New South Wales Supreme Court CITATION : MD Lawyers Pty Ltd v Stephen Wayne Velik [2009] NSWSC 879 HEARING DATE(S) : 24 August 2009 JUDGMENT OF : Hammerschlag J EX TEMPORE JUDGMENT DATE : 24 August 2009 DECISION : The statutory demand for payment of debts dated 10 June 2009 is set aside. Defendants to pay plaintiff's costs of the proceedings. CATCHWORDS : CORPORATIONS – statutory demand – application to set aside under s 459H – genuine dispute – substantiated amount less than statutory minimum – demand set aside LEGISLATION CITED : Corporations Act 2001 (Cth) CATEGORY : Principal judgment CASES CITED : Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC 411 MD Lawyers Pty Ltd - Plaintiff PARTIES : Stephen Wayne Velik - First Defendant Laura Alison Velik - Second Defendant FILE NUMBER(S) : SC 3443/2009 COUNSEL : P.D. Rodionoff [Plaintiff] S.W. Velik - Solicitor [Defendants] SOLICITORS : Mahony Dominic Solicitors [Plaintiff] SV Law [Defendants] - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST HAMMERSCHLAG J 24 AUGUST 2009 3443/2009 MD LAWYERS PTY LTD -V- STEPHEN WAYNE VELIK AND LAURA ALLISON VELIK JUDGMENT 1 HIS HONOUR: This is an application to set aside a statutory demand dated 10 June 2009 which the defendants served on the plaintiff. The defendants licensed the plaintiff to occupy certain premises at 55 York Street, Sydney. The licence agreement was part of a merger arrangement between the plaintiff, a company carrying on the business of a legal practice, and the first of the defendants, Mr Velik, a solicitor. The second defendant is Mrs Velik. 2 The Statutory Demand claims, relevantly, three separate amounts which the plaintiff asserts are genuinely in dispute: a firstly, an amount of $4,812.50 attributable to rental (or licence fee) for the remainder of the month of April 2009; b secondly, an amount of $167.46 claimed by the defendants for media advertising costs; and c thirdly, an amount of $6,732 which emanates from a quotation which has been admitted into evidence which is intended to reflect the cost of repainting. 3 I should not let the occasion pass without remarking that the amount of the Statutory Demand is relatively small and well within Local Court jurisdiction. It is a cause for regret that practitioners of this Court find themselves here when, in my view, they should do everything to resolve this commercial dispute extra-curially. 4 Barrett J said in Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC 411 at [23]that: "... the task faced by a company challenging a statutory demand on the "genuine dispute" ground is by no means at all a difficult or demanding one. The company will fail in that task only if it is found upon the hearing of its s 459G application that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted. Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger." 5 The defendants assert that on 3 April 2009 they terminated the licence for the plaintiff's breach. The plaintiff's first answer to the defendants' claim is that it says that on the same day it gave one month's notice terminating it. There is a difficulty with the plaintiff's proposition because the evidence in its present state establishes that the defendants gave their notice before the plaintiff did. 6 However, with respect to the rental claim the plaintiff says that from 4 April 2009 they gave occupation of the premises to Mr Velik and that thenceforth he carried on his legal practice there under the name of SV Law. It says that "by denying the plaintiff the right" to occupy the premises during the one-month period the defendants waived their right to receive the rental for that one month. 7 Mr Rodionoff of counsel, for the plaintiff, also put that no damage had been suffered by the defendants given that from 4 April 2009, the date after which the licence came to an end, one of the defendants has had occupation of and benefit of the premises. This he used to found a submission that the defendants have not established their damages at least for the reason that they had a duty to mitigate and have successfully done so. 8 These are issues deserving further investigation. A finding of a genuine dispute must follow. 9 In relation to painting they say that the amount claimed is unreasonably high in view of the fact that the costs incurred by them in repainting the premises earlier was $3,500, and they dispute that it was reasonable for the premises to be required to be painted in any event. 10 It seems to me that there is, likewise, sufficient to disclose a genuine dispute to the low level of satisfaction which is required. The plaintiff disputes the reasonableness of the requirement to repaint and also disputes the quantum. It provides some basis for doing so. That is sufficient. 11 The amount of $167.46 appears to be in the different category. The material proffered by the plaintiff does not establish any bona fide defence to that amount. 12 Mr Rodionoff drew my attention to s 459H(3) of the Corporations Act 2001 (Cth) which provides that if the substantiated amount of a statutory demand found by the Court is less than the statutory minimum, the Court must, by order, set aside the demand (the statutory minimum is $2000). 13 I would have varied the demand to reflect the substantiated amount of $167.46 but that amount is below the statutory minimum. Section 459H(3) of the Act requires that I set the statutory demand aside and I do so. 14 It has often been said that the statutory demand procedure should not be used as a vehicle to determine disputed amounts. 15 I make orders in terms of paragraph 1 of the Originating Process dated 26 June 2009 to the effect that the statutory demand for the payment of debts served by the defendants dated 10 June 2009 is set aside. 16 The defendants are to pay the plaintiff's costs of the proceedings. ********** 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.