In the matter of Commonwealth Bank of Australia

[2021] NSWSC 401

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Commonwealth Bank of Australia [2021] NSWSC 401

Hearing dates:

13 April 2021

Date of orders:

13 April 2021

Decision date:

13 April 2021

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Creditor’s statutory demand set aside. Defendant to pay Plaintiff’s costs.

Catchwords:

CORPORATIONS — Winding up — Statutory demand — Application to set aside

CORPORATIONS — Winding up — Statutory demand — Genuine dispute about existence or amount of debt

Legislation Cited:

- Corporations Act 2001 (Cth)

- Service and Execution of Process Act 1992 (Cth)

Cases Cited:

-Bagshaw v RTS Super Pty Ltd [2019] WASCA 85

- CGI Information Systems v APRA Consulting Pty Limited (2003) 47 ACSR 100; [2003] NSWSC 728

-Eyota Pty Ltd v Hanave Pty Limited (1994) 12 ACSR 785

-Ligon 158 Pty Ltd v Huber [2016] NSWCA 330

-Marlan Financial Services Pty Ltd v New England Agricultural Traders Pty Ltd (1998) 158 FLR 256; [1999] VSC 435

- Meads v Meads 2012 ABQB 571

- Re 8D Pty Ltd (2013) 279 FLR 98; [2013] NSWSC 1297

- Re AMP Life Ltd [2018] NSWSC 855

- Re Wollongong Coal Ltd (2015) 110 ACSR 134

-Sheridan v Colin Biggers & Paisley [2019] NSWSC 528

- Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452; [1997] FCA 681

-Wichman v Pepper Finance Corp Ltd [2019] NSWCA 195

Category:

Principal judgment

Parties:

Commonwealth Bank of Australia (Plaintiff)
Ronald Mark Gregory (Defendant)

Representation:

Counsel:
J Hynes (Plaintiff)

Solicitors:
Dentons Australia (Plaintiff)

File Number(s):

2021/59254

Judgment – EX TEMPoRE (rEVISED 14 aPRIL 2021)

1. By Originating Process filed on 2 March 2021, the Commonwealth Bank of Australia (“CBA”) applies under ss 459G, 459H and 459J of the Corporations Act 2001 (Cth) to set aside a creditor’s statutory demand dated 4 February 2021 ("Demand") issued by the Defendant, Mr Ronald Gregory, to CBA. The basis on which that Demand is sought to be set aside is, in substance, that the debt claimed by Mr Gregory against CBA is genuinely disputed.

2. The Demand refers to a debt in the amount of $418,000 and also claims interest and costs, and describes the debt as follows:

“Debt arising from outstanding invoice number RMG261020201429 for which First Notice dated the 26/10/2020, Second Notice dated 20/11/2020 and Third & Final Notice dated 11/12/2020 with invoices enclosed being delivered to the debtor company by Australia Post Domestic Letter with Tracking to which no replies from the debtor company were received.

The invoice relates to debt by the debtor company as confirmed in an unrebutted affidavit dated 4/08/2020.

A second unrebutted affidavit regarding commercial default for non payment by the debtor of invoice number RMG261020201429 by the debtor company is to the creditor.”

3. The verifying affidavit dated 4 February 2021 likely does not comply with the requirements for verification of a creditor’s statutory demand, so far as it contains a series of negative statements, commencing with the proposition that Mr Gregory has not been provided with any material evidence that he is not the creditor and continuing through several paragraphs of a similar character to conclude that:

“I have not seen or been presented with any material evidence that there is genuine dispute about the existence or amount of the debt by the debtor company to the creditor and I believe sincerely that no such evidence exists.

I have not seen or been presented with any material evidence that this statutory demand does not comply with the appropriate rules of the Corporation Act 2001 and I believe sincerely that no such evidence exists.”

It is not necessary to express any final view as to the adequacy of that affidavit where CBA did not rely on any inadequacy in that affidavit as the basis for its application to set aside the Demand.

CBA’s evidence

4. CBA reads, first, the affidavit of Mr Hanrahan dated 2 March 2021. Mr Hanrahan is employed by CBA in its Financial Assistance Solutions and Collections Team and gives evidence that he has access to CBA's books and records in respect of the proceedings, and refers to service of the Demand on CBA's registered office. He notes that Mr Gregory has held Visa credit card facilities with CBA since 2006 and refers to correspondence with Mr Gregory which appears to have given rise to discontent on Mr Gregory's part, and to a complaint made by Mr Gregory to the Australian Financial Complaints Authority which it appears was dismissed.

5. Mr Hanrahan, in turn, refers to a number of documents on which Mr Gregory has relied, in correspondence with CBA and in these proceedings, and I mark some of the documents which have since been provided to the Court as MFI1 in these proceedings. Mr Gregory did not appear and none of his affidavits have been read and none of those documents tendered in the proceedings, except so far as CBA had led evidence of them to identify the claims he has made.   Mr Hanrahan seeks to identify Mr Gregory's underlying claim, which appears to arise from an invoice issued by him to CBA, which in terms relates to a fine purportedly imposed by Mr Gregory on CBA in respect of an alleged trespass on an agreement between Mr Gregory and CBA. Mr Hynes, who appears for CBA, perhaps somewhat uncharitably but likely correctly, refers to the basis of Mr Gregory's claim in that respect as incomprehensible, so far as Mr Gregory seeks himself to impose a fine for the suggested breach, and so far as the concept of a trespass upon an agreement is one which would not ordinarily be known to Australian law.

6. By a further affidavit dated 9 March 2021, Mr Holland, a process server, refers to service of the proceedings which seek to set aside the Demand upon Mr Gregory. The Originating Process was served under cover of a notice under the Service and Execution of Process Act 1992 (Cth) (“SEPA”), so far as the proceedings were brought in the Supreme Court of New South Wales and served upon Mr Gregory in the State of Victoria. I will refer to an issue arising in respect of an aspect of that notice below.

7. By a further affidavit dated 10 March 2021, Mr Lewin, a solicitor acting for CBA, referred to service of further documents upon Mr Gregory by post. By a second affidavit of Mr Lewin also dated 10 March 2021, he led evidence of a company search of CBA, a matter required by the Corporations Rules in respect of an application of this character. By a third affidavit dated 18 March 2021, Mr Lewin led evidence of further correspondence with Mr Gregory.

8. By an affidavit dated 22 March 2021, Mr Holland gave evidence of service of further documents upon Mr Gregory. By his affidavit dated 22 March 2021, Mr Lewin referred to sending an email to Mr Gregory, including further evidence in the proceedings and the Plaintiff's outline of submissions, identifying the orders it sought. By a further affidavit of Mr Lewin dated 25 March 2021, he updated the position in respect of correspondence with Mr Gregory and a further affidavit dated 6 April 2021 indicated that Mr Gregory had been advised of the adjournment of CBA's application to today, to allow him to consider supplementary submissions which had been made by CBA in respect of the issue arising under SEPA.

Mr Gregory’s position

9. Mr Gregory has not appeared at any stage in the proceedings, whether by filing a notice of appearance, or attending any of the hearings conducted by telephone. However, there is no doubt that Mr Gregory is aware of the proceedings, and he has actively participated in them by correspondence to the Court and the filing of affidavit evidence, which I have marked, as I noted above, "MFI1". The form of Mr Gregory’s correspondence and evidence has many of the features which were described in the judgment of the Court of Queen’s Bench of Alberta in Meads v Meads 2012 ABQB 571 as “Organized Pseudolegal Commercial Argument”, which I noted in Sheridan v Colin Biggers & Paisley [2019] NSWSC 528 at [10] and to which the Court of Appeal referred in Wichman v Pepper Finance Corp Ltd [2019] NSWCA 195.

10. The documents filed by Mr Gregory, but not read or tendered by him because he has not appeared, include a document dated 4 March 2021 titled "Notice to Principal is Notice to Agent" addressed to the Registrar of the Court, and demanding a copy of any lawful contract made between Mr Gregory and the Court with his informed consent on which the Court relies. Mr Gregory then claims that, if the Court does not provide him with such a contract within seven days, it will be taken to have assented that no contract exists with him. It appears to be self-evident that no contract exists between Mr Gregory and the Supreme Court of New South Wales. However, the Court's jurisdiction is not contractual in nature. In particular, the Commonwealth and the State of New South Wales have conferred jurisdiction under the Corporations Act 2001 on the Court, including jurisdiction to set aside a creditor’s statutory demand, and that jurisdiction does not require Mr Gregory's agreement for its exercise.

11. By an affidavit, Mr Gregory addresses various matters including that he is "a living spirit within a sentient breathing man"; that he has not been presented with facts or material evidence of various matters, and that he does not have a contract or consent to any contract with any person or persons without his fullest informed consent. That affidavit concludes with the striking affirmation that it is "As Good as Avaal", a proposition that is not commonly seen in affidavits in the Courts of New South Wales, but appears to be known to United States law in respect of guarantees.

12. By “Notice of non-consent” dated 24 March 2021, Mr Gregory draws to the Court's attention that he has no contract with the Court, a matter to which I have referred above. By a second affidavit, of substantial length, Mr Gregory addresses matters raised by the affidavits on which CBA relies. By a letter dated 25 March 2021 addressed to the Registrar he addresses further aspects of the affidavits on which CBA relies. By an email dated 29 March 2021, he succinctly advised my Associate, so far as he had been informed of a hearing of the proceedings on 26 March 2021, that he did "not consent". Three further affidavits address issues including those raised by the Plaintiff's supplementary outline of submissions and, by an affidavit which appears to be directed to the attention of CBA’s solicitors, Mr Gregory seeks to highlight a suggested fraud, presumably in respect of these proceedings, and by a further affidavit, directed to the attention of the Chief Justice of New South Wales, the Chief Judge of the Equity Division and the Registrar of the Supreme Court, he addresses the same matter.

13. I draw attention to these documents, not because they are in evidence or because Mr Gregory made any attempt to read the affidavit evidence, or to tender them, but because they demonstrate that Mr Gregory is squarely on notice of the proceedings and has had an opportunity to be heard in them.

Whether a genuine dispute is established

14. Turning now to the applicable legal principles, s 459H(1)(a) of the Corporations Act provides that a creditor's statutory demand may be set aside when the Court is satisfied that there is a genuine dispute about the existence or amount of a debt to which the demand relates. That test has been formulated as requiring that the dispute is not "plainly vexatious or frivolous" or "may have some substance", or involves a "plausible connection requiring an investigation", and is similar to that which would apply in an application for an interlocutory injunction or a summary judgment: Eyota Pty Ltd v Hanave Pty Limited (1994) 12 ACSR 785 at 787. In Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452 at 464, the Federal Court held that "a genuine dispute" must be bona fide and truly exist in fact, and the grounds for that dispute must be real and not spurious, hypothetical, illusory, or misconceived. In CGI Information Systems v APRA Consulting Pty Limited [2003] NSWSC 728; (2003) 47 ACSR 100 at [16] Barrett J noted that the task faced by a company challenging a creditor’s statutory demand on the genuine dispute grounds "is by no means at all a difficult or demanding one", and it will fail in that task

"only if it is found, upon the hearing of its 459G application, that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted. Once the company shows that even one issue has a significant degree of cogency to be arguable, a finding of genuine dispute must follow. The Court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that on rational grounds indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company serves stronger".

15. Mr Hynes also refers to my decision in Re Wollongong Coal Ltd (2015) 110 ACSR 134 at [9]ff and, which was in turn noted by the Court of Appeal in Ligon 158 Pty Ltd v Huber [2016] NSWCA 330. Mr Hynes also refers to the observation of Gleeson JA in Re AMP Life Ltd [2018] NSWSC 855 at [35] that the bar for establishing a genuine dispute is not high.

16. As I have noted above, the Demand appears to turn on an invoice issued by Mr Gregory, which in turns depends on the assertion of an agreement between Mr Gregory and CBA, and an alleged "trespass" by CBA on that agreement, giving rise to a penalty imposed by Mr Gregory of $1,000 per day from 30 May 2019. Mr Hynes points out that the concept of "trespass" in this context is uncertain, where trespass would ordinarily be understood as an act of a defendant which directly and intentionally or negligently disturbs a plaintiff's possession of a chattel, such as taking goods out of the plaintiff's possession: Sheridan v Colin Biggers & Paisley above at [46].

17. Here, it seems to me that a genuine dispute plainly arises, so far as there is a dispute, on the evidence led by CBA, as to the existence of the underlying agreement; there is plainly a dispute, available at law, as to the existence of any concept of trespass upon such an agreement; and the basis on which Mr Gregory is entitled to establish a daily fine for the suggested trespass can only be described as mysterious. For these reasons, I am satisfied that a genuine dispute as to the Demand is established and, subject to one issue as to service of the Originating Process, the Demand should be set aside.

An issue as to service of the Originating Process

18. Mr Hynes fairly draws attention to the fact that the Originating Process which sought the setting aside of the Demand was served in Victoria and, as I noted above, a notice was given under SEPA. Mr Hynes fairly acknowledges that the notice given under that Act indicated that Mr Gregory would need to file an appearance in the Court by 8 March 2021, and that that requirement did not comply with the requirement under SEPA to allow 21 days after receiving the process to serve a notice of appearance.    

19. Mr Hynes points out that this is, of course, not a case where no notice under SEPA was given, a matter which has from time to time given rise to difficulties of the kind considered in Marlan Financial Services Pty Ltd v New England Agricultural Traders Pty Ltd (1998) 158 FLR 256; [1999] VSC 435 and Re 8D Pty Ltd (2013) 279 FLR 98; [2013] NSWSC 1297 at [9]. It is instead a case where there is an error in the notice, so far as the time specified for filing a notice of appearance, and Mr Hynes contends that the notice substantially complied with the prescribed form under SEPA. He in turn refers to the decision in Bagshaw v RTS Super Pty Ltd [2019] WASCA 85, which involved a very similar deficiency in the notice under SEPA which allowed 7 rather than 21 days to file an appearance. Their Honours there noted that it was doubtful that a form which failed to comply with the prescribed form, merely by reason of an understatement at the time for filing of a notice of a respondent's intention to appear, would not substantially comply with that form. It was there not necessary for the Court to determine the matter.

20. Here, it seems to me that there was substantial compliance with the prescribed form, so far as Mr Gregory was given notice of what was necessary to contest the claim, including the need to file an appearance in the Court. Although he was informed of a lesser period than the requisite period in which that could be done, there is no suggestion that that error caused any disadvantage to him, since he did not choose to file a notice of appearance within that time, or later, but nonetheless actively participated in the proceedings by filing the documents to which I referred above, while appearing to deny the Court's jurisdiction to determine the matter because it did not have a contract with him. I am satisfied, in those circumstances, that there has been substantial compliance with the requirements of SEPA, and that any non-compliance had not caused Mr Gregory any disadvantage and has not deprived the Court of jurisdiction to determine the matter.

21. For these reasons, I made orders setting aside the Demand and that Mr Gregory pay CBA’s costs of the proceedings as agreed or as assessed.

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Decision last updated: 21 April 2021