FEDERAL COURT OF AUSTRALIA

Carinda Homes Pty Ltd v Highlands Austral Pty Ltd,

in the matter of Carinda Homes Pty Ltd [2003] FCA 275

CORPORATIONS – application to set aside statutory demand – application filed within the 21-day time limit fixed in s 459G of the Corporations Act 2001 (Cth), but not served within that time as required by that section – lack of jurisdiction – proceeding incompetent.

Corporations Act 2001 (Cth) s 459G

David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 applied

IN THE MATTER OF CARINDA HOMES PTY LTD

CARINDA HOMES PTY LTD v HIGHLANDS AUSTRAL PTY LTD

N 3009 OF 2003

LINDGREN J

21 MARCH 2003

SYDNEY

THE COURT ORDERS THAT:

1.         The proceeding be dismissed as incompetent.

2.         The plaintiff pay the defendant’s costs on an indemnity basis.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The plaintiff applies under s 459G of the Corporations Act 2001 (Cth) (“the Act”) for an order setting aside a statutory demand.  The defendant served the statutory demand on the plaintiff on 4 February 2003.  The originating process was filed on 24 February 2003 and was returnable last Friday 14 March 2003.  On that date the matter was before the Registrar.  Both parties were represented: the plaintiff by Mr Foley, solicitor; and the defendant by Mr Park, solicitor.  The Registrar directed the plaintiff to file and serve any further affidavits before 19 March 2003, and fixed the proceeding for hearing today.

2                     Before the Registrar, Mr Park submitted that the proceeding should be dismissed because:

·        the originating process had not been served within the 21-day period allowed by subs 459G(3) of the Act; and

·        the affidavit filed in support of the originating process did not meet the statutory description of “an affidavit supporting the application” in par 459G(3)(a) of the Act.  The supposed supporting affidavit was, omitting formal parts, as follows:

“I, Frank Orehek [no occupation was specified] of 7 Linksley Ave Glenhaven 2156 say on oath -

1.      In communications with Austral it was agreed that they would await our incoming funding in order to pay the outstanding debt. And therefore we wish to set aside the creditors [sic] statutory demand. Attached please find” [only a blank page was attached, although the blank page bore signatures that indicated the affidavit had been sworn in front of a Justice of the Peace].

3                     Notwithstanding the Registrar’s direction, the plaintiff has not filed any further affidavit.

4                     The proceeding was before the Registrar again this morning when, apparently, Mr Foley telephoned to say that he was ill and would not be attending Court and had contacted the other party.  The Registrar referred the proceeding to me as Corporations Judge.  Mr Paabo, solicitor, has appeared before the Registrar and before me for the defendant.  He has informed me that no further affidavits have been received by him and that Mr Foley’s secretary contacted him to say that Mr Foley was ill and would not be attending Court.

5                     So far as appears, the plaintiff has not actually sought an adjournment of the hearing today.  Rather, as a matter of courtesy, Mr Foley has simply, and quite properly, informed the Court of his inability to attend Court.  But if an adjournment had been sought, I would have refused it and proceeded to hear the matter in the absence of the plaintiff under O 32 r 2(1)(d) of the Federal Court Rules.

6                     My reason is that the plaintiff clearly cannot succeed.  Although, as has been seen, the proceeding was commenced within the 21-day period after service of the statutory demand referred to in subss 459G(2) and (3) of the Act, a copy of the originating process and a copy of the supporting affidavit were not served within that time as required by subs 459G(3)(b) of the Act.  As is well-known, the time limit fixed by subss 459G(2) and (3) is a condition of the existence of the Court’s jurisdiction to set aside a statutory demand:  David Grant & Co Pty Limited v Westpac Banking Corporation (1995) 184 CLR 265 (“David Grant”) at 276—277 per Gummow J, with whom the other members of the Court agreed.  The evidence shows that the present application and supporting affidavit were served on 28 February 2003, three days after expiry of the 21-day period.

7                     For the above reason I would have refused any application for an adjournment.  For the same reason, I will dismiss the proceeding as incompetent.  The plaintiff has the benefit of O 32 r 2(2).

8                     I have not found it necessary to address the defendant’s other submission, namely, that the affidavit which was filed in time but served out of time does not amount to “an affidavit supporting the application” within par 459G(3)(a) of the Act, and that for this reason also the Court did not become seized of jurisdiction in the matter (the most recent consideration of the statutory description of the affidavit appears to be that in POS Media Online Ltd v B Family Pty Ltd [2003] NSWSC 147).

9                     The defendant seeks costs on an indemnity basis.  Because the well-known decision in David Grant made it so clear that the proceeding was doomed to fail, it was quite unreasonable for it to be pursued once 25 February 2003 had passed without service having been effected.  For this reason, I would allow indemnity costs.

Associate:

Dated:              2 April 2003

There was no appearance for the plaintiff.