Raffles Co Pty Ltd v Cech

[2001] QSC 129

SUPREME COURT OF QUEENSLAND

CITATION:

Raffles Corporation Pty Ltd  v  Cech [2001] QSC 129

PARTIES:

RAFFLES CORPORATION PTY LTD
(ACN: 088 517 435)
(applicant)
v
DUSAN CECH and CORNELIA CECH
(respondents)

FILE NO:

S2678/01

DIVISION:

Trial Division

PROCEEDING:

Application to Set Aside Statutory Demand

DELIVERED ON:

4 May 2001

DELIVERED AT:

Brisbane

HEARING DATE:

30 April 2001

JUDGE:

Wilson J

ORDER:

1.        That the application be dismissed

2.        That the applicant pay the respondents’ costs of            and incidental to the application to be assessed on            the standard basis.   

CATCHWORDS:

CORPORATIONS – PRACTICE AND PROCEDURE – application to set aside statutory demand – whether genuine dispute about existence/amount of debt exists – whether further grounds in support of application can be raised more than 21 days after the statutory demand is made

Corporations Law (Cth), s 459G, s 459H

D & S Group of Companies v O’Connor Investments Pty Ltd (1997) 15 ACLC 1,794, followed.
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265, cited.
Eden Bay Pty Ltd v Bennett (1997) 15 ACLC 1,634, followed.
Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 14 ACLC 1,703, followed.

COUNSEL:

P Kelly (not of counsel - by leave) for the applicant
EJ Morzone for the respondents

SOLICITORS:

Swanwick Murray Roche for the respondents

1. WILSON J: This is an application under Part 5.4 Division 3 of the Corporations Law to set aside a statutory demand on the ground that there is a genuine dispute about the existence or amount of the debt to which the notice relates. See s 459H.

1. The demand, which was dated 28 February 2001, was for $10,916.16 moneys allegedly owing pursuant to a lease of bottleshop premises in Rockhampton between the creditors (Dusan and Cornelia Rosa-Maria Cech) as lessors and the applicant as lessee.  The amount claimed in the demand was for rent, interest on unpaid rent, legal costs and telephone charges.

1. Of the amount claimed, the applicant conceded that $7,683.57 is owing (as per a handwritten schedule signed by the applicant’s director Peter Kelly and provided to the Court).  The balance of $3,232.59 is disputed by the applicant.  As I understood Mr Kelly’s submissions, the remaining dispute relates to rent for June 2000 and January 2001, the quantum of the interest claimed by the creditors, $395.42 legal costs (out of total legal costs claimed of $1,795.42) and telephone charges of $8.45.

1. In an affidavit sworn by Mr Kelly on 20 March 2001 and filed on 22 March 2001 in support of the application to set aside the demand, the applicant relied only on the following grounds: -

“2.Raffles entered into a Lease with D & C Cech Family Discretionary Trust ABN 39 917 195 541 Not Mr and Mrs Cech as set out in the Affidavit by Mr Dusan Cech.

3.The final adjustment for tiles, labour and painting is to be deducted from the lease amount.”

1. As to the first ground, the lease document is in evidence.  The lessors were Mr and Mrs Cech.  They admit that they entered into the lease in their capacity as trustees.  However, a trust is not a separate legal entity and this is not a ground for setting aside the statutory demand.

1. The second ground relates to a deduction of $2,500.00.  It is clear from the schedule attached to the statutory demand that this amount was deducted in calculating the amount of the demand.

1. Outside the 21 day period allowed for making an application to set aside a demand (s 459G(2)), the applicant sought to raise the following further grounds: -

(1)The commencement date of the lease. 

This is shown on the lease document as 10 June 2000.  The lease was executed by the lessors on 17 May 2000.  The date of execution by the applicant lessee is not shown.  However, the document was stamped on 3 July 2000 and so must have been executed by both parties before then.  The calculation of the amount owing in the schedule attached to the statutory demand included rent from 10 June 2000 and interest thereon.  The applicant asserts an oral agreement made in discussions between Brad McNamara and Peter Kelly on behalf of the applicant and Dusan Cech between June and November 2000 that the lease should commence from 10 July 2000.

(2)That the lease was terminated on 2 January 2001 and that accordingly the applicant is not liable for rent claimed for January.

There was no sworn evidence to this effect, but I understood that, given the opportunity, Mr Kelly was prepared to give oral evidence.

(3)The disputed interest calculation. 

Clause 2.4 of the lease provides that “additional rent” should be payable on any late payment at the rate of 2% per month or any part of a month, the additional rent being payable on demand.  The applicant asserts that the creditors have calculated “interest on interest” (presumably compound interest) and that they are not entitled to do this.

(4)Disputed claims for legal expenses and telephone charges. 

Clause 2.1(g) of the lease entitled the creditors to: -

“all reasonable costs and expenses incurred by [them] in relation to any notice given to the [applicant] in accordance with this Lease, lawful determination or attempted determination of this Lease, the surrender of this Lease, the granting of any consent, proceedings lawfully brought by the [creditors] to enforce the [applicant’s] performance and obligations under this Lease.”

1. The creditors’ counsel relied on the decision of the South Australian Supreme Court in D & S Group of Companies Pty Ltd v O’Connor Investments Pty Ltd (1997) 15 ACLC 1,794 in support of a submission that no account could be taken of any affidavits filed outside the 21 day period insofar as they raised any ground not identified in the affidavit filed within that period. Reliance was placed on David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265. This point was well taken. Under s 459G “an affidavit supporting the application” must be filed within the 21 days. The affidavit must disclose facts showing a genuine dispute, but it need not go into evidence: as Sundberg J held in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 14 ACLC 1,703, the supporting affidavit filed within the 21 days may read like a pleading. It may be supplemented in the sense that a further affidavit containing evidence proving the facts asserted in that affidavit may be filed after the 21 days. Indeed on the hearing of the application only admissible evidence can be relied upon. However, evidence supporting some other grounds not raised in the affidavit filed within the 21 days may not be relied upon. See also Eden Bay Pty Ltd v Bennett (1997) 15 ACLC 1,634. Accordingly, the present applicant may not rely on grounds not set out in the affidavit filed within the 21 days.

1. Even if that were not the case, the applicant concedes that $7,683.57 is owing.  That amount was not paid within the period allowed by the demand, and to that extent the demand would be valid.

1. Non-compliance with the demand has given rise to a presumption of insolvency, which may be relied upon as the basis for a winding up.

Orders:

1. That the application be dismissed.

1. That the applicant pay the respondents’ costs of and incidental to the application to be assessed on the standard basis.