand on more than one company - Not permissible to serve single combined statutory demand on more than one company - Defect in demand which would cause substantial injustice within meaning of s 459J(1)(a) of the Act unless set aside

Corporations Act 2001 (Cth) LEGISLATION CITED : Industrial Relations Act 1996 (NSW) Industrial Relations Commission Rules 1996 Acts Interpretation Act (Cth)

Elyard Corporation Pty Limited v DDB Needham Sydney Pty Limited (1995) 133 ALR 206 L Shaddock & Associates Pty Limited v Parramatta City Council (No 2) (1982) 151 CLR 590 Eumina Investments Pty Limited v Westpac Banking Corporation (1998) 84 FCR 454 CASES CITED : Barclays Australia (Finance) Limited v Mike Gaffikin Marine Pty Limited (1996) 21 ACSR 235 Midas Management Pty Ltd v Equator Communications Pty Ltd [2007] NSWSC 759 Re Pepper (1969) 14 FLR 282 Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 24 ACSR 353 Ritter v Godfrey [1920] 2 KB 47

PARTIES : The Joadja Whiskey Co Pty Limited Yael Abraham

COUNSEL : T. Bartush-Peek (Solicitor) (Plaintiff) Y. Abraham (Self-represented) (Defendant)

SOLICITORS : Our Lawyers Our Conveyancers (Plaintiff) Y Abraham (Self-represented) (Defendant)

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

5988/2006 THE JOADJA WHISKEY CO PTY LIMITED -v- YAEL ABRAHAM

EX TEMPORE JUDGMENT 1 HIS HONOUR: This is an application brought under one of ss 459H(1)(a), 459J(1)(a) or 459J(1)(b) of the Corporations Act 2001 (Cth) ("the Act"). By originating process dated 27 November 2006 the plaintiff, The Joadja Whiskey Co Pty Limited ("Joadja") seeks an order that there be set aside a statutory demand made on it by the defendant, Yael Abraham. The demand is dated 15 November 2006 and was served on Joadja on or about 16 November 2006.

2 The relevant part of the demand is in the following terms: "To: Jasmman Pty Limited registered office: 40 Derby St Vaucluse NSW 2030; and To: The Joadja Whiskey Co Pty Limited Limited registered office: P Konnaris, 13 Station St Kogarah 2217. 1. The Companies owe YAEL ABRAHAM the amount of $22,500 plus interest totalling $1215 at the statutory rate of 10% from the 4th May 2006 to date being the total of the amount of debts described in the Schedule. 2. Since the amount owed is a judgment debt, there is no need to prepare an affidavit according to the rules."

3 On 4 May 2006 the Industrial Relations Commission of New South Wales, Commissioner McDonald presiding, in a suit for unfair dismissal (under s 84 of the Industrial Relations Act 1996 (NSW)) brought by the defendant against both Jasmman Pty Ltd ("Jasmman") and Joadja, gave judgment in her favour for $22,500 gross. 4 Although it is clear that both Jasmman and Joadja were sued, the cover page of the judgment reflects the respondent as only Jasmman. 5 Moreover, the orders made by the learned Commissioner were in the following terms: "In this matter, for reasons outlined herein, I have determined that the dismissal was harsh, unjust and unreasonable, and I hereby make the following orders: (a) The Commission orders that the respondent pay to the applicant an amount of compensation of $22,500 gross. (b) The amount of compensation specified above has been determined, having regard to s 89 (5) and s 89(6) of the Act. (c) The amount of compensation specified above is to be paid by the respondent to the applicant within 21 days from the date of this decision." (emphasis added) 6 On its face judgment was given against a single respondent. 7 In addition, in paragraph 46 of the judgment under the heading "Summary", the Commissioner said: "In summary of this first issue as to whether there was an employer - employee relationship, the Commission has concluded that there was such a relationship. The prima facie position adopted by the Commission, was that such a relationship existed because of the letter of employment (ex 4, annex A)."

8 The letter referred to was exhibited to the judgment. It is a letter addressed to Yael Abraham dated 15 December 2002 on the letterhead of "Jasmman Pty Limited, (A.B.N 27 092 769 214) Trading as Joadja Creek Heritage Tours" and signed by Mark Longobardi, Company Director.

9 The judgment was manifestly unclear. There were two respondents. Judgment was given against one, without identifying it. A central plank of the Commissioner's reasoning in finding an employment contract is a letter under the hand of only one, namely Jasmman. 10 The first line of attack on the demand by Joadja was that there is a genuine dispute about the existence of the debt (as contemplated by s 459H(1)(a) of the Act) because judgment was not given against Joadja or at least it was unclear whether it was. 11 On 22 December 2006, that is well after the expiry of the 21 day period for payment allowed by the demand, the Commissioner published a second judgment in which he corrected the initial one and in which he said, amongst others, the following: "My orders do not identify by name who was to pay such compensation to the applicant but used the term 'the respondent' to identify who was to pay the compensation. For completeness, this Supplementary Decision states that the Orders made on 4 May 2006, were made jointly and severally against each company named as "the Respondent". Thus, 'the Respondent', for the purposes of the Orders, was: Jasmman Pty Limited and the Joadja Whiskey Company Pty Ltd."

12 Two principles are well established. 13 The first is that when an order is properly made under what is commonly termed the "slip rule" (which in the Industrial Commission of New South Wales is r 38 of the Industrial Relations Commission Rules 1996) the effect is that the mistake or error in the original judgment or order is eradicated so that the original judgment or order is treated as having always been made as corrected. Thus, where an order under the slip rule is made, the correction speaks as from the date of the original judgment or order: Elyard Corporation Pty Limited v DDB Needham Sydney Pty Limited (1995) 133 ALR 206; L Shaddock & Associates Pty Limited v Parramatta City Council (No 2) (1982) 151 CLR 590.

14 The second is that where there is a debt which is the subject of a judgment of a court of competent jurisdiction, there cannot be a genuine dispute between the parties with respect to it within the meaning of that term in s 459H of the Act: Eumina Investments Pty Limited v Westpac Banking Corporation (1998) 84 FCR 454; Barclays Australia (Finance) Limited v Mike Gaffikin Marine Pty Limited (1996) 21 ACSR 235; Midas Management Pty Ltd v Equator Communications Pty Ltd [2007] NSWSC 759. The reasoning is that, absent any stay and even pending an appeal, there can be no genuine dispute as to the existence of the judgment debt because the fact of that debt is a res judicata between the parties. 15 Applying these two principles to the present facts has the following consequences: a once corrected on 22 December 2006, the Commissioner's judgment spoke as from 4 May 2006, that is, from before the statutory demand was served; and b as of 4 May 2006, there was, as between these parties, a res judicata on the issue that Joadja was indebted to the defendant in the amount of the debt of the judgment given by the Industrial Commission of New South Wales. 16 It follows that it is not open to Joadja to assert that there is a genuine dispute as to the existence of the debt and its quest to do so fails.

17 The question then arises whether the statutory demand falls to be set aside under s 459J of the Act which provides as follows: On an application under s 459G the court may, by order, set aside the demand if it is satisfied that: (a) because of a defect in the demand substantial injustice will be caused unless the demand is set aside; or (b) there is some other reason why the demand should be set aside. 18 The discretion under s 459J(1)(b) of the Act is a wide one.

19 The terms of the judgment were manifestly unclear. The judgment would, to the ordinary reader have appeared more likely to have been against Jasmman rather than against Joadja. 20 This, in my opinion, constitutes some other reason why the demand, in the particular circumstances of this case, should be set aside under s 459J(1)(b). 21 A further ground was relied on by Joadja.

22 The demand was a composite one addressed to both Joadja and Jasmman relying on the judgment. Under s 459E(1) of the Act a person may serve on a company a demand. 23 Under s 459E(2)(e) the demand must be in the prescribed form. That form is Form 509H. Consistent with s 459E(1) it makes no provision for a demand to be addressed to more than one company. Section 23 of the Acts Interpretation Act (1901) (Cth) provides: "In any Act unless the contrary intention appears: (a) … (b) words in a singular number include the plural and words in the plural number include the singular." In my view, s 459E(1) of the Act and the prescribed form evince a contrary intention and it is not permissible for a single statutory demand to be made on more than one company.

24 In Re Pepper (1969) 14 FLR 282 Gibbs J (as he then was) held that s 55(1) of the Bankruptcy Act 1966-1968 (Cth) under which a debtor could himself present a petition was not affected by s 23(b) of the Acts Interpretation Act (Cth) so as to permit a joint debtors' petition. His Honour made the point that if the word debtor in s 55 of that Act were construed as including the plural, the section would enable any two or more debtors to petition whether they were joint debtors or not. The section so construed would permit two debtors to join in a petition even though they had no joint liabilities or joint assets, a result which would be obviously inconvenient. Similar considerations apply to a statutory demand. If s 23(b) of the Acts Interpretation Act were to permit plural recipients, a statutory demand could be addressed to a multiplicity of debtors even though they were not jointly liable, a strong pointer that the context otherwise indicates. 25 This is a defect in the demand, which in my view, would cause substantial injustice within the meaning of s 459J(1)(a) of the Act, unless it is set aside. 26 The difficulty was exacerbated here given the lack of clarity of the Commissioner's judgment as to which company was the judgment debtor or whether it was both.

27 The demand contains a number of other defects. Firstly, it claims the amount of $22,500 plus interest at the statutory rate of 10 per cent from 4 May 2006, whereas the judgment requires payment to be made "within 21 days from the date of this decision", that is 21 days from 4 May 2006. Secondly, the provisions of the Industrial Relations Act (s 372) apparently do not make provision for interest after judgment, but only interest up to judgment. Thirdly, if the statutory interest rate which applies to judgments of the Commission were to be applied the rate would have been 9 per cent and not 10 per cent from 4 May 2006. These defects are themselves sufficient to warrant setting aside the demand.

28 Finally, it was made clear in submissions by Ms Abraham that she did not intend to rely on the demand. This is itself other reason why the demand should be set aside under s 459J(1)(b) of the Act.

29 As appears from above, the demand should be set aside because of defects in it and for separate and distinct other reasons in addition: Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 24 ACSR 353. 30 I order that the statutory demand dated 15 November 2006 be set aside.

31 Joadja has been successful. Ordinarily costs would follow the event. However, I take the view that this is a case where Joadja should be denied its costs for two principal reasons. 32 The first is that correspondence which emanated from Joadja's side of the record was in intemperate and inappropriate terms: Ritter v Godfrey [1920] 2 KB 47. 33 For example, in the letter dated 5 February 2007 its solicitors wrote the following: "As in the proceedings you have brought against one of the director's of our clients in the District Court you display an ignorance of the relevant law. This is despite you previously having held a practising certificate as a solicitor for a number of years. As a consequence our client is incurring unnecessary costs which in our view will be recoverable against you on an indemnity basis. " [ sic ]

34 The second is that in a letter dated 27 November 2006, an undated fax to Joadja's solicitors on a "without prejudice" basis (which was tendered by Joadja), and a letter of 5 February 2007, the defendant indicated a willingness to reach terms that the demand not be pressed on the basis that each party bear their own costs. Whilst the defendant did not unequivocally, unilaterally withdraw the demand and Joadja would have been entitled to require her to pay its costs, in the same letter of 5 February 2007, the solicitors said this: "To make the position clear you have no capacity to withdraw the present defective demand whilst our clients' application is on foot, unless it is with the consent of our clients. We are instructed our clients will not agree to your request." 35 Nothing in that letter indicated that the plaintiff was willing to reach terms if the defendant paid its costs. The position adopted by Joadja was that it was proceeding without qualification, which I consider to be unreasonable in the circumstances.

36 In my view, it is appropriate that Joadja bear its own costs. Accordingly, I make no order as to costs. **********

10/08/2007 - substitute orsmall "s" for [sic] - Paragraph(s) Par 26Par 33 10/08/2007 - substitute or - first word, line 3 - Paragraph(s) 26

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