Supreme Court New South Wales Medium Neutral Citation: In the matter of Ege Foods Australia Pty Ltd ACN 162 175 831 [2014] NSWSC 1249 Hearing dates: 8 September 2014 Decision date: 08 September 2014 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Creditor's statutory demand set aside Catchwords: CORPORATIONS – statutory demand – setting aside statutory demand – affidavit supporting statutory demand – absence of statement as to deponent's belief that there is no genuine dispute as to debt claimed Legislation Cited: (Cth) Corporations Act 2001, s 459G, s 459J(1)(b) Cases Cited: Ceduna Marina Development Co Pty Ltd v Umilo Bria [2012] SASC 115 In the matter of Kisimul Holdings Pty Ltd [2014] NSWSC 422) Kisimul Holdings Pty Ltd v Clear Position Pty Limited [2014] NSWCA 262 Category: Principal judgment Parties: Ege Foods Australia Pty Ltd ACN 62 175 831 (plaintiff) Ege Fine Foods Australia Pty Ltd ACN 060 882 297 as trustees for the Diptron Unit Trust (defendant) Representation: Counsel: J T Johnson (plaintiff) C Koyuncu (solicitor) (defendant) Solicitors: Anderson Lawyers (plaintiff) MCK Lawyers (defendant) File Number(s): 2014/221689 Judgment – ex tempore 1. HIS HONOUR: By originating process filed on 28 July 2014 the plaintiff Ege Foods Australia Pty Limited seeks an order pursuant to (Cth) Corporations Act 2001, ss 459G and 459J(1)(b), setting aside a creditor's statutory demand served on the plaintiff by the defendant on 7 July 2014 claiming a debt of $130,000 described in the schedule to the statutory demand as "1. $130,000 being for non-payment of purchase price in respect of the contract for sale of business dated 19 February 2014". 2. The creditor's statutory demand was accompanied by an affidavit of Gursel Ozme of 4 July 2014, which was in the following terms: I am the director of the Creditor. I am Authorised to and do make this affidavit of behalf of the Creditor. Annexed hereto and marked "A" is a current extract of the records maintained by the Australian Securities and investments Commission with respect to the debtor. The following facts are within my own personal knowledge. The Creditor and the debtor entered into a Contract for Sale of Business dated 19 February 2014 ("the Contract"). Annexed hereto and marked "B" is a true copy of th First 2 pages of the Contract and pages 1 to 10 of the Special Conditions. The Contract, involved vendor finance, whereby the debtor was to pay the sum of $130,000.00 to the Creditor on or before 120 days after Completion Date in payment of the balance of the purchase price. The Completion Date was 28 February 2014. The sum of $130,000.00 was due on or before 28 June 2014. To date the debtor has failed to pay the debt of $130,000.00. 1. It will be self-evident that, at the very least, that affidavit does not contain the statement required by the prescribed form to the effect that in the deponent's belief there is no genuine dispute as to the debt claimed. 2. As has recently been reaffirmed by the Court of Appeal in Kisimul Holdings Pty Ltd v Clear Position Pty Limited [2014] NSWCA 262 [see also my earlier judgment on the stay application: In the matter of Kisimul Holdings Pty Ltd [2014] NSWSC 422], the omission of such a statement from the verifying affidavit is a very important defect in the affidavit accompanying the demand. The purpose of requiring such a statement is to ensure that demands are not issued except after the person authorising their issue has given close attention as to whether or not there is a genuine dispute. In that way it provides an important filtering mechanism to ensure that the demand process is used only in an appropriate case. 3. That did not happen here. As was said in both the Kisimul judgments referred to above, neither I nor the Court of Appeal was able to identify or was taken to any case in which the absence of such a clause from the accompanying affidavit has not resulted in the setting aside of a demand. Section 459J(1)(a) does not apply. In particular, there is no limitation on the court's ability to set aside a demand in such circumstances for the reason that substantial injustice will otherwise be done, because that requirement only attends a defect in the demand under subsection (a) and not a defect in the accompanying affidavit. 4. As I read the judgment of Kourakis CJ in Ceduna Marina Development Co Pty Ltd v Umilo Bria [2012] SASC 115, it is in no way to the contrary. In that case, the affidavit accompanying the demand did verify the demand and contained the requisite "no dispute" clause. It should also be observed that, although Kisimul has recently restated these principles, the critical nature of such a defect has been well-known for years. This demand should have been withdrawn once that defect was drawn to the attention of the issuing party. 5. The court orders that: 1. The creditor's statutory demand dated 4 July 2014 and served 7 July 2014 by the plaintiff on the defendant be set aside; 2. The defendant pay the plaintiff's costs assessed in the sum of $12,500; 3. The court notes the undertaking of the solicitor for the defendant to write a letter to the effect indicated in conversation between the court and the said solicitor. ********** 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. Decision last updated: 15 January 2015