Sacon Constructions Pty Ltd v Concrite Quarries Pty Ltd

[1997] FCA 843

FEDERAL COURT OF AUSTRALIA

COMPANIES - Statutory Demand - Setting aside - Supporting affidavit - Minimum requirements of supporting affidavit under section 459G(3) of the Corporations Law (Cth)

Corporations Law (Cth) ss 459G, 459H, 459S

Dromore Fresh Produce Pty Ltd v W Paton Fertilizers Pty Ltd (1997) 15 ACLC 424 - referred to
Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 14 ACLC 1,703 - applied
John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716 - applied
Re Hire Works Pty Limited; Hire Works Pty Ltd v Elexpo Pty Ltd (1996) 14 ACLC 111 - distinguished
Re: Louisbridge Pty Ltd [1994] 2 Qd R 144 - referred to

SACON CONSTRUCTIONS PTY LTD ACN 002 848 722 v
CONCRITE QUARRIES PTY LIMITED ACN 002 232 859

NG 3151 of 1997

SACON CONSTRUCTIONS PTY LTD ACN 002 848 722 v
CONCRITE PTY LIMITED ACN 000 795 166

NG 3152 of 1997

EMMETT J
SYDNEY
15 AUGUST 1997

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 3151 OF 1997

BETWEEN:	SACON CONSTRUCTIONS PTY LTD ACN 002 848 722 Applicant
AND:	CONCRITE QUARRIES PTY LIMITED ACN 002 232 859 Respondent

NG 3152 of 1997

BETWEEN:	SACON CONSTRUCTIONS PTY LTD ACN 002 848 722 Applicant
AND:	CONCRITE PTY LIMITED ACN 000 795 166 Respondent
JUDGE(S):		EMMETT J
DATE OF ORDER:		15 AUGUST 1997
WHERE MADE:		SYDNEY

THE COURT ORDERS THAT:

1. The applications be dismissed.

2. The applicant pay the respondent’s costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 3151 of 1997

BETWEEN:	SACON CONSTRUCTIONS PTY LTD ACN 002 848 722 Applicant
AND:	CONCRITE QUARRIES PTY LIMITED ACN 002 232 859 Respondent

NG 3152 of 1997

BETWEEN:	SACON CONSTRUCTIONS PTY LTD ACN 002 848 722 Applicant
AND:	CONCRITE PTY LIMITED ACN 000 795 166 Respondent
JUDGE(S):	EMMETT J
DATE:	15 AUGUST 1997
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

HIS HONOUR:  There are two applications before me.  In each of them the applicant is Sacon Constructions Pty Limited (“Sacon”). I gather, from their names that the respondents in the two applications are related.  The applications are, in effect, identical and I will deal with the application in NG 3151 of 1997 on the assumption that what I say in relation to that application would also apply to NG 3152 of 1997.

The proceeding is an application under section 459G of the Corporations Law to set aside a statutory demand. Section 459G(1) provides that a company may apply to the court for an order setting aside a statutory demand served on the company. Under section 459G(2) such an application may only be made within 21 days after the demand is so served. Section 459G(3) then provides:

An application is made in accordance with the section only if, within those 21 days:

(a)      an affidavit supporting the application is filed with the court; and

(b)a copy of the application and a copy of the supporting affidavit, are served on the person who served the demand on the company.

Having regard to the preamble to section 459G(3) it is somewhat curious that section 459G(2) does not specify that an application may only be made in accordance with the section, such that 459G(3) would specify the only circumstances in which the application is made in accordance with the section. However, I think that is how 459G(2) must be read. The consequence is that unless an application is made in accordance with the section, it must fail.

The issue is whether within the 21 days after the statutory demand was served, an affidavit supporting the application was filed with the court.  It is common ground that the application was made within 21 days.  It is also common ground that an affidavit expressed to be affidavit in support was also served within 21 days.

The affidavit in question is in the following terms:

(1)      I am the director of the applicant company.

(2)I am in receipt of the statutory demand of debt issued pursuant to section 459E, from the creditor Concrite Quarries Pty Limited.

(3)I have inspected the demand and attached affidavit.  The debt is disputed.  The debtor has a cross-claim equal to or greater then [sic] the amount claimed.

There was attached to the affidavit a copy of the demand and an affidavit under section 459E of the Law. The application before me today is for summary dismissal of the application to set aside the demand on the ground, in effect, that the application is incompetent. The contention by the respondent, to which I shall refer as Concrite, is that, in order to satisfy section 459G(3), an affidavit must say something more than a mere assertion that there is a dispute or that there is a cross-claim. Reliance was placed on the decision of Sundberg J in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 14 ACLC 1,703. There his Honour said that in order to be a supporting affidavit, an affidavit must say something that promotes the company's case. The affidavit must disclose facts showing that there is a genuine dispute between the parties. His Honour said that a mere assertion that there is a genuine dispute is not enough, nor is a bare claim that the debt is disputed sufficient. However, while such an affidavit need not go into evidence, it must at least read like a pleading.

Reliance was placed by Sacon on the decision of Senior Master Mahoney in Re: Hire Works Pty Limited; Hire Works Pty Ltd v Elexpo Pty Ltd (1996) 14 ACLC 111 to the effect that compliance with section 459G(3) is not necessarily jurisdictional. The Master said (at 114):

...whether an affidavit purporting to satisfy the requirements of s 459G(3) will be held to have done so, or not, will depend on the circumstances of the case. This means that, if there is an affidavit filed and served as required, a question with respect to its sufficiency is not jurisdictional. In other words, that the affidavit does not provide “grounds for concluding there is a genuine dispute... or that the company has an offsetting claim” does not necessarily mean that the application must be dismissed....

He also said:

...even where (as here) the affidavit contains no more than an assertion of dispute, it would not be correct summarily to dismiss the application without the applicant’s having an opportunity to explain why, (if it does not appear in the affidavit) the deponent said no more.  It may be that there is a valid explanation, for example,  that the person with detailed knowledge of the facts was unavailable. It must always be borne in mind that the procedural requirements imposed on a company desiring to have a statutory demand set aside are onerous; and that the consequence of failure to file and serve the application and affidavit in support within 21 days of the service of the statutory demand cannot be relieved...

He considered therefore that:

...in a case where, for example, the only director with knowledge of the facts, was ill or outside Australia or for some other reason could not make the affidavit required by s 459G(3), the court would not readily dismiss a company's application under s 459G(3) on the ground that the affidavit in support did not achieve the standard referred to in John Holland and Louisbridge. (the authorities to which he referred).

Sundberg J in Graywinter Properties relied on a decision of Young J in John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716 at 718. Young J, in Dromore Fresh Produce Pty Ltd v W Paton Fertilizers Pty Ltd (1997) 15 ACLC 424, after referring to his own decision in John Holland Construction and Engineering Pty Ltd and to the decision of Ryan J of the Supreme Court of Queensland in Re: Louisbridge Pty Ltd [1994] 2 Qd R 144 at 145 considered that the thinking of Sundberg J in Graywinter was correct.

I am disposed to agree with those observations.  The object of those provisions was to avoid having these sorts of disputes on the hearing of a winding up application.  That object would be best served by requiring a company in receipt of a demand to specify the grounds upon which it says there should be no winding up application.

I do not consider that the affidavit to which I have referred satisfies the requirement as explained by Sundberg J that it “support” the application.  While it contains something more than an assertion that the debt is disputed, namely that Sacon has a cross-claim equal to or greater than the amount claimed, no attempt is made to explain what the nature of the cross-claim is or its quantification.

Counsel for Sacon also relied on some further evidence filed today.  The first was a letter written by the solicitors for Sacon indicating that the application for summary dismissal would be opposed.

Some particulars were set out in that letter of the nature of the cross-claim as follows:

a.That your client has, on previous occasions over-charged for the supply of concrete.

b.Our client's own calculations indicate that they have been overcharged for 1000 cubic metres of concrete.

c.Further it was a condition of the Contract that your client shall provide comprehensive strength test results.  Your client has failed to provide the required test results.

Due to your client's breach the sum of $116,301 is being withheld by the project builder.

Contrary to your affidavit our client does have a legitimate dispute with your client.

We require time to provide comprehensive affidavits from our engineers, site foreman etc.

This matter should be dealt with in the usual way by the courts.

The affidavits that were filed support the assertions made in paragraphs a, b and c above. However, the evidence does not explain why that material was not filed within the period of 21 days contemplated by section 459G. In the circumstances, to the extent that the qualification contemplated by Master Mahoney is correct, it would not be satisfied in the present case. That is to say, my conclusion is that the affidavit was not a supporting affidavit and there is no satisfactory explanation as to why the particulars which were subsequently made available were not the subject of an affidavit served within the 21 day period.

I should say that if that material had been the subject of an affidavit served within 21 days and there was no other material to suggest that the assertions were made otherwise than bona fide, I would probably have been satisfied as to the matters set out in section 459H(1). I make no finding about those matters because that question was not in issue and Concrite has made no effort to oppose the matters that were deposed to in the affidavits before me.

In the circumstances it seems to me that the subsequent pursuit of the application would be futile, since it is doomed to failure.  The application has not been made in accordance with the section because an affidavit supporting the application was not filed within the 21 days after the demand was so served. Accordingly it appears to me that the appropriate course is to dismiss Sacon’s application.  It follows that Sacon should pay Concrite's costs.

I should observe, however, that having regard to the tentative conclusion which I have reached if a winding-up application were to be made and leave were to be granted under section 459S(1) for the matters which are the subject of these affidavits to be relied upon in opposition to a winding-up application, the question of the cost of this application may be relevant for consideration of the Court dealing with that application. It is not appropriate for me to endeavour to decide that question in advance, but I make the observation for the benefit of any court dealing with a winding up application.

The order that I make in application NG 3151 of 1997 is that the application be dismissed with costs, including reserved costs.  I make the same order in NG 3152 of 1997.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett

Associate:

Dated:            15 August 1997

Counsel for the Applicant:	S.M. Kettle
Solicitor for the Applicant:	Borak & Co
Counsel for the Respondent:	-
Solicitor for the Respondent:	Watkins Tapsell
Date of Hearing:	15 August 1997
Date of Judgment:	15 August 1997