Aamac v Eco-Farms

[2004] NSWSC 193

CITATION:	Aamac v Eco-Farms [2004] NSWSC 193
HEARING DATE(S):	12/03/04
JUDGMENT DATE:	12 March 2004
JURISDICTION:	Equity Division
JUDGMENT OF:	Master Macready at 1
DECISION:	Application dismissed with costs.
CATCHWORDS:	Corporations Law. Application to set aside statutory demand. No matter of principle.
PARTIES :	Aamac Warehousing & Transport Pty Limited v Eco-Farms Pty Limited
FILE NUMBER(S):	SC 6096/03
COUNSEL:	Mr R. Keller for plaintiff Mr J. Orsborn for defendant
SOLICITORS:	McKells Solicitors for plaintiff Hicksons Solicitors for defendant

- 1 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

EQUITY DIVISION

12 MARCH 2004

MASTER MACREADY

06096/03 - AAMAC WAREHOUSING AND TRANSPORT PTY LIMITED v ECO-FARMS PTY LIMITED

JUDGMENT

1 MASTER: This is an application to set aside a statutory demand. The statutory demand is dated 12 November 2003 and claims an amount of $17,500 which is one month's rent for a period of a sublease.

2 The defendant is the sublessor and the plaintiff is the sublessee under a sublease that commenced allegedly on 1 Mach 2003. It was not executed until 14 May 2003.

3 The actual plaintiff went into occupation on 24 February 2003. It vacated on 14 November 2003.

4 There are sought to be raised a number of matters. Two matters by the plaintiff in support of its application to set aside the demand and one by the defendant in relation to the actual proceedings, namely, whether they should be struck out.

5 I will deal with the last one first. The affidavit in support did not comply with the provisions of rule 2.4A of the Corporations Rules which require that a copy of a company search in respect of the plaintiff be annexed to the affidavit in support. The rule is expressed in mandatory terms. However, the rules in clause 1.32(5) provide that the other Court rules may apply if relevant but not inconsistent.

6 This brings into play the general power of the Court to relieve from the operation of the rules under the Supreme Court Rules Part 1, Rule 12. There is certainly a number of cases where it would be useful to have a company search of the plaintiff particularly where questions of service and other matters are necessary and have to be investigated. However, in the present matter the parties are here and nothing much touches on anything in or found out from a company search.

7 Accordingly, I dispense with the requirement to annex the company search and I so order.

8 The plaintiff bases its application on two grounds. Firstly, it says there is a genuine dispute because the actual terms of the lease provide that no rental is payable in respect of the period up until 12 April 2004. That appears because in the lease itself clause 14.01 of the head lease has been deleted and in its place is a clause in these terms:

“Notwithstanding the provisions of section 3, the rent for the first year of the lease shall be paid by the first lessee and only obliged to commence paying rent as from 12 April 2004".

9 That provision if it stood as it was would mean that no rent was payable. Just to set the factual background it should be noted that in the letter from the agent setting out the terms of lease it was a rental free period that was given as six weeks. This is a reference, therefore, to the rent free period which should have been until 12 April 2003, not 2004.

10 Be that as it may, in this particular matter it was not raised in any of the affidavits in support. The point was taken and it does raise a question which goes to jurisdiction.

11 The normal rule is that a dispute must be raised in the initial affidavit which is filed and sworn within the 21 day period. It is possible to supplement the material filed in time by a later affidavit and the principles are set out by Sunberg J in Graywinter Properties Pty Limited v Gas and Fuel Corp Superannuation Fund 21 ASCR 581 at 587.

12 There has been a clear dispute on the cases as to whether the matter has to be dealt with in this initial affidavit. That matter has now been dealt with by a judge of this Court and the Full Court of Western Australia in Process Machinery v ACN 057 260 590 (2002) 2 NSWSC 45. Barrett J decided that a new ground could not be raised in such circumstances. At paragraph 16 and following his Honour expressed his views in the following terms:

“Furthermore, the applicant is confined to the grounds shown by the application and supporting affidavit filed and served within the 21 day period to which section 459G refers. This last point is important. It was recently confirmed by the Full Court of the Supreme Court of Western Australia in Energy Equity Corp Ltd v Sinedie Pty Limited (2001) WASCA 419 (20 December 2001). Wallwork J (with whom Steytler J and Olsson AU agreed) quoted the following passage from the judgment of Perry J in D and S Group of Companies Pty Limited v O'Connor Investments Pty Limited (1975) 15 ACLC 1794 (in which the opening words refer to an observation of Gummow J in David Grant ):

'It seems to be implicit in that observation and from the terms of section 459G(3) that if an affidavit is to be used in support of the application, it must be filed within the defined period of 21 days.

It seems to me then that the affidavit of Mr Savvas having been filed and served well after the expiration of the period of 21 days, insofar as it raises any ground offered in support of the application not identified in the affidavit of Mr Gerovasilis filed within time, could not be taken into account in determining the application. Furthermore, David Grant is authority for the proposition that there is no ability to extend the time limit.'

Wallwork J also quoted from the judgment of Mandie J in Missay Pty Limited v Seventh Cameo Nominees Pty Limited (in liquidation) (2000) VSC 397:

'I think that there is another reason for refusing special leave because it seems to me that the interpretation of the Corporations Law contained in D and S Group of Companies Pty Limited v O'Connor Investments Pty Limited (1997) 15 ACLC 1794 at 1798 is applicable and should be followed by this Court. If a ground in support of an application to set aside a statutory demand is not identified within the period provided by the Corporations Law, then it seems to me that it cannot be relied upon out of time upon appeal.'

Wallwork J's conclusion was then stated:

'In my view it now seems to be accepted that an affidavit filed outside the 21 day period which raises a new ground or grounds to set aside a statutory demand (as opposed to an affidavit which expands on grounds in an earlier affidavit which has satisfied the threshold test) cannot be used in an application of this nature. The Corporations Law operates throughout Australia and uniformity of approach is desirable.'

This is consistent with the conclusion reached earlier in the same year by Wilson J of the Supreme Court of Queensland in Raffles Corporations Pty Limited v Cech (2001) QSC 129:

'Under section 459G 'an affidavit supporting the application' must be filed within the 21 days. The affidavit must disclose facts showing a genuine disputed, but it need not go into evidence: As Sundberg J held in Graywinter Properties Pty Limited v Gas and Fuel Corp Superannuation Fund (1996) 14 ACLC 1703, the supporting affidavit filed within the 21 days may read like a pleading. It may be supplemented in the sense that a further affidavit containing evidence proving the facts asserted in that affidavit may be filed after the 21 days. Indeed, on the hearing of the application only admissible evidence can be relied upon. See also Eden Bay Pty Limited v Bennett (1997) 15 ACLC 1634. Accordingly, the present applicant may not rely on grounds not set out in the affidavit filed within the 21 days.'

This raises a question about the nature and extent of definition or assertion required. In Energy Equity Corp the company sought to rely on an offsetting claim in the form of a cause of action in negligence. It was not permitted to do so because this 'was not specifically referred to in the first affidavit.' D and S Group of Companies was also a case in which a particular offsetting claim was raised for the first time after the expiration of the 21 day period. In Raffles Corporation , the company wished to argue, as part of an asserted genuine dispute, an alleged oral agreement varying the operation of a lease, an alleged termination of that lease and a calculation of interest in a way said not to be consistent with the lease terms. This was in circumstances where the affidavit dealt only with the identity of the lessor and a particular deduction of $2,500 and did not foreshadow in any way the additional objections later advanced.

It is thus reasonably clear that the relevant concept or 'raising' or 'identifying' a particular ground involves some verbal delineation of that ground in the section
459G(3)(a) affidavit. If a debt of $10,000 were claimed as one year's interest under a contract providing for interest at the rate of 9% per annum on a principal sum of $100,000, it would not, in my opinion, be sufficient for the affidavit to annex the loan agreement and say no more. It would have to refer at least to the connection between the contract and the debt claimed and put in issue the calculation of interest - even if it merely said, 'The debt does not accord with the annexed contract.'

The real point is that the application and affidavit filed and served within the 21 days period must fairly alert the claimant to the nature of the case the company will seek to make in resisting the statutory demand. The content of the application and affidavit must convey, even if it be by necessary inference, a clear delineation of the area of controversy so that it is identifiable with one or more of the grounds made available by ss459H and 459J. That process of delineation may not be extended after the end of the 21 day period, although it is open to the plaintiff to supplement the initial affidavit by way of additional evidence relevant to the area of controversy identified within that period.”

13 Having regard to his Honour's reasoning and the cases to which he referred, I think that the better view is as decided by his Honour, namely, that unless the particular dispute is raised in the affidavit filed within time it cannot be dealt with in latter affidavits. This is subject to the qualification, of course, that a genuine dispute arising out of a matter of law which does not require evidence to support it would, of course, always be available to be argued. See Callite v Peter John Adams and Ors [2001] NSWSC 52.”

14 This point was not raised in the affidavit filed and served within time. It was suggested that because the application itself sought to set aside the demand on the basis that there was a genuine dispute that this was sufficient. However, as the authorities I have referred to indicate there is in fact higher requirement and it has not been complied with in this case.

15 Accordingly, this ground is not available to be considered on the plaintiff’s application.

16 The second ground relates to an off-setting claim. It is sought to raise an off-setting claim which has been quantified at $33,560. That off-setting claim generally covers the costs of the plaintiff moving out from the premises and going to other premises.

17 The basis for the off-setting claim is that it is alleged that there was some representations made prior to the execution of the lease as to the suitability of the premises. The only areas in the affidavit evidence that deal with this are in paragraphs 14 to 17 of the affidavit of Mr Peter Panayi of 3 December 2003.

18 Although those paragraphs record conversations in which he talks to his counter part from the defendant about the operation, they contain absolutely nothing which is promissory or might in any way be a representation as to suitability of premises. In contrast when one looks at the matter one sees that opportunity was given for inspection. It seems to me just looking at that material there is simply no evidence at all of some representation as to suitability of the premises.

19 There are a number of others matters that have been said in relation to whether it was a genuine off-setting claim. It is pointed out that the problems that are said to have arisen such as holes in the road surface arose before the lease was executed in May.

20 There also appears to be evidence of a move from the premises being prompted more by new contract work obtained elsewhere than with the problems of the premises. I accept that there are complaints obviously in the evidence about the state of the premises and that was a fact that existed. However, I am not satisfied that there was any representation at all as to the suitability of the premises.

21 I do not see any foundation for any off-setting claims. In these circumstances I dismiss the application with costs.

22 Exhibits may be returned.

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Last Modified: 03/23/2004