FEDERAL COURT OF AUSTRALIA
Sandys Swim Pty Ltd v Morgan [2022] FCA 1574
File number: ACD 42 of 2022 Judgment of: SARAH C DERRINGTON J Date of judgment: 23 December 2022 Catchwords: CORPORATIONS – application to set aside a statutory demand pursuant to s 459G of the Corporations Act 2001 (Cth) – whether application served within 21 days as required by s 459G – where statutory demand served by email and post – whether service effective by virtue of s 600G and ss 105A and B when email received Legislation: Acts Interpretation Act 1901 (Cth), s 28A
Corporations Act 2001 (Cth), ss 9, 105A, 105B, 109X, 459E, 459G, 459H(1)(a) and (b), 459J, 600G
Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth)
Evidence Act 1995 (Cth), s 161
Federal Court of Australia Act 1976 (Cth), s 35A(5)
Federal Court Rules 2011 (Cth), r 1.34
Cases cited: Arcade Badge Embroidery Co Pty Ltd v Deputy Commissioner of Taxation [2005] ACTCA 3; 58 ATR 456
Bioaction Pty Ltd v Ogborne [2022] FCA 436; 159 ACSR 173
David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; 184 CLR 265
In the matter of Black Tie Holdings Pty Ltd [2022] NSWSC 781
Jin Xin Investment & Trade (Australia) Pty Ltd v ISC Property Pty Ltd [2006] NSWSC 7; 24 ACLC 281
Mangraviti Pty Ltd, Joe v Lumley Finance Ltd [2010] NSWSC 61
Martin v Commonwealth Bank of Australia [2001] FCA 87
Mazukov v University of Tasmania [2004] FCAFC 159
Miletich v Murchie [2012] FCA 1013; 297 ALR 566
Division: General Division Registry: Australian Capital Territory National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 57 Date of hearing: 19 December 2022 Counsel for the Applicant: By its Director, Mr A S Brown Counsel for the Respondent: Mr C H Matthews Solicitor for the Respondent: Gibbs Wright Litigation Lawyers ORDERS
ACD 42 of 2022 BETWEEN: SANDYS SWIM PTY LTD ABN 73 641 260 451
Applicant
AND: LANCE MORGAN
Respondent
ORDER MADE BY:
SARAH C DERRINGTON J
DATE OF ORDER:
23 DECEMBER 2022
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The parties provide written submissions, not exceeding three pages, on appropriate costs and other consequential orders, on or before 20 January 2023.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
SARAH C DERRINGTON J
INTRODUCTION
The Applicant seeks to set aside the respondent creditor’s statutory demand for payment dated 26 July 2022 (the application). A Registrar of this Court has refused the application. The matter comes before me on a hearing de novo: Federal Court of Australia Act 1976 (Cth), s 35A(5); Martin v Commonwealth Bank of Australia [2001] FCA…
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- AGLC
- Sandys Swim Pty Ltd v Morgan [2022] FCA 1574
- Case
- [2022] FCA 1574
- Decision Date
CaseChat Overview and Summary
The court had to resolve three issues: whether the application was served within 21 days of the statutory demand being served, whether there was a genuine dispute about the debt identified in the demand, and whether there was a genuine offsetting claim. The court found that the application was not served within the required 21 days. Furthermore, the court found no evidence of a genuine dispute or offsetting claim. Consequently, the court held that the statutory demand was valid and dismissed the application.
The court ordered that the application be dismissed and directed the parties to provide written submissions on appropriate costs and other consequential orders by 20 January 2023. The entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.
Orders
Orders of the court
1. The application be dismissed.
2. The parties provide written submissions, not exceeding three pages, on appropriate costs and other consequential orders, on or before 20 January 2023.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Three issues arise for determination.(a)Whether the Applicant failed to make and serve the application and supporting affidavit within 21 days after it was brought to the attention of the sole director, Mr Brown, such that the application fails to meet the statutory threshold in s 459G of the Corporations Act 2001 (Cth);(b)Whether there is a genuine dispute about the debt identified in the demand pursuant to s 459H(1)(a) of the Corporations Act.(c)Whether there is a genuine offsetting claim pursuant to s 459H(1)(b) of the Corporations Act.Chronology of relevant events On or about 24 September 2021, the Applicant commenced proceedings in the District Court of Queensland against Mr Morgan claiming, inter alia, damages for alleged breaches of an informal lease. The Applicant also has proceedings on foot in the Queensland Civil and Administrative Tribunal against Mr Morgan for the payment of money for services which were commenced on 5 September 2022. These proceedings are said to be relevant to the genuine offsetting claim (Affidavit of Alex Brown 04.10.22 [4] and Annexure ASB80). On 9 June 2022, Dearden DCJ dismissed the Applicant’s summary judgment application in relation to its claim in the District Court and ordered, inter alia, that the Applicant pay Mr Morgan’s costs of two applications brought by the Applicant, and Mr Morgan’s successful application for security for costs. On 7 July 2022, the Applicant filed and served an appeal from the decision of Dearden DCJ (CA 7968/22). On 21 July 2022, Barlow QC DCJ had before him five applications brought by the Applicant. Judge Barlow QC dismissed three, adjourned one, and partially dismissed the fifth. His Honour ordered that Mr Brown pay jointly and severally Mr Morgan’s cost of each application heard and determined on that day, fixed in the sum of $12,455 plus GST. It is that amount that is the subject of the statutory demand. On 16 August 2022, the Applicant filed an appeal from the orders of Barlow QC DCJ (CA9733/22). The Applicant has not complied with the timetabling orders in relation to the two appeals which were ordered by the Court of Appeal to be heard together. On 26 July 2022, Mr Morgan served a statutory demand on the applicant seeking payment of the unpaid costs order made by Barlow QC DCJ in the sum of $13,700.05 comprised of the fixed costs of $12, 255 plus GST. On 17 August 2022, Mr Morgan filed and served an application to wind up the Applicant. On 19 August 2022, the Applicant filed the current application to set aside the statutory demand pursuant to s 459G of the Corporations Act on the basis that there is a genuine dispute and a genuine offsetting claim between the parties. The application and supporting affidavit were also served on 19 August 2022 (Affidavit of Alex Brown 25.08.22 [4]-[5] and Annexures ASB9 and ASB10).WAS THE APPLICATION SERVED WITHIN TIME? The primary issue to be resolved is whether 21 days had elapsed from the date the demand was served, 26 July 2022, and the date when the application to set aside the statutory demand was filed and served, 19 August 2022. Mr Morgan contends that the Applicant was obliged by s 459G(2) of the Corporations Act to file and serve its application by 16 August 2022 and, consequently, the Court does not have jurisdiction to determine the application.