Stone Resources Australia Ltd v M Drilling Pty Ltd - [2013] WASC 39

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: STONE RESOURCES AUSTRALIA LTD -v- V M DRILLING PTY LTD [2013] WASC 39

CORAM: MASTER SANDERSON

HEARD: 6 FEBRUARY 2013

DELIVERED : 6 FEBRUARY 2013

PUBLISHED : 12 FEBRUARY 2013

FILE NO/S: COR 161 of 2012

BETWEEN: STONE RESOURCES AUSTRALIA LTD
Plaintiff
AND
V M DRILLING PTY LTD
Defendant

Catchwords:

Corporation law - Application to set aside statutory demand - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff: Mr C L Hollett
Defendant: Mr A J Papamatheos

Solicitors:

Plaintiff: Bowen Buchbinder Vilensky
Defendant: Lawton Lawyers

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

Createc Pty Ltd v Design Signs Pty Ltd (2009) 71 ACSR 602
Graywinter Properties Pty Ltd v Dyer (1997) 15 ACLC 302

MASTER SANDERSON: This was the plaintiff's application to set aside a statutory demand. After hearing argument I dismissed the application. I indicated I would publish reasons for doing so at a later date. These are those reasons.
Before dealing with the merits of the application itself I should say something as to the admissibility of certain evidence the plaintiff sought to rely upon. In support of its application, the plaintiff sought to rely upon an affidavit of Wenhua Shan affirmed 2 November 2012. Mr Shan is a Chinese National who does not speak or read English. He makes that point at par 4 of his affidavit. He then goes on to sign the affidavit (which is in English) and his signature was witnessed by a legal practitioner. The plaintiff also sought to rely on an affidavit of Sheng Hui Lu affirmed 2 November 2012. Mr Lu is the Assistant Chief Executive Officer of the plaintiff. He says he has acted as an interpreter for Mr Shan. He also details the circumstances in which Mr Shan's affidavit was affirmed (par 6):
At the time when Mr Shan swore this affidavit I translated the contents of the affidavit from English to Chinese and read the document aloud to Mr Shan. I was satisfied that Mr Shan indicated to me that he understood the contents of the document that I read to him and he instructed me that he agreed with the contents of the affidavit.
Section 14 of the Oaths, Affidavits and Statutory Declarations Act 2005 (WA) is in the following form:
Affidavits and declarations by people not conversant with English
(1)If the person making an affidavit is not sufficiently conversant with English to be able to make the affidavit in English, the person may make the affidavit in another language but the affidavit is not admissible in a court or by a person acting judicially unless -
(a)the affidavit is translated into written English by a suitably qualified translator; and
(b)the translator makes an affidavit -
(i)that sets out his or her qualifications as a translator;
(ii)that says the English translation is accurate; and
(iii)that has the English translation attached to it.
(2)Subsection (1), with any necessary changes, applies to and in respect of a statutory declaration as if each reference in the subsection to 'affidavit' were a reference to 'statutory declaration'.
Clearly there has been no compliance with that section. Indeed almost every requirement of the section has been breached. The affidavit was produced in English and then translated into Chinese by Mr Lu. Section 14(1)(a) anticipates the original of the affidavit being in the native language of the deponent (in this case Chinese) and then translated into English by 'a suitably qualified translator'. Here it is not clear when Mr Lu is a suitably qualified translator; he has not set out his qualifications as a translator. He is not in a position to say the English translation is accurate because there is no Chinese original.
It is possible under s 16 of the Act to excuse a failure to comply precisely with the terms of the Act. In particular, s 16(2) is in the following form:
The validity of an oath, affirmation, affidavit or statutory declaration is not affected by the fact that the required procedure for taking or making it is not followed exactly as long as the procedure actually followed substantially complies with the required procedure.
In my view, this is not a case where the procedure substantially complied with what is required. It was altogether back‑to‑front. In the circumstances, I was not prepared to admit the affidavit into evidence.
Counsel for the defendant raised two further objections to the admissibility of Mr Shan's affidavit. First, he said it raised matters which were not contained in the original affidavit supporting the application. Therefore the affidavit was not admissible under the so‑called 'Graywinter' principle: see Graywinter Properties Pty Ltd v Dyer (1997) 15 ACLC 302. Counsel's complaint was justified. In broad terms the plaintiff says there is a genuine dispute as to the debt because it is not satisfied the work was actually done. Mr Shan's evidence was not the work was not done, but it was not done properly. It was not until Mr Shan's affidavit any suggestion to that effect was made. In my view, there is not a sufficient connection between the complaint in the affidavit supporting the application and Mr Shan's evidence to warrant his affidavit being admitted. Second, the plaintiff says Mr Shan purports to give evidence as an expert when in fact there is no evidence as to his qualifications. In my view, there is no substance in this objection. Mr Shan says he is a qualified geologist and has been so since 1993. He is the chief geologist for the plaintiff and has been since 2011. In my view, the affidavit sets out the basis upon which Mr Shan gives evidence and for the purposes of an application to set aside a statutory demand and his evidence would not be inadmissible on the basis of his lack of qualifications.
The primary argument of the plaintiff was the demand was issued for debt collection purposes and therefore was an abuse of process. The plaintiff argued it should be set aside for 'some other reason' under s 459J(1) of the Corporations Act 2001 (WA). The argument was formulated in this way.
There will be an abuse of process if the purpose of the party issuing a statutory demand is not to wind up the company on the ground of insolvency but rather to use the process as a means of obtaining an advantage for which the process is not designed or to obtain some collateral advantage beyond what the law offers, such as the application of pressure to compel payment of a disputed debt: see Createc Pty Ltd v Design Signs Pty Ltd (2009) 71 ACSR 602 [48] ‑ [50]. The plaintiff is a publicly listed company being listed in the Australian Stock Exchange with an ordinary share issue as at 30 September 2012 of 635,970,520 ordinary shares. The plaintiff says there is no real issue as to the solvency. Furthermore, the documents filed in support of the application support the view the plaintiff is solvent.
There are two answers to the plaintiff's argument. First, correspondence passing between the parties in relation to the alleged debt strongly suggested that the plaintiff was experiencing difficulties paying its debts. In opposition to the application, the defendant relied on an affidavit of Matthew Robin May sworn 7 December 2012. Appearing as annexure MRM 37 to that affidavit is a series of emails passing between officers of the plaintiff and the defendant. This email chain suggests the plaintiff was having difficulty paying the defendant's accounts. The emails say nothing about any defect in the work or work not done. Reading these emails and the documents generally it was not unreasonable for the defendant to question whether the plaintiff was able to meet its debts as and when they fell due - that is to say whether the plaintiff was solvent.
Second, the 2012 annual report of the plaintiff does raise some concerns about its solvency. In opposition to the application the defendant relied on an affidavit of Lara Claire Heaney sworn 29 January 2013. Appearing as annexure LCH 1 to that affidavit is the annual report of the plaintiff. Under the 'Notes to the Financial Statements' section of the report there appears as Note 1(f) the following:
The Directors recognise that additional funding is required to ensure the Company can pay its debts as and when they fall due and to meet its ongoing operational activities. The Directors consider that the Company is a going concern and has received a letter of support from Stone Resources Ltd (SRL) its parent company. In addition, the Company has received commitments/loan from the China Development Bank of $13,297,700 (equivalent of USD$13,000,000) providing them with the financial ability to honour their commitment.
Also forming part of the plaintiff's annual report is the independent auditor's report prepared by accountants H L B Mann Judd. In the course of their report the auditors say:
Without qualification to the opinion expressed above, we draw attention to Note 1(f) to the financial statements which indicate that the ability of the company to continue as a going concern and, therefore, met its debts and commitments as and when they fall due is dependent the (sic) continued support from Stone Resources Ltd, its parent company. Should the parent entity be unable to provide sufficient funding, there is a material uncertainty that may cast significant doubt over whether the company will continue as a going concern and, therefore, whether it will realise its assets, and extinguish its liabilities in the normal course of business and the amount stated in the financial report.
The plaintiff filed evidence to suggest that it is solvent, that it has the support of its parent company and that it is well able to meet its debts as and when they fall due. All of that may be correct; it is not for me to make a decision on that question in the course of this application. But taken in the overall, it can be said in this case it is clear and obvious the defendant issued the statutory demand based upon concerns as to whether the plaintiff could make payment of its debts.
The plaintiff also maintained there was a genuine dispute about whether the debt, the subject of the statutory demand, is owing. In support of the application the plaintiff relied on an affidavit of Kai Ye Shuai affirmed 8 October 2012. There are only three relevant paragraphs and I will quote them in full:
10.At the time that Mr Bowen swore his Affidavit in support of the statutory demand, the alleged debt was in dispute and was the subject of discussions between representatives of the Plaintiff and the Defendant and I truly believe that Mr Bowen cannot claim that the debt was not genuinely disputed.
11.From the knowledge which I have obtained from perusing and studying correspondence maintained by the Plaintiff in relation to the Defendant, I truly believe that the Plaintiff has received various invoices from the Defendant but the Plaintiff disputes the charges in the various invoices issued by the Defendant to the Plaintiff on the basis that the Plaintiff does not know whether or not work has actually been undertaken that has been charged for.
12.By reason of the matters deposed to in this Affidavit, I truly believe that there is a genuine dispute between the Plaintiff and the Defendant regarding the existence or the amount of the debt to which Statutory Demand relates.
Really, what Mr Shuai says is he is not sure the work was done. No further evidence was adduced to expand upon that bold assertion. There is nothing in the correspondence which explains why Mr Shuai harbours doubts. In a matter such as this it is not surprising when an application has to be made within 21 days a bare assertion of a dispute is all that finds its way into an affidavit. But if there is a genuine dispute it might be expected the plaintiff would file further evidence outlining the nature of the dispute and why it is of the view the work was not done. Here there is a paucity of evidence.
That is to be contrasted with the voluminous evidence which was lodged on behalf of the defendant. The affidavits of Mr May and Andrew James Hawker run into thousands of pages. They go into mind‑numbing detail explaining what was done and how it was done properly. It is unnecessary for present purposes to analyse any of this material. The failing here is in the plaintiff not providing evidence to support its bare assertion the work has not been done. The plaintiff did not make out there was a genuine dispute as to the existence of the debt.
For these reasons I dismissed the plaintiff's application. At the plaintiff's request I did extend the time for compliance with the statutory demand by 28 days. I also ordered the plaintiff pay the defendant's costs of the application included reserved costs.