Flintel Pty Ltd v Flexible Telecommunications Pty Ltd - [2024] WASC 63

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   FLINTEL PTY LTD V FLEXIBLE TELECOMMUNICATIONS PTY LTD [2024] WASC 63
CORAM:   MASTER RUSSELL
HEARD:   29 FEBRUARY 2024
DELIVERED          :   11 MARCH 2024
FILE NO/S:   COR 139 of 2023
BETWEEN:   FLINTEL PTY LTD
Plaintiff
AND
FLEXIBLE TELECOMMUNICATIONS PTY LTD
Defendant

FILE NO/S: COR 140 of 2023
BETWEEN: FLINTEL GROUP PTY LTD
Plaintiff
AND
FLEXIBLE TELECOMMUNICATIONS PTY LTD
Defendant

Catchwords:

Corporations - Application to set aside statutory demand - Failure to comply with requirements of s 459G - Application not made in accordance with s 459G - Application not served within statutory period - Turns on own facts

Legislation:

Corporations Act 2001 (Cth) s 459G

Result:

Applications dismissed

Category: B

Representation:

COR 139 of 2023

Counsel:

Plaintiff	:	M Tolcon
Defendant	:	M Paterson

Solicitors:

Plaintiff	:	Forbes Kirby
Defendant	:	Michael Paterson & Associates

COR 140 of 2023

Counsel:

Plaintiff	:	M Tolcon
Defendant	:	M Paterson

Solicitors:

Plaintiff	:	Forbes Kirby
Defendant	:	Michael Paterson & Associates

Cases referred to in decision:

Accommodation West Pty Ltd v Innis [2009] WASC 337
Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd [2018] NSWCA 270
David Grant & Co Pty Ltd v Westpac Banking Corp [1995] HCA 43; (1995) 184 CLR 265
PCM Nominees (WA) Pty Ltd v 063 291 430 Pty Ltd [2017] FCA 848

MASTER RUSSELL:

Introduction

By originating process filed in each of COR 139 of 2023 and COR 140 of 2023 (Corporations Proceedings) on 5 September 2023, the plaintiffs, Flintel Pty Ltd and Flintel Group Pty Ltd respectively, applied to set aside a statutory demand served on each of them by the defendant, Flexible Telecommunications Pty Ltd (together the Applications).
On 29 February 2024, I dismissed the Applications as they were not made in accordance with s 459G(3) of the Corporations Act 2001 (Cth).
I gave brief oral reasons for my decision at the hearing on 29 February 2024 and said I would provide written reasons. These are my reasons.

The Applications

The Applications are said to be made pursuant to s 459G of the Corporations Act to set aside statutory demands served on each of the plaintiffs by the defendant on 15 August 2023, on the grounds that:
(a)there is a genuine dispute between the plaintiff and the defendant as to the amount of the debt claimed in the statutory demand;
(b)the plaintiff has an offsetting claim against the defendant; and
(c)on other grounds stated in the supporting affidavit, including that the statutory demand is an abuse of process.
The plaintiffs rely on affidavits sworn by Gillian Lesley Robb on 5 September 2023 and 29 February 2024 and written submissions filed on 19 October 2023.
The defendant relies on affidavits sworn by Michael Edward Paterson on 22 September 2023 and 12 October 2023 and substituted written submissions filed on 12 October 2023.
The Applications were initially listed for a special appointment to be heard together on 4 December 2023.

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] WASC 63
Decision Date: 11 MARCH 2024

CaseChat Overview and Summary

Flintel Pty Ltd and Flintel Group Pty Ltd sought to set aside statutory demands served by Flexible Telecommunications Pty Ltd under the Corporations Act 2001 (Cth). The plaintiffs argued that there was a genuine dispute over the amount of debt claimed and that the plaintiffs had offsetting claims against the defendant. They also claimed that the statutory demands were an abuse of process. The defendant argued that the plaintiffs had not complied with the strict requirements of section 459G of the Corporations Act, particularly in terms of the service of the applications. The court was required to decide whether the plaintiffs' applications were valid and whether the statutory demands could be set aside on the grounds provided.

The court dismissed the plaintiffs' applications to set aside the statutory demands. The primary reason for dismissal was the failure of the plaintiffs to comply with the strict procedural requirements of section 459G(3) of the Corporations Act. Specifically, the applications were not served on the defendant within the statutory period, which is a critical procedural requirement. The plaintiffs attempted to argue that there was an agreement to settle the matter, but the court found that this did not rectify the procedural failure. The court noted that the statutory requirements under section 459G of the Corporations Act must be strictly adhered to, and any deviation from these requirements can result in the application being dismissed.

The court's decision was based on the strict interpretation and application of the statutory provisions. The court held that the plaintiffs' failure to serve the applications within the required timeframe was a fatal procedural error that rendered the applications invalid. The court also noted that the plaintiffs' claims of a genuine dispute and abuse of process did not address the fundamental procedural defect in the applications. Consequently, the court dismissed the applications to set aside the statutory demands. The plaintiffs were ordered to pay the defendant's costs of $1,750 in respect of each application, totaling $3,500.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

By originating process filed in each of COR 139 of 2023 and COR 140 of 2023 (Corporations Proceedings) on 5 September 2023, the plaintiffs, Flintel Pty Ltd and Flintel Group Pty Ltd respectively, applied to set aside a statutory demand served on each of them by the defendant, Flexible Telecommunications Pty Ltd (together the Applications). On 29 February 2024, I dismissed the Applications as they were not made in accordance with s 459G(3) of the Corporations Act 2001 (Cth). I gave brief oral reasons for my decision at the hearing on 29 February 2024 and said I would provide written reasons. These are my reasons. The Applications are said to be made pursuant to s 459G of the Corporations Act to set aside statutory demands served on each of the plaintiffs by the defendant on 15 August 2023, on the grounds that:(a)there is a genuine dispute between the plaintiff and the defendant as to the amount of the debt claimed in the statutory demand;(b)the plaintiff has an offsetting claim against the defendant; and(c)on other grounds stated in the supporting affidavit, including that the statutory demand is an abuse of process. The plaintiffs rely on affidavits sworn by Gillian Lesley Robb on 5 September 2023 and 29 February 2024 and written submissions filed on 19 October 2023. The defendant relies on affidavits sworn by Michael Edward Paterson on 22 September 2023 and 12 October 2023 and substituted written submissions filed on 12 October 2023. The Applications were initially listed for a special appointment to be heard together on 4 December 2023. On 1 December 2023, the parties filed a memorandum of consent orders in each proceeding confirming their consent to the special appointment being adjourned to a date after 1 February 2024, stating:The parties have reached an in-principle settlement in this matter, but the terms of this settlement require action to be taken on the part of the defendant on or before 31 January 2024. In the event these actions are unfulfilled as at 31 January 2023 (sic), this matter will be brought back on. The joint hearing of the Applications was adjourned to 29 February 2024. In the written submissions filed on behalf of the defendant, it was submitted, in effect, that the Applications should be dismissed because there was a failure to comply with the strict provisions of s 459G of the Corporations Act as to the service of the Applications on the defendant. When the Applications were called on for hearing on 29 February 2024, the plaintiffs presented two further affidavits in support of an oral application for a stay or adjournment of the hearing. They were:(a)a supplementary affidavit of Gillian Lesley Robb sworn and filed on 29 February 2024; and(b)an affidavit of Zoe Cassandra Thornton affirmed and filed on 29 February 2024 (Further Affidavits). After hearing from counsel for the plaintiffs and for the defendant, I stood the matter down to consider the Further Affidavits in more detail. In essence, the plaintiffs assert that an agreement was reached with the defendant, in communications between their respective lawyers, to settle the Corporations Proceedings, as referred to in the Further Affidavits (Agreement). It is said that by the Agreement, the parties were to sign a memorandum of consent orders dismissing the Applications with costs of $1,750 payable by the plaintiff to the defendant of $1,750 in respect of each application (a total of $3,500), and the defendant would forbear from bringing winding up applications in relation to the unsatisfied statutory demands upon:(a)payment of $3,500 by the plaintiffs to the defendant's lawyers to be held in escrow in relation to the costs of the Applications; and(b)payment by the plaintiffs of unpaid superannuation in relation to Mr Lyndon Croot, by 31 January 2024.