Oakland Property Holdings Pty Ltd ACN 090 604 872 v J P Morgan Trust Australia Ltd ACN 050 052 as custodian of Trafalgar Opportunity Fund No 4 ARSN 107 416 348

CATCHWORDS: Corporations law - statutory demand - creditor's change of name - known to debtor - whether use of old name provided "some other reason" to set aside demand.

CASES CITED: Spencer Constructions Pty Ltd v G & N Aldridge Pty Ltd (1997) 76 FCR 452; Topfelt Pty Ltd v State of New South Wales (1993) 12 ACSR 381.

PARTIES: Oakland Property Holdings Pty Ltd ACN 090 604 872 - J P Morgan Trust Australia Ltd ACN 050 294 052 as custodian of Trafalgar Opportunity Fund No 4 ARSN 107 416 348

COUNSEL: P Bolster - Applicant S Ipp - Respondent

SOLICITORS: Ma and Company - Applicant Henry Davis York - Respondent

LOWER COURT JURISDICTION: Supreme Court - Equity Division

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 040418/08

MONDAY 15 DECEMBER 2008 OAKLAND PROPERTY HOLDINGS PTY LIMITED ACN 090 604 872 v J P MORGAN TRUST AUSTRALIA LIMITED ACN 050 294 052 AS CUSTODIAN OF TRAFALGAR OPPORTUNITY FUND NO 4 ARSN 107 416 348 JUDGMENT

1 HIS HONOUR: This is an application to extend the time for compliance with a statutory demand until the determination of an appeal from the refusal to set it aside. 2 The statutory demand was dated 15 January 2008, and was served on the applicant on 16 January 2008. It required payment of $5,363,622.73, in the accompanying affidavit said to be a debt due and payable on 31 December 2007 under a loan for facility to which the creditor and the debtor were parties together with others. On 4 February 2008 the applicant filed an application to set aside the demand. Extensions of time to comply with the demand were granted and the application was heard by Macready AsJ on 17 November 2008. 3 On 28 September 2007 the respondent had changed its name from J P Morgan Trust Australia Ltd to BNY Trust Company of Australia Ltd. The demand stated that the applicant owed "JP Morgan Trust Australia Ltd ACN 050 294 052 as custodian of Trafalgar Opportunity Fund No. 4 ARSN 107 416 348 (creditor)" and required that the debt be paid to the creditor. The accompanying affidavit was headed with the same description of the creditor and provided evidence that the debt was due and payable to it. 4 The basis for the application was the change of name. It was said, in short, that the demand and affidavit in the former name provided "some other reason" for setting the demand aside pursuant to s 459J of the Corporations Act 2001, which provides: " 459J Setting aside demand on other grounds

(1) On an application under section 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.

(2) Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect." 5 The learned associate judge described the applicant's argument as an argument that the entity JP Morgan Trust Australia Ltd was not in existence as at 15 January 2008. It was, although the name had changed, and his Honour so held. 6 His Honour's reasons however, went beyond this argument. He considered that, although there was a defect in the demand in the use of the previous name, substantial injustice would not be caused, so that s 459J(1)(a) did not apply. I will shortly state his reasons for considering that substantial injustice would not be caused, and indeed it should be said that his Honour noted that the application was not made in reliance on para (a) of s 459J(1). His Honour did not consider that there was "some other reason" within s 459J(1)(b), because he did not think that there was anything beyond the defect in the demand and an equivalent misnomer in the affidavit so that, as he said in relation to the affidavit, "[t]here has been no conduct which would have the effect of subverting the purpose of Pt 5.4 of the Act and in my view the misdescription in the affidavit, if it had only occurred in the affidavit, would not have led me to set aside the demand." 7 The reasons for concluding that there was no substantial injustice came down to the following. 8 First, the change of name was known to the applicant because on 9 January 2008, about a week prior to the service of the demand, the respondent's solicitors had written to its solicitors in relation to the debt and, while requiring payment by the deposit of funds to a nominated account of "JP Morgan Trust Australia Ltd", had headed the letter "BNY Trust Company of Australia Ltd (formerly JP Morgan Trust Australia Ltd) (as custodian of Trafalgar Opportunity Fund No 4) advance to Oakland Property Holdings Pty Ltd." 9 Secondly, the respondent had on 15 February, after service of the demand, paid $3,793,203.59 in partial satisfaction of the debt, which his Honour said was "consistent with Oakland being under no confusion as to the identity of the creditor". 10 Thirdly, the ACN number was stated on the demand, and his Honour said that, "[t]he use of the correct ACN number provided the means of ascertaining the actual name of the creditor and it would significantly overcome any possible confusion the misdescription of the creditor's name may have had on Oakland."

11 Following the dismissal of application to set aside the demand on 4 December 2008 the applicant filed a summons seeking leave to appeal. Orders were made by Macready AsJ extending the time for compliance with the demand until 5pm on 18 December 2008, in order that the application presently before me could be made. On 11 December 2008 a notice of motion seeking extension of the time for complying with the demand pending the hearing of the appeal was filed. 12 The affidavit in support sworn by Mr Vincent Pang, the sole director and secretary of the applicant, relevantly stated that the applicant, "[h]as in place various banking and financial facilities and any winding-up proceedings will constitute events of defaults [sic] under these facilities and would entitle the plaintiff's financiers to exercise enforcement rights under those financial and banking facilities."

13 Mr Pang asserted, and this was part of the submissions of Mr Bolster who appeared on behalf of the applicant, that without an extension of the time within which to comply with the demand any success on appeal would be rendered nugatory. The central issue on the application before me was whether the applicant had any prospects of obtaining leave to appeal, itself involving the prospects on appeal. The respondent's principal submission was that the applicant "has no prospects of success on appeal", pointing out that the debt was not disputed and that the applicant sought to rely on "a technical argument" based upon misstatement of the respondent's name. 14 The applicant's argument before me, representing the argument it proposed to put on the application for leave to appeal, was a little different from the argument as it appears to have been put below. It was affirmed that the applicant did not rely on s 459J(1)(a) and that it contended for "any other reason" within s 459J(1)(b). It was submitted that the combined effect of the misdescription in the demand and the affidavit was important because the applicant could not comply with the demand without making an enquiry to ascertain the identity of the creditor to whom payment should be made. There was reference to evidence given by Mr Pang before the associate judge in para 10 of his affidavit affirmed on 1 February 2008 - "10. I have caused a search to be made on the defendant and understand that the defendant has changed its name to BNY Trust Pty Ltd on 17 January 2007 and annex and mark as F a copy of ASIC search of 17 January 2008." 15 While the applicant accepted that this did not link the search with doubt as to the identity of the creditor, it submitted that, because of the dates, that was the inference to be drawn, namely that the search was because of doubt. The respondent submitted to the contrary, that in the absence of any evidence from Mr Pang where evidence would be expected the inference should not be drawn and that there could be many reasons for making a search, but that in any event the knowledge given to the applicant through the letter to its solicitors was well adequate to ensure that there was no confusion. 16 The applicant relied in particular on Topfelt Pty Ltd v State Bank of New South Wales Ltd (1993) 12 ACSR 381. In that case a demand was served which required the payment of a stated amount "together with interest from 11 March 1993 to date and continuing." It was held that the demand should be set aside. Lockhart J said at 390 that it was not sufficient for a creditor to claim interest on the amount of a judgment debt by specifying either a rate of interest or a daily or other periodic figure representing the interest component without stating the precise amount of it, leaving it for the debtor to make the precise calculation of the interest, observing that it was "not the debtor's obligation to calculate the interest which the creditor calls upon to pay." His Honour said at 396 that - "The demand is erroneous because it cannot be complied with on its face, even allowing for misstatements. The applicant must make enquiries of one kind or another in order to ascertain the amount of interest that is said to be payable whether he makes the enquiries from his solicitor or from the Supreme Court or others." 17 In Spencer Constructions Pty Ltd v G & N Aldridge Pty Ltd (1997) 76 FCR 452 the Full Court of the Federal Court understood his Honour to have been acting under s 459J(1)(b), and summarised the basis of his Honour's decision at 459 in the terms that - "...Lockhart J based his conclusion on the basis that the statutory demand could not in fact be complied with because it was not the obligation of a debtor to calculate the interest the creditor calls upon the debtor to pay. This factor is not accurately described only as a 'defect in the demand', it is more than a defect as the debtor was unable to comply with the notice without making enquiries which it was not obliged to make." 18 The present case, in my view, is not a Topfelt case. There is no doubt from the demand about what was required in order to comply with it, that is, to pay the debt to the entity J P Morgan Trust Australia Ltd with the stated ACN number. That was the entity with which the applicant had entered into a finance facility. It had received correspondence showing the change of name. It had been told in that correspondence of the bank account of the entity with the name J P Morgan Trust Australia Ltd to which payment should be made, and as the associate judge observed the fact of payment on 15 February 2008 showed that there was no confusion. 19 It is true, as was submitted on behalf of the applicant, that in Topfelt Lockhart J did not enquire into actual confusion caused to the debtor, but these matters are relevant to whether or not the demand and the affidavit were of a nature to be confusing to this debtor. In my opinion they were not. It was not a situation where the debtor had to make enquiries in order to ascertain what entity it had to pay, because it knew that it had to pay J P Morgan Trust Australia Ltd, it had the bank account details, and that remained so even though it knew also from the letter to its solicitors that the name of the company had been changed. It does not seem to me that para 10 of Mr Pang's affidavit really alters this because, in the absence of anything indicating why the company search was made, it does not seem to me appropriate to infer that it was made because of doubt as to the identity of the creditor to whom payment should be made. 20 The result is that I do not think that there is any meaningful prospect of success in obtaining leave to appeal. While I accept that the effect of declining an extension of the time to comply with the demand will be significant, in that upon the expiry of the available time there will be what may be called a deemed insolvency, and further, that that may have some effect on other finance arrangements of the applicant, in order to say that the application for leave to appeal and any appeal will be rendered nugatory it is necessary to see something which will lose validity or effect. I do not think that there is anything which will lose validity or effect. 21 It was submitted that it was relevant that the respondent would not suffer prejudice, or at least that it was not shown that the respondent would suffer prejudice, because the respondent was a secured creditor and there was no evidence showing that deferring the time at which it might be able to continue with its endeavour to wind the applicant up would be detrimental to it through, for example, the accrual of interest beyond the value of the security properties. 22 There is no evidence one way or the other before me. However, it is also important in matters such as this that what the associate judge called the statutory scheme, the purpose of Pt 5.4 of the Act not be subverted, and part of that purpose is that there should be speedy resolution of applications to wind up companies in insolvency. It follows that one should not take a course which would intervene in the operation of the statutory scheme unless there be reason to do so, and that links with the well recognised public interest in taking care lest insolvent companies be left able to trade and otherwise act to the detriment of the public. Again I do not have any direct evidence, but it appears that the business of the applicant for which the finance facility was obtained was a property development. Relevant land was purchased in January 2007. It seems to me that there is at least a prospect that the applicant is still trading and, small though it may be, it is a factor in the course which I propose to take, that there is the potential for prejudice to the public if, for no good reason, the applicant were relieved from the due processes of an application by the respondent to wind it up in the event that payment is not made prior to the expiry of the present period of the demand. 23 However the principal factor upon which I act is as I have said, that I do not think that there is any meaningful prospect of obtaining a grant of leave to appeal. It follows that in my opinion the application for extension of the time for compliance with the demand should be refused.

(Counsel addressed on a short further extension of time for compliance with the demand.)

24 I extend the time for compliance with the demand for a further twenty-four hours, that is until 5pm on Friday 19 December 2008.

What about costs of this application, gentlemen? BOLSTER: Nothing I can say your Honour.

HIS HONOUR: No, there probably is not. Do you want them?

HIS HONOUR: Well in addition to that extension of time the formal order is that the notice of motion filed on 11 December 2008 is dismissed with costs. IPP: Your Honour if I may, I think procedurally there have been several interlocutory processes that have been filed, I just want to make sure that, I think one before my friend became involved and costs were reserved in relation to that. I have certainly seen an interlocutory process and a notice of motion, I just wish to make clear that the order that your Honour has just made in relation to costs covers all of those interlocutory processes.

HIS HONOUR: I am not too sure what you mean. There has been at least one application before the Registrar I think for short service.

BOLSTER: I think what my friend is referring to is the applications below, there were two applications I think to Associate Justice Macready. His Honour did not want to deal with them, he wanted to go up.

HIS HONOUR: What did he do about the cost of those?

HIS HONOUR: In principle they probably would go with what I have said, would they not, Mr Bolster?

BOLSTER: They probably would your Honour, whether it is with the leave application that is probably going to be rendered academic now.

HIS HONOUR: I order also that the applicant pay the respondent's costs of the applications for extensions of time heard by Macready AsJ on a day or days after--

IPP: Yes, there was an application for an extension. I think it was made on 21 November and then I think on 5 December.

BOLSTER: Your Honour would not need the precise date.

BOLSTER: Yes, I would not wish to be heard against that, your Honour.

HIS HONOUR: Yes, all right, I will do that. oOo

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