Pluton Resources Limited (Receivers and Managers Appointed), in the matter of Pluton Resources Limited (Receivers and Managers Appointed) v Lefty Resources Pty Ltd

REASONS FOR JUDGMENT 1 This is an application for the setting aside of a statutory demand in the sum of $275,000 which was issued by the defendant, Lefty Resources Pty Ltd on 24 February 2015 against the plaintiff, Pluton Resources Limited (Receivers and Managers Appointed). The plaintiff claims that there is a defect in the statutory demand because the defendant had in issuing the statutory demand relied upon two separate debts and that the statutory demand had not identified the amounts claimed in respect of each of the separate debts. 2 The description of the debt demanded, which was set out in the schedule to the statutory demand, shows the demand to be in respect of two unpaid invoices, namely, the invoice for LeftyFee1, issued on 22 October 2014 and the invoice for LeftyFee2 issued on 27 October 2014. 3 The description of the debt goes on to state that invoices were issued in respect of services which had been provided by the defendant to the plaintiff pursuant to a consultancy agreement entered into on or about 1 July 2014. However, the description of the debt does not state the amount demanded in respect of each invoice - only the total amount demanded, being $275,000, is identified. 4 The statutory demand has been treated by the parties as being a claim for payment of two debts. 5 The consultancy agreement referred to in the description provided for the payment by the plaintiff to the defendant of a "success fee" comprising three separate and equal tranches of money - each tranche becoming payable upon the achievement of three separate milestones. The total amount payable was $375,000 plus GST. 6 The statutory demand was served upon the plaintiff at the time when it was under the administration of receivers and managers. There is an affidavit from one of the receivers and managers, Mr Clifford Stuart Rocke, dated 18 March 2015, in support of the plaintiff's application to set aside the statutory demand. 7 Mr Rocke deposed that when he received the statutory demand he caused his staff or the staff employed by the plaintiff, to review the books and records of the plaintiff to attempt to identify the invoices which correspond to the invoices referred to in the description of the debt contained in the statutory demand. Mr Rocke went on to say that as a consequence of the review, he identified an invoice, LeftyFee1 dated 22 October 2014 issued to the plaintiff, which was in the sum of $125,000. However, said Mr Rocke, the review had failed to identify any invoice with the marking, LeftyFee2 dated 27 October 2014. 8 However, the defendant relies upon an affidavit of Mr Bruno Ruggiero who explains his dealings with Mr Jeremy Bower, a representative of the plaintiff at the time, in the following terms: 11. On 22 October 2014, I sent an email to Jeremy Bower. I attached four invoices for work Lefty had done to that date. Three of the invoices were for the Retainer for the months of July, August and September 2014. As the purchase order had been issued to Outotec for the pilot plant, the fourth invoice, LEFTYFEE1 was raised for to the first instalment of the Success Fee in the sum of $125,000. Annexed hereto and marked BR-2 is a copy of the email to Jeremy Bower dated 22 October 2014. 12. On the same day, I received an email from Jeremy Bower stating that invoices were "all in order" and that Michael Wyer, the Financial Officer of Pluton, would sort out payment. Annexed hereto and marked BR-3 is a copy of the email from Jeremy Bower dated 22 October 2014. 13. On 27 October 2014, pursuant to the Consultancy Agreement, I sent by way of email, two invoices to Jeremy Bower. The first invoice attached to the email was marked "LEFTYFEE1" and was the same as what I previously sent Pluton on 22 October 2014. The second invoice, marked "LEFTYFEE2" was issued given the Outotec pilot plant had been was mobilized and assembled at Cockatoo Island as required under the second milestone relating to the Success Fee payable. Each invoice was for the sum of $125,000. Annexed hereto and marked BR-4 is a copy of the email dated 27 October 2014. 14. Between 27 October 2014 and 3 November 2014, I spoke with Michael Wyer on the telephone. Michael Wyer said to me that he had scheduled payment of the invoices "LEFTYFEE1" and "LEFTYFEE2" to occur in the coming week. Lefty did not receive payment of these invoices that week. To the date of swearing this affidavit, Lefty has not received payment of the invoices. 15. On or around 25 November 2014, spoke with Jeremy Bower by telephone who asked me to re-send a copy of invoices 'LEFTYFEE1" and "LEFTYFEE2" to Pluton. I was copied into an email from Mitesh Raghani, an employee of Lefty, which enclosed a copy of the invoices. The email was also copied in to Ms Claire Bateman and Michael Wyer of Pluton. Annexed hereto and marked BR-5 is a copy of the email dated 25 November 2014. 16. Later that day, I realized that invoices "LEFTYFEE1" and "LEFTYFEE2" did not include the GST component which was payable pursuant to clause 5.2 of the Consultancy Agreement. As a result, I sent to Jeremy Bower, Ms Bateman & Michael Wyer by email, amended invoices "LEFTYFEE1" and "LEFTYFEE2" with GST. Each invoice was for the sum of $137,500 (inclusive of GST). Annexed hereto and marked BR-6 is a copy of the email dated 25 November 2014. 9 There is further email correspondence annexed to Mr Ruggiero's affidavit which shows that Mr Bower acknowledged the receipt of the two invoices referred to in para 16 of the affidavit, as well as a third invoice, and recognised that the debt in respect of those invoices was outstanding, but, said Mr Bower: Unfortunately repayment of this debt by Pluton at this time is not achievable in its entirety. 10 The email correspondence between Mr Ruggiero and a number of persons employed by the plaintiff, which is attached to Mr Ruggiero's affidavit, demonstrates the existence of that correspondence, and of the information necessary for the plaintiff to determine the amount claimed in each invoice comprising the total debt of $275,000 demanded in the statutory demand. 11 Section 459J(1) of the Corporations Act 2001 (Cth) provides that: On the application under section 459G, the Court may by order set aside the demand if it is satisfied that: (a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or (b) there is some other reason why the demand should be set aside. 12 In the case of Chippendale Printing Co Pty Limited v Deputy Commissioner of Taxation (1995) 55 FCR 562, Lindgren J found that on a proper construction of the Corporations Act, where a statutory demand was issued for a total amount comprised of two separate debts, then the debts should be individually identified and the amount separated and the total amount then given. That decision was followed by Nicholson J in the case of Delta Beta Pty Limited v Vissers [1996] 20 ASCR 583 (Delta Beta) and also Barrett J in the case of Condor Assessment Management v Excelsior Eastern Ltd (2005) 56 ACSR 223. 13 The statutory demand in this case, did not comply with that requirement. I find, therefore, that there is a defect in the statutory demand. 14 However, it is not enough, that there be a defect in the statutory demand, for the statutory demand to be set aside. The defect must be such that a substantial injustice will be caused if the demand is not set aside. 15 The plaintiff contends that substantial injustice will be caused if the statutory demand is not set aside because the plaintiff has been unable to find the particular invoices which are referred to in the statutory demand. 16 However, it is well recognised that there will not be a substantial injustice when the statutory demand makes clear sufficient information so that a debtor, if its own record keeping has been adequate, is able to determine whether it is liable for the amounts claimed (Delta Beta at 586). 17 As is demonstrated by the email correspondence attached to Mr Ruggiero's affidavit, all of the information needed for the plaintiff to determine whether it was liable for the amounts claimed in the statutory demand, was at one time contained in the records of the plaintiff. If it be the case that the plaintiff, whether under the control of Mr Rocke or before Mr Rocke was appointed, has failed to keep proper records, the plaintiff cannot rely upon its own default to allege that it is the subject of a substantial injustice by reason that it does not know the amount claimed in each of the two invoices comprising the total debt claimed in the statutory demand. 18 In those circumstances, I dismiss the application to set aside the statutory demand. 19 The plaintiff is to pay the defendant's costs to be taxed if not agreed. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.