Financial Solutions Australasia Pty Ltd v Predella Pty Ltd
[2002] WASCA 51
•18 MARCH 2002
FINANCIAL SOLUTIONS AUSTRALASIA PTY LTD -v- PREDELLA PTY LTD [2002] WASCA 51
| (2002) 26 WAR 306 | |||
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASCA 51 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:42/2001 | 16 NOVEMBER 2001 | |
| Coram: | ANDERSON J SCOTT J PARKER J | 18/03/02 | |
| 23 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| A | |||
| PDF Version |
| Parties: | FINANCIAL SOLUTIONS AUSTRALASIA PTY LTD (ACN 008 939 599) PREDELLA PTY LTD (ACN 009 200 529) |
Catchwords: | Corporations Appeal Application to set aside statutory demand Adequacy of affidavit in support of application Whether conforms with Corporations Law s 459G(3) Failure to comply with Corporations Rules within 21 days Whether compliance with Rules essential |
Legislation: | Corporations Law, s 459G(3)(a) Rules of Supreme Court (WA), O 81G (Corporations Rules) r 12 |
Case References: | Bell Construction Services Pty Ltd v Form-Kwip Building Services Pty Ltd [2001] NSWSC 73 Callite Pty Ltd v Adams & Ors [2001] NSWSC 52 David Grant & Company Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 Energy Equity Corporation Ltd v Sinedie Pty Ltd [2001] WASCA 419 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 14 ACLC 1703 Hunter Resources Ltd v Melville (1988) 164 CLR 234 John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716 Missay Pty Ltd v Seventh Cameo Nominees Pty Ltd (in liq) [2000] VSC 397 Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355 Robowash Pty Ltd v Robowash Finance Pty Ltd [2000] WASCA 409 The Australian Steel Co (Operations) Pty Ltd v Lewis [2000] FCA 1915 Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294 Australian Broadcasting Corporation v Australian Performing Rights Association Ltd (1973) 129 CLR 99 Azed Developments Pty Ltd v Frederick & Co Ltd (in liq) (1994) 12 ACLC 949 Biala Pty Ltd v Mallina Holdings Ltd (1989) 2 WAR 381 Bowler v Hilda Pty Ltd (in liq) (2001) 183 ALR 81 Brott v Grey (2000) 181 ALR 617 Bruce v Vanmeld [2001] NSWSC 362 Carb Royale Pty Ltd v Tonkin [2000] VSC 399 Dromore Fresh Produce Pty Ltd v W Paton (Fertilizers) Pty Ltd (1997) 15 ACLC 424 Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [2001] WASCA 299 Fitzgerald v Masters (1956) 95 CLR 420 Four Seasons Construction Pty Ltd v Eastern Metropolitan Regional Council (2000) 35 ACSR 716 Gramwick Investments Pty Ltd v Advanced Underpinning Pty Ltd (2001) 19 ACLC 593 Gregory v MAB Pty Ltd (1989) 1 WAR 1 Harkness v Bell's Asbestos & Engineering Ltd [1966] 3 All ER 843 Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 Lisciandro v Official Trustee in Bankruptcy (1996) 139 ALR 689 Metcalf v Permanent Building Society (in liq) (1992) 10 WAR 145 Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1994) 2 VR 290 Ogilvie v Adams [1981] VR 1041 Olsson v Dyson (1969) 120 CLR 365 Parkville Court Pty Ltd v Salvaris [1975] VR 393 Permanent Building Society (in liq) v Wheeler (1992) 10 WAR 109 Re Turner Corporation Ltd (in liq) (1995) 17 ACSR 761 Rudolphy v Lightfoot (1999) 167 ALR 105 Sacon Constructions Pty Ltd v Concrite Quarries Pty Ltd (1997) 15 ACLC 1303 Secured Income Real Estate (Australia) Ltd v St Martins Investment Pty Ltd (1979) 144 CLR 596 State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 Watson v Phipps (1985) 63 ALR 321 Westgold Resources NL v St George Bank Ltd (1998) 29 ACSR 396 Young v Queensland Trustees Ltd (1956) 99 CLR 560 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : FINANCIAL SOLUTIONS AUSTRALASIA PTY LTD -v- PREDELLA PTY LTD [2002] WASCA 51 CORAM : ANDERSON J
- SCOTT J
PARKER J
- Appellant (Respondent)
AND
PREDELLA PTY LTD (ACN 009 200 529)
Respondent (Applicant)
Catchwords:
Corporations - Appeal - Application to set aside statutory demand - Adequacy of affidavit in support of application - Whether conforms with Corporations Law s 459G(3) - Failure to comply with Corporations Rules within 21 days - Whether compliance with Rules essential
Legislation:
Corporations Law, s 459G(3)(a)
Rules of Supreme Court (WA), O 81G (Corporations Rules) r 12
(Page 2)
Result:
Appeal dismissed
Category: A
Representation:
Counsel:
Appellant (Respondent) : Mr J C Giles
Respondent (Applicant) : Mr M H Zilko SC
Solicitors:
Appellant (Respondent) : Solomon Brothers
Respondent (Applicant) : Peter J Whyte
Case(s) referred to in judgment(s):
Bell Construction Services Pty Ltd v Form-Kwip Building Services Pty Ltd [2001] NSWSC 73
Callite Pty Ltd v Adams & Ors [2001] NSWSC 52
David Grant & Company Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Energy Equity Corporation Ltd v Sinedie Pty Ltd [2001] WASCA 419
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 14 ACLC 1703
Hunter Resources Ltd v Melville (1988) 164 CLR 234
John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716
Missay Pty Ltd v Seventh Cameo Nominees Pty Ltd (in liq) [2000] VSC 397
Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355
Robowash Pty Ltd v Robowash Finance Pty Ltd [2000] WASCA 409
The Australian Steel Co (Operations) Pty Ltd v Lewis [2000] FCA 1915
Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294
(Page 3)
Case(s) also cited:
Australian Broadcasting Corporation v Australian Performing Rights Association Ltd (1973) 129 CLR 99
Azed Developments Pty Ltd v Frederick & Co Ltd (in liq) (1994) 12 ACLC 949
Biala Pty Ltd v Mallina Holdings Ltd (1989) 2 WAR 381
Bowler v Hilda Pty Ltd (in liq) (2001) 183 ALR 81
Brott v Grey (2000) 181 ALR 617
Bruce v Vanmeld [2001] NSWSC 362
Carb Royale Pty Ltd v Tonkin [2000] VSC 399
Dromore Fresh Produce Pty Ltd v W Paton (Fertilizers) Pty Ltd (1997) 15 ACLC 424
Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [2001] WASCA 299
Fitzgerald v Masters (1956) 95 CLR 420
Four Seasons Construction Pty Ltd v Eastern Metropolitan Regional Council (2000) 35 ACSR 716
Gramwick Investments Pty Ltd v Advanced Underpinning Pty Ltd (2001) 19 ACLC 593
Gregory v MAB Pty Ltd (1989) 1 WAR 1
Harkness v Bell's Asbestos & Engineering Ltd [1966] 3 All ER 843
Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85
Lisciandro v Official Trustee in Bankruptcy (1996) 139 ALR 689
Metcalf v Permanent Building Society (in liq) (1992) 10 WAR 145
Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1994) 2 VR 290
Ogilvie v Adams [1981] VR 1041
Olsson v Dyson (1969) 120 CLR 365
Parkville Court Pty Ltd v Salvaris [1975] VR 393
Permanent Building Society (in liq) v Wheeler (1992) 10 WAR 109
Re Turner Corporation Ltd (in liq) (1995) 17 ACSR 761
Rudolphy v Lightfoot (1999) 167 ALR 105
Sacon Constructions Pty Ltd v Concrite Quarries Pty Ltd (1997) 15 ACLC 1303
Secured Income Real Estate (Australia) Ltd v St Martins Investment Pty Ltd (1979) 144 CLR 596
State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146
Watson v Phipps (1985) 63 ALR 321
Westgold Resources NL v St George Bank Ltd (1998) 29 ACSR 396
Young v Queensland Trustees Ltd (1956) 99 CLR 560
(Page 4)
1 ANDERSON J: I have had the advantage of reading in draft the judgment of Parker J and I agree with it. As to the sufficiency of the affidavit in support of the application to set aside the statutory demand, I must say I do not see why a debtor faced with a statutory demand from a stranger who claims to be an assignee does not sufficiently dispute liability to the stranger by stating a "genuine bona fide belief" that the deed of assignment "may be void and of no legal force or effect", which is the statement made by Mr Farbenbloom in his supporting affidavit of 14 December 2000. That is more than a mere assertion that there is a genuine dispute. It states the basis of the dispute. A little more might have been required had the debtor been in possession of the deed of assignment. So far as appears, neither Mr Farbenbloom nor the debtor Predella Pty Ltd was in possession of the deed of assignment. The affidavit is to be understood as saying "the assignment is unenforceable. Particulars will be given after discovery". That would be a good pleading, disclosing a good defence in the sense that it is more than a bare denial.
2 There is nothing I wish to add to the judgment of Parker J with respect to the other grounds of appeal. I agree that the appeal should be dismissed.
3 SCOTT J: I have had the opportunity of reading in draft the reasons of his Honour Parker J. I am in agreement with those reasons and have nothing further to add.
4 PARKER J: This is an appeal from a decision of Master Bredmeyer setting aside a statutory demand. The Master had concluded in effect that there was a genuine dispute whether any debt existed between the respondent and the appellant.
Background circumstances
5 On 5 December 2000 the statutory demand was served on the respondent, Predella Pty Ltd ("Predella") at its registered office in a suburb of Perth. The demand was made by the appellant, Financial Solutions Australasia Pty Ltd ("Financial Solutions") and described the debt, the subject of the demand in the following terms:
"Moneys owing pursuant to two loan agreements now consolidated made between the Company and the National Mutual Life Association of Australasia Ltd (ACN 004 020 437) ('AXA') assigned to the creditor by virtue of a deed of
(Page 5)
- assignment between AXA and the creditor stamped on 27 September 2000 $1,267,339.20.
Less offsetting claim $363,025.00
Total amount $904,314.20"
6 In the accompanying affidavit Mr Parkinson, a director of Financial Solutions, deposed that he made the affidavit from his own knowledge and from the records of Financial Solutions relating to Predella. He went on to say:
"4. The Debtor Company is indebted to the Creditor in the sum of $1,267,339.20, being the amount payable by the Debtor Company to the Creditor pursuant to an undated, but stamped Deed of Assignment between the Creditor and the National Mutual Life Association of Australia Ltd (ACN 004 020 437) ('AXA') assigning the benefit of all moneys payable by the Debtor Company pursuant to two loan agreements between the Debtor Company and AXA dated 31 May 1992, less the offsetting claim made by the Debtor Company, as to which there is a genuine dispute, in the amount of $363,025.00, leaving a total of $904,314.20 (the 'debt').
5. The debt is now payable and has not been paid by the Debtor Company.
6. I verify that the debt of $904,314.20 mentioned in the Statutory Demand is due and payable by the Debtor Company to the Creditor.
7. I believe that there is no genuine dispute about the existence or amount of the debt."
7 While it is contended for Financial Solutions that this affidavit complied with Form 7 which was then prescribed for this purpose in the Seventh Schedule of the Rules of the Supreme Court 1971, it is to be noted that the substantial part of the material contents of the affidavit related not to the affairs of Financial Solutions and its dealing with Predella but to the affairs of AXA and its dealings with Predella. It is as between AXA and Predella that the original debt existed and (on the factual basis asserted by Mr Parkinson) but for the purported assignment would now be due and payable to AXA by Predella or be subject to a
(Page 6)
- genuine dispute between Predella and AXA. Yet the affidavit of Mr Parkinson did not purport in any way to identify on what basis he had knowledge of those matters as between AXA and Predella in relation to the debt as the instructions to par 3 of Form 7 required. Mr Parkinson gave as his source of knowledge the records of Predella and his own knowledge. Northing is advanced to found a view that the records of Predella would be an adequate source and it is not suggested that Mr Parkinson is an officer of AXA or that he had inspected the records of AXA or had any other relevant means of knowledge.
8 I also note, as did the Master in his reasons, that the affidavit did not annexe a copy of the assignment or either of the two loan agreements between AXA and Predella dated 31 May 1992 on which the claimed entitlement of Financial Solutions depended. I should not be taken to be suggesting that it was essential for these documents to be annexed to the affidavit, but the failure to annexe them is factually relevant as will appear.
9 Predella had been given a notice of the purported assignment by letter dated 13 October 2000 from solicitors acting for Financial Solutions. The notice of assignment referred to two loan agreements between Predella and AXA both dated 31 May 1992 and referred to an undated deed of assignment between AXA and Financial Solutions which had been stamped on 27 September 2000. Predella instructed a solicitor who by letter dated 18 October 2000 responded to that notice by letter in which inter alia Predella sought to be provided with a copy of the deed of assignment. Despite ongoing correspondence between the two solicitors, in the course of which in early November the request of Predella was extended to include the "two loan agreements bearing date 31 May 1992", the solicitors for Financial Solutions declined to make those documents available for inspection.
10 The statutory demand having been served on 5 December 2000, on 20 December 2000 Predella commenced proceedings to have the statutory demand set aside. The originating process of Predella and an affidavit of its director Mr Farbenbloom in support of the application were filed and served on Financial Solutions within the 21 days limited for this purpose by s 459G of the Corporations Law. Mr Farbenbloom was at this time living in the United States of America. His affidavit was sworn there on 14 December 2000 but because of delay in the original reaching Perth a facsimile copy of it was filed under a supporting affidavit of a member of the staff of the solicitor for Predella. The original was filed after it was
(Page 7)
- received in Perth. It is not suggested that there is any failure to comply with the time limited by the Corporations Law in this regard.
11 As had been foreshadowed in correspondence between the solicitors, as part of the application to set aside the statutory demand, Predella sought an order for discovery inter alia of the deed of assignment and the two loan agreements dated 31 May 1992 referred to in the statutory demand and the accompanying affidavit of Mr Parkinson. Orders were made for their discovery. By affidavit sworn on 9 February 2001 and pursuant to the order for discovery, Mr Parkinson for Financial Solutions produced a copy of the deed of assignment. Relevantly, it assigned to Financial Solutions all of the right, title and interest of AXA in two loan agreements between Predella and AXA both dated 31 May 1992. By that same affidavit, however, Mr Parkinson deposed that the two loan agreements on which Financial Solutions relied to found its demand were "not in the possession of" Financial Solutions and that he had been informed by officers of AXA that despite search they had been unable to locate them. He deposed that further efforts were to be made to locate them.
12 Eventually, by affidavit sworn 26 February 2001 Mr Parkinson for Financial Solutions produced copies of two deeds of loan between AXA and Predella. Each of these, however, was dated 31 March 1992. The statutory demand, its accompanying affidavit and the deed of assignment had stipulated two loans dated 31 May 1992. Mr Parkinson further deposed that he had been informed by officers of AXA that the date of the loans, the subject of the debt assigned to Financial Solutions, was 31 March 1992 and that the deed of assignment between AXA and Financial Solutions should have referred, and was intended to refer, to two loan agreements dated 31 March 1992 instead of 31 May 1992. Mr Parkinson further deposed that he had been informed by officers of AXA that the two loan agreements dated 31 March 1992 were the only loan agreements entered into between AXA and Predella "that AXA have (sic) been able to locate and that AXA are (sic) unaware of any other loan agreements entered into with Predella".
13 Further, each of the two deeds of loan between AXA and Predella dated 31 March 1992 thus produced by Mr Parkinson for Financial Solutions included identical provisions as follows:
"9. ASSIGNMENT
(Page 8)
- 9.1 Subject to the provisions of Sub-clause 9.2, this Deed shall be binding upon and enure to the benefit of the Borrower and the Lender and their successors and permitted assigns.
9.2 The Lender may at any time transfer all or any part of its rights and benefits under this Deed and/or the Securities by assigning to any one or more banks or other lending institutions (each of which is hereinafter in this Clause called an 'Assignee') all or any part of the Lender's rights and benefits hereunder and/or under the Securities in consideration of the agreement of each such Assignee to perform that percentage of the Lender's obligations hereunder as corresponds with that percentage of the Lender's rights and benefits so assigned to such Assignee whereupon the Lender shall be released from the obligations which correspond to the rights and benefits so assigned."
- It is not the case of Financial Solutions, and there was certainly nothing in the evidence before the Master to suggest, that Financial Solutions was either a bank or a lending institution within the meaning of the two clauses 9.2. The Master found it was neither.
14 It was thus the case that the statutory demand sought to enforce a debt which depended on an assignment in which the two loans were, at best, wrongly described and, on the face of the two loan agreements there was an obvious question whether assignment was permitted from AXA to Financial Solutions which was not a bank or a lending institution.
15 The real issues of substance on this appeal are raised by grounds 1 and 2. Ground 1 contends that the application to set aside the statutory demand had failed to comply with, what are submitted to be, essential requirements of O 81G r 12(2) ("the Corporations Rules") of the Rules of the Supreme Court 1971 ("RSC"), and Ground 2 that the affidavit of Mr Farbenbloom in support of the application was insufficient to give the Master jurisdiction to deal with the application. I will consider the jurisdictional question raised by Ground 2 first.
(Page 9)
Ground 2
16 An application to set aside a statutory demand may only be made within 21 days after the demand is served on a company by virtue of s 459G(2) of the Corporations Law. Section 459G(3) further provides:
"(3) An application is made in accordance with this section only if, within those 21 days:
(a) an affidavit supporting the application is filed with the Court; and
(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company."
"In providing that an application to the court for an order setting aside a statutory demand 'may only' be made within the twenty-one day period there specified and that an application is made in accordance with s 459G only if, within those twenty-one days, a supporting affidavit is filed and a copy thereof and of the applications are served, sub-ss (2) and (3) of s 459G attach a limitation or condition upon the authority of the court to set aside the demand. … Here, the phrase '[a]n application may only be made within 21 days' should be read as a whole. The force of the term 'may only' is to define the jurisdiction of the court by imposing a requirement as to time as an essential condition of the new right conferred by s 459G. An integer or element of the right created by s 459G is its exercise by application made within the time specified. …
This consideration gives added force to the proposition which has been accepted in some of the authorities that it is impossible to identify the function or utility of the word 'only' in s 459G(2) if it does not mean what it says, which is that the application is to be made within twenty-one days of service of the demand, and not at some time thereafter and that to treat s 1322 as authorising the court to extend the period of twenty-one days specified in s 459G would deprive the word 'only' of effect."
(Page 10)
- Hence, as his Honour said at 278:
"For these reasons, the requirement of s 459G that the application to the court for which it provides be made only within twenty-one days after service of the demand should not be treated as supplemented or qualified by the operation of s 1322(4)."
19 What is required of an affidavit for it to satisfy the jurisdictional requirement of s 459G(3)(a) has received judicial consideration. In the present case the ground of Predella's application was that the statutory demand should be set aside because of a genuine dispute as to the existence of the debt: s 459H(1)(a). Young J considered what is required of an affidavit to show that a genuine dispute exists as to the debt the subject of a demand in John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716, where at 718 his Honour said:
"There may be cases, and indeed it may be the majority of cases, where the court will look not only to an assertion of a dispute, but some sort of material short of proof which backs up the claim that is made that the amount is disputed. It is clear that what is required in all cases is something between mere assertion and the proof that would be necessary in a court of law. Something more than mere assertion is required because if that were not so then anyone could say merely it did not owe a debt.
On the other hand, if proof of a claim was required then one would be doing the very thing that one is not to do, and that is to try this sort of dispute in the Companies Court. What more than assertion is required is something that may differ from case to case. In Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No 2) (1994) 12 ACLC 490 I indicated
(Page 11)
- that so long as the claim is not fictitious or merely colourable and is genuinely believed to exist one can ordinarily take that as sufficient. That is something more than mere assertion."
20 In Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 14 ACLC 1703 Sundberg J considered whether the affidavit filed in that case was "supporting the application" within the meaning of s 459G(3)(a). At 1708 - 9 his Honour said:
"In order to be a 'supporting affidavit' an affidavit must say something that promotes the company's case. An affidavit which merely says 'I am a director of the company but am too busy at present to make a full affidavit, and I will do so later' would not support the application. It would in no way advance, further or assist the company's cause, which is to have the notice set aside. At the other extreme, the affidavit need not detail, in admissible form, all the evidence that supports the contention of a genuine dispute: John Holland …
In a s 459H(1)(a) case, the affidavit must in my view disclose facts showing there is a genuine dispute between the parties. A mere assertion that there is a genuine dispute is not enough. Nor is a bare claim that the debt is disputed sufficient. It follows from the fact that the affidavit need not go into evidence, which is the customary function of an affidavit, that it may read like a pleading.
An affidavit which exhibits an exchange of correspondence between the parties or between their solicitors from which it appears that a claim is made and rejected for reasons given can qualify as a supporting affidavit. And an affidavit verifying the pleadings in an action may qualify.
I am thus unable to accept the respondent's submission that the affidavit must contain sufficient material to make out a case under s 459H. In reply, that submission was somewhat retreated from. It was said that the affidavit must, as a minimum, contain a statement of the material facts on which the applicant intends to rely to show a genuine dispute – it might read more like a pleading than a story. That accords with what I consider to be the minimum requirement."
- However, as Sundberg J went on to say in Graywinter at 1709:
(Page 12)
- "In several cases it has been held that an applicant is not restricted on the hearing to the affidavit that is served with the application …. An applicant whose initial affidavit has satisfied the threshold test must be able to supplement the material, because while the 'supporting' affidavit does not have to deploy the evidence, on the hearing only admissible evidence can be relied on …."
- As his Honour also observed, however:
" … the cases do not support the proposition for which the applicant contended, namely that an affidavit that does not satisfy the threshold test can be supplemented later on … I am respectfully unable to agree that the court can entertain as an application under s 459G a case in which an affidavit containing the minimum requirements has not been served within time."
"If a ground in support of an application to set aside a statutory demand is not identified within the period provided by the Corporations Law then it seems to me that it cannot be relied upon out of time upon appeal."
- This line of reasoning and decision led this Court to say, in an obiter passage, in Energy Equity Corporation Ltd v Sinedie Pty Ltd [2001] WASCA 419 at [29] per Wallwork J, Steytler and Olsson JJ concurring, that:
"In my view it now seems to be accepted that an affidavit filed outside the 21 day period which raises a new ground or grounds to set aside a statutory demand (as opposed to an affidavit which expands on grounds in an earlier affidavit which has satisfied the threshold test) cannot be used in an application of this nature. …"
(Page 13)
- which respect see Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294 at [27].
23 In the present case it is submitted by Financial Solutions that the original affidavit filed of Mr Farbenbloom is insufficient to satisfy this jurisdictional requirement of s 459G(3)(a) that there be a supporting affidavit. Relevantly, Mr Farbenbloom annexed the statutory demand and the accompanying affidavit of Mr Parkinson and went to depose:
"4. I believe, on the basis of the matters outlined below, that there exists a genuine dispute between the applicant and the respondent as to the claim made in the statutory demand and that the applicant has a bona fide defence thereto.
Deed of Assignment
5. The applicant has not sighted the deed of assignment referred to in Annexure 'AF-1' and being described as 'Moneys owing pursuant to two loan agreements now consolidated made between the Company and the National Mutual Life Association of Australasia Pty Ltd (ACN 004 020 437) ('AXA') assigned to the creditor by virtue of a deed of assignment between AXA and the creditor stamped on 27 September 2000, and it is the genuine bona fide belief of the applicant that the said deed of assignment may be void and of no legal force or effect.
6. Accordingly the applicant seeks discovery of the documents referred to in the statutory demand comprising Annexure 'AF-1' and the loan agreements referred to in the affidavit of Bruce Parkinson and comprising 'AF-2' in order to determine whether the respondent has a legally enforceable claim against the applicant."
24 It is submitted for Financial Solutions that this affidavit is insufficient to raise a genuine dispute either that there was no valid assignment of the benefit of the loans because of the mistake in identification in the assignment of the deeds of loan or that the assignment was invalid or ineffective because Financial Solutions was not a permitted assignee within the meaning of the two clauses 9. In particular Financial Solutions relies on the view expressed by Sundberg J in Graywinter that
(Page 14)
- the material facts on which the applicant intends to rely to show a genuine dispute should be set out.
25 It can be readily accepted that in Mr Farbenbloom's affidavit he has not set out all the material facts necessary to establish the invalidity or ineffectiveness of the assignment from AXA to Financial Solutions on either of those two particular bases. However, to pose the issue in that way appears to me to misunderstand or misstate the case which Predella sought to advance before the Master and which the affidavit of Mr Farbenbloom sought to support.
26 By the statutory demand and the accompanying affidavit of Mr Parkinson, both of which were annexed to the affidavit of Mr Farbenbloom, it was obvious that Financial Solutions was a stranger to the two loan agreements on which the demand depended and that any entitlement of Financial Solutions to demand payment from Predella depended entirely on the validity and effectiveness of the deed of assignment from AXA to Financial Solutions. This assignment was undated but had been stamped over eight years after the loans from AXA to Predella. The statutory demand had been served only a little over two months after the assignment was stamped.
27 The affidavit of Mr Farbenbloom did not seek to dispute that Predella owed money to AXA. It was directed to the different question, whether Predella was indebted to Financial Solutions at the time it demanded payment from Predella. Mr Farbenbloom expressly deposed in this respect that in his belief a genuine dispute existed as to the claim of Financial Solutions to be entitled to payment from Predella, and that Predella had a bonafide defence to the claim for payment made by the statutory demand.
28 The basis of this defence was identified as a genuine belief that the deed of assignment may be void or of no legal force or effect. Anticipating an issue which will be considered later in these reasons, it was so sworn at a time when, because Predella did not have access to the relevant documents, its director could not swear positively that the assignment was in his belief void and of no legal effect. For the same reason it was sworn at a time when Predella, by it's director and solicitor, was not able to be satisfied that, despite it's belief to the contrary, the assignment was valid and effective. Hence it was not in a position to know or accept that moneys were due by Predella to Financial Solutions pursuant to the two loan agreements and the deed of assignment as claimed in the demand.
(Page 15)
29 It is not surprising that in this somewhat unusual situation, Predella should seriously and genuinely dispute that it was obliged to pay as demanded because it was not, by its director and its solicitor, in a position to verify the validity of the substantial claim made against it by a stranger – Financial Solutions. That validity depended on the legal force and effect of documents to which Predella did not then have access and, in the case of the assignment, to which it was not a party.
30 As Financial Solutions could be expected to have (or to have access to) the documents on which it's claim depended, there appears to be substance and reality in the view that until Financial Solutions allowed Predella access to the documents on which its claim expressly depended, there existed adequate and sound reason for Predella to dispute the claim. The dispute was none the less genuine because its foundation may have been no more than Predella's inability to verify the validity of the claim made by Financial Solutions with which Predella had not had any commercial relationship before the purported assignment.
31 It appears to me that this is the substance and effect of what was raised by the affidavit of Mr Farbenbloom. Hence, he went on expressly to seek an order for discovery by Financial Services of the documents identified in the statutory demand and the accompanying affidavit of Mr Parkinson, being the documents on which its claim against Predella depended. Obviously, and as Mr Farbenbloom effectively acknowledged, on inspection of the documents the position taken by Predella might prove to be ill-founded. But that did not preclude there being a genuine dispute that the debt existed in the meantime, on the basis identified.
32 While Mr Farbenbloom's affidavit may also have been intended to raise some more particular basis, which was not identified, for the belief that the assignment may have been of no legal force or effect, I have not found it necessary to examine that possibility and its consequences to deal with this ground.
33 When the basis of Predella's application is correctly appreciated it follows, in my view, having regard to the views of Sundberg J in Graywinter, that the material facts on which the applicant intended to rely to show a genuine dispute of the nature identified were sufficiently, though less than ideally, set out in Mr Farbenbloom's affidavit and its annexures.
34 It is necessary to bear in mind also that Sundberg J was dealing with a very different factual situation. Apt as his observations were in my
(Page 16)
- respectful view to the circumstances with which he was concerned, and extremely helpful as his views have proved to be, there is reason to hesitate and hold back from an acceptance of the apparent affect of the submission for Financial Solutions that the concluding paragraph of the passages cited earlier from Sundberg J's reasons in Graywinter reveal a settled and universal principle, which must be satisfied by an affidavit before it can be accepted as "supporting the application" within the meaning of s 459G(3)(a) and as satisfying the jurisdictional requirement being considered. The statutory yardstick remains that the affidavit should support the application. The precise nature of the application may well influence what this requires.
35 In the position in which Predella was placed it can be accepted, applying the views of Young J in John Holland Construction, that the affidavit went beyond mere assertion that it did not owe Financial Solutions the money demanded, and backed up that claim by disclosing a commercially and legally credible basis on which it disputed that it was obliged to pay the money to Financial Solutions as claimed in the statutory demand. As Young J observed, what more than assertion is required is something that may differ from case to case. In the present circumstances to require more than was advanced in the affidavit would effectively deny Predella any basis on which it could challenge the statutory demand, even though it had not then had access to the documents on which the claim against it by a stranger expressly depended, and even though it could not therefore reliably determine whether the claim, or its own contrary belief, was well-founded.
36 Given the basis on which Predella sought to demonstrate that there was a genuine dispute as to the claim of Financial Solutions, the affidavit of Mr Farbenbloom appears sufficiently to have backed up that case, and to have disclosed the material facts on which Predella contended there was a genuine dispute, for that affidavit to be accepted as satisfying the jurisdictional requirement of s 459G(3)(a) that there be an affidavit supporting the application. Ground 2 is not made out.
37 The jurisdictional requirement having been satisfied it was open to the Master to order discovery of the documents on which the claim in the demand depended, with the consequences outlined earlier in these reasons. Further evidence was also adduced, in particular in support of the genuineness of the dispute. This disclosed that from the time Predella had received notice of the assignment under cover of a letter from the solicitors for Financial Solutions, it did not accept the validity of the assignment. It immediately sought access to the deed of assignment, and
(Page 17)
- by early November that request was extended to expressly include the two loan agreements dated 31 May 1992. A chamber summons to secure discovery was expressly foreshadowed even at that early stage, which was some weeks before the statutory demand. Correspondence between the solicitors continued culminating, relevantly, in the solicitors for Financial Solutions declining to make the documents available for inspection in a letter dated 15 December 2000, which was after the statutory demand had been served.
38 In accepting that there was an affidavit supporting the application I have proceeded, as did the Master, on the basis that Predella, its director Mr Farbenbloom and its solicitor, did not have access at the relevant time to the deed of assignment or to the loan agreements between AXA and Predella. This was clearly so with respect to the deed of assignment; no copy of the assignment was provided with the notice of assignment and a copy was not annexed to the affidavit accompanying the statutory demand. Ground 2.2 of the Grounds of Appeal challenges the finding of the Master, however, that Predella did not have access to the loan agreements. It is contended that on the evidence the only inference available to the Master was that Predella did have access because it was a party to the agreements. I do not agree with this. The agreements were entered into in 1992. They seem to have been associated with the appointment of Predella as an agent of the National Mutual Life Association of Australasia Limited. Then and now Mr Farbenbloom and his wife were the directors of Predella. Over eight years later, at the time of the events relevant to the assignment and the statutory demand in December 2000, Mr Farbenbloom had moved to the United States of America. As has been indicated, within three or so weeks of receiving notice of the purported assignment, and before the statutory demand was served, the solicitor for Predella sought to be provided with copies of the two loan agreements and that was maintained in correspondence with Financial Solutions' solicitors until they declined to provide them. While Mr Farbenbloom could not depose that he had "not sighted" the two loan agreements, as he had deposed with respect to the deed of assignment, because in 1992 he had executed the two loan agreements dated 31 March 1992 and it is probable that as at December 2000 he had not then adverted to the distinction in date between 31 March and 31 May 1992, he nevertheless expressly sought discovery of the loan agreements by the affidavit which he swore in support of the application. In these circumstances it appears to me to have been well open to the Master to infer that at the time of the service of the notice of assignment and thereafter until the loan agreements dated 31 March 1992 were produced
(Page 18)
- on affidavit by Mr Parkinson at the end of February 2001, neither Mr Farbenbloom nor the solicitor for Predella had access to the two deeds of loan dated 31 March 1992. On the present evidence they could not have had access, of course, to two deeds of loan dated 31 May 1992.
Ground 1
39 By ground 1 Financial Solutions contends that the affidavit of Mr Farbenbloom in support of the application failed to meet essential requirements of O 81G r 12, as that rule then provided, in that it failed to state "the facts in support of the process" as required by subrule (1) and it failed to "annexe a record of a search of the records maintained by the Commission, in relation to the company that is the subject of the application …" as required by subrule (2). Order 81G r 12 then provided:
"12 (i) Unless the Court otherwise directs, an originating process, or interlocutory process, must be supported by an affidavit stating the facts in support of the process.
(ii) An affidavit in support of an originating process must annex a record of a search of the records maintained by the Commission, in relation to the company that is the subject of the application to which the originating process relates, carried out no earlier than seven days before the originating process is filed."
40 The appellant points to the word "must" in both subrule (1) and (2) as indicating an essential requirement of a supporting affidavit, the intention of the rule in each case being, it is submitted, that an affidavit which fails to comply with the requirement is not valid or effective as an affidavit supporting the application; Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355 at 390-391; The Australian Steel Co (Operations) Pty Ltd v Lewis [2000] FCA 1915 at [39]-[43] are relied on. This is a case it is submitted in which the requirements of r 12 cannot be relaxed or waived; as Dawson J put it in Hunter Resources Ltd v Melville (1988) 164 CLR 234 at 259, either there was compliance or there was not.
41 It is necessary to draw a distinction between the jurisdictional requirement of s 459G(3) and compliance with the procedural rules of this Court. The rules relevantly seek to facilitate the operation inter alia of s 459G(3), but they can never expand or modify its jurisdictional requirement. In this case either the affidavit satisfies the statutory
(Page 19)
- requirement of s 459G(3)(a) or it does not. That is determined on the proper construction of s 459G. I have indicated in these reasons my view that in this case the affidavit of Mr Farbenbloom did not fail to meet that jurisdictional requirement of the Corporations Law.
42 A distinct issue is whether the requirements of Rules of this Court applicable to an affidavit of this nature were complied with. As Santow J succinctly put the issue in Callite Pty Ltd v Adams & Ors [2001] NSWSC 52 at [5]:
"It is clear that while non-compliance with the Corporations Law rules is a matter for the Court to consider in determining whether or not to grant any dispensation, that question is quite distinct from whether the affidavit meets the description in s 459G(3); that is to say, is it 'an affidavit supporting the application' …."
43 Turning to the word "must" in O 81G r 12(1) and (2) to determine its intended effect, it is necessary, of course, to have regard not only to the actual words in each subrule but also to the context and the scope and object of the rule, and of the rules generally. It is the case that O 81G is replete with the word "must". It is applied to a wide variety of requirements and procedures, including, for example, in r 11 procedural steps to be taken by the Principal Registrar, and in r 17 the filing of a Notice of Appearance before appearing at the hearing of an application (a procedure with which the appellant failed to comply before the Master but which he did not take to be essential and extended time for compliance).
44 Of course the word "must", without more, would suggest that compliance is essential. But by O 81G r 1(2) the ordinary rules of the court are applied to the Order, so far as they are not inconsistent with the Corporations Rules comprised in O 81G. By RSC O 2 r 1 non-compliance with a rule is an irregularity, not a nullity, and the Court is empowered to dispense with compliance entirely or to make such order as it thinks fit in cases of non-compliance. Order 81G r 8 provides for extensions and abridgments of time for compliance with the Rules in that Order unless the Corporations Law, the ASIC Law or the Order otherwise provides and r 5(1) allows for substantial compliance with prescribed forms to be sufficient even though the relevant rules of the Order provide that process "must" be in accordance with the applicable form.
45 Looking to the general context, O 81G is in aid of the Corporations Law. There is nothing in that law which would suggest a legislative
(Page 20)
- intention that requirements such as those in r 12 would be essential to the validity of an application. To the extent that r 12(1) may require, in a particular case, something additional to or different from s 459G(3)(a) to be included in the supporting affidavit, it is not apparent why that additional or different requirement should be essential to the validity of the application. While r 12(2) seeks to ensure that, by the annexure of a record of a recent company search, the Court has current relevant information when it deals with the application, it is not apparent why it should be essential for that search to be annexed to the affidavit itself, non-compliance being fatal to the application. Compliance by the time of the hearing would meet the objective.
46 For my part I see no reason to discern an intention in r 12 that the word "must" should exclude the operation of r 8 or the general dispensing power in RSC O 2 r 1. In my view, in its context the word "must" in r 12 is to be understood as subject to r 8 and also to the general dispensing power.
47 I note that Santow J had to deal with this question in the context of essentially identical rules in Bell Construction Services Pty Ltd v Form-Kwip Building Services Pty Ltd [2001] NSWSC 73 in a context where, as here, there had been a failure to annexe to the supporting affidavit the company search required by the New South Wales equivalent to O 81 r 12(2). At [14] his Honour said:
"Otherwise, as I said in Callite, what s 459G makes mandatory in this context is that there be 'an affidavit supporting the application'. That means establishing the case for the application, being usually that there is a genuine dispute. The company search required by the Rules is irrelevant to that matter. It cannot be said that a requirement in the Rules, here only recently introduced, thereby ipso facto acquires the status of a mandatory requirement for s 459G purposes. That would not be congruent with the fact that the requirements of the Rules remain dispensable by the court. S 459G of the CorporationsLaw does not interfere with that. To suppose otherwise would carry the absurd implication that whatever requirements may from time to time be introduced by the Rules, non-compliance with such Rules coupled with a failure to obtain dispensation within the twenty-one days allowed by s 459G of the Corporations Law would be fatal. This is more especially as dispensation can always be obtained afterwards in a proper case. (I should interpolate that I do now give that dispensation,
(Page 21)
- on terms that the omitted search be filed with an affidavit within seven days.) S 459G of the Corporations Law in its mandatory requirements demands an affidavit meeting the description of an 'affidavit supporting the application', not an affidavit in all respects conforming to the Supreme Court Rules from time to time."
- As is apparent from the passage quoted his Honour had no hesitation in exercising the general dispensation power of the Rules in that case despite the use of the word "must" in the particular subrule in question.
48 In reaching this view Santow J considered but rejected a submission, repeated on this appeal, that the decision of this Court in Robowash Pty Ltd v Robowash Finance Pty Ltd [2000] WASCA 409 required the contrary conclusion. Robowash dealt with a different issue from the present. There had been a deficiency in compliance with the requirement of s 459G(3)(b) of the Corporations Law that "a copy of" the supporting affidavit be served. What was served was an incomplete affidavit; pages had been omitted from an annexure. I would respectfully adopt Santow J's views as expressed at [9] – [13] of his reasons and would not wish to add anything further on that matter.
49 For these reasons I am not persuaded that in the present case, there having been compliance with s 459G(3), it was beyond the powers available to the Master to allow late compliance with the requirement of O 81G r 12(2) with respect to the company search or to allow the late introduction of further facts and evidence in support of the genuine dispute raised in the supporting affidavit. In my view the circumstances were such that the steps he took in this regard were open to him in the proper exercise of the discretionary powers available to him.
Grounds 3 and 5
50 By ground 3 it is contended that the Master should have held in effect that the clauses 9 of the two loan agreements dated 31 March 1992 on their true construction did not preclude an assignment to Financial Solutions. By ground 5 it is effectively contended that Master should have held that there had been a valid and effective assignment of the two loan agreements dated 31 March 1992, even though the deed of assignment referred to two loan agreements dated 31 May 1992.
51 While there may prove to be justification for construing or rectifying the deed of assignment as referring to the two loan agreements dated
(Page 22)
- 31 March 1992, and, while it may possibly prove to be the case on final analysis that the clauses 9 of each of the two loan agreements do not preclude an assignment to a company which is neither a bank or a lending institution, neither of those issues was properly raised for decision by the Master on the application to set aside the statutory demand. To the extent that these issues may have become relevant, that relevance was whether each of those matters was capable of constituting, or of supporting the existence of, a genuine dispute as to the validity and effectiveness of the purported assignment. That was the point before the Master.
52 No error is revealed by the Master's failure to determine the matters raised by grounds 3 and 5 on an application to set aside the statutory demand.
Ground 4
53 There remains ground of appeal 4 which is concerned with views of the Master as to the affidavit of Mr Parkinson served with the statutory demand. As I understand the reasons of the Master the views he formed about the affidavit of Mr Parkinson were not essential to his ultimate decision, which would have been the same irrespective of his views about that affidavit. Further, Predella did not seek to rely on any inadequacy in this respect in support of its application. Nevertheless, I note the following. Much earlier in these reasons I have expressed briefly my own appreciation of the shortcomings of the affidavit. In the respects there indicated, in my view, it fell short of adequately stating the source of Mr Parkinson's knowledge as required by the instructions to par 3 of Form 7 in the Seventh Schedule to the Rules. There was no adequate reason why it should have been accepted by the Master that the records of Financial Solutions on which Mr Parkinson relied would disclose the relevant course of dealing between AXA and Predella. While the affidavit appeared to be in the required form it was deficient in its substance for the reasons indicated, and I can well understand the Master's reservations.
54 In his reasons the Master did note that there was no hard evidence of default. Default was a matter within the knowledge of AXA and Predella. For the reasons indicated the affidavit failed to identify any basis upon which Mr Parkinson was able to depose that there had been default so as to entitle the calling up of the loans. Subject to that issue it would not normally have been necessary, of course, for the affidavit to provide "hard evidence" detailing the default.
(Page 23)
55 Grounds of Appeal 4.2 and 4.3 appear to me to confuse the position of Predella. It is the case that it did not deny a debt between it and AXA. The point that Predella disputed was its obligation to make payment in respect of that debt to Financial Solutions, which was an issue turning on the validity and effectiveness of the assignment. As indicated, however, nothing really turns on the issues raised by this ground.
Conclusion
56 For these reasons I am not persuaded that Financial Solutions has demonstrated that the Master was without jurisdiction to set aside the statutory demand or that on any of the other bases raised by the Grounds of Appeal his decision to do so was materially affected by error of fact or law.
57 I would dismiss the appeal.
134
38
2