Re Coles Supermarkets Australia Pty Ltd
[2022] VSC 438
•28 July 2022 (given ex tempore, revised 11 August 2022)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2022 02169
IN THE MATTER of COLES SUPERMARKETS AUSTRALIA PTY LTD
(ABN 45 004 189 708)
BETWEEN:
| COLES SUPERMARKETS AUSTRALIA PTY LTD (ABN 45 004 189 708) | Plaintiff |
| v | |
| AMBER STACEY GA | First Defendant |
| WENICO GA, JR | Second Defendant |
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JUDGE: | Hetyey AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 July 2022 | |
DATE OF JUDGMENT: | 28 July 2022 (given ex tempore, revised 11 August 2022) | |
CASE MAY BE CITED AS: | Re Coles Supermarkets Australia Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2022] VSC 438 | Second Revision: 15 August 2022 |
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CORPORATIONS – Corporations Act 2001 (Cth) – Part 5.4 – Insolvency – Statutory demand – s 459G – Application to set aside statutory demand – Underlying employment dispute relating to COVID-19 vaccination policy – Where alleged acceptance of contractual terms by silence – s 459E(2) – Failure to properly particularise or explain debt claimed – s 459J(1)(a) – Defect in demand – Where substantial injustice caused unless set aside – s 459E(3) – Failure of affidavits in support of demand to properly verify debt – Affidavits in support of demand not properly witnessed – s 459E(1) – Where demand claims debt that is not due and payable – Meaning of ‘debt’ – s 459J(1)(b) – Some other reason to set demand aside – s 459H(1)(a) – Where genuine dispute about existence of debt – Statutory demand set aside.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms S Hooper | Norton Rose Fulbright |
| The Defendants appeared in person | Self-represented litigants |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
Background......................................................................................................................................... 1
Procedural history.............................................................................................................................. 5
Material relied on............................................................................................................................... 8
Statutory provisions and legal principles..................................................................................... 8
Section 459J grounds....................................................................................................................... 11
Defects in statutory demand............................................................................................ 11
Problems with affidavits in support of demand........................................................... 14
No debt due and payable................................................................................................. 16
Genuine dispute grounds............................................................................................................... 18
Conclusion and costs....................................................................................................................... 20
HIS HONOUR:
Introduction
Amber Stacey Ga and Wenico Ga, Jr. (‘Amber’ and ‘Wenico’,[1] respectively, and ‘the defendants’, collectively), who are married and appear today as self-represented litigants, are former employees of Coles Supermarkets Australia Pty Ltd (‘the plaintiff’ or ‘Coles’). Because the defendants declined to be vaccinated in accordance with a COVID-19 vaccination policy for Coles employees, Coles terminated their employment. However, it is not the role of this Court to determine the fairness or lawfulness of that decision in this proceeding. Instead, this proceeding is concerned with the narrow question of whether a statutory demand issued by the defendants against Coles on 16 May 2022 for the sum of $6,028,250 (‘the statutory demand’ or ‘the demand’) should be set aside pursuant to ss 459G, 459H and 459J of the Corporations Act 2001 (Cth) (‘the Corporations Act’) on the basis that there is a genuine dispute about the existence of the debt claimed in the demand, because of alleged defects in the demand or, alternatively, for ‘some other reason’.
[1]At the initial return of this matter, the defendants specifically requested that the Court refer to them as by their first names.
Background
Before the termination of her employment, Amber was employed by Coles as a team member in the bakery department of the Sippy Downs store in the Sunshine Coast region, Queensland. Amber’s employment was terminated with four weeks’ notice on 30 May 2022 which took effect on 27 June 2022. Wenico’s employment with Coles was terminated with five weeks’ notice on 27 May 2022 and took effect on 1 July 2022. Before that time, Wenico was employed as a customer service agent at Coles’ Maroochydore store, also in the Sunshine Coast, where he was involved in the delivery of online grocery orders.
Coles introduced its COVID-19 vaccination policy in November 2021 (‘the Policy’). The Policy required employees in Queensland to be vaccinated against COVID-19 by 25 February 2022, or have an approved exemption, in order to continue to work on site. The defendants did not obtain COVID-19 vaccinations by that time or receive exemptions.
Prior to the implementation of the Policy, on 9 July 2021, the defendants emailed a letter to their respective Coles store managers, titled ‘Notice of Conditional acceptance to Offer’. In that letter the defendants stated they did not consent to being offered ‘a medical product now or in the future, including but not limited to an alleged COVID‑19 ‘vaccine’, flu vaccine and any or all medical devices including but not limited to a face mask or face covering’. They also sought various information from Coles, including details of the efficacy and safety of COVID‑19 vaccines, COVID‑19 tests and the use of face masks. The letter also gave notice of various ‘fees’ the defendants would charge upon the occurrence of certain events specified in a ‘fee schedule’, including hourly administration fees, a $2 million fee for ‘compensation for any discrimination event of any kind … per person, per incident’ and a further $2 million fee for ‘all breaches or restrictions of … Universal Human Rights’, and a $4 million ‘non-negotiable joinder fee’ for any person seeking to become a party to the contract said to be constituted by the letter.
On 19 July 2021, the defendants further corresponded with their respective store managers by email in a letter titled ‘Notice of Default’. The letter asserted that because Coles had not provided the defendants with the requested information, Coles was bound by the terms and conditions set out in the earlier correspondence. The letter included a ‘fee schedule’ in the same or similar terms as the previous ‘fee schedule’. A further letter titled ‘Final Notice of Default’ was emailed by the defendants to the relevant Coles store managers on 27 July 2021. Again, the letter included a ‘fee schedule’ and asserted that Coles had acquiesced to the terms and conditions previously set out.
On 4 August 2021, the defendants again emailed their Coles store managers, along with the chief executive officer (‘CEO’) of Coles and the Queensland State General Manager of Coles, attaching purported contracts between the defendants and those persons, but not Coles itself (‘the purported contracts’). Each of the purported contracts is said to ‘confirm the commencement of the contract that was entered into by … acquiescence to the previous three notices’ and contains a ‘fee schedule’ in the form previously provided. The purported contracts were signed by the defendants and witnessed by Judith Groves and Shaun Groves. They were not signed by any of the other named parties or Coles.
On 25 February 2022, Wenico attended his workplace without a vaccination exemption. Later that day, Ms Lucy Tehan, an employee relations specialist employed by Coles, sent him an email confirming that his application for a medical exemption was denied and directing him not to attend work until he complied with the Policy. The email also stated that Coles ‘[did] not accept the nature of [Wenico’s] correspondence which purports to impose obligations, including personal and financial liability on Coles and individual Coles’ [sic] personnel’. Correspondence was also sent to Amber on 25 March 2022 confirming she was not permitted to work as she had failed to comply with the Policy.
On 28 February 2022, Wenico sent a document styled ‘Notice to cease and desist’, together with attachments, to Ms Tehan, Mr Steven Cain as Coles CEO, the Store Manager of Maroochydore Coles and others, claiming, amongst other things, that Coles had not ‘demonstrated compliance with employment laws and contract laws’ and had committed actions ‘of a criminal nature’ (‘the 28 February 2022 notice’). The document also referred to prior notices sent to Coles in July and August 2021. Like the earlier documentation, the document included a ‘fee schedule’ in the same or similar terms as the previous ‘fee schedules’ but including a new item for ‘punitive damages for loss of wages’. The ‘fee schedule’ was said to be accepted by Coles in the event Coles terminated Wenico’s employment. The notice also made Coles an offer to ‘buy-out’ Wenico’s employment contract for the amount of $836,000 or to find him alternative work at Coles. In the event Coles opted to terminate Wenico’s employment and not take up any of the alternatives put forward, it was stated that Coles would be taken to have accepted the fee schedule.
On 2 March 2022, Mr Jason Goyal, Coles’ legal counsel, responded to the 28 February 2022 notice by letter, specifically rejecting any allegations that Coles had contravened its contract of employment with Wenico and maintaining that given Wenico had not complied with the Policy, he had demonstrated that he was not ready, willing and able to perform his work duties. The letter also stated that whilst every assertion made by Wenico was not specifically responded to, any silence by Coles should not be interpreted as acceptance of those assertions.
Following this communication from Coles, the defendants sent various other notices, invoices and emails to Coles and/or its representatives claiming alleged damages and debts purportedly resulting from the plaintiff’s enforcement of the Policy. For example, on 4 March 2022, Wenico emailed a document titled ‘Notice of Breach’ addressed to Mr Goyal and other Coles personnel. In the notice, Wenico asserted the Policy was ‘not included in [his] original [employment] contract and therefore [could not] be added to [his] contract without [his] consent’. The notice also relevantly stated:
… we reject your claims and you are in breach, therefore Steven Cain, acting as CEO for Coles Supermarkets, Agents, Successors and Assigns, will find attached our invoice for breach as previously notified. We reserve the right to issue invoices to any other parties should we choose, at any time. Invoices must be paid within seven (7) days.
The notice dated 4 March 2022 attached an invoice in the sum of $8,020,000 addressed to ‘Steven Cain Acting as CEO for Coles Supermarkets Australia Pty Ltd ABN 45 004 189 708’ comprised of a number of the fees set out in the previous ‘fee schedules’ (‘the 4 March 2022 invoice’). The 4 March 2022 invoice was purportedly amended that same day to the lesser sum of $6,022,000, including ‘Compensation per discrimination event (Religious and Disability)’ in the sum of $2 million, ‘Breach of Universal Human Rights’ in the sum of $2 million, together with administration fees and loss of wages. On 13 March 2022 and 28 March 2022, Wenico issued further invoices to Mr Cain ‘[a]cting as CEO for Coles Supermarkets’, each titled ‘Invoice Overdue’ and for the sums of $6,024,050 and $6,028,050, respectively. The second of these is for the same sum as the amount claimed in the statutory demand. Additional ‘notice[s] of default for overdue payment’ were then issued by the defendants jointly on 20 April 2022 and 30 April 2022 to Mr Cain seeking payment of this same amount. The defendants appear to have then posted the statutory demand and accompanying affidavits to the plaintiff on 17 May 2022. I will return to the characteristics of the demand and the supporting affidavits shortly.
An email was sent by the defendants to Mr Cain on 9 June 2022 attaching the 4 March 2022 invoice and the invoices of 13 March 2022 and 28 March 2022 which they said needed to be attached to the statutory demand.
Procedural history
The plaintiff filed its application to set aside the statutory demand on 14 June 2022. The application was first returnable before the Court on 15 July 2022, at which time the Court made orders permitting the defendants to file and serve short written submissions in reply to the plaintiff’s submissions filed on 14 July 2022 and adjourning the matter for final hearing until today.[2]
[2]In addition, on 15 July 2022 Delany J made an order that the originating process filed on 14 June 2022 be referred to an Associate Judge for hearing and determination pursuant to rule 77.05 of the Supreme Court (General Civil Procedure) Rules2015 (Vic) and, if required, also pursuant to rule 16.1(3) of the Supreme Court (Corporations) Rules 2013 (Vic). The order was made because in its originating process the plaintiff initially also sought a declaration pursuant to s 36 of the Supreme Court Act 1986 (Vic), and all other enabling powers, that the statutory demand is null and void and of no force or effect. However, at the initial hearing on 15 July 2022, counsel for the plaintiff indicated that this declaratory relief was no longer pressed. As a consequence, it is not addressed in these reasons.
For the sake of completeness, I will briefly deal with a number of points raised by the defendants concerning their identity and the manner in which they appear in this proceeding.
Towards the end of the initial hearing on 15 July 2022, Amber and Wenico submitted that whilst the defendants had issued the statutory demand and had been served with the plaintiff’s application to set it aside, they denied being the defendants themselves and instead maintained that they were ‘attorneys of record for the defendants … representing legal fictions’ and ‘administering the estates for those legal fictions’, ‘in the all capital name’.[3]
[3]Transcript of Proceeding Re Coles Supermarkets Australia Pty Ltd (Supreme Court of Victoria, S ECI 2022 02169, Hetyey AsJ, 15 July 2022) (‘Transcript’) 17-19.
In a notice of appearance dated 4 July 2022, Amber and Wenico entered an appearance for the named defendants as ‘Attorney of Records … appearing under duress for the beneficiaries as the Defendants are the injured party in this matter’. In statutory declarations dated 7 July 2022 and filed in the proceeding, Amber and Wenico say they each ‘deposited the natural person into a private trust’ (which I understand to be called ‘the Mane Trust’), in respect of which Amber has been appointed power of attorney. In their written submissions dated 25 July 2022, the defendants assert that ‘Amber, the woman, and Wenico, the man, are the Creditor’s [sic] and acting as agent for the Defendants, whom in the legal realm, the Defendants are seen as the Creditor’s [sic]’.
The defendants appear to be seeking to draw a distinction between themselves as ‘natural’ or ‘living’ persons, on the one hand, and their status as ‘legal’ personalities, on the other. However, contemporary Australian law does not distinguish between a human being and their legal personality.[4] Any such distinction would potentially leave a human being without legal rights, which would be unacceptable in modern society.[5] The contentions put forward by the defendants in this regard are artificial and have no legal consequence.
[4]See R v Sweet [2021] QDC 216 [6] (Judge Cash).
[5]Ibid.
I am satisfied on the material available to me that the statutory demand was issued by the named defendants and that the defendants were personally served with the plaintiff’s application to set the demand aside within the requisite 21 day statutory period. I am also satisfied that Amber and Wenico appear unconditionally as the named defendants in the proceeding. The mere fact that they have been served with an application to set aside the demand they have issued does not place them under duress.
The hearing today was arranged to be heard via audio visual link using videoconference technology. At the commencement of the hearing, the defendants requested that the Court restrict the number of people permitted to observe the proceeding. It was confirmed by counsel for Coles that the observers were employees of Coles and its external lawyers.
The principle of open justice is not absolute and can be limited in the exercise of the Court’s inherent jurisdiction where it is necessary to secure the proper administration of justice.[6] The provisions of the Open Courts Act 2013 (Vic) (‘the Open Courts Act’) confirm that the principle of open justice can be displaced where the circumstances make it necessary.[7] Whilst a ‘closed court order’ may be made under s 30 of the Open Courts Act, s 28 of that legislation states:
[6]Hogan v Hinch (2011) 243 CLR 506, 531 (French CJ); Carroll v Goff [2021] VSCA 267 (‘Carroll’) [106] (Maxwell P, Kennedy and Walker JJA).
[7]Open Courts Act 2013 (Vic) ss 4, 28; Carroll [106].
(1)In determining whether to make any order, including a closed court order, a court or tribunal must have regard to the primacy of the principle of open justice and the free communication and disclosure of information which require the hearing of a proceeding in open court.
(2)A court or tribunal should only make a closed court order—
(a)that the whole or any part of a proceeding be heard in closed court or closed tribunal; or
(b)that only specified persons or classes of persons may be present during the whole or any part of a proceeding—
if the specific circumstances of a case make it necessary to override or displace the principle of open justice and the free communication and disclosure of information which require the hearing of a proceeding in open court.
The defendants did not identify any circumstances of this case which were sufficient reason to displace the principle of open justice, or to justify the making of an order closing the Court to members of the public or additional observers associated with Coles. Nor was such an order necessary to secure the proper administration of justice. Further, there is nothing about the character of this proceeding or the nature and function of the Court in this proceeding which suggests the principle of open justice should be limited.[8] Accordingly, I refused the defendant’s request to close the Court and/or restrict the number of persons able to observe the hearing.
[8]See Carroll [106].
Material relied on
The plaintiff relies on the affidavits and exhibits of Lucy Tehan affirmed on 13 June 2022 and 11 July 2022; affidavits of service of Mitchell Glover affirmed 23 June 2022; and written submissions dated 14 July 2022. The defendants, in turn, rely on the following material in opposition to the application: the statutory declaration of Amber dated 7 July 2022; the statutory declaration of Wenico dated 7 July 2022; the affidavit of Amber affirmed on 7 July 2022; the affidavit of Wenico affirmed on 7 July 2022; an ‘amended’ version of the statutory demand dated 7 July 2022; an ‘amended’ affidavit of Amber in support of the demand made 7 July 2022; an ‘amended’ affidavit of Wenico in support of the demand made 7 July 2022; and written submissions of the defendants dated 25 July 2022.
Statutory provisions and legal principles
I turn now to the relevant statutory provisions and principles. At the hearing on 15 July 2022, I read out and explained the relevant statutory provisions to the defendants given their status as self-represented litigants to ensure they were able to engage with the submissions and materials put forward by Coles in seeking to set aside the demand.
Section 459E of the Corporations Act relevantly 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;
…
(2) The demand:
(a)if it relates to a single debt--must specify the debt and its amount; and
…
(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 relevantly states:
(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 the statutory period[9] after the demand is so served.
[9]The term ‘statutory period’ is defined in s 9 of the Corporations Act 2001 (Cth) as: ‘(a) if a period longer than 21 days is prescribed--the prescribed period; or (b) otherwise--21 days’.
Section 459H(1) of the Corporations Act relevantly provides:
This section applies where, on an application under section 459G, the Court is satisfied …
(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
Having regard to the relevant case law, the following are a number of well-established statements of principle that define what constitutes a genuine dispute for the purpose of s 459H(1) of the Corporations Act:
(a) for a dispute to be ‘genuine’ it must be ‘bona fide and truly exist in fact’;[10]
[10]Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 (‘Spencer Constructions’) 464 (Northrop, Merkel and Goldberg JJ), cited with approval by the Victorian Supreme Court of Appeal in Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in Liq) [2015] VSCA 330 (‘Malec’) [49] (Kyrou, Ferguson and Kaye JJA).
(b) ‘the grounds for alleging the existence of a dispute … [must be] real and not spurious, hypothetical, illusory or misconceived’;[11]
[11]Spencer Constructions 464, cited with approval in Malec [49].
(c) the dispute must have a ‘sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile … Something “between mere assertion and the proof that would be necessary in a court of law” may suffice’;[12]
[12]TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd (2008) 66 ACSR 67 (‘TR Administration’) 79 (Dodds-Streeton JA); Malec [49].
(d) a genuine dispute may involve a ‘plausible contention requiring investigation’ and raise the same sort of considerations as the ‘serious question to be tried’ test that applies in the case of interlocutory injunctions;[13]
[13]Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd (2013) 85 NSWLR 601 (‘Britten‑Norman’) 608 [31] (Beazley P, Meagher and Gleeson JJA); Malec [48].
(e) the Court should not uncritically accept statements about an alleged genuine dispute which are ‘equivocal, lacking in precision, inconsistent with undisputed contemporary documents … or inherently improbable … ’;[14]
(f) if the dispute appears to be something ‘merely created or constructed in response to the pressure represented by the service of the statutory demand’, then it is not advanced in good faith and will not be regarded as genuine;[15] and
(g) whilst the underlying nature of the dispute about the existence of a debt ‘must be exposed’, the Court will not deal with the merits and nothing of substance will be decided.[16]
[14]Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, 787 (McLelland CJ in Eq), cited with approval by the Victorian Supreme Court of Appeal in TR Administration 78 [64] and Malec [50].
[15]Creata (Aust) Pty Ltd v Faull (2017) 125 ACSR 212, 224 [47] (Barrett AJA, with Gleeson and White JJA agreeing). See also JJMMR Pty Ltd v LG International Corp [2003] QCA 519 [18] (McPherson JA) where the same point was made in respect of an offsetting claim.
[16]Quadrant Constructions Pty Ltd v HSBC Bank Australia Ltd [2004] FCA 111 [4] (Finkelstein J). See also Malec [48].
The hurdle for establishing a genuine dispute claim is a relatively low one and an applicant must satisfy the Court that such a dispute exists on the balance of probabilities.[17]
[17]See Farid Assaf, Assaf’s Winding Up in Insolvency (3rd ed, Lexis Nexis, 2021) (‘Assaf’s Winding Up in Insolvency’) [6.25] citing Re Speedy Loans Pty Ltd [2014] VSC 273 [17] (Gardiner AsJ); Moyall Investments Services Pty Ltd v White (1993) 12 ACSR 320, 324 (Ryan J); Southern Canola Producers Pty Ltd v Painter Griffith & Associates (1997) 15 ACLC 956 (Santow J) and Sterling Estates (SA) Pty Ltd v Bradley (2000) 34 ACSR 177 [16] (Hamilton J).
Section 459J of the Corporations Act 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.
The term ‘defect’ in the context of s 459J(1)(a) means ‘a lack or absence of something necessary or essential for completeness; a shortcoming or deficiency; an imperfection’.[18] The question of whether a defect will cause substantial injustice unless a demand is set aside depends on the nature of the particular defect identified and the surrounding circumstances.[19]
[18]Topfelt Pty Ltd v State Bank of NSW Ltd (1993) 12 ACSR 389, 392 (Lockhart J). See also Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2015) 104 ACSR (‘Wollongong Coal’) 425, 445-6 [108] (Wigney J).
[19]Condor Asset Management Ltd v Excelsior Eastern Ltd (2005) 56 ACSR 223, 231 [25] (Barrett J); Randall Pty Ltd v Chepan Pty Ltd [2009] NSWSC 848 [15] (Barrett J); Re MHC Pathology Pty Ltd (2020) 356 FLR 222 (‘Re MHC Pathology’) [64]–[66], [75].
Whilst the discretion conferred under s 459J(1)(b) of the Corporations Act to set aside a statutory demand for ‘some other reason’ is broad, a judge should not set aside a demand under s 459J(1)(b) simply because she or he subjectively considers it fair to do so.[20] The Court’s power under this sub-section exists to maintain the integrity of the statutory demand procedure in Part 5.4 of the Corporations Act and to counter its subversion.[21] Non-compliance with the requirements of s 459E(3) that the demand be accompanied by an affidavit verifying the debt claimed will justify the setting aside of the demand under s 459J(1)(b) of the Corporations Act.[22] Further, the absence of a specific reference to the nature of the debt in the affidavit in support of a demand may also warrant its setting aside under s 459J(1)(b) of the legislation.[23]
[20]Meehan v Glazier Holdings Pty Ltd (2005) 53 ACSR 229, 240 [60]–[61] (Santow and Tobias JJ, and Young CJ in Eq); Re MHC Pathology at [64]–[66], [75].
[21]Rinfort Pty Ltd v Arianna Holdings Pty Ltd (2016) 111 ACSR 607, 633 [84] (Black J; Re MHC Pathology at [64]–[66], [75].
[22]Wollongong Coal at [83]–[84]; ReNanevski Developments Pty Ltd (No 2) [2019] NSWSC 1217 [7] (Rees J).
[23]AMD Resources Ltd v TRS Management Pty Ltd [2021] VSC 202 (‘AMD Resources’) [37] (Randall AsJ); Re Simmoll [2021] VSC 693 [37] (Hetyey AsJ).
Section 459J grounds
It is convenient to firstly deal with the grounds raised by the plaintiff under s 459J.
Defects in statutory demand
Coles observes that the demand is addressed to ‘Steven Cain, acting as Chief Executive Officer for COLES SUPERMARKETS c/- 800 Toorak Road, Hawthorn East Victoria 3123 (“the company”).’ It is submitted that it is not clear on the face of the demand whether the debtor is said to be Coles, another Coles entity, or Mr Cain personally. It is also pointed out that a company search for Coles confirms that its registered office is in fact 800-838 Toorak Road, Hawthorn East VIC 3123. I am not satisfied that either of these apparently minor defects has caused Coles any substantial injustice for the purpose of s 459J(1)(a) of the Corporations Act.[24] In particular, I accept that the reference to Mr Cain was not intended to refer to him as the debtor. The title to the demand refers to ‘the company’ in parentheses and suggests the demand was always intended to be issued to a corporate debtor. The affidavits in support of the demand also refer to the correct ABN for the plaintiff.
[24]See Hornet Aviation Pty Ltd v Ansett International Air Freight (1994) 16 ACSR 21, upheld in Hornet Aviation Pty Ltd v Ansett International Air Freight (1995) 16 ACSR 445.
However, the demand suffers from the following more significant defects:
(a) the demand identifies the debt as being ‘made up of the following items’, but only lists a single item being ‘[the 4 March 2022 invoice], issued for’ purported breaches of two contracts in respect of the defendants being stood down without pay ‘as per Fee Schedule in … Notice of Confirmation emailed on 4th August 2021.’ The fact that the defendants say they are not legally trained is not an adequate answer to this defect;
(b) the demand does not attach the invoice dated 4 March 2022 to which it refers, nor does it specify, particularise or attach the contracts said to have been breached. Again, although the defendants submit they were unaware that they ought to have provided the invoices apparently the subject of the demand, that does not redress this issue;
(c) in any event, Wenico appears to have sent Coles personnel two invoices dated 4 March 2022, both of which are for different sums than the amount claimed in the demand. I note the defendant’s submission that there was only one invoice issued and therefore can only be one payment. As the chronology I have set out makes clear, that statement is factually incorrect;
(d) neither the 4 March 2022 invoice nor the revised invoice sent later that day bears Amber’s name. The invoices were only issued in the name of Wenico. It is therefore unclear on what basis Amber has signed the statutory demand which purportedly relies on the 4 March 2022 invoice and how she claims to be a creditor of Coles; and
(e) it is unclear whether the defendants are referring in the demand to their employment contracts with Coles or the purported contracts. Although the defendants say the invoice details apparently match the fees set out in previous notices provided, this would not enable Coles to ascertain the purported contractual basis for the demand.
In the case of Re Simmoll Pty Ltd,[25] I said that:
… a statutory demand and, by extension, its accompanying affidavit, must put the debtor company on notice in an unambiguous way of the matters the legislation requires, including: the nature of the debt;[26] a statement that the debt is due and payable;[27] and an explanation of how the amount claimed is composed or calculated.[28] Although a debtor company can be presumed to have some familiarity with the relevant subject matter of the statutory demand, it is not obliged to speculate upon what it is that the creditor demands.[29] At the same time, whilst a failure to specify in the demand the precise legal basis of the debt claimed may constitute a defect, it will not necessarily be causative of substantial injustice sufficient to justify its setting aside.[30]
[25][2021] VSC 693 [29] (‘Re Simmoll’).
[26]LSI Australia Pty Ltd v LSI Holdings Ltd [2007] NSWSC 1406 (‘LSI Australia’) [54] (Austin J); Patonga Beach [18] (Austin J); and Business to All [11] (Hammerschlag J).
[27]Main Camp Tea Tree Oil Ltd v Australian Rural Group Ltd (‘Main Camp’) [23] (Barrett J).
[28]RadioMio Pty Ltd v Kendell (2011) 254 FLR 33, 46 [56] (Gardiner AsJ).
[29]Assaf’s Winding Up in Insolvency [8.19], citing Main Camp [37] and Embleton Motor Co Pty Ltd v Saedi [2014] WASC 308 [7] (Master Sanderson).
[30]Assaf’s Winding Up in Insolvency [8.38], citing Aspermont Ltd v Robash Pty Ltd (1998) ACLC 485; Arrow Asset Management Pty Ltd v Sportsworld Group plc [1999] NSWSC 1207.
In my view, the statutory demand is vague and ambiguous because it fails to explain to a reasonable person in the position of the director of the plaintiff the general nature of the alleged debt in order for that person to ascertain whether there is a genuine dispute about the debt.[31] The legal basis of the debt claimed is simply unclear. The plaintiff should not be expected to guess what the demand relates to or the source of the obligation to make payment.[32] Without knowing these things, the plaintiff has been put in the unsatisfactory situation of having to determine whether there is a genuine dispute about the existence or amount of the debt and whether to make an application to set the demand aside. A substantial injustice has therefore occurred.
[31]LSI Australia [54] (Austin J).
[32]Re Simmoll [34].
Although the defendants submit that the amount of the statutory demand apparently represents 0.006% of Coles’ profits for the 2021 financial year, this is irrelevant to the question of whether substantial injustice arises for the purpose of s 459J(1)(a) of the Corporations Act. Also irrelevant to the question of substantial injustice is the suggestion that there have been apparent discrepancies in relation to the correct payment of wages to Coles’ employees, or that the defendants say that they themselves have been subjected to substantial injustice by the plaintiff.
I note that the defendants rely on an ‘amended’ statutory demand dated 7 July 2022 which is included in the bundle of their material filed on 8 July 2022. The ‘amended’ statutory demand adjusts the debt to conform with the amount stated in the 4 March 2022 invoice and now refers to the 28 February 2022 notice. However, it is not possible for a person to amend a statutory demand after it has been served. Only the Court may vary a demand under s 459H(4) of the Corporations Act if satisfied that there is a genuine dispute or offsetting claim under s 459G and that ‘the substantiated amount’ is at least as great as the statutory minimum.
For all of the above reasons, the statutory demand is defective and should be set aside under s 459J(1)(a).
Problems with affidavits in support of demand
In addition, there are also a number of problems with the affidavits made in support of the statutory demand.
First, neither of Amber or Wenico’s affidavits exhibit any of the notices, correspondence and invoices (including the 4 March 2022 invoice) to which they refer. The affidavits do not provide verification of the debt claimed in the statutory demand as required by s 459E(3) of the Corporations Act. The affidavits do not clearly state the nature of the debt or refer to the source of the obligation on the plaintiff to make payment. In addition, they do not make clear how the debt set out in the demand is calculated. Although Amber and Wenico say they were not aware of the specific requirements for affidavits in support of statutory demands, this does not address the deficiencies of their affidavits. Further, the fact that on 9 June 2022, Wenico emailed Coles the 4 March 2022 invoice and a further two invoices after serving the demand does not meaningfully assist in providing an understanding of the demand itself. Nor do the ‘amended’ affidavits in support of the statutory demand dated 7 July 2022 and their accompanying exhibits assist in clarifying the basis of the debt claimed. It is only possible to serve an updating affidavit in support of a statutory demand either with the demand itself or within a reasonable time before the expiration of the 21 days available to the company to apply to set aside the demand.[33] That has not occurred here.
[33]Chadmar Enterprises Pty Ltd v IGA Distribution Pty Ltd (2005) 190 FLR 466 [52] (Higgins CJ); Ambassador at Redcliffe Pty Ltd v Barreau Peninsula Property Pty Ltd [2007] 2 Qd R 199 [21] (White J); ReNanevski Developments Pty Ltd (No 2) [2019] NSWSC 1217 [7] (Rees J).
Secondly, it is also unclear whether the affidavits in support of the demand have been witnessed by a person authorised to take affidavits in Queensland (where they appear to have been signed), or at all. Both affidavits are missing a conventional jurat clause (including details of where, before whom and by whom it was sworn). Both affidavits identify two witnesses: Judith Groves and Shaun Groves (who are the same people who witnessed the purported contracts), but there is no indication that those people are authorised affidavit takers or special witnesses under the Oaths Act 1867 (Qld). The reference in the affidavits to them being signed in the presence of two witnesses in accordance with certain biblical scripture does not suffice. Whilst I understand from the defendants’ submissions that they approached a Justice of the Peace to witness their affidavits in support of the demand but that person was reluctant to do so because the affidavits did not relate to an existing court proceeding, the fact remains that the affidavits were not properly witnessed.
Accordingly, the debt claimed in the demand is not properly verified by affidavit for the purpose of s 459E(3) of the Corporations Act. I am satisfied that these deficiencies in the affidavits in support of the demand and the non-compliance with s 459E(3) constitute ‘some other reason’ to set the demand aside under s 459J(1)(b).
No debt due and payable
There is also a further basis to set aside the demand for ‘some other reason’ which is critical in this case.
For the purpose of s 459E(1) of the Corporations Act, a debt is due and payable when it is ascertainable, immediately payable and presently recoverable or enforceable by action.[34]
[34]Re Elgar Heights Pty Ltd [1985] VR 657 (‘Re Elgar Heights’) 669, 671 (Ormiston J); Remuneration Data Base Pty Ltd v Pauline Goodyer Real Estate Pty Ltd [2007] NSWSC 59 (‘Remuneration Data Base’) [39]–[42] (White J); NA Investments Holdings Pty Ltd v Perpetual Nominees Ltd (2010) 79 ACSR 544, 552–3 [63] (Lindgren AJA); Main Camp 731–2 [17]; Re Sceam Construction Pty Ltd [2021] VSC 437 [34] (Hetyey AsJ); Re Simmoll [44].
In Re Simmoll Pty Ltd[35] I made the following comments in relation to the concept of a debt for the purposes of the Corporations Act:
Although the term ‘debt’ is not defined in the Corporations Act, it should be construed in a practical and common sense manner, consistent with its context and the underlying statutory purpose.[36] In Rothwells Ltd v Nommack (No 100) Pty Ltd,[37] a case which involved an application to restrain a winding up proceeding, McPherson J succinctly described a debt as ‘a liquidated sum in money presently due, owing and payable’ by a debtor to a creditor.[38] A debt can therefore be distinguished from a claim of damages for breach of contract or any other unliquidated claim.[39] … Similarly, there is abundant authority for the proposition that an obligation to pay unliquidated damages is not a debt capable of supporting a statutory demand.[40] This is consistent with the legislative policy underpinning Part 5.4 of the Corporations Act that the statutory presumption of insolvency in s 459C(2)(a) should be available only in clear cases of indebtedness where the reason for non-compliance with a statutory demand is an inability of the debtor company to pay and where no other inference for non-payment can be drawn, such as the debt being presently unrecoverable or unenforceable.[41]
[35]At [45].
[36]Hawkins v Bank of China (1992) 26 NSWLR 562 (‘Hawkins’) 572 (Gleeson CJ); Powell v Fryer (2001) 159 FLR 433, 443 [64] (Olsson J, with whom Duggan and Williams JJ agreed).
[37][1990] 2 Qd R 85 ('Rothwells v Nommack’).
[38]Ibid 86. A liquidated sum was explained in Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138, 142 (Knox CJ and Starke J quoting the then current fifth edition of Odgers on Pleading and Practice) as being an ‘amount to which the plaintiff is entitled … [which] can be ascertained by calculation or fixed by any scale of charges, or other positive data’.
[39]Young v Queensland Trustees Ltd (1956) 99 CLR 560, 569 (Dixon CJ, McTiernan and Taylor JJ). See also Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 424 where Brennan CJ, Dawson and Toohey JJ characterised a debt as being a ‘form of action for a liquidated sum and not damages’; and Hansmar Investments Pty Ltd v Perpetual Trustee Co Ltd (2007) 61 ACSR 321, 327 (White J).
[40]Re Elgar Heights; Rothwells v Nommack 88 (McPherson J); First Line Distribution Pty Ltd v Whiley (1995) 18 ACSR 185, 188 (Cohen J); Reinsurance Australia Corporation Ltd v Odyssey Re (Bermuda) Ltd (2000) 36 ACSR 348, 355 (Macready M); CGI Information Systems and Management Consultants Pty Ltd v APRA Consulting Pty Ltd (2003) 47 ACSR 100, 103 (Barrett J); Re Towncars Franchises Sydney Pty Ltd [2013] NSWSC 1235 [29]-[30] (Brereton J).
[41]Assaf’s Winding Up in Insolvency [3.49]. See also Re Elgar Heights 669 (Ormiston J); Remuneration Database [41] (White J); Re Renu Waste Pty Ltd [2020] NSWSC 108 (‘Re Renu Waste’) [23] (Rees J); Re Essential Media and Entertainment Pty Ltd [2020] NSWSC 990 [97] (Rees J).
I am not satisfied that the sum claimed in the statutory demand is due and payable for the purpose of s 459E(1) of the Corporations Act. It is not ascertainable, immediately payable and presently recoverable or enforceable. The defendants have not obtained any judgment of a court or tribunal in relation to any claim for breach of contract or discrimination, or the infringement of their workplace rights, upon which they can base the demand. Although the defendants submit that the debt arises because of the operation of the various notices, fee schedules and purported contracts sent to Coles and its employees, presumably as a liquidated sum, there is no record of any acceptance by the named recipients, counterparties, or Coles itself, to the terms of those documents. In particular, none of the purported contracts are executed by any party other than the defendants.
Further, any silence on the part of Coles or the named recipients of, or counterparties to, the purported contracts, invoices, other notices, and fee schedules sent by the defendants does not automatically constitute their acceptance or acquiescence. It is a fundamental principle of contract law that an offeree’s intention to accept an offer must be clear and unequivocal. However, because silence is almost always equivocal, it will rarely be regarded as acceptance.[42] As the Court of Appeal further explained in Danbol Pty Ltd v Swiss Re International SE:[43]
The requirement for acceptance, which must be communicated by the offeree to the offeror, is subject to a number of principles. First, as a general rule, silence cannot constitute acceptance. The rule is primarily designed to protect the offeree from having a contract foisted upon it by preventing the offeror from stipulating that a contract will be created by silence on the part of the offeree. It is a reflection of the requirement for mutual assent.[44]
[42]See Allied Marine Transport Ltd v Vale do Rio Doce Navegaco SA [1985] 2 All ER 796; and JW Carter, Contract Law in Australia (7th ed, Lexis Nexis, 2018) [3-29].
[43][2020] VSCA 274.
[44]Ibid [74] (McLeish JA, Niall JA and Sifris JA).
The Court of Appeal further observed that in the absence of a clearly identified offer and acceptance, it will be difficult for a party to identify mutual assent to a binding legal relationship and its terms.[45]
[45]Ibid [82].
Because there is no debt that is due and payable, the demand must also be set aside under s 459J(1)(b) of the Corporations Act for ‘some other reason’.
Genuine dispute grounds
Even if I am wrong that the statutory demand should be set aside for the reasons I have identified under s 459J of the Corporations Act, it is clear that there is a genuine dispute about the existence of the debt claimed in the demand which is bona fide and which truly exists in fact. In briefly dealing with this aspect of the case, I am of the view that a genuine dispute arises as a result of the following matters.
First, the argument by Coles that the purported contracts, fee schedules, notices or invoices cannot give rise to a debt in the absence of express acceptance is a plausible contention requiring investigation which cannot be resolved in this summary proceeding. Similarly, on any view, there is a genuine dispute that any silence on the part of Coles or the named recipients of, or counterparties to, the purported contracts, fee schedules, notices or invoices sent by the defendants does not constitute acceptance of the terms of those documents. Relevant to these matters is the express rejection by Mr Goyal in his letter dated 2 March 2022 that any silence by Coles should not be interpreted as acceptance of assertions made by Wenico. Also relevant is the email dated 25 February 2022 from Ms Tehan to Wenico stating that Coles ‘[did] not accept the nature of [Wenico’s] correspondence which purports to impose obligations, including personal and financial liability on Coles and individual Coles’ [sic] personnel’.
Secondly, it is a matter of genuine dispute whether there was sufficient consideration for the purported contracts. The plaintiff contends that there is no consideration for the purported contracts, whereas the defendants suggest that consideration would be satisfied by attaching a $1.10 postage stamp. Whether there has been sufficient consideration for the purported contracts is a triable issue which cannot be resolved here.
Thirdly, even assuming there was some binding agreement between Coles and the defendants, I accept the plaintiff’s submission that there is a genuine dispute about whether the clauses in the purported contracts, fee schedules, notices or invoices said to give rise to the debt claimed by the defendants are unenforceable as penalties. A relevant consideration is whether the sum claimed is out of all proportion to the damage likely to be suffered as a result of the alleged breach of agreement.[46] Again, that is a triable issue which cannot be determined in this proceeding.
[46]AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170, 190 (Mason and Wilson JJ); Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656.
Fourthly, whether Coles has breached the defendants’ employment contracts, infringed their workplace rights or discriminated against them, including in the application of the Policy, and whether Coles is liable to compensate the defendants accordingly, are also matters of genuine dispute which cannot be determined in this forum. The entire chronology of events I have set out suggests there has been an ongoing dispute between the parties about those matters. I also note that the letter of Mr Goyal dated 2 March 2022 specifically rejects any allegations that Coles has contravened its contract of employment with Wenico. This aspect of the dispute therefore has a sufficient objective existence and prima facie plausibility to distinguish it from mere assertion.
Conclusion and costs
It is clear that the defendants have objected to the imposition of the Policy by Coles in the strongest possible terms. It is also clear that the defendants feel particularly aggrieved by the termination of their employment by Coles. However, the statutory demand procedure is not the appropriate vehicle to ventilate those matters.
In light of the reasons I have set out, the statutory demand must be set aside under s 459J(1)(a) for numerous defects which result in substantial injustice and/or under s 459J(1)(b) for ‘some other reason’. Further, and to the extent necessary, the demand must also be set aside under ss 459G and 459H because there is a genuine dispute about the existence of the debt claimed in it.
Following the delivery of these ex tempore reasons, I heard the parties on the question of costs and made a ruling to the following effect.
The plaintiff sought an order that the defendants pay its costs on a standard basis, whereas the defendants resisted that order.
Section 459N of the Corporations Act states that where on an application under s 459G, the Court set aside a demand, it may order the person who served the demand pay the plaintiff’s costs in relation to the application. Section 24 of the Supreme Court Act 1986 (Vic) also relevantly provides that ‘the costs of and incidental to all matters in the Court … is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid’. The fact that the defendants say they do not consent to a costs order by the Court is irrelevant. The Court retains jurisdiction to make an order for costs.
The Court also has a wide discretion in relation to costs.[47] However, there is a general rule that, in the absence of good reason to the contrary, a successful litigant should recover their costs.[48] Where a company succeeds in setting aside a statutory demand, the Court will usually order that the company be awarded costs pursuant to the general principle that costs should follow the event,[49] however, each case will turn upon its own facts.[50]
[47]See also s 65C of the Civil Procedure Act 2010 (Vic); Assaf’s Winding Up in Insolvency [10.101], citing Re Mailrite Pty Ltd (1985) 9 ACLR 863, 867-8 (Master Lee); Re Great Barrier Reef Flying Boats Pty Ltd (1982) 6 ACLR 820, 822 (Thomas J) and Morepine Pty Ltd v Crush Pacific Industries Pty Ltd (1996) 20 ACSR 41, 44 (Young J).
[48]Towercom [2013] VSC 585; Ritter v Godfrey [1920] 2 KB 47, 5; Donald Campbell & Co Ltd v Pollak [1927] AC 732, 809 (Viscount Cave LC); Milne v Attorney-General (Tas) (1956) 95 CLR 460, 477; Oshlack Oshlack v Richmond River Council (1998) 193 CLR 72, 86 (Gaudron and Gummow JJ).
[49] Global v Sensis [2007] NSWSC 967.
[50]Ford Motor Co of Australia v Arrowcrest Group Pty Ltd [2003] FCA 597; iInvest Pty Ltd v Metyor Inc [2003] NSWSC 879; Blazai Pty Ltd v Palasty [2001] NSWSC 225.
Here, the plaintiff has succeeded in setting aside the demand on all of the grounds advanced. There is no reason why the general rule about costs should not apply. Despite being invited by the plaintiff’s solicitors to withdraw their demand before this proceeding was commenced, the defendants declined to do so. The defendants should pay the plaintiffs costs on a standard basis, such cost to be taxed in default of agreement.
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