Riverlands Club Holdings Ltd v Suzy David trading as David Legal

[2008] NSWSC 1065

CITATION:	Riverlands Club Holdings Ltd v Suzy David trading as David Legal [2008] NSWSC 1065
HEARING DATE(S):	09/10/08
JUDGMENT DATE :	9 October 2008
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
EX TEMPORE JUDGMENT DATE:	9 October 2008
DECISION:	Statutory demand set aside
CATCHWORDS:	CORPORATIONS - winding up - statutory demand - application for order setting aside - Local Court judgment entered following lodgment of certificate of assessment of costs - judgment in favour of two persons - statutory demand issued by one of those persons in respect of debt to that person only - whether genuine dispute as to existence of debt
LEGISLATION CITED:	Corporations Act 2001 (Cth), ss 9, 459G, 459H(1)(a), 459J(1)(a)
CATEGORY:	Principal judgment
CASES CITED:	115 Constitution Road Pty Ltd v Downey [2008] NSWSC 997 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 Re Bowen; Ex parte Australian Workers' Union (1945) 13 ABC 275 Australian Workers' Union v Bowen (1946) 72 CLR 575 Manzo v 555/255 Pitt Street Pty Ltd (1990) 21 NSWLR 1
PARTIES:	Riverlands Club Holdings Ltd - Plaintiff Suzy David trading as David Legal - Defendant
FILE NUMBER(S):	SC 4311/08
COUNSEL:	Mr J T Johnson - Plaintiff Mr D R Pritchard SC/Mr M G McHugh - Defendant
SOLICITORS:	Blackstone Waterhouse Lawyers - Plaintiff David Legal - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

THURSDAY, 9 OCTOBER 2008

4311/2008 RIVERLANDS CLUB HOLDINGS PTY LIMITED v SUZY DAVID T/AS DAVID LEGAL

JUDGMENT

1 The plaintiff makes application under s 459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand dated 3 June 2008 served on it by the defendant who is described in the originating process as "Suzy David T/as David Legal".

2 Paragraph 1 of the statutory demand is in these terms:

“The company owes Suzy David t/as David Legal of 3/43 Harris Street, Fairfield NSW 2165 (‘ the creditor ’), the amount of $2,204.78 being the amount of the debt described in the Schedule.”

3 The schedule to which reference is made in paragraph 1 is as follows:

“ RIVERLANDS CLUB HOLDINGS PTY LTD

Date of Debt	Description of the Debt	Date of Certificate of Costs	Date of Judgement/ Order	Amount of Debt
15.06.07	Tax invoice for legal services	18.04.08	3.6.08	$2,204.78
Total Amount of the Debt	$2,204.78 (inclusive of GST)

“

4 Although the plaintiff advances allegations of abuse of process, its principal contention is that the debt to which the statutory demand relates, being the debt described in paragraph 1 and the schedule as I have mentioned, does not exist. It thus maintains that there is a genuine dispute as to the existence of the debt, that being a matter within s 459H(1)(a). This ground is squarely raised by paragraph 8 of Mr Taylor's affidavit of 24 June 2008 filed with the originating process.

5 The plaintiff's case, simply put, is that it cannot, as a matter of law, be said - as the statutory demand says - that the plaintiff "owes Suzy David T/as David Legal" an amount of $2,204.78.

6 There is in evidence a judgment of the Local Court at Fairfield in a total sum of $2,204.78 in favour of "Suzy David & Fred David T/as David Legal" as plaintiff and against the present plaintiff as defendant. This judgment was entered in consequence of the filing at the Local Court of documents created following an assessment of costs under the Legal Profession Act 2004 (I should point out that Suzy David and Fred David are both solicitors). There was no adjudication of any dispute or claim by the Local Court. There was merely entry of judgment in the terms I have described in consequence of the operation of statutory provisions.

7 As I understand it, the plaintiff accepts that a sum of $2,204.78 is owing, due and payable by it to "Suzy David & Fred David T/as David Legal" in consequence of the judgment. But that, the plaintiff says, does not mean that a sum $2,204.78 is, as the statutory demand states, owing, due and payable by it to "Suzy David T/as David Legal".

8 I was taken to cases about the nature of a debt owed to two or more persons and it is sufficiently clear, in my view, that the judgment debt in this case is a joint debt, that is, that it is owed to Suzy David and Fred David jointly. Reference was made in that respect to the decision of Clyne J in Re Bowen; Ex parte Australian Workers' Union (1945) 13 ABC 275 at 278 (and, on appeal to the High Court, Australian Workers' Union v Bowen (1946) 72 CLR 575).

9 I was also taken to the decision of Hodgson J in Manzo v 555/255 Pitt Street Pty Ltd (1990) 21 NSWLR 1 where it is indicated that, in the case of a jointly held debt, payment to one of the joint creditors constitutes a discharge.

10 But the question here is not about who can give an effective acquittance to the debtor. It is the separate and, I think, simple question whether the debt described in the statutory demand exists.

11 The statutory demand is predicated on the existence of a debt owing, due and payable by the plaintiff to a specified person alone. The only debt that appears, in reality, to be owing, due and payable by the plaintiff is a debt owing, due and payable to two persons of whom the specified person is one. And, as I have said, it is sufficiently clear that it is owing, due and payable to the two persons jointly.

12 This case is distinguishable from the recent decision of Rein J in 115 Constitution Road Pty Ltd v Downey [2008] NSWSC 997 to which I was taken in some detail. In that case, the statutory demand related to a debt owing, due and payable to two persons but was signed by only one of them. Here, the demand refers to a debt represented as being a debt owing due and payable to one person only; and it is signed by that one person. The lack of correspondence with which Rein J had to deal therefore does not arise in this case.

13 It is to my mind clear that the plaintiff has, to the standard required by Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, shown that there is, at the very least, a plausible contention requiring further investigation as to whether a debt as described in the demand (and therefore the debt to which the demand relates) is in existence; and this is so even though a debt of corresponding amount owing, due and payable to the defendant and another person jointly may be taken to exist. There is therefore a genuine dispute as to the existence of the debt to which the statutory demand relates.

14 It is, in my view, beside the point that both Suzy David and Fred David say that Suzy David alone is, as between them, solely entitled to the judgment debt. The judgment speaks for itself and I must take it as I find it. In any event, Fred David says quite clearly in his affidavit that he was at the relevant time a partner of Suzy David, albeit a "salary [sic] partner"; and Suzy David accepts that Fred David was a partner of hers. From this one would infer that they were in practice as partners and the debt was partnership property.

15 The matter may be disposed of on the s 459H(1)(a) ground alone.

16 Implicit in what I have said to this point is rejection of the submission that this is merely a case of "defect", which is defined by s 9 to include "misdescription of a debt" and "misdescription of a person". This case goes well beyond that. The issue of injustice raised by s 459J(1)(a) therefore does not arise.

17 In view of the position reached, there is no need for me to consider the abuse of process argument advanced by the plaintiff, which is based on an allegation of improper or collateral purpose in the issue of the statutory demand. I might say, however, in general terms that the argument is not compelling, given that we are dealing here with a mere statutory demand.

18 The order of the court will be that the statutory demand dated 3 June 2008 served by the defendant on the plaintiff be set aside.

[Counsel addressed on costs]

19 The plaintiff, having been successful, seeks an order for costs. It is submitted on the plaintiff’s behalf that it should be ordered that the costs be assessed on the indemnity basis.

20 The defendant does not seek to argue that costs should not follow the event but does say that assessment should not be on the indemnity basis.

21 I am not satisfied that there is any good reason to make the second order the plaintiff seeks. The circumstances cannot, in my view, be said to have involved “relevant delinquency” on the defendant’s part, in the sense referred to in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72. There were matters properly requiring investigation. They were dealt with in submissions and the matter was determined on its merits after reasonable and responsible argument on both sides.

22 I order that the defendant pay the plaintiff's costs of the proceedings, such costs to be assessed on the ordinary basis.

**********