Plaintiff v Defendant

... whether any of the identified events in section 459C has occurred at any time after the commencement of the relevant period. The Act does not require any further consideration of whether the event persists at the date of the application for winding up. [32]

1. That temporal focus was also considered to in DG Haulage, where it was held that where a winding up application had been made prior to the time for expiry the application could be amended so as to rely upon a later presumption of insolvency so long as that presumption was operative prior to the hearing.[33]
2. If leave is granted in this case, the amendment will operate from the date of the originating process.[34] As at that date (28 February 2025), the expiry of BP Australia's statutory demand (being 2 January 2025), was still within the three month period prescribed by s 459C of the Act.
3. In my view, it is open to permit the plaintiff to rely upon a statutory presumption of insolvency by reason of the defendant's failure to comply with a statutory demand issued by BP Australia where that failure to comply occurred during or after the 3 month period ending on the day the plaintiff's application was made.
4. Turning then to s 459Q of the Act. The originating process and affidavit filed in support both appear on their face to comply with the requirements under s 459Q of the Act. The originating process relies upon a statutory demand dated 17 January 2025 which the plaintiff says was served on the registered office of the company at the Geraldton address. It attaches a copy of that statutory demand. The affidavit of service of the statutory demand says that the statutory demand was served on the registered office as at the time the statutory demand was served.
5. Whilst the 'error' as identified by the plaintiff is that the address stated on the statutory demand and the 'record of service' exhibited to the affidavit use the former registered office, the defect in the originating process is reliance upon that event as the one which gives rise to the statutory presumption.
6. In Kornucopia Sifris J said of s 459Q:

[134] Thirdly, by contrast to the position here, s 459Q of the Act is not the section pursuant to which an application for the winding up of a company is made. That is s 459P (or ss 234, 462 or 464). Section 459Q can instead be characterised as a provision which is ancillary or additional to s 459P, and facilitative of the means by which proof of insolvency can be adduced by a plaintiff. Prior to setting out the pre-conditions with which s 459Q is concerned, it states "If an application for a company to be wound up in insolvency relies on a failure by the company to comply with a statutory demand the application must". That section presupposes that there is "an application for a company to be wound up in insolvency", which is that brought under s 459P. Upon there being an application made by a competent applicant under

s 459P, the Court is vested with jurisdiction to make orders as it sees fit with respect to that application. There is nothing in the text of

ss 459Q or 459P which ties the jurisdiction of the Court, granted by

s 459P, with the requirements of s 459Q. The word "If" contained within the s 459Q premises the conditions which "must" be met for that otherwise valid application to "rel[y] on a failure by the company to comply with a statutory demand" as the basis for the allegation that the company is insolvent. The effect of non-compliance does not affect the validity of the applicant, but rather, the basis upon which a plaintiff can establish insolvency (that is, by presumption if there is compliance or be evidence if there is not). It could not, therefore, be said that event if there is non-compliance with s 459Q, that there is, as was the case in David Grant, "no application under Pt 5.4 before the court" for remedial orders to be made in respect of.

1. The nature of the amendment sought is not one where the plaintiff seeks to rectify its status as a creditor pursuant to s 459P nor is it seeking to amend or add a ground upon which it now wishes to rely.[35] Indeed, it is not even seeking to rely upon an alternative presumption under s 459C of the Act. Rather, the plaintiff wishes to amend the particulars to the grounds currently pleaded to rely upon a different event, being the defendant's failure to comply with BP Australia's statutory demand in support of its grounds under s 459C(1) of the Act.
2. The BP Australia statutory demand was issued on 17 December 2024. The evidence before the Court states that the statutory demand was served on the registered office of the company as at that date. There is no evidence that any application was made to set aside BP Australia's statutory demand or otherwise that the statutory demand was satisfied within statutory period for compliance of 21 days. Whilst the defendant has made some payment to BP Australia in respect of the debt, those payments have not satisfied the statutory demand. The evidence is that as at the date the plaintiff made the winding up application a statutory demand (BP's demand) had expired and the full debt remain unpaid.
3. Now, the defendant's solicitor says that part of the prejudice that might be suffered by the defendant by reason of the amendment is that the defendant does not know what debt it is responding to. With respect, that concern is entirely what ss 467(3) and 467A of the Act are intended to resolve.
4. In Chen v Kornucopia, Sifris J held:

[139] It is my view that the construction set out above is not only open on the words of the Act, but gives adequate effect to its purpose, insofar as it would permit otherwise meritorious applications to be pursued rather than dismissed or prolonged on technical or procedural grounds, whether or not the defect complained of caused injustice to the company. That too is a matter towards which s 467A is directed; defects and irregularities which cause no material prejudice. Opportunistic conduct (namely, procedural omissions or defaults by plaintiffs which cause no material prejudice to defendants, but which defendants take advantage of) must not be looked at favourably by the Court, especially in light of considerations of efficient civil procedure and the timely and just resolution of real issues which arise in winding up applications. In this respect, the following observation of Doyle J (with whom Parker and Lovell JJ agreed) in Heirloom Vineyards Wine Company Pty Ltd v Sante Wines Pty Ltd, is particularly apt:

It is true that the operation of s 467A does not extend to cure defects that have the consequence that the court's jurisdiction under s 459G has not been invoked. However, the existence of

s 467A is consistent with an intention on the part of the legislature that the overall focus be on matters of substance rather than form. It is also true that in emphasising a focus upon the commercial justice of the dispute, and upon substance over form, the legislature most likely had in mind that it would typically be recalcitrant debtors who might seek to exploit technicalities or matters of form, rather than creditors. But I do not think that it follows that substance is to be preferred over form only where that is to the advantage of the creditor. Rather, it is a general approach that should guide the Court in its consideration of issues ...

1. The statutory regime provided in Part 5.4 of the Act is designed to ensure that by the time a defendant faces a winding up application the question of whether there is a genuine dispute in respect of the debt ought to have been determined (other than in particular circumstances for the purposes of s 459S). Again, that is to ensure that the focus of winding up application is on the solvency of the company and not the liability of the defendant to the plaintiff for the debt which gives the plaintiff standing.
2. Accordingly, it is incumbent on a defendant to (a) dispute a debt claimed in another court in those proceedings; (b) dispute the foundation for the statutory demand within the 21 period prescribed under the Act; or make an application in the winding up proceeding pursuant to s 459S of the Act.
3. In the case of the BP Australia statutory demand, that demand was issued in respect of a judgment debt obtained in the Magistrates Court of Victoria on 5 August 2024. That judgment was obtained in default of appearance and no application has been made to appeal or otherwise set aside that decision. Accordingly, the judgment stands. Upon the issuing of the statutory demand the defendant did not apply to set aside the BP Australia statutory demand within the 21 day period.
4. Furthermore, and assuming that the defendant may have faced at some point in this proceeding with an application for substitution by BP Australia, the existence of the statutory demand served by BP Australia which has expired and with which the defendant has failed to comply, may limit the basis upon which the defendant could challenge BP Australia's status as a creditor.[36]
5. Now, the defendant has foreshadowed that should the amendment be allowed it may wish to be heard on any application under s 459S of the Act. That is fine. That application may still be available to the defendant should it wish to make it.
6. To that end, the defendant will not, in my view, suffer any substantial injustice should leave be granted to amend the originating process to allow the plaintiff to rely upon BP Australia's statutory demand.
7. Indeed, the fact of this amendment being one which goes to the evidentiary foundation of the claim is highlighted by the plaintiff's submission that any prejudice that might in fact be suffered, would fall on the plaintiff itself. Should the defendant make it's foreshadowed application under s 459S of the Act, the plaintiff will be at an evidentiary disadvantage in that it does not have direct knowledge of the BP Australia debt. I agree, however, with plaintiff counsel's submission that those are matters of evidence and trial - not a question of jurisdiction on the application.
8. The function of ss 467 and 467A of the Act is to ensure that defects or irregularities in an application do not undermine an otherwise meritorious application such that matters are dismissed for technical or procedural reasons.[37] Section 459C(2)(a) requires there to be an event in the nature of failure to comply with 'a' statutory demand in order for the presumption of insolvency to arise. Section 459Q of the Act is a facilitative provision by which the plaintiff seeks to adduce evidence of insolvency. The matters articulated in the originating process are particulars of the s 459C 'event' and the 459Q process. Contrary to the defendant's submission that it does not know what case it has to answer, the proposed amendment to the originating process will amend those particulars and provide clarity as to the case that the defendant must meet before it is required to put on its evidence and submissions in opposition.
9. I should note that at no stage during the course of the proceeding (or this application to amend) has the question of actual service of the plaintiff's statutory demand arisen nor have I been asked to resolve the question of whether service was effected. The plaintiff has not lead any evidence as to how the error in the affidavit of service came about, nor is a submission made one way or the other as to whether the plaintiff's statutory demand came to the attention of the defendant.
10. Furthermore, the issue of service of the plaintiff's statutory demand has not at any time during the course of the proceeding been raised by the defendant. No application was made to set aside the statutory demand nor has any application been made pursuant to s 459S to oppose the winding up application on the basis that the statutory demand was never served.
11. Regardless, whether or not the plaintiff is able to demonstrate actual service that is a matter that goes to the plaintiff's ability to prove the grounds upon which it relies not to the jurisdiction of the Court on the application itself.
12. There is one further matter I should mention. In its oral submissions, the defendant's solicitor suggested that such an approach might be open to abuse by 'aggressive creditors' who may seek to commence proceedings without service of the statutory demand.
13. It is true to say that compliance with the processes provided pursuant to s 459Q are critical because of the seriousness and consequences of winding up proceedings.
14. In Chen v Kornucopia, Sifris J said (citations omitted):

[138] Seventhly, there being no bar to the jurisdiction of the Court to make a remedial order (whether that is an amendment, dispensation, or some other order) to cure a defective application, the Court must do so unless it is of the opinion that this would cause the company the subject of the application to suffer substantial injustice that could not be remedied by some other means. Of course, the commencement of winding up proceedings is a serious matter with potentially grave financial consequences, and that step should only be taken where "there is a proper foundation for the presumption upon which commencement of the application is based." But that is the matter with which s 467A is concerned. A company without notice of the particulars which support an attempt to have it wound up would, in the vast majority of cases, have no difficulty in establishing "substantial injustice" of a kind that should result in the application's dismissal. The Court will not look favourably upon abuses of the statutory regime consisting of where a winding up application is filed prior to the expiry of a statutory demand, or without an adequate supporting affidavit which verifies the debt, or indeed without any contemporaneous affidavit. Brereton J described this in powerful terms in Re Vangory Holdings Pty Ltd, in the case of a supporting affidavit which did not verify the relevant debt:

In my view, the role of s 459Q(3) is very similar. Its function is to require a creditor, before instituting proceedings reliant on the presumption of insolvency - and in which, by reason of

s 459S, the defendant will ordinarily be precluded from disputing the existence of the debt - to give close and serious attention to the existence of the debt a second time, this time before instituting proceedings. In such proceedings, a creditor has many advantages, s 459S being perhaps the most obvious of them. It is not asking too much of a creditor who seeks to invoke those draconian consequences first to comply strictly with the requirements that trigger them.

1. It is incumbent upon plaintiffs who apply to wind up a company by reason of failure to comply with a statutory demand that the statutory processes are followed closely and that attention is paid to ensure the correct steps are being taken and accurate evidence is placed before the Court. I do not however think that the effect of granting the plaintiff leave to amend its application on this occasion will 'open the floodgates' to applications commenced by plaintiffs without service of a statutory demand. I disagree. An application commenced in the circumstances described by the defendant would likely face either an application to dismiss the proceeding because it was without foundation or otherwise an abuse of process, each of which would operate as a disincentive to that type of "aggressive" application.
2. In the present case, where there has been an error in identifying proper service of a statutory demand and where another 'event' under s 459C of the Act exists, the desirability of maintaining an otherwise valid application brought by a plaintiff creditor with proper standing means the application should not be dismissed where the defect can be cured and there is no prejudice to the defendant.
3. For the reasons I have explained above, I am satisfied that the plaintiff should be granted leave to amend the originating process to rely upon BP Australia's statutory demand because:

(a) the jurisdiction of the Court has been properly invoked pursuant to s 459A of the Act;

(b) the plaintiff has standing as a creditor of the defendant pursuant to s 459P of the Act by reason of the judgment debt obtained on 20 December 2024 which, as at the date of the proceeding was unsatisfied;

(c) on the current evidence, the statutory demand issued by BP Australia on 17 December 2024 was prima facie deemed served on the registered office of the defendant on 2 January 2025;

(d) assuming service on that day, the defendant failed to comply with BP Australia's statutory demand by 23 January 2025, a date three months prior to the date of the originating process, being 28 February 2025;

(e) the defect in the plaintiff's originating process is one which is capable of being cured by reason of an amendment pursuant to s 467(3) of the Act;

(f) there is no substantial injustice to the defendant in the plaintiff relying upon BP Australia's statutory demand. The defendant has not been deprived of any opportunity to challenge BP Australia's statutory demand or the underlying judgment by reason of the amendment. Those opportunities were available well before proceedings commenced and the defendant has chosen not to do so. The effect of the amendments is to particularise the matters on which the plaintiff intends to rely in seeking orders winding up the defendant. The defendant will still have the opportunity to make any necessary amendments to its grounds of opposition and tailor its evidence to the case as it is now put.

1. I will make orders in the form sought by the plaintiff.

[1] Transcript of Proceedings, ML & NB Pty Ltd (ACN 657 782 851), (Supreme Court of Victoria, Gitsham JR, 6 June 2025), 22, [13] - [21].

[3] Farid Assaf, Assaf's Winding Up in Insolvency (LexisNexis, 3rd ed, 2021) ('Assaf') 42 [1.52].

[5] Aussie Vic Plant Hire v Esanda Finance [2008] HCA 9; (2008) 232 CLR 314 ('Esanda Finance') at [14].

[8] [1983] Ch 1 at [20].

[9] [1987] Ch 419; [1987] 1 All ER 890 at Ch 454-5 [455] as cited in Assaf (n 3) 1.21.

[10] (2006) 151 FCR 196; 230 ALR 581; [2006] FCAFC 55.

[12] Corporations Act 2001 (Cth) ('Act') s 459P(1)(b).

[13] [1997] HCA 20; (1997) 144 ALR 359.

[21] Assaf (n 3) 3.2; Chen v Kornucpia [2019] VSC 756; (2019) 349 FLR 35 ('Chen v Kornucpia') at [134]; see also Equipped Constructions Pty Ltd v Form Architects Pty Ltd [2006] NSWSC 500 at 24.

[23] Assaf (n 3) 3.2 citing Clarke & Walker Pty Ltd v Thew [1967] HCA 28; (1967) 116 CLR 465 at 467; [1967] HCA 28; [1967] ALR 633 at 634 . See also Createc Pty Ltd v Design Signs Pty Ltd (2009) 71 ACSR 602; [2009] WASCA 85 at [2] per Martin CJ (with whom Owen and Miller JJA agreed); and Commonwealth Bank of Australia v Garuda Aviation Pty Ltd [2013] WASCA 61; (2013) 45 WAR 92; 93 ACSR 168 at [20]

[24] Rule 5.4(2) of the Supreme Court (Corporations) Rules 2023 also requires the creditor to swear an affidavit that verifies service of the statutory demand; the company's failure to comply with that demand and whether and what to extent the debt the subject of the demand remains due and payable.

[27] Chen v Kornucpia (n 20) at 74 [132].

[29] In the matter of DG Haulage Pty Ltd [2017] VSC 780 (DG Haulage).

[31] Rule 36.01(2) of the Rules says that r 36.01(1) applies to an originating process.

[34] r 36.01 of the Rules and in particular the commentary at [I 36.01.20] of Civil Procedure Victoria as referred to in Chen v Kornucopia (n 3) at 49 [141].

[35] Although on the basis of the findings in other cases that may not result in the application being invalid in the sense that it is a nullity.

[36] See Bibby Financial Services Australia Pty Ltd v Wolf Industries Australia Pty Ltd [2004] NSWSC 134; (2004) 49 ACSR 45.

[37] Chen v Kornucpia (n 20) at 77-78 [139].