MATTER : Section 459E, s 459G, s 459H & s 459J(1)(b) of the Corporations Law

BETWEEN : ROBOWASH FINANCE PTY LTD (ACN 062 596 203)

Corporations law - Application to set aside statutory demand - Whether application properly made - Whether copy of affidavit served

71 Paisley Street, Footscray Pty Ltd v Vineyards Estate Pty Ltd, unreported; FCA; 18 August 1995

Atherton v Jacksons Corio Meat Packing (1965) Pty Ltd [1967] VicRp 110; [1967] VR 850

Australian Broadcasting Corp v Redmore Pty Ltd [1989] HCA 15; (1989) 166 CLR 454

Bailey v Hinch [1989] VicRp 9; [1989] VR 78

Beck v Scammell (1986) RTR 162

Chief Constable of Surrey v Wickens (1985) RTR 277

Elders Trustee & Executor Co Ltd v Sach [1944] SASR 65

Eng Mee Yong v Letchumanan S/O Velayutham [1980] AC 331

Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund [1996] FCA 822; (1996) 70 FCR 452

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

National Mutual Fire Insurance Co Ltd v Commonwealth [1981] 1 NSWLR 400

Pacific Capital Ltd v BBC Hardware Ltd (1995) 13 ACLC 1652

Re Commercial Trade Finance Pty Ltd (1995) 19 ACSR 188

Re Cotton Crops Pty Ltd [1986] 2 Qd R 328

Re Koscot Interplanetary (UK) Ltd Re Koscot AG [1972] 3 All ER 829

Re Wakim; Ex parte McNally [1999] HCA 27

Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 24 ACSR 353

The Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue, unreported; SCt of VIC (Beach J); 30 April 1997

Toovey v Chief Constable of Northampton (1986) Crim LR 475

Trycala Pty Ltd v Natures Realm (Australia) Pty Ltd [1998] 1023 FCA; 24 August 1998

Vicbar Pty Ltd v Development Constructions (Newcastle) Pty Ltd (1995) 13 ACLC 1120

1 MASTER SANDERSON: This is an application to set aside a creditor's statutory demand. The application is brought under s 459G of the Corporations Law. Section 459G(3) deals with the requirements for making an application. It is in the following terms:

"An application is made in accordance with this section only if, within those 21 days [being the 21 days referred to in s 459G(2)]:

(a) an affidavit supporting the application is filed with the Court; and

(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company."

2 As a preliminary matter, the respondent says that there is no application made in accordance with s 459G because a copy of the supporting affidavit was not served on the respondent. It is alleged, on behalf of the respondent, that what was served was an affidavit and annexures with four pages of the annexures missing. The affidavit in question is an affidavit of Eric Lindsay Bolto, sworn 28 May 1999. The affidavit and annexures run to 97 pages. It is alleged that pages 58, 59, 60 and 63, all of which were pages of the annexures, were missing. The respondent argues that this failure to comply with the provisions of s 459G(3)(b) means that no application is properly on foot.

3 The High Court considered the operation of s 459G in David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265. The question in that case was whether or not it was open to the court to extend the 21 day period for making an application specified in s 459G(2). However, in the course of his judgment, Gummow J considered the operation of the statutory demand scheme as a whole. His Honour put the position as follows (at 276 - 277):

"In providing that an application to the court for an order setting aside a statutory demand 'may only' be made within the twenty-one day period there specified and that an application is made in accordance with s 459G only if, within those twenty-one days, a supporting affidavit is filed and a copy thereof and of the applications are served, sub-ss (2) and (3) of s 459G attach a limitation or condition upon the authority of the court to set aside the demand. In this setting, the use in s 459G(2) of the term 'may' does not give rise to the considerations which apply where legislation confers upon a decision-maker an authority of a discretionary kind and the issue is whether 'may' is used in a facultative and permissive sense or an imperative sense ... . Here, the phrase '[a]n application may only be made within 21 days' should be read as a whole. The force of the term 'may only' is to define the jurisdiction of the court by imposing a requirement as to time as an essential condition of the new right conferred by s 459G. An integer or element of the right created by s 459G is its exercise by application made within the time specified. To adapt what was said by Isaacs J in The Crown v McNeil [1922] HCA 33; (1922) 31 CLR 76 at 100 - 101, it is a condition of the gift in sub-s (1) of s 459G that sub-s (2) be observed and, unless this is so, the gift can never take effect. The same is true of sub-s (3)."

4 Assuming that the documents served on the respondent were a copy of the application and a copy of the supporting affidavit with four pages of the annexures missing, can it be said that the applicant has complied with the requirements of s 459G(3). In other words, is a document with four pages of the annexures missing "a copy of the supporting affidavit". If it is not, then, in line with what was said in the David Grant case, no application is properly made. The respondent's argument turns on the meaning of "affidavit" in s 459G(3)(b). Does it mean just a copy of the sworn evidence of the deponent, or does it include the annexures referred to in the text?

5 The term "affidavit" is referred to in s 9 of the Corporations Law but the definition is of no assistance in the present circumstances. The Corporations Rules, O 81G, do not define the term "affidavit". Rule 9(1) of O 81G requires that where an application is to be served, a copy of the affidavit shall be served with it. However, as the requirements of s 459G(3) are quite specific, r 9 is of no assistance. There is nothing else in O 81G which impacts upon the matters in issue.

6 Order 37 of the Rules deals with affidavits generally. Rule 2 deals with the form of affidavits. Rule 2(8) is in the following terms:

"Subject to Rule 9(1), a document that is to be used in conjunction with an affidavit must be annexed to the affidavit and be referred to in the affidavit as being annexed."

7 It is the procedure in this State that documents referred to in an affidavit are annexed to the affidavit, rather than exhibited thereto. This present practice represents a change to the practice prior to 1990. Seaman: Civil Procedure Western Australia, at par 37.6.3 deals with the method of annexing exhibits. The learned author puts the position as follows:

"The whole method of dealing with the exhibits to affidavits has been changed by the additions of subrr (6) to (10) [of rule 2] and the amendment of r 9. The purpose of the amendments is to enable the judge or master to follow the affidavits in much the same way as appeal books, finding the exhibited material by reference to the index and going to it by reference to the pagination at the top right corner of every page. The result will be that paper exhibits which are not within r 9(1) will be bound with the affidavit without individual face sheets. If the exhibits require a face sheet to carry a certificate required by r 9(2), it is necessary that the face sheets be included in the numbered sequence of the pagination."

8 It is the practice in this jurisdiction for a party to file and serve affidavits upon which it is intended to rely. Then, unless objection is taken by the other party to the contents of the affidavit, the contents of the affidavit are taken into evidence without the need for the affidavit to be read. Nonetheless, an affidavit which has been placed on file does not become part of the proceedings until it is opened to the court: see Barristers Board v Tranter Corp [1976] WAR 65 at 67; Manson v Ponninghaus [1911] VicLawRp 49; [1911] VLR 239. Thus, although documents relied upon in the body of the affidavit are annexed to it, these documents would, if the deponent was giving evidence orally, be taken in as exhibits. The fact that the potential exhibits are annexed to the affidavit is nothing more than a procedure for the convenience of the court.

9 The practice in Western Australia can be contrasted with the practice in Victoria. Under O 43.06 of the Victorian General Rules of Procedure in Civil Proceedings a document referred to in an affidavit is not to be annexed to the affidavit. Rather, a separate cover sheet is to be provided to the document and it is referred to as an exhibit. What is more, save in certain proceedings (for example, in summary judgment applications), there is no general requirement that copies of exhibits be served: see Williams: Civil Procedure Victoria, par 43.06.10. A person who is served with an affidavit but not with a copy of an exhibit is entitled to inspect the exhibit: see Re Hinchcliffe [1895] 1 Ch 117. But the right to inspect an exhibit does not alter the fact that there is no requirement that the exhibit be served with the affidavit.

10 It may well be that the failure to serve a number of pages of the annexures offends O 37 r 2. If that is so, the breach can be excused under O 2 r 1(2). But the applicant has not failed to comply with the strict requirements of s 459G(3) because a copy of the affidavit, as against a copy of the supporting affidavit with annexure (my underlining) has been served. The present position can be contrasted with a situation where one or other of the pages of the affidavit itself had been omitted from what was served on the respondent. It might then well be the case that there was a failure to serve "a copy of the supporting affidavit". Such an omission could not be rectified under O 1 r 2 or, on the authority of David Grant, in any other way. The application would not be properly made and must fail. But that is not the position here.

11 It was further submitted on behalf of the respondent that s 459G(3) involved a two stage process. First, an affidavit supporting the application was to be filed with the court. Secondly, a copy of the application and a copy of the supporting affidavit was to be served on the respondent. It was submitted that the use of the word "copy" meant that what was served on the respondent had to be precisely the same as what was filed. In other words, if the document purporting to be the supporting affidavit which was served on the respondent was not identical to the document filed with the court, then the applicant had not complied with s 459G(3). It was submitted that the word "copy" meant a precise and exact replica and there could be no departure between the document filed and the document served. In support of this proposition, counsel relied on Cooke v Vaughan (1838) 7 LJ Ex 219. Counsel for the plaintiff also submitted that there could be no argument based on the applicant having substantially complied with the requirements of the section: see Hunter Resources Ltd v Melville [1988] HCA 5; (1988) 164 CLR 234. In my view, however, this does not advance the respondent's position. It is not in dispute that a copy of the affidavit itself, as against the annexures, was served on the respondent. In my view, the word "copy" in s 459G(3)(b) refers only to the affidavit and not to the annexures. For these reasons, I have reached the conclusion that the application under s 459G is properly on foot.

12 I will hear the parties as to how the matter should proceed from this point and on the question of costs.