12 A change of company name does not create a new legal entity: s 161(1)(a) and Genovese v BGC Constructions Pty Ltd (2005) 215 ALR 440 at 443. Therefore, the effect of the misdescription of the name of the creditor was not that the demand and supporting affidavit was served on behalf of a non-existent entity. The misdescription falls squarely within the definition of a defect in relation to a statutory demand set out in s 9 of the Act.
13 The problem with the second and third of these cases is that they predate an important development in the law on statutory demands. In Scandon Pty Ltd v Dome Supplies Pty Ltd the creditor failed to state its current name (it used a false name) and its ACN in the statutory demand. Senior Master Mahoney of the Supreme Court of Victoria held that s 459J(1)(a) did not apply as the applicant debtor did not suffer any substantial injustice by reason of the defect. However, the Court set aside the demand pursuant to s 459J(1)(b) on the basis that the demand was defective for its failure to state its current name and ACN.
14 However, Scandon Pty Ltd v Dome Supplies Pty Ltd was subsequently disapproved by the Full Federal Court in Spencer Constructions Pty Ltd v G&M Aldridge Pty Ltd (1997) 76 FCR 452 at 460; (1997) 24 ACSR 353. In that case the Full Federal Court held that s 459(1)(a) and s 459J(1)(b) are mutually exclusive so that a defect in a demand is to be dealt with only under s 459J(1)(a) and a defect in an affidavit under s 459J(1)(b) and held that a demand could not be set aside under s 459J(1)(b) in respect of a defect that caused no substantial injustice. The court said at page 460:
"We agree with Hill J when he said in Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd (1994) 51 FCR 446 at 450 ; 128 ALR 149 , that s 459J(1)(a) and (b) are mutually exclusive.
Insofar as the decision of Senior Master Mahoney in Scandon Pty Ltd v Dome Supplies Pty Ltd , supra, suggests that a defect in a demand can be set aside under s 459J(1)(b) when the defect is not productive of substantial injustice we would, with respect, disagree. In our view Master Mahoney fell into error by reading "defect" in s 459J(2) as limited to a "defect in the demand". As we have already noted a "defect" in s 459J(2) is wider than a "defect in the demand" in s 459J(1)(a). In this respect we would also respectfully differ from McLelland CJ in Eq in B & M Quality Constructions Pty Ltd v Buyrite Steel Supplies Pty Ltd (1995) 15 ACSR 433 ; 13 ACLC 88, 91 where His Honour read "defect" in s 459J(2) as a defect in the demand itself.
Master Mahoney also read an "other reason" in s 459J(1)(b) as being a reason other than one where "substantial injustice will be caused". In our view this is a misreading of the subparagraph. An "other reason" is clearly a reason other than "a defect in the demand". As we have said, we agree with Hill J in Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd , supra, that subpara (b) covers only cases where the reason to set aside the demand is a reason other than the existence of a defect in the demand: see also Victor Tunevitsch Pty Ltd v Farrow Mortgage Services Pty Ltd (in liq) (1994) 14 ACSR 565 , 567; Chains & Power (Aust) Pty Ltd v Commonwealth Bank of Australia (1994) 15 ACSR 544 , 552; Chippendale Printing Co Pty Ltd v DCT (1995) 15 ACSR 682 , 699.
Our conclusion is that in the absence of substantial injustice, a court is precluded by s 459J from setting aside a demand solely on the ground that it contains defects. We would add that the alternative view contended for by the appellant would, in a practical sense, render subpara (a) otiose. It would have been sufficient for the section to provide for a demand to be set aside if there is reason to do so. As substantial injustice (as described in s 459J(1)(a)) is the most obvious reason, no special provision in subpara (a) would have been necessary. Our construction of the section gives effect to the legislative intent and gives a substantive operation to each part of the section."
15 Spencer Constructions has since been followed in New South Wales in, for example, Daewoo Australia Pty Ltd v Suncorp-Metway Ltd (2000) 48 NSWLR 692 at 705 and W &F Lechner Pty Ltd v Drummond & Rosen Pty Ltd (2001) 38 ACSR 42.
16 The problem for the plaintiff is that the same defect being a misdescription in the name of the plaintiff occurs in both the demand and the heading in the affidavit. Thus on the authority of Spencer Constructions unless there is substantial injustice the demand can not be set aside as s 459J (1) (a) will apply.
17 In the event that a different view were taken I should note the present law on the approach to 459J(1) (b) which was helpfully set out in the defendants submissions in these terms:
"8. Section 459J provides:
"(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 "
9. In Hoare Bros Pty Ltd v Commissioner of Taxation (1996) 62 FCR 302 at 317-318 the Full Federal Court held that the discretion in s.459J(1)(b) may be applied, for example, to conduct that may be described as unconscionable, an abuse of process, or which gives rise to substantial injustice.
10. In Portrait Express (Sales) Pty Ltd v Kodak (A'asia) Pty Ltd (1996) 20 ACSR 746 Bryson J stated at 757 that the discretionary power under s.459J(1)(b) should not be activated "unless the decision to do so is supported by some sound or positive ground or good reason which is relevant to the purposes for which the power exists."
11. The New South Wales Court of Appeal in Meehan v Glazier Holdings (2005) 53 ACSR 229 at 239 approved of Portrait Express and at 240 confirmed that proof of injustice was a criterion for setting aside a statutory demand. However, Santow JA explained at 239 the test requires that "one must look at the relative position of both parties against the objectives of Pt 5.4." Earlier in his judgment at 238 [47] Santow JA described the legislative intent of Pt 5.4 of the Act as "the proposition that a winding up application is not to be used for the improper purpose of compelling a solvent company to pay a disputed debt". See also Polstar Pty Ltd v Agnew [2007] NSWSC 114 per Barrett J at [44].
12. In a separate judgment in Meehan v Glazier Holdings Young CJ in Equity stated at 240 [60] that:
"It is not possible to set out fully the cases that might fall within s.459J(1)(b) nor if it were possible would it be wise to do so. The sort of case that will be covered will include gross defects in supporting affidavits and documentation and where the alleged creditor has made statements or representations relating to the statutory demand which have reasonably induced a change of the alleged debtor's position.
A judge is not at liberty to set aside a demand under s.459J(1)(b) merely because he or she subjectively considers it fair to do so".
13. In Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1997) 80 FCR 296; 25 ACSR 675 the Full Federal Court held at 301 that the discretion to set aside a statutory demand is to be exercised having regard to all the circumstances of the case and that "there is no iron clad rule that a defective affidavit will mandate the setting aside of the demand." "
18 The factors which I have set above which lead to there being no substantial injustice are equally applicable to the consideration of the defect in the affidavit. There has been no conduct which would have the effect of subverting the purpose of Part 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.
19 I order that the proceedings be dismissed with costs.
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