Kezarne Pty Ltd v Vital Security System Pty Ltd

[1996] FCA 553

IN THE FEDERAL COURT OF AUSTRALIA           ) 
  )  
NEW SOUTH WALES DISTRICT REGISTRY          )  No NG 3343 of 1996
  )  
GENERAL DIVISION  )     

BETWEEN:           KEZARNE PTY LTD

Applicant

AND:  VITAL SECURITY SYSTEM PTY LTD

Respondent

Coram:        Davies J.
Date:           14 June 1996
Place:          Sydney

REASONS FOR JUDGMENT

The question before me is whether a valid application has been lodged pursuant to s.459G of the Corporations Law. That section provides:-

"459G(1)A company may apply to the Court for an order setting aside a statutory demand served on the company.

(2)An application may only be made within 21 days after the demand is so served.

(3)An application is made in accordance with this section only if, within those 21 days:

(a)an affidavit supporting the application is filed with the Court; and

(b)a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company."

Section 459H relevantly provides:-

"459H (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;

..."

In this case, the application as lodged was filled out by a solicitor in handwriting and read:-

"Application under Section 459G of the Corporations Law

On the grounds appearing in the accompanying affidavit the applicant claims

1.That there is no genuine dispute concerning the debt in the statutory demand of Vital Security System P/L.

2.Costs."

The application was supported by a handwritten affidavit, apparently also written out by the solicitor, but sworn by the project manager of the applicant company, Kezarne Pty Ltd, which read:-

"In the Federal Court of Australia

New South Wales District Registry

General Division

Vital Security System P/L & Kezarne P/L

Affidavit under Section 459E of the Corporations Law

on the 31st May 1996, I Sandra Voo of 16/37 Byron St, Coogee, project manager say on oath:-

1.  I believe that there is no genuine dispute about the existence of the debt referred to in the Statutory Demand served on Kezarne P/L on the 13 May 1996

2.Kezarne P/L was not the contracting party with Vital Security System & therefore does not owe any money to it."

The issue is whether these documents constitute the making of a valid application for an order setting aside a statutory demand under s.459G in accordance with Order 71, rule 36B of the Federal Court Rules which provides:-

"36B. An application under subsection 459G(1) of the Corporations Law must be made in accordance with Form 5 and must be accompanied by an affidavit:

(a)stating any material facts relied upon by the applicant in support of the application; and

(b)identifying the grounds on which it is said that the Court should make an order under section 459H or 459J of the Corporations Law setting aside the demand."

It seems to me that there is, on the face of the application, a patent error, and that anyone looking at the document would understand that it was intended to be an application under s.459G of the Corporations Law, which is the section referred to. I am of the opinion that there was therefore an application for an order setting aside a statutory demand within the terms of Order 71, rule 36B. I think that is clear from the face of the document, although the order sought therein is not so expressed.

The application is supported by an affidavit to which, in a matter such as this, one is entitled to have regard, for s.459G requires there to be both an application and a supporting affidavit. The supporting affidavit states, in precise terms, that the company, Kezarne Pty Ltd, was not the contracting party with the creditor which served the statutory demand and goes on to say:

"... and therefore [Kezarne] does not owe any money to it."

Reading that, it seems to me to be clear enough that there was an application made under s.459G for an order setting aside the statutory demand and that the application was made on the ground set out in para. 459H(1)(a), namely, that there was a genuine dispute between Kezarne Pty Ltd and Vital Security System Pty Ltd about the existence of the debt.

The application and the affidavit both state that "there is no genuine dispute concerning the debt in the statutory demand", but that is a patent error and the opposite was meant.  It is clear that both the application and affidavit were written in a hurry by someone who did not give proper attention to what he or she wished to convey.

Although the documents were very poorly drafted, there was substantial compliance with provisions of s.459G and with the requirements in Order 71, rule 38B(3).

It follows that I am of the opinion that there was a valid application and that the application can be amended so as to set out expressly what I would imply from the documents themselves.  I shall remit the matter to the Registrar to deal with the application.  I do not think I need do any more.  I have not made an order as to amendment but, there being a valid application, the Registrar will consider this matter.

As to costs, I am of the opinion that I should make no order as to costs.  I think that the documents were very poorly drafted and caused costs to be incurred and that each party should abide its own costs of the matter. 

I certify that this and the 4 preceding pages
are a true copy of the reasons for judgment herein of
the Honourable Justice Davies.

Associate:

Date:   14 June 1996

Counsel for the applicant:  M.R. Gracie

Solicitor for the applicant:  Creedon Lawyers

Counsel for the respondent:                  W.G. Murphy (Solicitor)

Solicitor for the respondent:                 Bartier Perry & Purcell

Date of hearing:  14 June 1996

Date of judgment:  14 June 1996