JJ Armstrong Pty Ltd v Hamptee Pty Ltd - [2017] VSC 427

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT
CORPORATIONS LIST

S CI 2017 00113

JJ ARMSTRONG PTY LTD (ACN 075 084 687)	Plaintiff
v
HAMPTEE PTY LTD (ACN 613 621 408)	Defendant

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	21 June 2017
DATE OF JUDGMENT:	26 July 2017
CASE MAY BE CITED AS:	JJ Armstrong Pty Ltd v Hamptee Pty Ltd
MEDIUM NEUTRAL CITATION:	[2017] VSC 427

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CORPORATIONS – Application to set aside statutory demand under sections 459G and 459J of Corporations Act (2001) (Cth) by reason of alleged genuine disputes and offsetting claim – Debt the subject of demand allegedly assigned to defendant prior to service of demand – Plaintiff not given any notice of the assignment prior to service of demand and demand and accompanying affidavit made no reference to alleged assignment – Demand set aside for ’some other reason’ pursuant to s 459J – Condor Asset Management v Excelsior Eastern Ltd (2005) 56 ACSR 223 applied.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A J Purton	Jeremy Johnson &Associates
For the Defendant	Mr D P Lorbeer	Amini Lawyers

HIS HONOUR:

On 3 January 2017, the defendant (‘Hamptee’) served a statutory demand under s 459E of the Corporations Act 2001 (Cth) (‘the Act’) on the plaintiff (‘JJ Armstrong’) (‘the demand’).

By originating process filed on 17 January 2017,.JJ Armstrong made application to set aside the demand pursuant to ss 459G and 459J of the Act

JJ Armstrong relies on affidavits of Ben Newbold sworn 17 January 2017 and 16 June 2017, together with an affidavit of John Newbold sworn 20 June 2017. Hamptee relies on the affidavit of Arif Sakhayi affirmed 5 April 2017.

JJ Armstrong contends the demand should be set aside on the following grounds:

(a) it contains a defect causing substantial injustice;

(b) there is a genuine dispute as to:

(i) whether JJ Armstrong owes anything to Hamptee at all given that it had no dealings with that company;

(ii) whether JJ Armstrong is required to pay anything in connection with the invoices referred to in the demand in light of the quality and amount of the work performed; and

(c) JJ Armstrong has an offsetting claim arising from rectification works that were necessary to be carried out.

The grounds in paragraphs 4(a) and (b)(i) are closely related and involve consideration of an alleged assignment of the debts claimed in the demand by a business conducted by Arif Sakhayi to Hamptee, a company in which his wife is the sole director.

For the reasons which follow, I consider the demand should be set aside under s 459J of the Act, making it unnecessary to consider whether JJ Armstrong has a genuine dispute as provided by ground (b)(ii) or an offsetting claim under ground (c).

The demand claims that JJ Armstrong owed Hamptee $76,000. The schedule to the demand identifies the debts as follows:

Description of Debt

Amount

Monies owed pursuant…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] VSC 427
Decision Date: 26 July 2017

CaseChat Overview and Summary

JJ Armstrong Pty Ltd sought to set aside a statutory demand issued by Hamptee Pty Ltd, the matter being heard in the Federal Circuit Court of Australia. The core of the dispute involved whether the statutory demand issued by Hamptee was valid or could be set aside due to an alleged assignment of the debt to Hamptee prior to the service of the demand. JJ Armstrong contended that they were unaware of the assignment and that the demand made no reference to such an assignment, arguing that this constituted a genuine dispute as per the Corporations Act. They sought relief under sections 459G and 459J of the Act.

The legal issues before the court were whether the statutory demand was validly issued and if there existed a genuine dispute warranting the setting aside of the demand. Specifically, the court had to determine if the assignment of the debt to Hamptee prior to the demand's service constituted a genuine dispute and if the lack of notice of the assignment to JJ Armstrong justified setting aside the demand. The court also needed to consider if the demand and accompanying affidavit were made without reference to the alleged assignment, as stipulated by the relevant sections of the Corporations Act.

The court found that the statutory demand was indeed issued without proper notice to JJ Armstrong of the assignment of the debt, and the demand itself did not reference the assignment. The court applied the principles from the case of Condor Asset Management v Excelsior Eastern Ltd, which established that a demand could be set aside if made for some other reason contrary to the provisions of the Act. Consequently, the court ruled that the statutory demand was not validly issued, and it was set aside. The court's decision highlighted the importance of providing notice of assignments to debtors and ensuring that statutory demands reference all relevant transactions.

The final orders included setting aside the statutory demand issued by Hamptee and awarding costs to JJ Armstrong, reflecting the court's decision that the demand was not properly issued.

Orders