Avidsys Pty Ltd v Orbital Corporation Limited

[2019] WASC 393

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   AVIDSYS PTY LTD -v- ORBITAL CORPORATION LIMITED [2019] WASC 393

CORAM:   MASTER SANDERSON

HEARD:   17 OCTOBER 2019

DELIVERED          :   31 OCTOBER 2019

FILE NO/S:   COR 148 of 2019

BETWEEN:   AVIDSYS PTY LTD

Plaintiff

AND

ORBITAL CORPORATION LIMITED

Defendant

Catchwords:

Corporations law - Application to set aside a statutory demand - Turns on own facts

Legislation:

Nil

Result:

Application to set aside statutory demand dismissed

Representation:

Counsel:

Plaintiff	:	Mr M L Bennett
Defendant	:	Mr T Langdon

Solicitors:

Plaintiff	:	Bennett + Co
Defendant	:	HWL Ebsworth Lawyers

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

Buzd Pty Ltd v Acurix Networks Pty Ltd [2019] WASC 152

Wildtown Holdings Pty Ltd v Rural Traders Company Ltd [2002] WASCA 196

MASTER SANDERSON:

1. This is the plaintiff's application to set aside a statutory demand.  The application proceeded on the very narrow basis.  The plaintiff argued the affidavit accompanying the statutory demand was 'inadequate, non‑compliant or defective' and the demand ought be set aside on that basis.

2. In Buzd Pty Ltd v Acurix Networks Pty Ltd [2019] WASC 152 I dealt with this issue. In doing so I provided a lengthy quote from the judgment of Templeman J in Wildtown Holdings Pty Ltd v Rural Traders Company Ltd [2002] WASCA 196. I will not repeat that quote. It is important to note that Templeman J emphasised it is misleading to refer to a 'defect' in an accompanying affidavit. The affidavit is evidence and to that extent it cannot be 'defective'. The purpose of the affidavit is to verify that the amount in the statutory demand is owing. Templeman J explains why that verification is essential to the statutory demand procedure. Essentially a court must be satisfied the deponent has satisfied himself or herself the debt is owing. To do that the process by which the deponent acquired knowledge of the existence of the debt must be outlined. That is what the statute requires.

3. So the essential question in this case can be framed in this way.  Did the affidavit accompanying the demand demonstrate the deponent had satisfied himself the debt was outstanding and, allied with that, did the affidavit show how the deponent acquired that knowledge?

4. The statutory demand was verified by an affidavit of Todd Matthew Alder sworn 27 June 2019.  That affidavit appears as annexure HXG3 to the affidavit of Himanshu Gautam affirmed 19 July 2019 and filed in support of the application.  By par 1 of the affidavit Mr Alder identifies himself as the 'Chief Executive Officer and Managing Director' of the defendant.  Paragraphs 2 and 3 are then in the following terms:

   2.I am aware of the debt of $1,435,241 (Debt) owed by AvidSys Pty Ltd … to the Creditor.

   3.I have inspected the business records of the Creditor in relation to the Debtor Company's account with the Creditor.

5. The use of the word 'account' in par 3 was criticised by counsel for the plaintiff.  He said the plaintiff did not ever have an account with the defendant.  As is made plain by the remainder of the affidavit, the plaintiff and the defendant entered into a Share Sale Agreement (the Agreement) pursuant to which the plaintiff was obliged to make certain payments to the defendant.  But it is difficult to see how this arrangement could have led to any 'account'.  That term usually suggests a trading relationship between the parties.  For instance, a debtor may purchase certain goods from a creditor and not make payment.  The creditor could rightly say the debtor had an account - that is, by looking at the books and records of a company the creditor could ascertain from time to time how much it was owed by the debtor.  It is a familiar and easily understood principle.  But to use the word 'account' for a share sale agreement seems to be misleading.

6. While that may be the case the rest of the affidavit makes it abundantly clear how the debt claimed in the demand arose.  Paragraph 4 refers to the Agreement and actually annexes a copy of the Agreement to the affidavit.[1]  Paragraph 6 explains what was required by the Agreement.  Paragraphs 7, 8 and 9 highlight particular terms of the Agreement.  Paragraphs 10 through to 13 refer to payments made by the plaintiff to the defendant.  Paragraphs 14 and 15 explain how the outstanding balance is calculated and do so by reference to the Agreement.

   [1] Annexure 'TMA-1' to affidavit of Todd Matthew Alder sworn 27 June 2019.

7. In reality what Mr Alder is doing is referring to the Agreement, acknowledging payments have been made and, by reference to particular paragraphs of the Agreement, highlighting what is outstanding.  There is nothing in his explanation which is inconsistent or at odds with the clear contractual position between the parties.  He has clearly satisfied himself the debt is outstanding by reference to the Agreement between the plaintiff and the defendant and by reference to amounts which have been paid by the plaintiff.  No one reading the affidavit could be in any doubt Mr Alder is familiar with the contractual arrangement between the parties, the payments that have been made and the basis upon which the statutory demand is formulated.  In all respects the affidavit is adequate.

8. The application to set aside the statutory demand will be dismissed.  The plaintiff should pay the defendant's costs of the application including reserved costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

DG
Associate to Master Sanderson

31 OCTOBER 2019