Endeavour Investments (NT) Pty Ltd v Jones
[2022] NTSC 77
•6 October 2022
CITATION:Endeavour Investments (NT) Pty Ltd v Jones [2022] NTSC 77
PARTIES:ENDEAVOUR INVESTMENTS (NT) PTY LTD (ACN 133 112 811)
v
JONES, Selwyn Thomas
TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION: SUPREME COURT exercising Territory jurisdiction
FILE NO:2022-01509-SC
DELIVERED: 6 October 2022
HEARING DATE: 25 August 2022
JUDGMENT OF: Huntingford A/AsJ
CATCHWORDS:
Corporations law – Winding up in insolvency – Statutory demand – Whether “genuine dispute” within meaning of s 459H(1) Corporations Act 2001 (Cth) – Discretion to set aside statutory demand for “some other reason” in Corporations Act 2001 (Cth), s 459J(1)(b) – where terms of order of NTCAT as registered in Local Court unclear – where genuine dispute as to whether debt due and payable – where other reasons to set aside statutory demand – statutory demand set aside
Corporations Act 2001 (Cth), Pt 5.4, ss 459E, 459G, 459H, 459J
Northern Territory Civil and Administrative Tribunal Act 2014 (NT)
Mineral Titles Act 2010 (NT)Boutique Venues Pty Ltd v JACG Pty Ltd [2007] NTSC 5; Carwyn Constructions Pty Ltd v J & WL Consulting Services [2009] QCA 225;
Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5;
Chapel of Angels Pty Ltd v Hennessy [2021] FCA 875; CP York Holdings Pty Ltd v Food Improvers Pty Ltd [2009] NSWSC 409; Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41; Fitness First Australia Pty Ltd v Dubow (2011) 251 FLR 241; Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (2019) NSWLR 397; Gym Pty Ltd v Crackerjack Investments Pty Ltd [1997] FCA 751; Hotncold Pty Ltd v Hawk Construction Services Pty Ltd [2006] WASCA 45; J Build Developments Pty Ltd v Airconditioning and Electrical Services (Aust) Pty Ltd [2022] VSC 434; Kismul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262; Main Camp Teatree Oil Ltd v Australian Rural Group Ltd [2002] NSWSC 219; Meehan v Glazier Holdings Pty Ltd [2005] NSWCA 24; MNWA Pty Ltd v Deputy Commissioner of Taxation [2016] FCAFC 154; NT Resorts Pty Ltd v Deputy Commissioner of Taxation (1998) 153 ALR 359; Playford Vineyard Pty Ltd v Wishford Nominees Pty Ltd [2018] SASC 152; Re Essential Media and Entertainment Pty Ltd [2020] NSWSC 990; Re Golden Robot Records International Pty Ltd [2021] NSWSC 1146; Re PostNet Australia Pty Ltd [2017] NSWSC 160; Scolaro’s Concrete Construction Pty Ltd v Schiavello Commercial Interiors (Vic) Pty Ltd (1996) 62 FCR 319; Scream Construction Pty Ltd v Owners Corporation No. 711686W [2021] VSC 437; Spacorp Australia Pty Ltd v Myer Stores Ltd (2001) 19 ACLC 1270; Spencer Constructions Pty Ltd v G&M Aldridge Pty Ltd (1997) 76 FCR 452; Tuffrock Pty Ltd v Roger Smith & Associates Pty Ltd [2015] NSWSC 738; Verimark Pty Ltd v Passiontree Velvet Pty Ltd [2019] NSWSC 455, referred toREPRESENTATION:
Counsel:
Plaintiff:J Fincher
Defendant:A Howland
Solicitors:
Plaintiff:Cozens Johansen Lawyers
Defendant:Ward Keller
Judgment category classification: B
Judgment ID Number: Hun2204
Number of pages: 25
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWINEndeavour Investments (NT) Pty Ltd v Jones [2022] NTSC 77
No. 2022-01509-SC
BETWEEN:
ENDEAVOUR INVESTMENTS (NT) PTY LTD (ACN 133 112 811)
Plaintiff
AND:
SELWYN THOMAS JONES
Defendant
CORAM: HUNTINGFORD A/AsJ
REASONS FOR JUDGMENT
(Delivered 6 October 2022)
Introduction
This is an application by the plaintiff, Endeavour Investments (NT) Pty Ltd, (Endeavour), under s 459G of the Corporations Act 2001 (Cth) for an order pursuant to s 459H, or in the alternative s 459J, setting aside a creditor’s statutory demand dated 24 May 2022 served on it by the defendant, Selwyn Thomas Jones (Jones).
The debt to which the statutory demand relates is described in the schedule as “…a judgment debt arising from an order of the Northern Territory Civil and Administrative Tribunal (File No.:2021-02427-CT) made on 12 November 2021 (attached at Annexure 1) and registered in the Local Court of the Northern Territory on 13 April 2022 (Case No: 2022-00971-lC). A copy of the Notice of Registration of Order is attached at Annexure 2.” The amount of the debt was $38,000.
No verifying affidavit accompanied the statutory demand.
Endeavour relied upon affidavits of William Andrew Jettner affirmed 14 June 2022 and Nicholas Ryan Johansen affirmed 21 July 2022. Jones relied upon the affidavits of Amanda Jane Thorneycroft sworn 30 June 2022 and Ashley Thomas Heath sworn 3 August 2022. There was no dispute as to the facts.
Background
In 2021 the parties were involved in a dispute concerning mineral lease ML30259, owned by Jones, which led to a proceeding in the Northern Territory Civil and Administrative Tribunal (NTCAT).
On 21 November 2021, following a conciliation conference, consent orders were made by NTCAT in these terms:
THE TRIBUNAL ORDERS BY CONSENT THAT:
1 The Respondent pay the Applicant $38,000 by (i) 11 January 2022 or (ii) 7 days from the date of Ministerial consent of the transfer Mineral Lease ML30259, whichever is the later, in accordance with the terms in attachment A.
Attachment A
2 The settlement sum of $38,000 to be paid to Ward Keller Trust Account.
3 The above is subject to Ministerial Consent to the transfer of Mineral Lease ML30259 to Endeavour or its nominee.
4 The transfer to be prepared by Endeavour’s solicitors and to be signed by Jones by 3 December 2021 and by Endeavour or its nominee within 7 days of receipt of the transfer signed by Jones.
5 Endeavour or its nominee to lodge the transfer with the Department of Industry Tourism and Trade by 24 December 2021.
6 All government charges including stamp duty to be paid by Endeavour or its nominee in relation to the transfer, including all transfer fees.
7 The parties agree that the transfer of ML30259 will be as a going concern. Otherwise, Endeavour will pay the GST on presentation of an invoice.
8 Jones to provide Endeavour notification of discharge of Jones’ authorisation provided by the Department to Jones.
9 The above to be incorporated in a suitable deed of release with necessary indemnities, to be prepared by the Respondent’s solicitors. The Deed will compromise (i) the matters set out in the Application and Response filed in NTCAT proceeding 2021-02427-CT; (ii) any claim in relation to ML30259 and (ii) the claim Endeavour has against Jones in relation to the invoice number 10936 dated 10 May 2018 by Complete Tenement Management.
10 Each party to bear their own costs.[1]
Following the making of the NTCAT orders a deed of release was drafted, but the terms were never agreed and it was not executed. The mineral lease has not been transferred to Endeavour and Endeavour has not paid $38,000 to Jones.
On 10 December 2021 Endeavour applied to NTCAT to reopen the proceeding. However, that application was later withdrawn and an order noting the withdrawal was made by NTCAT on 11 February 2022.
Notwithstanding the lack of a signed deed, some steps have been taken in relation to the transfer of the mineral lease. On 23 December 2021, Jones’ solicitors wrote to the Minister responsible for the Mineral Titles Act 2010 (NT). That letter refers to an earlier application, by letter dated 2 December 2021 (which is not in evidence) “making application for Minister’s consent under section 123(4) Mineral Titles Act regarding transfer of ML30259”.[2] The purpose of the 23 December 2021 letter was to “clarify several issues in relation to the application”. The clarification related to the condition which Jones had asked the Minister to make regarding registration of the transfer, namely that registration be subject to the Minister being satisfied that “the terms of the order have been satisfied”, and how that might occur.
On 24 March 2022 the Director Mineral Titles, as delegate of the Minister for Mining and Industry, wrote to Jones’ solicitors in these terms[3]
I refer to the lodgement of Instrument of Dealing (Transfer) D94349 seeking to transfer Mineral Lease 30259 between Selwyn Jones and Endeavour Investments (NT) Pty Ltd and your application for prior approval under s123(4).
I, as Delegate of the Minister for Mining and Industry have considered your request and hereby give notice that there is sufficient grounds for accepting the application for approval of transfer under s123(4) of the Mineral Titles Act 2010 (MTA) for Transfer D94349.
The registration of the Transfer D94349 under s123 of the MTA will be subject to the following condition being met:
·Notification from Ward Keller, on behalf of Selwyn Jones, that the full amount ($38,000.00) of the payment contemplated by Order 1 of the Order has been received into Ward Keller's trust account or, such other evidence as may satisfy the Minister that payment has been made.
Attached to the delegate’s letter was a document headed “Dealing Schedule” which is certified by the Director Mineral Titles to be a true extract of the data in the Mineral Titles Register. That document records the relevant dealing as a transfer lodged on 20 January 2022 and approved on 24 March 2022. The box on the form headed “Registered” contains no date.
On 8 April 2022 Jones applied to the Local Court seeking registration of the NTCAT order pursuant to s 84 of the Northern Territory Civil and Administrative Tribunal Act 2014 (NT) and rule 35.09 of the Local Court (Civil Jurisdiction) Rules 1998 (NT).
The Notice of Registration of Order issued by the Local Court on 14 April 2022 records the registered order in these terms:
THE TERMS OF THE ORDER ARE:
1. The respondent pay the Applicant $38,000 by (i) 11 January 2022 or (ii) 7 days from the date of Ministerial consent of the transfer Mineral Lease ML30259, whichever is the later, in accordance with the terms in attachment A.
Although “attachment A” is referred to in the Local Court order, the parts of the NTCAT order which appear under that heading were not included.
The statutory demand scheme under the Corporations Act
Section 459E of the Corporations Act sets out the requirements for a statutory demand. It relevantly provides:
(1) A person may serve on a company a demand relating to:
(a)a single debt that the company owes to the person, that is due and payable and whose amount is at least the statutory minimum; or
…
(3) Unless the debt, or each of the debts, is a judgment debt, the demand must be accompanied by an affidavit that:
(a)verifies that the debt, or the total of the amounts of the debts, is due and payable by the company; and
(b)complies with the rules.
An application to set aside a statutory demand is made under s 459G.
Section 459H(1) of the Corporations Act provides for applications to set aside statutory demands on the grounds that there is either a genuine dispute as to the existence or amount of the debt, an offsetting claim, or both. The section is, relevantly, in these terms:
(1) This section applies were, on an application under section 459G, the Court is satisfied of either 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 demand relates:
(b) that the company has an offsetting claim.
…
(3) If the substantiated amount is less than the statutory minimum, the Court must, by order, set aside the demand.
…
(6) This section has effect subject to section 459J.
Section 459J provides:
(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.
The grounds for setting aside a statutory demand in sub-sections 459J(1)(a) and (b) are mutually exclusive.[4]
“Due and payable” cases and Part 5.4 of the Corporations Act
A central issue in this case is whether the subject debt was due and payable at the time that the statutory demand was served. “Due and payable” cases have given rise to different approaches by courts as to the proper ground under the Corporations Act upon which a statutory demand might be set aside. The differing approaches are set out in the obiter comments of Finkelstein J in NT Resorts Pty Ltd v Deputy Commissioner of Taxation[5] where his Honour said at 365:
On what ground then should the applicant base its application? There are only two possibilities. The first is s 459H(1)(a) that permits an application to be made when there “is a genuine dispute … about the existence … of a debt to which the demand relates”. Here there is no dispute about the existence of the debts due to the Crown. What is said is that those debts were not due and payable. Does such an allegation fit within the language of the ground? It would if the “debt” that is referred to in s 459H(1)(a) is only a debt of the class that can be included in a statutory demand; that is a debt that is due and payable. In that event the application could be made under s 459H(1)(a). But it is by no means clear that this construction is available. The second possibility is that the application should be based on s 459J(1)(b). There is no doubt that this ground is available if s 459H(1)(a) is not.
In reality it is not necessary to reach a concluded view on the matter (although I should say that I incline in favour of the view that s 459J(1)(b)) is the only available ground) for the reason that the standard of proof would in either case be the same. That is to say if the application must be made under s 459J(1)(b) the court would not exercise its discretion to set aside the demand unless it was satisfied that there was a genuine dispute about whether the debt to which the demand relates was due and payable.
In Tuffrock Pty Ltd v Roger Smith & Associates Pty Ltd, and the more recent case of Re Golden Records International Pty Ltd, Black J in the Supreme Court of New South Wales considered that the best approach was to proceed under s 459J(1)(b).[6] However, other cases have been decided on alternative approach under s 459H(1)(a).[7]
Appellate consideration of the point is limited. In Hotncold Pty Ltd v Hawk Construction Services Pty Ltd McLure JA, with whom Steytler P and Murray AJA agreed, noted “differing judicial views” but as the application of s 459H(1)(a) was not argued in the appeal, did not decide whether that was the correct provision.[8] Her Honour did, however, comment that if s 459H(1)(a) did not apply, then s 459J(1)(b) would.[9] The issue was noted again in Central City Pty Ltd v Monevento Holdings Pty Ltd where the Court of Appeal of Western Australia said:
It is unnecessary to decide which of the two provisions apply in this case, as the appellants rely on each, and the point sought to be made under each section is the same, namely, whether there was a genuine dispute as to whether the alleged debt was presently due and payable.[10]
Sections 459H and 459J of the Corporations Act provide separate and distinct grounds upon which a statutory demand may be set aside.[11] The facts of this case, can be considered under either s 459H or 459J, noting that each provision has different requirements. The fact that the grounds for setting aside a statutory demand under Part 5.4 of the Corporations Act are separate and distinct, does not mean that they cannot arise for consideration on the same facts.
The question of whether a plaintiff who argues that a statutory demand should be set aside under s 459J(1)(b) on the basis that the debt is not due and payable must establish that matter on the balance of probabilities has recently been described as an “open question”.[12] It is clear, however, that the onus rests with the plaintiff on the elements which the section requires to be established. The question is whether the court is persuaded that there is “some other reason” why the statutory demand should be set aside.
Section 459J(1)(b) is a remedial provision of wide compass giving a court power to set aside a statutory demand for a reason other than a defect in the demand within s 459J(1)(a).[13] In Meehan v Glazier Holdings Pty Ltd, Young CJ in Eq, said:
[T]he discretionary power under s 459J(1)(b) should not be activated unless the decision to do so is supported by some sound or positive ground or good reason which is relevant to the purpose for which the power exists … A judge is not at liberty to set aside a demand under s 459J(1)(b) merely because he or she subjectively considers it fair to do so.[14]
The cases in which a statutory demand may be set aside in accordance with s 459J(1)(b) are not confined to those within established categories.[15]
Test for “genuine dispute” under s 459H
In Boutique Venues Pty Ltd v JACG Pty Ltd[16] Southwood J set out the relevant test for genuine dispute for s 459H as follows:
The test for determining whether a “genuine dispute” has arisen for the purposes of s 459H of the Act is stated in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785: per McLelland CJ at 787:
It is however necessary to consider the meaning of expression “a genuine dispute” where it occurs in section of 459H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the “serious question to be tried” criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit “however equivocal, lacking in precision, inconsistent with the undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be” not having “sufficient prima facie plausibility to merit further investigation as to (it’s) truth” (cf Eng Mee Young v Letchumanan (1980) AC 331 at 341) or “a patently feeble legal argument or an assertion of facts unsupported by evidence”.
All that the legislation requires is that the court concludes that there is a genuine dispute. A court must bear in mind that it is not expected to finally determine the rights and obligations of the parties or to express a view on the ultimate question or to form an opinion on the likely outcome of the proceedings: Scolaro’s Concrete Construction Pty Ltd v Schiavello Commercial Interiors (Vic) Pty Ltd;[17] Spacorp Australia Pty Ltd v Myer Stores Ltd.[18]
The Local Court order and genuine dispute under s 459H(1)(a)
A debt is due and payable when the time for payment has arrived and an unqualified obligation requiring immediate performance has arisen.[19] Where the obligation to pay depends upon fulfilment of a condition, such as at a particular future date or upon the happening of an event, the debt will be due and payable when the relevant condition is satisfied.[20]
In most situations, the judgment of a court will resolve all issues between the parties as to amount owing and time for payment and will therefore leave no room for argument as to existence or amount of a debt.[21]
Jones submitted that because the debt is registered in, and therefore taken to be an order of, the Local Court there cannot be a genuine dispute as to when payment is due. However, the question in this case is not as to the form of the order, but its terms.
Statutory demands based on court orders have been set aside where particular facts have led to a finding that there was a genuine dispute as to whether the debt was due and payable at the relevant date. In Workout Gym Pty Ltd v Crackerjack Investments Pty Ltd[22] Goldberg J of the Federal Court found that there was a genuine dispute where payment under a judgment entered as part of a settlement agreement was called into question as a result of the terms of the associated settlement deed. In Verimark Pty Ltd v Passiontree Velvet Pty Ltd,[23] at [78] Ward CJ in Eq of the Supreme Court of New South Wales held that there was a genuine dispute where it was arguable that the time for payment of money due under an order for costs made in the Local Court had not arrived.
Endeavour argues that there is a genuine dispute in this case as to the time for payment arising from the wording of the Local Court order because there are terms and conditions which are relevant to the time for payment, but which are not apparent from the Local Court order. Jones submits in response that the absence of “attachment A” in the Local Court order simply means that it can have no bearing on its construction.
In my view, there is no basis for ignoring the words of the Local Court order. The phrase, “in accordance with” is context specific, but generally means “in conformity with” or “consistently with”. In the Local Court order, the words “in accordance with the terms in attachment A” must grammatically relate to the first part of the sentence, which deals with the amount and time for payment. Therefore, I interpret the Local Court order as providing that the requirement as to payment, including the timing, must be consistent with, or conform to, “the terms in attachment A”. As “attachment A” is not included, it is at least arguable that the Local Court order is uncertain as to when payment is due because it is impossible to know whether “attachment A” has been complied with.
Therefore, if the Local Court order alone is relied upon, the fact that it is uncertain as to its terms is sufficient to raise a plausible contention requiring investigation as to what the terms are, and therefore a genuine dispute for the purposes of s 459H(1)(a). If I am wrong about that, I also think that the uncertainty in the Local Court order would be an “other reason” to set the statutory demand aside under s 459J(1)(b).
The NTCAT order and the requirement for a verifying affidavit
There is no dispute that “attachment A” in the Local Court order refers to orders 2 – 10 of the NTCAT order, which appear under that heading. Although the Local Court order is uncertain when read alone, it is much clearer when read with the NTCAT order. It is necessary therefore to consider whether the two orders could and should be read together in the context of the statutory demand, and what the effect might be on the question of whether the statutory demand should be set aside.
Unless the relevant debt is a judgment debt, s 459E(3)(a) of the Corporations Act requires that a statutory demand must be accompanied by a verifying affidavit. It is well established that a failure to serve a verifying affidavit with a statutory demand for a debt which is not a judgment debt can be a basis for setting aside a statutory demand under s 459J(1)(b).[24]
The statutory demand served by Jones referred not only to the Local Court order but also to the order of NTCAT, and both were annexed to it.
In accordance with s 84 (monetary orders) and 84A (other orders) of the Northern Territory Civil and Administrative Tribunal Act orders of NTCAT cannot be enforced without first being registered in the Local Court.
Practically identical schemes for registration of civil and administrative tribunal orders exist in other Australian jurisdictions. In Scream Construction Pty Ltd v Owners Corporation No. 711686W, Hetyey AsJ said that an order of the Victorian Civil and Administrative Tribunal was not a judgment debt for the purpose of Part 56.4 of the Corporations Act.[25]
If Jones had served the demand based only on the NTCAT order there is no doubt he would have had to accompany it with an affidavit verifying that the debt was due and payable by the company. Jones argues that he did not have to take that step because of registration of the order in the Local Court created a judgment debt.
The difficulty is that, as I have already found, the wording of the Local Court order means that its terms are uncertain. A fair reading of the statutory demand shows that it relies not only on the judgment debt created by the Local Court order, but also on the NTCAT order. That being the case, the statutory demand relied in part on the NTCAT order and therefore should have been accompanied by a verifying affidavit. I do not think that the registration of part of the NTCAT order in the Local Court can impart the quality of a judgment debt to the balance for the purpose of the statutory demand scheme. When considering the purpose of s 459E(3)(a), and bearing in mind that the central issue in this case is whether the subject debt is due and payable, the need for a verifying affidavit is not a mere formality.
In coming to this conclusion I regard as conclusive the fact that the Local Court order cannot, because of its terms, stand alone. Although the monetary amount is referred to in the Local Court order, the rights and obligations of the parties are not ascertainable without the NTCAT provisions. I have considered Jones’ evidence and submissions about how the Local Court order came to be registered in the form that it was, and the effect of the Local Court (Civil Procedure) Rules definition of “judgment debt”. I am of the view that neither of these things make any difference in this case. The considerations are those in the Corporations Act and the provisions of Northern Territory legislation are not determinative.[26]
The NTCAT order and genuine dispute under s 459H(1)(a)
Despite my findings above, I will now consider, because it was argued in some detail, and in case my above conclusions are wrong, whether there can be a genuine dispute that the debt is due and payable when the whole of the NTCAT order is considered. Endeavour argues that some of orders 2-10 of the NTCAT order create conditions precedent which have not been fulfilled. This part of the discussion also raises questions to be considered under, alternatively, s 459H(1)(a) and s 459J(1)(b).
Was ministerial consent the only condition
Jones argues that there was only one relevant condition, namely ministerial consent, and that it had been satisfied.[27] Jones also submits that there is no requirement that any of the other events in NTCAT Annexure A occur before or contemporaneously with the approval of the transfer of ML30259, in particular the signing of a deed and registration of the transfer, and therefore those matters are irrelevant to the question of whether the debt is due and payable.
To determine these issues it is necessary first to consider in more detail the relationship between NTCAT order 1 and orders 2-10.[28] I have already found that the phrase “in accordance with the terms in attachment A” in order 1 means that the payment and the time for it must be in compliance with orders 2-10. This is obvious in relation to some of the Annexure A terms, less so with others. Order 3 is the clearest. There is a direct relationship between the operative part of order 1 and order 3 because order 3 is the term which makes the payment in order 1 “subject to” ministerial consent to transfer the mineral lease to Endeavour or its nominee. Order 1 perhaps implies, but does not expressly require, ministerial consent to the transfer, and it does not say to whom the transfer is to be made.
Whether the balance of the orders are relevant to the question of whether the $38,000 is due and payable is less clear. Orders 2, 4 and 5 are largely mechanical, although they provide a process towards the obtaining of consent and the transfer itself. Order 6 relates to who is to pay the costs of the transfer and order 7 is an agreement to transfer “as a going concern”. Order 10 relates to costs, presumably of the NTCAT proceeding. However, none of these terms were said to raise a dispute as to a condition precedent as to payment.
Endeavour did however argue that order 9, which provides “the above to be incorporated in a suitable deed of release with necessary indemnities,” created a condition precedent to payment which had not been met because no deed had been signed. It seems that “the above” refers to orders 1-8. Order 9 does not expressly provide that order 1 is subject to the signing of a deed, although the use of “to be” implies that the deed was mandatory rather than optional.
A deed of release and indemnity is a usual and important part of dispute resolution, particularly where, as here, property was to be transferred and allegations of debt compromised. It is not a formal or procedural requirement. I note in this case that order 9 sets out specific additional matters which the deed must encompass, including “any claim in relation to ML30219”. As the mining lease is being transferred and payment made “in accordance with” the whole of the terms of Attachment A, it seems to have been contemplated that the deed would resolve rights related to the transfer. I think that it is therefore arguable that the deed was to be completed before the payment was made, or the transfer completed.
Therefore, the NTCAT order, read with the Local Court registered order raises a plausible contention requiring investigation as to whether the deed referred to in order 9 is required before payment is due in accordance with NTCAT order 1, and therefore there is a genuine dispute in relation to that question within the terms of s 459H(1)(a) of the Corporations Act.
Has “ministerial consent” been given?
It was common ground that ministerial consent was required before payment was due. I have already explained why I consider that there is a genuine dispute as to whether the deed of settlement was also required before the debt becomes due and payable. However, in case I am wrong about that I will say something about the issue of ministerial consent and Jones’ submission that that condition has been complied with, as evidenced by the letter from the Minister’s delegate of 24 March 2022.
As to whether ministerial consent has been given, Endeavour submits that it is arguable that it has not, because of the requirements of s 123 of the Mineral Titles Act. Endeavour argues that s 123(1) requires that a person must apply to the Minister for “approval and registration” of a transfer and that means that approval and registration are one step, not two. On Endeavour’s argument, “ministerial consent” in the NTCAT orders can only mean “approval and registration” based on the wording of s 123(1). As registration has not occurred, Endeavour says that there has been no consent.
It is inappropriate for a court to make any substantial decision as to an underlying dispute on an application to set aside a statutory demand. However, some consideration of a short legal point such as this is often necessary to determine whether a dispute is genuine.[29]
When s 123 of the Mineral Titles Act is considered as a whole, including the terms of sections 123(4) and (5) which draw a clear distinction between the approval of a transfer and its registration, I am satisfied that “approval” and “registration” in s 123(1) are two separate steps. Therefore, I do not accept that “ministerial consent” in the NTCAT orders can only mean “approval and transfer” in accordance with s 123 of the Mineral Titles Act. If that were the only point advanced by Endeavour in relation to s 123 of the Mineral Titles Act, the in my view it would not meet the threshold for a genuine dispute.
However, it is not clear whether the use of “ministerial consent” in the NTCAT orders was intended to refer to “approval”, as used in the Mineral Titles Act or “approval and registration”. Although the words “approval” and “consent” have a very similar, if not identical, meaning the question is what the parties meant by the words “ministerial consent” in the NTCAT order, and whether any genuine dispute as to the time for payment of the $38,000 arises as a result.
The NTCAT consent orders clearly anticipated the need for the Minister to act in accordance with the applicable legislation. Despite this, the NTCAT orders do not use the exact words or appear to closely consider the requirements of s 123 of the Mineral Titles Act. In particular, the NTCAT orders do not provide, as one would expect, for the crucial detail as to whether payment is to occur only when the transfer is registered or at some earlier time, such as on approval of the transfer.
The s 123(4) application by Jones both results from and illustrates the difficulties arising. Section 123(4) of the Mineral Titles Act enables a party to a transfer to apply to the Minister for a notice of the approval of the transfer. It further provides that the notice “may include a statement that the transfer will be registered on a date or occurrence, or subject to a condition, specified in the notice”.
The Delegate’s letter of 24 March 2022 included a condition as to registration. That condition was made by the Minister on the application of Jones. Endeavour objected, but an application under s 123(4) can be made by either party and there is no requirement for consent in the Mineral Titles Act. Whether to include a condition in the notice under s 123(4) is a matter for the Minister.
The effect of the condition included by the Minister is that the Minister will not register the transfer of the mineral lease to Endeavour until she is satisfied that the payment of $38,000 has been made to Jones.
There is no provision in the NTCAT orders which allowed parties to unilaterally insert further conditions. Such matters might have been negotiated as part of a deed of settlement, but that has not occurred. Although approval and transfer are separate acts under the Mineral Titles Act, the NTCAT orders taken as a whole indicate that the ministerial consent and completion of the transfer were to be closely connected. Therefore, it is arguable that an approval with a condition as to registration which is, at least to some extent in the hands of Jones, is not the ministerial consent contemplated by order 3.
Conclusion on genuine dispute
For the reasons set out above, I am satisfied on the balance of probabilities that at the time of hearing this application there is a genuine dispute within the meaning of s 459H(1) of the Corporations Act, about whether the debt described in the statutory demand, was due and payable, and therefore “existed” at the date of the service of the demand.
Some other reason – s 459J(1)(b)
Although considerable argument was focused on the meaning of s 123 in the Mineral Titles Act, and the other issues raised above, the underlying problem is that the NTCAT orders do not properly set out a process for finalisation of the original dispute between the parties. The failure to agree a comprehensive regime for settlement has left them in an entirely unsatisfactory position. The failure to agree a process for transfer and payment in relation to the mineral lease is the most obvious, and perhaps the most fundamental of the resulting difficulties. It is clear that this is a case where a settlement has unravelled, and that that unravelling occurred before the settlement was fully resolved or implemented. As a result, one of the parties, Jones, has attempted to enforce the NTCAT orders by, among other steps, serving the statutory demand.
Consideration of s 459J(1)(b) should with approached “with the purpose of Pt 5.4 in mind”[30] as the power to set aside a statutory demand under that provision “exists to maintain the integrity of the Pt 5.4 process”.[31] In Meehan, Santow JA said at [52]:
Indeed, it is an error of principle to invoke as a test “substantial injustice to the party seeking to set aside the statutory demand” for the purpose of subparagraph (b) of s 459J(1) when this is solely based on the position of the party subject to the statutory demand. Rather one must look at the relative position of both parties against the objectives of Pt 5.4. That is why the more general formulation of Bryson J in Portrait Express is to be preferred as an approach; that is, setting aside a statutory demand under s 459J(1)(b) where there is proper reason viewed in the circumstances of the parties taking into account the purposes of Pt 5.4.
Considering the position of each of the parties alongside the purpose of Part 5.4 of the Corporations Act, it seems to me that the statutory demand in this case is more likely to be about seeking a way to resolve an impasse in the incomplete settlement negotiations, than providing evidence of insolvency of the company. Jones submits that if the terms of the Local Court order are so uncertain that they cannot give rise to a judgment debt then that means that the orders of the Local Court could never be enforced. Even if that were true, it is not the function of Part 5.4 to rectify a bad bargain.
As I have discussed above, the way in which the settlement agreement was documented, and not documented, as appears from the NTCAT orders, means that there is more likely than not to be a genuine dispute about the terms of that agreement which directly bears upon whether the amount of $38,000 is presently due and payable to Jones. Taking that into account, together with the additional matters as to the uncertainty of the terms of the Local Court order if read alone, the non-service of the verifying affidavit if the Local Court order and NTCAT order are taken as both founding the statutory demand, together with consideration of the purpose of Part 5.4 of the Corporations Act and the relative positions of the parties, I have concluded that there are grounds to exercise the Court’s discretion to set aside the statutory demand under s 459J(1)(b).
Defect in the demand, s 459J(1)(a)
Endeavour also argued that because the debt included in the statutory demand was not due and payable, its inclusion in the demand constituted a defect within the meaning of s 459J(1)(a) and that the demand should be set aside on that ground. Given my findings above that the demand should be set aside in accordance with s 459H(1)(a), or alternatively s 459J(1)(b), it is not necessary for me to determine this ground.
However, I am of the view that this is a case where the defect is in relation to rather than in the demand. In other words, I do not consider that this case likely falls within s 459J(1)(a). Further, in order to succeed under s 459J(1)(a) Endeavour would need to show that the debt was not due and payable on the balance of probabilities, rather than that there was, on the balance of probabilities, a genuine dispute about that fact as is required for s 459H(1)(a). That point was not argued, and neither was the requirement for “substantial injustice” in s 459J(1)(a).
Order
I order that the statutory demand dated 24 May 2022 served upon the plaintiff by the defendant be set aside.
[1] In the NTCAT proceeding Endeavour was the respondent and Jones was the applicant.
[2] Annexure C to the affidavit of Amanda Thorneycroft sworn 30 June 2022.
[3] Annexure D to the affidavit of Amanda Thorneycroft sworn 30 June 2022.
[4] Spencer Constructions Pty Ltd v G&M Aldridge Pty Ltd (1997) 76 FCR 452
[5] (1998) 153 ALR 359
[6] Tuffrock Pty Ltd v Roger Smith & Associates Pty Ltd [2015] NSWSC 738, per Black J at [12] – [13]; see also Re Golden Robot Records International Pty Ltd [2021] NSWSC 1146, per Black J at [35]
[7] Re PostNet Australia Pty Ltd [2017] NSWSC 160, Per Barrett AJA at [16]. See also Re Essential Media and Entertainment Pty Ltd [2020] NSWSC 990 per Rees J, at [98] – [102]
[8] Hotncold Pty Ltd v Hawk Construction Services Pty Ltd [2006] WASCA 45, per McLure JA at [24]. The facts in Hotncold concerned whether a retention sum was due under a building contract.
[9]Ibid [31] – [33]
[10] Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASC 5, Per Murphy JA, with whom Buss JA agreed, at [17]. The High Court considered the scheme of Part 5.4 of the Corporations Act in the context of taxation debts in Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41, at [19] – [24], [59] – [63] and held that none of the grounds in s 459H or 459J were made out because of the scheme of the relevant taxation legislation
[11] Carwyn Constructions Pty Ltd v J & WL Consulting Services [2009] QCA 225 per Keane JA, with whom Holmes JA and Philippides JA agreed, at [8]
[12] Re Golden Robot Records International Pty Ltd [2021] NSWSC 1146, per Black J at [35]. See also MNWA Pty Ltd v Deputy Commissioner of Taxation [2016] FCAFC 154, per Farrell and Davies JJ at [179] – [193]
[13] DCT v Broadbeach Properties Pty Ltd [2008] HCA 41, at [24]
[14] Meehan v. Glazier Holdings Pty Ltd [2005] NSWCA 24, per Young CJ in Eq at [59] – [61]
[15]Kismul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262, Per Barrett JA at [24]
[16] [2007] NTSC 5 at [20] – [21]
[17] (1996) 62 FCR 319
[18] (2001) 19 ACLC 1270 at [4] to [5]. See also summary of principles in Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5, per Murphy JA at [9] – 15] and in J Build Developments Pty Ltd v Airconditioning and Electrical Services (Aust) Pty Ltd [2022] VSC 434, per Heytey AsJ at [28].
[19] Main Camp Teatree Oil Ltd v Australian Rural Group Ltd [2002] NSWSC 219 at [17]
[20]Playford Vineyard Pty Ltd v Wishford Nominees Pty Ltd [2018] SASC 152, per Stanley J at [41]
[21]Chapel of Angels Pty Ltd v Hennessy [2021] FCA 875, per Derrington J at [24] – [30]; Verimark Pty Ltd v Passiontree Velvet Pty Ltd [2019] NSWSC 455, per Ward CJ in Eq, at [55].
[22] [1997] FCA 751
[23] [2019] NSWSC 455
[24] Fitness First Australia Pty Ltd v Dubow (2011) 251 FLR 241, Per Ward J at [103]
[25] Scream Construction Pty Ltd v Owners Corporation No. 711686W [2021] VSC 437, per Heytey AsJ at [34]
[26] Terms such as “judgment debt” must be interpreted in the context of the federal law and definitions in State or Territory legislation, such as the Local Court (Civil Jurisdiction) Rules 1998 (NT), are not determinative. See In the matter of Colour Metal Pty Ltd [2021] NSWSC 1012, per Leeming JA, at [18]
[27] Defendant’s outline of submissions 17 August 2022 at [7]
[28] For ease of reference, in this part of the discussion I will refer only to the NTCAT order numbering, on the understanding that NTCAT order 1 and the Local Court registered order are identical and a reference to NTCAT order 1 is also a reference to the Local Court registered order.
[29] Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (2019) NSWLR 397 per White JA at 417 [90]
[30] CP York Holdings Pty Ltd v Food Improvers Pty Ltd [2009] NSWSC 409, per Barrett J at [14]
[31] Ibid at [21]
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