Re Crimson Fresh Produce Pty Ltd
[2022] VSC 797
•22 December 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2022 02977
IN THE MATTER of CRIMSON FRESH PRODUCE PTY LTD (administrators appointed) (ACN 616 330 520)
BETWEEN:
| CRIMSON FRESH PRODUCE PTY LTD (administrators appointed) (ACN 616 330 520) | Plaintiff |
| v | |
| R. W. PASCOE PTY LTD (ACN 010 890 892) | Defendant |
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JUDGE: | Barrett AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 October 2022 |
DATE OF JUDGMENT: | 22 December 2022 |
CASE MAY BE CITED AS: | Re Crimson Fresh Produce Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2022] VSC 797 |
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CORPORATIONS – Application to set aside a statutory demand – Corporations Act 2001 (Cth) ss 459G, 459H – Whether there is a genuine dispute as to the existence or amount of the debt – Whether there are offsetting claims – Whether there was an abuse of process – Held that there was a genuine dispute as to part of the alleged debt – Held that there were offsetting claims – Statutory demand varied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R Padia, director of the Plaintiff, appeared with leave of the Court for the limited purpose of relying on his affidavit affirmed on 4 August 2022 | |
| For the Defendant | Mr L Copley | HopgoodGanim Lawyers |
TABLE OF CONTENTS
Representation.................................................................................................................................... 1
Background......................................................................................................................................... 2
Principles............................................................................................................................................. 7
Consideration...................................................................................................................................... 8
Genuine dispute............................................................................................................................ 8
Offsetting claims.......................................................................................................................... 10
Abuse of process......................................................................................................................... 12
Conclusion......................................................................................................................................... 13
HIS HONOUR:
By Originating Process filed on 5 August 2022, the plaintiff applies for an order setting aside a statutory demand dated 8 July 2022 and served on it by the defendant on 19 July 2022 (‘statutory demand’). The statutory demand states that the plaintiff owes the defendant the amount of $300,000.04. The schedule to the statutory demand describes the amount as being calculated by reference to 11 invoices with reductions made to some of those invoices by adjustment notes.
The plaintiff relies on:
(a) an affidavit affirmed by Rakesh Padia (‘Mr Padia’), the director of the plaintiff, on 4 August 2022; and
(b) an affidavit dated 21 October 2022 which appears to have been prepared by Mr Padia.
The defendant relies on:
(a) an affidavit sworn by Noel Greenhalgh (‘Mr Greenhalgh’), the managing director of the defendant, on 5 September 2022; and
(b) written submissions filed on 4 October 2022.
Representation
The plaintiff was unrepresented and Mr Padia sought leave to appear on its behalf at the hearing on 26 October 2022. I granted leave to Mr Padia to address the Court in relation to an application for an adjournment of the hearing, which he did and which was refused for reasons given ex tempore on the day.
The next question was whether Mr Padia ought to be given leave to represent the plaintiff on the hearing of the application to set aside the statutory demand. For reasons given ex tempore, I considered that Mr Padia should be given leave to appear for the plaintiff for the limited purposes of formally relying on his affidavit affirmed on 4 August 2022, and particularly the letter from the plaintiff’s former solicitors dated 3 August 2022 which sets out in some detail the basis upon which it is said there is a genuine dispute in relation to the debts claimed in the statutory demand, and the basis upon which it is said there are offsetting claims. But I did not give general leave beyond that to Mr Padia to represent the plaintiff.
Background
The plaintiff is a fruit and vegetable wholesaler which purchases fruit and vegetable produce for export to Asian markets. The defendant is a fruit and vegetable wholesaler operating predominantly out of the Brisbane markets in Rocklea, Brisbane.
In about 2014, the defendant began conducting business with SAB Fresh Fruit Ltd (‘SAB Fresh’) whereby SAB Fresh would request the defendant to provide it with certain brands of fruit and vegetable. If the defendant was able to fulfil request, it would provide the produce to SAB Fresh, which would then be exported. The dealings between those two entities were conducted by Mr Greenhalgh for the defendant, and Mr Padia for SAB Fresh.
In 2016, a dispute arose between SAB Fresh and the defendant in relation to a number of unpaid accounts. SAB Fresh and the defendant entered into a settlement agreement in relation to the outstanding accounts. At this time in 2016, the defendant ceased trading with SAB Fresh.
In 2018, Mr Padia contacted Mr Greenhalgh and said that he wished to recommence trading with the defendant. It is unclear from the material filed what occurred between this conversation in 2018 and March 2021, but in March 2021, Mr Padia, apparently then on behalf of the plaintiff, contacted Mr Greenhalgh to discuss the purchase of apples from New Zealand. Mr Greenhalgh describes the conversation he had with Mr Padia in March 2021 as follows:
In about March 2021, Mr Padia contacted me by telephone and said to me words to the effect that he was seeking to purchase produce from a New Zealand apple company, however the New Zealand apple company was not prepared to offer Mr Padia any credit.
Later, in about March 2021, Mr Padia and I engaged in further telephone conversations where we discussed Mr Padia’s proposal further. During these telephone calls, I said to Mr Padia, words to the effect that the defendant would agree to pay the New Zealand apple company upfront, on Mr Padia’s behalf, for a shipment of produce, and forward it to the plaintiff on credit. Mr Padia said to me words to the effect that he agreed to this proposal.
Based on the abovementioned telephone discussions which I had with Mr Padia in March 2021, I understood that Mr Padia was now operating through the plaintiff entity.
This particular transaction was successful — the defendant paid for the apples upfront, and the plaintiff paid the defendant for the produce after it had been sold. Thereafter, between about 28 June 2021 and 24 August 2021, the defendant supplied fruit and vegetables to the plaintiff at the plaintiff’s request. Mr Greenhalgh describes the way in which the arrangement was conducted as follows:
Mr Padia would telephone me to request that the defendant supply specified produce.
If the defendant was able to supply the requested produce, it would prepare the produce and Mr Padia would make arrangements to collect the produce from the defendant’s premises.
Mr Padia would make all arrangements for freight, exportation and sale of the produce and his entities (either the plaintiff or SAB Fresh) were responsible for the payment of all expenses relating to the transport, export and sale of the produce.
Upon collection of the produce, the defendant would send a tax invoice to the customer (either the plaintiff or SAB Fresh) for the produce.
The price stated on the tax invoice was sent by the defendant, based on the estimated net return of the produce, which the defendant determined based on current information about the market value of the produce in Australia and at the destination where the produce was to be sold.
On every sale that I can recall between the defendant and either SAB Fresh or the plaintiff, Mr Padia would contact me after he had sold the goods at the destination, and assert that he was not able to obtain the estimated market value for the produce. Typically, he would assert that the quality of the produce upon arrival did not meet expectations. He would invariably request that credit be applied to the defendant’s tax invoice to account for this.
Accordingly, the arrangement between the defendant and the entities controlled by Mr Padia, became an informal consignment, whereby, after Mr Padia had sold the produce at the destination, he would seek that a credit be applied towards the invoiced amount.
Usually, Mr Padia would provide a sales report to the defendant, which purported to show the net return which was obtained for relevant produce.
The sales reports which were provided by Mr Padia set out the amounts which Mr Padia said he obtained for the produce as well as the various expenses and commissions which were incurred in relation to the sale.
As far as I can recall, I never asked Mr Padia to prove that the price which he said he obtained and the expenses which he said he incurred were accurate, because the sales report was only ever intended to be used as part of the negotiations, and on each occasion, if the amount in the sales report was lower than defendant was prepared to accept, the parties were able to reach an agreement as to appropriate credit which should be applied to each invoice.
Upon receipt of the sales report, I would speak with the grower about the proposed credit and then verbally negotiate with Mr Padia and come to an agreement as to an appropriate credit to be applied to the defendant’s invoice.
The defendant would then prepare an adjustment note to show the credit that had been agreed, and send it to the plaintiff.
There was never any agreement between the defendant and any entity controlled by Mr Padia, to the effect that credits were to be issued strictly in accordance with the sales reports provided by the plaintiff. The sales reports were only ever used as part of the negotiations.
On many occasions, following receipt of the sales report, defendant agreed to the proposed credit, and I verbally confirmed to Mr Padia that I would agree to reduce the invoiced amount, to the net return was obtained for the produce.
However, on other occasions, particularly when the net return was much lower than the original price stated on the invoice, I would say to Mr Padia that the plaintiff was not prepared to reduce the invoice to the alleged net return amount, and the parties verbally agreed to some other amount of credit.
Other than the provision of invoices, adjustment notes and sales reports, almost all arrangements between the defendant and either SAB Fresh or the Plaintiff were verbal (including orders and negotiations for adjustments) and were negotiated by Mr Padia and I [sic] during telephone discussions.
Mr Greenhalgh says that the total agreed price for produce which was provided between 28 June 2021 and 24 August 2021 in accordance with this arrangement was $307,440.04. Mr Greenhalgh further says that of this amount the plaintiff has only paid $7,440.00 on 5 April 2022, leaving a balance of $300,000.04 outstanding.
Mr Greenhalgh says he communicated with Mr Padia between about November 2021 and May 2022, and he refers to and exhibits a chain of texts and emails between 18 January 2022 and May 2022, where the defendant is demanding payment and Mr Padia discusses payment, including proposed payment schedules, without objecting to the amounts claimed. That correspondence includes an email dated 26 February 2022 from Mr Padia to Mr Greenhalgh in which Mr Padia attaches a payment schedule which appears to provide for a payment of $7,440.04 to be made on 25 March 2022 and thereafter 10 monthly payments of $30,000.00 commencing on 25 April 2022 and continuing until 25 January 2023, being a total of $307,440.04. It appears from emails exchanged between Mr Padia to Mr Greenhalgh on 8 March 2022 that Mr Greenhalgh discussed the matter with Mr Padia and Mr Greenhalgh said he was unwilling to accept $7,440.00 as a first payment and required the first instalment to be ‘$37k’. On 25 March 2022, the defendant emailed Mr Padia a ‘reminder’ that ‘as per your payment schedule your first payment of $37 440.04 is due today’. It is apparent from the correspondence and material that payment of $7,440.00 was paid but other amounts were not. On 4 April 2022, Mr Greenhalgh sent a text to Mr Padia in which he states, ‘You have only paid $7440. You were supposed to pay 37440. Get the balance paid immediately.’ He sent a further text on 2 May 2022 in which he states:
I note you have broken your word again on repayment of the outstanding debt to me. You have until COB Wednesday to pay the $45k. The alternative will not be good for our business relationship. Get it fixed.
The defendant prepared a statutory demand dated 8 July 2022 and served it on the plaintiff on 19 July 2022. The affidavit accompanying the statutory demand sworn by Mr Greenhalgh on 8 July 2022 states that he has inspected the business records of the defendant and verifies that the amount claimed in the statutory demand is due and payable by the plaintiff. The amount claimed is itemised in the statutory demand in some detail by reference to 11 numbered and dated tax invoices with references to adjustment notes which are also numbered and dated and for specified amounts. The descriptions of the invoices and adjustment notes appear to reflect broadly the arrangement described by Mr Greenhalgh.
By Originating Process filed on 5 August 2022, the plaintiff applied for an order setting aside the statutory demand on the grounds that: there is a genuine dispute about the existence or amount of the debt; the statutory demand is an abuse of process; and the plaintiff has offsetting claims. The affidavit in support of the application (the affidavit of Mr Padia affirmed on 4 August 2022) exhibits a letter from the plaintiff’s previous solicitors to the defendant’s solicitors dated 3 August 2022 (‘3 August letter’) upon which it relies.
At the hearing, Mr Padia indicated that the plaintiff wished to rely on that affidavit affirmed by Mr Padia on 4 August 2022. In the 3 August letter the plaintiff’s previous solicitors state that ‘[o]n multiple occasions, [Mr] Padia of [the plaintiff] informed Mr Greenhalgh that the fruit produce was of poor quality … we are instructed that [the plaintiff] achieved the following sales’. Thereafter there is a list of 11 orders totalling $282,297. The solicitor’s letter then goes on to itemise what are alleged to be miscalculations in the statutory demand. The following table sets out what the defendant claims are the adjustments for each invoice, what the plaintiff says are proper adjustments, and the admitted or uncontested amount owing.
| Invoice No. | Amount of Invoice ($) | Defendant Adjustment ($) | Plaintiff Adjustment ($) | Admitted/ Uncontested Total ($) | |
| 1 | 2111589 | 125,820.00 | -106,785.00[1] | 19,035.00 | |
| 2 | 2112328 | 123,930.00 | -104,488.00 | 19,442.00 | |
| 3 | 2113083 | 107,730.00 | -95,674.00 | -105,674.00 | 2,056.00 |
| 4 | 2113291 | 25,872.00 | -8,936.00 | -17,251.43 | 8,620.57 |
| 5 | 2113695 | 57,724.00 | -42,538.00 | 15,186.00 | |
| 6 | 2114846 | 89,775.00 | -41,915.61 | 47,859.39 | |
| 7 | 2116023 | 90,720.00 | -51,724.00 | 38,996.00 | |
| 8 | 2116472 | 93,555.00 | -67,226.00 | -72,226.00 | 21,329.00 |
| 9 | 2117156 | 86,310.00 | -42,141.00 | 44,169.00 | |
| 10 | 2119469 | 27,458.55 | 27,458.55 | ||
| 11 | 2119471 | 32,533.10 | 32,533.10 | ||
| 276,684.61 |
[1]The adjustment of this invoice by the defendant includes the $7,440 that was paid by the plaintiff on 5 April 2022.
The 3 August letter also:
(a) asserts that the plaintiff is entitled to a 15% commission on the total net sales, which it says were $282,297.00, which totals $42,344.55 in commission; and
(b) says that the plaintiff has an offsetting claim in relation to an unpaid invoice number INV-0386 which totals $52,800.00.
Accordingly, the total value of the disputes and offsetting claims that the plaintiff raises in relation to the amounts claimed in the statutory demand, if accepted in full, would reduce the amount claimed by the defendant to $181,540.06.
Principles
A company may apply to the court to set aside a statutory demand under s 459G of the Corporations Act 2001 (Cth) (‘Corporations Act’) where there is a genuine dispute between the company and the person serving the demand about the existence or amount of a debt to which the demand relates, or where the company has an offsetting claim. The court has power to vary the demand under s 459H of the Corporations Act.
The principles regarding what is a genuine dispute or offsetting claim and how they are to be assessed are well settled and were summarised by the Victorian Court of Appeal in Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq)[2] as follows:[3]
[2][2015] VSCA 330.
[3]Ibid [47]–[51] (citations omitted).
The terms of s 459H of the Corporations Act and the authorities make clear that, on an application to set aside a statutory demand, the applicant is required only to establish a genuine dispute or offsetting claim. The applicant is required to evidence the assertions relevant to the alleged dispute or offsetting claim only to the extent necessary for that primary task. It is not necessary for the applicant to advance a fully evidenced claim. Therefore, the task faced by an applicant is by no means at all a difficult or demanding one.
In determining such an application, it is not necessary or appropriate for a court to engage in an in-depth examination or determination of the merits of the alleged dispute. This is because an application alleging a genuine dispute or offsetting claim is akin to one for an interlocutory injunction and requires the applicant to establish that there is a ‘plausible contention requiring investigation’ of the existence of either a dispute as to the debt or an offsetting claim. It is therefore not helpful to perceive that one party is more likely than the other to succeed or that the eventual state of the account between the parties is more likely to be one result than another. Further, the determination of the ‘ultimate question’ of the existence of the debt at a substantive hearing should not be compromised.
The court is required to determine whether the dispute or offsetting claim is ‘genuine’. It has been said that the criterion of a ‘genuine’ dispute requires that the dispute be bona fide and truly exist in fact and that the grounds for alleging the existence of a dispute be real and not spurious, hypothetical, illusory or misconceived. It has also been observed that the dispute or offsetting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion. It must also have sufficient factual particularity to exclude the merely fanciful or futile. A rigorous curial approach is essential to the effective operation of the statutory scheme.
The court is not required to accept uncritically every statement in an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be, as it may not have sufficient prima facie plausibility to merit further investigation as to its truth. The court is also not required to accept uncritically a patently feeble legal argument or an assertion of facts unsupported by evidence, although this should not be read as suggesting that the applicant must formally or comprehensively evidence the basis of its dispute or off-setting claim. Except in such extreme cases, the court should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on by the applicant to set aside a statutory demand.
Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd involved a demand for payment of a debt alleged to be due under a contract for the supply of goods. The applicant relied on four matters, each of which had the potential to affect the respondent’s entitlement to be paid the entire amount of the debt. Barrett J held that all four matters were sufficiently plausible to raise a genuine dispute. He relevantly stated:
The [applicant] will fail in [the] task [of establishing a genuine dispute] only if … the contentions upon which it seeks to rely … are so devoid of substance that no further investigation is warranted. Once the [applicant] shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the [applicant], it must find that a genuine dispute exists, even where any case apparently available to be advanced against the [applicant] seems stronger.
Consideration
Genuine dispute
The first question is whether there is a genuine dispute about the existence or amount of the debt. The statutory demand lists 11 invoices for specific amounts. The 3 August letter, which is the basis upon which the statutory demand is challenged, responds to the matters raised in the statutory demand but only deals with three of the invoices as follows:
(a) in relation to invoice 2113291, the plaintiff challenges the adjustment figure applied by the defendant on the basis that freight costs were not taken into account which in turn affected the net sales return upon which adjustments had to be made. The 3 August letter asserts that the adjustment should be $17,251.43 rather than $8,936.00;
(b) in relation to invoice 2113083, the plaintiff states that the appropriate adjustment in accordance with the agreement between the parties, and a sales report said to have been emailed to Mr Greenhalgh on 27 September 2021, was an amount of $105,674.00 instead of $95,674.00; and
(c) in relation to invoice 2116472, the plaintiff states that the appropriate adjustment in accordance with the agreement, and a sales report said to have been emailed to Mr Greenhalgh on 5 October 2021, was an amount of $72,226.00 instead of $67,226.00.
The defendant submits that the adjustments to these invoices were the subject of conversations and emails which were resolved by agreed adjustment notes in September and November 2021, and that the suggestion that any further credits ought be applied to the invoices has only arisen since the statutory demand was served. Mr Greenhalgh exhibits to his affidavit various texts and emails, and refers to conversations in which he says Mr Padia never took issue with the invoices as calculated. On that basis, so it was submitted, the plaintiff’s suggestion that the invoices have been calculated incorrectly ought to be rejected.
While it appears that Mr Padia did not express concerns about the adjusted invoices until after the receipt of the statutory demand, the fact that no complaint was raised does not necessarily mean that there can be no genuine dispute about the amounts in fact outstanding pursuant to the terms of the agreement between parties. I note in particular that the agreement as described by the defendant accommodated an element of negotiation as to price. Mr Greenhalgh describes the arrangement as ‘an informal consignment’ and describes the process by which a price was reached in part as follows:
Other than the provision of invoices, adjustment notes and sales reports, almost all arrangements between defendant and either SAB Fresh or the Plaintiff were verbal (including orders and negotiations for adjustments) and were negotiated by Mr Padia and I [sic] during telephone discussions.
In circumstances where the arrangement between the parties involved a degree of flexibility as to the fixing of price and included an element of oral negotiations for adjustments, there is much scope for a genuine dispute as to any particular price said to have been agreed upon. I note that Mr Greenhalgh states that not only did Mr Padia not complain about the invoices, but he provided many assurances that he was going to pay the outstanding amount. While there are some circumstances in which a court may find that an agreement to a repayment schedule of an alleged debt precludes a genuine dispute in relation to such sums,[4] each case must depend on its own facts. Notwithstanding the apparent absence of complaints by the plaintiff in relation to the three invoices, I am satisfied that the plaintiff has established to the requisite standard that there is a genuine dispute about them to the extent the complaints are raised. As noted above that dispute only relates to a part of each of those invoices which were otherwise unchallenged.
[4]See, eg, AMI Australia Holdings Pty Ltd v PHD Networks Pty Ltd [2011] NSWSC 161, [61]–[62].
As all of the plaintiff’s arguments regarding the amounts due pursuant to the 11 invoices are accepted, the balance of the invoices that remain unchallenged total $276,684.61.
The next question is whether the plaintiff has offsetting claims.
Offsetting claims
The first offsetting claim relates to a commission that the plaintiff says it is entitled to in the amount of 15% on the total net sales of $282,297.00 being $42,344.55. The plaintiff says it is entitled to this commission ‘in accordance with the Agreement’. While the plaintiff does not descend into the usual details of an agreement as one might expect in a pleading, the 3 August letter does set out alleged specific terms of the agreement between the parties including that the plaintiff would be entitled to a 15% commission on sales.
The defendant says that ‘[i]t is unclear on what basis the plaintiff is alleging that it is entitled to commission’ because the plaintiff’s affidavit does not descend into any detail about the terms of the alleged agreement to pay commission, nor has there been any response to the defendant’s denials of any such entitlement. But as noted above, the terms of the agreement as set out by the defendant itself involve a degree of flexibility, and it is not clear on the face of the terms set out by the defendant what the plaintiff’s entitlement to remuneration is. In the context of the agreement generally, it is not unreasonable to think that the remuneration to which the plaintiff may be entitled could be calculated by reference to a percentage commission on sales. That issue having been raised, and there being no clear evidence as to any alternative term as to remuneration, I am satisfied that the plaintiff has established, to the ‘not … particularly high’[5] standard required, that it has an offsetting claim.
[5]Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37, 39.
The second offsetting claim articulated in the 3 August letter is that on 22 April 2022, the plaintiff supplied grapes to the defendant for which it issued an invoice for $52,800.00 which has not been paid.
Mr Greenhalgh says that he did not receive any invoice for $52,800.00 but rather he received an invoice for $25,344.00 which was sent by the plaintiff to the defendant on 22 April 2022. He exhibits an email dated 22 April 2022 from Mr Padia on behalf of the plaintiff to him, which attaches the invoice numbered 0386 in the amount of $25,344.00. The defendant says that the invoices bear the same invoice number save that the unit price in the $52,800.00 invoice is $25, but in the $25,344.00 invoice it is $12, and notes that the plaintiff provides no explanation for these differences. The defendant accepts that in relation to the subject matter of this invoice it owes the plaintiff the sum of $23,032.46 based on an adjustment of the invoice issued on 26 April 2022. On that basis it accepts that the substantiated amount in the statutory demand should be reduced to $276,967.58.
The questions surrounding the issuing of this invoice, and any variation to it, are sufficiently opaque that I do not consider it can be concluded there is no offsetting claim. The plaintiff’s former solicitors stated quite clearly, presumably on instructions, that the invoice for $52,800.00, a copy of which was exhibited to Mr Padia’s affidavit of 4 August 2022, was issued and that it has not been paid. The concession as to the amount of $23,032.46 reflects to an extent the issues that may arise having regard to the terms of the agreement.
Abuse of process
The 3 August letter also claims that the statutory demand is an abuse of process as it has been issued merely as a method of debt recovery. The letter states:
It is well-established that issuing statutory demands as an instrument of debt recovery to coerce the payment of an alleged debt is improper (Moutere Pty Ltd v Deputy Commissioner of Taxation [2000] NSWSC 379, [54]).
Service of the Statutory Demand on Crimson Fresh [the plaintiff] constitutes an abuse of process given the amount of the Alleged Debt is not owed by Crimson Fresh to RWP [the defendant] and the surrounding circumstances.
The defendant rejects the proposition that the statutory demand is an abuse of process on the basis that:
(a) prior to the statutory demand being issued, the plaintiff did not raise any question about invoices that had been rendered, but cited various reasons for its failure to pay including technical issues with the bank, financial problems relating to COVID-19 and cash flow issues;
(b) on 26 February 2022 the plaintiff proposed a payment schedule to repay the sum of $307,440.04 which was the amount outstanding at the time; and
(c) following the receipt of the statutory demand, the plaintiff raised a dispute about an amount representing less than 10% of the total amount claimed in the invoices.
I am not satisfied in the circumstances that the statutory demand is an abuse of process. While the plaintiff has raised some issues in relation to the amounts claimed in the statutory demand, there is some force in the argument that those issues were raised largely after the receipt of the statutory demand and notwithstanding correspondence prior to the statutory demand that suggests the invoices may have been admitted. Even at its highest, the plaintiff does not take issue with a substantial portion of the invoices which are claimed in the statutory demand. I also note that the matters raised by Mr Padia in support of his adjournment application were directed largely towards having sufficient time to enable the plaintiff to negotiate a resolution of the outstanding debts, or, if not, then to pay them. None of that is necessarily determinative of the rights and obligations of the parties to the agreement, but it does provide an appropriate rationale for the defendant to issue a statutory demand. In Muller v Academic Systems Pty Ltd,[6] Atkinson J observed:
It is trite law that a statutory demand is not merely a debt collection device. It cannot and should not be used when the creditor is aware that there is a genuine dispute in respect of the debt. However, where there is no dispute as to the debt, a creditor may use the statutory demand procedure and subsequently make an application to wind up the company in insolvency if the statutory demand is not satisfied.[7]
[6][2007] QCA 218.
[7]Ibid [40] (citation omitted); see also Farid Assaf, Assaf’s Winding Up in Insolvency (LexisNexis, 3rd ed, 2021) 35–6.
I am not satisfied that the defendant’s purpose in serving the statutory demand was other than a purpose to which a statutory demand is directed.[8] It follows that I am not satisfied that it was an abuse of process.
[8]Roberts v Wayne Roberts Concrete Constructions Pty Ltd (2004) 208 ALR 532, 547–8 [55]–[56].
Conclusion
As a consequence I find that:
(a) there is a genuine dispute about the calculation of the three invoices addressed in the 3 August letter with the result that the admitted total of the statutory demand for the purposes of s 459H(2) of the Corporations Act is $276,684.61;
(b) the offsetting total for the purposes of s 459H(2) is $95,144.55, which includes the claim for the unpaid invoice in the amount of $52,800, and the claim for the unpaid commission of $42,344.55; and
(c) the substantiated amount for the purposes of s 459H(2) is $181,540.06.
I will order that, pursuant to s 459H(4) of the Corporations Act, the statutory demand be varied accordingly and declare that it have effect, as so varied, as from when the statutory demand was served on the plaintiff.
By email dated 19 December 2022, the Court was notified that administrators were appointed to the plaintiff on 4 November 2022. I will direct that if any party seeks any orders as to costs, they should file and serve written submissions supporting such application by 1 February 2023.
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