In the Matter of Suters Holdings Pty Limited

[2012] NSWSC 1051

Supreme Court

New South Wales

Medium Neutral Citation:	In the Matter of Suters Holdings Pty Limited [2012] NSWSC 1051
Hearing dates:	24 July 2012
Decision date:	24 July 2012
Jurisdiction:	Equity Division - Corporations List
Before:	Brereton J
Decision:	Statutory demand set aside with indemnity costs
Catchwords:	CORPORATIONS - creditor's statutory demand - application to set aside - Corporations Act s 459G COSTS - indemnity costs - whether indemnity costs should be ordered where creditor's statutory demand was entirely misconceived - where no reasonable basis for claimed debt has been articulated by defendant - where defendant failed to withdraw it after dispute was raised by plaintiff - act of relevant delinquency
Legislation Cited:	(Cth) Corporations Act 2001, s 459H, s 459J, s 459G
Category:	Principal judgment
Parties:	Suters Holdings Pty Limited (plaintiff) Paul Stephenson (defendant)
Representation:	Counsel: F Assaf (Plaintiff) D Mahendra (Defendant) Solicitors: O'Hearn & Bilinksy Lawyers (Plaintiff) Thomas Mitchell (Defendant)
File Number(s):	2012/ 56751

Judgment (ex tempore)

1. HIS HONOUR: By originating process filed on 21 February 2012, the plaintiff company Suters Holdings Pty Ltd claims an order setting aside a creditor's statutory demand dated 31 January 2012 and served on it by the defendant Paul Stephenson, pursuant to (Cth) Corporations Act 2001, s 459H, or alternatively, s 459J. At the outset of the hearing this morning, counsel for the defendant informed the court that an order setting aside the statutory demand was no longer opposed, and that order will be made. The plaintiff now applies for an order that its costs be paid by the defendant on the indemnity basis. This argument is put chiefly on the basis that the invocation of the creditor's statutory demand procedure was inappropriate and an abuse of process from the outset, having regard to the manifest existence of a genuine dispute.

1. In that respect it is noteworthy that, at least so far as can be ascertained from the evidence filed and the submissions lodged with the court, no reasonable basis for the claimed debt has ever been articulated by the defendant. The defendant's affidavit sworn 13 April 2012 appears to assert that, by correspondence of 9 December 2012, the plaintiff accepted the defendant's offer to sell to it 500 shares, but refused to apply the proper value to its shareholding. It is self-evident that where there is no agreement on price it can hardly be said that there was a concluded agreement, or at least that that is very seriously arguably so.

1. Today, it was suggested in argument that the defendant relied on an Australian Securities and Investment Commission ("ASIC") search that did not show him to be a shareholder in the company (and thus, implicitly, that the plaintiff treated his shares as having been purchased). There are multiple difficulties with this proposition. The first is that no such proposition appears in the s 459G affidavit filed on behalf of the defendant in the proceedings. The second is that the creditor's statutory demand was dated 31 January 2012, and served shortly thereafter, whereas the search in question was extracted on 15 February 2012, and there is no evidence that the defendant saw any earlier version of the search. The third is that, as counsel for the plaintiff points out, the list of members in the ASIC extract is only (and expressly) of the top 20 members in each class, and does not purport to be a complete list of all the members. In those circumstances, it would not be reasonable to rely on it as tending to establish that the defendant no longer held any shares.

1. In my opinion, the invocation of the creditor's statutory demand procedure in this case was entirely misconceived from the outset. Failing to withdraw it after dispute was raised on 15 February 2012 was an act of relevant delinquency for the purposes of the principles concerning awards of indemnity costs. That is reinforced by the failure to accept offers subsequently made on 14 June and 10 July 2012, which were more advantageous to the defendant than the ultimate outcome of the proceedings.

Orders

1. I therefore make the following orders:

(1)   Order that the creditor's statutory demand dated 31 January 2012 and served by the defendant on the plaintiff company be set aside.

(2)   Order that the defendant pay the plaintiff's costs, such costs to be assessed on the indemnity basis.

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