In the matter of Nanevski Developments Pty Limited

[2019] NSWSC 1204

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Nanevski Developments Pty Limited [2019] NSWSC 1204
Hearing dates:	16 July 2019
Date of orders:	16 July 2019
Decision date:	16 July 2019
Jurisdiction:	Equity - Corporations List
Before:	Rees J
Decision:	Leave to amend Originating Process: at [7]
Catchwords:	CIVIL PROCEDURE — Originating process — Amendment — Application to set aside statutory demand — New ground sought to be advanced — Whether precluded by “Graywinter principle” — Where defects not referred to in affidavit but apparent from face of documents annexed — Saferack Pty Ltd v Marketing Heads Australia Pty Ltd (2007) 214 FLR 393; [2007] NSWSC 1143 applied — Leave to amend granted subject to usual costs order.
Legislation Cited:	Corporations Act 2001 (Cth), ss 459H, 459J
Cases Cited:	Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd (2013) 85 NSWLR 601; [2013] NSWCA 344 Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund (1996) 70 FCR 452; (1996) 21 ACSR 581 Hopetoun Kembla Investments Pty Ltd v JPR Legal Pty Ltd (2011) 87 ACSR 1; [2011] NSWSC 1343 In the Matter of Tesrol Holdings Pty Ltd (2013) 97 ACSR 9; [2013] NSWSC 1534 Infratel Networks Pty Ltd v Gundry’s Telco & Rigging Pty Ltd (2012) 92 ACSR 27; [2012] NSWCA 365 Ligon 158 Pty Ltd v Huber (2016) 117 ACSR 495; [2016] NSWCA 330 Saferack Pty Ltd v Marketing Heads Australia Pty Ltd (2007) 214 FLR 393; [2007] NSWSC 1143 The MCF Group Pty Ltd v GJB Legal Pty Ltd trading as Byles Anjos Lawyers [2019] NSWSC 3 Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2015) 104 ACSR 425; [2015] FCA 221
Category:	Procedural and other rulings
Parties:	Nanevski Developments Pty Limited (Plaintiff) Mega Top Cargo Pty Limited (Defendant)
Representation:	Counsel: Mr P McDonald (Plaintiff) Mr G Stapleton (Defendant)   Solicitors: Carneys Lawyers (Plaintiff) Valorum Law Group (Defendant)
File Number(s):	2019/121042

Judgment

1. HER HONOUR: These proceedings were commenced on 17 April 2019. The plaintiff’s application, expressed as being brought under section 459H of the Corporations Act 2001 (Cth), sought to set aside a statutory demand by reason of the existence of a genuine dispute and an offsetting claim. Two affidavits were filed in support of the originating process, being the affidavits of George Hoddle and Tom Nanevski. The affidavits annexed the statutory demand and affidavit verifying the demand.

2. On 8 July 2019, the plaintiff served its written submissions and thereby indicated that the plaintiff intended to seek to amend the originating process at the hearing to also seek to set aside the statutory demand under section 459J(1)(a) of the Corporations Act, that there is a defect in the form of the demand, and under section 459J(1)(b) for “some other reason” by reason of an alleged defect in the accompanying affidavit. The defects were not referred to in the affidavits filed in support of the originating process which simply annexed the demand and affidavit without further commentary.

3. The defendant opposes the amendment being granted at this late stage and rely upon an affidavit of Ken Slaveski of 15 July 2019 in which Mr Slaveski points out that these defects were not asserted at any time before the service of the plaintiff’s outline of submissions and, if these alleged defects had been raised earlier, then different decisions might have been made in the conduct of these proceedings including, for example, withdrawing the statutory demand and reissuing a demand without the alleged defects. It is suggested by Mr Slaveski that if these defects are found to be valid, then the defendant may simply issue a further statutory demand absent these defects.

4. Section 459G(2) of the Corporations Act provides that an application to set aside a statutory demand can only be made within 21 days after the demand is served and section 459G(3)(a) provides that the application must be supported by an affidavit. The established law, referred to as the Graywinter principle from Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund (1996) 70 FCR 452; (1996) 21 ACSR 581, is that an applicant cannot rely on any ground for setting aside a demand that is not raised in the affidavit filed within that 21 day limit. In The MCF Group Pty Ltd v GJB Legal Pty Ltd trading as Byles Anjos Lawyers [2019] NSWSC 333, I reviewed the authorities which deal with the Graywinter principle at [47]–[55], in particular more recent authorities including Ward J’s (as her Honour then was) exposition in Hopetoun Kembla Investments Pty Ltd v JPR Legal Pty Ltd (2011) 87 ACSR 1; [2011] NSWSC 1343 which seems to me to reflect the current principles in this State: see also Ligon 158 Pty Ltd v Huber (2016) 117 ACSR 495; [2016] NSWCA 330; Infratel Networks Pty Ltd v Gundry’s Telco & Rigging Pty Ltd (2012) 92 ACSR 27; [2012] NSWCA 365. The Graywinter principle, while most often arising in relation to genuine disputes or offsetting claims under section 459H of the Corporations Act, also applies to grounds raised under section 459J: see, for example, In the Matter of Tesrol Holdings Pty Ltd (2013) 97 ACSR 9; [2013] NSWSC 1534 per Black J at [36].

5. In Saferack Pty Ltd v Marketing Heads Australia Pty Ltd (2007) 214 FLR 393; [2007] NSWSC 1143, Barrett J considered that it was sufficient to raise a defect in a statutory demand or affidavit if those documents were annexed to the affidavits filed in support of an application to set aside a statutory demand without necessarily setting out the alleged defect within the body of those affidavits: at [22]–[26]. His Honour’s judgment in that case has since been cited without criticism by the Court of Appeal: Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd (2013) 85 NSWLR 601; [2013] NSWCA 344 at [45]; Infratel Networks at [31]; see also Wigney J in Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2015) 104 ACSR 425; [2015] FCA 221 at [130]–[131]. It seems to me in those circumstances that the plaintiff is entitled, consistent with the Graywinter principle, to seek to raise these alleged defects at the trial.

6. The second question is whether the late amendment should be granted by reference to case management principles. It seems to me, in circumstances where the defect sought to be relied upon by the plaintiff stems from documents which are already before the Court and which require the consideration of discrete legal questions, that the amendment should be allowed as the defendant is not prejudiced, in terms of meeting that argument, at trial. It is readily apparent that if the issue had been articulated at an earlier point in time, the defendants may have taken a different forensic path in these proceedings. It seems to me that any prejudice thereby suffered by the defendants can be cured by a costs order, being the usual order that the plaintiff pay any costs thrown away by reason of the amendment. It will be a matter for the defendant in due course to prove what those costs would be and that may depend in some part upon whether the plaintiff’s existing contentions as to a genuine dispute and offsetting claim are in any event established.

7. In those circumstances, I make the following orders:

1. I grant leave to the plaintiff to file in court an amended originating process.

2. I order the plaintiff to pay any costs thrown away by the defendant by reason of the amendment.

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Decision last updated: 11 September 2019