Kiama Development Co Pty Limited v Wilcox [1999] NSWSC 513

New South Wales Supreme Court CITATION : Kiama Development Co Pty Limited v Wilcox [1999] NSWSC 513 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 1973/99 HEARING DATE(S) : 31 May 1999 JUDGMENT DATE : 31 May 1999

Kiama Development Co Pty Limited (P) Rosanna Wilcox (D1) PARTIES : Birgitta Spicer (D2) Graham Wilcox (D3) John Spicer (D4) JUDGMENT OF : Master McLaughlin

COUNSEL : Mr. I. Pike (D) SOLICITORS : Douglas Knaggs (P) Heckenberg & Associates (D) CATCHWORDS : ACTS CITED : Corporations Law DECISION :

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER McLAUGHLIN

Monday, 31 May 1999

1973/99 KIAMA DEVELOPMENT CO PTY LIMITED -v- ROSANNA WILCOX AND ORS JUDGMENT

1 MASTER: By summons filed on 12 April 1999 the plaintiff, Kiama Development Co Pty Limited, seeks an order that the document headed Statutory Demand dated and served on the plaintiff by the defendants on 24 March 1999 be set aside. The defendants named in the summons are Rosanna Wilcox, Birgitta Spicer, John Spicer and Graham Wilcox. 2 The document to which the summons refers is headed Creditors Statutory Demand for Payment of Debt. It follows precisely the form set forth in Form 509 H (2) contained in Schedule 2 to the Regulations under the Corporations Law. It requires payment by the plaintiff of the sum of $96,205.58. That alleged debt is described in the schedule to the demand as follows:- Judgment entered by the District Court of New South Wales, Sydney (proceedings number 1839 of 1999) in favour of the creditor on 15 March 1999 $96,205.58. 3 Paragraph 6 of the demand states the address of the creditor for service of copies of any application and affidavits is care of Heckenberg & Associates, Solicitors, level 3, 185 Elizabeth Street, Sydney, NSW 2000, DX 644 Sydney. 4 The summons to set aside the demand and the affidavit in support were received by Heckenberg & Associates on 28th April 1999 under cover of a letter dated 23 April 1999. It would appear, however, that a copy of the summons and affidavit in support were on 21 April 1999 received by another firm of solicitors, Martins. That firm does not act for the defendants in the present proceedings and it is not referred to in the statutory demand. 5 There has been placed in evidence before me a certificate of Judgment in the District Court of New South Wales at Sydney in proceedings No. 1839 of 1999. That certificate is dated 22 March 1999. Paragraph 1 of that certificate is in the following terms:- In this action the plaintiffs recovered Judgment against the defendants on 15 March 1999 in the sum of $96,205.58 and its costs zero dollars and zero cents. 6 There has also been placed in evidence a certificate as to determination of costs from Costs Assessor, M L Bradazon, issued on 5 March 1999 which includes the following: This application is determined by assessing as a fair and reasonable amount of costs to be paid to the applicant the sum of $96,205.58. 7 There is no evidence before the Court which discloses that any application has been made to the District Court for a stay of execution upon the judgment recovered by the present defendants as a judgment creditor as against the plaintiff as one of a number of judgment debtors. 8 I here note that Mr Knaggs, Solicitor for the present plaintiff, sought an adjournment of the hearing to enable him to ascertain whether an application for a stay of execution upon the judgment had been filed in the District Court. Since the judgment was entered two and a half months ago and since there was no evidence of any application having been made to the District Court before today, I refused any such adjournment. 9 Mr Knaggs, on behalf of the present plaintiff, submitted that I should go behind that judgment. Where there is a judgment of the District Court of New South Wales, where there is a no application to set aside that judgment, and where there has been no stay of execution upon that judgment, I consider that, firstly, I do not have the power to go behind the judgment; secondly, even if I did have that power, I certainly would not in those circumstances do so. 10 So far as the substance of the present proceedings is concerned --- that is, whether there is any ground upon which I should set aside the statutory demand in accordance with the provisions of Division 3 of Part 5.4 of the Corporations Law --- I am not satisfied that there is a genuine dispute between the plaintiff and the defendants about the existence or the amount of the debt to which the demand relates. 11 However, there are two further aspects of the proceedings to which I should refer. Firstly it has been submitted on behalf of the defendants that the present proceedings are not an application of the nature contemplated by Division 3 of Part 5.4, in that they do not comply with the requirements of section 459 G of the Corporations Law. Subsection (2) of that section provides that an application for an order setting aside a statutory demand may only be made within twenty one days after the demand is served. In the circumstances of the instant case, that twenty one day period expired on 15 April 1999. 12 Subsection 3 of section 459 G provides:- That such an application is made in accordance with that section only if, within those 21 days: (a) an affidavit supporting the application is filed with the Court; and (b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company. 13 Whilst the affidavit supporting the application (being the affidavit of John Desmond French, sworn 6 April 1999), was filed within the twenty one day period, neither a copy of the summons nor a copy of that affidavit were within that period served on the person who served the demand on the company. 14 In the light of the address of the creditor for service of copies of any application and affidavits set forth in paragraph 6 of the demand, the failure of the present plaintiff to serve the copy of the summons and a copy of the affidavit of Mr French upon the present defendants care of Heckenberg & Associates at the address disclosed in paragraph 6 of the demand within the twenty one day period is fatal to the present proceedings. In that regard, I would refer to the decision of the High Court of Australia in David Grant & Co. Pty Limited -v- Westpac Banking Corporation Limited (1994), 184 CLR, 265 at 278, being the judgment of Gummow J with whom the other members of the Court agreed; and also to Centurion Constructions Pty Limited V Beca Developments Pty Limited (1996) 14 ACLC 312, a decision of McLelland CJ in Eq. Since the proceedings were not instituted in the manner required by section 459 G, the summons must inevitably be dismissed. 15 The Court has no power to extend the twenty one day period, as was decided by the High Court of Australia in David Grant & Co. Limited v Westpac Banking Corporation. Although without opposition by the defendants, the plaintiff filed in Court this day, 31 May 1999, a Notice of Motion seeking orders that the time for service of the summons and affidavit be extended until the date upon which those documents were in fact served upon Heckenberg & Associates and that service of those documents be deemed to have taken place at that time. The Court has no power to grant that relief. 16 It has also been submitted on behalf of the plaintiff that the form of the statutory demand is inconsistent with the requirements prescribed by section 459 G. Subsection (1) of that section provides that a company may apply to the Court for an order setting aside a statutory demand served on the company. Subsection 2 requires that such an application be made within twenty one days after the demand is so served. The phrase "statutory demand" is defined in section 9 of the Corporations Law as meaning, relevantly, a document that is, or purports to be, a demand served under section 459 E. 17 The form which is prescribed by the Regulations, being Form 509 H in Schedule 2 to the Regulations made under the Corporations Law (which was, as I have already recorded, followed by the defendants in the present proceedings) includes as paragraph 5 the following:- section 459 G of the Corporations Law provides that a company served with a demand may apply to a court having jurisdiction under the Corporations Law for an order setting the demand aside. An application must be made within 21 days after the demand is served and, within the same period; (a) an affidavit supporting the application must be filed with the court; and (b) a copy of the application and a copy of the affidavit must be served on the person who served the demand. 18 It is submitted on behalf of the plaintiff that the form of the demand in the instant case, and indeed the form prescribed by the Regulations to the Corporations Law, is inconsistent with the provisions of section 459 G, since paragraph 5 of the form refers to a 'demand' and not to a 'statutory demand'. It is submitted on behalf of the plaintiff that paragraph 5 in the notice should refer to a company served with a 'statutory demand' being entitled to apply to a Court. 19 The reason, so it is submitted, why the form should refer to a statutory demand is that the definition of statutory demand in section 9 is a demand that has been served under section 459 E. 20 I do not consider that the form which is prescribed in Schedule 2 to the Regulations, being Form 509 H, is in any way inconsistent were the provisions of section 459 G, or is in any way inconsistent with the provisions of section 459 E. I do not consider that the form prescribed in the Regulations or the form which is used in the instant case can in any way be in any way treated as being ultra vires. I am quite satisfied that the demand which was served upon the plaintiff is a demand which has been served under section 459 E. 21 But even if (contrary to the conclusion which I have just expressed) the reference in paragraph 5 to a company served with a 'demand' is an inappropriate reference, that fact of itself would not, in my view, have any effect upon the demand which has been served upon the plaintiff, or upon the failure of the plaintiff to comply with that demand. 22 Paragraph 5 of the demand sets forth certain rights to which the debtor company is entitled. Unless it can be suggested that the debtor company has somehow been misled by paragraph 5 concerning its rights, it seems to me that even if the submissions of the plaintiff in this regard were correct, that fact would have no effect upon the consequences of the demand or of the failure of the plaintiff to comply with it. 23 I summarise therefore as follows my foregoing views. 24 The present proceedings were not instituted in the manner required by section 459 G, since the summons and the affidavit were not served upon the defendants within the twenty one day period required by subsection (2) of that section. I consider that the form of demand following Form 409 H in Schedule 2 to the Regulations made under the Corporations Law, is appropriate in these circumstances of this case. There is no inconsistency between the form presently used and the requirements of section 459 E. The form of the demand is a demand under section 459 E and therefore, comes within the definition contained in section 9 of "statutory demand". 25 Even if paragraph 5 of the demand was inappropriately worded and should have included the phrase 'statutory demand' where the word 'demand' appears in the first sentence thereof, I do not consider that the effect of the use of the word 'demand' would have any consequences other than those which flow from the failure of the plaintiff to comply with the demand, either by paying the amount of the debt within the specified period of twenty one days, or by instituting proceedings of the nature contemplated under section 459 G within that period. 26 Further, there is no evidence whatsoever upon which the Court could possibly conclude that there is any genuine dispute as to either the indebtedness of the plaintiff to the defendants, or the amount of that indebtedness. There is a Certificate of Judgment of the District Court of New South Wales in evidence in the present proceedings in the amount claimed by the present defendants against the plaintiff. There is no evidence that any application has ever been made, either to set aside that judgment or to seek a stay of execution thereof. 27 Accordingly, I propose to order that the summons be dismissed. I make the following orders: (i) I order that the summons be dismissed. (ii) I order that the plaintiff pay the costs of the defendant, such costs to be on the party and party basis up to and including 12 May 1999, and thereafter to be on the indemnity basis. The exhibits may be returned. **********