Carb Royale Pty Ltd v Tonkin

[2000] VSC 399

SUPREME COURT OF VICTORIA

COMMERCIAL AND EQUITY DIVISION

Not Restricted

No. 5306  of  2000

CARB ROYALE PTY LTD	Plaintiff
v
DOUGLAS EWART TONKIN	Defendant

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MASTER:	Senior Master Mahony
WHERE HELD:	Melbourne
DATES OF HEARING:	17 May 2000, 15 June 2000, 18 August 2000
DATE OF JUDGMENT:	2 October 2000
CASE MAY BE CITED AS:	Carb Royale v Tonkin
MEDIA NEUTRAL CITATION:	[2000] VSC 399

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Corporations Law, section 459E (3)

Winding up – statutory demand – setting aside – affidavit accompanying demand – witness not adding after signature details required by Rules – whether affidavit “complies with the rules”

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P. J.  Booth	Behan & Speed
For the Defendant	Mr P. Bornstein	Ponte Earle Harrick

JUDGMENT

1. In this proceeding the plaintiff seeks an order under section 459G of the Corporations Law setting aside a statutory demand served on it by the defendant. For the purposes of these reasons, it is unnecessary to set forth all the issues raised to support the plaintiff’s case or the arguments put concerning them. Apart from that with respect to which I reserved my decision, they have been determined for reasons given extempore with the result that, if the remaining issue is decided in favour of the defendant, the statutory demand will not be set aside but varied under section 459H (4)(a) so as to reduce the sum demanded from $34,584.90 to $16,916.90.

1. The remaining issue concerns the effectiveness of the document in the form of an affidavit served with the statutory demand.  The debts demanded were not judgment debts and so section 459E (3) required that the statutory demand be accompanied by an affidavit “that … verifies that the debt, or the total of the amounts of the debts, is due and payable by the company; and … complies with the rules”.  The plaintiff’s submission was that the document in the form of an affidavit did neither.

1. As to the former, the contention was that it did not properly verify the debts.  It did not purport to verify the debts in the sense that would be required in an application for summary judgment with respect to them.  But all that is required by section 459E (3)(a) is “a formal affirmation” that the debt or the total of the debts is due and payable: AZEDDevelopments Pty Ltd v Frederick & Co Ltd (in liquidation) [1994] 14 ACSR 54, at 56; 12 ACLC 949, at 941. Nor do the Rules impose any greater requirement. In paragraph 3 of the document the defendant (who is the deponent if the document is an affidavit) asserted: “The total of the debts mentioned in the statutory demand is due and payable by the Debtor [the plaintiff]”. This is the verification which was required both by section 459E (3)(a) and the new ‘harmonised’ Rules: see Rule 5.2 (a) and Form 7 of the Supreme Court (Corporations Law) Rules 1999 (“Chapter V”).

1. The other contention was that the document did not “comply with the rules” in the sense required by section 459E (3)(b). This was based on the failure of the person whose illegible signature appeared at the end of the jurat as that of the person who had administered the oath to the plaintiff to add below that signature by legible writing, type or stamp “his name and address and a statement of the capacity in which he has authority to take the affidavit”: see Rule 43.01 (7) of the Supreme Court (General Civil Procedure) Rules 1996 (“Chapter I ”).

1. Rules of Court, of course, apply to proceedings in a court, not to extra-curial processes.  The Legislature’s requirement that in certain circumstances a document for which, and for the service of which, legislation provides in a non-curial situation “be accompanied by an affidavit that … complies with the rules” necessarily occasioned difficulty.  (It seems probable that the draftsperson should have provided for a statutory declaration.)  In Victoria, “rules” in this context means the “rules” of this Court or those of the Supreme Court of “another jurisdiction”: section 9.  The primary difficulty – in the days before ‘harmonisation’ and, as I understand it, Queensland is still to adopt ‘harmony’ – was, perhaps, the answer to the question, whose rules should apply in any given case?  That, I believe, was authoritatively resolved by the Full Court of the Federal Court in Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] 24 ACSR 353; 15 ACLC 1001. In rejecting a submission that the relevant rules were necessarily those of the court in whose jurisdiction the company to be served with the demand had its registered office, the Full Court held that “the rules” were those “of any court which has the jurisdiction to hear and determine any application in relation to, or arising out of, the service of a statutory demand”: ACSR, at 362; ACLC, at 1009.

1. In this proceeding, no issue was raised as to the application to the document accompanying the statutory demand of rules other than the Rules of this Court. The Rules in Chapter I, including Rule 43.01 (7) (the Rule which was relied on by the plaintiff), “so far as they are relevant and not inconsistent with [Chapter V]” apply to a proceeding in the Court to which Chapter V applies: Rule 1.3 (2) of Chapter V. It is Chapter V which contains specific requirements (in Rule 5.2 and Form 7) as to an affidavit which accompanies a statutory demand. The plaintiff – properly, in my view – did not seek to contend that there was any failure of the document to comply with those requirements. The defendant – again, properly in my view – did not suggest that the reference to a proceeding should exclude the application of Rule 43.01 (7) of Chapter I if it was otherwise relevant to the requirements of section 459E (3)(b). Since that section necessarily attracts to the affidavit accompanying a statutory demand the provisions of Rule 5.2 of Chapter V, the incorporation of Chapter I in Chapter V ought similarly attract Rules concerning affidavits in Chapter I “so far as [those Rules] are relevant and not inconsistent with [Chapter V]”. (In so far as the “general” Rules of other Supreme Courts do not coincide with Chapter I of the Rules of this Court, there may be differences in result in consequence of this, notwithstanding the ‘harmonisation’ of Rules with respect to proceedings under the Corporations Law. This is a fact, not a plea for more ‘harmony’.)

1. In Order 43 of Chapter I there are a number of Rules concerning affidavits. I shall not set them out. A number of them are expressed so as to impose requirements for affidavits, for example, Rule 43.01 (1): “An affidavit shall be made in the first person”; Rule 43.01 (5): “Every affidavit shall be signed by the deponent …”; and Rule 43.01 (6): “Each page of an affidavit shall be signed by the person before whom it is sworn.” Others are expressed so as to impose obligations on persons, for example, Rule 43.01 (7) on which the plaintiff relies: “The person before whom an affidavit is sworn shall legibly write, type or stamp below his signature in the jurat his name and address and a statement of the capacity in which he has authority to take the affidavit”; and see, also, Rule 43.02 (1).

1. I consider the distinction to be crucial. An affidavit not made in the first person or not signed by the deponent would not comply with the Rules. An affidavit made but which involves a breach of Rule 43.01 (7) is one in respect of which an obligation imposed on a person has not been performed. If there is otherwise no cause for complaint, the affidavit complies with the Rules; but the person on whom the Rules impose an obligation has not complied with the obligation.  This distinction is supportable not only by the terms of the Rule itself but also by the terms of Rule 43.02 (1) which concerns the obligations of the person before whom an affidavit is made where the deponent is illiterate or blind; and by the provisions of section 123C (3) of the Evidence Act 1958 (Vic.) which are to the same effect as Rule 43.01 (7). That the Act and Rule impose personal obligations, rather than requirements for affidavits, is put beyond question by the fact that the section imposes a penalty.

1. Accordingly, I conclude that the failure of the solicitor before whom the defendant made the affidavit accompanying the statutory demand to comply with Rule 43.01 (7) did not mean that the affidavit did not “comply with the rules” as required by section 459E (3)(b).

1. Thus, the plaintiff’s submission that the document accompanying the statutory demand was not an affidavit as required by section 459E (3) fails.

1. In my view, however, the failure of the person before whom the defendant made the affidavit to comply with Rule 43.01 (7) and, more particularly, with section 123C (3) of the Evidence Act, is not without consequence.  A court readily recognises that the rationale of such provisions is to enable the court to take judicial notice of the signature of the person: see Re Noitaroproc Pty Ltd; Re Heine Finance Pty Ltd [1991] 9 ACLC 1331. The director or secretary of a company receiving a statutory demand and an accompanying affidavit in the form in which the plaintiff received the affidavit of the defendant is unlikely to recognise the significance of the omission. The presence or absence of the additional details underneath the signature of the witness to the deponent’s signature usually will make no difference to him or her. One of the obligatory ‘Notes’ which appears at the end of a statutory demand (see Form 509H) repeats section 459E (3) but, unless the director or secretary is also a litigation lawyer, the likelihood is that the reference to the requirement that the affidavit comply “with the rules” will generally be meaningless and, in most cases, insufficient to inspire the reader to consult such a lawyer. Usually, as in this case, it will be some other more obvious source of objection to the demand that will inspire the consultation. When consulted, however, and given the opportunity to peruse the statutory demand and the affidavit, the solicitors must be concerned whether the document is an affidavit at all. If it is not made before a person authorised to administer an oath or affirmation for an affidavit, the document, despite its form, will not be an affidavit; and the statutory demand will be liable to be set aside on that ground alone: cf. Victor Tunesvitsch Pty Ltd v Farrow Mortgage Services Pty Ltd (in liquidation) [1994] 14 ACSR 565; 12 ACLC 963. In such circumstances it will be necessary to apply for an order that the statutory demand be set aside unless the solicitor knows the signature and that it is that of a person who is qualified to administer the oath or affirmation. Once a proceeding under section 459G has been duly commenced, the creditor will have the opportunity to answer the point by filing and serving an affidavit proving the identity, address and qualification of the witness – as happened in this proceeding. Until that proof is adduced, however, the proceeding is properly brought and there must be consequences as to costs even if the plaintiff has no other basis for obtaining an order that the statutory demand be set aside.

1. In this proceeding, the plaintiff has also succeeded in part by satisfying me that the statutory demand should be varied by reduction to a sum less than half its total.  In these circumstances I shall need to hear counsel as to what order(s) as to costs ought be made.