SANQUESTA Pty Ltd v Midpoint Holdings Pty Ltd

[2013] WASC 388

SANQUESTA PTY LTD -v- MIDPOINT HOLDINGS PTY LTD [2013] WASC 388

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2013] WASC 388
Case No:	COR:151/2013	Heard:	14 OCTOBER 2013
Coram:	MASTER SANDERSON	Delivered:	24/10/13
No of pages:	7	Judgment Part:	1 of 1
Result:	Demand set aside
Category:	B
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Parties:	SANQUESTA PTY LTD (ACN 081 876 904) as Trustee for the CAPONE INVESTMENT TRUST MIDPOINT HOLDINGS PTY LTD (ACN 009 421 381)
Catchwords:	Corporations Act 2001 (Cth) Application to set aside a statutory demand Turns on own facts
Legislation:	Nil
Case References:	Nil

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : SANQUESTA PTY LTD -v- MIDPOINT HOLDINGS PTY LTD [2013] WASC 388 CORAM : MASTER SANDERSON HEARD : 14 OCTOBER 2013 DELIVERED : 24 OCTOBER 2013 FILE NO/S : COR 151 of 2013 BETWEEN : SANQUESTA PTY LTD (ACN 081 876 904) as Trustee for the CAPONE INVESTMENT TRUST

Plaintiff

AND

MIDPOINT HOLDINGS PTY LTD (ACN 009 421 381)
Defendant

Catchwords:

Corporations Act 2001 (Cth) - Application to set aside a statutory demand - Turns on own facts

Legislation:

Nil

Result:

Demand set aside

Category: B

Representation:

Counsel:

Plaintiff : Mr A P Hershowitz
Defendant : Mr G J Douglas

Solicitors:

Plaintiff : Granich Partners
Defendant : Hotchkin Hanly

Case(s) referred to in judgment(s):

Nil


1 MASTER SANDERSON: This is an application to set aside a statutory demand. The point at issue involves the interaction between the statutory demand and certain provisions of the Civil Judgments Enforcement Act 2004 (WA). For reasons which follow the demand ought be set aside.

2 The facts can be shortly stated. The defendant served on the plaintiff the creditor's statutory demand for payment of debt dated 3 July 2013. The demand states that the debt owing arises from a 'judgment debt pursuant to a Debt Appropriation Order of the District Court of Western Australia dated 1 July 2013'. The amount of the demand was $148,144.01. The statutory demand was not accompanied by an affidavit. However attached to the statutory demand was a document headed 'Form 18 - Debt Appropriation Order and Notice to Third Persons of Obligations'.

3 The plaintiff applies to set the statutory demand aside on two bases. First it is said the statutory demand is defective in that it does not comply with the provisions of s 459E of the Corporations Act 2001 (Cth) as it is not accompanied by an affidavit. Second it is said there is genuine dispute as to whether the amount said to be owed under the debt appropriation order is in fact owed by the plaintiff to the defendant.

4 The further background facts are these. The defendant leased commercial premises to Bromir Pty Ltd (Bromir) as trustee for the ABM Family Trust. The term of the lease commenced on 17 November 2010 and expires on 16 November 2015. Mr Bartolo Gaetano Raffaele (Mr Raffaele) was the guarantor of all Bromir's obligations under the written lease. Following breaches of the lease the defendant commenced proceedings against Bromir and Mr Raffaele on or about 23 August 2010. Neither of the defendants filed an appearance. The defendant obtained default judgment against both on 29 November 2012. Both judgments were for the liquidated sum of $135,911.93 plus damages to be assessed. When damages were assessed the total sum owed by Bromir and Mr Raffaele was the amount the subject of the statutory demand.

5 As at 20 June 2013 Bromir owned a current asset in the form of a debt in the sum of $392,579. This appears from Bromir's financial statements which are annexure AS6 to the affidavit of Albert John Sertorio which appears as annexure MAC5 to the affidavit of Mark Anthony Cheveralls sworn 7 August 2013 and filed in opposition to this application. The debtor in this loan was the present plaintiff. There is no dispute between the parties about these facts.

6 On 21 June 2013 the defendant filed with the District Court an application for a debt appropriation order. That application was accompanied by the affidavit of Mr Sertorio to which I have just referred. It was also accompanied by an outline of submissions in support of the application for the debt appropriation order. Without hearing from the defendant a deputy registrar of the District Court made the debt appropriation order. That is the document which accompanied the statutory demand. On 25 June 2013 the defendant served the application documents on Mr Raffaele. On 26 June 2013 the defendant served the application documents on Bromir. It is to be noted the date of the debt appropriation order was 1 July 2013.

7 Prior to 27 June 2013 Bromir owed Jennie Lorraine Raffaele the sum of $562,152. This was an amount standing in a loan account. Bromir is trustee for the ABM Family Trust. Mrs Raffaele made a loan to Bromir of the $562,152 to set up and establish Bromir's business.

8 By way of deed of assignment and release dated 27 June 2013 Mrs Raffaele assigned the debt of $562,152 due by Bromir to her to the plaintiff. In consideration of the assignment the plaintiff released Mrs Raffaele from a debt owing by her in the sum of $362,234. By reason of the deed of assignment and release as at 27 June 2013 the plaintiff had a claim against Bromir for the amount of $562,152. By deed of set-off dated 28 June 2013 that debt was set-off against the sum of $392,579 owing by the plaintiff to Bromir. Consequently on the plaintiff's case Bromir is currently indebted to the plaintiff in the sum of $169,580. Accordingly, as at 28 June 2013 it is the plaintiff's position there was no money owing by the plaintiff to Bromir and no current asset owned by Bromir in the form of a debt in the sum of $392,579.

9 Section 49 of the Civil Judgments Enforcement Act deals with debt appropriation orders. It is in the following terms:

(1) In order to recover a judgment debt, a judgment creditor may apply to the court for an order requiring a person who owes or will or may owe an available debt to the judgment debtor alone or to the judgment debtor jointly with another or others to pay -

(a) the whole amount of the available debt; or

(b) such of the available debt as will satisfy the judgment debt,

to the judgment creditor at the time or times when the available debt would otherwise be paid to the judgment debtor.


(2) The court may make such an order, subject to sections 20(1) and 22.

(3) When or after making a debt appropriation order, the court may make an order under Schedule 1 clause 2, 3 or 4.

(4) A debt appropriation order may apply to more than one available debt that is or will be or may be owed by one person to the judgment debtor alone or to the judgment debtor jointly with another or others.

(5) Despite any other law, a debt appropriation order may be made in respect of any available debt owed by the State to the judgment debtor.

10 Section 50 of the Act deals with what must be in the debt appropriation order and requires the judgment creditor to serve the order on third persons. Once the order is served on a third party that third party then has certain obligations. These are covered in s 52 of the Act which is in the following terms:

(1) If -

(a) a third person is served with a debt appropriation order; and
(b) the appropriated debt under the order, or any part of it -

(i) is not or will not be or may not be due and payable until more than 7 days after the day on which the order is served; or

(ii) will not be due and payable until a condition is fulfilled,


the third person must within 7 days after the day on which the order is served give the judgment creditor a written notice stating -

(c) the date on which the appropriated debt, or any part of it, is or will be or may be due and payable; and

(d) the amount of the appropriated debt if that amount is less than the judgment debt.

(2) A third person who -

(a) pays an amount to the judgment creditor under a debt appropriation order; or

(b) retains an amount under section 53(1),

must give the judgment debtor a written notice containing details of the amounts.

(3) A person who knowingly makes a statement in a notice given under subsection (1) or (2) that is false or misleading in a material particular commits an offence.

Penalty: Imprisonment for 12 months.

11 The difficulty for the defendant in this case is the purported assignment of the debt took place before the debt appropriation order was served. The papers which were lodged with the District Court and led to the debt appropriation order being issued were served prior to the assignment taking place. But that is of no consequence. It is service of the order itself which triggers the third party's obligations. By the time the order was served the assignment had been perfected and on the plaintiff's case it was no longer indebted to Bromir. Thus it says there is a genuine dispute as to whether or not the plaintiff is indebted via the debt appropriation order to the defendant.

12 The defendant's answer is to refer to s 89 of the Property Law Act 1969 (WA). That section is in the following terms:

(1) Except as provided in this section, every alienation of property made, whether before or after the coming into operation of this Act, with intent to defraud creditors is voidable, at the instance of any person thereby prejudiced.

(2) This section does not affect the law of bankruptcy for the time being in force.

(3) This section does not extend to any estate or interest in property alienated for valuable consideration and in good faith or upon good consideration and in good faith to any person not having, at the time of the alienation, notice of the intent to defraud creditors.

13 This section requires a determination that the alienation of property was done with the intention to defraud creditors. That requires a concluded view to be reached as to the intentions of Mrs Raffaele and the directors of Bromir. It is difficult, on the face of it, to see why the assignment should have taken place when it did other than for the purpose of defeating the defendant as a creditor. But an application to set aside a statutory demand is not the forum to make a final decision on this point. I also accept there is evidence which suggests in the past the Raffaele interests have taken steps which might well be construed as an attempt to put property out of reach of creditors. That does not alter the position. There is clearly a genuine dispute in this case as to whether the plaintiff is indebted to the defendant.

14 The statutory demand ought be set aside. Subject to hearing from the parties the defendant ought pay the plaintiff's costs of the application.