1 Devonworth Enterprises P/L v Sydney Olympic Sporting Club Ltd and 1 Ors; and 2 Windereen Holdings Pty Ltd v Sydney Olympic Sporting Club Ltd and 1 Ors

[2001] NSWSC 834

CITATION:

1. Devonworth Enterprises P/L v Sydney Olympic Sporting Club Ltd & 1 Ors; AND 2. Windereen Holdings Pty Ltd v Sydney Olympic Sporting Club Ltd & 1 Ors [2001] NSWSC 834 revised - 8/10/2001

CURRENT JURISDICTION:

Equity

FILE NUMBER(S):

SC 4036/01; 4037/01

HEARING DATE(S):

20/09/01

JUDGMENT DATE:

20 September 2001

PARTIES :

1. Devonworth Enterprises Pty Ltd (ACN 081 763 859) (Plaintiff)
Sydney Olympic Sporting Club Ltd (ACN 052 338 066) (First Defendant)
Peter Dendrinos (Second Defendant)

2. Windereen Holdings Pty Ltd (ACN) 081 366 850) (Plaintiff)
Sydney Olympic Sporting Club Ltd (ACN 052 338 066) (First Defendant)
Peter Dendrinos (Second Defendant)

JUDGMENT OF:

Santow J

COUNSEL :	J T Johnson (Plaintiffs) G Segal (Defendants)
SOLICITORS:	Sally Nash & Co (Plaintiffs) Konstan Lawyers (Defendants)
CATCHWORDS:	CORPORATIONS - Statutory demand - Indemnity costs where no affidavit verifying - Responsibility of officer.
LEGISLATION CITED:	Corporations Act s459E
DECISION:	Indemnity costs awarded against company only.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

SANTOW J

No. 4036/01 - Devonworth Enterprises P/L v Sydney Olympic Sporting Club Ltd & 1 Ors
No. 4037/01 - Windereen Holdings Pty Ltd v Sydney Olympic Sporting Club Ltd & 1 Ors

Judgment ex tempore
20 September 2001 (REVISED 8 October 2001)

INTRODUCTION

1 The Plaintiff, ultimately without opposition to-day, has obtained orders that the Defendant’s Statutory Demands should be set aside. That result was inevitable given that the relevant Statutory Demands were not accompanied by any affidavit verifying the debt, the subject of such Demands, as is mandatorily required by s459E of the Corporations Act. This is where the debt is not a judgment debt, as clearly it is not.

2 The withdrawal of opposition occurred only to-day, the date of the hearing, notwithstanding that on 13 August 2001 by letter from the solicitors for the Plaintiffs to the Defendants that fatal defect in the Statutory Demand was clearly pointed out; it was described, correctly, as “defective in form and content”. The Defendant was requested to withdraw the Statutory Demands but nothing was done till to-day to do so. That of itself bears upon whether indemnity costs should be awarded against at least the First Defendant, the Company now in at least strained financial circumstances if not insolvent, that issued the relevant Statutory Demands.

3 Regrettably the Court’s time has been wasted by the matter proceeding to its present hearing. The only question before me is whether indemnity costs should be awarded as distinct from party and party costs, and whether these should be awarded not only against the First Defendant but also against the Second Defendant being the Director and Secretary who caused the issue of the Statutory Demand.

RESOLUTION OF ISSUE

4 Debate took place as to whether, without more, the facts as I have recounted them would justify indemnity costs at least against the First Defendant. It is fundamental that a Statutory Demand which threatens the ultimate consequence of winding-up be based upon a properly verified debt. Moreover, that verification is no mere technical matter but goes fundamentally to whether or not the issue of the Statutory Demand is an abuse of process. That the Statutory Demand issued, containing in an unverified schedule broad reference to the basis for the alleged debt, falls well short of the mandatory verification by affidavit, with the sanctions that attend a false affidavit.

5 That is why, without more, I would conclude that indemnity costs are properly payable.

6 The Defendants then attempted to argue that, were I satisfied on additional evidence which they sought to tender, that then there was no basis for a genuine dispute concerning the alleged debt, this would obviate indemnity costs. The Defendants were attempting to controvert that there was a genuine dispute, in circumstances where they had no basis for doing so, purely to argue about indemnity costs. There was no basis for doing so because there was no valid Statutory Demand.

7 I do not accept that submission in any event that there was no genuine dispute. First, the Defendants on the present state of the evidence frankly concede that there is no basis they could put for refuting that there is a genuine dispute. To permit the filing of further evidence would be quite unjustified in circumstances where there is no valid statutory demand before me. Indeed it would be dubious whether such further evidence could be belatedly filed even had there been a valid Statutory Demand.

8 In any event, it is reasonably clear even taking into account the foreshadowed further evidence that there is the basis for a genuine dispute. The agreement relied on to ground the claimed debt is oral and its terms will inevitably be the subject of dispute.

9 One possible dispute relates to whether there were any condition attaching to the supposed oral commitment to pay $250,000 such as unqualified accounts. Another relates to whether the individuals ever agreed that their five companies would be responsible for the alleged debt.

10 However, I do not wish to do that which would only be appropriate were there a Statutory Demand before me; that is, attempt to determine the genuineness or otherwise of the dispute, beyond noting that the threshold for a genuine dispute is a modest one.

11 In all the circumstances, I consider indemnity costs should be payable. With some hesitation I will not award indemnity costs against the Second Defendant only because it is possible that the Second Defendant acted in good faith, though on a clearly misconceived basis.

ORDERS

12 That the First Defendant pay the Plaintiff’s costs on an indemnity basis.

13 Orders are also made by consent in terms of paras 1 and 2 of the Plaintiffs’ Originating Summons

**********

Last Modified: 10/09/2001