Austwide Business Brokers Pty Limited v Kajun Design Pty Limited [2001] NSWSC 1074

New South Wales Supreme Court

CITATION : Austwide Business Brokers Pty Limited v Kajun Design Pty Limited [2001] NSWSC 1074 FILE NUMBER(S) : SC 3989/01 HEARING DATE(S) : 2 November 2001 JUDGMENT DATE : 2 November 2001

PARTIES : Austwide Business Brokers Pty Limited (Plaintiff) Kajun Design Pty Limited (Defendant) JUDGMENT OF : Master McLaughlin

COUNSEL : J. Johnson (Plaintiff) C. Whitelaw (Defendant) SOLICITORS : Wakeling & Associates, Solicitors (Plaintiff) MacKellar Crain & Barnett, Solicitors (Defendant) LEGISLATION CITED : Corporations Act DECISION : See paragraph 30.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Master McLaughlin Friday, 2 November 2001 3989/01 AUSTWIDE BUSINESS BROKERS PTY LIMITED -V- KAJUN DESIGN PTY LIMITED JUDGMENT 1 Master: There is presently before the Court an application made by the plaintiff, Austwide Business Brokers Pty Ltd, by way of originating process filed by it on 7 August 2001. 2 By that originating process the plaintiff seeks substantively an order in the following terms: An order that the creditors' statutory demand for payment of debts issued by the defendant against the plaintiff and served on the plaintiff on 18 July 2001 be set aside. 3 The heading of the original process identifies the parties as being Austwide Business Brokers Pty Ltd as the plaintiff and Kajun Design Pty Ltd as the defendant. 4 For reasons best known to those who prepared that document, the name and identity of the defendant precede the name and identity of the plaintiff in the entitlement of these proceedings. 5 In support of the originating process there was filed on 7 August 2001 an affidavit of Peter Raymond Wilson sworn on the same date. That affidavit is the only affidavit which is relied upon by the plaintiff as constituting an affidavit of the nature contemplated by the provisions of section 459G(3) which requires that within a specified period "an affidavit supporting the application is filed with the Court". 6 The affidavit of Mr Wilson annexes a number of documents including, as I understand it, although the affidavit is far from precise in this regard, the statutory demand which is the subject of the present proceedings. That statutory demand is addressed to Austwide Business Brokers Pty Ltd (described as "the company"). 7 Paragraph 1 of the demand is in the following terms: The company owes Kajun Design Pty Ltd, creditor, the amount of $69,237.55 plus legal costs being the amount described in the schedule. 8 The schedule to the demand contains under the heading description of the debt the following: "For artwork and overall design and layout judgment 17 July 2001, District Court Sydney, $69,237.55". 9 The schedule contains under the heading "Amount of the debt" the following, "Judgment owed $69,237.55". 10 Although a demand grounded upon a judgment debt does not require to be accompanied by an affidavit of the nature which may be compendiously described as an affidavit verifying the demand, nevertheless, in the instant case the demand was, in fact, accompanied by an affidavit of Graham Keith Barnett sworn 17 July 2001. That deponent states in the following terms: "I am the plaintiff's solicitor for Kajun Design Pty Ltd, the creditor". 11 Paragraph 4 of that affidavit states: "I believe that there is no genuine dispute about the existence or amount of the debt to which the demand relates". 12 The affidavit in support of the present application, being that of Peter Raymond Wilson of 7 August 2001 to which I have already referred, is a somewhat curious document. The deponent states in paragraph 1 that he is a director of the defendant in these proceedings. These proceedings are, of course, identified in the entitlement to the affidavit which discloses that the proceedings are proceedings 3898/2001 in the Equity Division of this Court and that the proceedings are between Austwide Business Brokers Pty Ltd described as plaintiff and Kajun Design Pty Ltd described as defendant. 13 The deponent sets forth his association with and participation in the affairs of the defendant and the involvement between the defendant and the plaintiff. In paragraph 16 of his affidavit the deponent states: "After taking into account the monies paid by the defendant to the plaintiff totalling $30,106.23 there remains a credit balance due by the plaintiff to the defendant of $44,721.08". 14 In paragraph 17, the defendant states: "On 7 July 2001 judgment was entered up by the plaintiff notwithstanding that the plaintiff was aware that the claim was being opposed". 15 That statement is, of course, totally meaningless. It will probably be suggested, indeed Counsel for the plaintiff has indicated that such is his understanding, that the affidavit of Peter Raymond Wilson of 7 August 2001 contains what is referred to as typographical errors and misprints. 16 That is all very well, but that affidavit must comply with the requirements of subsection (3) of section 459G of the Corporations Act to enable the present proceedings to be properly constituted. The deponent of the affidavit has stated that there is due by the plaintiff, Austwide Business Brokers Pty Ltd, to the defendant, that is, Kajun Design Pty Ltd a credit balance of $44,721.08. 17 There is reference in the affidavit to a judgment that was entered up on 7 July 2001. That judgment may or may not be identical to the judgment that is referred to in the schedule to the statutory demand which is a judgment dated 17 July 2001. 18 Paragraph 19 in Mr Wilson's affidavit is in the following terms: "A notice of motion is being filed this day in the District Court of New South Wales seeking orders inter alia that the judgment entered in proceedings number 2211/2001 be set aside. Exhibited hereto and marked with the letter B are copies of the said notice of motion and affidavit in support thereof". 19 Subsequently, on 18 October 2001 (that is, after the present proceedings were instituted) the District Court judgment in favour of Kajun Design Pty Ltd, the present defendant, was by consent of both parties set aside. There is now no judgment of the District Court in favour of Kajun Design Pty Ltd against Austwide Business Brokers Pty Ltd. However, the proceedings by the former company against the latter company in the District Court are currently on foot. 20 It is no part of the function of the Court in carrying out the responsibility committed to it by Division 3 of Part 5.4 of the Corporations Act upon an application to set aside a statutory demand, to embark upon a hearing as to the merits of a dispute between the parties or to attempt to resolve disputed questions of fact. 21 The Court, under the provisions of subsection (1) of section 459H is required to be satisfied, relevantly, of whether there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates. 22 In the instant case, the debt to which the statutory demand relates is identified as a judgment debt, the description of that debt being, however, somewhat infelicitously phrased, because preceding the reference to the judgment of the District Court there is a reference to "for artwork and overall design and layout". 23 Further, there is a reference in paragraph 1 of the demand to the assertion that the present plaintiff owes the present defendant "the amount of $69,237.55 plus legal costs". The legal costs are not otherwise identified and are not referred to in any way to the schedule to the demand. It seems to me that I should disregard the reference to legal costs in paragraph 1 of the demand and treat those words as mere surplusage; and that I should regard the words "being the amount described in the schedule" as qualifying the entirety of the phrase, "the amount of $69,237.55 plus legal costs" and then to observe that the schedule refers only to the judgment of the District Court in the specified amount of $69,237.55. 24 It is abundantly apparent that the debt in respect of which the demand has been made by the plaintiff upon the defendant is a judgment debt of the District Court of New South Wales. That judgment has now been set aside. The judgment debt no longer exists. The entire basis of the demand has been removed. 25 The fact that there may be or may not be a genuine dispute as to the asserted indebtedness of the plaintiff to the defendant in either the amount referred to in the demand or in some other amount cannot have any bearing upon the question of whether or not there is a genuine dispute as to the existence of the judgment debt. The judgment debt no longer exists. 26 I have already adverted to the problems which appear to me possibly to arise in consequence of the form and content of the affidavit of Mr Peter Raymond Wilson filed in support of the application. It may well be that, if that affidavit had not contained reference to the default judgment of the District Court and to the intention (set forth in paragraph 19 of the affidavit) of the plaintiff to apply to set aside that judgment, it would have been very difficult to regard the proceedings as being properly constituted, especially since the deponent of the affidavit, in addressing the question of the indebtedness of the plaintiff to the defendant, asserted that the plaintiff was indebted to the defendant in an amount of $44,721.08. 27 However, the affidavit does proceed to address itself to the existence of the default judgment and to the intended application of the plaintiff to set aside that default judgment. 28 To the extent that it addresses itself to that fundamental aspect of the matter, it seems to me that it does comply with the requirement of constituting an affidavit supporting the application, but only just so complies. 29 It follows from the foregoing that the statutory demand must inevitably be set aside, and I propose so to order. 30 I make the following orders: (1) I make an order as in paragraph 1 in the originating process.