Imagebuild Group Pty Ltd v Fokust Pty Ltd

[2017] VSC 484

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 2017 00766

IMAGEBUILD GROUP PTY LTD (ACN 142 525 924)	Plaintiff
v
FOKUST PTY LTD (ACN 094 218 961)	Defendant

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JUDGE:	EFTHIM AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	19 May 2017
DATE OF JUDGMENT:	24 May 2017
CASE MAY BE CITED AS:	Imagebuild Group Pty Ltd v Fokust Pty Ltd
MEDIUM NEUTRAL CITATION:	[2017] VSC 484

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CORPORATIONS – Whether to set aside statutory demand – Corporations Act 2001 (Cth), s 459G – Whether affidavit accompanying originating process to set aside statutory demand is a supporting affidavit – Supporting affidavit filed outside of 21 day period – Whether supporting affidavit can be supplemented.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Leung	Halifax Hood Lawyers
For the Defendant	Mr D Noble, solicitor	Noble Lawyers

HIS HONOUR:

1. Image Build Group Pty Ltd applies to set aside a statutory demand served on it by the defendant Fokust Pty Ltd.  The demand claims that the plaintiff owes the defendant $540,453.86 which ordered to be paid to the defendant by the County Court of Victoria made on 30 January 2017.

1. The plaintiff contends that it has an offsetting claim.  It submits that the Court should:

-          give leave to the plaintiff to amend its originating process in order to make its application with reliance on its offsetting claims.  The originating process seeks to set aside the demand on the grounds that there is a genuine dispute between the plaintiff and the defendant about the existence of the amount of the debt.  Here there is a judgment debt so there is no genuine dispute as to the existence of the debt;

-          find that the plaintiff has a genuine offsetting claims in the form of a Defects Claim and a Liquidated Damages Claim; and

-          reduce the amount claimed in the statutory demand to $34,334.86 or alternatively reduce the amount by the value of the Defects Claim and Liquidated Damaged Claim that the Court finds is calculable on the evidence before it. 

1. On 10 February 2017 a statutory demand and accompanying affidavit was served on the plaintiff at the plaintiff’s registered office.

1. On 3 March 2017, the plaintiff filed an originating process seeking to set aside the statutory demand.  Accompanying that application was an affidavit of Joshua Watson, Practice Manager, of the law firm Anslie Harding and Wood solicitors who acted on behalf of the plaintiff. 

1. Mr Watson in that affidavit deposes:

4.Ansley Harding and Wood solicitors have prepared the originating process and supporting affidavit of the deponent, Brett Spits, the director of the plaintiff to accompany the plaintiffs application to set aside or vary the statutory demand;

…

5.The originating process and a true copy of the supporting affidavit (unsworn) will be filed with the Supreme Court of Victoria today; the Deponent is not available for attendance at our office today as he is working in rural Victoria and due to computer issues is not able to send us a sworn copy until Monday 6 March 2017. 

6.A true copy of the supporting affidavit (unsworn) will be filed with the originating process today.

…

7.I have been advised that the Deponent will be express posting the original affirmed supporting affidavit tomorrow.

1. Section 459G of the Corporations Act 2001 (Cth) (‘the Act’) provides:

(1)A company may apply to the Court for an order setting aside a statutory demand served on the company.

(2)An application may only be made within 21 days after the demand is so served.

(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.

1. In David Grant and Co Pty Ltd[1] the High Court held that an application under s 459G must be made within 21 days after the demand is served on a company. This 21 day period cannot be extended.

   [1][1995] HCA 43.

1. The affidavit accompanying the originating process to set aside the statutory demand is not a supporting affidavit.  Mr Watson deposes that the supporting affidavit is to be that of Mr Brett Spits, director of the plaintiff.  That affidavit did not accompany the originating process and it is that affidavit which refers to the dispute.  As that affidavit was received outside the 21 day period the application must be dismissed.  That affidavit was exhibited to the affidavit of Mr Watson.  It was not sworn.  For an affidavit to fit the description of an affidavit supporting the application, the affidavit must establish the case for the defendant.  All the affidavit does is advise the Court that there will be a supporting affidavit which has not been sworn.  Admittedly that affidavit does contain facts that the plaintiff will intend to rely upon but until such affidavit is sworn they do not even amount to a bare assertion. 

1. The plaintiff relied on the principles referred to by Sundberg J in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Ltd.  The plaintiff submitted that the grounds of the application to set aside were raised in Mr James’ affidavit and therefore could be supplemented. 

1. Sunberg J in Graywinter 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.  That evidence must be available at the hearing of the application to set aside, because that application is for final and not interlocutory relief: 71 Paisley Street.

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.[2] 

[2](1996) 21 ACSR 581 at 587.

1. In Hansmar Investments Pty Ltd v Perpetual Trustee Co Ltd[3] stated:

However, whilst I hesitate to differ from any observations of Barrett J, I respectfully consider that the test enunciated in Process Machinery Australia Pty Ltd v ACN 057 260 950 Pty Ltd at [22] and repeated in Elm Financial Services Pty Ltd v MacDougal at [7] that the ground of challenge must be raised expressly or by necessary inference, is stated too strictly. The Graywinter principle is based upon an implication from the requirement in s 459G that an application to set aside a statutory demand be accompanied by an “affidavit supporting the application” which must be filed and served within 21 days after service of the demand. The implication is now firmly established. However, in my view, the implication is no more than that the grounds of the application to set aside the demand must be raised by the supporting affidavit.

[3](2007) 61 ACSR 32 at [26].

1. Here the plaintiff does not have a supporting affidavit before the Court which is capable of being supplemented.  All the plaintiff has done is to merely say the director is too busy at present to make a full affidavit and will do so later.  It is not an affidavit capable of being supplemented.

1. The Court does therefore not have the jurisdiction to hear this application and the application must be dismissed. If but for this debt the plaintiff is solvent it may then at the hearing of an application to wind up the plaintiff, leave may be sought by the plaintiff pursuant to s 459S of the Act to raise its counterclaim.