William Buck (WA) Pty Ltd v Faulkner - [2021] WASC 113

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   WILLIAM BUCK (WA) PTY LTD -v- FAULKNER [2021] WASC 113
CORAM:   MASTER SANDERSON
HEARD:   3 MARCH 2021
DELIVERED          :   3 MARCH 2021
PUBLISHED           :   16 APRIL 2021
FILE NO/S:   COR 4 of 2021
BETWEEN:   WILLIAM BUCK (WA) PTY LTD
Plaintiff

AND

CRAIG PETER FAULKNER
Defendant

Catchwords:

Corporations law - Use of different time frames for statutory demand - Turns on own facts

Legislation:

Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Cth)
Corporations Act 2001 (Cth)
Corporations and Bankruptcy Legislation Amendment (Extending Temporary Relief for Financially Distressed Businesses and Individuals) Regulations 2020 (Cth)

Result:

Statutory demand set aside

Category: B

Representation:

Counsel:

Plaintiff	:	DH Solomon
Defendant	:	MP Bruce

Solicitors:

Plaintiff	:	Solomon Brothers
Defendant	:	Bruce Legal Consultants (Perth)

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

Cooloola Dairys Pty Ltd v National Foods Milk Ltd (2005) 1 Qld R 12
Hooker Cockram Ltd v Minesco Pty Ltd (2001) 3 VR 466
Sentinel Financial Management Pty Ltd v Entercorp Finance Pty Ltd (1996) 15 ACLC 201

MASTER SANDERSON:

This was the plaintiff's application to set aside a statutory demand. After hearing argument, I ordered the demand be set aside and the defendant pay the plaintiff's costs of the application. This may be the first and the last application which concerns the interaction of the emergency regulations which extended the time for compliance with a statutory demand to six months and what might be called the usual statutory demand regime.
A copy of the statutory demand appears as attachment RBJ‑1 to the affidavit of Robin Boyd Judd sworn 19 January 2021. The amount of the demand is $537,172.76. It is worth noting in passing that the amount of the demand found in the schedule is somewhat difficult to calculate. It is necessary to add together two figures. Furthermore, the demand claims ongoing daily interest. A party looking to comply with the demand would have to calculate by reference to the specified daily rate just what the amount of the demand was on the date of payment. It has been said on many occasions a demand must specify a figure which, if paid, would satisfy the demand. The point was not taken by the plaintiff in this case and therefore I need say nothing more on that issue, other than to observe the demand is not in a correct form.
To understand the background to this dispute, it is necessary to recount the history of the acrimonious and litigious relationship between the plaintiff and the defendant. In or around 2010 a dispute arose between the plaintiff and the defendant in relation to the defendant's employment with the plaintiff. The matter eventually went to trial and judgment was handed down on 24 September 2013. Essentially, the defendant was successful. On 18 June 2015, he lodged a bill of costs for taxation. On 4 April 2016, that bill was provisionally assessed at $381,650. On 8 April 2016, the plaintiff objected to the provisional assessment.
On 4 July 2016, the defendant filed an amended bill of costs. On 2 September 2016, the plaintiff filed notices of objection and submissions. On 15 September 2016, the defendant filed a response to the objections.
On 24 October 2017, the registrar advised the parties of the basis on which he intended to conduct the taxation. On 24 January 2018, there was an oral hearing of the taxation. On 20 August 2018, the registrar provisionally assessed the bill in the sum of $398,239.78. On 24 August 2018, the plaintiff filed notice of objections to the taxation. On 24 March 2020, the Coronaviris Economic Response Package (Payments and Benefits) Act 2020 (Cth) (the Act) received the Royal Assent. As part of that package the 21 day statutory demand period was extended to six months: see s 2 and sch 12 pt 2 cl 25 and cl 21‑24, cl 26 and cl 29 of the Act. The Act also increased the statutory minimum amount of the debt which could found a statutory demand from $2,000 to $20,000. Clause 26 inserted in reg 5.4.01AA(3) read as follows:
This regulation is repealed at the end of the period of six months starting on the day this regulation commences.
On 2 September 2020, the registrar issued a certificate of taxation in the sum of $387,671.04 and reasons on the objections. The defendant then demanded payment of the certificate, together with interest thereon totalling $530,106.59. On 16 September 2020, the plaintiff filed an application for review of the certificate of taxation.
On 17 September 2020, the Corporations and Bankruptcy Legislation Amendment (Extending Temporary Relief for Financially Distressed Businesses and Individuals) Regulations 2020 (Cth) were issued. Pursuant to sch 1 cl 3, reg 5.4.01AA(3) was repealed and substituted:
This regulation is repealed at the end of 31 December 2020.
On 30 September 2020, the defendant issued a statutory demand. This demand was issued under the regime which required payment of the demand within six months or provided six months within which a person served with the demand could apply to set the demand aside. At all material times that demand was extant. The time for compliance with the demand, or the period within which the plaintiff could apply to set the demand aside, expired at the end of March 2021.
On 5 January 2021, the defendant issued another statutory demand seeking payment of the same debt covered by the earlier demand within 21 days. On 19 January 2021, the plaintiff filed this application to set the second of the two demands aside. There were three grounds upon which the application was made. For present purposes two of those grounds can be put to one side. I determined the filing of the second demand was an abuse of process and I set the demand aside on that basis.
Leaving to one side for a moment the changes to the statutory demand regime mandated by the covid related regulations, there is some inconsistent authority as to whether a creditor may issue multiple statutory demands. On the one hand there are cases such as Sentinel Financial Management Pty Ltd v Entercorp Finance Pty Ltd (1996) 15 ACLC 201 and Hooker Cockram Ltd v Minesco Pty Ltd (2001) 3 VR 466 which are to the effect that the issue of multiple statutory demands will provide 'some other reason' why the demand should be set aside under s 459J of the Corporations Act 2001 (Cth). On the other hand, Chesterman J came to the opposite conclusion in Cooloola Dairys Pty Ltd v National Foods Milk Ltd (2005) 1 Qld R 12. While it would seem the better view supports the reasoning of Chesterman J it is to be noted that these cases dealt with s 459J of the Corporations Act. In this case, the application was made, and my decision turned, on a finding the issue of the second demand was an abuse of process.
There are no authorities which deal with this issue directly. My approach was as follows. The legislature in response to an extraordinary situation extended the time for compliance with a statutory demand from 21 days to six months. A creditor had two options. He could issue a demand and, if there was no application to set the demand aside, or no compliance with the demand in the six month period, he could rely on the presumption of insolvency and move to wind up the debtor. In this case, the creditor who issued a demand knew the debtor did not have to take any steps before 30 March 2021. Both parties, in conformity with the amended regime, knew the parameters within which they operated. As an alternative, the creditor could have decided to wait and see if and when the amended regime came to an end and the 21 day period for compliance with the demand was reinstated. Again, both parties would then know the regime within which they were operating. Really a creditor in the position of the defendant here had to make an election. He either had to proceed under the amended regime or wait and see what happened and perhaps in due course act under the old regime.
The defendant made that election. He decided to proceed under the amended regime. Having made that decision it did not seem to me to be consistent to then purport to act under the old regime. It must be acknowledged there is nothing in the regulations which would directly prevent such a step. However, I view it as an abuse of process. It is using the processes of the court to circumvent a choice as to which regime the defendant would rely upon.
Accordingly, I ordered the demand be set aside.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CB
Associate to Master Sanderson
16 APRIL 2021