The Uniting Church in Australia Property Trust (Q) v Northbank Place (Vic) Pty Ltd
[2009] VSC 660
•7 August 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 4148 of 2009
| THE UNITING CHURCH IN AUSTRALIA PROPERTY TRUST (Q) (ABN: 25 548 385 225) | Plaintiff |
| v | |
| NORTHBANK PLACE (VIC) PTY LTD (ACN: 093 463 597) | Defendant |
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ASSOCIATE JUDGE: | Gardiner | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 March 2009 | |
DATE OF JUDGMENT: | 7 August 2009 | |
CASE MAY BE CITED AS: | The Uniting Church in Australia Property Trust (Q) v Northbank Place (VIC) Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 660 | |
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CORPORATIONS – EXTERNAL ADMINISTRATION - INSOLVENCY – Application to set aside statutory demand under section 459G of the Corporations Act 2001 by plaintiff which was incorporated under The Uniting Church in Australia Act 1977 Qld – no jurisdiction to make order under 459 G – application dismissed.
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REASONS FOR DECISION
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | J Digby, QC with A Hourigan | HWL Ebsworth |
| For the Defendant | G Golvan, QC with J Twigg | Thomson Playford Cutlers |
HIS HONOUR:
By originating process filed 13 January 2009 the Plaintiff, The Uniting Church in Australia Property Trust (Q), makes application pursuant to Section 459G of the Corporations Act (“the Act”) to set aside a statutory demand (“the demand”) dated 22 December 2008 and served on it by the Defendant (“Northbank”) on 23 December 2008.
The following affidavits are relied upon by the Plaintiff in support of its application:
·David Allen sworn 12 January 2009 and 27 February 2009;
·Stephen Robert Peake sworn 12 January 2009 and 27 February 2009.
Northbank relies on the following affidavits in opposition to the application:
·Robert John Cooke sworn 12 February 2009 and 5 March 2009;
·Anthony George Ellul sworn 12 February 2009;
·Michael Warren sworn 18 March 2009.
As I have observed in my reasons for decision in the related proceeding involving The Uniting Church (NSW) Trust Association Ltd (4149 of 2009), the statutory demand which is the subject of this application makes a demand for the same debt and is identical in its terms to the demand served on The Uniting Church (NSW) Trust Association Ltd. There is a discrete question which arises in this application by reason that the Plaintiff is constituted under The Uniting Church in Australia Act 1977 (Qld) (“the UCAA”). This gives rise to a threshold point going to the jurisdiction of the Court to hear the application and to the efficacy of the demand in creating a deemed act of insolvency [1].
[1] See Section 459C of the Act
The demand is in the form of Form 509H of the Corporations Regulations and is said to be made pursuant to paragraph 459E(2)(e) of the Act. It is accompanied by an affidavit of Craig Grenfell Williams sworn 22 December 2008 in Form 7 of the Supreme Court (Corporations) Rules 2003.
The Plaintiff is incorporated pursuant to the provisions of s 11 of the UCAA which provides:
“There is hereby constituted a body called `The Uniting Church in Australia Property Trust (Q)’.”
Section 12 of the UCAA provides:
“The Trust shall –
(a)be a body corporate with perpetual succession and a common seal;v
(b)be capable in law of –
(i)suing and being sued; and
(ii) acquiring, holding and dealing with and disposing of real and personal
property; and(iii) doing and suffering all such acts and things as bodies corporate may by law do
and suffer.”The Plaintiff contends that it is not a “company” within the meaning of ss 459E(1) or 459P(1), which respectively provide:
Section 459E(1) “A person may serve of a company a demand relating to:
(a) a single debt that the company owes to the person, that is due and payable and whose amounts total at least the statutory minimum; or
(b) 2 or more debts that the company owes to the person, that are due and payable and whose amounts total at least the statutory minimum.”
Section 459P(1) “Any one or more of the following may apply to the Court for a company to be wound-up in insolvency…”.
(emphasis added).
Section 9 of the Act defines “company” to mean:
“…a company registered under this Act and:
(a) in Chapter 2K (other than sections 273A to 273E), includes a registrable body that is registered under Division 1 or 2 of Part 5B.2 of this Act; and
(b) in sections 273A to 273E, includes a registered body that carries on business outside its place of origin; and
( c)in Parts 5.7B and 5.8 (except sections 595 and 596), includes a Part 5.7 body; and
(d) in Part 5B.1, includes an unincorporated registerable body.”
Paragraphs (a), (b) and (d) have no application nor has paragraph (c), as resort is not being made to Parts 5.7B or 5.8 in the present context so as to include a Part 5.7 body. The Plaintiff is not a “company” within the meaning of s 9 of the Act and the demand is therefore not an effective demand under s 459E of the Act. A statutory demand made pursuant to s 459E(2) can only establish presumed insolvency under s 459C when served on a “company”. The Plaintiff could not be wound up under s 459P of the Act.
The question then arises as to whether, as Northbank contends, the Plaintiff is a “Part 5.7 body” and the demand is a demand under s 585(a) of the Act such that it would be susceptible of being wound-up under the provisions of that Part of the Act on the basis of non compliance with the demand.
A “Part 5.7 body” is defined in s 9 of the Act as:
“(a) a registrable body that is a registerable Australian body and:
(i) is registered under Division 1 of Part 5B.2; or
(ii)is not registered under that Division but carries on business in this jurisdiction and outside its place of origin; or
(b) a registerable body that is a foreign company and:
(i) is registered under Division 2 of Part 5B.2; or
(ii) is not registered under that Division but carries on business in Australia; or
( c)a partnership, association or other body (whether a body corporate or not) that consists of more than 5 members and that is not a registerable body;
but does not include an Aboriginal and Torres Strait Islander Corporation.”
Northbank does not contend that the Plaintiff is a “foreign company” or a “partnership, association or other body” within the meaning of sub-paragraphs (b) and (c) of the s 9 definition of a Part 5.7 body. To qualify as a Part 5.7 body the Plaintiff must therefore be a “registrable body” which is a “registrable Australian body” and be able satisfy either of the two limbs of sub-paragraph (a). The Plaintiff is not registered under Division 1 of Part 5B.2 and consideration is required to be given as to whether it “carries on business in this jurisdiction” [i.e. Australia] and outside its place of origin [i.e. Queensland]”.
Section 21 of the Act deals with the notion of carrying on business in Australia or a State or Territory. Section 21(2) of the Act provides:
“[Business property and shares] A reference to a body corporate carrying on business in Australia, or in a State or Territory, includes a reference to the body;
(a) establishing or using a share transfer office or share registration office in Australia, or in the State or Territory, as the case may be; or
(b)administering, managing, or otherwise dealing with, property situated in Australia, or in the State or Territory, as the case may be, as an agent, legal personal representative or trustee, whether by employees or agents or otherwise.”
Section 21(3) relevantly provides:
“[Exceptions to carrying on business] Despite sub-section (2), a body corporate does not carry on business in Australia, or in the State or Territory, merely because, in Australia, or in a State or Territory, as the case may be, the body:
…
(j) invests any of it’s funds or holds any property.”
The Plaintiff submits that by reason of s 21(3)(j), the Plaintiff does not “carry on business” so as to be considered a Part 5.7 body. I do not accept that submission. The Plaintiff is more than a mere investor and holder of property. By virtue of entering into the Umbrella Agreement and other agreements in connection with the construction of the building the subject of this application, I consider that the Plaintiff “carries on business” within the meaning mentioned in the definition of “Part 5.7B body” as defined in s 9 of the Act.
Northbank submits that the Plaintiff is a Part 5.7 Body because it is a “registrable body” and a “registrable Australian body” that carries on business in the Australian jurisdiction and outside of its place of origin. A “registrable body” is defined in s 9 as being “a registered Australian body or a registered foreign company.” The Act defines “registrable Australian body” as:
“(a) A body corporate, not being:
(i) a company; or
(ii) an exempt public authority; or
(iii) a corporation sole; or
(b) an unincorporated body that, under the law of its place of formation:
(i) may sue or be sued; or
(ii) may hold property;
in the name of its secretary or of an officer of the body duly appointed for that purpose but does not include foreign companies.”
To qualify as a Part 5.7 body, the Plaintiff must be a “registrable Australian body” and in order to be so characterised, it cannot be a “company” within the meaning of the Act. In my opinion the Plaintiff is a body corporate which is not a company and is in my view a Part 5.7 body.
Northbank in its submissions effectively concedes that the Plaintiff is not a “company” within the meaning of the Act, but submits that the demand it has served purports to be a demand on a “company” under s 585(a) of the Act which provides:
“For the purposes of this Part, a Part 5.7 body is taken to be unable to pay its debts if:
(a) a creditor, by assignment or otherwise, to whom the Part 5.7 body is indebted in a sum exceeding the statutory minimum then due has served on the Part 5.7 body, by leaving at its principal place of business in this jurisdiction or by delivering to the secretary or a director or senior manager of the Part 5.7 body or by otherwise serving in such manner as the Court approves or directs, a demand, signed by or on behalf of the creditor, requiring the body to pay the sum so due and the body has, for 3 weeks after the service of the demand, failed to pay the sum or to secure or compound for it to the satisfaction of the creditor;”
The demand served on the Plaintiff informs the Plaintiff of its rights and the steps required to make application to set aside the demand. Such matters are not relevant or appropriate to a s 585(a) demand.
In Residents against Improper Development Inc. v Chase Property Investment Pty Ltd[2], Barrett J of the Supreme Court of New South Wales considered an application to set aside a statutory demand which the Defendant served on the Plaintiff association , which was incorporated under the Associations Incorporation Act 1994 (NSW). The subject document was in the form prescribed for a statutory demand under s 459E of the Act. The Defendant, despite an invitation to do so, did not withdraw the demand and the Plaintiff association commenced an application seeking an order “that the document issued and served by the Defendant upon the Plaintiff purports to be a notice under Section 459E of the Corporations Act dated 13 April 2006, be set aside.”
[2] [2006] NSWSC 623
The Defendant creditor contended that the demand, which was in the form prescribed for a statutory demand under s 459E of the Act, was in truth a demand pursuant to s 585(a) of the Act. The Defendant submitted that first, the Association should consent to dismissal of the originating process and second, that since the demand was a “valid and effective demand for the purpose of s 585(a) of the Corporations Act”, the Defendant could rely on non-compliance with it as the basis for filing a winding-up application of a Part 5.7 Body under s 583 of the Act.
The Plaintiff association in Residents against Improper Development Inc. contended that, as the document was in the form prescribed for a s 459E statutory demand, it was a “statutory demand” as defined by s 9 with the result that there was jurisdiction in the Court to set it aside.
At paragraph [10] and following Barrett J stated:
“The question whether a particular document either is or “purports to be” within this description cannot be answered by merely looking at its form and content. An essential attribute, according to the definition, is that it has been “served under section 459E.” That section of course, begins:
“A person may serve on a company a demand …….”[emphasis added]”.
[11] The concept of being “served under section 459E“ thus carries within it the requirement that the relevant service be “on a company” - a requirement that, in this case, cannot on any view of matters be seen to be satisfied. The only aspect of the s.9 definition of “company” that is relevant to the construction of s.459E is the core aspect covered by the words ”a company registered under this Act” The plaintiff is, quite simply, not a company registered under the Corporations Act.
[12] In any case where a document which is, or purports to be, in the form prescribed for the purposes of s.459E is, in truth, not “served on a company”, the setting aside jurisdiction centred upon ss.459G, 459H and 459J is not engaged. The correct course is to seek a declaration that the document is not a statutory demand or to take the point about the lack of statutory efficiency if and when a winding up application is subsequently made. Those alternatives were clearly spelled out by Mandie J in Emhill Pty Ltd v Bomsoc Pty Ltd (2004) 50 ACSR 305 in relation to a situation where the form of the document and the status of the addressee as a “company” were not in question but there had been no service as such. The alternatives apply also to the present case where the form of the document and the matter of the service is not in question but the entity served is not a “company”.
[13] At the hearing before me, the plaintiff made an oral application for leave to amend to add a claim for declaratory release of the claim referred to by Mandie J. That application was not formally dealt with and I do not think that there is now any real need for it to be pursued. It is sufficient, I think, that I record that the document of 13 April 2006 is not a “statutory demand” within the meaning of the Corporations Act, that the court accordingly lacks jurisdiction to determine any s.459G application in respect of it and that the originating process will, on that basis, therefore be dismissed.”
Barrett J then went on to consider the question of costs. At paragraph [15] he stated:
“It is a pity that the defendant’s solicitors did not act upon the plaintiff’s solicitors’ invitation of 24 April 2006 to read the decision in QBE Workers Compensation (NSW) Pty Ltd v Wandiyali ATSI Inc…. Had they done so, they would (or should) have seen that their client was in no position at all to seek to rely on the demand. The Wandiyali decision is to the effect not only that the s.459E statutory demand process with respect to “companies” is unavailable in relation to an association incorporated under the Associations Incorporation Act, but also that s.585(a) process in relation to Part 5.7 bodies is likewise unavailable, even allowing for the fullest effect of the State law provisions dealing with incorporated associations and applying Corporations Act provisions with respect to Part 5.7 bodies in relation to their winding-up. A reading and understanding of the latter aspect of the judgment would have prevented the defendant’s solicitors embarking upon the incorrect arguments as to the applicability of ss.583 and 585(a) advanced in the letter of 29 May 2006.”
On an application of the reasons of Barrett J in Residents against Improper Development Inc. the demand served on the Plaintiff is not a statutory demand properly so called by reason that the Plaintiff is not a company and the demand is therefore not susceptible of being the subject of an application to set the demand aside under S 459G, nor in my opinion is the demand a demand under S 585(a) of the Act. Part 5.7 and in particular S 585(a) does not provide a mechanism for an application to be made to set aside a demand served under S 585(a). The demand which that section contemplates be served is of the character of a demand served under the provisions which applied prior to the introduction of the 1993 amendments to the Corporations Law[3].
[3] See section 460(2) Corporations Law which provided that: “For the purposes of an application that is made in relation to a company on the ground provided by subsection (1), the company shall be deemed to be unable to pay its debts if: (a) a creditor by assignment or otherwise to whom the company is indebted in a sum exceeding $1,000 then due has served on the company a demand, signed by or on behalf of the creditor, requiring the company to pay the sum so due and the company has, for 3 weeks after the service of the demand, failed to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor;.
As a corollary, the demand cannot be used as the basis for an application that the Plaintiff be wound up under either Part 5.4 or Part 5.7 of the Act.
The application to set aside the demand is dismissed. If I did have jurisdiction to consider the Plaintiff’s application, I would have set aside the demand for the same reasons that I have done so in the related application involving The Uniting Church (NSW) Trust Association Limited in proceeding 4149 of 2009. I note that the affidavit of Stephen Robert Peake, who is the general manager of the Plaintiff, deposes that the Plaintiff has funds under management in excess of $560 million. Mr Peake deposes that of its total investment portfolio, no less than 10% is held in cash and liquid securities and those funds are available for immediate use in payment of the liabilities of the Plaintiff as and when they fall due. I take that to mean that the Plaintiff has $56 million available to meet claims of its creditors. Northbank has not sought to contradict or take issue with that evidence. On an application of the reasoning of Finkelstein J in Paperlinx which is extracted in the reasons given in the related proceeding involving the NSW entity, I consider that any winding up application based on a valid demand would, on the evidence before me, fail. My only reservation in that regard is the absence of evidence as to the cash flow solvency of the Plaintiff but this also seemed to be absent in Paperlinx.
The Defendant, by a letter of 6 January 2009 from the Plaintiff’s solicitors, was invited to withdraw the demand. That letter warned the Defendant that the Plaintiff would seek indemnity costs against it if the demand was not withdrawn on that basis but the Defendant has declined to do so. I will hear the parties as to whether the Plaintiff should be awarded costs on an indemnity basis.
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