Habrok (Rydges) Pty Limited v Australian Surface Drilling (WA) Pty Ltd
[2023] WASC 457
•30 NOVEMBER 2023
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: HABROK (RYDGES) PTY LIMITED -v- AUSTRALIAN SURFACE DRILLING (WA) PTY LTD [2023] WASC 457
CORAM: FORRESTER J
HEARD: 27 NOVEMBER 2023
DELIVERED : 27 NOVEMBER 2023
PUBLISHED : 30 NOVEMBER 2023
FILE NO/S: COR 70 of 2023
BETWEEN: HABROK (RYDGES) PTY LIMITED
Plaintiff
AND
AUSTRALIAN SURFACE DRILLING (WA) PTY LTD
Defendant
Catchwords:
Corporations - Application to set aside statutory demand pursuant to s 459H(1)(a), s 459H(1)(b) or s 459J(1)(b) of the Corporations Act 2001 (Cth)
Legislation:
Corporations Act 2001 (Cth)
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | No Appearance |
| Defendant | : | M Rosario |
Solicitors:
| Plaintiff | : | In Person |
| Defendant | : | Norton Rose Fulbright Australia |
Cases referred to in decision:
CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31
Rectangular Pty Ltd v ATF the Marco Cardaci Testamentary Trust [2023] WASC 13 (S)
FORRESTER J:
(This judgment was delivered extemporaneously on 27 November 2023 and has been edited from the transcript and headings added).
Introduction
This is an application by the plaintiff to set aside a statutory demand issued by the defendant on 21 April 2023.
The application is made pursuant to s 459H(1)(a) of the Corporations Act 2001 (Cth) (the Act), or in the alternative s 459H(1)(b) or s 459J(1)(b) of the Act.
The application is supported by the affidavit of Simon Raftery sworn on 12 May 2023. In his affidavit, Mr Raftery deposes that he is the sole director of the plaintiff and authorised to make the affidavit on behalf of the plaintiff. Annexed to his affidavit is a copy of the statutory demand and the required accompanying affidavit.
The statutory demand seeks payment of the sum of $482,206.46. The affidavit accompanying the statutory demand is an affidavit of Wayne Brenton Pettingill affirmed on 21 April 2023. Mr Pettingill deposes in his affidavit that the sum claimed was the subject of two invoices dated July 2022, which were rendered pursuant to purchase orders. The invoices are attached and referred to a 'PO' number.
An application to set aside a statutory demand may only be made within the statutory period, in this case, 21 days. Within that period, an affidavit supporting the application must be filed with the court. The relevant affidavit was not filed until 3 August 2023. However, on 12 May 2023, Christopher Kingsley Pearce filed an affidavit sworn on 12 May 2023 annexing Mr Raftery's affidavit and indicating it would be filed as soon as the original was received. The defendant has not taken issue with this particular aspect of the matter.
Plaintiff's evidence
In his affidavit, Mr Raftery deposes:[1]
In the supporting affidavit, Mr Pettingill alleges the amounts in the statutory demand are owed under two invoices made out to the Plaintiff pursuant to purchase orders.
I examined the invoices and I do not consider the Plaintiff owes the alleged amount to the Defendant.
Nothing in the invoices constitutes an agreement by the Plaintiff to pay money to the Defendant and the invoices are not themselves representative of any obligation on the part of the Plaintiff to pay the Defendant any money.
Mr Pettingill's affidavit does not provide copies of any relevant purchase orders. I do not consider the Plaintiff has any obligation under any purchase order to pay the Defendant the amount demanded.
I do not consider the Plaintiff owed the Defendant the amount demanded in the statutory demand. At the very least, there is a genuine dispute about the existence of the debt demanded by the Defendant.
[1] Affidavit of Simon Raftery sworn on 12 May 2023 [6] - [10].
Despite the reference in the originating process to section 459H(1)(b) of the Act, there is no evidence in Mr Raftery's affidavit as to any offsetting claim.
Defendant's affidavit
In a responsive affidavit affirmed on 3 August 2033, Mr Pettingill deposed that the plaintiff was the site operator of the Matsu Iron Ore Project, located in northern Western Australia, hereafter the Matsu Project.
On 22 February 2022, Mr Sam Woodford, who Mr Pettingill understood, from his conversation with Mr Woodford and his email signature block, was a registered manager employed by the plaintiff and responsible for managing the Matsu Project on behalf of the plaintiff, contacted Mr Pettingill by email asking whether the defendant would be interested in providing contracting services to perform a reverse circulation drilling program at the Matsu Project.[2]
[2] Affidavit of Wayne Brentyn Pettingill affirmed 3 August 2023, 8 (WBP-1).
The defendant was interested and submitted a proposal, following which, Mr Woodford sent an email to Mr Pettingill on 27 May 2022 attaching a document entitled 'Minor Works Contract Agreement' which had been executed by Mr Raftery.
On 27 May 2022, Mr Pettingill executed a counterpart of the agreement and sent a copy of the execution page to Mr Woodford.
On 27 May 2022, Mr Woodford provided Mr Pettingill with a purchase order number PO-0077 of the same date, in connection with the works.[3] The purchase order was for works to the value of $306,000 plus GST, although that was stated to be an approximate value.
[3] Affidavit of Wayne Brentyn Pettingill affirmed 3 August 2023, 40 (WBP-6).
Following completion of the work, the defendant was required to make a claim for payment. Thereafter, the defendant was required to supply a tax invoice, following which, the plaintiff was required to pay the sum claimed in 30 days.
On 18 July 2022, Mr Woodford sent an email to Mr Pettingill requesting an invoice dated to the final works on 8 July 2022, so it could be processed for payment.[4] Tax invoice 254 was issued in the sum of $316,315.72 plus GST, whereupon Mr Woodford emailed Mr Pettingill advising that that invoice had been sent for payment.
[4] Affidavit of Wayne Brentyn Pettingill affirmed 3 August 2023, 41 - 44 (WBP-7).
On 29 August 2022, Mr Pettingill received an email from Mr Woodford advising that the defendant's claim for the month of July 2022 had been approved. However, after this, Mr Pettingill noticed that there was an error in the payment claim and it should have been for $134,259.17, instead of $124,438.36. He deposes that he telephoned Mr Woodford, who told him that the amount of $134,259.17 was approved by the plaintiff. As a result of that, Mr Pettingill issued invoice 261.
Both invoices were due to be paid by 1 September 2022. They were not paid and Mr Pettingill made enquiries of Mr Woodford and other employees of the plaintiff as to when payment would be received. In September 2022, Mr Pettingill spoke to Mr Raftery who told him that the invoices would be paid by the end of that month.
Over the following months, text message exchanges took place in which Mr Raftery either promised to pay the invoices soon or offered to meet or telephone to discuss the matter. Mr Pettingill also deposes that he met with Mr Raftery on 3 November 2022, at which time Mr Raftery told him the defendant could expect payment within a week.
In particular, Mr Pettingill deposes that at no time did Mr Raftery ever assert that the plaintiff did not owe the outstanding sum or a part of it.
Progress of these proceedings
Orders were made on 20 July 2023 requiring the plaintiff to file any affidavits in reply by 10 August 2023. By order dated 5 September 2023, that deadline was extended to 26 September 2023. No further affidavits have been filed on the part of the plaintiff.
The plaintiff has also failed to file any written submissions in support of its application. The defendant has filed written submissions.
On 24 November 2023, the plaintiff's solicitors were permitted to cease to act for the plaintiff. The materials relied upon for that application have been restricted from me. A certificate of service of orders by those solicitors has been filed, in which it is certified that the orders were served on the plaintiff at its registered office on 24 November 2023.
No representative of the plaintiff nor any legal representative appeared before me on 27 November 2023. In my view, it was appropriate to proceed with the application on that date. The plaintiff has had ample opportunity to file an affidavit in reply, establishing its grounds for setting the statutory demand aside. Equally, it has had ample opportunity to file written submissions in support of its application and has failed to do so. Further, the plaintiff failed to appear on 27 November 2023. The defendant is entitled to have the matter determined.
Disposition
As indicated, the plaintiff claims that the statutory demand should be set aside pursuant to s 459H(1)(a), or in the alternative, s 459H(1)(b), or s 459J(1)(b) of the Act.
Section 459H(1) provides:
This section applies where, 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.
Section 459J relevantly provides:
On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:
…
(b) there is some other reason why the demand should be set aside.
On behalf of the plaintiff, Mr Raftery deposed to his belief that there was a genuine dispute between the company and the defendant as to the existence of the debt. However, the only basis stated in his affidavit was the lack of a purchase order in the original affidavit of Mr Pettingill. The purchase order and the contract under which it was issued was subsequently annexed to Mr Pettingill's affidavit, affirmed on 3 August 2023.
The contract for works was entered into on behalf of the plaintiff by signature of Mr Raftery himself. Mr Raftery has not filed any affidavit contradicting Mr Woodford's authority to authorise payment of the defendant's claims; he also does not respond to the fact that there was a purchase order. Mr Raftery has also not sought to establish that the works were not carried out or were not all carried out. In short, having alleged that there was a genuine dispute on the basis of the absence of a purchase order, Mr Raftery has failed to respond in any way to assert that there continues to be a genuine dispute as to the amount of the debt or any part of it.
For completeness, no other person has sought to file any material on behalf of the plaintiff either.
There is no evidence of any offsetting claim or any other basis upon which I should make an order setting aside the statutory demand.
Genuine dispute
The applicable legal principles regarding what is required to constitute a 'genuine dispute' as to the existence of a debt for the purposes of s 459H(1)(a) are well established. They were summarised in CA & Associates Pty Ltd v Fini Group Pty Ltd[5] as follows:
1.The court's function is to determine whether there is a genuine dispute; the court is not expected to undertake an extended inquiry or attempt to weigh the merits of the dispute. It is not part of the court's function to resolve the dispute.
2.It suffices if there is a 'plausible contention' requiring 'further investigation' - something that may be equated to the criterion of whether there is a 'serious question to be tried'.
3.However, the applicant must establish that: (a) the dispute is bona fide and truly exists in fact; and (b) the grounds alleging the existence of the dispute are real and not spurious, hypothetical, illusory or misconceived.
[5] CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31 [35] (footnotes omitted).
In his affidavit in support of the application by the plaintiff, Mr Raftery, in effect, asserted only that the contractual obligation of the plaintiff to pay the debt had not been properly established.
However, the contract, purchase order, invoices and agreements to pay the invoices have now all been produced. I am satisfied, on the available evidence, that the plaintiff entered into an agreement with the defendant, that the works were carried out, that payment was properly sought and authorised under the contract, that invoices were issued in accordance with the contract and that they have not been paid. Further, I am satisfied that the sole director of the plaintiff has acknowledged liability for the debt in communications with Mr Pettingill.
In the absence of any contradictory evidence, I am not satisfied that the plaintiff has established that there is a genuine dispute as to the existence of the debt within the meaning of s 459H(1)(a).
Alternative bases
I am also not satisfied that there is any evidence supporting an offsetting claim or any other reason to set aside the statutory demand.
Conclusion
Accordingly, the plaintiff's application to set aside the statutory demand is dismissed.
Costs
In terms of the defendant's application for indemnity costs, the principles in relation to the award of indemnity costs were recently stated by Lundberg J in Rectangular Pty Ltd v ATF the Marco Cardaci Testamentary Trust.[6] It is unnecessary for me to repeat those principles, except to note that an award of indemnity costs is something which is unusual and should only be made in exceptional circumstances.
[6] Rectangular Pty Ltd v ATF the Marco Cardaci Testamentary Trust [2023] WASC 13 (S).
One such circumstance in which an award is appropriate is where an action has been commenced or continued in circumstances where the applicant, properly advised, should have known he had no chance of success.
In my view, the filing of Mr Pettingill's affidavit sworn 3 August 2023, is the appropriate point after which indemnity costs should be ordered. Accordingly, I order that the costs of the defendant up to and including 3 August 2023 be awarded on an ordinary basis, to be taxed if not agreed and that the plaintiff pay the defendant's costs on an indemnity basis thereafter.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AT
Associate to the Honourable Justice Forrester
30 NOVEMBER 2023
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