Supreme Court New South Wales Medium Neutral Citation: In the matter of Jana Pty Ltd [2022] NSWSC 112 Hearing dates: 14 February 2022 Date of orders: 14 February 2022 Decision date: 15 February 2022 Jurisdiction: Common Law Before: Williams J Decision: Statutory demand set aside and the defendant to pay the plaintiff's costs (see paragraph [63]) Catchwords: CORPORATIONS – statutory demand – application to set aside statutory demand – whether there is a genuine dispute as to whether debt was due and payable – whether there is a genuine dispute as to the correct construction of deed – whether demand should be set aside for some other reason Legislation Cited: Corporations Act 2001 (Cth), ss 459E, 459G, 459H, 459J Cases Cited: Creata (Aust) Pty Ltd v Faull (2017) 125 ACSR 212; [2017] NSWCA 300 In the matter of Essential Media and Entertainment Pty Ltd [2020] NSWSC 990 In the matter of JF Essential Power Pty Limited [2018] NSWSC 435 In the matter of Savemore Wholesale Pty Ltd [2021] NSWSC 307 Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330 Category: Principal judgment Parties: Jana Pty Ltd (Plaintiff) Allspec Constructions and Project Management Pty Ltd (Defendant) Representation: Counsel: Mr J Bennett (Plaintiff) Mr L Katsinas (Defendant) Solicitors: Optic Lawyers (Plaintiff) JK Solicitors (Defendant) File Number(s): 21/279991 Publication restriction: N/A Judgment Introduction 1. By originating process filed on 1 October 2021, Jana Pty Ltd ACN 158 982 122 (Jana) applies pursuant to s 459G of the Corporations Act 2001 (Cth) to set aside a statutory demand issued to it on 13 September 2021 by the defendant, Allspec Constructions and Project Management ACN 617 645 799 (ACPM) (the demand). 2. Paragraph 1 of the demand states that Jana owes ACPM "the amount of $481,865.51 being the total of the amount of the debt described in the Schedule". The Schedule describes the debt as follows: "The Debtor Company, Jana Pty Ltd as Guarantor, Guaranteed payment of the Acknowledgement of Debt of $481,865.51 and the terms and conditions set out in the Deed dated 19 January 2021 as annexed and marked 'A'". 1. I will return to the provisions of the deed dated 19 January 2021 later in these reasons (the Deed). 2. It is common ground that Jana's application to set aside the statutory demand was made within the statutory period in s 459G(2) of the Corporations Act. 3. Jana applies to set aside the demand on two grounds. 4. First, Jana contends the demand should be set aside pursuant to s 459H(1)(a) of the Corporations Act because there is a genuine dispute about the existence of the debt to which the demand relates. The dispute concerns: 1. whether, on the proper construction of the Deed, Jana was a guarantor in respect of the amount of $481,865.51; and 2. if Jana was a guarantor (which is disputed), whether the amount of $481,865.51 was a debt that was due and payable by Jana as at the date of issue of the demand on 13 September 2021. 1. Second, Jana contends that the demand should be set aside pursuant to s 459J(1)(b) of the Corporations Act because ACPM has engaged in conduct that was unconscionable, an abuse of process or has given rise to substantial injustice by issuing the demand for the purported improper purpose of applying pressure to Jana. 2. ACPM contends that there is no genuine dispute and that the demand was not issued for an improper purpose. 3. Jana relies on two affidavits of its director, Mr Anthony Azizi sworn on 1 October 2021 and 22 November 2021 and two affidavits of its solicitor, Mr Nathan Buckley sworn on 25 October 2021 and 22 November 2021, together with the annexures and exhibits to those affidavits. 4. ACPM relies on an affidavit of its director, Mr Joseph Elia, sworn on 26 October 2021, an affidavit of Elie Elia (a former employee of one of the parties to the Deed) sworn on 8 October 2021 and an affidavit of its solicitor, Mr Kirco Jakimoski, sworn on 4 November 2021, together with the annexures and exhibits to those affidavits. 5. The evidence was voluminous. I have had regard to Jana's written submissions, the written submissions provided by counsel for ACPM, [1] the further submissions made orally at the hearing and the evidence referred to in the parties' written and oral submissions. 6. At the conclusion of the hearing of Jana's application on 14 February 2022, I made an order setting aside the demand on the basis that I would publish my reasons for doing so at a later date. These are those reasons. Genuine dispute: s 459H(1)(a) 1. Section 459E(1) of the Corporations Act provides that a statutory demand may only be served on a company in relation to debts which are "due and payable", meaning that the debt is "ascertainable, immediately payable and presently recoverable or enforceable by action": see In the matter of Essential Media and Entertainment Pty Ltd [2020] NSWSC 990 at [96]-[97] (Rees J) and the authorities there cited. 2. The principles to be applied to determine whether there is a genuine dispute about the existence or amount of the alleged debt or whether it is due and payable are well known. The threshold to establish a genuine dispute within the meaning of s 459H(1)(a) of the Corporations Act is not high. A genuine dispute requires that the dispute be bona fide and truly exist in fact and that the grounds for alleging the existence of a dispute are real and not spurious, hypothetical, illusory or misconceived. In other words, the company applying to set aside the statutory demand must demonstrate that there is "a plausible contention requiring investigation". The Court is concerned only with the existence of a genuine dispute, and not with the parties' relative prospects of success in relation to the dispute. A finding of genuine dispute will be made if the applicant shows that even one issue has a sufficient degree of cogency to be arguable, even where the case to be advanced against the applicant appears to be stronger. The Court does not engage in any form of balancing exercise between the strengths of the parties' competing contentions: Creata (Aust) Pty Ltd v Faull (2017) 125 ACSR 212; [2017] NSWCA 300 at [17] (Barrett AJA, Gleeson and White JJA agreeing), citing with approval Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330 at [47]–[50]; see also In the matter of JF Essential Power Pty Limited [2018] NSWSC 435 at [24] (Black J) and In the matter of Savemore Wholesale Pty Ltd [2021] NSWSC 307 at [22]-[25] (Black J) and the authorities there referred to. 3. As I have already mentioned, the dispute raised by Jana in the present case principally concerns the construction of the Deed. Drawing on previous authority, Barrett AJA explained the approach to be taken to disputes about construction issues in the context of s 459H of the Corporations Act in Creata (Aust) Pty Ltd v Faull, supra, at [26]-[29] (Gleeson and White JJA agreeing): [2] "26. The grounds of appeal raise squarely the question of the extent to which it is open to the court to decide questions of construction in s 459H(1)(a) cases. In every such case, the issue is, of course, merely whether it has been shown that a "genuine dispute" exists. In determining that issue, the court is neither required nor expected to avoid all issues of construction. Where a contract contains a simple and unambiguous promise to pay, the court embarks on a task of construction (albeit not a difficult or controversial one) in determining that that promise creates a debt and no argument to the contrary is plausible. But where the question of construction has any element of rational controversy to it, the court must exercise particular restraint. 27. That matter was recently addressed by Gleeson JA in both In the matter of Litigation Insurance Pty Ltd [2017] NSWSC 334 and In the matter of Linton Developments (Qld) Pty Ltd [2017] NSWSC 336. In each of those cases, his Honour quoted the following passage in the judgment in Drillsearch Energy Ltd v Carling Capital Partners Pty Ltd [2009] NSWSC 1192 at [45]: 'A dispute as to the existence of a debt that is the product of a dispute about construction is not removed from s 459H(1)(a) just because the issue in contention is one of construction. While it has been said that "a short point of law or the construction of documents or agreed facts" may, unlike a disputed question of fact, be determined upon a s 459G application (see Delnorth Pty Ltd v State Bank of New South Wales (1995) 17 ACSR 379 at 384), it does not follow that the court is compelled to make such a determination. In the case of a legal argument, determination might be appropriate if it were, in the words of McLelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, a "patently feeble legal argument".' 28. Gleeson JA also referred to a similar formulation in Wellnora Pty Ltd v Fiorentino (2008) 66 ACSR 229; [2008] NSWSC 483 at [50] where attention was drawn to what was said by Brooking and Charles JJA in Spacorp Australia Pty Ltd v Myer Stores Ltd (2001) 19 ACLC 1270; [2001] VSCA 89 at [4]: 'We think, if we may say so, that, except in a case in which it is as plain as a pikestaff that there is no debt (where bluntness may be in the interests of both sides), Judges should, in general at all events, in dealing, whether at first instance or on appeal, with the question of genuine dispute, be at pains to perform the admittedly delicate task of disposing of that question without expressing a view on what we have called the ultimate question. For otherwise, on an application which resembles if it is not in law an interlocutory one, things may be said which embarrass the judge before whom the ultimate question comes.' 29. After referring to a summary of the position in in Broadspectrum (Australia) Pty Ltd v Centauri Business Services Pty Ltd [2016] NSWSC 1045 at [22] and the statement by this Court in Ligon 158 Pty Ltd v Huber (2016) 117 ACSR 495; [2016] NSWCA 330 at [11] concerning the restraint that a court should exercise in considering the "ultimate question" of the indebtedness of a company served with a statutory demand (as distinct from the question whether genuine dispute exists), Gleeson JA said: 'The important points to be derived from the authorities are as follows. First, the court dealing with a s 459G application is not compelled to determine questions of construction of documents. Second, s 459G proceedings are not ordinarily the occasion for the court to construe a contract where there are competing views about its meaning. Third, cases in which it will be appropriate for the court to entertain a construction argument on a s 459G application are likely to be few in number. Fourth, the court's state of mind concerning the existence of a genuine dispute may range from a clear conviction that the debt does not exist to an opinion that the genuine dispute hurdle has only just been cleared.'" 1. There are seven parties to the Deed: 1. Trinity Constructions (AUST) Pty Ltd (defined as the Head Contractor); 2. Trinco (NSW) Pty Ltd (defined as Trinco); 3. Jana (defined as the Landowner); 4. Anthony Azizi (defined as the Guarantor); 5. ACPM (the defined as the Subcontractor); 6. JK Elia Holdings Pty Ltd ATF The JK Elia Trust (defined as the Purchaser); and 7. Joseph Elia (defined as Employee of Subcontractor). 1. The Deed is very poorly drafted. 2. Broadly speaking, the Deed makes provision for: 1. the payment by Trinco, the Head Contractor and Jana of various amounts owing by the Head Contractor or its associated entities to the Subcontractor, being a total amount of $481,865.51; 2. a charge granted by Jana in favour of the Subcontractor over certain land owned by Jana at Bexley North (the Bexley North land) "as security for all monies owed pursuant to this deed"; 3. the engagement of the Subcontractor and Employee of Subcontractor to undertake certain works for the Head Contractor for an "annual retainer" of $450,000, of which $250,000 per annum is invoiced and payable weekly and the remaining $200,000 per annum is due and payable on the anniversary of the retainer; and 4. the sale by Jana to the Purchaser of an unregistered lot within the Bexley North land that is referred to as Lot 30, 8-18 Stoney Creek Road and defined in clause 1.3 of the Deed as "the Property" (Lot 30). 1. The demand relates only to the $481,865.51 amount referred to above. 2. The recitals to the Deed record that: "F. Over time the Subcontractor has loaned the Head Contractor and or its associated entities various sums of money which have never been repaid with interest, or at all. G. Over time the Subcontractor has performed various tasks for the Head Contractor for which it has not received payment in full as agreed ('Retainer') H. The Head Contractor has agreed to use the services of the contractor and the contractor has agreed to provide those services on the terms and conditions set out in this agreement. I. The Head Contractor and the Subcontractor have agreed to crystallize the amount owing to the Subcontractor by the Head Contractor as at the date of this Deed. J. The Anthony Azizi, the landowner and the guarantors guarantee the terms and conditions set out in this Deed." 1. Clause 2 of the Deed provides: [3] "2 ACKNOWLEDGEMENT OF DEBT 2.1 The Head Contractor acknowledges and agrees upon the execution of this deed that from the date of execution of this deed, the sum of $481,865.51 ('Guarantee Debt') is a debt owing to Allspec Constructions and Project Management Pty Ltd ('Subcontractor') for various loans from the Subcontractor or Joseph Elia to the Head Contractor or its related entities. The Head Contractor and the Guarantors agree not to dispute the Guarantee Debt. The Guarantee debt includes payments to subcontractors and suppliers on behalf of Head Contractor. The Head Contractor acknowledges that monies are owed to the Subcontractor by the Head Contractor for project management services, loans and building and construction services regarding the residential construction sites located at 266-268 Pennant Hills Road Thornleigh and 8-18 Stoney Creek Road Bexley NSW ('the sites'). 2.2 The owner of the land charge's its property identified at clause 1.3 herein to the Subcontractor and or its nominee of the consents to the subcontractor or its nominee to lodge a Caveat over the said property as security for all monies owed pursuant to this deed. 2.3 The landowner and guarantors acknowledge and confirm that all amounts due to the subcontractor will be paid at settlement or in the alternative and at the discretion of the Subcontractor and by agreement offset any balance of secured monies from the further sale by the Land owner of Real Property to the Purchaser or from the refinance of the property." 1. The term "settlement" is not defined in the Deed. However, the term "Settlement Date of the Contract for Sale" is defined in clause 8.64 as meaning "for an off the plan purchase, the settlement period runs parallel with the construction program, progress of the subject property, the occupation certificate being granted authorizing the property to be habitable and strata plan registration with the NSW Land Registry Services." The "Contract for Sale of Land" is defined in clause 8.17 as meaning the contract referred to in clause 5 of the Deed for the sale of Lot 30 by Jana to the Purchaser. 2. Clause 3 of the Deed provides: "3. OPERATIVE PROVISIONS 3.1 Trinco and Trinity owe the Subcontractor for works, various loans and building and construction services at the various sites in the sum of $481,865.51. A copy of the $481,865.51 is at (Appendix 1). 3.2 The parties acknowledge that Trinco, the Head Contractor and Jana Pty Ltd will be making the payments that will be applied against the reduction of the debt. These payments will be taken to have been made on account on behalf of the Head Contractor to the Subcontractor for the purpose of the Guarantee Debt and this Deed. 3.3 The Land owner will sell one unit as agreed to JK Elia Holdings Pty Ltd ATF The JK Elia Trust or its nominee for a guaranteed maximum price of $516,518.20 (GST Inclusive) ('Sale Price'). 3.4 The Head Contractor and the Landowner and its associated entities will indemnify the Subcontractor and its associated entities to this Deed for any loss suffered as a result of a breach of this Deed on a full indemnity basis." 1. Clause 8 of the Deed is entitled "General" and contains a number of sub-clauses that are structured as definitions. At least some of those sub-clauses nevertheless contain what appear to be substantive rather than definitional provisions, including clauses 8.30, 8.31 and 8.34 referred to below. 2. Clause 8.30 provides: "'Guarantee' – means each Guarantor unconditionally and irrevocably guarantees the payment by the Head Contractor and or its associated entities to the Subcontractor of the Guarantee debt and Guaranteed moneys upon demand by the Subcontractor or its nominated nominee and the punctual performance by the Guarantors of all the Guarantors other obligations under this Deed. This guarantee is a continuing indemnity and extends to all of the Additional Amount, and any accrued Interest and other money payable under this document. Each guarantor waives any right it has of first requiring the Secured Party to commence proceedings or enforce any other right against the Company or any other person before claiming from the Guarantor under this document." 1. Clause 8.34 provides: "'Guarantors' means jointly and severally guarantee unconditionally and irrevocably the obligations of the Head Contractor, Trinco, the Landowner, all directors and trusts and it associated entities and the guarantor." 1. Clause 8.32 provides: "'Guarantee Debt' is defined as all monies and obligations owed by the Head Contractor, the Landowner and its associated entities and Anthony Azizi to the Subcontractor in connection with the Retainer Agreement, loans and this deed." 1. Clause 8.35 provides: "'Guaranteed Moneys' means all amounts from time to time due at the settlement of the Contract for sale of land and owing by the Head Contractor, Landowner and its associated entities to the Subcontractor and or its nominees under or pursuant to this Deed. The Guarantors unconditionally and irrevocably guarantee payment, their obligation to pay any and all amounts owed from time to time and the interest on the accrued monies and the guaranteed monies will continue after settlement of the contract for sale of land." 1. The "Contract for sale of land" is defined in clause 8.17 as meaning the contract for sale by Jana to the purchase of part of the Bexley North land that I have referred to at [18] above. 2. Clause 8.27 provides: "'Enforcement of Guarantee'-means this Deed is a primary obligation of each Guarantor and is in addition to and not in substitution for any other Security which the Subcontractor or its nominee may hold or have recourse to in respect of the Guaranteed Moneys and, may be enforced without first having recourse to any such Security and without taking any steps or proceedings against the Head Contractor or Guarantors whether pursuant to such Security or otherwise and notwithstanding that any other Security shall be in whole or in part unenforceable by reason of any rule of law or equity." 1. Clause 8.31 is entitled "Guarantee Absolute and Unconditional" and relevantly provides that each "Guarantor" understands and agrees that "this Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment and performance" and that when "making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, any Guaranteed Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Head Contractor and its associated entities, any other Guarantor or any other Person or against any collateral security or guarantee for the Guaranteed Obligations …" 2. Clauses 8.22 and 8.23 provide: "8.22 'Default' – The Head Contractor and its associated entities must ensure that an Event or Default does not occur. A default under this deed will exist when: (a) the weekly services of the subcontractor are not paid; (b) the payment of the Guarantee Debt on demand within 14 days; (c) the Vendor does not complete the Contract for Sale of Land Settlement on the Settlement Date. 8.23 In the event of Default, Costs and Expenses – a reference to 'default, costs and expenses' in this deed includes reasonable legal costs and expenses in connection with the enforcement of the Deed to be paid on a party / party basis." 1. Clause 8.24 provides: "'Due and Payable' when used with reference to any and all sums secured by this Deed shall mean due and payable, whether by acceleration or call for payment as provided in this Deed." 1. Clause 8.46 provides: "'Loan' – an agreement to loan monies will be a debt due and payable immediately, and any other monies owed pursuant to this Deed where a business borrows money and pays it back in instalments (plus interest) within a specified period of time or on demand by the Subcontractor or its nominees or at settlement of the Contract for Sale of Land." 1. Clause 8.48 provides: "'Maturity date' – when all debts whether outstanding or not, loans, accrued amounts at the expiry of the 12 Month period from the commencement date with interest are due and payable forthwith or on demand." 1. Although the Deed names only one party as a "Guarantor" (Mr Azizi), clause 2.3 and the definitions of "Guarantee" in clause 8.30, "Guaranteed Moneys" in clause 8.35, "Enforcement of Guarantee" in clause 8.27 and "Guarantee Absolute and Unconditional" in clause 8.31 refer to guarantors in the plural or to "each Guarantor" (arguably assuming that there is more than one guarantor). Clause 8.34, which purports to define the term "Guarantors", does not in fact define that term but rather describes the obligations guaranteed. The term "Guarantee Debt" is defined in clause 2.1 and defined differently in clause 8.32. In clause 2.3, "the landowner" is referred to separately from "the guarantors". As I have referred to above, Jana is the party the Deed described as "the Landowner". 2. Clause 2.3 of the Deed describes the time at which the "landowner and guarantors acknowledge and confirm that all amounts due to the subcontractor will be paid" by reference to: 1. "settlement"; or 2. "the further sale by the Land owner of Real Property to the Purchaser"; or 3. "from the refinance of the property". 1. Options (2) and (3) above are described in clause 2.3 as being in the alternative to option (1) and "at the discretion of the Subcontractor and by agreement". 2. By contrast, the definition of "Guarantee" in clause 8.30 states that "each Guarantor unconditionally and irrevocably guarantees the payment by the Head Contractor and or its associated entities to the Subcontractor of the Guarantee debt and Guaranteed moneys upon demand by the Subcontractor …" (my emphasis). 3. ACPM issued a letter of demand dated 4 May 2021 to Jana, Trinco and the Head Contractor. The letter was sent by email to Mr Azizi. It stated: "Trinity Constructions (AUST) Pty Ltd ('Trinity') and Trinco (NSW) Pty Ltd ('Trinco') and JANA Pty Ltd ('JANA') and collectively known as the ('Guarantors'), acknowledge and agree from the date of execution of the deed 19 January 2021 ('Deed') the sum of $481,865.51 ('Guarantee Debt') is a debt owing to Allspec Constructions and Project Management Pty Ltd ('Allspec') for various loans from Allspec to the Guarantors. In that regard, pursuant to the terms of the Deed, the Guarantors jointly and severally guarantee unconditionally and irrevocably the obligations of Trinity, Trinco and Jana, all directors and trusts and its associated entities and guarantor. The Guarantors agree not to dispute the Guarantee Debt. The Guarantors acknowledge that monies are owed to Allspec by the Guarantors for project management services, loans and building and construction services regarding the residential construction sites located at 266-268 Pennant Hills Road Thornleigh and 8-18 Stoney Creek Road Bexley NSW ('the sites'). Accordingly, we request that you pay the total sum of $481,865.51 via direct deposit … We are not apprised of any circumstances that may justify withholding payment of the debt. In that regard a Statutory Demand pursuant to the Corporation Act 2001 should be served on the guarantors unless the debt is paid by the stipulated date above. …" 1. A second letter of demand was issued on 11 May 2021 for an amount of $757,567.46, including the amount of $481,865.51. 2. As I have already referred to, the statutory demand was issued on 13 September 2021. 3. Mr Azizi has given evidence that, as at 13 September 2021, none of the three circumstances referred to in clause 2.3 of the Deed had occurred. In his affidavit sworn on 22 November 2021, Mr Azizi deposed that: "The construction of the development is still taking place, and this will not be complete until at least, the end of next year. No documents have been lodged with the NSW Land Registry Services to register the lots or strata plan within the development and this will not be done until the works have been completed. Mr Elia also confirms at paragraph 150 of his Affidavit sworn 26 October 2021 that the construction on this development is still taking place and transfer of the apartment to the Purchaser is yet to occur." 1. It is common ground that construction is still taking place and that the transfer of Lot 30 to the Purchaser has not occurred. In his affidavit sworn on 26 October 2021, Mr Joseph Elia deposed that: "The 'charged' property [referring to Jana's property at Bexley] is currently under construction with only excavation works completed and performance of the contract for sale of land dated 19 January 2021 has not yet occurred." 1. There was no evidence that this position had relevantly changed between the date these affidavits were sworn and the hearing of Jana's application to set aside the statutory demand on 14 February 2022. 2. Mr Azizi also deposed in his 22 November 2021 affidavit that neither of the other two conditions set out in clause 2.3 of the Deed had occurred, as Jana had not entered into any further contracts of sale with ACPM or the Purchaser and Jana had not refinanced the development site. 3. The written submissions served by Jana prior to the hearing stated that none of the events referred to in clause 2.3 had occurred as at the date of the demand. The submissions disclosed that: "For what it is worth, in the interest of candour, a refinance of the property is in motion and payment is intended to be made shortly as contemplated by the third trigger in clause 2.3." 1. It was submitted on behalf of Jana that there is a genuine dispute within the meaning of s 459H(1)(a) of the Corporations Act. Relying on the matters referred to at [34] above, Jana submits that there is a genuine dispute about whether it was a "guarantor" under the Deed, properly construed. Jana submits that recital J to the Deed, which refers to "the terms and conditions set out in this Deed" being guaranteed by, inter alia, "the landowner", is not an operative clause. Jana submits that it is clear from clause 3.1 of the Deed that the amount of $481,865.51 is a debt owed to ACPM by the Head Contractor and Trinco, and not by Jana. Jana characterises clause 3.2 of the Deed as merely containing an acknowledgement rather than imposing an obligation of payment. Jana submits that, reading the Deed as a whole, it is clear that its role is the role of a landowner permitting the performance of other parties' obligations under the Deed to be secured by the charge against its property. 2. Jana further submits that, even assuming that it is a "guarantor" within the meaning of the Deed (which is disputed), the "Guarantee debt" referred to in clause 2.1 of the Deed was not due and payable at the time the demand was issued because the events referred to in clause 2.3 had not occurred. Jana relies on the provisions of clause 2.3, Mr Azizi's evidence referred to at [43]-[45] above and the provisions of clause 8.64 of the Deed as defining "settlement" for the purpose of clause 2.3. 3. ACPM contends that "properly construed, the guarantee extends to the obligation of Jana as guarantor both to repay on demand the Guarantee Debt $481,865.51 principal and interest on the guarantee debt and to its obligation to pay the Additional Moneys". The reference to interest and to "Additional Moneys" (a term that is not defined in clause 8 of the Deed) can be put to one side for the moment, as the question is whether there is a genuine dispute about the debt in respect of which the demand was issued. The demand was issued only in respect of the sum of $481,865.51 allegedly owed by Jana "as Guarantor". 4. ACPM's submissions in support of its contention referred to immediately above may be summarised as follows: 1. it is clear from recital J of the Deed that Jana "guaranteed payment of the Acknowledgement of Debt of $481,865.51", referring to authorities concerning the use that may be made of recitals in the construction of deeds and contracts, including where the recitals are inconsistent with the operative provisions of the deed or contract; 2. "… what is meant by the sentence in clause 2.1 of the deed 'The head Contractor and the guarantors agree not to dispute the guarantee debt' was that there were multiple guarantors other than the head contractor trinity, (see guarantors in the deed at clause 8.34). There is no reference in clause 2.1, that the only guarantor to the deed is Mr Anthony Azizi"; 3. "if the definition of Landowner and guarantor is to be construed as the plaintiff contend, there would be no work for the guarantee or the charge to do". ACPM submits that there would have been no commercial reason for Jana to have granted the charge over the Bexley North land if it was not a guarantor. ACPM also submits that Jana is properly described as guarantor as a result of having granted that charge, referring to Jowitt v Callaghan (1938) SR (NSW) 512; 4. clause 2 of the Deed creates an obligation for Jana to pay the "Guarantee Debt" immediately and "there is nothing in clause 2.3 that says payment of moneys owed to the defendant is conditional upon settlement of the contract for sale of land". Rather, the "Guarantee Debt" is repayable on demand as stated in clauses 8.24 and 8.30 of the Deed, and ACPM has made such a demand on 4 May 2021 and 11 May 2021. Having regard to clauses 3.2, 8.24 and 8.30 and also clauses 8.46 and 8.48 of the Deed, the reference to payment "on settlement" in clause 2.3 should be construed as referring only to the time for payment of amounts owing in relation to the retainer of the Subcontractor and not the sum of $481,865.51 in clause 2.1. ACPM submits that clause 2.3 otherwise makes no commercial sense. 1. ACPM relies on various surrounding circumstances in support of the construction for which it contends. 2. ACPM's submissions referred to paragraph 27 of Mr Azizi's second affidavit in which he stated that "the Deed does not 'secure all monies owed to the Defendant' at settlement of the 'Property'" and that "the Plaintiffs only obligation to make payment is in the sum of $481,865.21, being the sum claimed under the Defendant's Statutory Demand". Read in context, I do not accept ACPM's submission that this statement by Mr Azizi constitutes an admission of "the debt". I do not regard the statement as an admission that Jana's obligation in respect of that amount was an obligation "as Guarantor" or that the amount was due and payable as at the date of the demand. 3. ACPM also relies on the indemnity in clause 3.4 of the Deed as supporting the construction of the Deed for which it contends. 4. ACPM submits that: "By executing a deed, the party whose act and deed it is becomes, as a general rule, conclusively bound by what has been stated in the deed to be effected, undertaken or permitted by that party and is, as a rule, estopped from averring and proving by extrinsic evidence that the contents of the deed did not in truth express that party's intentions or did not correctly express them or that there are reasons why that party should not be obliged to give effect to the deed …" 1. That submission merely begs the question: on the proper construction of the Deed, what has been stated about the payment by Jana of the sum of $481,865.51? 2. ACPM's submissions also refer to the evidence of Mr Joseph Elia to the effect that Mr Azizi agreed "that the acknowledgement of debt was to be paid down and the sum of $330,000 was to be paid by 9 September 2021". I do not regard that submission as relevant to the present application. The question is whether there is a genuine dispute about the debt that is the subject of the demand. The demand related to a debt said to be owed by Jana "as Guarantor" under the Deed, not an amount owed pursuant to an agreement allegedly made subsequently between Mr Azizi and Mr Joseph Elia. 3. Having considered Jana's submissions referred to at [48]-[49] above and ACPM's submissions referred to at [50]-[54] above, I was satisfied by the conclusion of the hearing on 14 February 2022 that there is a genuine dispute in relation to the whole of the alleged debt. The dispute concerns the existence of the alleged debt described in the demand ("as Guarantor") and, if that debt exists, whether it was due and payable at the time of the demand was issued on 13 September 2021. Contrary to ACPM's submissions, Jana's contentions about the construction of the Deed are not "baseless". On the contrary, Jana relies on the express words of certain clauses in the Deed. ACPM has raised contrary arguments. I do not express any view about which party's arguments may ultimately succeed, but I reject ACPM's submission that "there is not a bona fide disputed issue of fact or law but only one based on spurious, hypothetical, illusory or misconceived grounds". In my view, Jana's application raises bona fide issues of law concerning the proper construction of the very poorly drafted Deed. 4. To put it another way, this is not a case that is "plain as a pikestaff". There is a genuine dispute about how the Deed, properly construed, operates in respect of the amount of $481,865.51 referred to in clause 2.1. Noting the Court of Appeal's observations in Creata (Aust) Pty Ltd v Faull, supra, about the need for judges determining applications of this kind to exercise caution before expressing views about the merits of the dispute, I shall refrain from making any further comment about the substance of the parties' submissions concerning the proper construction of the Deed. 5. For those reasons, I determined at the conclusion of the hearing the "admitted amount" for the purpose of s 459H is nil and the statutory demand must be set aside: s 459H(3). Some other reason: s 459J(1)(b) 1. Given the conclusion I reached in relation to s 459H(1)(a), it is not necessary to consider the alternative basis of Jana's application to set aside the statutory demand. Costs 1. Costs ordinarily follow the event and ACPM did not seek to be heard against an order that it pay Jana's costs of the proceedings. Conclusion and orders 1. For the foregoing reasons, I made the following orders on 14 February 2022: 1. Order that the statutory demand dated 13 September 2021 issued by the defendant to the plaintiff be set aside. 2. Order that the defendant pay the plaintiff's costs of these proceedings. ********** Endnotes 1. Counsel's written submissions replaced submissions earlier prepared by ACPM's solicitor. 2. See also CA Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31 at [38]-[40] (Buss P and Vaughan JA). 3. In this extract and all other extracts from the Deed set out in these reasons, all spelling and grammatical errors are from the original text. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 February 2022