Besser Industries (NT) Pty Ltd v Steelcon Constructions Pty Ltd
[1995] FCA 180
•30 MARCH 1995
CATCHWORDS
CORPORATIONS - statutory demand - application to set aside statutory demand - whether genuine dispute as to existence of debt - whether lump sum contract price inconsistent with progress payments - admitted error in the amount claimed by the statutory demand - power of the court to vary the demand pursuant to s 459H - whether in circumstances a genuine dispute about the amount of the debt - whether accompanying affidavit complies with r 36A of the Corporations Rules.
Corporations Law ss 459E, 459H, 459J
Corporations Rules r 36A
Egan v State Transport Authority (1982) 31 SASR 481 at 537
The Tergeste [1903] P 26 at 34
Cempro Pty Ltd v Dennis M Brown (1994) 13 ACSR 628
Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA (1994) 15 ACSR 347 at 354
Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd (in liq) [1989] 3 All ER 74 at 77
Hornet Aviation Pty Ltd v Ansett International Air Freight (Northrop J, unreported, 6 December 1994)
Hamilhall Pty Ltd (In liq) v A T Phillips Pty Ltd (1994) 15 ACSR 247
No. SG 3166 of 1994
BESSER INDUSTRIES (NT) PTY LTD v STEELCON CONSTRUCTIONS PTY LTD
Branson J.
Adelaide
30 March 1995
IN THE FEDERAL COURT OF AUSTRALIA )
)
SOUTH AUSTRALIA DISTRICT REGISTRY ) No. SG 3166 of 1994
)
GENERAL DIVISION )
BETWEEN:
BESSER INDUSTRIES (NT) PTY LTD
Applicant
- and -
STEELCON CONSTRUCTIONS PTY LTD
Respondent
MINUTES OF ORDER
CORAM: Branson J.
PLACE: Adelaide
DATE: 30 March 1995
THE COURT ORDERS THAT:-
The statutory demand in this matter is varied by deleting from para 1 thereof the words "the amount of $799,283.30 being the total of the amounts of the debts described in the Schedule" and inserting in their place the words "the amount of $678,660.00".
It is declared that the demand is to have had effect, as so varied, as from when the demand was served on the applicant.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA )
)
SOUTH AUSTRALIA DISTRICT REGISTRY ) No. SG 3166 of 1994
)
GENERAL DIVISION )
BETWEEN:
BESSER INDUSTRIES (NT) PTY LTD
Applicant
- and -
STEELCON CONSTRUCTIONS PTY LTD
Respondent
REASONS FOR JUDGMENT
CORAM: Branson J.
PLACE: Adelaide
DATE: 30 March 1995
The applicant has applied to the Court pursuant to s 459G of the Corporations Law for an order setting aside a statutory demand dated 14 December 1994 served upon it by the respondent. The application was made within 21 days after the demand was served and the other requirements of s 459G were complied with.
Mr Abbott QC, who appeared with Mr Mansueto for the applicant, argued first that there is a genuine dispute between the applicant and the respondent about the existence of the debt to which the demand relates. This argument calls for
consideration of certain Heads of Agreement dated 26 August 1994 entered into by the applicant as principal and the respondent as contractor.
THE HEADS OF AGREEMENT
Pursuant to the Heads of Agreement the contractor agreed to undertake certain works ("the works") involving the preparation of certain land at Darwin for subdivision by the construction of road works, storm water drainage, water supply reticulation and sewerage works as described in certain tender documents. For present purposes the significant paragraphs of the Heads of Agreement are as follows:-
"1.The principal hereby engages the contractor to perform the Works for the total sum of ONE MILLION, FOUR HUNDRED AND THIRTY SEVEN THOUSAND DOLLARS ($1,437,000-00) (hereinafter called "the contract sum") and the contractor accepts such engagement.
2.The parties hereto agree that the terms and conditions of the contract to perform and complete the works shall be in accordance with General Conditions of Contract (NPWC Edition 3 1981) incorporating the annexure hereto as the formal annexure to such General Conditions of Contract. In the event that there is any contradiction between these Heads of Agreement and such general conditions of contract, the terms of these Heads of Agreement shall prevail.
(not here relevant)
The contractor shall bring the works to practical completion by no later than 18 November 1994.
The parties hereto acknowledge and agree that the contract sum shall be payable by the principal to the contractor by cash and in kind in that upon completion of the works and the issue of freehold titles to the various allotments with the subdivision that the principal shall transfer and convey to the contractor freehold titles to lots 15 and 16 as shaded red on the plan annexed hereto, the value of which lots the parties hereto acknowledge and agree shall be the sum of $360,000-00. Upon the transfer to the contractor of freehold titles in such allotments to the contractor the contractor shall allow to the credit of the principal the said sum of $360,000-00 as part payment of the contract sum. The titles to such allotments shall be unencumbered save and accept any easement as may be required by any statutory authority for any public purpose.
. . . . . . . "
The annexure referred to in para 2 of the Heads of Agreement as the formal annexure to the General Conditions of Contract includes the following entry:-
"The Basis of Payment shall be: PROGRESS PAYMENTS -
(clause 3.1) see clause 42."
The words "PROGRESS PAYMENTS - see clause 42" have been typed on to a printed annexure form opposite printed words which call for an identification of the basis of payment. The typed entry is not entirely appropriate in the circumstances: cl 3.1 of the General Conditions of Contract provides for the annexure to indicate whether the contractor is to be paid on a lump sum basis or on a schedule of rates basis. In this case the Heads of Agreement plainly specify for payment on a lump sum basis. Nonetheless it seems to me that the reference in the annexure to progress payments is significant. I deal with this further below.
For completeness I set out the heading to cl 3 and subclauses 3.1 and 3.2 of the General Conditions of Contract:-
"3. NATURE OF CONTRACT
3.1 Description
The Contractor shall be paid either on a Lump Sum basis or on a Schedule of Rates basis or partly on a Lump Sum basis and partly on a Schedule of Rates basis as stated in the Annexure hereto.
Sub-clause 3.2 shall apply to payments on a Lump Sum basis and sub-clause 3.3 shall apply to payments on a Schedule of Rates basis.
Unless otherwise stated in the Contract, the Contract shall not be subject to adjustment for rise and fall in costs.
3.2 Lump Sum
(a)Where payment is to be made on a Lump Sum basis the Contractor shall execute the work and perform his obligations under the Contract and the sum payable by the Principal to the Contractor therefor shall be the lump sum accepted by the Principal adjusted by any additions or deductions pursuant to the Contract.
(b)A Bill of Quantities shall not form part of the Contract except to the extent provided for in the Contract."
Clause 42 of the General Conditions of Contract is headed "CERTIFICATES AND PAYMENTS". Subclauses 42.1 and 42.2 deal with progress payments and payment on issue of a certificate of practical completion. They provide as follows:-
"42.1 Progress Certificates and Progress Payments
Unless otherwise provided in the Contract, the Contractor shall submit to the Superintendent a detailed statement, in a form satisfactory to the Superintendent, every month showing the contract value of the work carried out in performance of the Contract and incorporated in the Works. Within twenty-one days after the receipt by the Superintendent of such a statement or, if the Contractor fails to submit any such statement, at such time as the Superintendent thinks fit, the Superintendent shall determine the value of the work so carried out and incorporated and issue a progress certificate.
Payment of moneys due under a progress certificate shall be made by the Principal within fourteen days after the issue of that progress certificate. The amount of the progress payment will be the total gross value shown in the progress certificate less -
(a)any retention moneys as provided in the Annexure hereto; and
(b)any progress payment already made in respect of work covered by that progress certificate; and
(c)any other amount that the Principal may be entitled to deduct from the moneys due under that progress certificate.
The payment of moneys under a progress certificate shall not be taken as evidence against or as an admission by the Principal that any work or item of work specified in any progress certificate has been constructed or executed or of the value thereof or of any work having been constructed or executed in accordance with the Contract, but shall be taken to be payment on account only.
42.2 Certificates of Practical Completion
When the Superintendent is satisfied that Practical Completion of the Works or of a separable part of the Works has been reached he shall issue to the Contractor a Certificate of Practical Completion for the Works or for that separable part of the Works which shall state the date of practical completion of the Works or of that separable part of the Works, which date shall, for the purposes of the Contract, be known as the Date of Practical Completion of the Works or of that separable part of the Works."
It was argued on behalf of the applicant that the Heads of Agreement provide for payment by the principal to the contractor of the total contract sum upon completion of the works and do not make provision for progress payments. It is agreed that the works were not complete as at the date of the statutory demand and that the applicant can only be shown to be indebted to the respondent if the Heads of Agreement properly construed provide for progress payments during the course of the works
In my view the fact that cl 1 of the Heads of Agreement provides for a lump sum as the contract sum or price does not tell against an intention that the contract sum should be payable by instalments. Many authorities recognise that there is no necessary inconsistency between a lump sum contract price and progress payments. See, for example, Tharsis Sulphur & Copper Co v M'Elroy & Sons (1878) 3 App Cas 1040; Banbury v Daniel (1884) 54 LJ Ch 265; Re Sanders Constructions Pty Ltd [1969] Qd R 29; Dawnays Ltd v F.G. Minter Ltd and Trollope & Colls Ltd [1971] 1 WLR 1205; Chalet Homes Pty Ltd v Kelly [1978] Qd R 389; Egan v State Transport Authority (1982) 31 SASR 481); Ownit Homes Pty Ltd v Batchelor [1983] 2 Qd R 124.
The purpose of progress payments in construction contracts was explained by White J in Egan v State Transport Authority at p 537. His Honour said:-
"Payments have long been recognised as being merely agreed instalments in reduction of the lump sum price, made on that account to keep the building contractor on the job. The purpose of instalment payments is not to pay for the materials in the sense that a purchaser of land or of specific goods pays money for or towards the purchase price. Instalment payments are made in contracts like this as a practical measure to enable the contractor to keep working under the contract; they are made also in reduction of the lump sum contract price. Such payments have been described as the "life blood" of the contract."
I am in respectful agreement with His Honour on this point. The same approach was taken by Phillimore J in The Tergeste [1903] P 26 at p 34 where His Honour said:-
"A man who contracts to do a long costly piece of work does not contract, unless he expressly says so, that he will do all the work, standing out of pocket until he is paid at the end. He is entitled to say, "That is not my contract; it is quite true that I had contracted to do the work and I am bound to do it; but there is an understanding all along that you are to give me from time to time, at reasonable times, payments for work done, and if the contract here was to do certain work, it always included that term, to do it if we are paid reasonable sums in part payment as we go along, not an advance, but in part payment for work already done before we proceed to the next thing"; and if that payment is not made, then the shipwright, or any other artificer is entitled to review his work, and say, "I have done work worth so much; true I have contracted to do other work, but it is not reasonable I should do it as I have not been paid, and in respect of work I have done I claim payment"."
The General Conditions of Contract NPWC Ed.3 themselves reflect the lack of inconsistency between lump sum contracts and progress payments (see clauses 3 and 42).
Is there anything in the Heads of Agreement in this case which is inconsistent with the provisions in cl 42 of the General Conditions of Contract so far as that clause makes provision for the making of progress payments during the life of the agreement? On behalf of the applicant para 5 of the Heads of Agreement is identified as contradicting cl 42 of the General Conditions of Contract within the meaning of cl 2 of the Heads of Agreement.
Paragraph 5 of the Heads of Agreement (which is set out above) does not expressly contradict cl 42 of the General Conditions of Contract. By para 5 the parties acknowledge and agree that the contract sum payable is payable by the principal to the contractor partly by cash and partly in kind. So far as it is payable in kind the paragraph provides for the manner and timing of the payment and for the financial credit which the principal is to be allowed for such payment. The paragraph does not expressly deal with the time when, or basis upon which, the cash component of the contract sum is to be paid.
However the Heads of Agreement, by an annexure thereto which is described in para 2 as the formal annexure to the General Conditions of Contract, do refer to progress payments and to cl 42 of the General Conditions of Contract. Clause 42 provides for the making of progress payments "[u]nless otherwise provided in the Contract". This reference to progress payments and cl 42 is, in my view, a strong indication of an intention in the parties that the contract sum in this matter was to be payable, in part, by progress payments in accordance with the procedure outlined in cl 42 of the General Heads of Agreement. Nothing provided anywhere else in the Heads of Agreement, in my view, discloses a contrary intention.
It is true that there could be some uncomfortableness in the combined operation of para 5 of the Heads of Agreement and cl 42 of the General Conditions of Contract. Nonetheless I agree with Mr Sulan QC, who with Mr Ross-Smith appeared for the respondent, that para 5 of the Heads of Agreement and cl 42 of the General Heads of Agreement can relatively simply be made to work together. That portion of the contract sum which it is agreed should be payable in kind upon the completion of the works and the issue of titles to the allotments is an amount, in my view, which the principal will be entitled to deduct from moneys due under progress certificates (see cl 42.1 of the General Conditions of Contract). I agree with Mr Sulan that such deduction may only be made from later progress certificates (i.e. where total payments pursuant to all issued progress certificates come close to the total amount payable in cash under the Heads of Agreement) and may not be made from the progress certificates which form the basis of the respondent's claim against the applicant. Paragraph 5 of the Heads of Agreement provides that the contractor is to allow credit to the principal for the agreed value of the allotments to be transferred as part payment of the contract sum "[u]pon the transfer to the contractor of freehold titles in such allotments". Nothing in the Heads of Agreement supports any suggestion that the principal is to be given credit for such agreed value against early progress certificates. I refer again to the purpose of progress payments as discussed above.
DISPUTE AS TO THE EXISTENCE OF THE DEBT
Is there in the circumstances a genuine dispute as to the existence of the debt referred to in the statutory demand? I leave to one side for this purpose the question of the actual amount claimed by the statutory demand. The issues for me in this regard are whether there is a dispute and whether it can be characterised as genuine. It is not for me to adjudicate the dispute or to seek to assess its merit if I find it to be
genuine (see, for example, Moyall Investments Services Pty Ltd v White (1993) 12 ACSR 320; Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd (1994) 13 ACSR 525; Cempro Pty Ltd v Dennis M Brown Pty Ltd (1994) 13 ACSR 628).
In Chippendale Printing Co Pty Limited v Deputy Commissioner of Taxation (Lindgren J, unreported, 3 February 1995) Lindgren J reaffirmed the view which he had earlier expressed in Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA (1994) 15 ACSR 347 at 354 that:-
"The task confronting a company applying to set aside a statutory demand of establishing the "genuineness" of a dispute or claim is, in my opinion, no more onerous than that which would confront it if it were seeking to meet an application by the creditor for summary judgment."
I note that ordinarily leave will be given to defend an action where summary judgment is sought in a matter dependent on questions of statutory construction which are not absolutely clear (see Garms v Birnzwejg [1990] 2 Qd R 336 per Macrossan CJ at p 342). However, as was pointed out by Parker LJ in Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd (in liq) [1989] 3 All ER 74 at p 77:-
"The purpose of [the summary judgment procedure] is to enable a plaintiff to obtain a quick judgment where there is plainly no defence to the claim. If the defendant's only suggested defence is a point of law and the court can see at once that the point is misconceived the plaintiff is entitled to judgment. If at first sight the point appears to be arguable but with a relatively short argument can be shown to be plainly unsustainable the plaintiff is also entitled to judgment."
In my view a similar approach is appropriate on an application to set aside a statutory demand. In this case there is some superficial attraction in the argument put forward by Mr Abbott. However, having heard and considered full argument, I have formed the view that the argument that there is no debt in existence is unsustainable. That is, there is in my view, no reasonable ground to found the alleged dispute. It is therefore not strictly necessary for me to determine whether the applicant does bona fide dispute the debt.
Nonetheless I note that certain matters of fact in this case are, at the least, consistent with the dispute not being a genuine one. One affidavit read in this matter was sworn by Mr Theodor Rapp, who was employed by the applicant as "land development supervisor" in respect of the property development to which the Heads of Agreement relate. Mr Rapp received the progress claims made by the respondent and forwarded them to the superintendent for the purpose of the contract between the parties ("the superintendent"). He did so because the superintendent, Mr Colin Stanley Pascoe, advised him that they should be forwarded to him for verification. Such request was consistent with Mr Rapp's own experience of property development and he complied with it. His employer had not advised him that such a course would be inappropriate in this case. Further Mr Pascoe, whose affidavit in this matter was also read, stated that he had received the two progress claims in issue and in due course issued progress certificates in respect of them. There is no evidence that the applicant sought to advise him at the time that the issue of progress certificates in this matter would be inappropriate.
If the applicant were at all times of the view that no monies were payable under the Heads of Agreement until the completion of the works I find it surprising that it did not so advise persons such as Messrs Rapp and Pascoe who were involved in overseeing the implementation of the Heads of Agreement.
ERROR IN AMOUNT CLAIMED
I turn to consider the applicant's alternative argument which is that there is a defect in the statutory demand in that the amount claimed by the statutory demand is in error. The amount which is demanded to be paid, secured or compounded is the total of two progress claims submitted by the respondent pursuant to cl 42 of the General Conditions of Contract. Prior to the hearing of this matter, and before me, the respondent has acknowledged that the amount which ought to have been claimed was the total amount of the two progress certificates issued by Mr Pascoe. The respective amounts are as follows:-
total of progress claims : $799,283.30
total of progress certificates : $678,660.00.
That is, it is now agreed that the statutory demand claims $120,623.30 more than the amount due and payable to the respondents.
Section 459E(2) of the Corporations Law provides as follows:-
"The demand:
(a)if it relates to a single debt - must specify the debt and its amount; and
(b)if it relates to two or more debts - must specify the total of the amounts of the debts; and
(c)must require the company to pay the amount of the debt, or the total of the amounts of the debts, or to secure or compound for that amount or total to the creditor's reasonable satisfaction, within 21 days after the demand is served on the company; and
(d)[not here relevant]
(e)[not here relevant]
(f)[not here relevant]."
Although the word "must" appears at first glance to be used in the above provision in the mandatory sense of "it shall ...." the context in which the provision is found discloses a contrary intention. For example, s 459J(2) provides:-
"Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect."
Further s 459H gives the Court power to vary the amount of the demand in certain circumstances.
It is argued on behalf of the applicant that in the circumstances of this case the statutory demand should be set aside pursuant to s 459J of the Corporations Law. Section 459J provides as follows:-
"(1)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.
(2)Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect."
Plainly there is a defect in the demand: the wrong amount is claimed to be due and payable. However, I agree with the view of Northrop J expressed in Hornet Aviation Pty Ltd v Ansett International Air Freight, A Division of Ansett Transport Industries (Operations) Pty Ltd (Northrop J, unreported, 6 December 1994) that:-
"If there are any defects in the amount stated in the statutory demand, that of itself, is not sufficient to render the demand invalid."
In this case the difference between the amount to which the demand relates and the amount actually due and payable is significant. I do not regard the size of the difference as affecting its character as a defect. There may be cases in which the nature and extent of a defect will be relevant to the issue of injustice. However no evidence of injustice has been identified here. I understand s 459J(1)(a) to be concerned with injustice to the company upon which the statutory demand is served.
The two figures, the total amount of the progress claims made by the respondent and the total amount for which the superintendent has issued progress certificates, are figures
which at all times have been well known to the applicant. It is plain from the affidavit sworn by Mr Barry Glenn Raphael in support of this application that he was aware of the provenance of the figure claimed by the statutory demand. It is also plain that he was aware that only amounts certified by the superintendent were in fact payable pursuant to cl 42 of the General Conditions of Contract. I am not satisfied that substantial injustice to the applicant will be caused unless the demand is set aside.
As to the existence of some other reason why the demand should be set aside, I am satisfied that no such reason has been established on the approach which I take to the interpretation of s 459H (see below). If I am wrong in my interpretation of s 459H it may well be that an inability in the Court to vary the demand would provide a reason why the demand should be set aside (see s 459L of the Corporations Law). Consideration of this possibility will have to await another day.
It is contended on behalf of the respondent that the Court can vary the statutory demand and declare it to have effect as varied as from when it was served upon the applicant (Corporations Law s 459H(4)).
The power of the Court under s 459H is predicated upon its being satisfied of one or both of the following:-
"(a)that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the claim relates;
(b)that the company has an offsetting claim".
Here no offsetting claim by the applicant is asserted. As indicated above I am not satisfied that there is a genuine dispute between the applicant and the respondent about the existence of the debt to which the claim relates.
Am I in the circumstances entitled to be satisfied that there is a genuine dispute between the applicant and the respondent about the amount of the debt to which the claim relates? The respondent has conceded that it made an error in its statutory demand. Mr Sulan has argued that it would be inappropriate for the respondent to be treated less favourably by reason of this concession than it would have been had it attempted to justify the amount claimed in the statutory demand.
I do not find this an easy issue with which to deal. I have not been referred to any authority directly on point, nor have my researches revealed any. Subsection 459H(1) must be construed within the context of Division 2 of Part 5.4 of the Corporations Law. That context makes it clear that statutory demands are not intended to fail by reason of mere defects (see s 459J). Disputes between the parties as to the amount of a company's indebtedness are not, generally speaking, intended to defeat statutory demands. Rather the Court has a power to vary statutory demands to ensure that they reflect an amount for which they can be substantiated (see s 459H).
In the context in which it is found it seems to me that s 459H of the Corporations Law discloses an intention to cover a situation such as the present. I am satisfied that the applicant genuinely disputes the amount of the debt specified in the statutory demand. By its service of the statutory demand the respondent formally claimed the amount referred to therein. I do not consider that in the circumstances of this case the concession made by the respondent later than the time of service of the statutory demand has the effect of depriving the Court of the power to vary the statutory demand pursuant to s 459H of the Corporations Law. In my view there is in the circumstances of this case a genuine dispute between the parties about the amount of the debt to which the claim relates within the meaning of s 459H(1).
THE ACCOMPANYING AFFIDAVIT
The third argument advanced on behalf of the applicants was that the affidavit which accompanied the statutory demand failed to comply with the rules (see s 459E(3)(b) of the Corporations Law). The deficiency identified is that the affidavit does not contain the "Important Note" set out in Form 93B of the Federal Court Forms (see rule 36A(1)(b) of the Corporations Rules).
Mr Sulan has drawn attention to r 36A(4) which is in the following terms:-
"For the purposes of subsection 459E(3) of the Corporations Law, an affidavit in support of a statutory demand that complies with the rules of a Supreme Court of a State or Territory is taken to be an affidavit that complies with this rule".
There are apparently no special rules in the Northern Territory which govern affidavits required by s 459E(3) of the Corporations Law: they are governed by the general Supreme Court Rules. No defect in the relevant affidavit when judged against such rules has been identified.
I prefer, however, to deal with this issue by reference to s 459J of the Corporations Law. The Corporations Law does not provide for the setting aside of affidavits: it provides for the setting aside of statutory demands. It may be, as I suggested in Hamilhall Pty Ltd (In Liquidation) v A.T.Phillips Pty Ltd (1994) 15 ACSR 247 that were a statutory demand purportedly to be served without being accompanied by any affidavit, or accompanied by an affidavit which failed in a substantial way to meet the requirements of s 459E(3), the service of the demand might be held to be defective. However that is not this case. Here the failure to comply with s 459E(3) is technical in nature. No injustice or disadvantage to the applicant has been suggested to flow therefrom. In my view the failure to include the "Important Note" in the affidavit is a defect within the meaning of s 459J of the Corporations Law. I do not consider that such defect in the affidavit in the circumstances of this case constitutes "some other reason why the demand should be set aside" within the meaning of s 459J(1)(b) of the Corporations Law. If I were to set aside the statutory demand by reason of
the failure to include the "Important Note" in the accompanying affidavit I would, in my view, be doing so "merely because of a defect". By reason of s 459J(2) I do not have the power to do so.
Finally it was argued on behalf of the applicant, perhaps only faintly, that the affidavit which accompanied the statutory demand when it was served failed to verify the debt specified in the demand as required by s 459E(3) of the Corporations Law. The basis of this submission was the error as to the amount due and owing referred to above. As I stated in Hamilhall Pty Ltd (In Liquidation) v A.T.Phillips Pty Ltd I am of the view that in the context of Part 5.4 of the Corporations Law the expression "verify" is used in the sense of "a formal affirmation". Section 459H of the Corporations Law clearly envisages that statutory demands will be validly served claiming payment of amounts which are genuinely in dispute. It may be assumed that such some disputes will ultimately resolve in favour of the recipient of the statutory demand. Such statutory demands will have been accompanied by affidavits as required by s 459E when served. Such affidavits will have purported to verify that amounts were due and payable that in fact were not due and payable. Nothing within Division 2 of Part 5.4 of the Corporations Law suggests, in my view, that statutory demands which are accompanied by such affidavits should for that reason alone be set aside. If it were to be shown that the affidavit had not been sworn in good faith the position might well be different. No issue of good faith has been raised in this matter. In my view the affidavit which accompanied the statutory demand when it was served did verify that the debt was due and payable within the meaning of s 459E of the Corporations Law.
CONCLUSION
The order of the Court will be that the statutory demand in this matter will be varied by deleting from para 1 thereof the words "the amount of $799,283.30 being the total of the amounts of the debts described in the Schedule" and inserting in their place the words "the amount of $678,660.00". It will be declared that the demand is to have had effect, as so varied, as from when the demand was served on the applicant.
I certify that this and the preceding pages are a true copy of the Reasons for Judgment of Justice Branson.
Associate:
Dated:
Counsel for the Applicant : Mr M Abbott QC, with him Mr R Mansueto
Solicitors for the Applicant : Piper Alderman
Counsel for the Respondent : Mr J Sulan QC, with him Mr R Ross-Smith
Solicitors for the Respondent : Thomsons
Hearing Date : 9 March 1995
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