New South Wales Supreme Court CITATION : Bridges and Towers Pty Ltd v Surucic [2009] NSWSC 1180 HEARING DATE(S) : 03/11/09 JUDGMENT DATE : 3 November 2009 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Barrett J EX TEMPORE JUDGMENT DATE : 3 November 2009 DECISION : Statutory demand set aside. Order that defendant pay plaintiff's costs assessed on the indemnity basis. CATCHWORDS : CORPORATIONS - winding up - winding up in insolvency - application for order setting aside statutory demand - whether genuine dispute as to existence of debt - no matter of principle - whether "some other reason" within s 459J(1)(b) - where s 459E(3) affidavit made by person other than issuer of demand - where authority of that person not shown - where deponent does not identify source of knowledge of matters stated in demand Corporations Act 2001 (Cth), ss 459E(3), 459G, 459H(1)(a), 459J(1)(b) LEGISLATION CITED : Supreme Court (Corporation) Rules 1999, rule 5.2 Uniform Civil Procedure Rules 2005, rule 7.24 CATEGORY : Principal judgment B & M Quality Constructions Pty Ltd v Buyrite Steel Supplies Pty Ltd (1994) 15 ACSR 433 CASES CITED : Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 Oshlack v Richmond River Council (1998) HCA 11; (1998) 193 CLR 72 Standard Commodities Pty Ltd v Societe Socinter Department Centragel [2005] NSWSC 294; (2005) 54 ACSR 489 PARTIES : Bridges and Towers Pty Ltd - Plaintiff Daniel Surucic - Defendant FILE NUMBER(S) : SC 3729/09 COUNSEL : Mr A A Narayan - Plaintiff Mr G Vok - Defendant SOLICITORS : Heidtman & Co Lawyers - Plaintiff Mr G Vok - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J TUESDAY 3 NOVEMBER 2009 3729/09 BRIDGES AND TOWERS PTY LTD v DANIEL SURUCIC JUDGMENT 1 The plaintiff applies under s 459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand dated 27 June, 2009. 2 The person by whom the statutory demand was served and who is named in it as "the creditor" is Daniel Surucic. He is, of course, the present defendant. 3 The statutory demand relates to an alleged debt of $6,050.00 said to be the balance of moneys owing by the plaintiff to Daniel Surucic for work done, being painting work at the Cypress Lakes Resort. 4 The plaintiff's case is based principally on the contention that there is a genuine dispute about the existence of the alleged debt. The plaintiff thus relies on s 459H(1)(a) of the Corporations Act. 5 The plaintiff accepts that painting work was done for it at Cypress Lakes but it does not accept that it retained Daniel Surucic to do the work. Rather, the plaintiff says it retained Chris Surucic who is said to be Daniel's father. This contention is supported by correspondence including a letter of 5 June, 2009 from the plaintiff to Chris Surucic referring to invoices issued by him and alleging that some work covered by the invoices had been invoiced twice or even three times. It seems tolerably clear that there was a contractual relationship between the plaintiff and Chris Surucic. 6 Counsel for the plaintiff also points to the fact that Daniel Surucic, the defendant and the person who served the statutory demand, has not sworn and filed any affidavit for the purposes of the proceedings. Daniel Surucic, although made party to the proceedings and served, has thus apparently not chosen to attempt to explain the basis upon which he claims to be a creditor of the plaintiff. 7 The plaintiff has, in these circumstances, established the existence of a genuine dispute as to the existence of any contract between itself and Daniel Surucic and therefore as to the existence of any debt owing, due and payable by it to Daniel Surucic. All I am concerned with here is whether a genuine dispute has been shown, that is to say, a plausible contention that the money claimed in the demand to be owing, due and payable is not in truth owing, due and payable: Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785. The threshold faced by a company seeking to rely on s 459H(1)(a) is not a demanding one. It has been crossed in this case. Specifically, I do not need to decide in this case who actually owes what to whom. That is something that is for other proceedings elsewhere, if it is to be pursued. The genuine dispute contention is made out. 8 The plaintiff also relies on s 459J(1)(b) of the Corporations Act, maintaining that there is good reason within the scope of that provision why the demand should be set aside. In this part of the case, the plaintiff points to the fact that the affidavit that accompanied Daniel Surucic's statutory demand in accordance with s 459E(3) was an affidavit of Chris Surucic, not of Daniel Surucic; and that the affidavit is therefore non-compliant. This is because s 459E(3)(b) requires that an affidavit made for the purposes of the section comply with the rules; and that rule 5.2 of the Supreme Court (Corporation) Rules 1999 (being one of the applicable rules) says that such an affidavit must be made by the "creditor" (that is, the person issuing and serving the statutory demand) or by a person with the authority of the "creditor". Here, the creditor is Daniel Surucic but the affidavit was made by Chris Surucic. He is not the creditor; and it is not said in the affidavit itself or otherwise shown that Chris Surucic made the affidavit with Daniel's authority. 9 There is an added point. The affidavit is also deficient in that it does not comply with Form 7 as rule 5.2 requires. This is because Chris Surucic does not state (as Form 7 requires) the source of his knowledge about the matters in the statutory demand which, on the face of the demand, are matters involving Daniel Surucic and not involving Chris Surucic. Counsel for the plaintiff relied, in this respect, on Standard Commodities Pty Ltd v Societe Socinter Department Centragel [2005] NSWSC 294; (2005) 54 ACSR 489. It is pertinent to quote paragraph [15]: "If a person claiming to be a creditor of a company is to obtain, through Pt 5.4, the benefit of a presumption of insolvency under s 459C, it is necessary that that person provide to the company all the information that must be provided in and with a statutory demand. The company receiving the demand is entitled to know that the information given both comes from and is attested to by the person claiming to be a creditor. Where, as here, important elements of the information are represented as no more than a belief of a third party based wholly on representations of a second party and without any indication at all that the second party has obtained the information from the person claiming to be a creditor, that entitlement is denied. In the present case, the affidavit cannot be regarded as containing any statement by (or sourced from) the defendant as to the matters referred to in paras 4 and 5 of form 7. In line with the cases mentioned at [12] and [13] above, that, in my opinion, represents a reason under s 459J(1)(b) for setting aside the statutory demand." 10 The cases referred to at the end of this extract include B & M Quality Constructions Pty Ltd v Buyrite Steel Supplies Pty Ltd (1994) 15 ACSR 433. 11 The statutory demand in this present case was created and served in a way that did not recognise and accommodate this fundamental requirement as to information to be given on affidavit by the issuer of a statutory demand to the company served. 12 The plaintiff has been successful in its contentions based on s 459H(1)(a) and s 459J(1)(b). There will therefore be an order setting aside the statutory demand. 13 I should mention in conclusion that there was no appearance by or on behalf of the defendant when these proceedings came on for hearing. A Mr Vok sought to appear for the defendant. Mr Vok is not a legal practitioner. Representation of the defendant by Mr Vok would have been inconsistent with rule 7.24 of the Uniform Civil Procedure Rules 2005 which confirms, as part of the rules of court, the general principle that a natural person litigant may carry on proceedings either in person or through a solicitor. I declined to allow Mr Vok to appear for the defendant. His presence showed, however, that the defendant was aware of time and place of the hearing, so that it was appropriate to proceed on the basis that a case was presented by the plaintiff alone. 14 The order of the court is that the creditor's statutory demand dated 27 June 2009 served by the defendant on the plaintiff be set aside. [Submissions by the plaintiff's counsel on costs] 15 The plaintiff seeks an order for costs and says that costs should be assessed on the indemnity basis. 16 As to the first part of this application, there can be no quarrel. The plaintiff has been successful. Costs should follow the event. 17 As to the submission that costs should be assessed on the indemnity basis, the plaintiff relies on a letter of 10 July 2009 sent by its solicitors to Mr Vok who is nominated in the statutory demand as the person to whom copies of any application and any affidavit should be addressed. 18 The letter of 10 July 2009 contended that there was a genuine dispute about the existence of the debt and that the affidavit of Chris Surucic accompanying the statutory demand was defective and did not satisfy the relevant requirements. The letter put succinctly the very case upon which the plaintiff has this morning been successful. It concluded by inviting withdrawal of the statutory demand and stating that, if it became necessary to make an application to the court for an order setting aside the demand, indemnity costs would be sought. 19 It is clear that the defendant, from the earliest stage, was on notice of the case on which the plaintiff has now succeeded. By declining the invitation to withdraw the demand and putting the plaintiff to the trouble and cost of these proceedings, the defendant has acted in a manner that is unreasonable and entails "relevant delinquency" as referred to in Oshlack v Richmond River Council (1998) HCA 11; (1998) 193 CLR 72. 20 I order that the defendant pay the plaintiff's costs of the proceedings, such costs to be assessed on the indemnity basis. ********** 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.