2020 Construction Systems Pty Ltd v Dryka & Associates Pty Ltd - [2010] WASC 22

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: 2020 CONSTRUCTION SYSTEMS PTY LTD -v- DRYKA & ASSOCIATES PTY LTD [2010] WASC 22

CORAM: BEECH J

HEARD: 3 FEBRUARY 2010

DELIVERED : 12 FEBRUARY 2010

FILE NO/S: CIV 1084 of 2010

BETWEEN: 2020 CONSTRUCTION SYSTEMS PTY LTD
Plaintiff
AND
DRYKA & ASSOCIATES PTY LTD
Defendant

Catchwords:

Injunctions - Interlocutory injunctions - Corporations - Winding up - Statutory demand under s 459E Corporations Act - Application to restrain winding up proceedings based on statutory demand - Alleged formal defects in statutory demand - Whether statutory demand a nullity or abuse of process - Turns on own facts

Legislation:

Oaths, Affidavits and Statutory Declarations Act 2005 (WA), s 9, s 16
Corporations Act 2001 (Cth), s 459E, s 459G, s 459J, s 459S

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff: Ms K E Roach
Defendant: Mr A Metaxas

Solicitors:

Plaintiff: Park Legal Solutions
Defendant: Metaxas & Hager

Case(s) referred to in judgment(s):

Beralt v Joe Battaglia Plastering Pty Ltd [1999] QSC 202; [2001] 1 Qd R 232
Crema (Vic) Pty Ltd v Land Mark Property Developments (Vic) Pty Ltd [2006] VSC 338; (2006) 24 ACLC 889
David Grant & Co Pty Ltd (Receiver Appointed) v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265
Dromore Fresh Produce Pty Ltd v W Paton (Fertilizers) Pty Ltd (1997) 137 FLR 307
Global Cement (North Qld) Pty Ltd v Benchmark Debtor Finance Pty Ltd [2007] QSC 143
Goldman Asset Management Pty Ltd v Prudential-Bache Securities (Australia) Limited (Unreported, WASC, Library No 980449, 27 July 1998)
House of Tan Pty Ltd v Beachiris Pty Ltd (1996) 14 ACLC 1536
Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd (1994) 51 FCR 446
NT Resorts Pty Ltd v Deputy Commissioner of Taxation (Cth) (1998) 153 ALR 359
Peak Hill Manganese Pty Ltd v Hydraplant Equipment Pty Ltd [2003] WASC 120
Quitstar Pty Ltd v Cooline Pacific Pty Ltd [2002] NSWCA 329
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622
Redglove Holdings Pty Ltd v GNE & Associates Pty Ltd [2001] NSWSC 867
Sheslow v Diamond Rose NL [2005] NSWSC 492; (2005) 54 ACSR 376
State Bank of New South Wales v Tela Pty Ltd (No 2) [2002] NSWSC 20; (2002) 188 ALR 702
Topfelt Pty Ltd v State Bank of New South Wales Ltd (1993) 47 FCR 226
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Vicbar Pty Ltd v Development Constructions (Newcastle) Pty Ltd (1995) 13 ACLC 1220
Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509

BEECH J:

Introduction

On 14 September 2009 two documents were delivered to the plaintiff's registered office. The first document (the Statutory Demand) was or purported to be a creditor's statutory demand; the second (the Affidavit) an accompanying affidavit. The plaintiff challenges the validity of these documents.
The plaintiff (2020) seeks an urgent interlocutory injunction restraining the defendant (Dryka & Associates) from commencing any proceeding to wind up 2020 in insolvency in reliance on the Statutory Demand and the Affidavit.
For the reasons that follow, I would not grant an interlocutory injunction. In summary:
(1)I am not persuaded that 2020 has established a serious question to be tried that the Statutory Demand is a nullity or involved an abuse of process; and
(2)I am not persuaded that the balance of convenience favours the grant of the injunction.

Background

The Statutory Demand relates to a debt of $64,650. Earlier, Dryka & Associates served on 2020 a statutory demand dated 28 February 2009 in respect of the same debt.
2020 applied to set aside the statutory demand of February 2009. That application was proceedings COR 60 of 2009. Two grounds were stated in the originating process to set aside that statutory demand. The first ground was that there was a genuine dispute about the debt claimed. The second ground was that there was no affidavit accompanying the statutory demand because the purported affidavit was not witnessed by an authorised person under the Oaths, Affidavits and Statutory Declarations Act 2005 (WA).
2020 filed an affidavit of Richard James Trainer in support of the application. That affidavit was filed in support of the contention that the debt was disputed.
In COR 60 of 2009 on 16 April 2009 Master Sanderson ordered that the statutory demand of February 2009 be set aside. He made that order on the basis of the second ground advanced in the originating process, namely that the accompanying affidavit had not been witnessed by an authorised person.
As I have said, on 14 September 2009, Dryka & Associates served the Statutory Demand and the Affidavit.
On 6 October 2009, 2020 commenced proceedings COR 193 of 2009 seeking an order that the Statutory Demand be set aside. When those proceedings were commenced 2020 believed the documents had been served on 15 September 2009. However, it subsequently emerged that the documents had been served on 14 September 2009. As a consequence, on 14 January 2010 the application in COR 193 of 2009 was dismissed on the grounds that the application was not made within the 21‑day time limit required by s 459G(2) of the Corporations Act 2001 (Cth).
At the hearing in COR 193 of 2009, counsel for 2020 applied to amend the proceedings to include a claim for a declaration that the Statutory Demand does not substantially comply with the essential requirements of s 459E and that non‑compliance renders it insufficient to support an application to wind up 2020. The application to amend was opposed by Dryka & Associates. Simmonds J refused the application, while reserving the liberty of 2020 to bring fresh proceedings seeking a declaration.
The effect of the dismissal of the s 459G proceedings in COR 193 of 2009 was that the time for compliance with the Statutory Demand expired on 21 January 2010: s 459F(2)(a)(ii).
On 20 January 2010, 2020 commenced this action by filing a writ endorsed with a statement of claim. On 20 January 2010 it also filed a chamber summons for an interlocutory injunction.
The writ seeks a declaration that the Statutory Demand:
(a)does not substantially comply with the essential requirements of s 459E(3) of the Corporations Act;
(b)is of no force and effect; and
(c)is so defective that non‑compliance with it is insufficient to support an application to wind up 2020 in insolvency either pursuant to s 459B of the Corporations Act or on any other ground.
Dryka & Associates, by its solicitor, gave an undertaking on 20 January 2010 not to file a winding up application based on the Statutory Demand without giving 48 hours notice. At the hearing of the application for an interlocutory injunction, counsel for Dryka & Associates confirmed that undertaking extended to delivery of my decision on this application.

Interlocutory injunctions: general principles

I repeat the summary I gave in Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] ‑ [11]:
In Castlemaine Tooheys Ltd v The State of South Australia (1986) 161 CLR 148 at 153, Mason ACJ summarised the principles governing the grant or refusal of an interlocutory injunction as follows:
In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction.
That summary was adopted by Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199 at 217. These principles have been routinely applied in this and other courts in Australia.
These principles were further explained by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, [65]–[71] (Gleeson CJ and Crennan J agreeing). Their Honours stated that the relevant principles are those stated in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618, where the two main inquiries were said to be whether the plaintiff had made out a prima facie case and whether the balance of convenience favours the grant of the injunction. The phrase 'prima facie case' does not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed. It is sufficient that the plaintiff show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial. How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders the plaintiff seeks: [65], [71].
The apparent statement by Lord Diplock in American Cyanamid Co v Ethicon Ltd [1975] AC 396, 407 that, provided the court is satisfied that the plaintiff's claim is not frivolous or vexatious, there will be a serious question to be tried, is not to be followed. The governing consideration is that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory orders sought. These principles make it clear that the various considerations identified by Mason ACJ in Castlemaine Tooheys are to be considered together.
As the apparent strength of the applicant's case diminishes, the balance of convenience moves against the making of an order: Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49, 54 ‑ 55; Todd v Novotny [2001] WASC 171. The grant of an injunction involves balancing the injustice which might be suffered by the defendant if the injunction is granted and the plaintiff later fails at trial, against the injustice which might be suffered by the plaintiff if the injunction is not granted and the plaintiff later succeeds at trial: Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670; Madaffari v Labenai Nominees Pty Ltd [2002] WASC 67 [14].

The form of the Statutory Demand and the Affidavit

The claims made by 2020 invite detailed attention to the form of the Statutory Demand and the Affidavit.
In par 2 of the Statutory Demand the following is stated:
Attached is the affidavit of John Joseph Dryka dated 11 September 2009, (resworn 14 September 2009), together with the annexures 'JJD1' to 'JJD3' verifying that the amount is due and payable by the company.
In fact, the annexures to the Affidavit are marked A to D, not JJD1 to JJD3. 2020 claims that this means that the Statutory Demand is a nullity.
In the jurat, on page 2 of the Affidavit, it is said that the affidavit is sworn by John Joseph Dryka on 11 September 2009 at Perth. He has signed, once, adjacent to the jurat. Underneath the jurat is written:
Resworn before A Swift JP at Perth, on 14-9-2009.
The signature of each of Mr Dryka and Mr Swift, the justice of the peace before whom the Affidavit was resworn, appears once only on page 2. That point is emphasised in 2020's submissions.
On page 2 of the Affidavit there is also the stamp of Curtin House, Perth, WA, duty JP, with Mr Swift's initials. Mr Singer's signature does not appear on page 2, nor do his initials.
On the first page of the Affidavit the initials of Mr Singer appear, together with the signature of Mr Swift. All annexures to the Affidavit have been witnessed and signed by each of Mr Swift and Mr Singer: see pages 15, 17, 43 and 54.
The circumstances relating to the swearing of the Affidavit are explained in the affidavit of Mr Dryka sworn 1 February 2010. Counsel for 2020 accepted that I should act on the basis of that evidence. It is consistent with and supported by what can be seen on pages 1 and 2 of the Affidavit.
What occurred may be summarised as follows. Mr Dryka swore the Affidavit on 11 September 2009 at Curtin House, 60 Beaufort Street, Perth before Mr Colin Singer, JP. After leaving he noticed that Mr Singer had not signed on the second page. He returned to 60 Beaufort Street on 14 September 2009 to reswear the Affidavit. Mr Swift was on duty as JP that day. Mr Swift asked Mr Dryka a series of questions, one of which was whether he had signed the document. Mr Dryka said that he had and showed Mr Swift the signature on the second page and the initials on the first page. Mr Swift then wrote 'Resworn before A Swift, JP at Perth on 14‑9‑2009' on the second page of the document and signed the Affidavit on the first page, the second page and (initialled) the other pages.
It is not necessary to recount in detail all of the content of the Affidavit. 2020's argument relies on pars 11 and 14 of the Affidavit. To put those paragraphs into context, I also refer to pars 10 and 12 of the Affidavit. Paragraphs 10 ‑ 12 and 14 are in the following terms:
10.In support of the application by the debtor company to set aside the previous Statutory Demand, an Affidavit was filed by Richard James Trainer sworn 3 April 2009 together with Annexures 'RJT1' to 'RJT2'. Annexed hereto and affixed with the letter 'B' is a true and correct copy of the Affidavit of Richard James Trainer.
11.The creditor has examined the contents of the Affidavit of Richard James Trainer referred to in paragraph 10 above and it is apparent that the contents of the Affidavit of Richard James Trainer contained material that appeared to be perjured and untrue in various material aspects.
12.The persons who conducted the affairs of the creditor with Richard James Trainer, Mieczyslaw John Dryka ('Michael Dryka'), Nikita Kraynev have gone on oath in response to the false and untrue allegations raised by Richard James Trainer in his Affidavit. Annexed hereto and affixed with the letter 'C' is a true and correct copy of the Affidavit of Nikita Kraynev sworn 10 September 2009 together with annexures 'NK1' to 'NK2'. Annexed hereto and affixed with the letter 'D' is a true and correct copy of the Affidavit of Mieczyslaw John Dryka sworn 11 September 2009 together with Annexures 'MJD1' to 'MJD9'.
…
14.In the circumstances, the creditor is desirous to appoint a liquidator to establish whether the debtor company was incurring debt at a time when it had no reasonable expectation of paying that debt.

2020's claim

The essence of 2020's claim is pleaded in pars 6 ‑ 8 of the statement of claim, which are in the following terms:
6The [Affidavit]
(a)has markings on it that show, contrary to the requirements of the Oaths, Affidavits and Statutory Declarations Act 2005 (WA):
(i)that either on the date of 11 September 2009 or on the date of 14 September 2009:
(A)     the jurat; and
(B)      page 1,
of the [Affidavit] was not signed or personally marked by John Joseph Dryka;
(ii)that the alteration to the date of the [Affidavit] as noted on page 2 of the [Affidavit] has not been signed or initialled by John Joseph Dryka;
(iii)that either on the date of 11 September 2009 or on the date of 14 September 2009:
(A)     the jurat; and
(B)      page 1,
of the [Affidavit] was not signed or personally marked by the person before whom it was sworn;
(iv)that the alteration to the date of the [Affidavit] as noted on page 2 of the [Affidavit] has not been signed or initialled by the person before whom it was sworn;
(b)contains unfounded assertions in paragraphs 11 and 12 as to the veracity of evidence given in unrelated Supreme Court proceedings;
(c)expressly discloses in paragraph 14 that the Defendant is 'desirous to appoint a liquidator to establish whether the debtor company was incurring debt [sic] at a time when it had no reasonable expectation of paying that debt'; and
(d)has only Annexures 'A' to 'D' inclusive, rather than the 'Annexures JJD1 to JJD3' that is stated in the [Statutory Demand] to be annexed to the [Affidavit].
7By reason of the facts pleaded in paragraph 6, the [Affidavit]:
(a)fails to comply substantially or at all with the requirements of the Corporations Act 2001 (Cth), the Supreme Court Corporations (WA) Rules of Court and the Oaths, Affidavits and Statutory Declarations Act 2005 (WA); and
(b)discloses an intention on the part of the Defendant to wind up the Plaintiff, which evidences an impermissible intention on the part of the Defendant when making and delivering the [Statutory Demand] and [Affidavit]; and
(c)contains defamatory material, which evidences an impermissible intention on the part of the Defendant when making and delivering the [Statutory Demand] and [Affidavit].
8By reason of the facts pleaded in paragraphs 6 and 7, the [Statutory Demand] is a nullity and is of no force or effect.
It can be seen that it is the alleged defects in or complaints about the Affidavit that are said to lead to the conclusion that the Statutory Demand is a nullity and of no force and effect.
The claims made by 2020 may be put into two categories. The first category relates to formal or technical defects in the Affidavit or Statutory Demand. The second category alleges improper purpose or abuse of process. I will deal first with the complaints of a formal or technical nature.
The claims of formal defect leading to invalidity advanced by 2020 must be viewed in the context of the legal principles about statutory demands and the regime created by pt 5.4 of the Corporations Act.

Defects in statutory demands: legal principles

By s 459E a creditor may serve on a company a demand relating to a debt that is due and payable.
By s 459E(2)(e) a statutory demand must be in the prescribed form. By s 459E(3)(b), with an immaterial exception, the demand must be accompanied by an affidavit that complies with the rules. By r 5.2 of the Supreme Court (Corporations) Rules 2004 (WA), the affidavit must be in accordance with Form 7 and state the matters mentioned in that form. Counsel for 2020 accepted in argument that the Affidavit complied with the Rules and Form 7.
By s 459G the company may apply to the court for an order setting aside a statutory demand within 21 days. Section 459H concerns the existence of a dispute between the parties about the debt or an offsetting claim. Section 459J provides for a statutory demand to be set aside on other grounds. It provides as follows:
459J Setting Aside Demand on Other Grounds
(1)[Defect or other reason] 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 may be set aside; or
(b)there is some other reason why the demand should be set aside.
(2)[Mere defect] Except as provided in subsection (1), the Court must not set aside a statutory demand because of a defect.
If the statutory demand is not set aside and remains in force then it gives rise to a presumption of insolvency: s 459C.
Section 459S creates important limitations on the grounds upon which a company may oppose a winding up application that is based on a failure by the company to comply with a statutory demand. Section 459S provides:
459SCompany May Not Oppose Application On Certain Grounds
(1)[Demand may not ground opposition] In so far as 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 company may not, without the leave of the Court, oppose the application on a ground:
(a)that the company relied on for the purposes of an application by it for the demand to be aside; or
(b)that the company could have so relied on, but did not so rely on (whether it made such an application or not).
(2)[Ground material to solvency] The Court is not to grant leave under subsection (1) unless it is satisfied that the ground is material to proving that the company is solvent.

The starting point is that complaints about defects in demands are to be raised in an application under s 459G and such applications are required to be made within 21 days of service. When such complaints are made, by s 459J, the demand is to be set aside because of a defect only if substantial injustice will be caused unless the demand is set aside or (perhaps) if, for some other reason, the court considers it should be set aside. I say 'perhaps' because some judges have suggested s 459J(1)(a) and s 459J(1)(b) are mutually exclusive in that (b) does not apply to defects. I do not need to determine whether that is so.
Section 459J creates a regime quite different from the very strict approach to the issues of validity of bankruptcy notices. That was a deliberate choice by the legislature in enacting pt 5.4 of the Corporations Act. See, for example, Topfelt Pty Ltd v State Bank of New South Wales Ltd (1993) 47 FCR 226, 235 ‑ 238; Vicbar Pty Ltd v Development Constructions (Newcastle) Pty Ltd (1995) 13 ACLC 1220, 1224 ‑ 1225.
These two provisions in combination mean that a party alleging a defective statutory demand to be a nullity faces a high hurdle. Not all defects render a statutory demand liable to be set aside under s 459J, only those giving rise to substantial injustice or (perhaps) those constituting another reason to set aside the demand. Further, not all defects rendering a statutory demand liable to be set aside under s 459J will render it a nullity. Consequently, it would seem that only a very small set of extreme cases would fall into the category of nullity. That is borne out by the authorities.
It is important to notice that by s 9, 'statutory demand' means a document that is or purports to be a demand served under s 459E. It is clear from the case law that the definition in s 9 applies to pt 5.4 div 3. The expression 'purports to be' means 'professes or claims to be': Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd (1994) 51 FCR 446, 452.
The effect of that definition is to narrow the scope for an argument that the document served was a nullity which the court could ignore as having no legal consequences. The courts have referred to the possibility that a document professing to be a statutory demand might be so fundamentally defective that it would not be treated as a statutory demand See Topfelt Pty Ltd v State Bank of New South Wales Ltd (238); Kalamunda Meat Wholesalers (452); Vicbar Pty Ltd (1224 ‑ 1225); NT Resorts Pty Ltd v Deputy Commissioner of Taxation (Cth) (1998) 153 ALR 359, 367; Crema (Vic) Pty Ltd v Land Mark Property Developments (Vic) Pty Ltd [2006] VSC 338; (2006) 24 ACLC 889 [91] ‑ [116]. In all these cases, the possibility was referred to, but found not to be applicable in the circumstances of the case. Cases in which it has been applied are few.
In Dromore Fresh Produce Pty Ltd v W Paton (Fertilizers) Pty Ltd (1997) 137 FLR 307, 311, Young J commented that cases will be 'very rare' where a demand is outside what is a purported demand.
In Crema [110] Dodds‑Streeton J suggested that only deficiencies of a gross and exceptional character would deny a document the status of a statutory demand. See also Quitstar Pty Ltd v Cooline Pacific Pty Ltd [2002] NSWCA 329 [15].
One case where a document was held not to be a statutory demand was Sheslow v Diamond Rose NL [2005] NSWSC 492; (2005) 54 ACSR 376. In that case, the demand did not purport to be served under s 459E, or under the Corporations Act at all, but under a different (non‑existent) Act. Consequently, the demand did not engage the definition in s 9 of the Corporations Act. In the context of a winding up application, the court held that the demand was not a statutory demand within the meaning of pt 5.4 of the Corporations Act.
Another case in which a court came to a similar conclusion is Beralt v Joe Battaglia Plastering Pty Ltd [1999] QSC 202; [2001] 1 Qd R 232. In that case, the statutory demand that left out the words in the prescribed form 'that the application [to set aside the demand] must be made within 21 days after the demand was served'. Ambrose J held that the demand was fundamentally deficient. He held that it was a fundamental requirement of a statutory demand in its prescribed form, to inform the debtor company that, among other things, failure to either pay the debt or secure or compound it within 21 days, or to apply to have the demand set aside within 21 days would allow the creditor to apply to a court to have the debtor company wound up. Because the demand failed to inform the debtor company of that essential matter it could not be treated as an effective demand for the purposes of s 459E. See [59] ‑ [60]. Consequently, his Honour made a declaration that the statutory demand does not substantially comply with the essential requirements of s 459E and the relevant form, and that non‑compliance with it is insufficient to support an application to wind up the applicant.
I turn to the issue of whether 2020 has established a serious question to be tried of invalidity on the grounds of the alleged formal defects.

Is there a serious question to be tried of invalidity because of formal defects?

2020's first complaint about formal defects is contained in pars 6(a)(i) and 6(a)(iii) of the statement of claim. Those paragraphs complain, in substance, that Mr Dryka and the witness of the Affidavit have each signed the document once only and not on both 11 September 2009 and 14 September 2009.
Section 9 of the Oaths, Affidavits and Statutory Declarations Act governs how affidavits are made. Section 9 provides relevantly as follows:

9.Affidavits, how made

(1)Unless another written law provides otherwise, an affidavit for any purpose in this State must be made in accordance with this section.
(2)The affidavit must conclude with a statement that says ‑
(a)it is sworn or affirmed, as the case requires, by the person making it in the presence of an authorised witness; and
(b)where and when it is sworn or affirmed.

(3)The person who is making the affidavit must ‑
(a)sign or personally mark the statement required by subsection (2) and each other page of the affidavit;
(b)sign or initial any alteration, such as an insertion or erasure, that has been made to the affidavit; and
(c)in the presence of an authorised witness, say orally on oath or orally affirm ‑
(i)that he or she is the person named as the maker of the affidavit;
(ii)that the contents of the affidavit are true;
(iii)that the signature or mark is his or hers; and
(iv)if necessary, that any attachment to the affidavit is the attachment referred to in it.

(4)The requirements of subsection (3)(a) and (b) need not be complied with in the presence of an authorised witness.
(5)After the maker has complied with subsection (3)(c), the authorised witness must ‑
(a)under or near the statement required by subsection (2) ‑
(i)sign or personally mark the affidavit; and
(ii)imprint or clearly write his or her name and qualification as an authorised witness;

(b)sign or personally mark each other page of the affidavit; and
(c)sign or initial any alteration in the affidavit that has been signed or initialled by the maker.

Section 16 of that Act provides:
16. Non‑compliance with form or procedure, effect of
(1)The validity of an oath, affirmation or statutory declaration is not affected by the fact that the person taking or making it does not use the exact words required as long as the words actually used do not materially affect the substance of the exact words and are not likely to mislead.
(2)The validity of an oath, affirmation, affidavit or statutory declaration is not affected by the fact that the required procedure for taking or making it is not followed exactly as long as the procedure actually followed substantially complies with the required procedure.
2020 contends that if an affidavit is resworn it needs to have two sets of all signatures in order to be valid. I do not consider that 2020's contention is arguable. Mr Singer, the witness on 11 September 2009, had not signed on page 2. That was rectified by the swearing on 14 September 2009 before Mr Swift. Obviously, Mr Swift needed to sign (in each place) once only. Mr Dryka did not have to sign the Affidavit, for the second time, on 14 September 2009. He had already signed it. Section 9(4) expressly provides that it is not necessary that the signing of an affidavit occur in the presence of the authorised witness. By s 9(3)(c)(iii) the person making the affidavit must say in the presence of the authorised witness, among other things, that the signature is his or hers. That is what occurred in this case, as I explained in [24].
I cannot discern any defect in the making of the Affidavit on 14 September 2009, much less a defect that amounts to substantial non‑compliance within the meaning of s 16(2) of the Oaths, Affidavits and Statutory Declarations Act.
For these reasons, I am not persuaded that the plaintiff's first contention raises a serious question to be tried.
Paragraphs 6(a)(ii) and (iv) of the statement of claim complain that the 'alteration' to the date as noted on page 2 of the Affidavit has not been signed or initialled by each of Mr Dryka and Mr Swift, as is said to be required by s 9(3)(b) and s 9(5)(c) of the Act. This complaint was not developed in oral submissions. I do not consider that it gives rise to any serious question to be tried. In the circumstances outlined in [16] ‑ [24] above, no 'alteration' was made to the Affidavit. It was simply resworn. Thus s 9(3)(b) and s 9(5)(c) are not engaged.
Paragraph 6(d) of the statement of claim complains that the Affidavit has attached to it annexures A to D and not 'annexures JJD1 to JJD3' as stated in the Statutory Demand as being annexed. Counsel for 2020 submits that the absence of correlation between what was said to be attached and what was in fact attached meant that there was no accompanying affidavit.
Paragraph 2 of the Statutory Demand stated that what was attached was an affidavit of John Joseph Dryka dated 11 September 2009 and resworn 14 September 2009. What was in fact attached matched that description. Paragraph 2 further stated that the attached affidavit verified that the amount is due and payable. The Affidavit did that. Consequently, the only discrepancy related to the annexures to the Affidavit. The annexures were described as JJD1 to JJD3 rather than annexures A to D.
Counsel for 2020 accepts, rightly, that the question is not whether the defect is such as would have rendered the Statutory Demand liable to be set aside under s 459J of the Corporations Act. Counsel accepts that 2020 faces a substantially higher hurdle than that in making good its invalidity argument at trial. See [30] ‑ [37] of these reasons. It is also relevant that, as counsel for 2020 accepted, the Affidavit contains the matters required by the Rules and by Form 7.
I am not persuaded that this complaint gives rise to any serious question to be tried. To my mind, the misstatement in relation to the annexures does not arguably lead to any reasonable risk of misconception or confusion about what was the accompanying affidavit. It is clear that the affidavit in fact attached was, and was intended to be, the accompanying affidavit. The misdescription would, in my opinion, lead to no more than the inference that there was a misdescription in the reference in par 2 of the statutory demand to annexures in the accompanying affidavit.
That brings me to 2020's finsal argument, of abuse of process and improper purpose, based on pars 11 and 14 of the Affidavit. I begin with some relevant legal principles.

Abuse of process and extraneous purpose; legal principles

There is no doubt that, after the enactment of pt 5.4 of Corporations Act, the court retains its power to control and prevent conduct that is an abuse of process. That was confirmed by Gummow J in David Grant & Co Pty Ltd (Receiver Appointed) v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265, 279. The existence of the power has not been doubted subsequently. The question is not whether there is such a power but whether the circumstances of this case arguably engage that power.
The cases make clear that the enactment of pt 5.4 has fundamentally altered the circumstances in which it can be said that a creditor's conduct involves an abuse of process. An abuse is much more difficult to establish since the enactment of pt 5.4. See, for example, House of Tan Pty Ltd v Beachiris Pty Ltd (1996) 14 ACLC 1536, 1,538; Redglove Holdings Pty Ltd v GNE & Associates Pty Ltd [2001] NSWSC 867 [26] ‑ [29]; State Bank of New South Wales v Tela Pty Ltd (No 2) [2002] NSWSC 20; (2002) 188 ALR 702 [13] ‑ [14]; Peak Hill Manganese Pty Ltd v Hydraplant Equipment Pty Ltd [2003] WASC 120.
Proceedings, including the issue of a statutory demand, may involve an abuse of process if done for an extraneous or improper purpose. That will occur if the process is used to obtain some advantage for which it is not designed: Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 526 (to which Gummow J referred in David Grant); Redglove [26] ‑ [28]; State Bank v Tela [10].
There are other categories of abuse of process, and the categories are not closed. Improper purpose was the species of abuse alleged by 2020 in this case.
It is clear that a legitimate purpose of the serving of a statutory demand is to have the debt paid or else to apply to have the debtor wound up and the debt admitted to proof in the liquidation: Redglove Holdings Pty Ltd v GNE & Associates [28] ‑ [29]; Global Cement (North Qld) Pty Ltd v Benchmark Debtor Finance Pty Ltd [2007] QSC 143 [24]; State Bank v Tela [11]. In Tela [11] Barrett J said as follows:
The scheme of the legislation makes it clear that a creditor who has duly served a statutory demand which remains unsatisfied for the relevant period has a right to seek winding up. In former times, it was regarded as an abuse of process for such an application to be pursued in circumstances where the debt was disputed or an off-setting claim existed. The rationale was that winding up proceedings were not the appropriate occasion for those matters to be addressed and that the threat of such proceedings, with their serious commercial consequences, involved resort to the particular remedy for a purpose regarded by the law as improper. All that has been changed by Pt 5.4. It is now abundantly clear that, unless the Division 3 process is employed by the company concerned to ventilate in advance, by way of opposition to the statutory demand, any claim it has about the existence or amount of the debt or any off-setting claim, it is perfectly legitimate for the creditor to proceed with a winding up application even though such a dispute or off-setting claim may in fact exist.

Is there a serious question to be tried of abuse of process or improper purpose?

2020 submits that pars 11 and 14 of the Affidavit reveal, arguably at least, ulterior purposes. Paragraph 7 of the statement of claim pleads that these paragraphs disclose or evidence an impermissible intention. That impermissible intention is not particularised. Paragraph 8 pleads that that leads to the conclusion that the Statutory Demand is a nullity and of no force or effect.
In oral submissions, the impermissible intention was stated in two different ways. Early in the oral submissions it was expressed as an intention 'simply to wind up [2020] in circumstances where [Dryka & Associates] is not otherwise entitled to do so' (ts 29). Later in oral submissions it was expressed as disclosing an intention to wind up 2020 regardless of whether the debt was paid (ts 35 ‑ 36). I do not consider that pars 11 and 14 of the Affidavit arguably support an inference to either of these effects.
Counsel for 2020 submits that recovery of a debt is the 'appropriate and only [proper] motivation for issuing a creditor's statutory demand' (ts 32). I reject that proposition. As I have said, it is a legitimate purpose of service of a statutory demand to intend to apply to wind up the debtor company if it fails to pay the debt.
To my mind, par 14 does not arguably reveal any impermissible purpose. Alone or in combination with par 11, I do not consider it is capable of supporting an inference that, in serving the Statutory Demand and the Affidavit, Dryka & Associates intended to apply to wind up 2020 in circumstances where 2020 paid the demanded debt. Apart from anything else, if the debt was paid, Dryka & Associates would no longer be a creditor. The compelling inference is that, in serving the Statutory Demand, Dryka & Associates wanted its debt repaid and, if and only if it were not paid, it intended to apply to wind up 2020. That is a legitimate purpose for serving a statutory demand. Indeed, it is the primary object of any creditor invoking the statutory demand process. Further, there is nothing sinister or unusual in an investigation by a liquidator of whether the company in liquidation was incurring debt at an earlier time without reasonable expectation of being able to pay the debt.
Counsel for 2020 submits that par 11 of the Affidavit referred to the affidavit of Mr Trainer in 'unrelated' proceedings. I do not consider that the earlier proceedings in which Mr Trainer's affidavit was sworn were unrelated. Those proceedings related to the same debt. Mr Trainer's affidavit sought to raise a dispute about that debt. Far from referring to an affidavit in unrelated proceedings, it seems to me that par 11 was, in effect, seeking to deal, in an anticipatory way, with any argument by 2020 that the debt was disputed. That was, as counsel for Dryka & Associates accepted, unnecessary. However, the inclusion of an unnecessary pre‑emptive answer to an anticipated response by the debtor does not, to my mind, provide an arguable basis to infer an improper purpose.
The conclusion that par 11 is a pre‑emptive answer to an anticipated 'defence' by the debtor is reinforced when it is read in the context of pars 10 and 12 of the Affidavit. I note also that, in par 12, the affidavits of Nikita Kraynev and Mieczyslaw John Dryka were annexed. Those affidavits responded in detail to Mr Trainer's affidavit.
2020 submits that the pejorative language in the Affidavit and its reference to perjury by Mr Trainer reveals animosity and an intention to 'cause problems' by alleging perjury. I am unable to identify what problems, and with whom, it is alleged that this affidavit is intended to cause. Contrary to counsel for 2020's submission, it is no part of the function of a liquidator to investigate whether an affidavit sworn in support of an application to set aside a statutory demand involved perjury.
I am not persuaded that pars 11 and 14 of the Affidavit arguably support an inference of any impermissible purpose. Nor am I persuaded that those paragraphs arguably mean that the Affidavit lacks the character of an accompanying affidavit for the purposes of serving a statutory demand.
Thus I am not satisfied that 2020's complaints about the Affidavit, individually or when taken together, give rise to a serious question to be tried respecting the validity and efficacy of the Statutory Demand.
I would refuse the injunction on that ground alone. However, for the sake of completeness, I turn to the balance of convenience.

Balance of convenience

Counsel for 2020 submits that if no interlocutory injunction were granted, 2020 would suffer irreparable loss and damage in the following respects:
(1)2020's creditors becoming entitled to accelerate repayment of its debt facility;
(2)loss of reputation;
(3)loss of control of substantial intellectual property rights;
(4)loss of the ability to continue to prosecute the existing Supreme Court action seeking recovery of moneys due to 2020; and
(5)termination of 2020's existence as a legal entity.

There is no evidence to support the first respect in which damage is said to be threatened. There is no evidence about the terms of any debt facility of 2020.
I accept that the commencement of a winding up application may adversely affect the reputation of 2020. This is a factor in the balance that weighs in favour of the grant of an interlocutory injunction.
I do not accept that the filing of a winding up application will cause damage in the third, fourth and fifth respects set out above. Those consequences will occur, if at all, only if a winding up order is made. They will not occur upon the making of an application to wind up the company. As counsel for 2020 accepted in the course of oral argument, 2020's contention that the Statutory Demand and the Affidavit are nullities will, if accepted, amount to a defence to the winding up application. Consequently, I do not accept that damage in the third, fourth and fifth respects would occur as a consequence of not granting the injunction. If they occur, it would be as a consequence of a subsequent decision of the court.
Counsel for 2020 submits that it would be prejudiced in having to run its defence in the winding up proceedings where it would be 'subject to harsh exclusion provisions' in the Corporations Act. Counsel referred to s 459 of the Corporations Act and the need to 'squeeze itself into the box' (ts 40) of obtaining leave under that section.
I do not accept that this is a relevant prejudice or injustice. As Steytler J observed in Goldman Asset Management Pty Ltd v Prudential-Bache Securities (Australia) Limited (Unreported, WASC, Library No 980449, 27 July 1998), this is a product of the intention of the legislature in framing pt 5.4 of the Corporations Act.
Counsel for 2020 submits that if an interlocutory injunction were not granted, 2020 would be prejudiced in that it would need to run the proceedings in this action while also running the same arguments in the defence to the winding up application. Further, counsel submits that the winding up application may be commenced in the Federal Court which leads to the possibility of inconsistent judgments on the same question.
I do not accept that these matters give rise to any relevant prejudice. First, I am not persuaded that 2020 would be required, in any practical sense, to run two sets of proceedings. It would not need to continue these proceedings. In that regard, counsel for 2020 referred to the threat of costs upon a discontinuance of these proceedings. However, to my mind, the more likely approach to costs upon discontinuance would be that each party bear its own costs. See in this respect Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 624 ‑ 625.
Further, and in any event, if there were two sets of proceedings it seems to me to be very likely, almost inevitable, that the proceedings would be heard together. If necessary, an order transferring one proceeding under the cross‑vesting legislation could be made.
2020 further submits that it might not obtain an award of costs in its favour even if it succeeds in opposing the winding up order. I accept that that is so. However, given that that result would be the consequence of the exercise of a judicial discretion in relation to costs, I am not persuaded that it bears in any significant way upon the balance of convenience.
2020 submits that Dryka & Associates' claim was for a sum of less than $65,000 plus interest and that pursuit of that claim by an action would not be prejudiced by this injunction. I accept that.
Counsel for 2020 submits that Dryka & Associates had not established by evidence that it would suffer any prejudice.
On the material before me, the position is as follows:
(a)a statutory demand was served on 2020 on 14 September 2009;
(b)2020 did not pay the debt the subject of the demand;
(c)the demand has not been set aside; and
(d)2020 has adduced no evidence about its financial position.
I do not infer that 2020 is insolvent. There is no evidence, one way or the other, as to 2020's solvency. In the circumstances I have outlined, that absence of evidence of solvency seems to me to have some significance. In particular, it is relevant to whether Dryka & Associates might suffer prejudice from the grant of the injunction.
The grant of the injunction will, by definition, delay Dryka & Associates from filing a winding up application based upon the Statutory Demand until after the resolution of this action. If 2020 is insolvent (and it is unknown whether that is so) then, in my opinion, Dryka & Associates will be prejudiced by the delay. Moreover, on that hypothesis, other third parties may also be prejudiced.
Counsel for 2020 submits that a delay in the making of a winding up application of an insolvent company does not give rise to prejudice on the part of a creditor of that company unless either:
(a)during the period of the delay the solvency of the debtor company changes; or
(b)it is shown that in the period of delay the distribution to creditors is reduced.
I do not accept this submission. In my opinion, in the context of an assessment of the balance of convenience, delay in the winding up of an insolvent company is in itself relevant prejudice to a creditor of that company.
Counsel for 2020 submits that any prejudice arising from delay in the winding up was limited to a period of three weeks. That was because, the submission continued, it was open to Dryka & Associates to serve a fresh statutory demand, which would mean that a new 21‑day period would run from the date of service of the new demand. I do not accept that submission. Apart from anything else, it involves Dryka & Associates abandoning the Statutory Demand in serving a further demand. The efficacy of the Statutory Demand is the subject matter of this action. Thus the serving of a new statutory demand would involve the abandonment by Dryka & Associates of the rights that are in issue in this action.
Counsel for 2020 submits that any prejudice to Dryka & Associates would be compensated under the undertaking as to damages. In the circumstances outlined in [84], and where the injunction is to restrain an application to wind up 2020, I am not persuaded that that is so.
In summary, in relation to the balance of convenience, for the reasons I have given, it seems to me that the relevant factors in the balance are as follows. The risk of damage to the reputation of 2020 if an injunction is not granted must be weighed against the risk of prejudice to Dryka & Associates, and potentially others, if the injunction is granted and if (as is unknown) 2020 is insolvent. Taking into account my view as to the weakness of 2020's case on the merits, I am not persuaded that the balance of convenience favours the grant of the injunction.

Conclusion

For these reasons I would not grant an interlocutory injunction.