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Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd

Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd

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Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation: Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344
Hearing dates: 11 July 2013
Decision date: 21 October 2013
Before: Beazley P;
Meagher JA;
Gleeson JA
Decision:
(1) Leave to appeal granted;
(2) Appeal allowed;
(3) Set aside orders made by Black J on 19 April 2013;
(4) Order that the statutory demand dated 26 November 2012 issued by Analysis & Technology Australia Pty Limited against Britten-Norman Pty Limited be set aside;
(5) Order that Analysis & Technology Australia Pty Limited pay Britten-Norman Pty Limited's costs at first instance and on the appeal;
(6) Order that Analysis & Technology Australia Pty Limited have a certificate under the Suitors' Fund Act 1951 if so entitled.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords: CORPORATIONS - winding up - statutory demand - application to set aside - Corporations Act 2001, ss 459G, 459H - whether evidence sufficient to establish offsetting claim - whether evidence sufficient to establish quantum of offsetting claim
Legislation Cited: Corporations Act 2001 (Cth)
Evidence Act 1995
Supreme Court (Corporations) Rules 1999
Cases Cited: Beauty Health Group v Sholl [2011] NSWSC 77
Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWSC 1302
Chase Manhattan Bank Australia Limited v Oscty Pty Limited [1995] FCA 1208; 17 ACSR 128
Commonwealth of Australia v Amann Aviation Pty Ltd (1991) HCA 54; 174 CLR 64
Elm Financial Services Pty Ltd v Macdougal [2004] NSWSC 560
Eumina Investments Pty Ltd v Westpac Banking Corp [1998] FCA 824; 84 FCR 454
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
Financial Solutions Australasia Pty Ltd v Predella Pty Ltd [2002] WASCA 51; 167 FLR 106
Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund [1996] FCA 822; 70 FCR 452
Greenwood Manor Pty Ltd v Woodlock (1994) 48 FCR 229
Hansmar Investments Pty Ltd v Perpetual Trustee Company Ltd [2007] NSWSC 103; 61 ACSR 32
Hills Motorway Ltd v UBS AG [2005] NSWSC 1086
Infratel Networks Pty Ltd v Gundry's Telco & Rigging Pty Ltd [2012] NSWCA 365; 297 ALR 372
Macleay Nominees v Belle Property East Pty Ltd [2001] NSWSC 743
Meadowfield Pty Ltd v Gold Coast Holdings Pty Ltd [2001] WASCA 360
Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290
No. 96 Factory Bargains Pty Ltd v Kershel Pty Ltd [2003] NSWSC 146
Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601
Roberts v Rodier [2006] NSWSC 282
Robinson v Harman (1848) 1 Ex 850;
154 ER 363
Royal Premier…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] NSWCA 344
Decision Date: 21 October 2013

CaseChat Overview and Summary

The appeal concerned a dispute between Britten-Norman Pty Ltd and Analysis & Technology Australia Pty Ltd regarding a statutory demand. Britten-Norman Pty Ltd sought to set aside the statutory demand issued by Analysis & Technology Australia Pty Ltd. The primary court had made orders on 19 April 2013, which Britten-Norman Pty Ltd sought to have set aside.

The legal issues before the court were whether the evidence filed in support of Britten-Norman Pty Ltd's application to set aside the statutory demand was sufficient to establish the existence of an offsetting claim, and if so, whether the quantum of that offsetting claim was sufficiently established. The court was required to consider the evidentiary threshold for setting aside a statutory demand, particularly in relation to offsetting claims, and the application of the rules of evidence in such proceedings.

The court reasoned that for an application to set aside a statutory demand under section 459G of the Corporations Act 2001, supported by an affidavit under section 459H, the evidence must satisfy the court that there is a "serious question to be tried," an "issue deserving of a hearing," or a "plausible contention requiring investigation" of either a dispute as to the debt or an offsetting claim. The court noted that the evidence need not conclusively prove the claim, nor be incontrovertible, given the time constraints for filing the affidavit. The hearsay rule applies with less strictness in interlocutory proceedings, allowing for hearsay evidence provided its source is adduced. The central issue is not whether the debt is owed, but whether there is a genuine dispute or an offsetting claim.

The appeal was allowed, and the orders made by Black J on 19 April 2013 were set aside. The statutory demand dated 26 November 2012 issued by Analysis & Technology Australia Pty Limited against Britten-Norman Pty Limited was set aside. Analysis & Technology Australia Pty Limited was ordered to pay Britten-Norman Pty Limited's costs at first instance and on appeal, and was granted a certificate under the Suitors' Fund Act 1951 if entitled.

Orders

Orders of the court

(1) Leave to appeal granted;

(2) Appeal allowed;

(3) Set aside orders made by Black J on 19 April 2013;

(4) Order that the statutory demand dated 26 November 2012 issued by Analysis & Technology Australia Pty Limited against Britten-Norman Pty Limited be set aside;

(5) Order that Analysis & Technology Australia Pty Limited pay Britten-Norman Pty Limited's costs at first instance and on the appeal;

(6) Order that Analysis & Technology Australia Pty Limited have a certificate under the Suitors' Fund Act 1951 if so entitled.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Background

Background to the litigation

Section 459G provides that an affidavit must be filed in support of the application to set aside the demand within the 21 day period in which the section provides that the application must be made. The Corporations Rules, r 2.4(1) provide, relevantly, that, unless the Court otherwise directs, an originating or interlocutory process must be supported by an affidavit stating the facts in support of the process. An affidavit constitutes written evidence and thus, subject to certain exceptions, must comply with the rules of evidence as to form and relevance. Relevance for the purposes of an application under s 459H is governed by the terms of the section and the particular matters raised by the application: see the Evidence Act 1995, s 55. Accordingly, there must be evidence that satisfies the court that there is "a serious question to be tried", or "an issue deserving of a hearing", or a "plausible contention requiring investigation" of the existence of either a dispute as to the debt or an offsetting claim. It is apparent, therefore, that evidence sufficient to satisfy this test, given the time period in which the affidavit must be filed, cannot and need not conclusively prove the claim or otherwise be incontrovertible or substantially non-contestable. Having regard to the test that applies in determining whether the evidence is sufficient for the purposes of setting aside the demand, which is discussed below, the hearsay rule will not apply with the same strictness as is required in a fully contested hearing of a principal dispute. Rather, as in the case of an interlocutory proceedings, hearsay evidence may be admissible provided evidence of the source of the hearsay is adduced: see the Evidence Act, s 75. Regardless whether proceedings to set aside a statutory demand are characterized as final or interlocutory, the issue in such proceedings is not whether a debt to which the statutory demand relates is owed. The issue is whether there is a genuine dispute about whether a debt is owed or whether there is an off-setting claim. Thus in Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) [2004] NSWSC 527; 185 FLR 130 at [21]-[22], White J explained that evidence which may be inadmissible as hearsay or opinion to establish a fact relevant to indebtedness would not on that account be inadmissible to establish a fact relevant to whether there was genuine dispute about indebtedness. As the Court has already noted, the question in contention in this case is whether there was sufficient evidence to establish the existence of an off-setting claim. In dealing with that question, the Court has found it of assistance to deal with a line of authority relating to the similar question that arises under s 459H(1)(a), namely, what is required by way of evidence to establish the existence of a disputed debt for the purposes of the section. The distinction between determining whether there was sufficient evidence to establish a disputed debt as opposed to whether the applicant's claim will succeed was considered by Northrop J in Greenwood Manor Pty Ltd v Woodlock (1994) 48 FCR 229, at 234, where his Honour observed:

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Medium Neutral Citation:	Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344
Hearing dates:	11 July 2013
Decision date:	21 October 2013
Before:	Beazley P; Meagher JA; Gleeson JA
Decision:	(1) Leave to appeal granted; (2) Appeal allowed; (3) Set aside orders made by Black J on 19 April 2013; (4) Order that the statutory demand dated 26 November 2012 issued by Analysis & Technology Australia Pty Limited against Britten-Norman Pty Limited be set aside; (5) Order that Analysis & Technology Australia Pty Limited pay Britten-Norman Pty Limited's costs at first instance and on the appeal; (6) Order that Analysis & Technology Australia Pty Limited have a certificate under the Suitors' Fund Act 1951 if so entitled. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	CORPORATIONS - winding up - statutory demand - application to set aside - Corporations Act 2001, ss 459G, 459H - whether evidence sufficient to establish offsetting claim - whether evidence sufficient to establish quantum of offsetting claim
Legislation Cited:	Corporations Act 2001 (Cth) Evidence Act 1995 Supreme Court (Corporations) Rules 1999
Cases Cited:	Beauty Health Group v Sholl [2011] NSWSC 77 Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWSC 1302 Chase Manhattan Bank Australia Limited v Oscty Pty Limited [1995] FCA 1208; 17 ACSR 128 Commonwealth of Australia v Amann Aviation Pty Ltd (1991) HCA 54; 174 CLR 64 Elm Financial Services Pty Ltd v Macdougal [2004] NSWSC 560 Eumina Investments Pty Ltd v Westpac Banking Corp [1998] FCA 824; 84 FCR 454 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 Financial Solutions Australasia Pty Ltd v Predella Pty Ltd [2002] WASCA 51; 167 FLR 106 Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund [1996] FCA 822; 70 FCR 452 Greenwood Manor Pty Ltd v Woodlock (1994) 48 FCR 229 Hansmar Investments Pty Ltd v Perpetual Trustee Company Ltd [2007] NSWSC 103; 61 ACSR 32 Hills Motorway Ltd v UBS AG [2005] NSWSC 1086 Infratel Networks Pty Ltd v Gundry's Telco & Rigging Pty Ltd [2012] NSWCA 365; 297 ALR 372 Macleay Nominees v Belle Property East Pty Ltd [2001] NSWSC 743 Meadowfield Pty Ltd v Gold Coast Holdings Pty Ltd [2001] WASCA 360 Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290 No. 96 Factory Bargains Pty Ltd v Kershel Pty Ltd [2003] NSWSC 146 Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601 Roberts v Rodier [2006] NSWSC 282 Robinson v Harman (1848) 1 Ex 850; 154 ER 363 Royal Premier…