Danbeckim Pty Limited v MMI Workers Compensation (NSW) Pty Limited [1999] NSWSC 427

New South Wales Supreme Court CITATION : Danbeckim Pty Limited v MMI Workers Compensation (NSW) Pty Limited [1999] NSWSC 427 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 4057/98 HEARING DATE(S) : 6 May 1999 JUDGMENT DATE : 6 May 1999

PARTIES : Danbeckim Pty Limited (P) MMI Workers Compensation (NSW) Pty Limited (D) JUDGMENT OF : Master McLaughlin

COUNSEL : Ms. S. Walsh (P) Mr. P. M. Day (D) SOLICITORS : Orchiston Ranzetta Finney (P) Michell Sillar (D) CATCHWORDS : ACTS CITED : Corporations Law Workers' Compensation Act 1987 DECISION :

- 6 - SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER McLAUGHLIN

Thursday, 6 May 1999

4057/98 DANBECKIM PTY LIMITED -v- MMI WORKERS COMPENSATION (NSW) LIMITED JUDGMENT

1 MASTER: By summons filed on 25 September 1998 the plaintiff, Danbeckim Pty Limited, seeks an order that the creditors' statutory demand for payment of debt dated 27 August 1998 by the defendant, MMI Workers' Compensation (NSW) Limited be set aside. 2 Although the summons refers to a demand dated 27 August 1998 the statutory demand the subject of the present proceedings is, in fact, dated 15 June 1998. That demand seeks payment by the plaintiff to the defendant of the amount of $16,797.14. That amount is described in the schedule to the demand as follows: Outstanding Workers' Compensation Insurance premium pursuant to policy No. MWL0033067 for the period 25 November 1996 to 25 November 1997 (inclusive) for $13,903.50 plus interest which, at 31 May 1998, amounts to $2,893.64 and continues at the rate of 1.2 per cent per month compound, pursuant to s.172 of the Workers' Compensation Act 1987, total amount $16,797.14. 3 Although the demand makes reference in the schedule to a certain policy, neither the plaintiff nor the defendant has seen fit to place before the Court a copy of that policy. It would appear, however, that that policy relates to Workers' Compensation insurance taken out in respect to a business conducted under the name, Deadlock Security Service. A Business Names extract which has been tendered in evidence as part of Exhibit 1 discloses that for a period of five days during the period in respect to which the statutory demand relates (being the period from 25 November 1996 to 30 November 1996) that business was conducted by the plaintiff company. 4 Although the demand claims a premium in an amount of $13,903.50, it appears that after the issue of the demand and after the institution of the present proceedings, the amount of that premium was reduced to $110 and that that amount has been paid. 5 The balance of the demand relates to interest upon the premium in the amount of almost $3,000. It has been submitted on behalf of the defendant that whilst the amount of the premium for which the plaintiff is liable has been reduced from almost $14,000 to $110, that fact does not, of itself, have the consequence of reducing the liability of the plaintiff to pay interest in the amount claimed. 6 The evidence includes a communication dated 15 March 1999 from the Operations Review Branch of WorkCover Authority, which is a statutory entity. That communication refers to the statutory obligations of WorkCover to administer the requirements of the Workers' Compensation Act 1987, in particular, the provisions of that Act concerning the responsibility of an employer to supply an insurer with a return relating to wages, and the regulations under that Act. 7 That communication from the WorkCover Authority states the decision of that entity that there is no compelling reason for it to waive the interest charge up to the date when the plaintiff's actual wage declaration was received. 8 It is appropriate here to record that the statutory demand which has been treated by the parties as the subject of the present proceedings was not the first such demand made by the present defendant against the present plaintiff in respect to the insurance premiums under the policy to which I have already made reference. There was an earlier demand dated 11 June 1997, which claimed the identical amount of $13,903.50 for outstanding premiums, but a smaller amount, $653.84 in respect to interest. 9 There were communications between the directors of the plaintiff and the defendant concerning that earlier statutory demand. Those communications essentially related to the assertion on the part of the plaintiff that it was not and never had been insured with the defendant and that another company with a similar name (of which the directors of the plaintiff were also directors, but with which the plaintiff company had no other relationship), had been insured for workers' compensation with the defendant. 10 In the light of the communications between the plaintiff with the defendant concerning the earlier statutory demand, it is somewhat difficult to understand how the affidavit verifying the demand of 15 June 1998, being the affidavit of Barry Gordon Lampard sworn 15 June 1998, could truthfully say, as that deponent does in paragraph 6 thereof, "I believe there is no genuine dispute about the existence of or the amount of the debt to which the demand relates". 11 The present proceedings are brought pursuant to the provisions of Division 3 of Part 5.4 of the Corporations Law. The plaintiff relies upon section 459H of that Statute and, in particular, subsection (1) of that section which provides that the section has application where the Court is satisfied, relevantly, that there is a genuine dispute between the company and the respondent about the existence or amount of the debt to which the demand relates. 12 The plaintiff submits that there is a genuine dispute as to the amount of the debt, being the entirety of the amount claimed in the demand, other than the sum of $110 (which sum the plaintiff has already paid, that payment being acknowledged by the defendant). 13 Whilst it is possible that at the time when the demand was served the plaintiff may have been liable for the premium in the amount claimed in the demand, nevertheless that amount is no longer owing. Despite the submissions on behalf of the defendant to the contrary, it seems to me that where an amount is admitted not to be owing at the present time, it would be quite wrong to allow the demand in that amount to remain on foot. 14 As to the component for interest, it has been submitted by the defendant that, whilst the amount of the premium was, after the issue of the demand, reduced from almost $14,000 to $110 and that amount of $110 has subsequently been paid, nevertheless the defendant is entitled to the full amount of the interest claimed in the demand, that component being $2,893.64, because, so it is submitted, the WorkCover Authority has declined to waive the calculation of that interest. 15 It has been submitted on behalf of the plaintiff, however, that that interest which has been the subject of representations to the WorkCover Authority and of the decision by the WorkCover Authority is not interest upon the premium which is payable by the plaintiff to the defendant, being in an amount of $110. Rather, so it is submitted, that component is in the nature of a penalty which may be payable by the plaintiff to the defendant consequent upon the failure of the plaintiff to provide information concerning employees in accordance with the statutory requirement in that regard. Thus, so it is submitted on behalf of the plaintiff, it cannot be interest upon the amount of any premium which may be payable by the plaintiff to the defendant. 16 If there were no dispute as to the component in the demand representing the amount of interest, then the appropriate course would be to reduce the amount claimed in the demand from the total of $16,797.14 to the figure in respect of which there was no dispute. But I have already expressed my view during submissions that I find a logical difficulty in understanding how the defendant can be entitled to interest calculated in a certain manner at a certain rate upon a premium in a certain amount, such interest said to total almost $3,000, when the premium upon which that interest is calculated is now conceded by the defendant to be only $110, not $13,903.50 17 It may be that the plaintiff is, in fact, liable to pay to the defendant an amount equal to the calculations provided by the defendant in annexure S to the affidavit of Phillip Mark Day sworn 20 April 1999. But, if so, it does not seem to me that that liability is a liability for a component of the amount claimed in the statutory demand, being expressed to be the interest for the period specified at the rate specified upon any outstanding premium, when that premium is now only $110. 18 It seems to me, therefore, that there is a genuine dispute, not only as to the component for the premium, but as to the component for the interest claimed in the statutory demand. Accordingly, therefore, I propose to order that the statutory demand dated 15 June 1998 be set aside. 19 (Counsel addressed on costs.) 20 It is noted that the amount of the premium at $110 has been conceded by the defendant, but only since the wages information was provided on 20 November 1998. 21 I make the following orders: (1) I order that the statutory demand dated 15 June 1998 served by the defendant upon the plaintiff be set aside. (2) I order that the defendant pay the costs of the plaintiff. The exhibits may be returned **********