OSTGRO Australia Pty Ltd v Parkfeeds (WA) Pty Ltd

[2003] WASC 34

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   OSTGRO AUSTRALIA PTY LTD -v- PARKFEEDS (WA) PTY LTD [2003] WASC 34

CORAM:   MASTER SANDERSON

HEARD:   3 DECEMBER 2002

DELIVERED          :   12 MARCH 2003

FILE NO/S:   COR 296 of 2002

MATTER                :Section 459G of the Corporations Act

BETWEEN:   OSTGRO AUSTRALIA PTY LTD (ACN 094 721 070)

Applicant

AND

PARKFEEDS (WA) PTY LTD (ACN 090 803 313)
Respondent

Catchwords:

Corporations Act - Application to set aside statutory demand - Turns on own facts

Legislation:

Corporations Act, s 459G, s 459J

Result:

Statutory demand set aside

Category:    B

Representation:

Counsel:

Applicant:     Mr D F Gordon

Respondent:     Mr R A Zilkens

Solicitors:

Applicant:     Gordons

Respondent:     Zilkens & Co

Case(s) referred to in judgment(s):

Topfelt Pty Ltd v State Bank of New South Wales Ltd (1994) 12 ACLC 15

Case(s) also cited:

Energy Equity Corporation v Sinedie Pty Ltd (2002) 20 ACLC 1248

Financial Solutions Australsia Pty Ltd v Predella Pty Ltd (2002) 167 FLR 106

Gordon v McGregor (1909) 8 CLR 316

Graywinter Properties Pty Ltd v Gas & Fuel Superannuation Fund (1996) 14 ACLC 1703

Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1062

NQEA Australia Pty Ltd v ADI Ltd (1999) 17 ACLC 927

Re Louisbridge Pty Ltd [1994] 2 QdR 144

Ridgepalm Corp Pty Ltd v Vison Lab Pty Ltd [2001] WASC 108

Scanhill Ltd v Century 21 Australasia Pty Ltd (1994) 12 ACLC 111

Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 15 ACLC 1001

1. MASTER SANDERSON:  This is the return of the plaintiff's originating process seeking to set aside a statutory demand.  The application is expressed to be made pursuant to s 459G of the Corporations Act.  Counsel for the plaintiff did not either in his written or oral submissions make reference to s 459J of the Corporations Act.  Nonetheless, during the course of the hearing the statutory demand and the affidavit supporting the demand were examined in some detail.  It became clear that there was an issue as to whether or not there was a defect in the demand or the supporting affidavit which would warrant the demand being set aside under s 459J.

2. A copy of the statutory demand and the affidavit in support are to be found as annexure "RD1" to the affidavit of Raymond Kerry Desmond ("Mr Desmond"), sworn 25 September 2002 and filed in support of the application.  The amount of the debt is said to be $133,251.55.  The way in which this amount is made up is set out in a schedule to the demand.  The affidavit accompanying the statutory demand was sworn by Steven Clifford Carter ("Mr Carter").  Because of the importance of this affidavit I will set it out in full:

   "1I am a director of Parkfeeds (WA) Pty Ltd ACN 090 803 133, the creditor named in the accompanying statutory demand and I am authorised by the creditor to swear this affidavit on the creditor's behalf.

   2In May 2001 the creditor and the debtor entered into a contract upon terms specified in a document entitled heads of agreement.

   3Under clause 4 of the heads of agreement, the debtor agreed to pay the creditor 37.5c per live bird per week for the agistment of ostriches on the creditor's property.

   4Under clause 5 of the heads of agreement, the debtor agreed to purchase all feed necessary for the ostriches from the creditor at a fixed price per tonne.

   5Under clause 9 of the head of agreement the debtor, was to make payment of any invoices received from the creditor within 14 days of receipt of the invoice.

   6The debtor has failed to pay, either in part or in full, invoices numbered 7995, 7998, 8033 and 8996, particulars of which are as follows:

Description	Amount Due	Date Due	Amount Paid	Date Paid	Amount outstanding
Invoice No. 7995	$11,652.31	08.02.02	$0	-	$11,652.31
Invoice No. 7998	$28,834.41	18.02.02	$0	-	$28,834.41
Invoice No. 8033	$8,525.00	28.05.02	$7,614.20	29.05.02	$910.80
Invoice No. 8996	$8,000.00	01.07.02	$0	-	$8,000.00
Sub-total	$49,397.52
Less sum transferred from cash account	$6,091.57	11.04.02	($6,091.57)
Less overpayment of invoice no. 8966	$54.40	27.06.02	(54.40)
Total	$43,251.55

7Pursuant to clause 13 of the heads of agreement, the debtor was to pay the creditor a total of $201,667.00 in full and final satisfaction of the debt owed to the creditor by Ostrich Meat & Marketing Co, whose business the debtor took over. The repayment of the debt under clause 13 was to be by way of a payment of $111,667.00 to the creditor on or before 17 May 2001, and by instalments of $30,000.00 on 31 January 2002, 28 February 2002 and 31 March 2002.

8The debtor paid the creditor $111,667.00 on 17 May 2001 but has not made the payments of $30,000.00 each due on 31 January, 28 February or 31 March 2002.

9The debtor has failed or refused to pay the creditor $43,251.55 of the amount of due under invoices 7995, 7998, 8033 and 8996 and has failed or refused to pay the creditor $90,000.00 of the debt taken over from Ostrich Meat and Marketing Co as required under the heads of agreement.

10I believe that the amount of $133,251.55 being the debt specified in the accompanying statutory demand (the debt) and referred to in paras 6, 7, 8 and 9 above is due and payable by the debtor to the creditor.

11I believe that there is no genuine dispute about the existence or amount of the debt referred to in para 10.

12I believe all matters stated in this affidavit to be true."

1. The affidavit does not comply with the requirements of O 81G r 31(a).  But what it does do is set out in some detail the way that Mr Carter says the debt is calculated.  Based on the supporting affidavit a number of matters are clear.  First, the defendant is relying on an agreement reached between the plaintiff and the defendant in May 2001.  Second, the defendant says the plaintiff has failed to make payment of four invoices which in aggregate total $49,397.52.  Certain amounts have been credited by the defendant against these invoices, leaving an amount owing, based on the invoice, of $43,251.55.  Thirdly, in addition to amounts owing on invoices, the plaintiff allegedly owes the defendant $90,000 because it failed to make payment of $30,000 in three instalments due on 31 January 2002, 28 February 2002 and 31 March 2002.  All of that emerges with some clarity from the reading of the demand and the accompanying affidavit.  The only difficulty is that much of it is wrong. 

2. A copy of the agreement appears as annexure "SCC" to the affidavit of Stephen Clifford Carter, sworn 14 November 2002 and filed in opposition to the application.  A reading of the agreement shows that par 3, 4, 5 and 7 of the affidavit in support of the statutory demand accurately summarise the agreement.  Mr Carter has sworn a further affidavit in opposition to the application dated 13 November 2002.  Appearing as annexure "SCC1" to that affidavit is a document which Mr Carter says at par 11(1) is "a statement of all the debits (invoice amount) and credits (amount paid) on Ostgro's account with Parkfeeds".  In fact the first entry on the document is for 23 April 2001.  It shows an invoice amount of $201,667.  There then follows a series of invoices for varying amounts which were clearly rendered by the plaintiff to the defendant from time to time.  For instance, on 30 April 2001 the defendant rendered invoice no 7727 for $15,583.60.  On 2 May 2001 the plaintiff paid the defendant an amount of $13,000.  It is not entirely clear from the statement of account whether the $13,000 was in part payment of invoice no 7727 or not.  What is clear is that the defendant rendered accounts to the plaintiff from time to time and the plaintiff made payments to the defendant from time to time.  But the payments were habitually less than the invoices with the result that the indebtedness of the plaintiff to the defendant continued to grow.  It would appear that no payments were made by the plaintiff to the defendant in satisfaction of the four invoices referred to in the supporting affidavit.  For instance, invoice no 7995 was rendered on 8 February 2002 for the sum of $11,652.31. 

3. On 14 February 2002 the plaintiff paid to the defendant an amount of $30,000.  But on the plaintiff's evidence this $30,000 was paid to discharge the $30,000 which was due on 31 January 2002.  So it might well be said that the plaintiff did not make payment of invoice no 7995.  But equally it might be said that the plaintiff did not make payment on invoice no 8003 which was rendered on 3 March 2002, or invoice no 8015 which was rendered on 28 March 2002.  It is difficult to see why the defendant has settled upon the four nominated invoices as being those not paid by the plaintiff.

4. There is a further complication.  In April 2002 the plaintiff and the defendant entered into a second agreement.  That agreement appears as annexure "RD3" to the affidavit of Mr Desmond sworn 25 September 2002.  Pursuant to the terms of this second agreement the plaintiff acknowledges that it is indebted to the defendant; however the amount of the debt is not specified.  In cl 1 of the agreement there is a payment schedule which required the plaintiff to pay to the defendant $40,000 on or before 30 April 2002, $60,000 on or before 31 May 2002 and $20,000 on or before 30 June 2002.  The plaintiff says that it did make payment of this $120,000 by payments of $20,000 on 2 May 2002, $20,000 on 6 May 2002, $10,000 on 27 June 2002, $10,000 on 1 July 2002 and $60,000 on 3 July 2002 (see par 12 of Mr Desmond's affidavit sworn 25 September 2002).  The statement of account produced by the defendant records these payments.  But there is no mention of them in the affidavit accompanying the demand and it is difficult to see precisely how they have been taken into account by the defendant.

5. The question is whether, given this confused state of affairs, the demand ought be set aside under s 459J of the Corporations Act.  That section is in the following terms:

   "(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."

6. On behalf of the defendant it was argued that although the amount specified in the demand was not in all probability the amount owed by the plaintiff to the defendant and although the way in which the amount in the demand was calculated was confusing, it was nonetheless the case that the plaintiff was indebted to the defendant for an amount probably greater than the amount referred to in the demand at the date the demand was served.  It was therefore said that the plaintiff suffered no prejudice as a consequence of the confusing and inaccurate figure in the demand and there was no reason to set the demand aside.  In Topfelt Pty Ltd v State Bank of New South Wales Ltd (1994) 12 ACLC 15, Lockhart J considered the operation of s 459J in circumstances where a demand claimed money under a mortgage and a further unspecified amount as interest. His Honour held that the demand should be set aside. He said (at 28):

   "There is no evidence before the Court from the applicant of any specific injustice that it has suffered or may suffer because of the defects in the statutory demand …

   Nevertheless, it is not the obligation of the debtor company to calculate the interest which the creditor calls upon him to pay; to make certain and specific something which the creditor has left uncertain and unspecified.  Also, in winding up proceedings the Court acts not merely inter partes, but in the public interest.  An order for winding up operates in rem.  It is in the public interest that provisions of the Corporations Law which require a statutory demand to state the amount of a debt that is due and payable, should be observed."

7. If this were a mere misstatement of an amount by a few dollars, there could be no question of setting t,he demand aside.  But having read all the evidence filed on behalf of the defendant I am unable to ascertain how much it is said the plaintiff owes the defendant.  Furthermore, the basis upon which the calculation is made is still not entirely clear.  What is clear is that the way in which the calculation appears in the affidavit in support of the demand is wrong.  It does not take into account the second agreement and the payments made pursuant to that agreement.  In my view the situation is such that the demand ought be set aside under s 459J.

8. I will hear the parties as to costs.