FEDERAL COURT OF AUSTRALIA Australian Cinemas Pty Limited v Australian Executor Trustees Limited [2011] FCA 927 Citation: Australian Cinemas Pty Limited v Australian Executor Trustees Limited [2011] FCA 927 Parties: AUSTRALIAN CINEMAS PTY LIMITED ACN 096 376 920 v AUSTRALIAN EXECUTOR TRUSTEES LIMITED ACN 007 869 794 File number: NSD 935 of 2011 Judge: ROBERTSON J Date of judgment: 17 August 2011 Catchwords: CORPORATIONS – Statutory demand – application to set aside – whether formal defect in supporting affidavit– claim that deponent not a person with authority of the creditor – claim not supported by the evidence CORPORATIONS – Statutory demand – application to vary amount of demand – offsetting claim – substantiated amount – whether corporation prevented by contract from relying on claim it has against creditor as an offsetting claim for purposes of s 459H CORPORATIONS – Statutory demand – whether interest accruing after date of demand may form part of substantiated amount Legislation: Corporations Act 2001 (Cth) ss 459G, 459H, 459J Federal Court (Corporations) Rules 2000 (Cth) Retail Shop Leases Act 1994 (Qld) ss 18, 19, 20, 43 Cases cited: ANZ Banking Group Ltd v Kamlock Pty Ltd (1993) 42 FCR 125 applied Blue Hills Village Management (Liverpool) Pty Limited v Babcock and Brown International Pty Limited [2009] NSWSC 87 discussed Deputy Commissioner of Taxation v Cye International Pty Ltd (No 2) (1985) 10 ACLR 305 applied Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 applied Gilbert-Ash (Northern) Limited v Modern Engineering (Bristol) Limited [1974] AC 689 distinguished Jem Developments Pty Limited v Hansen Yuncken Pty Ltd (2006) 205 FLR 432 discussed Jem Developments Pty Limited v Hansen Yuncken Pty Ltd (2006) 60 ACSR 393 referred to John Shearer Limited v Gehl Company (1995) 60 FCR 136 cited Norman; in the matter of Forest Enterprises Limited v FEA Plantation Limited [2011] FCAFC 99 cited Ozone Manufacturing Pty Limited v Deputy Commissioner of Taxation (2006) 94 SASR 269 cited Pearson's Products Pty Limited v C P Technologies Pty Limited [1999] NSWSC 575 cited Rawson v Samuel (1841) Cr & Ph 161, (1841) 41 ER 451 cited Re Morris Catering (Australia) Pty Limited (1993) 11 ACSR 601 applied Renaissance Holdings Pty Ltd v Kennedy (1998) 16 ACLC 1,108 applied Topfelt Pty Ltd v State Bank of New South Wales Ltd (1993) 47 FCR 226 applied Date of hearing: 4 August 2011 Date of last submissions: 11 August 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 74 Solicitor for the Plaintiff: Mr J B McCooe of McCooe Raves & Poole Counsel for the Defendant: Mr L Katsinas Solicitor for the Defendant: Teddington Legal IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 935 of 2011 BETWEEN: AUSTRALIAN CINEMAS PTY LIMITED ACN 096 376 920 Plaintiff AND: AUSTRALIAN EXECUTOR TRUSTEES LIMITED ACN 007 869 794 Defendant JUDGE: ROBERTSON J DATE OF ORDER: 17 AUGUST 2011 WHERE MADE: SYDNEY THE COURT ORDERS AND DECLARES THAT: 1. The substantiated amount of the demand is $27,795.51. 2. The demand be varied accordingly. 3. The demand has had effect, as so varied, as from the date the demand was served on the plaintiff. 4. Time for compliance with the statutory demand dated 24 May 2011 be extended to 14 days from 17 August 2011. 5. Each party is to bear its own costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 935 of 2011 BETWEEN: AUSTRALIAN CINEMAS PTY LIMITED ACN 096 376 920 Plaintiff AND: AUSTRALIAN EXECUTOR TRUSTEES LIMITED ACN 007 869 794 Defendant JUDGE: ROBERTSON J DATE: 17 AUGUST 2011 PLACE: SYDNEY REASONS FOR JUDGMENT Introduction 1 This is an application under ss 459G, 459H and 459J of the Corporations Act 2001 (Cth) ("Corporations Act") in relation to a creditor's statutory demand for payment of debt dated 24 May 2011, being $48,342.55 for rent outstanding plus interest in the amount of $845.52. The application is dated 15 June 2011. There was no dispute between the plaintiff and the defendant about the existence or amount of the debt. 2 The plaintiff, an independent cinema exhibitor, operates a business known as Nerang Cinemas from retail shop premises in the shopping centre complex known as Earle Plaza at 52 Price Street, Nerang at the Gold Coast in Queensland. 3 The plaintiff has been in occupation of those premises since November 2003. The defendant acquired the shopping centre complex in which the premises are situated in approximately mid March 2007 and completed the sale of that property in approximately mid March 2011. It seems that the defendant is no longer the owner of the shopping centre complex or the lessor of the plaintiff company. 4 The plaintiff relied on the affidavit of Robert Bailey affirmed on 15 June 2011 and the defendant relied on the affidavit of Mark Christian Walsh sworn on 28 June 2011. Each affidavit was read without objection. Neither deponent was cross-examined. 5 The plaintiff claimed (retaining the original numbering and punctuation): 1. The Creditor's Statutory Demand for Payment of Debt dated 24th May 2011 be set aside; 1. Alternatively, a determination of the substantiated amount of the demand pursuant to Section 459H of the Corporations Act 2001; 2. An order extending the time for compliance with The Creditor's Statutory Demand for Payment of Debt dated 24th May 2011 to a time being 14 days following the final determination of this Application 3. Costs; and 4. Such further or other orders as this Honourable Court deems fit. 6 The issues were: the claim that the statutory demand be set aside; the offsetting claim; and a question of interest accruing after the date of the demand. The claim that the statutory demand be set aside 7 The claim that the statutory demand be set aside may be disposed of shortly. 8 It was pressed by reference to s 459J(1)(b) which provides that the Court may set aside the demand if it is satisfied that "there is some other reason" why the demand should be set aside. 9 The reason the demand should be set aside, it was submitted, was the form of the affidavit made on 24 May 2011 accompanying the statutory demand. The deponent, Mark Christian Walsh declared and affirmed: 1. I am an authorised officer of the Creditor (Australian Executor Trustees Limited) named in the statutory demand, which this affidavit accompanies, relating to the debt owed by the Company [Australian Cinemas Pty Ltd]. 2. I am duly authorised by the Creditor to make this Affidavit on its behalf. 10 The submission then referred to an affidavit by the same deponent sworn on 28 June 2011 which annexed "a true copy of an Authority from the respondent authorising me to swear this affidavit on its behalf". That authority was dated 28 June 2011, which post-dated by about a month the affidavit accompanying the statutory demand, and stated in part: Australian Executor Trustees Limited … hereby authorises Mark Christian Walsh … to: 1. Sign the documents and swear the Affidavits as listed below in in (sic) respect of the recovery of a debt outstanding to Australian Executor Trustees Limited . . . by Australian Cinemas Pty Limited . . . : (a) Creditors Statutory Demand for Payment of Debt dated 24 May 2011; (b) Affidavit Accompanying Demand sworn by Mark Christian Walsh on 24 May 2011; … 11 It was submitted that the authority document showed that Mr Walsh was not a person with the authority of the creditor within r 5.2(b) of the Federal Court (Corporations) Rules 2000. 12 I do not take from the authority dated 28 June 2011 an implication that Mr Walsh was not a person with the authority of the creditor when he affirmed the affidavit accompanying the statutory demand on 24 May 2011. Further, such an implication would be contrary to the express statement in Mr Walsh's affidavit affirmed on 24 May 2011, the relevant parts of which I have set out above. As I have noted, Mr Walsh was not cross-examined. 13 This submission fails and I reject the claim that the statutory demand be set aside. The offsetting claim 14 The plaintiff submitted that it had an offsetting claim. This claim was broken down into four subject matters. In each case, invoices were annexed to Mr Bailey's affidavit. 15 The first related to the plaintiff, between 22 June 2010 and March 2011, repairing and replacing air conditioning equipment that was said to be the property of the defendant and the responsibility of the defendant to maintain. 16 The second was in respect of the period 22 June 2010 to March 2011 for repairing and replacing fire equipment that was said to be the property of the defendant and the responsibility of the defendant to maintain. 17 There was a third category in respect of the repair of the ceiling of the retail premises following an air conditioning pump failure. 18 The fourth and last category was that the plaintiff said it was required to carry out repair work to its candy bar following work carried out by the defendant to satisfy the local council's requirement relating to the grease trap that serviced the defendant's property. 19 A claim was abandoned that the plaintiff lost earnings as a result of the inability to operate its coffee shop due to the plumbing work carried out by the defendant in respect of the grease trap. 20 Allowing for some other invoices in respect of which the claim was abandoned, the live claims, grouped by subject matter, were: Air conditioning - $886.60 $508.20 $352.00 $704.00 $1,109.08 $155.10 Fire equipment - $65.83 $1,012.00 $2,115.30 $7,134.60 $470.25 $782.10 $1,435.50 Water damage - $3,300.00 Grease trap - $671.00 $396.00 $295.00 The total of the offsetting claim was therefore $21,392.56. 21 In Re Morris Catering (Australia) Pty Limited (1993) 11 ACSR 601 at 605 ("Re Morris Catering (Australia)") Thomas J said: There is little doubt that Div 3 … prescribes a formula that requires the court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the court will examine the merits or settle the dispute. The specified limits of the court's examination are the ascertainment of whether there is a "genuine dispute" and whether there is a "genuine claim". It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it), the court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another. The essential task is relatively simple — to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it). 22 In Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787, McLelland CJ in Eq said: It is, however, necessary to consider the meaning of the expression "genuine dispute" where it occurs in s 450H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the "serious question to be tried" criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit "however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be" not having "sufficient prima facie plausibility to merit further investigation as to [its] truth" (cf Eng Mee Yong v Letchumanan [1980] AC 331 at 341), or "a patently feeble legal argument or an assertion of facts unsupported by evidence": cf South Australia v Wall (1980) 24 SASR 189 at 194. His Honour stated his agreement with the approach in Re Morris Catering (Australia). 23 I note that although a question of construction may be determined by the Court, the Court will not, generally speaking, decide contested issues of law or contested issues of fact in deciding whether a genuine dispute exists. 24 In the present case, the defendant submitted there was a short answer, flowing from the terms of the lease, to the entirety of the offsetting claim. 25 Particular attention was drawn to clause 2.1 of the lease: Payment of annual rent The Tenant will pay the rent free from exchange deduction set off or counterclaim and abatement to the Landlord as the Landlord requires: . . . 26 The defendant also relied on cl 2.6 of the lease which was in the following terms: No right of set-off (a) The Tenant's obligation to pay all rent and the rights of the Landlord to the rent are absolute and unconditional and are not subject to any abatement, reduction, set-off, defence, counterclaim, or recoupment. (b) The rent will continue to be payable in all events in the manner and at the times provided in this Lease unless the obligation to pay it is terminated under the express provisions of this Lease. 27 This submission on behalf of the defendant was advanced in reliance on Jem Developments Pty Limited v Hansen Yuncken Pty Ltd (2006) 205 FLR 432 ("Jem Developments"). The argument was put that, accepting that the offsetting claim in the present case was founded on the lease executed on 11 December 2007, the lessor/defendant and lessee/plaintiff had, by contractual stipulation, intended to segregate a particular debt, being the amount claimed as rent, so that no offsetting claim in relation to the lease or arising out of the plaintiff's occupation of the premises could be brought. 28 In Jem Developments, Jempac were property developers and the proprietors of a site in Wollongong. In January 2004 Jempac entered into a building contract with Hansen Yuncken Pty Limited ("HY") for HY as a builder to construct a building on the site. In mid 2004 several claims were made by HY for extensions of time and disruption costs. HY and Jempac agreed to resolve their differences concerning these claims and executed a deed dated 18 June 2004. The deed provided that in consideration of Jempac paying HY a sum of $500,000.00, referred to as "the Bonus" and which was a payment in addition to the contract sum, HY withdrew all its claims against Jempac, including the particular claims it had made in April 2004 and HY released Jempac from all claims it may have had in connection with the building contract and the project up to the date of the deed. 29 Clause 2 of the deed provided that the principal agreed to pay to the contractor a bonus of $500,000.00 in addition to the contract sum and that the bonus would rank in priority before any entitlement of the principal to receive any monies in connection with the project. The deed of June 2004 was not intended to replace the building contract. Practical completion occurred on 3 November 2005 and HY took the view that the sum of $500,000.00 had fallen due under the settlement deed on 2 January 2006 and claimed payment, notwithstanding the disputes about alleged defective work and delays. 30 HY issued a statutory demand dated 22 March 2006. Jempac's solicitors asserted that Jempac had an offsetting claim against HY for defective and incomplete works and liquidated damages and it was asserted that the offsetting amount was substantially in excess of $500,000.00. HY's solicitors responded by drawing attention to cl 2.1(2), that is, "the Bonus will rank in priority before any entitlement of the Principal to receive monies in connection with the Project". 31 In reliance on Gilbert-Ash (Northern) Limited v Modern Engineering (Bristol) Limited [1974] AC 689 at 722-723 per Lord Salmon, Austin J held: There is no good reason for denying effect to a contractual stipulation that is intended to segregate a particular debt and prevent it from being reduced by debts owing by the creditor to the debtor and by counter-claims of the debtor against the creditor. Thus, if A and B enter into a contract by which they agree that in stated circumstances, A will pay B $500,000, without any deduction for any debt, then B may owe A or any claim that A may have against B, and then the payment of $500,000 falls due and payable by A, then as a matter of contractual stipulation, A is prevented from reducing the payment obligation by reference to counter-debts or counter-claims. That being so, if B makes a statutory demand on A under s 459E for payment of $500,000, A is prevented by the contract from relying on any claim it has against B as an offsetting claim for the purposes of s 459H. (emphasis added) 32 The context of Gilbert-Ash (Northern) Limited and Lord Salmon's dictum was not a statute or a statute dealing with winding up of corporations. Instead the case concerned the general law and the rights of parties to alter what Lord Salmon referred to as "the ordinary rights of set-off". 33 In Jem Developments Austin J concluded at [41] that cl 2.1(2) of the settlement deed had the effect that Jempac's obligation to pay $500,000.00 was not to be eliminated or reduced by reference to any entitlement of Jempac to receive monies in connection with the project and, a fortiori, by reference to any claim by Jempac against HY in connection with the project. 34 The Court held that, in view of the terms of cl 2.1(2), Jempac's claims for damages for delay and defective work could not be offset against its claim under cl 2 for payment of $500,000.00 and therefore Jempac did not have any offsetting claim for the purposes of s 459H. 35 A difficulty with this approach, in my view, is the definition of "offsetting claim" in s 459H(5) which was not addressed in Jem Developments except in the one sentence which I have emphasised above. It will be recalled, however, that an offsetting claim is defined to mean a genuine claim that the company has by way of counterclaim, set-off or cross-demand even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates. 36 These and related matters are referred to in the judgment of Austin J given a few days later and reported as Jem Developments Pty Limited v Hansen Yuncken Pty Ltd (2006) 60 ACSR 393 where at [7] his Honour said that the plaintiffs intended to argue on appeal that any contractual stipulation purporting to quarantine a particular debt from any reduction by counterclaim or set-off, however clear and specific it may be, did not prevent the Court from concluding that the contractual counterpart had an offsetting claim under s 459H. This was based on the broad definition of "offsetting claim" in s 459H(5) and decisions such as John Shearer Limited v Gehl Company (1995) 60 FCR 136, Pearson's Products Pty Limited v C P Technologies Pty Limited [1999] NSWSC 575 and Ozone Manufacturing Pty Limited v Deputy Commissioner of Taxation (2006) 94 SASR 269. It does not appear however that the matter ultimately went to judgment in the Court of Appeal. 37 Jem Developments was applied in Blue Hills Village Management (Liverpool) Pty Limited v Babcock and Brown International Pty Limited [2009] NSWSC 87 ("Blue Hills Village Management"). 38 In that case there were other Commercial List proceedings in the Supreme Court. The trial judge in those proceedings had indicated his view that the plaintiffs should pay the costs thrown away by reason of an amendment on an indemnity basis and that a fixed amount, which could either be reached by agreement or on the basis of the Court fixing a minimum amount, should be payable forthwith. 39 The defendants' solicitors wrote to the solicitors for the plaintiffs in the Commercial List proceedings confirming that their clients were prepared to accept payment of $70,000.00 from the plaintiffs as a minimum amount of costs payable forthwith, with the remainder of costs payable by the plaintiffs to the first and second defendants on an indemnity basis to be determined by a costs assessor or as agreed between the parties at a later date. The defendants and the plaintiffs agreed that the plaintiffs would pay the defendants $70,000.00 forthwith. 40 Barrett J held that the context left no room for doubt that $70,000.00 was to be paid before adjudication of the principal claims in the Commercial List proceedings and regardless of the pendency of those claims and the outcome in those proceedings. That was the reason for separation out of the $70,000.00 and the requirement for payment forthwith. If the contention about a right of set-off were correct, the $70,000.00 would not be payable until the determination of the Commercial List proceedings. That would entirely defeat the purpose of both the court's direction as to costs and the parties' agreement based on it. The court made it clear in the Commercial List proceedings that the general rule as to timing of payment under r 42.7 of the Uniform Civil Procedure Rules 2005 was not to apply to the agreed amount. His Honour did not accept that the only avenue available in case of non-payment of the $70,000.00 was intended to be a stay of the Commercial List proceedings. The intention was quite clearly that the defendants should have a right to payment of an agreed sum forthwith and that recovery accordingly should be available. 41 Barrett J held that, in the particular circumstances of the case, there was no right to set-off the principal claims in the Commercial List proceedings against the separate and immediate obligation to pay the $70,000.00 payable forthwith. The plaintiff had not made out its case of offsetting claim within s 459H(1)(b). 42 In both these decisions of the Supreme Court of New South Wales the terminology and intention of the provision against offsetting was, in my opinion, clearer: there was in each case reason to hold that the parties had made a special arrangement. I would distinguish them on their facts. Here there is no special arrangement separate to the lease. It seems likely that the clauses in the lease were intended to be relevant to the application to the lease of the principle of equitable set-off in accordance with Rawson v Samuel (1841) Cr & Ph 161, 178–179, (1841) 41 ER 451, 458-459, recently considered in Norman; in the matter of Forest Enterprises Limited v FEA Plantation Limited [2011] FCAFC 99, that is, to limit the circumstances in which a court might find that a cross-claim impeached the title to the demand for rent. 43 In the present case however I do not need to resolve either the question of construction raised by Jem Developments or Blue Hills Village Management or whether those cases are to be distinguished on their facts. This is because of the operation of the Retail Shop Leases Act 1994 (Qld) ("Retail Shop Leases Act"). The parties accepted that that Act was applicable to the present premises. 44 The following provisions of the Retail Shop Leases Act are relevant: 18 If, under this Act, a duty is imposed or an entitlement is conferred on a lessor or lessee under a retail shop lease, the duty or entitlement is taken to be included in the lease. 19. A provision of a retail shop lease is void if it purports to exclude the application of a provision of this Act that applies to the lease. 20. If a provision of this Act is inconsistent with the provision of a retail shop lease, the provision of this Act prevails and the provision of the lease is void to the extent of the inconsistency. 45 The plaintiff relied on ss 43(1)(c) and 43(1)(d)(i) of the Retail Shop Leases Act which are as follows: 43(1) The lessor is liable to pay to the lessee reasonable compensation for loss or damage suffered by the lessee because the lessor, or a person acting under the lessor's authority – (a) … ; or (b) … ; or (c) causes significant disruption to the lessee's trading in the leased shop or does not take all reasonable steps to prevent or stop significant disruption within the lessor's control; or (d) does not have rectified as soon as is practicable – (i) any breakdown of plant or equipment under the lessor's care or maintenance; or … Thus there is, where the specified circumstances are enlivened, a right to compensation which may not be modified by agreement and which, it is at least arguable, prevails over the terms of cll 2.1 and 2.6 of the present lease. 46 In my view there is insufficient factual material to enliven s 43(1)(c), that is that the lessor, or a person acting under the lessor's authority caused significant disruption to the lessee's trading in the leased shop or did not take all reasonable steps to prevent or stop significant disruption within the lessor's control. This provision suggests that some event or series of events has occurred, of which there is insufficient factual material in the evidence before me. 47 The issues which presently arise under s 43(1)(d)(i) of the Retail Shop Leases Act are: first, whether there was a breakdown of plant or equipment; second, whether that plant or equipment was under the lessor's care or maintenance; and third, whether the lessor did not have that breakdown rectified as soon as practicable. 48 I turn now to the claimed categories said to constitute an offsetting claim or claims with reference to s 43(1)(d)(i). As I understood it, subject to the Jem Developments point which I have considered above, the defendant conceded there was an offsetting claim in respect of the grease trap. This leaves for detailed consideration the air conditioning issue; the fire equipment issue and the water damage issue. Air conditioning 49 Mr Bailey in his affidavit stated that the plaintiff repaired and replaced on a number of occasions between 22 June 2010 and March 2011 air conditioning equipment that was the property of the defendant and the responsibility of the defendant to maintain but which the defendant did not have rectified as soon as practicable after notification of break down. The same paragraph of the affidavit stated that the plaintiff was prohibited from carrying on its business without proper functioning air conditioning. 50 The defendant's evidence on this point was to the effect that the tax invoices on which the plaintiff relied were for maintenance works which were the responsibility of the plaintiff pursuant to the lease. Clause 4.5(a) of the lease provided that the maintenance costs for the air conditioning unit servicing the premises were the responsibility of the tenant but that the landlord was responsible for the costs of repairing and replacing air conditioning equipment that was the property of the landlord. 51 Clause 5.6 of the lease was also referred to which provided that: "Except as otherwise provided in this Lease the Tenant will not interfere with … the Air Conditioning Equipment … without first obtaining the consent in writing of the Landlord. 52 Mr Walsh deposed that the plaintiff did not obtain the defendant's prior consent. He also denied that the plaintiff lessee notified the defendant of the faults in the air conditioning equipment. 53 In my view the plaintiff has a genuine claim against the defendant in respect of the air conditioning equipment, which claim is founded in s 43(1)(d)(i) of the Retail Shop Leases Act. There was a breakdown, there is sufficient evidence that the equipment was under the lessor's care and there is an arguable case as to the time requirement for rectification by the lessor which depends on a detailed examination of the surrounding facts and circumstances. 54 It does militate against the genuineness of the claim and the "as soon as practicable" element that there was no prior notification of the faults but the invoices are contemporaneous and no attack was made on either their authenticity or on Mr Bailey's veracity. Fire equipment 55 The plaintiff's evidence was to the effect that on a number of occasions between 22 June 2010 and March 2011 the plaintiff repaired and replaced the fire equipment that was the property of the defendant and the responsibility of the defendant to maintain which the defendant did not have rectified as soon as was practicable after notification of breakdown. It was said that the plaintiff was prohibited from carrying on its business without proper functioning fire protection equipment (including emergency lighting). 56 The defendant's evidence was that the plaintiff did not obtain the prior consent in writing to the carrying out of the works. It was also said that the relevant tax invoices had not previously been provided to it and were for operating expenses payable by the plaintiff pursuant to the lease for works required to enable the plaintiff to comply with its obligations as to fire safety under the lease and/or the works necessary due to the plaintiff's use of the premises. 57 The defendant relied on cl 4.9 of the lease which provided that the lessee would be responsible for all its own operating expenses, including but not limited to electricity, air-conditioning maintenance, cleaning, waste removal, grease trap cleaning costs and telephone charges to the leased premises. 58 The defendant also relied on cll 5.3 and 5.14 of the lease which provided that: The Tenant will duly and punctually comply with and observe all Statutes and all orders ordinances regulations and by-laws …relating to the Premises or to the Tenant's use or occupation of the Premises or Complex…. The Tenant will at all times in its use of the Premises comply with the requirements of the Insurance Council of Australia and The Metropolitan Fire Brigades Board and the laws and regulations for the time being in force relating to fires and the provisions of every relevant Statute, regulation and ordinance. 59 In my view the plaintiff has a genuine claim arising from s 43(1)(d)(i) of the Retail Shop Leases Act in relation to the fire equipment. 60 I am satisfied to the requisite degree that there was a breakdown of this plant or equipment; that this plant or equipment was under the lessor's care or maintenance; and that the lessor did not have that breakdown rectified as soon as practicable. 61 Again, it does militate against the genuineness of the claim and the "as soon as practicable" element if there were no prior notification of the faults but the evidence of the defendant is equivocal on this point in relation to the fire equipment claims. Water damage 62 Mr Bailey deposed that the plaintiff was required to repair a ceiling at the retail shop premises following an air conditioning pump failure which resulted in a build up of water in the pump reservoir which leaked through the ceiling causing damage to that ceiling. 63 The defendant relied on cl 8.3 of the lease by which the plaintiff indemnified the defendant against and in respect of all and any actions claims, demands, losses, damages, costs and expenses which the defendant may incur in respect of or arising from, amongst other things, overflow or leakage of water (including rain water) in or from the premises but originating within the premises or caused or contributed to by any act or omission of the plaintiff. 64 Again, in my view the plaintiff has a genuine claim under s 43(1)(d)(i) of the Retail Shop Leases Act. I am satisfied to the requisite degree that there was a breakdown of plant or equipment; that that air conditioning pump was under the lessor's care or maintenance; and that the lessor did not have that breakdown rectified as soon as practicable. 65 I accept that there was some unsatisfactory email correspondence in February 2011 but, in my view, that is not a sufficient basis on which to conclude that the damage did not flow from the breakdown of a faulty air conditioning pump located in the ceiling of the building and thus a breakdown of plant or equipment under the defendant's care or maintenance. It is not sufficiently clear that cl 8.3 of the lease applied to the water from the air conditioner or that, if it did, it would operate according to its terms in light of the provisions of the Retail Shop Leases Act I have set out above. Summary 66 There is an arguable question for each of these claims concerning whether the defendant did not have that breakdown rectified as soon as was practicable for the purposes of s 43(1)(d)(i) of the Retail Shop Leases Act. 67 The total of the offsetting claim is therefore $21,392.56. Interest accruing after the date of the demand 68 The defendant submitted that there should be factored into the substantiated amount interest accruing after the date of the demand. 69 The authorities show that such interest is not claimable. Those authorities include Deputy Commissioner of Taxation v Cye International Pty Ltd (No 2) (1985) 10 ACLR 305 at 306; ANZ Banking Group Ltd v Kamlock Pty Ltd (1993) 42 FCR 125 at 126; Topfelt Pty Ltd v State Bank of New South Wales Ltd (1993) 47 FCR 226 at 241-242; and Renaissance Holdings Pty Ltd v Kennedy (1998) 16 ACLC 1,108 at 1,110. 70 Here the statutory demand did not make a claim for interest accruing after the date of the demand so it is not liable to be set aside on that basis. Equally, such interest does not form part of the substantiated amount. It could not have been the subject of a statutory demand under s 459E as it would not have been an amount then due and payable. 71 After the conclusion of the hearing, in light of the authorities to which I have referred at [69] above, the defendant abandoned this claim. Conclusion 72 Acting under s 459H(4), the substantiated amount being at least as great as the statutory minimum, I vary the demand as indicated and declare the demand to have had effect, as so varied, as from the date the demand was served on the company. 73 Also, under s 459F(2)(a)(i). I extend time for compliance with the statutory demand dated 24 May 2011 to 14 days from the date of judgment. 74 As to costs, the plaintiff has failed in its claim to have the statutory demand set aside and also abandoned a substantial part of its offsetting claim. The parties have had a broadly even measure of success and each should bear its own costs. I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson. Associate: Dated: 17 August 2011