Plaintiff v Defendant

1 This matter concerns an application made under s 459G of the Corporations Act 2001 (Cth) ('the Corporations Act') by the plaintiff, Mu Meeting Point Pty Ltd ('Mu Meeting Point'), to set aside an undated statutory demand ('the statutory demand' or 'the demand') purportedly posted by the defendant, Lighthouse Corporation (Capital) Pty Ltd ('Lighthouse Capital'), on or around 26 July 2021. Mu Meeting Point contends that the demand should be set aside because it was not provided with the statutory demand until service of a related winding up application brought by Lighthouse Capital, which relies on Mu Meeting Point's non-compliance with the demand ('the winding up proceeding').[1] Additionally, the plaintiff argues there is a genuine dispute about the existence of the alleged debt and there are defects in the demand sufficient to cause substantial injustice unless it is set aside.

2 In the alternative, and somewhat unconventionally, Mu Meeting Point seeks two declarations that do not rely on the machinery of Pt 5.4 of the Corporations Act. The first is a declaration that Mu Meeting Point was not duly served with the demand on or around 4 August 2021, or at all. The second is a declaration that the demand, its accompanying affidavit, and any reliance on those documents by Lighthouse Capital in any proceedings brought to wind up Mu Meeting Point is an abuse of process.

3 The demand claims the sum of $425,000.00, which is allegedly owing pursuant to a 'bonus payment' special condition ('the bonus payment') forming part of a sale of business contract dated June 2018, between Lighthouse Corporation (Monash) Pty Ltd ('Lighthouse Monash') as trustee for the Lighthouse Holding Trust ('the Trust') (as vendor) and Mu Meeting Point (as purchaser), which settled on 22 August 2018 ('the sale of business contract').

4 The sale of business contract concerned the sale of a business called 'Monash Meeting Point' ('the business'), which operates a cafeteria-style food court located on Monash University's Clayton campus and comprises various outlets, including 'Insalata Fresca', 'Café Sapora' and 'Juice Point'. Albert Jacobs signed the document for the vendor as director of Lighthouse Monash, whereas Quan Chun Wang and Xi Chen both signed for the purchaser as directors of Mu Meeting Point. The business was sold for a total sum of $3.3 million, with $10,000.00 to be paid as a deposit, $155,000.00 on the exchange of contracts, and the balance on the date of settlement,[2] subject to consent being obtained from Monash University as landlord of the relevant business premises. At the time of entering into the sale of business contract, Lighthouse Monash was the tenant of the business premises under a five year lease with Monash University ('the original lease'). The original lease was extended in June 2016 for a further five years and expired in June 2021.

5 The amount of the bonus payment is recorded in item 11 of the 'Particulars of Sale' and the special condition relating to the bonus payment is located at cl 5 of sch 7 to the sale of business contract. The special condition is in the following terms:

Bonus payment

1. The bonus payment is payable within 28 days after the landlord has signed a lease or has signed a variation of a lease for a lease from the date of settlement to 5 June 2021 and a further term of no less than 5 years from 6 June 2021 under the same terms and conditions as the current lease, to the purchaser no earlier than the date of settlement (New Lease).

5A. Further subject to special condition 5:

(A) the bonus payment will be due and payable by the purchaser no earlier than the date of settlement, whether a New Lease is granted to the purchaser or a nominated company or any entity using the trading names under licence herein or the premises.

(B) This amount shall be paid to an account as nominated by the vendor or by Mr Albert Jacobs or his beneficiaries. In the event an account is not nominated within 30 days of being notified of any option or new lease, the purchaser agrees to make the bonus payment in the following account: bsb: 063.408 a/c: 1065.1586.

(C) Interest shall accrue on any and all overdue amounts in favour of the vendor according to the rate as stipulated by the Penalty Interest Rates Act 1983 (cth) + 5%.

6 I pause here to observe that it is Lighthouse Monash, rather than Lighthouse Capital, which is listed as vendor on the sale of business contract and the lessee under the original lease. According to Mr Jacobs, who is also a director of the defendant company, in August 2018, Lighthouse Monash was removed as corporate trustee for the Trust and all rights, debts and obligations were assigned and 'novated' to Lighthouse Capital and Lighthouse Monash was then sold. The circumstances of the assignment and novation are contested by the parties.

7 On 25 February 2021, Mu Meeting Point and Monash University entered into a further lease in respect of an area smaller than the original lease, for a period of three years commencing 6 June 2021 ('the 2021 lease').

8 Mr Jacobs says that on or about 18 May 2021, he spoke to Mr Wang by telephone and Mr Wang agreed to pay the amount under the special condition of the sale of business contract, but he asked for an extension of time to pay due to cash flow issues resulting from the COVID-19 pandemic. Mr Jacobs says he did not agree to the request. However, Mr Wang has given unequivocal evidence that such a conversation did not occur.

9 On 5 June 2021, a tax invoice was rendered by the defendant and addressed to the plaintiff for the amount of $425,000 ('the 5 June 2021 invoice'). The accompanying description reads:

SALE OF BUSINESS - SECOND PART PAYMENT

SPECIAL CONDITIONS OF CONTRACT (SCHEDULE 7)

SECTION 5

10 The 5 June 2021 invoice states it was issued 'for and on behalf of Albert Jacobs and the Lighthouse Holding Trust ...'.

11 Mr Dimitrios (James) Podaridis, a barrister who was engaged by the defendant in relation to the sale of the business, deposes to sending, on 10 June 2021, the 5 June 2021 invoice by email to Henley Legal, the solicitors who had acted for the plaintiff in relation to the sale of business, at 'business.b@henleylegal.com'. However, I note that the generic email address used by Henley Legal in later correspondence is in fact 'Business_B@henleylegal.com', which may account for the plaintiff's evidence (discussed further below) that the 10 June 2021 email was never received. Mr Jacobs says that between 7 June 2021 and 24 June 2021, he tried to call Mr Wang on his mobile phone and landline, leaving various messages. Mr Wang again denies receiving calls or messages from Mr Jacobs throughout this time.

12 The defendant then issued the statutory demand for the amount claimed in the 5 June 2021 invoice. The demand is supported by an affidavit sworn on 26 July 2021 by Mr Jacobs who, among other things, deposes to having inspected the business records of the defendant in relation to Mu Meeting Point's 'account with the [defendant]'. The affidavit also refers to the 5 June 2021 invoice and asserts that the amount of $425,000 was 'payable on receipt of an option period or a new lease or extension to lease', payable to Lighthouse Monash as the vendor listed in the sale of business contract or Mr Jacobs or his nominee, subject to item 11 of the 'Particulars of Sale' and cl 5 of sch 7 to the sale of business contract. Mr Jacobs further deposes that he has 'assigned his rights to receive the [b]onus [p]ayment and has nominated [Lighthouse Capital] to receive the [b]onus [p]ayment and act on his behalf'.

13 Mr Podaridis has given evidence that he served the demand by ordinary pre-paid post to the plaintiff's registered office at 9 Belvedere Avenue, Wheelers Hill, Victoria on 26 July 2021 ('the Wheelers Hill address'). As previously indicated, Mu Meeting Point disputes it was ever served with the demand. I will return to the critical question of service of the statutory demand shortly.

14 After the demand expired unsatisfied, Mr Jacobs instructed his solicitors to prepare the winding up proceeding but to first write to Mr Wang, foreshadowing the filing of the matter. This occurred on 4 October 2021, when Ms Elise Steegstra of Cogent Legal sent a letter by email to Mr Wang ('the 4 October 2021 email'). The operative parts of the letter provided:

We note that the 21-day period for complying with or setting aside the Statutory Demand has now passed and as such, there exists a presumption of insolvency for [Mu Meeting Point].

Based on the presumption of insolvency, our client [(Lighthouse Capital)] may proceed to file a winding-up application with the Supreme Court of Victoria. Our client would be seeking orders for the winding-up of your company and the appointment of a liquidator of our choosing. If our client must proceed with the winding-up application, legal costs will be added to the outstanding debt and pursued from the liquidator.

Should our client proceed with this course of action, notification must be provided to ASIC Insolvency Notices and this then becomes publicly searchable by anyone on the internet. This may count as an insolvency event and be in breach of your lease agreement, subject to any ipso facto amendments, etc ... In other words, even the spectre of insolvency is damaging.

To prevent our client from proceeding with a winding-up application at the Supreme Court of Victoria, please contact our office to make arrangements for payment of the outstanding debt of $425,000.

(emphases in original)

15 In this letter, Ms Steegstra also suggested the demand was 'served by prepaid ordinary post on 27 July 2021', a day after Mr Podaridis deposes to having posted the demand. Ensuing correspondence between the parties' solicitors also makes reference to this 27 July 2021 date. However, in its written submissions, the defendant contended the demand was in fact posted on 26 July 2021.[3]

16 On 5 October 2021, Henry Wong of Henley Legal, solicitor for Mu Meeting Point, emailed Ms Steegstra a letter that disputed receipt of the demand and sought clarification in respect of the alleged debt claimed by Lighthouse Capital.

17 On 13 October 2021, Ms Steegstra responded to this correspondence by email to Henley Legal, attaching a copy of the demand purportedly served by post on 27 July 2021 ('the 13 October 2021 email'). The email relevantly stated:

Pursuant to section 160 of the Evidence Act 1995, it is presumed that the Statutory Demand would have been received at the address on the seventh working day after it has been posted, namely 5 August 2021. The 21-day time period for complying with or setting aside the Statutory Demand has since expired.

18 The letter also restated the basis of the claim as relating to 'Special Condition 5' of the sale of business contract (the bonus payment special condition).

19 On 14 October 2021, Jenny Liu and Henry Wong of Henley Legal replied to Ms Steegstra's email of 13 October 2021, seeking, amongst other things, 'material facts' to evidence satisfaction of the bonus payment conditions. The correspondence also requested details of alleged contact with Henley Legal on 10 June 2021 (the date the invoice was apparently sent by email to the offices of Henley Legal by Mr Podaridis).

20 Ms Steegstra's 26 October 2021 email in reply attached an affidavit of service of the demand deposed by Mr Podaridis and noted that the defendant was not prepared to 'debate the contents of the [5 June 2021] invoice'. The email also stated: '[Lighthouse Capital] was bringing the fact of the Statutory Demand again to [Mu Meeting Point's] attention prior to filing a Winding Up application with the Supreme Court of Victoria'.

21 Ms Steegstra says she did not hear further from Henley Legal or Mr Wang until after the winding up proceeding was issued and served. Similarly, Mr Jacobs says that prior to the winding up proceeding being served, 'neither Mr Wang nor any other person from or on behalf of [Mu Meeting Point] ... disputed the debt'. In fact, on 28 October 2021, Henley Legal wrote to the defendant's solicitors by email, disputing the debt and asserting that there was no basis for the statutory demand, having regard to the operation of the sale of business contract. The correspondence purports to have been sent to Ms Steegstra's attention at 'info@cogentlegal.com.au', however, searches of Cogent Legal's email system have not located it.

22 At all events, on 3 November 2021, Lighthouse Capital filed the winding up proceeding. That same day, the originating process, along with its associated documents and a cover letter were sent to Mu Meeting Point's registered office at the Wheelers Hill address by express post and Ms Steegstra sent an email to Henley Legal, indicating that the originating process had been posted. However, later that evening, Henley Legal replied, stating they did not have instructions to act in the matter and that the application ought to be served on the company directly. The documents sent to Henley Legal were directed to Mr Wang for Mu Meeting Point, who then forwarded them to the company's current solicitors (Danaher Moulton) on 4 November 2021.

23 Mr Wang deposes that on 8 November 2021, the envelope containing the winding up proceeding and associated documents, including the statutory demand, were received at the Wheelers Hill address, which is also his residential address.

24 Mu Meeting Point then filed the present application on 29 November 2021.

25 This matter was first heard on 15 December 2021 and orders were made granting the plaintiff leave to file and serve an amended originating process by which it sought the following 'freestanding' declarations framed as alternative relief:

(a) a declaration that the plaintiff was not duly served with the statutory demand on or around 4 August 2021, or at all; and

(b) further and alternatively, a declaration that the statutory demand, its accompanying affidavit and any reliance by the defendant on the demand and accompanying affidavit in any proceedings brought by the defendant to wind up the plaintiff are an abuse of process.

26 Additionally, the orders made provision for the defendant to file and serve further affidavit material and supplementary submissions and for the plaintiff to file and serve further affidavit materials and supplementary submissions in reply. The further hearing of the originating process (as amended) was adjourned to 18 March 2022.

27 This matter proceeded to hearing on 18 March 2022, however, due to the late filing of the affidavit of Albert Jacobs sworn on 17 March 2022, additional orders were made to allow the parties to address the matters arising from that affidavit. The orders permitted the plaintiff to file and serve two further affidavits in response and for the parties to file further supplementary written submissions.

28 Pending the determination of this proceeding, this Court made separate orders in the winding up proceeding pursuant to s 459R(2) of the Corporations Act, that the period for the determination of the winding up proceeding be extended to 5 January 2023.[4]

29 In support of its application, Mu Meeting point relies upon the affidavits and exhibits of:

(a) Mr Quan Chun Wang sworn 29 November 2021, 14 December 2021, 10 and 30 March 2022;

(b) Ms Mui Chanh Chuong sworn 13 December 2021; and

(c) Mr Ivan Harianto sworn 30 March 2022.

30 Lighthouse Capital places reliance upon the affidavits and exhibits of:

(a) Mr Albert Jacobs sworn 14 December 2021, 11 February 2022, and 17 March 2022;

(b) Mr Dimitrios (James) Podaridis sworn 14 December 2021 and 11 February 2022; and

(c) Ms Elise Steegstra sworn 14 and 15 December 2021.

31 The following issues require determination in this matter:

(a) whether the statutory demand was served on Mu Meeting Point:

(i) by post on or around 4 August 2021; or

(ii) informally by either the 4 October 2021 email or the 13 October 2021 email; or

(b) whether Mu Meeting Point was duly served with the statutory demand at any time;

(c) whether pursuant to s 459H of the Corporations Act, there is a genuine dispute as to the existence of the $425,000.00 debt to which the demand relates;

(d) whether substantial injustice will be caused unless the demand is set aside pursuant to s 459J(1)(a) of the Corporations Act; and

(e) whether the demand and accompanying affidavit and any reliance upon those documents in any winding up proceeding amounts to an abuse of process.

32 It is convenient to deal with the issues concerning the question of service of the demand together.

33 Pursuant to s 109X(1)(a) of the Corporations Act, a document, including a statutory demand, may be served on a company by leaving it at, or posting it to, the company's registered office.

34 Section 109X has been described as 'permissive and facultative' and not mandatory[5] or proscriptive.[6]

35 Section 29 of the Acts Interpretation Act 1901 (Cth) ('Acts Interpretation Act') states:

(1) Where an Act authorises or requires any document to be served by post, whether the expression "serve" or the expression "give" or "send" or any other expression is used, then the service shall be deemed to be effected by properly addressing, prepaying and posting the document as a letter and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.

(2) This section does not affect the operation of section 160 of the Evidence Act 1995.

36 Section 160 of the Evidence Act 2008 (Vic) ('Evidence Act') relevantly provides:

(1) It is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia or in an external Territory was received at that address on the seventh working day after having been posted.

37 As explained by the learned author of the text Assaf's Winding Up in Insolvency,[7] s 29(1) of the Acts Interpretation Act has two limbs - the 'deemed service limb' and the 'presumed time of service limb'.[8] To enliven the presumption of service under the deemed service limb, the serving party must prove the following matters, either by direct evidence or inference from the evidence:[9]

(a) the envelope bore the correct name and address;

(b) the envelope contained the relevant document to be served;

(c) the correct cost of postage was used to send the envelope; and

(d) the envelope was placed in the post.

38 A party can negate the statutory presumption of service under s 29(1) of the Acts Interpretation Act by proving, on the balance of probabilities, that there has been non-delivery, as distinct from non-receipt,[10] of the document.[11] Similarly, a party seeking to rebut the s 160 Evidence Act presumption bears the onus of adducing evidence sufficient to raise a 'doubt' as to receipt.[12] A 'doubt' need not rise to the level of 'proof to the civil standard of fact finding at trial as to actual non-delivery'.[13]

39 In Re Kornucopia Pty Ltd (No 1) ('Kornucopia (No 1)'),[14] Sifris J (as his Honour then was) discussed the evidentiary burden faced by a defendant company once the presumption of service under s 29(1) of the Acts Interpretation Act has been successfully invoked:

The Company bears the onus of establishing 'proof to the contrary' pursuant to s 29(1) of the AIA Act [Re AXF Group [2019] VSC 671, [42]]. It does so by proving non-delivery of the statutory demand to the premises of the company's registered office, or delivery to some address other than the registered office. If the company successfully proves alternative delivery or non-delivery, the presumption does not apply, and proof of non-delivery is effective as proof of non-service [That is, unless the plaintiff can then establish service on the company by alternative means without relying on the presumption, such as through effective informal service by email or some other means]. However, 'if there is no evidence of actual delivery or non-delivery, then the presumption will apply and the item will be deemed to be delivered in the ordinary course of post' [Formosa House Pty Ltd v Chang [2010] VSC 474, [11] (Ferguson J) ('Formosa House')].

...

As I observed in Re AXF Group [[2019] VSC 671], 'the absence of a notice from Australia Post marking the Demands as undeliverable is a significant indication as to whether or not delivery had occurred' [[2019] VSC 671, [84]]. To this, I would add the observation of Colvin J in [Deputy Commissioner of Taxation v Melking Holdings Pty Ltd [2019] FCA 988; (2019) 137 ACSR 411]:

it is a question of fact in each case whether the circumstances indicate that there has been non-delivery at the relevant place (as distinct from an unwillingness to receive the documents at the place where they were delivered or a failure for the documents to be brought to the attention of a particular person despite being delivered to that place) [(2019) [2019] FCA 988; 137 ACSR 411, 426 [56] ('Melking Holdings')].

Furthermore, as Colvin J also said in Melking Holdings, '[t]he registered office of a company must be a location that accommodates the possibility of service by post' [Ibid 425 [52]]. In Partners of Piper Alderman v Sharjade Pty Ltd, Barrett J said there is, implicit in the statutory regime, 'an expectation that there will be in place at the registered office a system for the safe and secure reception of documents delivered by post' [[2011] NSWSC 6, [18]]. In that case, the defendant company's mailbox was located outside the confines of the registered office itself and of the relevant building, such that it were accessible by anyone passing by and that 'anything might happen to documents put into a letter box situated on the public walkway' [Ibid [19]]. Non-receipt of the statutory demands would not, therefore, have been a solid foundation upon which an inference of non-delivery could have been drawn. The demand might not have been delivered, or it might have been and then removed from the letter box by any person passing by. There were there, as I said in relation to the scenario in Re AXF Group, 'an infinite number of possibilities' and each of which was 'equally likely' [Re AXF Group [2019] VSC 671, [83]]. Where there are numerous such possibilities, but no evidence tending to suggest which is most likely, the Court may inevitably hold that service (that is, delivery) has been effective, for that is the default position by virtue of the presumption, and no evidence has been adduced to suggest that it has not occurred.

I reiterate that it is incumbent on the company to adduce proof of non‑delivery. If there is only proof that the statutory demands have not been received by the Company, the presumption is not displaced and service has been effective according to s 29(1) [Ibid [42]]. While proof of non-receipt does not prove non-delivery [Fancourt (1983) HCA 25; (1983) 154 CLR 87, 96-7; Re Rustic Homes Pty Ltd (1988) 49 SASR 41, 44; Dwyer v Canon Australia Pty Ltd [2007] SASC 100, [8]-[9] (Debelle J); Deputy Commissioner of Taxation v Contract Synergies Administration Pty Ltd [2011] FCA 743, [5]-[18] (Jacobson J)], proof of non-receipt at a place by its occupant, as distinct from non-receipt by a person who is not an occupant, may prove non-delivery at that place for the purpose of s 29(1) of the AIA Act [Scope Data Systems Pty Ltd v Goman [2007] NSWSC 278; (2007) 70 NSWLR 176, 188 [49] (White J)]. That is, however, subject to what was said by McKerracher J in Josway:

while mere denial of non-receipt by the addressee would scarcely, if ever, suffice to prove 'non-delivery', evidence of non-receipt at a place by an appropriate occupant, depending on the cogency of the evidence, may be sufficient to create a doubt for the purposes of s 160 of the Evidence Act. While such evidence needs to be sufficient to create a 'doubt' it does not need to be proof to the civil standard of fact finding at trial as to actual non-delivery. A 'doubt' ought not to be assimilated with proof or demonstration [Josway [2018] FCA 466, [2] (McKerracher J) citing Deputy Commissioner of Taxation v Manta's on the Beach Pty Ltd [2012] FCA 417; (2012) 88 ATR 193, 196 [12] (Logan J)].[15]

40 Where a party employs a method of service on a company other than those methods contemplated by s 109X of the Corporations Act, the question of whether it is good service depends on the serving party proving to the Court's satisfaction that the document actually came to the attention of a responsible officer of the company who was expressly or implicitly authorised by the company to deal with the document.[16] This is known as 'the effective informal service rule'. Service by email or facsimile are modes of service that fall within the purview of this rule.[17] However, the question always remains whether the mode of service actually brought the document to the attention of a responsible officer.

41 The first issue for determination is whether the demand was served by post on or around 4 August 2021.

42 In his affidavit of 14 December 2021, Mr Podaridis, the barrister directly retained by the defendant from time to time, deposes that on 26 July 2021, he served the demand on the plaintiff by posting it by ordinary prepaid post at the post office situated at 464 Toorak Road, Toorak, in an envelope addressed to the plaintiff's registered office at the Wheelers Hill address.

43 In his second affidavit sworn 11 February 2022, Mr Podaridis elaborates that in June and July 2021, he was engaged by the defendant in relation to matters arising from the sale of the business to the plaintiff. He confirms posting the demand and accompanying affidavit to Mu Meeting Point by ordinary prepaid post on 26 July 2021 to the Wheelers Hill address. Mr Podaridis also exhibits a photograph he took on that date of the documents and a prepaid envelope marked to the attention of Mu Meeting Point's director, Mr Wang. He further deposes that on 27 July 2021, he sent an email to Mr Jacobs, attaching the relevant photograph to confirm the documents had been sent by post.

44 In his affidavit sworn on 14 December 2021, Mr Jacobs, the sole director, secretary and shareholder of Lighthouse Capital, deposes that on or about 13 July 2021, he instructed Mr Podaridis to prepare and serve the demand. On 26 July 2021, Mr Podaridis attended Mr Jacobs' address to witness him swearing the affidavit that accompanied the demand and for him to sign the demand. Mr Jacobs says Mr Podaridis informed him that he had posted the demand and its accompanying affidavit to the plaintiff on 26 July 2021. Mr Jacobs confirms he received the email from Mr Podaridis on 27 July 2021, recording that the demand and accompanying affidavit had been sent by ordinary prepaid post to the plaintiff's registered office and attaching Mr Podaridis' photograph of the demand, together with a copy of the envelope addressed to Mu Meeting Point. In her affidavit affirmed 14 December 2021, Ms Steegstra also describes the circumstances surrounding service of the demand on the basis of her information and belief. She states she was similarly provided with copies of the documents and the photograph of the envelope in which the documents were served.

45 In his second affidavit sworn 11 February 2022, Mr Jacobs deposes that he believed the demand was delivered to Mu Meeting Point on the basis that the return address listed on the envelope enclosing the demand is his residential address and he has not received any return mail.

46 In summary, Mr Podaridis has given direct evidence of having posted the documents on 26 July 2021 and he informed Mr Jacobs of this shortly after doing so. The photograph taken by Mr Podaridis clearly depicts an envelope with the correct name and registered address of the plaintiff. It also depicts part of the demand, the majority of which is covered by the envelope. Additionally, the envelope had a 'postage paid' stamp printed on or affixed to its top right corner. Mr Podaridis was not challenged under cross-examination in relation to any of these matters.

47 On the totality of its evidence, I am satisfied that Lighthouse Capital has put forward sufficient material, either by way of direct evidence or implication, to raise the presumption of service of the statutory demand under s 29(1) of the Acts Interpretation Act. Subject to evidence to the contrary, in accordance with s 160(1) of the Evidence Act, the demand is therefore taken to have been received at Mu Meeting Point's registered office on 4 August 2021.

48 The real issue then is whether Mu Meeting Point can displace the statutory presumption of service having regard to the principles set out in the authorities.

49 In his affidavit of 29 November 2021, Mr Wang explains that the registered office of Mu Meeting Point at the Wheelers Hill address is also his residential address. He deposes to living there with his wife since August 2014. Mr Wang says the demand was never delivered to his house until 8 November 2021, when it was received as part of the material accompanying the winding up proceeding. He notes the winding up proceeding documents had also been sent to the plaintiff's former solicitors on 3 November 2021 and that he had arranged for the documents to be forwarded to the company's current solicitors. Mr Wang confirms that at the time he received the 4 October 2021 email, he had neither seen nor received the demand.

50 Mr Wang goes on to explain that during the second half of 2021, neither he nor his wife travelled, but he would occasionally visit the family farm in Morwell, though never staying for longer than one night at a time. He states his wife never accompanied him on these trips. Instead, she stayed at the Wheelers Hill address. He explains that his wife has not spent a night away from the residential address since 26 July 2021 (i.e. when the demand was allegedly mailed).

51 According to Mr Wang, the mailbox at their Wheelers Hill address is set into the fence of the property, near the front gate, and is only a few steps from the front door. Either he or his wife checks the mailbox daily and brings in any mail to the kitchen. On the days when he is at Morwell, his wife checks the mailbox and places any letters not addressed to her on the kitchen table for him to open upon his return.

52 Mr Wang deposes that had the demand been delivered at any time in late July or early August 2021, or any other time, he would have collected it from the mailbox or his wife would have collected it from the mailbox and placed it on the kitchen table, and he would have promptly given it to his lawyer to obtain legal advice. That is in fact what he did when he received the documents associated with the winding up proceeding from Mu Meeting Point's former lawyers.

53 Mr Wang's wife, Mui Chanh Chuong, also swore an affidavit in the proceeding dated 13 December 2021. She confirms that the registered office of Mu Meeting Point at the Wheelers Hill address is also her residential address and that she has lived there with her husband since August 2014. Ms Chuong describes the mailbox as being built into the front fence of the property and located only a short distance from the front door. She explains that the mailbox can only be opened from the back and there is no ability for it to be opened from the side facing the street.

54 Ms Chuong states that during July and August 2021 and for the months following, she had remained at home and although she had gone out at times during the day, she never remained away from the home overnight. While her husband travelled to their property in Morwell during this time, he never stayed away longer than one night at a time.

55 On the days that her husband was home, either she or her husband would check the mailbox each day. She checks it at least once a day, sometimes twice because she likes to look through the catalogues that are delivered. When her husband is away, she checks the mailbox and places any envelopes that are addressed to her husband or his business on the kitchen table for him to open on his return. If her husband is home at the time, she gives any such mail to him. Ms Chuong deposes that although there is typically mail most days of the week, the volume of mail addressed to her husband or his business is not high.

56 Ms Chuong recalls that her husband travelled to Morwell a couple of times in August 2021, leaving on a Thursday and returning the following day. During those times, she does not recall collecting any letters specifically addressed to her husband's business. She reiterates that anything addressed to her husband or his business and removed from the mailbox by her would have been placed on the kitchen table for him to open upon his return. Since Mr Wang's trips to Morwell during this time were short, any mail would only have remained on the table for no more than a day.

57 The plaintiff's evidence paints a reasonably detailed picture of the system for the receipt, collection, and sorting of mail received at the Wheelers Hill address. The evidence suggests the mailbox at the registered office is relatively secure and not accessible from the street.[18] I am satisfied that there is in place at the plaintiff's registered office 'a system for the safe and secure reception of documents delivered by post',[19] even if it is a rudimentary one.

58 Additionally, both Mr Wang and Ms Chuong have given clear evidence of their movements during the relevant period when the demand was allegedly served at the Wheelers Hill address. Ms Chuong says she does not recall collecting any letters from the mailbox specifically addressed to her husband's business during the relevant period and Mr Wang emphatically denies the delivery of the demand at the Wheelers Hill address at any time until it was received together with the winding up proceeding documents on 8 November 2021. Neither witness was cross-examined on their evidence.

59 I regard the evidence of Mr Wang and Ms Chuong to be compelling and inherently plausible. Their methodical approach to retrieving mail indicates the demand would likely have come to the attention of Mr Wang and Mu Meeting Point had it been delivered on or around 4 August 2021. Given the cogency of the plaintiff's evidence, the fact that the envelope enclosing the demand was not returned to Mr Jacobs' residential address is not determinative of the issue.

60 In my view, the most likely inference permitted by the evidence is that the demand was not delivered to the registered office of Mu Meeting Point on or around 4 August 2021. On the balance of probabilities, the plaintiff's evidence has successfully negated the presumption of service arising from s 29(1) of the Acts Interpretation Act.

61 Regardless of whether service was effected on Mu Meeting Point by post, the defendant submits that the Court can nevertheless be satisfied the demand was brought to the attention of Mu Meeting Point through its director Mr Wang, either by:

(a) 4 October 2021, when the defendant's solicitors sent the 4 October 2021 email to Mr Wang; or

(b) 13 October 2021, at the latest,[20] when the defendant's solicitors sent Henley Legal the 13 October 2021 email, attaching a copy of the statutory demand and supporting affidavit.

62 The defendant further submits that because of the effective informal service of the demand on either of those days, the plaintiff's application is filed outside of the requisite 21 day period pursuant to s 459G of the Corporations Act and is therefore incompetent.[21]

63 In support of this contention, the defendant relies on the recent decisions of Halley J in Kookaburra Educational Resources Pty Ltd v MacGear Ltd Partnership trading as MacGear Australia, Re Kookaburra Educational Resources Pty Ltd ('Kookaburra')[22] and Gardiner AsJ in Re Caason Investments Pty Ltd ('Re Caason').[23]

64 In Kookaburra, a creditor sent a statutory demand to the debtor company's registered office by express and registered post, but a mail redirection had diverted the deliveries to a post office box maintained by the company's accountant. The creditor's solicitor emailed the accountant to clarify receipt of the demand. Justice Halley found that email communications between the creditor's solicitor and debtor's accountant established that the demand had been expressly brought to the attention of at least one of the directors of the debtor company by reason of the accountant first telephoning and then emailing the director with the demand.[24] His Honour considered that the director, as an officer of the company, 'was at least implicitly authorised by the company to deal directly and responsively with the [d]emand'.[25] This was held to constitute effective informal service of the demand, notwithstanding any failure of the creditor to serve the demand on the registered office of the company.[26]

65 In Re Caason, the defendant creditor contended that the plaintiff's s 459G application to set aside a statutory demand had been filed out of time and the Court therefore lacked jurisdiction to determine it. The defendant calculated the date by which the plaintiff was required to file its application by reference to the alleged informal effective service of the demand by email from the plaintiff's solicitor to the defendant's in-house lawyer. Associate Justice Gardiner held:

Mr Flory was an appropriate person to give notice of the Demand to when regard is had to his position as Group General Counsel at Caason, this being borne out of his involvement in hearings in the Federal Court of Australia before Murphy J and receipt of the resulting certificate of costs by way of service to his Caason email address. [27]

This was not a circumstance where Mr Flory was solicitor at an external law firm who had no previous involvement on Caason's behalf in the costs issue. He is described in his email signature as an internal senior employee of Caason as its legal counsel and had been closely involved in the matter prior to service of the demand.

67 The matter of Kornucopia (No 1) also deals with the question of effective informal service. Justice Sifris considered that in the event he was wrong in holding there had been service of a demand by post upon a debtor company, there had nevertheless been effective informal service of the demand by email to the directors of the company.[28] The relevant email in that case noted that the documents had been posted to the debtor company, but was in fact returned by Australia Post to the plaintiff's solicitors. The writer of the email 'strongly recommended' the directors read the demand and accompanying affidavit, which were themselves attached to the email.[29]

68 In my view, Lighthouse Capital has not established effective informal service for the following reasons.

69 First, neither the 4 October 2021 email nor the 13 October 2021 email was intended to operate as a means of effective informal service of the demand. The 4 October 2021 email sent to Mr Wang does not attach the statutory demand or its accompanying affidavit. It simply asserts that service of the demand occurred by prepaid post to Mu Meeting Point's registered office on 27 July 2021, that the 21 day period for complying with or setting aside the demand had passed, and that a presumption of insolvency had thereby arisen. Similarly, the 13 October 2021 email sent by Ms Steegstra to Mr Wong of Henley Legal does no more than affirm the defendant's position concerning service of the demand by reiterating there had been service by post on 27 July 2021. It refers to the presumption in s 160 of the Evidence Act and asserts that the demand would have been received at the plaintiff's registered address on the seventh working day after postage, namely 5 August 2021. Again, the 13 October 2021 email unequivocally states that the demand had already expired unsatisfied.

70 The purposes of the 4 October 2021 email and 13 October 2021 email are patently clear: they serve to state the defendant's position that the demand had been served on an earlier date and foreclose any opportunity by the plaintiff to challenge the demand under s 459G because the 21 day statutory period had passed. Both of these emails are therefore materially different to the email in Kornucopia (No 1), which did not insist that service by post had already occurred or that the statutory demand had expired. I do not consider that it is now open to the defendant to re-fashion the 4 October 2021 email or the 13 October 2021 email as evidencing effective informal service of the demand. The effective informal service rule does not operate as a saving mechanism to allow a creditor a second chance at service where it has already formally contended effective prior service by conventional means.

71 Secondly, I do not accept the defendant's submission that either by the 4 October 2021 email or 13 October 2021 email, the demand and supporting affidavit were brought to the attention of a responsible officer of the company who was expressly or implicitly authorised by the company to deal with and respond to the demand. As I have noted, the 4 October 2021 email does not even attach the relevant documents.

72 Thirdly, I accept the plaintiff's submission that the relevant facts surrounding the 13 October 2021 email can be readily distinguished from those in Re Caason. In Re Caason, Gardiner AsJ attached significance to the fact that the addressee of the relevant email and enclosed demand was an appropriate person to whom the demand may be given by virtue of his position as 'Group General Counsel'. His Honour distinguished the situation from that of a solicitor at an external law firm who has no previous involvement on the company's behalf in respect of the relevant matter. Unlike the addressee of the email in Re Caason, who was embedded within the plaintiff company and had assumed governance responsibilities as Group General Counsel, Mr Wong of Henley Legal cannot be regarded as an officer of Mu Meeting Point. The roles of Mr Wong and his firm were limited, at that time, to engaging in correspondence about the non-service of the demand and requesting details of the asserted debt. There is no evidence Henley Legal had previous dealings with Lighthouse Capital and its lawyers in relation to the debt claimed in the demand. As I have already noted, it is the plaintiff's evidence that the 5 June 2021 invoice, which preceded the demand, was not received by Henley Legal. The evidence in fact suggests that the invoice was misdirected by the defendant's lawyers to the wrong email address (it was sent to business.b@henleylegal.com' instead of 'Business_B@henleylegal.com'). Further, the prior involvement of Henley Legal in the sale of business transaction itself more than three years prior does not mean they were appropriate persons to whom notice of the demand should have been given. In any event, Mu Meeting Point retained new lawyers (Danaher Moulton) in November 2021 to deal with the statutory demand and the resulting winding up proceeding. Moreover, unlike in Kookaburra, there is no evidence to suggest the 13 October 2021 email and its attachments were expressly brought to the attention of at least one of the directors of Mu Meeting Point.[30]

73 For the above reasons, there was no effective informal service of the demand on either 4 October 2021 or 13 October 2021.

74 In the amended originating process, Mu Meeting Point applies for the demand to be set aside on the basis that, amongst other things, it was not served upon the plaintiff until 8 November 2021. This is the date Mr Wang deposes to receiving an envelope in the mail at the Wheelers Hill address, which contained the originating process and related documents filed by Lighthouse Capital in the winding up proceeding.

75 This aspect of the application may be dealt with briefly. It must firstly be said that an allegation of non-service of a statutory demand is not a basis to set the demand aside under s 459G of the Corporations Act. The language of s 459G only enables '[a] company to apply to the Court for an order setting aside a statutory demand which has been served on the company'.[31]

76 I also accept the defendant's submission that service of the winding up proceeding documents (which included the statutory demand) in November 2021 cannot constitute service of the demand itself. Service of one legal process cannot, in any cogent sense, be equated with the service of another. That is especially so where, as in this case, the winding up proceeding relies upon the purported service of the statutory demand as an essential element of the application.

77 In light of my findings on the question of service of the demand, I am satisfied that a declaration should be made under s 36 of the Supreme Court Act 1986 (Vic) and r 23.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) that Mu Meeting Point was not duly served the statutory demand on 4 August 2021, or at all.

78 In arriving at that position, I do not accept Lighthouse Capital's contentions that:

(a) there is no jurisdictional basis to make such a declaration because it is made outside the 21 day window to set aside the statutory demand;[32] or

(b) it is inappropriate for such a declaration to be sought in the present application. Rather, any such declaration should be sought in the winding up proceeding (under s 459S of the Corporations Act or otherwise) to minimise costs and delay.

79 Instead of raising the argument of non-service of a statutory demand in opposition to any winding up application, or requesting that issue be dealt with as a separate question in a winding up proceeding,[33] it is possible for a party to bring a separate application seeking a declaration that the purported service of the demand is ineffective.[34] Such a declaration may be sought under the inherent jurisdiction of the Court and outside the legislative machinery contained in Pt 5.4 of the Corporations Act.

80 In Emhill Pty Ltd v Bonsoc Pty Ltd ('Emhill'),[35] Mandie J observed:

Section 459G(1) of the Act provides that a company may apply to the Court for an order setting aside such a statutory demand "served" on the company. I consider that the plaintiff cannot seek an order pursuant to s.459G(1) of the Act setting aside a statutory demand where it wishes to say that it has not been served with the demand. The appropriate mode of dealing with that situation would have been either to apply for a declaration that the purported service was ineffective or to rely upon the point in opposition to any winding up application based upon the statutory demand. Generally the declaratory procedure would be more convenient and sensible.[36]

81 Justice Mandie ordered that the proceeding be treated as an application for a declaration that the plaintiff was not duly served with the statutory demand on a particular date, or at all, but ultimately held that the plaintiff had in fact been duly served with the statutory demand on the date nominated by the defendant.[37]

82 In Re Huizhong Investment Group Pty Ltd ('Re Huizhong'),[38] the plaintiff sought declaratory and injunctive relief in respect of a statutory demand served on it by a defendant creditor in circumstances where a related winding up proceeding had already been commenced by the creditor in reliance upon the demand. In making a declaration as to non-service of the statutory demand, Black J noted:

that a failure to serve a creditor's statutory demand may, inter alia, be raised in an application for a declaration that the purported service of that demand is ineffective, as an alternative to relying upon that point in opposition to any winding up application based upon that demand, or dealing with the question of a failure to serve the statutory demand as a separate question in the winding up proceedings[.][39]

83 Justice Black concluded that a declaration should be made that the creditor did not serve the demand on the plaintiff on the nominated date, or at all.[40] His Honour was satisfied that such a declaration would afford the plaintiff certainty as to that matter and was supported by the absence of evidence of service of the demand, together with positive evidence that the demand was not served at the offices of the plaintiff's accountants on the nominated date.[41]

84 The above authorities confirm the Court has jurisdiction to make the declaration sought by the plaintiff. Further, there is utility in doing so because it will resolve a question of legal controversy between the parties.[42] Because the declaration is sought outside the regime in Pt 5.4 of the Corporations Act, the defendant's argument that the 21 day statutory period for making an application to set aside the demand under s 459G of the Corporations Act has passed is beside the point. Having regard to my finding of non-service of the demand, the 21 day period never commenced.

85 Additionally, I am not persuaded that it is inappropriate for such a declaration to be sought in the present application, rather than within the winding up proceeding (under s 459S of the Corporations Act or otherwise), because of attendant costs and delay. It was open to Mu Meeting Point to seek the declaration in a separate proceeding, even if it was unconventional to do so. Given the winding up proceeding has essentially been held in abeyance to allow this matter to proceed, the concern about costs and delay may be more theoretical than real. At any rate, there is no evidence before the Court on the question of wasted costs and delay.

86 There are a number of consequences that flow from my finding that the statutory demand was not served on 4 August 2021, or at all.

87 First, it inevitably follows that Lighthouse Capital is unable to rely upon the statutory presumption of insolvency found in s 459C(2)(a) of the Corporations Act for the purpose of the winding up proceeding.

88 Secondly, it is also clear that the Court does not have jurisdiction to determine the proceeding under s 459G of the Corporations Act because the provision only enables a company to apply to the Court for an order setting aside a statutory demand that has been served on a company.[43] For that reason, the Court cannot entertain the grounds advanced by the plaintiff that the statutory demand should be set aside because of a genuine dispute (under s 459H(1)(a) of the Corporations Act) or because of any defect that would cause substantial injustice (under s 459J(1)(a)).[44]

89 Alternatively, in the event I am wrong about the non-service of the demand, the Court would still lack jurisdiction to determine the proceeding to the extent it is made under s 459G because the application would not, on any view,[45] have been initiated until after the expiration of the 21 day statutory period.[46]

90 The final issue for determination is whether the demand and accompanying affidavit and any reliance upon those documents in any winding up proceeding amounts to an abuse of process. As previously explained, the plaintiff seeks an additional 'freestanding' declaration to this effect. In considering the availability of that relief, it is necessary to review the relevant authorities in some detail.

91 Since the introduction of Pt 5.4 of the Corporations Act, there has been some uncertainty about how the concept of abuse of process sits within the statutory regime and the extent to which Pt 5.4 provides an 'exclusive code' for resolving proceedings brought following the issue of a statutory demand.[47] However, following the High Court's decision in David Grant & Co Pty Ltd v Westpac Banking Corp ('David Grant'),[48] a case in which an application to set aside a statutory demand was filed and served out of time, it has generally been accepted that the court retains a 'residual jurisdiction to restrain reliance on the statutory demand procedure on the ground of an abuse of process'.[49] In David Grant, Gummow J (with Brennan CJ, Dawson, Gaudron and McHugh JJ agreeing)[50] observed:

It also may transpire that a winding up application in respect of a solvent company is threatened or made for an improper purpose which amounts to an abuse of process in the technical sense of that term, as explained in Williams v Spautz [(1992) [1992] HCA 34; 174 CLR 509, 518-22, 532-7]. However, in an appropriate case, injunctive relief may then be available to the company in a court of general equity jurisdiction [Bryanston Finance v de Vries (No 2) [1976] Ch 63 at 78, 79-80; L & D Audio Acoustics Pty Ltd v Pioneer Electronic Australia Pty Ltd (1982) 7 ACLR 180 at 183; 1 ACLC 536 at 538; Pacific Communication Rentals Pty Ltd v Walker (1993) 12 ACSR 287 at 289; 12 ACLC 5 at 6-7; Re J & E Holdings Pty Ltd (1995) 36 NSWLR 541 at 547-548].[51]

92 In the leading case of Williams v Spautz,[52] Mason CJ, Dawson, Toohey and McHugh JJ explained that an abuse of process will be evident where:

the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers.[53]

93 For the purpose of a proceeding to be considered improper, it is not necessary to show that the improper purpose is the sole purpose of the moving party, but only that it is the predominant purpose.[54] The party alleging an abuse of process bears the onus of demonstrating it[55] and that onus has been described as 'a heavy one'.[56]

94 The case of Hardel Property Holdings Pty Ltd v Allmark Property Management Pty Ltd[57] involved an application by way of an injunction to restrain a creditor from instituting proceedings to wind up the debtor company following a failure to comply with a statutory demand. The debtor company had previously applied to set aside the demand under s 459G of the Corporations Act on the basis it was not served within time. In the injunction proceeding, the debtor company argued that the creditor had instituted proceedings in the knowledge that no debt was owed to it. Justice Finn noted that to the extent such an argument merely called into question the existence of the debt, it alone would not establish a prima facie case of abuse of process.[58] Further, his Honour indicated that an abuse of process argument could not be used as a collateral method of disputing the existence of a debt.[59] In granting the injunction sought, Finn J ultimately held that:

A use of the statutory demand procedures in respect of a debt known to be spurious would give rise to an abuse of process if the statutory demand in turn was used to found a winding up application ...[60]

95 In Createc Pty Ltd v Design Signs Pty Ltd,[61] the Court of Appeal of Western Australia held that the purpose of the statutory demand process contemplated by Pt 5.4 of the Corporations Act:

is to provide a means whereby the insolvency of a company may be established for the purposes of an application to wind up that company. Its purpose is not to provide a means whereby those claiming a genuinely disputed debt can avoid the obligation of establishing their entitlement to that debt in a court of appropriate jurisdiction by placing commercial pressure on the party resisting payment.[62]

96 Adopting the criterion from Williams v Spautz, Martin CJ (with Owen and Miller JJA agreeing) articulated the test for abuse of process in the context of a statutory demand as follows:

[T]here will be an abuse of process if the purpose of the party issuing the statutory demand is not the purpose of pursuing the statutory demand to wind up the company on the ground of insolvency, but rather to use the process as a means of obtaining advantage for which the process is not designed or to obtain some collateral advantage beyond what the law offers - such as the application of pressure to compel payment of the disputed debt.[63]

97 In addition to finding there was a genuine dispute as to the existence of the underlying debt and an offsetting claim, Martin CJ held that the appeal should be dismissed because the 'issue of the statutory demand [was], and any winding-up application proposed to be brought pursuant to the demand would be, an abuse of process'.[64] His Honour held there was a clear and compelling inference that, notwithstanding the creditor had knowledge of the legal issues between the parties requiring resolution and instead of bringing proceedings in a court of competent jurisdiction for recovery of the debt it claimed, the creditor 'issued a statutory demand for the purpose of attempting to avoid that legal dispute, by putting pressure upon [the debtor company] to pay the debt'.[65]

98 In Re Huizhong,[66] in addition to making a declaration that the defendant had not duly served a statutory demand upon the plaintiff, Black J was also prepared to declare that the relevant statutory demand, its accompanying affidavit, and any reliance by the defendant on those documents in any proceeding brought by the defendant to wind up the plaintiff would be an abuse of process.[67] One of the factors suggestive of an abuse of process was the reliance by the creditor upon a statutory demand in circumstances where had the demand been served, it would have been plainly apparent that it would be genuinely disputed.[68] The plaintiff had also initially sought injunctive relief restraining any application to wind up the plaintiff, including in respect of an existing winding up application, and the issuing of any future statutory demand concerning the alleged debt. That injunctive relief was not ultimately granted because the creditor proffered an undertaking in narrower terms.[69]

99 The matter of Owen-Pearse v Lander Land Company Pty Ltd[70] concerned a review of a decision of a registrar to refuse a winding up application brought under s 459P of the Corporations Act on the basis that the proceeding was an abuse of process. The debtor company had not applied to set aside the demand under s 459G of the Corporations Act, but Banks-Smith J held that the failure to do so should be viewed in the context of four preceding statutory demands served upon the debtor and the 'shifting' identity of the nominated creditor, the description of the underlying debt and the quantum claimed.[71] In dismissing the application to extend time for the review application, her Honour considered that:

a court on a hearing de novo would find that the use of the statutory demand procedure and reliance on the [d]emand to found a winding up application constitutes an abuse of process in that the process was not instituted to seek to recover a genuine debt or to pursue an orderly liquidation of the company, but to coerce by unreasonable intimidation [the debtor company and its directors] into making payment to [the creditor].[72]

Relevant to that conclusion were a number of circumstances, including an absence of evidence to support the underlying debt, a failure by the creditor to rationally explain the basis for the debt claimed, and the use of a threatening tone in correspondence.[73]

100 The concept of abuse of process has also been delineated in a number of cases involving applications to set aside a statutory demand under s 459J(1)(b) of the Corporations Act on the basis there is 'some other reason' to do so. In Accordent Pty Ltd v RMBL Investments Ltd ('Accordent'), Doyle CJ, (with whom Bleby and Kelly JJ agreed),[74] held that:

[O]n an application to set aside a statutory demand it may be that the concept of an abuse of process is relevant only by way of analogy. A creditor who serves a statutory demand does not invoke the process of a court**.** A debtor who applies to have a statutory demand set aside does invoke the process and powers of a court, but whether in that setting it is appropriate to speak of an abuse of process by the creditor is another thing. ... Care is also called for in using the notion of 'pressure' to recover a debt, because there is no doubt that the service of a statutory demand will put pressure on a debtor company.

Of course, on an application by the creditor to wind up the debtor, the concept of abuse of process is relevant, but once again it is necessary for the court to recognise the manner in which the statutory regime relating to statutory demands operates.

Be that as it may, I accept that the concept of impropriety of purpose may be relevant to the application of s 459J(1)(b).[75]

101 Further, and relatedly, a statutory demand is not a proceeding, either curial or non-curial in nature.[76] Instead, its function is to provide a means of facilitating proof of a company's inability to pay its debts by creating a rebuttable statutory presumption of insolvency in the event the company fails to comply with the demand within the statutory period.[77]

102 In Reschke Pty Ltd v DiGiorgio Family Wines Pty Ltd,[78] Doyle J adopted the comments of Doyle CJ in Accordent, stating that a statutory demand does not in itself entail invoking a court process and 'probably cannot strictly constitute an abuse of process ... although analogous considerations apply, and inform the scope of s 459J(1)(b)'.[79] Justice Doyle confirmed that 'impropriety may well arise if the creditor uses the statutory demand facility knowing that the debt is the subject of a genuine dispute, or knowing that the company is solvent'.[80] His Honour further explained that:

not every case involving a genuine dispute will involve an abuse of process sufficient to constitute "some other reason" under s 459J(1)(b) ... [and] that the existence of such a dispute [must be] so clear or obvious that it can be inferred that the creditor must have known there was a genuine dispute, and hence invoked the statutory demand facility for the (improper) purpose of applying pressing [sic] to achieve payment of a debt that ought to have been pursued through ordinary court proceedings ...[81]

103 In Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd ('ASIC v Lanepoint'),[82] the High Court (Gummow, Heydon, Crennan, Kiefel and Bell JJ) discussed the historical operation of what may be termed the 'disputed debt principle' in the context of a winding up application brought by the regulator. Their Honours said:

Where a creditor sought to prove a company's insolvency by relying upon a debt owed by it, but without resort to the procedure of statutory demand, the court, as a general principle, would not order winding up where a debt was bona fide disputed upon some substantial ground ... [and] the principal reason for it was that the court would not permit an application for winding up to be used for the improper purpose of compelling a solvent company to pay a disputed debt. It followed that it had no application in the case of an insolvent company.[83]

There is a policy evident in the current statutory scheme that disputes concerning a statutory demand should, where possible, be determined prior to the determination of the winding up application and therefore separately from that application.

...

But such a policy says nothing about what is to occur if there remains an issue about a debt at the time the application for an order for winding up in insolvency is heard. Sections 459A and 467(1)(c) make plain that the court retains a discretion to stay proceedings on an application to wind up a company in insolvency.

...

The court may consider that although such a dispute may affect a conclusion as to solvency, the dispute may be more conveniently resolved in other proceedings which have been, or will be, brought for that purpose. Much may depend upon the nature of the dispute, and the extent to which it is removed from the central question of solvency ... [and] affected by the statutory presumption. The starting point, where the presumption operates, is that the onus is on the company to rebut the presumption, by proof of its solvency.[84]

105 The High Court further stated that unless the demand is 'rendered ineffective, by an order setting it aside, the [debtor] company is required to prove to the contrary of the presumption'.[85]

106 In Re Kornucopia Pty Ltd (No 4) ('Kornucopia (No 4)'),[86] Sifris J (as his Honour then was) also considered the question of abuse of process in a winding up context. His Honour adopted the High Court's reasoning in ASIC v Lanepoint and stated that:

Mere assertions that the plaintiff lacks locus standi as a creditor, or that the debt is disputed and that this was the reason why the company did not satisfy the statutory demand, will not suffice. A debtor may argue that a debt is bona fide disputed on substantial grounds, and while the Court retains discretion as to whether it should make orders under ss 459A or 461, it will not stay or dismiss the application in the absence of evidence of solvency.[87]

107 His Honour observed there have been a number of decisions of this Court that have analysed ASIC v Lanepoint and concluded there is unlikely any scope for the continued application of the disputed debt principle[88] in light of the regime established by Pt 5.4 of the Corporations Act.[89] However, Sifris J also said that:

The High Court did, however, appear to leave open the possibility that in limited or exceptional circumstances and cases, the Court could, in its discretion, stay or dismiss a winding up application which relies upon a debt which is disputed.[90]

A company cannot circumvent the provisions of Part 5.4 (and the preconditions for leave under s 459S) by instead raising the dispute within the sphere of abuse of process. In exceptional cases, it may be necessary to determine the dispute outside of the s 459S framework (see e.g. Re Huizhong Investment Group [2018] NSWSC 390). There must be some cogent [reason] [sic] why the s 459S procedure was not followed.[91]

The short point is that where the company is presumed to be insolvent, and there is no evidence of solvency, the existence of a genuine dispute is largely irrelevant to the Court's discretion. The company ought to have raised the dispute prior to the final hearing of the winding up application, by an application made under either ss 459G or 459S, as contemplated by the regime imposed by Part 5.4. That is the case regardless of how the company frames the abuse of process it relies upon. The common law doctrine of abuse of process cannot be employed in a manner that would undermine the intention of Parliament that disputes as to the existence or enforceability of a debt be dealt with under the provisions of the Act.[92]

110 Whilst it seems doubtful that an abuse of process argument that relies on the disputed debt principle can be sustained following the enactment of the legislative scheme in Pt 5.4 of the Corporations Act, a debtor company may, in the appropriate circumstances, still allege an abuse of process where a creditor institutes a proceeding for an improper purpose in the 'technical sense' as articulated by the High Court in Williams v Spautz.[93]

111 In Redglove Holdings Pty Ltd v GNE & Associates Pty Ltd ('Redglove Holdings'),[94] a case in which the applicant sought an injunction to restrain the commencement of a winding up proceeding on the basis of an abuse of process, Palmer J said that:

Where [a] debtor company has failed to set aside a statutory demand, it would have to establish by very cogent evidence that, despite the existence of a debt which can no longer be disputed, the creditor's purpose in seeking the winding up is not to collect payment of the debt or ... to have the company wound up, but is, rather, to achieve some entirely collateral end.[95]

112 It is not an abuse of process for a creditor to merely pursue a right for which the legislation expressly provides.[96] Even if a purpose of a creditor in issuing a statutory demand is to apply some pressure upon the debtor to achieve recovery of the relevant debt, it does not necessarily follow that the creditor has made an improper use of the statutory demand procedure.[97] It is only in rare circumstances that it will be an abuse of process for a creditor, who has the benefit of the presumption of insolvency, to proceed with a winding up application.[98]

113 The parties have filed extensive material on the question of abuse of process in this case.

114 The plaintiff contends the demand was issued to it in circumstances where the defendant knew, or ought reasonably have known, that the debt claimed in the demand was not due. It is further alleged that the demand was instead issued to apply pressure to compel payment of a debt the defendant knew it was not entitled to, or at least knew would be disputed. In support of these contentions, the plaintiff relies on the following matters:

(a) clause 5 of sch 7 of the sale of business contract provides that the bonus payment of $425,000 is 'payable within 28 days after the landlord [Monash University] has signed a lease or has signed a variation of a lease for a lease from the date of settlement to 5 June 2021 and a further term of no less than 5 years from 6 June 2021 under the same terms and conditions as the current lease ...' (emphasis added);

(b) in his affidavit of 29 November 2022, Mr Wang gave unchallenged evidence that the 2021 lease he ultimately negotiated with Monash University as landlord was only for a term of three years and was not on the same terms as the original lease because it was for a smaller area than the original lease. Moreover, the 2021 lease does not include any option for renewal.

(c) it appears Mr Jacobs sent the 5 June 2021 invoice the day prior to the commencement of the 2021 lease, without reviewing the document at all. On a review of the 2021 lease, it would have been readily apparent that it was not a lease of 'a further term of no less than 5 years from 6 June 2021 under the same terms and conditions as the original lease' to trigger the entitlement to the bonus payment under cl 5 of sch 7 to the sale of business contract;

(d) notwithstanding the above circumstances, Mr Jacobs caused the defendant to issue the statutory demand and swore an affidavit verifying the demand;

(e) Mr Jacobs' description in the accompanying affidavit that the debt arises from the sale of business contract, pursuant to 'Special Conditions Schedule 7, clause 5' and upon 'receipt of an option period or a new lease or extension to lease' is apt to mislead as it does not accurately record the operative part of the relevant clause;

(f) Mr Jacobs does not depose in the accompanying affidavit that the triggering part of cl 5 of sch 7 has been satisfied. He does not depose to having reviewed the terms of any relevant lease to determine whether the lease is of the kind that would trigger an entitlement to the bonus payment under the sale of business contract;

(g) at the time of execution of the sale of business contract, Mr Jacobs knew that neither he nor the defendant was a party to the contract and was therefore not entitled to demand any payment pursuant to it or assign the right to payment to any other party. Further, Mr Jacobs appears to have conflated the right to nominate a bank account for the remittal of the bonus payment under cl 5A(B) of sch 7 of the sale of business contract with an entitlement to payment or the right to assign that entitlement. As Mr Jacobs never had the right to be paid the bonus payment (or any payments under the sale of business contract), he was incapable of assigning it to anyone else;

(h) even if the bonus payment under cl 5 of sch 7 of the sale of business contract was payable, it would not be payable to the defendant. On that basis, the defendant lacks standing as a creditor to issue the statutory demand;

(i) Mr Jacobs' assertion in the affidavit accompanying the statutory demand that he had 'inspected the business records of [Lighthouse Capital] in relation to [Mu Meeting Point's] account with [Lighthouse Capital]' is insufficient verification of the debt claimed and that debt could only be owing to a different entity, namely Lighthouse Monash. An Australian Securities and Investments Commission company extract dated 24 November 2021 discloses that Lighthouse Monash changed its name to 'First Choice Carparking Pty Ltd' on or around 23 January 2020 and was then deregistered on 21 September 2020;

(j) the 4 October 2021 email sent by the defendant's solicitors to Mr Wang was threatening in its tone (presumably insofar as it refers to 'the spectre of insolvency [being] damaging' to Mu Meeting Point and the additional legal costs which will be incurred in a winding up proceeding);

(k) despite repeated requests, the legal basis of the debt claimed in the statutory demand has not been articulated by the defendant to date, including in the present application. The debt claimed is wholly spurious; and

(l) Mu Meeting Point was not served with the statutory demand.

115 The plaintiff submits that in the above circumstances, the demand and its supporting affidavit were prepared as a means of bringing improper pressure to bear upon Mu Meeting Point (or Mr Wang personally) to pay a substantial sum that Lighthouse Capital knew was not due and payable, or knew would be disputed. Alternatively, it is submitted that Mr Jacobs issued the demand without having personal knowledge of the relevant facts (i.e. the terms of the 2021 lease). It is contended that, in either case, it would be an abuse of process for Lighthouse Capital to bring any winding up application based on the failure to comply with the statutory demand because such an application would be brought on a debt that is not due to it.

116 The defendant makes the following submissions concerning Mu Meeting Point's allegation of abuse of process:

(a) such allegations are typically raised under s 459J(1)(b) of the Corporations Act, in an application to set aside a statutory demand, but that provision has not been referred to by the plaintiff. Instead, the bases of the plaintiff's abuse of process allegations are 'opaque';

(b) because the plaintiff failed to comply with the demand within the statutory period, the legislative presumption of insolvency under s 459C(2) of the Corporations Act arises and the plaintiff may therefore only raise a dispute about the demand by leave under s 459S of the Corporations Act, in circumstances where the relevant ground is 'material to proving that the company is solvent';

(c) the plaintiff is not entitled to circumnavigate the statutory regime by alleging abuse of process, ignoring the presumption of insolvency, and bringing an application to set aside the demand and/or seek declarations in proceedings parallel to the winding up proceeding. Nor is it open to the plaintiff to seek to avoid the presumption of insolvency by bringing a separate proceeding, in circumstances where a proceeding under section 459P of the Corporations Act is already on foot.

117 In responding to the plaintiff's contentions that there is no debt owing to Lighthouse Capital under the sale of business contract, the defendant relies on the affidavit of Mr Jacobs sworn 14 December 2021, which sets out the substance of a purported telephone conversation with Mr Wang on 18 May 2021, during which Mr Wang allegedly agreed to pay the bonus payment under the sale of business contract but requested an extension of time to make payment. Mr Jacobs also sets out numerous attempts at communicating with the plaintiff to arrange for payment of the $425,000.00 debt and suggests the plaintiff failed to respond to various messages on a voicemail message bank for Mu Meeting Point's landline. He goes on to say that after service of the winding up proceeding, he spoke to Mr Wang on 18 November 2021 and Mr Wang again agreed the invoice was payable.

118 In his affidavit of 11 February 2022, Mr Jacobs seeks to establish Lighthouse Capital's entitlement to the bonus payment and to issue the statutory demand. He variously states that:

(a) Lighthouse Holding Trust is the 'entity entitled to the debt' the subject of the statutory demand;

(b) '[o]n or about August 2018', Lighthouse Monash was replaced as corporate trustee for the Lighthouse Holding Trust and 'all rights and obligations as trustee were novated to [Lighthouse Capital as] the new corporate trustee' and Lighthouse Monash was then sold;

(c) all debts owing to Lighthouse Monash were 'novated' to Lighthouse Capital; and

(d) Lighthouse Monash had 'lawfully assigned the debt to Mr Jacobs and or his assigns, namely, [Lighthouse Capital]'.

119 In his affidavit sworn 17 March 2022, Mr Jacobs confirms that 'on or about August 2018', Lighthouse Monash was removed as corporate trustee for the Trust and 'all debts owed to Lighthouse Monash were assigned and novated to Lighthouse Corporation'. Mr Jacobs exhibits a deed of assignment and novation dated 24 August 2018 ('the deed of assignment') executed by Mr Jacobs, as director of both Lighthouse Capital and Lighthouse Monash. By its recitals, the deed of assignment states that Lighthouse Monash assigned to Lighthouse Capital 'its rights to unpaid monies and debts owed to it by [Mu Meeting Point] in full'; that Lighthouse Capital agreed to assume all rights under the sale of business contract; and that with effect from the date of the deed, Lighthouse Monash agreed to 'assign and or novate all of its inherent, express and or implied rights' to Lighthouse Capital resulting from the sale of business contract. Clause 1 of the deed of assignment then records that Lighthouse Capital was purportedly substituted for Lighthouse Monash under the sale of business contract and was apparently entitled to enjoy the rights and benefits accruing under it.

120 In his 17 March 2022 affidavit, Mr Jacobs deposes that the deed of assignment was provided in person to Mu Meeting Point's store manager, 'Ivan', on or about 27 August 2018, at the company's business premises at Monash University, when Mr Wang was not onsite. He says he recalls delivering a copy of the deed of assignment because he 'wanted the principal [of Mu Meeting Point] to know ... when the next instalment payment was due, to make payment to the correct entity'.

121 Further, in his affidavit of 11 February 2022, Mr Jacobs responds to the allegation that the term of the 2021 lease was less than five years by stating that under the sale of business contract, there were no further option terms available and that '[a] break in lease was therefore effected and a new lease was required to be entered into by the [p]laintiff.'[99] Mr Jacobs says that in these circumstances, s 21(1) of the Retail Leases Act 2003 (Vic) ('the Retail Leases Act') operates such that the plaintiff's lease is deemed to have a minimum term of five years.

122 In reply, Mu Meeting Point submits that Mr Jacobs' understanding of how the Retail Leases Act applies in this case is wrong because according to s 21(3) of that Act, no such deeming occurs where there has not been a break in the tenant's entitlement to possession of the retail premises. Clause 10 of the 2021 lease records that the business purchased by Mu Meeting Point has remained a tenant in occupation of the retail premises since 2011, pursuant to the original lease. Mu Meeting Point says that in any event, the 2021 lease is not 'under the same terms and conditions' as the original lease so as to enliven any entitlement to the bonus payment under cl 5 of sch 7 of the sale of business contract. The 2021 lease materially differs from the original lease in respect of the size of the area let, the lack of any option for renewal of the lease, and the amount of rent payable. The defendant does not engage with these critical points of difference between the two leases.

123 By his affidavit of 14 December 2022, Mr Wang denies having a telephone conversation with Mr Jacobs on 18 May 2021, during which he apparently acknowledged that Mu Meeting Point was liable to make the bonus payment. He also denies receiving missed calls from Mr Jacobs and states that Mu Meeting Point's landline did not in fact have the facility for leaving voicemails. Whilst Mr Wang confirms he ultimately spoke with Mr Jacobs on 18 November 2021, he says he never agreed the invoice was payable and when it was suggested to him that the debt could be paid in instalments, he denied that any money was owed. Mr Wang apparently said to Mr Jacobs that the bonus payment was 'not free money' but required the satisfaction of cl 5 of sch 7 of the sale of business contract. He points out that the conversation occurred following correspondence from Mu Meeting Point's lawyers to Lighthouse Capital's lawyers on 28 October 2021, in which the debt was wholly disputed.

124 The plaintiff submits that the evidence concerning the alleged novation and assignment by Lighthouse Monash to Lighthouse Capital is unsatisfactory. In particular, it is said that any novation of the obligations owed by the plaintiff under the sale of business contract requires all parties to that contract to agree that the obligations under the (pre-novated) sale of business contract be discharged and a new contract be entered into, in substitution for the old.[100] That did not occur. Further, to the extent the defendant contends the alleged debt had been assigned rather than novated, such an assignment would only be effective under s 134 of the Property Law Act 1958 (Vic) if express written notice of the assignment was given to the debtor.

125 In this regard, the plaintiff contends it never received notice of the deed of assignment. Mu Meeting Point relies on the affidavit of Mr Ivan Harianto, store manager, sworn 30 March 2022, who categorically denies taking personal delivery of the deed of assignment from Mr Jacobs on 27 August 2018. He further deposes that:

(a) he worked at the plaintiff's business premises during the whole of its opening hours in the period from 23 August 2018 (the day after the sale of business contract settled);

(b) he has never spoken to Mr Jacobs. The only communication he has had with Mr Jacobs has been via emails, which were copied to Mr Wang. The email correspondence concerned the administration of the catering website for the business operated by Mu Meeting Point and Mr Harianto forwarding Mr Jacobs outstanding invoices from his suppliers for the period prior to Mu Meeting Point taking over the business;

(c) he saw Mr Jacobs in person only once, in late September 2018, when Mr Wang was also in attendance;

(d) Mr Jacobs has never given him any mail or documents to pass on to Mr Wang, including on the day in question; and

(e) the only mail he has seen addressed to Mr Wang is deposited in Mu Meeting Point's tenant mailbox and delivered to the premises by Monash University staff. Any mail for Mr Wang is then placed on his office desk for him to collect.

126 In addition, Mr Wang gave further evidence in his affidavit of 30 March 2022 that the deed of assignment was never received by him, whether from Mr Harianto or by any other means. This is despite him having attended the business premises each Monday to Thursday in the period between 23 August 2018 and 7 September 2018, which was immediately after the plaintiff took over the relevant business. He specifically says he was in attendance at the plaintiff's premises on 27 August 2018, when the deed of assignment was allegedly delivered by Mr Jacobs.

127 There is authority to suggest the availability of a declaration of abuse of process in the form sought by the plaintiff.[101] However, such a declaration would rarely be sought, or granted, because the evidentiary foundation to support it would be highly fact-specific and involve singular circumstances. Such a declaration would not be made under the regime in Pt 5.4 of the Corporations Act, but instead made adjacent to the regime and in the exercise of the Court's inherent powers. It is apparent that abuse of process was not argued by the plaintiff pursuant to s 459J(1)(b) of the Corporations Act as 'some other reason' to set aside the demand. But nor could it be in the circumstances. The plaintiff contended, and I have found, that service of the statutory demand was ineffective. The Court only has jurisdiction to set aside a demand under s 459J(1)(b) of the Corporations Act where that demand has been served.

128 Whilst it may have been more conventional for Mu Meeting Point's abuse of process arguments to be ventilated in the winding up proceeding, the case of Re Huizhong makes clear it is not essential to do so.[102] It is not apparent that the plaintiff's present approach has occasioned any additional costs or delay in any material sense. On the other hand, where a declaration of abuse of process is sought in conjunction with injunctive relief, there is obvious logic to it being brought as a separate application prior to the commencement of any winding up proceeding.

129 I do not consider that Mu Meeting Point was required to adduce evidence of solvency as a precondition to arguing abuse of process in this proceeding. According to s 459C(1) of the Corporations Act, the statutory presumption of insolvency found in s 459C(2)(a) of the Corporations Act only has effect for the purpose of a winding up application made under ss 459P or 462 of the legislation. It is not an evidentiary presumption that applies in other proceedings, such as the present application. The cases which have held that a debtor company must present evidence of solvency to argue an abuse of process have arisen in a winding up context and in circumstances where a statutory demand has expired unsatisfied and the presumption of insolvency is enlivened.[103] In any event, no statutory presumption of insolvency arises because I have determined that the statutory demand was never served. Moreover, it is not the plaintiff's case that the defendant employed the statutory demand facility knowing that the plaintiff is solvent. The present situation is analogous to that mentioned by the High Court in ASIC v Lanepoint, whereby a debtor company is not required to rebut the presumption of insolvency if the statutory demand was 'rendered ineffective, by an order setting it aside'.[104] Here, the non-service of the demand rendered it ineffective.

130 Although the issuing of a statutory demand does not involve an invocation of a court process and therefore does not strictly constitute an abuse of process, the concept of abuse of process applies analogously. For the plaintiff to traverse the narrow road of abuse of process in the context of the statutory scheme, the authorities show it is permissible for it to argue an abuse of process in the technical sense contemplated by Williams v Spautz. It may therefore be argued that the defendant issued the statutory demand process not for the purpose of utilising it to wind up the company on the ground of insolvency, but as a means of obtaining an advantage for which the process is not designed, or to obtain some collateral advantage beyond what the law offers - such as the application of pressure to compel payment of a debt known to be disputed. In other words, the relevant abuse of process is constituted by a subversion of the regime provided for in Pt 5.4 of the Corporations Act. However, to the extent such an argument merely disputes the debt, that alone would be insufficient to establish an abuse of process. As the authorities make plain, something more is needed.

131 In the present case, it is tolerably clear that the debt is genuinely disputed by Mu Meeting Point. However, as I have previously stated, because the plaintiff was not served with the demand (or, if I am wrong about service, because the plaintiff's application was not made within the 21 day statutory period), the Court does not have jurisdiction to make a finding that there is a genuine dispute under s 459H of the Corporations Act. Nevertheless, the question of whether there is a genuine dispute about the debt the subject of the statutory demand was fully argued before me and is relevant to the broader abuse of process argument. In those circumstances, I consider it appropriate to state that had the Court's jurisdiction under ss 459G and 459H been established, the plaintiff would have likely succeeded in setting aside the demand on the ground of genuine dispute about the existence of the underlying debt. I hold that view for the reasons set out below.

132 First, the proper construction of cl 5 of sch 7 of the sale of business contract concerning the entitlement to the bonus payment is plainly a matter of contention between the parties. However, a proceeding brought under s 459G of the Corporations Act is not ordinarily an occasion for the Court to construe a contract where its meaning is in dispute.[105] There would rarely be any compelling reason to resolve disputed questions of contractual interpretation in an application to set aside a statutory demand.

133 Similarly, the question of whether s 21 of the Retail Leases Act applied to the 2021 lease and whether the lease is deemed to have a minimum term of five years to engage cl 5 of sch 7 of the sale of business contract turns on whether there was a break in the tenancy between the original lease and the 2021 lease. The plaintiff's contention that there was never a break in the tenancy is a plausible contention requiring investigation.[106] So too is the contention that there were other material differences between the original lease and the 2021 lease, which meant the necessary preconditions of cl 5 of sch 7 of the sale of business contract were never triggered.

134 Secondly, even assuming the entitlement to the bonus payment had been enlivened, there is a genuine dispute about whether the terms of the deed of assignment were effective in achieving a novation of the plaintiff's obligations under the sale of business contract. The plaintiff was not a party to the deed of assignment and it is unclear on what basis it was ever agreed by the parties to the sale of business contract that a new contract should be substituted for the old.

135 I also note, as an aside, that the references to the purported assignment and novation of rights under the sale of business contract are contained within the recitals to the deed of assignment rather than in its operative terms. Further, neither the deed of assignment, the statutory demand itself, or its supporting affidavit, make any mention of the replacement of Lighthouse Monash with Lighthouse Capital as corporate trustee of the Trust which Mr Jacobs says occurred 'on or about August 2018'. The defendant's evidence is ambiguous as to whether the replacement of trustee occurred before, after, or at the same time as the purported assignment and novation in the deed of assignment (which is dated 24 August 2018). It is also unclear whether Lighthouse Capital claims the debt the subject of the statutory demand in its capacity as trustee of the Trust or in its own capacity.

136 Thirdly, in the event there was an effective assignment of rights from Lighthouse Monash to Lighthouse Capital, the question of whether notice of that assignment was ever given to Mu Meeting Point is the subject of a bona fide dispute which truly exists in fact.[107] There is a stark conflict of evidence on the question of whether Mr Jacobs ever delivered a copy of the deed of assignment to Mu Meeting Point's business premises on 27 August 2018, or at all, so as to give notice of the assignment of Lighthouse Monash's rights under the sale of business contract to Lighthouse Capital, including in respect of the bonus payment. Whether Mu Meeting Point was notified of the assignment of the alleged debt the subject of the demand is clearly a triable issue. It will ultimately turn on the evidence of key witnesses under cross-examination.

137 Fourthly, a dispute about a contracting party or debtor-creditor relationship may constitute a genuine dispute for the purpose of s 459H(1) of the Corporations Act[108] and the question of which person or entity is party to an arrangement is appropriately a matter for a trial on the merits.[109]

138 Finally, whether there has been an admission or acknowledgment of the debt by Mr Wang on behalf of the plaintiff is also the subject of a genuine dispute between the parties and a matter requiring further investigation.[110] Because Mr Jacobs and Mr Wang have given conflicting evidence about the content of certain alleged conversations, cross-examination may be required.

139 Further, I should record that Mr Jacobs' evidence on the question of the assignment of the rights under the sale of business contract has been piecemeal, inconsistent and somewhat confusing. In his affidavit accompanying the statutory demand sworn on 26 July 2021, Mr Jacobs deposed that he had assigned his right to the bonus payment and nominated the defendant to receive it on his behalf, pursuant to cls 11 and 5A(B) of sch 7 of the sale of business contract. I agree with the plaintiff's submission that Mr Jacobs appears to have conflated the right to nominate a bank account for remittal of the bonus payment under cl 5A(B) of the sale of business contract with an entitlement to payment or the right to assign that entitlement. In his affidavit of 11 February 2022, Mr Jacobs does not specifically mention the deed of assignment or its alleged delivery to Mr Wang. Instead, he refers to the replacement of Lighthouse Monash as corporate trustee of the Trust in August 2018, that all rights and obligations as trustee were novated to the new corporate trustee, Lighthouse Capital, and that and all debts owed to Lighthouse Monash were novated to Lighthouse Capital. He says he was trying to locate a document recording the novation of debts from Lighthouse Monash to Lighthouse Capital. But he then states that Lighthouse Monash had specifically assigned the bonus payment to himself 'and or his assigns, namely [Lighthouse Capital]'. He only produced the deed of assignment on the afternoon prior to the hearing of the matter, in circumstances which were not fully explained. Despite Mr Jacobs' evidence about the replacement by Lighthouse Capital of Lighthouse Monash as corporate trustee of the Trust, the deed of assignment makes no reference to the change of trustee.

140 Notwithstanding the above, I do not accept that the debt the subject of the statutory demand is wholly spurious or lacks any rational basis. I simply consider that the debt is genuinely disputed by the plaintiff. However, that is insufficient to establish an abuse of process in the circumstances.

141 I am not satisfied there is adequate evidence that the statutory demand was actually issued by the defendant in circumstances where it knew the debt was not due and payable or was genuinely disputed, or where it would have been plainly apparent that that the debt would be genuinely disputed. There is no clear and compelling inference available on the evidence that the defendant had knowledge of any legal issues between the parties requiring resolution and that, instead of bringing proceedings in a court of competent jurisdiction, it misused the Pt 5.4 regime.

142 Nor am I satisfied on the evidence that in issuing the statutory demand, the defendant sought to invoke the legislative scheme in Pt 5.4 of the Corporations Act for any purpose other than to have its debt paid or to have the plaintiff wound up and its debt admitted for proof in a liquidation. The evidence falls short of establishing any impropriety of purpose by the defendant.

143 The plaintiff's case of abuse of process is ultimately one of inference. However, it was not put to Mr Jacobs that it was the defendant's predominant purpose in issuing the statutory demand to obtain an advantage for which the process is not designed or some collateral advantage beyond what the law offers - such as the application of pressure to impel payment of a debt known to be disputed. He was not cross-examined on his evidence concerning the issuing of the statutory demand at all.

144 Whilst the 4 October 2021 email is relied on by the plaintiff as evidence of an improper purpose, in my view, the correspondence does not go so far. I accept that some of its language, such as the reference to a notice of a winding up proceeding being publicly searchable and 'the spectre of insolvency', may be interpreted as threatening. But equally, it may simply be the use of infelicitous expression. When the 4 October 2021 email is read as a whole, it can be characterised as robustly asserting the defendant's position in relation to the statutory demand and outlining the next steps in the Pt 5.4 procedure. It also demands payment of the bonus payment, failing which a winding up proceeding would be commenced. To some extent, it applies pressure to achieve the payment. However, given it cannot be established that Lighthouse Capital or Mr Jacobs knew the debt was not payable or would be genuinely disputed, it is not illustrative of an improper use of the statutory demand procedure. The defendant has ultimately pursued a right for which the legislation expressly provides.

145 In the present case, the plaintiff has not discharged its heavy onus in making out an abuse of process. I decline to make the declaration of abuse of process sought.

146 For the reasons set out above, I will make a declaration that the plaintiff was not duly served with the statutory demand on or around 4 August 2021, or at all. The application will otherwise stand dismissed. I will hear the parties on the formulation of necessary orders, including on the question of costs.

LIGHTHOUSE CORPORATION (CAPITAL) PTY LTD (ACN 123 511 624)

[1] Lighthouse Corporation (Capital) Pty Ltd v Mu Meeting Point Pty Ltd, Supreme Court of Victoria, Proceeding S ECI 2021 04057.

[2] According to the sale of business contract, the date of settlement was 9 July 2018, however, the date was apparently extended to 22 August 2018, according to correspondence from the plaintiff's solicitor dated 28 October 2021.

[3] See defendant's written submissions filed 15 December 2021.

[4] See order made by Steffensen AsJ in the winding up proceeding on 22 June 2022.

[5] Deputy Commissioner of Taxation v Starpicket Pty Ltd [2012] FCA 1196; (2012) 212 FCR 578, 589 [72] (Greenwood J) ('Starpicket'); Chen v Kornucopia Pty Ltd (No 1) (2019) 59 VR 305, 319 [50] (Sifris J, as his Honour then was) ('Kornucopia (No 1)').

[6] Kookaburra Educational Resources Pty Ltd [2021] FCA 797, [57] (Halley J) ('Kookaburra'), citing Polstar Pty Ltd v Agnew [2007] NSWSC 114; (2007) 208 FLR 226, 229-30 [14]-[16] (Barrett J); Australian Solar Electrics Pty Ltd v IPD Group Ltd [2012] FCA 786, [8] (Gordon J); Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257, [33]-[39] (Farrell J).

[7] Farid Assaf, Assaf's Winding Up in Insolvency (Lexis Nexis, 3rd ed, 2021) ('Assaf's Winding Up in Insolvency').

[8] Ibid 250 [4.67], citing Lindgren J in Deputy Commissioner of Taxation v Trio Site Services Pty Ltd [2007] FCA 776, [20] and other cases.

[9] See Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216, [12] (Brereton J); Pearlburst Pty Ltd v Summers Resort Group Pty Ltd; Landmark Leisure Group Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126 and the authorities cited in that case_; Deputy Commissioner of Taxation v Clear Blue Developments Pty Ltd_ [2010] FCA 1223, [24] (Logan J); Brown v Bluestone Property Services Pty Ltd [2010] NSWSC 869, [13] (Barrett J); Renegade Rigging Pty Ltd v Hanlon Nominees Pty Ltd [2010] VSC 385, [22] (Ferguson J, as her Honour then was); Kornucopia (No 1), 316 [42]-[43] (Sifris J).

[10] Panimo Nominees Pty Ltd v Vasiliki Lobsters Melbourne Pty Ltd [2011] VSC 321, [15] (Gardiner AsJ).

[11] Starpicket, [74] (Greenwood J); Kornucopia (No 1), 317 [44] (Sifris J).

[12] Deputy Commissioner of Taxation v Manta's on the Beach Pty Ltd [2012] FCA 417, [11]-[12] (Logan J).

[13] Deputy Commissioner of Taxation v Josway Hospitality Pty Ltd [2018] FCA 466, [2](d) (McKerracher J).

[14] (2019) 59 VR 305.

[16] Woodgate v Garard Pty Ltd [2010] NSWSC 508; (2010) 78 ACSR 468, 477 (Palmer J) ('Woodgate'). See at 475-8 for a discussion of the scope of the effective informal service rule. The principles in Woodgate concerning effective informal service were cited with approval by Sifris J in Kornucopia (No 1), 319 [50]. See also Biotech International Ltd v Peptech Ltd [2000] WASC 120; (2000) 34 ACSR 443, 452 [37] (Owen J); Emhill Pty Ltd v Bonsoc Pty Ltd [2004] VSC 322; (2004) 50 ACSR 305, 312 [27] (Mandie J) ('Emhill'); Kookaburra Educational Resources Pty Ltd v MacGear Ltd Partnership trading as MacGear Australia, in the matter of Kookaburra Educational Resources Pty Ltd [2021] FCA 797, [57] (Halley J) ('Kookaburra').

[17] Austar Finance Group Pty Ltd v Campbell [2007] NSWSC 1493; (2007) 215 FLR 464, 473-4 [49] (Austin J); Woodgate, 477; Greenmint Pty Ltd v O'Keefe [2015] VSC 326.

[18] Cf Partners of Piper Alderman v Sharjade [2011] NSWSC 6, [19] (Barrett J) ('Sharjade') (where the mailbox formed part of a collection of boxes apparently accessible to anyone passing by) and Macrae v St Margaret's Hospital [1999] NSWCA 381, [21] (Davies AJA) (where it was observed that 'anything might happen to business letters put into a letterbox at the gate of a hospital or received at the hospital's reception desk').

[20] See the defendant's written submissions dated 15 February 2022, [3](b), although in the defendant's written submissions dated 14 December 2021, it was stated that the demand and accompanying affidavit were brought to the attention of Mu Meeting Point through at least one director by 4 October 2021 at the latest: at [36], [38].

[21] Referring to David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265 ('David Grant').

[22] [2021] FCA 797.

[23] [2021] VSC 487 ('Re Caason').

[27] Re Caason, [36] (emphasis added).

[29] Kornucopia (No 1), [23]-[26]

[32] See Corporations Act 2001 (Cth) s 9 ('Corporations Act'); Corporations Regulations 2001 (Cth) reg 5.4.01AAA.

[33] See, eg, James v Ash Electrical Services Pty Ltd [2008] NSWSC 1112; (2008) 73 NSWLR 95; Brown v Bluestone Property Services Pty Ltd [2010] NSWSC 869; Re Slodyczka & Farren Pty Ltd [2022] VSC 19.

[34] Assaf's Winding Up in Insolvency, [4.54], citing Emhill, [12] and Re Huizhong Investment Group Pty Ltd [2018] NSWSC 390, [23] ('Re Huizhong'), amongst other cases.

[35] [2004] VSC 322; (2004) 50 ACSR 305.

[38] [2018] NSWSC 390.

[39] Ibid [23], citing Emhill and other cases.

[42] Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564, 582 (Mason CJ, Dawson, Toohey and Gaudron JJ); Director of Consumer Affairs Victoria v Mecon Insurance Pty Ltd [2016] VSC 42, [22]-[23] (Elliott J).

[43] See Re Efficient Pure Plumbing Pty Ltd [2022] VSC 436, [25] (Hetyey AsJ).

[44] This latter ground was not properly articulated in any event and it is unclear what the alleged defect in the statutory demand was said to be.

[45] Having regard to the 13 October 2021 email as the last event of service alleged by Lighthouse Capital and allowing for the 21 day statutory period, Mu Meeting Point's application under s 459G of the Corporations Act would need to have been commenced by no later than 3 November 2021. It was commenced on 29 November 2021.

[46] David Grant, 277 (Gummow J). See also Carinda Homes Pty Ltd v Highlands Pty Ltd [2003] FCA 275; Renegade Rigging Pty Ltd v Hanlon Nominees Pty Ltd [2010] VSC 385, [2] (Ferguson J, as her Honour then was); Autumn Solar Installations Pty Ltd v Solar Magic Australia Pty Ltd [2010] NSWSC 463, [4] (Barrett J, as his Honour then was).

[47] See Createc Pty Ltd v Design Signs Pty Ltd [2009] WASCA 85; (2009) 71 ACSR 602, 611 (Martin CJ) ('Createc') and the extensive discussion of the topic in Assaf's Winding Up in Insolvency [11.65]-[11.84].

[48] [1995] HCA 43; (1995) 184 CLR 265.

[49] Createc, 611 (Martin CJ, with whom the rest of the Court agreed), citing House of Tan Pty Ltd v Beachiris Pty Ltd (1996) 21 ACSR 527, 528; SMEC International Pty Ltd v CEMS Engineering Inc [2001] NSWSC 459; (2001) 38 ACSR 595; Roberts v Wayne Roberts Concrete Constructions Pty Ltd [2004] NSWSC 734; (2004) 208 ALR 532; State Bank of New South Wales v Tela Pty Ltd (No 2) [2002] NSWSC 20; (2002) 188 ALR 702. See also Hardel Property Holdings Pty Ltd v Allmark Property Management Pty Ltd [2008] FCA 22, [2] (Finn J) ('Hardel Property Holdings'); Owen-Pearse v Lander Land Company Pty Ltd [2018] FCA 2077, [71] (Banks-Smith J); .

[52] [1992] HCA 34; (1992) 174 CLR 509 ('Williams v Spautz').

[53] Ibid 526-7 (Mason CJ, Dawson, Toohey and McHugh JJ), citing Re Majory (1955) Ch 600, 623-4 and Goldsmith v Sperrings Ltd (1977) 1 WLR 478, 498-9; Varawa v Howard Smith Co Ltd [1911] HCA 46; (1911) 13 CLR 35, 91.

[54] Williams v Spautz, 529. See also Burns Philp & Co Ltd v Murphy (1993) 29 NSWLR 723, 732 (Clarke and Handley JJA, Mahoney JA agreeing at 724); Re Excel Finance Corporation (rec & mgr apptd); Worthy v England (1994) 52 FCR 69, 89.

[55] Williams v Spautz, 529. See also Hardel Property Holdings, [19] in a winding up context.

[56] Williams v Spautz, 529, citing Scarman LJ in Goldsmith v Sperrings Ltd [1977] 1 WLR 478, 489. See also Hardel Property Holdings, [19].

[57] [2008] FCA 22.

[59] Ibid [21], citing Braams Group Pty Ltd v Miric [2002] NSWCA 417; (2002) 44 ACSR 124.

[61] [2009] WASCA 85; (2009) 71 ACSR 602.

[62] Ibid 604 [2] (Martin CJ, Owen and Miller JJA agreeing at 614 [61]-[62]).

[63] Ibid 611 [50]. See also Body Corporate Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd [2017] VSC 435; (2017) 322 FLR 355.

[66] [2018] NSWSC 390.

[70] [2018] FCA 2077.

[74] [2009] SASC 248; (2009) 105 SASR 62, ('Accordent').

[75] Ibid 71-2 [55]-[57] (emphasis added).

[76] See Assaf's Winding Up in Insolvency, [3.3] and the numerous cases cited therein. See also Re Syncordia Group Operations Pty Ltd [2021] VSC 732, [24] (Hetyey AsJ) ('Re Syncordia').

[77] Equipped Constructions Pty Ltd v Form Architects Pty Ltd [2006] NSWSC 500, [24] (Austin J); Re Syncordia [24].

[78] [2017] SASC 187 ('Reschke').

[82] [2011] HCA 18; (2011) 244 CLR 1 ('ASIC v Lanepoint').

[83] Ibid 10 [16] (citations omitted).

[86] [2020] VSC 7 ('Kornucopia (No 4)').

[87] Ibid [87] (emphasis in original).

[88] Also known as the 'second branch' of abuse of process identified in Fortuna Holdings Pty Ltd v Deputy Federal Commissioner of Taxation [1978] VicRp 9; [1978] VR 83, 88, 93, 95-6 (McGarvie J). His Honour said in that case (at 93) that the Court could intervene to restrain a winding up where there was a more suitable alternative means of resolving a disputed claim against the defendant company. See also L & D Audio Acoustics Pty Ltd v Pioneer Electronic Australia Pty Ltd (1982) 7 ACLR 180, where McLelland J indicated that an application by a creditor to wind up a company in insolvency may be held to be an abuse of process in certain circumstances, including where 'issues ... arise in the winding up proceedings of a kind inappropriate for determination in such proceedings eg a substantial contest as to the existence or enforceability of a debt relied on by the applicant, which should properly be resolved in separate proceedings brought for that purpose' (at 183).

[89] See A G Coombs Pty Ltd v M & V Consultants Pty Ltd (2018) 55 VR 513, 527, 540-1 (Sloss J) ('A G Coombs'); Re Vitamin Co Pty Ltd [2019] VSC 540, [79] (Hetyey JR, as his Honour then was) ('Vitamin Co'); Zeninvest Pty Ltd v Altus Development Pty Ltd (No 2) [2019] VSC 450, [30]-[31] (Efthim AsJ); AXF Entertainment Pty Ltd v AXF Group Pty Ltd (No 2) [2019] VSC 753, [38] (Efthim AsJ).

[90] Kornucopia (No 4), [97] (emphasis in original). See also n 56 of that judgment.

[93] See the discussion in A G Coombs, 527-30 [45]-[51]; Vitamin Co, [73]-[76]; Kornucopia (No 4), [89], [107].

[94] [2001] NSWSC 867; (2001) 165 FLR 72.

[96] Assaf's Winding up in Insolvency, [11.94], citing Macks (as trustee for Valamios) v Valamios Produce Pty Ltd [2003] NSWSC 993; (2003) 47 ACSR 583, 588 (Barrett J). See also AG Coombs, 540 [83].

[98] Assaf's Winding Up in Insolvency, [11.83]. See also A G Coombs, 528 [49].

[100] Plaintiff's submissions in reply dated 25 February 2022, citing ALH Group Property Holdings Pty Ltd v Chief Commissioner of State Revenue [2012] HCA 6; (2012) 245 CLR 338, 346 [12] (French CJ, Crennan, Kiefel and Bell JJ).

[103] See ASIC v Lanepoint; Kornucopia (No 4).

[105] Infratel Networks Pty Ltd v Gundry's Telco & Rigging Pty Ltd [2012] NSWCA 365; (2012) 92 ACSR 27, 34 [46] (Young AJA); Broadspectrum (Australia) Pty Ltd v Centauri Business Services Pty Ltd [2016] NSWSC 1045, [22] (Barrett AJA); Re Litigation Insurance Pty Ltd [2017] NSWSC 334, [31] (Gleeson JA); Creata (Aust) Pty Ltd v Faull [2017] NSWCA 300; (2017) 125 ACSR 212, 219 [29] (Barrett AJA, Gleeson JA agreeing at [1] and White JA agreeing at [2]); Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd [2019] NSWCA 60; (2019) 99 NSWLR 397, 417 (White JA).

[106] Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344; (2013) 85 NSWLR 601, 608 [31] (Beazley P, Meagher and Gleeson JJA); Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in Liq) [2015] VSCA 330, [48] (Kyrou, Ferguson and Kaye JJA) ('Malec').

[107] Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452, 464 (Northrop, Merkel and Goldberg JJ), cited with approval by the Victorian Supreme Court of Appeal in Malec, [49].

[108] See Re Heron Park Pty Ltd [2008] VSC 248, [48]-[53] (Robson J) ('Heron Park'); Re Amville Constructions Pty Ltd [2022] VSC 65, [32] (Hetyey AsJ) ('Re Amville').

[109] Re Warrego Energy EP469 Pty ltd [2020] NSWSC 980, [25] (Black J); Re Amville, [32].

[110] Re Simmoll Pty Ltd [2021] VSC 693, [86] (Hetyey AsJ).