Jones v Endeavour Investments (NT) Pty Ltd - [2023] NTCA 2

CITATION:Jones v Endeavour Investments (NT) Pty Ltd [2023] NTCA 2
PARTIES:JONES, Selwyn Thomas

v
Endeavour Investments (NT) Pty Ltd (ACN133112811)

TITLE OF COURT:  COURT OF APPEAL OF THE NORTHERN TERRITORY
JURISDICTION:  CIVIL APPEAL from the SUPREME COURT exercising Territory jurisdiction
FILE NO:AP 11 of 2022 (22234124)
DELIVERED:  23 February 2023
HEARING DATES:  15 February 2023
JUDGMENT OF:  Blokland and Brownhill JJ, Riley AJ
APPEALED FROM:  Supreme Court of the Northern Territory

CATCHWORDS:

CIVIL APPEAL – Corporations law – Statutory demand – Appeal against order setting aside statutory demand – Terms of settlement following mining lease dispute converted to consent orders before Northern Territory Civil and Administrative Tribunal – consent orders registered in the Local Court – Whether registered orders “judgment debt” per s 459E (3) Corporations Act – Determination of a debt as due and payable – Lack of clarity of orders registered in the Local Court – Statutory demand correctly set aside in the absence of accompanying affidavit per 459E of the Corporations Act – Appeal dismissed.

Corporations Act 2001 (Cth) s 459E, 459G, 459H, 459(J).
Northern Territory Civil and Administrative Tribunal Act 2014 (NT) s 84, 126.
Mineral Titles Act 2010 (NT) s 123(4).
Endeavour Investments (NT) Pty Ltd (ACN133112811) v Jones [2022] NTSC 77, Chapel of Angels Pty Ltd v Hennessy [2021] FCA 875, Re Douglas Aerospace Pty Ltd [2015] NSWSC 167, In the matter of Fewin Pty Ltd [2016] NSWSC 1945, Fitness First Australia Pty Ltd v Dubow (2011) 251 FLR 241, In the matter of Wyse Accounting Pty Ltd [2016] NSWSC 1722.
REPRESENTATION:
Counsel:
Appellant:Michael Grove
Respondent:  Tom Silvester
Solicitors:
Appellant:Ward Keller
Respondent:  Cozens Johansen Lawyers
Judgment category classification:    A
Number of pages:  11

IN THE COURT OF APPEAL
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Jones v Endeavour Investments (NT) Pty Ltd [2023] NTCA 2

AP 11 of 2022 (22234124)

BETWEEN:
SELWYN THOMAS JONES
Appellant

AND:
ENDEAVOUR INVESTMENTS (NT) PTY LTD (ACN133112811)
Respondent

CORAM: Blokland and Brownhill JJ, Riley AJ
REASONS FOR JUDGMENT
(Delivered 23 February 2023)
The Court:
Introduction

This is an appeal from an order of the Supreme Court setting aside a creditor’s notice of statutory demand issued pursuant to s 459G of the Corporations Act 2001 (Cth).
The circumstances giving rise to the challenge were not in dispute. They are recorded in the reasons for judgment of the Supreme Court from which the following summary is extracted.
In 2021, the parties had been in dispute regarding the sale by the appellant to the respondent of mineral lease ML 30259. Proceedings were commenced by the appellant against the respondent in the Northern Territory Civil and Administrative Tribunal (‘NTCAT’). Following a compulsory conference between the parties a settlement was reached and the terms of settlement were recorded and converted into consent orders before the NTCAT.[1] Those orders were in the following terms:
THE TRIBUNAL ORDERS BY CONSENT THAT:
1.The Respondent pay the Applicant $38,000 by (i) 11 January 2022 or (ii) 7 days from the date of Ministerial consent of the transfer Mineral Lease ML30259, whichever is the later, in accordance with the terms in attachment A.
Attachment A
2.The settlement sum of $38,000 to be paid to Ward Keller Trust Account.
3.The above is subject to Ministerial Consent to the transfer of Mineral Lease ML30259 to Endeavour or its nominee.
4.The transfer to be prepared by Endeavour’s solicitors and to be signed by Jones by 3 December 2021 and by Endeavour or its nominee within 7 days of receipt of the transfer signed by Jones.
5.Endeavour or its nominee to lodge the transfer with the Department of Industry, Tourism and Trade by 24 December 2021.
6.All government charges including stamp duty to be paid by Endeavour or its nominee in relation to the transfer, including all transfer fees.
7.The parties agree that the transfer of ML30259 will be as a going concern. Otherwise, Endeavour will pay the GST on presentation of an invoice.
8.Jones to provide Endeavour notification of discharge of Jones’ authorisation provided by the Department to Jones.
9.The above to be incorporated in a suitable deed of release with necessary indemnities, to be prepared by the Respondent’s solicitors. The Deed will compromise (i) the matters set out in the Application and Response filed in NTCAT proceeding 2021- 02427-CT; (ii) any claim in relation to ML30259 and (ii) the claim Endeavour has against Jones in relation to the invoice number 10936 dated 10 May 2018 by Complete Tenement Management.
10.Each party to bear their own costs.
Thereafter a deed of release was drafted, the terms of which were never agreed and it was not executed. The mineral lease has not been transferred to the respondent and the respondent has not paid $38,000 to the appellant. However, some steps were taken in relation to the transfer of the mineral lease including the appellant seeking the approval of the Minister for Mining and Industry to the transfer, pursuant to s 123(4) of the Mineral Titles Act 2010 (NT). On 24 March 2022, the delegate of the Minister wrote to the appellant in the following terms:
I refer to the lodgement of Instrument of Dealing (Transfer) D94349 seeking to transfer Mineral Lease 30259 between Selwyn Jones and Endeavour Investments (NT) Pty Ltd and your application for prior approval under s123(4). I, as Delegate of the Minister for Mining and Industry have considered your request and hereby give notice that there is sufficient grounds for accepting the application for approval of transfer under s123(4) of the Mineral Titles Act 2010 (MTA) for Transfer D94349. The registration of the Transfer D94349 under s123 of the MTA will be subject to the following condition being met:
· Notification from Ward Keller, on behalf of Selwyn Jones, that the full amount ($38,000.00) of the payment contemplated by Order 1 of the Order has been received into Ward Keller’s trust account or, such other evidence as may satisfy the Minister that payment has been made.
On 8 April 2022, the appellant applied to the Local Court seeking registration of the NTCAT order pursuant to s 84 of the NTCAT Act which permits a person to whom payment is to be made under a “monetary order” of the Tribunal to file the order in a court of competent jurisdiction and for relevant enforcement proceedings to be pursued. The Local Court issued a Notice of Registration of Order on 14 April 2022 in the following terms:
The terms of the order are:
1.The respondent pay the Applicant $38,000 by (i) 11 January 2022 or (ii) seven days from the date of Ministerial consent of the transfer Mineral Lease ML 30259, whichever is the later, in accordance with the terms in attachment A.
Despite the reference to “attachment A”, the remaining parts of the NTCAT order which are set out above at [3] were not included.
In those circumstances, the appellant served upon the respondent a statutory demand pursuant to s 459E of the Corporations Act in which it was stated that the respondent owed the appellant $38,000 which was then due and payable and was described as:
… a judgment debt arising from an Order of the Northern Territory Civil and Administrative Tribunal … made on 12 November 2021 (attached at Annexure 1) and registered in the Local Court of the Northern Territory on 13 April 2022 … A copy of the Notice of Registration of Order is attached at Annexure 2.
The statutory demand was not accompanied by an affidavit.
The Corporations Act – statutory demands
For present purposes s 459E of the Corporations Act provides:
(1)A person may serve on a company a demand relating to:
(a)a single debt that the company owes to the person, that is due and payable and whose amount is at least the statutory minimum; or
(b)…
(2)…
(3)Unless the debt, or each of the debts, is a judgment debt, the demand must be accompanied by an affidavit that:
(a) verifies that the debt, or the total of the amounts of the debts, is due and payable by the company; and
(b) complies with the rules.
Section 459G of the Corporations Act then provides that a company may apply to the Court for an order setting aside a statutory demand. It goes on to require that an affidavit supporting the application be filed with the Court and served. In relation to such an application s 459H of the Corporations Act provides that:
(1)This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:
(a)that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates:
(b)that the company has an offsetting claim.
…
(3)If the substantiated amount is less than the statutory minimum, the Court must, by order, set aside the demand.
…
(6)This section has effect subject to section 459J.
Section 459J of the Corporations Act provides:
(1)On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:
(a)because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or
(b)there is some other reason why the demand should be set aside.
(2)Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect.
The learned Associate Justice ordered that the statutory demand served by the appellant upon the respondent be set aside and gave detailed reasons for so doing. The primary ground relied upon by her Honour was that the Local Court order did not constitute a “judgment debt” for the purposes of the statutory demand scheme under the Corporations Act. In those circumstances the demand was required to be accompanied by an affidavit.[2]
Her Honour observed that in the event that this was wrong, there were a range of other matters giving rise to the same result. In summary her Honour concluded that, on the balance of probabilities, there was a genuine dispute between the parties within the meaning of s 459H(1) of the Corporations Act about whether the debt described in the statutory demand was due and payable and therefore “existed” at the date of service of the statutory demand.[3] Further, her Honour found there were grounds to exercise the Court’s discretion to set aside the statutory demand for other reasons, pursuant to s 459J(1)(b) of the Corporations Act.[4]
The appellant has appealed against that decision challenging many of the findings of her Honour.
A judgment debt?
The primary issue between the parties was whether the Local Court order constituted a “judgment debt” for the purposes of the statutory demand legislative scheme. Section 459E(3) of the Act provides an exemption from the requirement of a creditor to accompany the statutory demand with a verifying affidavit when the debt relied on is a judgment debt. In the present case no such affidavit was served. The term “judgment debt” is not defined in the Corporations Act and the parties did not point to any authority in which a working definition of the term has been provided.
It was the contention of the appellant that the statutory demand should be read as relying on the Local Court order only and that the order established a judgment debt; the precise amount which was to be paid (namely $38,000); and that the debt was due and owing. It was argued that, in its terms, the order fixed a precise time for payment being the last occurring of 11 January 2022 and seven days from the date of Ministerial consent of the transfer of the mineral lease. It was said those dates were “known, specific and readily calculable”. At the time the Local Court order was made, both dates had passed and, it was said, the judgment debt was therefore due and payable.
The learned Associate Judge held that the registration of the Order with the Local Court did not constitute a “judgment debt” for the purposes of the statutory demand scheme and, consequently, was required to have been accompanied by a verifying affidavit. Her Honour noted that the order of the NTCAT was not a judgment debt and there is no challenge to this conclusion. Her Honour referred to the wording of the Local Court order and, in particular, to the reference to payment being required to be made “in accordance with the terms in attachment A”. There was no attachment and, consequently, the terms were uncertain. As her Honour observed the Local Court order could not stand alone because the rights and obligations of the parties were not ascertainable without reference to “attachment A”. It followed that, without reference to attachment A, it could not be determined whether the debt was due and payable. A verifying affidavit was necessary.
It is apparent that the terms of the settlement reflected in the orders of the NTCAT have not been fulfilled. As the respondent has submitted, the appellant relied upon the first term of the settlement, a conditional payment obligation, to register the order as a judgment in the Local Court. However, that payment obligation was linked, in its terms, to the remaining terms of the NTCAT orders. The words ‘in accordance with the terms in attachment A’ cannot be ignored and, without the NTCAT orders, what those terms might be is unknown. The remaining NTCAT orders were not attached to the Local Court order. The Local Court order could not stand alone as a judgment debt because of the uncertainty surrounding whether the payment was due and, if so, when.
If the Local Court order is read in conjunction with the NTCAT orders, the uncertainty as to whether the debt was due and payable remained in the absence of affidavit material verifying that the conditions in paragraphs 2 to 9 of those orders had been met. Without an affidavit, it is not known which, if any, of the NTCAT orders had been complied with such that the debt was due and payable.
In those circumstances, the Local Court order standing alone could not satisfy the description of a “judgment debt” for the purposes of the statutory demand scheme and, if read with the terms of the NTCAT order (for which neither party contended), the same conclusion is reached. In the absence of an affidavit, as required by s 459E of the Corporations Act, the statutory demand must be set aside. There was no error in the approach adopted in the Supreme Court.
As the appellant acknowledged in the circumstances of this matter, if the statutory demand was for a debt which was not a “judgment debt” for the purposes of the Corporations Act, the failure to serve a verifying affidavit with the statutory demand provided the basis for the setting aside of the statutory demand under s 459J(1)(b) of the Corporations Act.[5]
For these reasons the appeal must be dismissed.
Other grounds of appeal
That is sufficient to dispose of this appeal.
It is unnecessary to consider whether a court asked to set aside a statutory demand based on a judgment debt may consider whether the statutory demand should be set aside because there exists a genuine dispute within s 459H of the Corporations Act. The Associate Judge held that a court could so determine,[6] in reliance on Workout Gym Pty Ltd v Crackerjack Investments Pty Ltd,[7] and Verimark Pty Ltd v Passiontree Velvet Pty Ltd.[8] That conclusion appears to be inconsistent with Chapel of Angels Pty Ltd v Hennessy and the authorities there referred to.[9] Given our decision that the Local Court order is not a “judgment debt”, it is unnecessary on this appeal to resolve this conflict in the authorities.
Our conclusion that the Local Court order was not a “judgment debt” also makes it unnecessary to consider whether the Associate Judge erred in concluding that there were other reasons, within s 459J of the Corporations Act, to set aside the statutory demand.
Disposition
The appeal is dismissed.

-----------------------

[1] Pursuant to s 126 of the Northern Territory Civil and Administrative Tribunal Act 2014 (NT) (‘NTCAT Act’).

[2] Section 459E(3) of the Corporations Act.

[3] Endeavour Investments (NT) Pty Ltd v Jones [2022] NTSC 77 per Huntingford A/AsJ at [59].

[4] Endeavour Investments (NT) Pty Ltd v Jones [2022] NTSC 77 per Huntingford A/AsJ at [63].

[5] Fitness First Australia Pty Ltd v Dubow (2011) 251 FLR 241 at [103].

[6] Endeavour Investments (NT) Pty Ltd v Jones [2022] NTSC 77 per Huntingford A/AsJ at [30].

[7] [1997] FCA 751.

[8] [2019] NSWSC 455.

[9] [2021] FCA 875 (at [25]-[28]).