Commercial Trade Finance Pty Ltd, Re [1995] QSC 326

J+; 11 State Reporting B~;:iuSc. °I 5 / 37Y.bI -·--------------------------------------- TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION HELMAN J No 720 of 1995 IN THE MATTER OF THE CORPORATIONS LAW I REVISED COPIES iSSUED 1 State Reporting Bureau IDated 11 a 1 9~ IN THE MATTER OF COMMERCIAL TRADE FINANCE PTY LIMITED (ACN 066 188 627) BRISBANE .. DATE 04/12/95 JUDGMENT 1 4th Floor, The Law Courts, George Street, Brisbane. Q. 4000 Tdephone: (07) 227 4360. Facsimile: (07) 227 5532 -- 1 of 8 -- 041295 tkm (Helman J) HIS HONOUR: This is an application by a company, Commercial Trade Finance Pty Limited, for an order setting aside a statutory demand for payment of debt, dated 7 September 1995, served on it by the respondent, Gresham Partners Limited. In serving the demand the respondent relied on the provisions of Part 5. 4 of the Corporations Law ( ss. 459-459T). It was common ground that the demand, which was not in respect of a judgment debt, should be taken to have been served on 12 September 1995. The application was filed on 3 October 1995 but copies of it and the supporting affidavit were not served on the respondent until 5 October 1995. Sections 459E(3), 459G, and 459J of the Corporations Law are relevant to this application. They are as follows: "459E(3) [Accompanying affidavit] Unless the debt, or each of the debts, is a judgment debt, the demand must be accompanied br an·affidavit that: (a) verifies that the debt, or the total of the amounts of the debts, is due and payable by the company; and (b) complies with the rules. 459G( 1) [Application to set aside statutory demand] A company may apply to the Court for an order setting aside a statutory demand served on the company. 459G(2) only be served. [Time limit on application] made within 21 days after An application may the demand is so 459G( 3) [Requirements for effective application] An application is made in accordance with this section only if, within those 21 days: (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 JUDGMENT 10 20 30 50 60 -- 2 of 8 -- 041295 tkm (Helman J) 459J( 1) [Power to set aside demand] On an application under section 459G, the Court may by order set aside the demand if it is satisfied that: (a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or (b) there is some other reason why the demand should be set aside. 459J(2) [Mere defect not ground to set aside] Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect." 10 It was not in dispute that s. 459G(3)(b) had not been complied with in this case in that copies of the application and the ~ supporting affidavit were not served on the respondent within twenty-one days after the demand was served. Mr Dunning, for the applicant, conceded that in those circumstances the application must be dismissed: see David 30 Grant & Co Pty Ltd v. Westpac Banking Corporation (1995) 69 A.L.J.R. 778. He submitted however that orders of the kind made by Senior Master Mahoney in Ultimate Manufacturing Pty Ltd v. Lyell Morris Pty Ltd (1995) 13 A.C.L.C. 1,268 should be made in this case. ~ In Ultimate Manufacturing Pty Ltd v. Lyell Morris Pty Ltd a statutory demand was served on a company in Victoria, but the demand specified a New South Wales address as the address for service of any application under s. 459G. That was a defect in the demand because s. 459E(2)(e) requires a demand be in the prescribed form, if any, and the prescribed form, Form 509H, in paragraph 6 requires the demand to show an address of the creditor for service of copies of any application and affidavit to be in the State or Territory in which the demand 3 JUDGMENT 50 60 -- 3 of 8 -- 041295 tkm (Helman J) is served on the company. have the demand set aside The company made an application to under s. 459G. The company's solicitor tried to serve notice of the application at the New South Wales address but failed to attach the notice required by s. 16 of the Service and Execution of Process Act 1992. Senior Master Mahoney concluded that the application was not "under section 459G". Because the application was not "under section 459G" the Senior Master dismissed it, but he did so on conditions as to disclosure designed to increase as much as possible the likelihood that the creditor would choose not to rely up. on the defective demand in any application for winding The conditions were imposed because the Senior Master concluded, on the evidence before him, that the application failed through no fault of the company or its solicitors but rather because of the defect in the demand. In this case, as in 1Jl timate Manufacturing Pty Ltd v. Lyell Morris Pty Ltd, the statutory demand did not show an address of the creditor for service of copies of any application and affidavit in the State or Territory in which the demand was to be served on the company: the address for service shown in the demand was a solicitors' office in Sydney, whereas it was served in Brisbane. The applicant served copies of the application and the supporting affidavit on the creditor by sending them by post on 3 October. They were received on 5 October. Mr Dunning submitted first that what prevented the applicant's complying with s. 459G( 3) ( b) was the respondent's failure to provide an address for service in Queensland. His second 4 JUDGMENT 10 20 30 40 50 60 -- 4 of 8 -- 04i295 tkm (Helman J) point was that the affidavit of Mr Richard McPhail, the company secretary of the respondent, is demonstrably false. Rule 52 of the Corporations (Queensland) Rules 1993 provides that the affidavit verifying a statutory demand under s. 459E ( 3) must be sworn by a person having knowledge of the facts. Mr McPhail swore that to his knowledge the sum of $57,580.87 was due and payable by the applicant to the respondent, and that he had personal knowledge of the debts making up that sum: $20,651.15 and $36,929.72. Mr Dunning submitted that from other evidence before me showing that the dealings between the parties were conducted on behalf of the respondent by others it should be concluded that Mr McPhail could not have been in a position to swear to what he did from his personal knowledge. Mr Egan, for the respondent, strongly urged me to conclude that there was no power to impose the conditions sought by the applicant. He submitted that Senior Master Mahoney' s assumption that there was such -a power was erroneous. In David Grant & Co. Pty Ltd v. Westpac Banking Corporation it was recognised, however, that relief may be available to a company in a court of general equity jurisdiction to modify, in an appropriate case, khe effect of a strict application of the rules in Part 5.4: "No doubt, in some circumstances, the new Pt 5. 4 may appear to operate harshly. But that is a consequence of the legislative scheme which has been adopted to deal with perceived defects in the pre-existing procedure in relation to notices of demand. It also may transpire that a winding up application in respect of a solvent company is threatened or mad_e 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) 174 C.L.R. 509 at pp. 518-522, 532-537]. However, in an appropriate case, injunctive relief may then be available to the company in a court of general 5 JUDGMENT 10 20 30 40 50 60 -- 5 of 8 -- 041295 tkm (Helman J) equity jurisdiction. 11 whom Brennan C. J. and agreed) (pp. 785-786 per Gummow J., with Dawson, Gaudron, and McHugh JJ. That passage is support for the contention that there is power to impose conditions of the sort imposed by Senior Master Mahoney. But before such a drastic step is taken the court asked to take it will of course require the factual basis upon which it is asked to act to be properly established. The applicant has put nothing before me to show how it came about that it did not comply with section 459G( 3) ( b). No explanation appears in the evidence as to why the applicant waited until the last day to institute the application, nor is it explained why the papers could not have been served at the Sydney address within the prescribed time. Modern communications are such that that could have been accomplished without great difficulty even if the applicant delayed until the eleventh hour to move. While it is clearly possible that the defect in the demand may have played a part in what happened, it does not necessarily follow that it did: the applicant and its advisers may simply not have adverted to the requirement ins. 459G(3)(b). At all events the onus lies on an applicant seeking to avoid the consequences of the scheme provided for in Part 5.4-- to put evidence before the Court so that it can properly assess whether the applicant is entitled to the relief sought. In Scandon Pty Ltd v. Dome Supplies Pty Ltd (1995) 13 A.C.L.C. 1,256 Senior Master Mahoney held that the failure to specify an address for service in the State in which a statutory demand was served justified setting aside a demand even though 6 JUDGMENT 10 20 30 40 50 60 -- 6 of 8 -- Q41295 tkm (Helman J) the company had been able to comply with s. 459G(3)(b). The Master concluded that al though the demand could not be set aside under s. 459J(l)(a) on the ground that "substantial injustice will be caused unless the demand is set aside", it should be set aside under s. 459J(l)(b), there being "some other reason why the demand should be set aside". The other reason was that, in the absence of exceptional circumstances - as for example where the company has invited the creditor to specify an address for service outside the State or Territory where it is served, "the opportunity ought to exist for the court to register clearly and appropriately the importance of due compliance with the requirements of paragraph 6 of Form 509(H)". (p. 1,261) No question of setting aside the demand arises here, and in my view a purely cautionary approach similar to that in Scandon Pty Ltd v. Dome Supplies Pty Ltd resulting in the relief sought is, perhaps some may think regrettably, not open here in relation to the defect in the-demand: the applicant must show by clear evidence, which is accepted, that it is entitled to a dispensation from the rigours of the scheme in Part 5.4. It has failed to do that. The contents of Mr McPhail's affidavit appear to me not to be inherently improbable if one bears in mind he was the company secretary. It does not follow that because others were more closely associated with the applicant at the time of the dealings between the parties that Mr McPhail could not have had personal knowledge of those dealings. 7 JUDGMENT 10 20 30 40 50 60 -- 7 of 8 -- 041295 tkm (Helman J) In those circumstances I conclude that the applicant here relies on inferences which amount to little more than conjecture. conditions. The application will be dismissed, without HIS HONOUR: I order that the applicant pay to the respondent its costs of and incidental to the application, including reserved costs, to be taxed. 8 JUDGMENT 10 20 30 50 60 -- 8 of 8 --