Business Structures Pty Ltd v D'Amico
[2012] VSC 146
•20 April 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST
S CI 2012 01000
| BUSINESS STRUCTURES PTY LTD (ACN 090 706 540) | Plaintiff |
| v | |
| GIUSEPPE D'AMICO (trading as D'Amico Steel Works) | Defendant |
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JUDGE: | GARDINER AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 18 April 2012 | |
DATE OF JUDGMENT: | 20 April 2012 | |
CASE MAY BE CITED AS: | Business Structures Pty Ltd v D'Amico | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 146 | Revised 26 April 2012 |
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CORPORATIONS – External administration – Application to set aside statutory demand – Demand claimed sums in excess of judgment the subject of the demand and was not accompanied by affidavit required under Section 459E(3) – Demand set aside.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr B Fried (Solicitor) | The Law Offices of Barry Fried |
| For the Defendant | Mr M Sanger | Hassell’s Litigation Service |
HIS HONOUR:
The plaintiff makes application by an originating process filed 24 February 2012 to set aside a statutory demand dated 2 February 2012. The demand was served on the plaintiff by the defendant on 6 February 2012.
The schedule to the demand states as follows:
Schedule
Description of the Debt
Amount of the Debt
Judgment registered in the Magistrates’ Court of Victoria at Moorabbin in Case No. B11896191 on 11 July 2011 in respect to VCAT Tribunal Case No. D84/2010 orders made 13 May 2011.
$34,618.65
Interest from 14 May 2011 to 2 February 2012 and being 264 days at statutory prescribed rate of 10.5% per annum
$2,629.12
$37,247.77
The demand was not accompanied by an affidavit verifying it pursuant to s 459E(3) of the Corporations Act2001.
In associated proceedings, the plaintiff, by an originating motion, sought judicial review of the VCAT order described in the schedule. However, on 18 April 2012, Randall AsJ dismissed the plaintiff’s application for an extension of time to commence those proceedings.
Because of that dismissal, the VCAT order, which was filed in the Magistrates’ Court pursuant to s 121 of the Victorian Civil and Administrative Tribunal Act 1998 on 11 July 2011, is enforceable as a monetary order and there can be no genuine dispute that it is due and payable.[1]
[1]Farid Assaf, Statutory Demands Law and Practice (1st ed, 2008), [5.24] and the cases cited at footnote 114.
There remains an issue arising from the fact that the defendant, as can been seen from the schedule extracted above, has claimed interest from 14 May 2011 (the day after VCAT made the order) to 2 February 2012 (the day that the statutory demand was issued). The plaintiff accepts that the order made by VCAT on 13 May 2011 is enforceable as a monetary order by reason that the defendant has complied with s 121 of the VCAT Act and that, had the defendant issued a statutory demand for that amount alone, it would not have been required to verify it by an accompanying affidavit under s 459E(3) of the Corporations Act 2001 (Cth) (“the Act”). However, the plaintiff submits that because the demand claims additional interest, which was not part of the VCAT order filed in the Magistrates’ Court, it makes a demand for amounts in excess of the judgment and, in the absence of an affidavit under s 459E(3) of the Act, the demand is fatally defective.
Mr Fried, who appeared on behalf of the plaintiff, made reference to the decision of Ward J in Fitness First Australia Pty Ltd v Dubow[2] where her Honour stated:[3]
The purpose of the requirement for a verifying affidavit is to enable the Court to be satisfied that there is a solid basis for the claim as to the existence of the debt. The exemption for the requirement for such an affidavit in the case of judgment debts is to be understood in that light. Where a portion of the amount claimed is not a judgment debt, then notwithstanding that it may be for a minor amount, there is nothing in the legislation that exempts the requirement for a verifying affidavit in relation to that portion of the debt. The failure to provide such an affidavit is not a defect in the demand, it renders the demand a non‑compliant demand and constitutes “some other reason” why the demand should be set aside under s 459J(1)(b) (Ford’s Principles of Corporations Law at para 27.065; Victor Tunisovic Pty Ltd v Farrow Mortgage Services Pty Ltd in liq [1994] TASSC 121; (1994) 14 ACSR 565).
[2](2011) 84 ACSR 296 (“Dubow”).
[3]Ibid [98].
The New South Wales Court of Appeal, in Dubow v Fitness First Australia Pty Ltd referred to with approval her Honour’s reasoning.[4]
[4]Referred to her Honour’s reasoning with approval [2011] NSWCA 401, [13]-[14].
In Anderson Formrite Pty Ltd v CASC Hire Pty Ltd,[5] Siopis J of the Federal Court of Australia held a statutory demand to be invalid on the basis that the exemption from the requirement to accompany a statutory demand with a verifying affidavit was limited to circumstances where the statutory demand made an identical demand to the amount of the judgment debt. He stated at paragraph 62 and 63:[6]
[62] The rationale for exempting a statutory demand for the very sum of a judgment, from the need for verification by an accompanying affidavit is apparent. The judgment speaks for itself as to the amount which is due and payable and, prima facie, also in relation to the absence of a genuine dispute.
[63] However, once the statutory demand is for a sum different from the sum in the judgment, the rationale for the exemption from the verification no longer applies because extraneous events or circumstances have intervened. There is then a need to identify the amount claimed by reference to the extraneous intervening events and circumstances. Further, these intervening events and circumstances are capable of giving rise to disputes as to the amount of an outstanding debt and, also, as to the continued existence of the debt. Thus, it is possible, depending on the nature of any agreement that the debtor and creditor may have reached in relation to the compromise or further payment of the judgment debt, that liability in respect of the judgment debt may have been discharged, to be replaced by a different contractual obligation (see McDermott v Black (1940) 63 CLR 161 at 183–185). In these circumstances, the same considerations which underlie the introduction of the legislative requirement for verification of statutory demands for amounts that were never the subject of a judgment, apply equally to demands for amounts different from the sum in respect of which a judgment was given. It follows, in my view, that a narrow construction should be given to the words ‘judgment debt’ in s 459E(3) of the Act so that the exemption is confined to demands for the very amount in respect of which judgment was obtained, and not for any different amount.
[5](2005) 147 FCR 379.
[6]Also see discussions in Assaf, above n 1, [3.20].
Mr Sanger of Counsel who appeared on behalf of the defendant, was not able to point out to me any means by which the defendant could characterise the inclusion of the interest component of the demand as being part of the judgment. He made reference to the decision of Topfelt Pty Ltd v State Bank of New South Wales[7] but that case involved quite different factual circumstances than those here and I consider that the approach taken in the cases referred to above, which are more on point, should be applied.
[7](1993) 12 ACSR 381, [49]-[54].
The statutory demand here clearly makes a demand for a sum in excess of the judgment filed in the Magistrates’ Court and it was not verified by an affidavit as required by s 459E(3). In such circumstances, I consider that the statutory demand dated 2 February 2012 and served on the plaintiff by the defendant on 6 February 2012 should be set aside. The defendant is to pay the plaintiff’s costs of the application including reserved costs.
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