Collins v Westpac

[2000] NSWSC 260

CITATION:	Collins v Westpac [2000] NSWSC 260
FILE NUMBER(S):	SC 5091/99
HEARING DATE(S):	31/03/2000
JUDGMENT DATE:	31 March 2000
PARTIES :	Brett Collins Investments Pty Limited v Westpac Banking Corporation
JUDGMENT OF:	Master Macready at 1

COUNSEL :	Mr R. Harper (P) Mr L. Aitken (D)
SOLICITORS:	Michael Blaxell (P) Corrs Chambers Westgarth (D)
CATCHWORDS:	Corporations Law. Application to set aside statutory demand due to a defect in the deman and affidavit. Reference in demand to a debt due under an agreement rather than a judgment obtained in respect of the debt. Held demand was a purported demand and no substantial injustice would result if it was not set aside. Summons dismissed.
CASES CITED:	Blair v Curran (1939) 62 CLR 464 at 532; Topfelt Pty Limited v State Bank of NSW (1933) 47 FCR 226; Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) FCR 452; B&M Construction v Buyrite Steel Supplies (1994) 15 ACSR 433; Equuscoup v Perpetual Trustee (1997) 80 FLR 259 at 301.
DECISION:	Para 22

- 1 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER MACREADY

FRIDAY 31 MARCH 2000

5091/99 - BRETT COLLINS INVESTMENTS PTY LIMITED v WESTPAC BANKING CORPORATION

JUDGMENT

1   MASTER: This is an application to set aside a statutory demand dated 4 November 1999 served by the defendant on the plaintiff claiming a payment of the sum of $79,070.13. 2   The description of the debt in the demand is in the following form:

" Description of the Debt(s) Amount of the Debt(s)

The balance outstanding as $79,070.13
as at 2 November 1999, of the
principal amount advanced to
the Company by the Creditor
and payable by the Company to
the Creditor, interest and
charges incurred as per the
Investment Property Loan
Agreement, contained in the
terms and conditions letter
dated 14 October 1996."

3   That description is inaccurate as the defendant has sued in the Common Law Division of this Court pursuant to the agreement alleged in the demand and recovered a judgment against the plaintiff. The judgment was for possession of a property and for the plaintiff in these proceedings to pay the sum of $198,950.22 plus $1,804 for costs. The plaintiff did not defend the common law proceedings. 4   Since that judgment was obtained on 14 May 1999 the defendant has realised some securities and the sum now alleged to be due under the judgment is the amount of $79,070.13 claimed in the demand. The plaintiff in these proceedings has received particulars of how the figure is calculated and does not dispute the amount. There is thus no suggestion of a genuine dispute as to the sum of $79,070.13 being due under the judgment as at 2 November 1999. 5   The plaintiff suggests that the demand be set aside because the correct description of the debt is one due under a judgment and not the agreement which is referred to in the demand. It points to the undisputed proposition that the debt due under the agreement has "passed into the judgment so that it is merged and no longer has an independent existence” see Blair v Curran (1939) 62 CLR 464 at 532.

6   It is submitted that the demand should be set aside on the grounds:

(a) That the deficiency is so fundamental that the demand is incapable of being a statutory demand.
(b) That the deficiency is a defect in the demand such that substantial injustice will be caused unless the demand is set aside.
(c) That there are defects in the affidavit in support of the demand. 7   I turn to the first matter. This claim arises as a result of comments made by Lockhart J in Topfelt Pty Limited v State Bank of New South Wales Limited (1933) 47 FCR 226. At 238 his Honour said:

"There may, however, be cases where deficiencies in the form of demands are so fundamental that the demands are incapable of assuming the description of statutory demands within the meaning of the Corporations Law . This is a question to be decided in future cases."

8   In Spencer Construction Pty Limited v G & M Aldridge Pty Limited (1997) FCR 452 the full court of the Federal Court did not overrule these comments, but made it plain that it would be an extraordinary case that would fall within this suggested exception. At 458 the Court had the following to say:

"The interpretation of s 459J(1) contended for by the appellant is not correct. Section 459J(1) and (2) constitute the statutory code for defects in a demand; within that code the legislature did not distinguish between degrees of defect in statutory demands. As we have pointed out a defect in a demand only gives rise to an entitlement (if substantial injustice is established) to have the demand set aside under s 459J(1)(a), but not under s 459J(1)(b). Accordingly, the 'other reason' required by s 459J(1)(b) must, in our view, be a reason other than a defect in the demand.
Section 9 of the Corporations Law defines a 'statutory demand', unless the contrary intention appears, as meaning:


'(a) a document that is, or purports to be, a demand served under section 459E; or

(b) such a document as varied by an order under subsection 459H(4).'

No contrary intention appears in s 459J. Accordingly, the expanded definition applies to s 459J which operates in respect of documents purporting to be demands served under s 459E. Thus so long as a document 'purports to be' a statutory demand, the power of the Court to set it aside on the basis that there is a defect in or relating to the demand, is to be determined by reference to s 459J. That offers further support for our view that even significant defects in a demand are to be determined under s 459J(1)(a) rather than s 459J(1)(b)."

9   The deficiency in the demand is one which clearly falls within the description of a defect. 10   Section 9 of the Corporations Laws defines "defect" in relation to a statutory demand as including:

"(a) an irregularity; and

(b) a misstatement of an amount or total; and

(c) a misdescription of a debt or other matter; and
(d) a misdescription of a person or entity."

11   The present problem is clearly a "misdescription of a debt". The demand followed the appropriate form for a statutory demand and it thus clearly purports to be a statutory demand. It thus must be dealt with under s 459J. That section is 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."

12   The only question is whether substantial injustice will be caused unless the demand is set aside.

13   The plaintiff's submissions were to the effect that the very defect was a substantial injustice and reference was made to Lockhart J's comments in Topfelt that it was not for the debtor to make inquiries as to how much was due. The affidavit in support was no more enlightening. It demonstrated that Mr Collins was:

(a) well aware of the earlier proceedings in 1999;
(b) did not defend them;
(c) was aware of the Bank realising the security in 1999;
(d) corresponding with the Bank as to any deficiency;
(e) had been advised of an estimated deficiency on resale prior to the demand. 14   He complained in the affidavit that he had not been provided, prior to demand, with particulars of how the sum of $79,070.13 was calculated. In order to comply with the demand he needed to make no inquiries. Events post demand demonstrate that the sum claimed was the correct sum due under the judgment. In these circumstances. I fail to see how there is substantial injustice which will be caused unless the demand is set aside. 15   I turn to the third ground. The affidavit of the bank officer was in the following form:

"1. I am an officer of the Creditor. I am duly authorised to swear this Affidavit on the Creditor's behalf. I have knowledge of the facts of this matter so far as they are known to the Creditor.
2. The Notice of Demand dated 4 November 1999 ('Demand'), a true copy of which is annexed to this Affidavit and marked 'A', was signed by me as the duly authorised attorney of the Creditor under Power of Attorney No 831 Book 4059.
3. I believe that the amount of $79,070.13, being the Debt specified in the accompanying Demand, is due and payable by the Debtor to the Creditor.
4. I have access to the books and records of the Creditor which indicate that the Debtor is indebted to the Creditor in the amount of $79,070.13.
5. I believe that the matters contained in this Affidavit and the Demand are true.
6. I believe that there is no genuine dispute about the existence of the Debt referred to in paragraph 3."

16   The affidavit is in the appropriate form and complies with Pt 80A r15. Given that the debt relied upon to support the statutory demand is a judgment debt, there is, in any event, no requirement for there to be an affidavit: see s459E (3). 17   It was submitted that because the demand misdescribed the debt, the affidavit must be wrong, i e there was no debt as alleged in paragraph (3) of the demand, only a judgment debt for the same amount. 18   I am conscious of the importance in the statutory scheme of the Act that compliance with the requirements for an affidavit is important. In B & M Construction v Buyrite Steel Supplies (1994) 15 ACSR 433 his Honour the Chief Judge said:

"In my opinion the departure from the relevant rule in respect of the affidavit accompanying the statutory demand is a matter of substance. The requirement of that rule, as to the identity of the person making the affidavit accompanying the statutory declaration, is designed to serve the public interest as well as to protect the company against unwarranted demands, by endeavouring to ensure, within practical limits, that the person who must put his or her oath or solemn affirmation to the relevant matters (and thereby risk a conviction for perjury if a knowingly false statement is made) is the person associated with the creditor who is most likely to have direct knowledge of those matters. It is important in this regard to bear in mind that the relevant matters include not only a belief as to the existence and amount of the debt, but also a belief as to the absence of any genuine dispute about the existence or amount of the debt. The express requirement in the rule that the person making the affidavit depose to his or her belief that there is no genuine dispute is a significant mechanism for filtering out cases where there is in fact such a dispute, so as to prevent such cases from reaching the Court on such an application as the present, with a consequent waste of time and resources. This mechanism would be substantially weakened unless a person likely to have personal knowledge of the existence of a dispute if there is one makes the affidavit. A statement of a belief that there is no genuine dispute based solely on hearsay is unlikely to have anything like the same degree of reliability. I therefore do not regard what has occurred in the present case as a merely technical breach of the rules. It goes to the heart of what Part 80A rule 15 was intended to achieve."

19   However, the fact that the affidavit can be demonstrated to be wrong by drawing some inference does not mean that it does not comply with the Rules. 20   It is clear that the decision to set aside under s459J(1)(b) because of a defect in an affidavit is discretionary and there is no ironclad rule that a defective affidavit will mandate the setting aside of the demand: see Equuscoup v Perpetual Trustee (1997) 80 FLR 259 at 301. 21 Even if I were persuaded that there is a defect in the affidavit (which I am not), I would not, as a matter of discretion, set it aside. This is because the debt relied upon is a judgment debt and thus there is no requirement for an affidavit. In addition, the nature of the defect is not one which I consider to be a serious departure from the scheme of the Act.

22   I order that the summons be dismissed and that the plaintiff pay the defendant's costs.

oOo

Last Modified: 09/25/2000