SUPREME COURT OF QUEENSLAND

CITATION: Elevare Pay Easy Pty Ltd v Cathy Jayne Again Pty Ltd & Anor [2021] QSC 303

PARTIES: ELEVARE PAY EASY PTY LTD ACN 634 728 591 (applicant)

v

CATHY JAYNE AGAIN PTY LTD ACN 642 764 903 (first respondent)

AND

CATHY JAYNE HOGBEN (second respondent)

FILE NO/S: BS 11451 of 2021 BS 12728 of 2021

DIVISION: Trial Division

PROCEEDING: Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON: 18 November 2021

DELIVERED AT: Brisbane

HEARING DATE: 16 November 2021

JUDGE: Brown J

ORDER: The order of the Court is that:

In respect of proceedings BS 11451/21:

1. The applicant have leave to file the AmendedOriginating Application dated 15 November 2021.

2. The first and second respondents be restrainedfrom making an application to wind up theapplicant based on non-compliance with theCreditors Statutory Demand dated 9 September2021 (“Demand”).

3. The respondents pay the applicant’s costs on astandard basis.

4. The Demand does not substantially comply with theessential requirements of section 459E of theCorporations Act 2001 and Form 509H under theCorporations Regulations and non compliance with

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it is insufficient to support an application to wind up the applicant.

In respect of proceedings BS 12728/21:

5. The creditors statutory demand for payment of adebt dated 13 October 2021 is set aside.

6. The first and second respondents pay the applicantscosts on the indemnity basis.

CATCHWORDS: CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – FOR DEFECT OR SOME OTHER REASON – SUBSTANTIAL INJUSTICE – where the applicant and first respondent entered into a loan agreement – where the applicant treated the loan agreement as being terminated – where the respondents issued the applicant with two statutory demands – where the applicant seeks to set aside the statutory demands

Corporations Act 2001 (Cth) ss 459G, 459H, 459E, 459J, 459S Corporations Regulations 2001 (Cth) Service and Execution of Process Act 1992 (Cth) s 16

David Grant & Co v Westpac Banking Corporation (1995) 184 CLR 265, cited Elan Copra Trading Pty Ltd v JT International Pty Ltd (2005) 226 ALR 349, considered Elliott Harvey Securities Ltd v Raynel & Anor [2015] QSC 212, citedFirst Line Distribution Pty Ltd v Paul Whiley (1995) 18 ASCR 185, cited Re Beralt Pty Ltd [2001] 1 Qd R 232, considered Re International Materials v Technologies Pty Ltd (1993) 47 FCR 226, cited Re Towncars Franchises Sydney Pty Ltd [2013] NSWSC 1235, cited SP Hay Pty Ltd v David Gray & Company Pty Ltd (2019) 133 ACSR 504, considered Sustainable Organics (Wooshaway) Pty Ltd v Ranger and Loaders Pty Ltd [2011] QSC 45, considered

COUNSEL: L Copley for the applicant

SOLICITORS: McInnes Wilson Lawyers for the applicant

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[1] Elevare Pay Easy Pty Ltd (“the applicant”) and Cathy Jayne Again Pty Ltd (“the

first respondent”) entered into a loan agreement on 31 August 2021 by which the

applicant agreed to lend the first respondent $300,000.00. The second respondent, Ms

Cathy Hogben (“second respondent”), is the sole director and secretary of the first

respondent. The loan agreement provided that the monies were to be paid within two

days of the date of the agreement, provided that the borrower provided to the lender

a properly executed copy of the loan agreement, the mortgage in registrable form and

any other document required for the registration of the mortgage (as requested by the

lender). The security that was proposed to be provided was property of the second

respondent’s mother. The lender required that the mother of the second respondent

had to comply with the VOI process which is said to be required by the South

Australian Land titles office.1 That included a verification process in relation to the

identity and signature of the mortgagor. The second respondent disputes that such a

process was required. In any event, the applicant’s solicitor subsequently notified the

first respondent on 7 September 2021 that the applicant was not prepared to proceed

further with the provision of funding, as it was not satisfied with the terms of the

documents submitted and treated the negotiations as being at an end and the loan

agreement, if otherwise binding, was treated by the applicant as terminated.

[2] The applicant was subsequently served with two statutory demands by one or both of

the respondents. The first dated 9 September 2021 claimed a debt of $300,000.00

(“first demand”). The second dated 13 October 2021 claimed a debt of $98,452.84

(“second demand”).

[3] The applicant applied to set aside the first demand pursuant to s 459G of the

Corporations Act 2001 (Cth), which is the subject of proceedings BS 11451/21.2

However, the applicant failed to attach the notice prescribed by s 16 of the Service

and Execution of Process Act 1992 (Cth) to the originating application. The applicant

accepted that the failure to attach such a notice meant that service on the respondents

was not effective and therefore, there was not a proper application before the Court

1 Affidavit of Luigino De Pasquale CFI 2 of BS 11451/21 at [17]-[21]. 2 CFI 1 in BS 11451/21.

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to set aside the demand within the twenty-one days required by s 459G of the

Corporations Act 2001 (Cth).3 The applicant sought leave, which was given, to

amend the originating application to include relief of the kinds ordered Re Beralt Pty

Ltd ,4 seeking:

(a) a declaration that the statutory demand does not substantially comply with the

essential requirements of s 459E of the Corporations Act 2001 (Cth) and Form

509H under the Corporations Regulations 2001 (Cth), and non-compliance

with it is insufficient to support an application to wind up the applicant; and

(b) an order restraining the respondent from making an application to wind up the

applicant.

[4] The proposed amended application was provided to the respondent on 9 November

2021.5

[5] A notice of appearance was provided by the second respondent, and who appears as

director of the first respondent.6

[6] An application was also made to set aside the second demand, which is the subject

of proceedings BS12728/21. The application to set aside the statutory demand was

made and served within the requisite time under s 459G of the Corporations Act 2001

(Cth).

Service

[7] Neither of the respondents appeared at the hearing, either in person or by telephone.

[8] Evidence of the service of the first and second respondents of the application to set

aside the first demand, together with a supporting affidavit, was provided by Mr

Giannetta. As set out above, a notice of appearance was entered by the second

respondent on her own behalf and she appears as director of the first respondent.

3 S 459G (3) of the Corporations Act 2001 (Cth); Beralt Pty Ltd v Joe Battaglia Plastering Pty

Ltd [2001] 1 Qd R 232. 4 [1999] QSC 202; Beralt Pty Ltd v Joe Battaglia Plastering Pty Ltd [2001] 1 Qd R 232. 5 Affidavit of Stephen Fox sworn 15 November 2021 [9]-[13] and [15]. 6 CFI 6.

5 [9] Affidavit evidence was provided by Mr Steven Treloar, Ms Bianca Ayres and Mr

Stephen Fox as to service of the application to set aside the second demand, together

with the supporting affidavit on the first and second respondent.

[10] There is no doubt Ms Hogben was aware of the hearing.

[11] Ms Hogben was apparently going to appear before the Court, by telephone when the

application was originally returned before the Court, on 15 November 2021, but did

not appear at the callover. The matter was stood down to a later time but there was no

appearance by telephone. Subsequently, Ms Hogben texted the applicant’s instructing

solicitor, Mr Fox, and emailed the Court indicating that she was caught up in Court

in South Australia. She emailed an affidavit to the Court. The matter was adjourned

to 16 November 2021 to allow the respondents to appear.

[12] However, despite the respondents being notified of the adjournment of the Court to

16 November 2021, the respondents again did not appear by telephone, although the

respondents had been provided with the telephone details to do so. As a result of being

satisfied that service had been effected upon the first and second respondents, I

proceeded to hear the applications.

First Demand – Proceedings BS 11451 of 2021

[13] Given that the applicant accepted that the application to set aside the first demand had

not been made, as required by s 459G of the Corporations Act 2001 (Cth), the

applicant was precluded from seeking to set aside the statutory demand under s 459H

or s 459J of the Corporations Act 2001 (Cth).7

[14] The applicant, however, seeks to rely on equitable relief restraining the respondents

from pursuing the winding up in reliance on non-compliance with the creditor’s

statutory demand dated 9 September 2021 on the basis that the statutory demand was

defective and it would be unconscientious for the second respondent to rely on her

entitlement to file a winding up application. There is evidence supporting the fact that

Ms Hogben has expressed an intention to wind the applicant up.

[15] The applicant submits that it would be unconscientious for the second respondent to

rely on her entitlement to file a winding up application on the basis that:

7 See David Grant & Co v Westpac Banking Corporation (1995) 184 CLR 265.

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(a) the applicant is not indebted to either of the respondents for the amount

described in the demand or at all;

(b) the demand is an abuse of process;

(c) the demand is not a statutory demand within the meaning of section 459E of

the Corporations Act 2001 (Cth); and

(d) the affidavit accompanying the first demand was not an affidavit which verified

the debt described.

Legal Principles

[16] In Re Beralt Pty Ltd,8 the interstate service of an application under s 459G of the

Corporations Act 2001 (Cth) for the setting aside of a statutory demand did not

comply with the Service and Execution of Process Act 1992 (Cth). The purported

statutory demand failed to inform the debtor that a failure to have it set aside within

twenty-one days after service would enable the creditor to apply to a Court to have

the debtor wound up. In his Honour’s view, the statutory demand could have been set

aside as a result of the deficiency under s 459J and was not a mere defect. Further, it

was not until just prior to the expiry of the twenty-one day period that the respondent

informed the applicant of its registered office where service was required to be

effected. Ambrose J also considered that the evidence supported the fact that the

applicant had a strongly arguable case disputing the existence and the amount of any

debt. However, while Ambrose J accepted that the Court lacked the jurisdiction to

set aside an ineffective statutory demand for want of a valid application under s 459G,

his Honour considered that the defect was such as to deprive the debtor company of

the notice of the time within which it was entitled to seek to have the demand set

aside. Ambrose J determined that a company would not wind up the applicant, having

regard to the defect in the demand. Accordingly, his Honour determined that fact

justified making a declaration that the demand did not substantially comply with the

essential requirements of the s 459E of the Corporations Act 2001 (Cth), and non-

compliance with the demand was insufficient to support a winding up application.

His Honour determined that the applicant have leave to apply for an injunction

restraining the making of an application based on such non-compliance if an

undertaking from the respondent not to wind up the applicant was not forthcoming.

8 [2001] 1 Qd R 232.

7 [17] Re Beralt Pty Ltd was approved and followed in SP Hay Pty Ltd v David Gray &

Company Pty Ltd.9 The application to set aside the statutory demand did not comply

with the Service and Execution of Process Act 1992 (Cth) and service was therefore

not effected under s 459G of the Corporations Act 2001 (Cth) within the twenty one

days required. Dart J, however, found that it would be unconscientious of the

defendant to issue winding up proceedings founded on the plaintiff’s failure to

comply with its demand. To avoid an obvious injustice, the defendant was enjoined

from relying on the plaintiff’s failure to comply with the statutory demand. Dart J

stated that in considering whether or not an injunction should be granted, the question

is simply whether, in the circumstances, it would be unconscientious for the defendant

to rely on the plaintiff’s failure to comply with the demand in a winding up

application. Dart J considered the question of whether it would be unconscientious

for the defendant to rely on the presumption of insolvency created by the right or

entitlement gained from the plaintiff’s failure to comply with the demand requires a

consideration of the manner in which the right or entitlement was acquired and the

injustice the exercise of it would cause the plaintiff.

[18] In SP Hay Pty Ltd v David Gray & Company Pty Ltd,10 the defendant had served a

demand containing an address for service for which valid service in compliance with

the Service and Execution of Process Act 1992 (Cth) could never have been effected.

S 459G of the Corporations Act 2001 (Cth) requires an address for service to be

provided in the State in which the demand is served, in order to facilitate the tight

time limits for making such an application. The statutory demand did not provide an

address in the State in which the demand was served as required by form 509H of the

Corporation Regulations 2001 (Cth). Dart J considered a party should not be lightly

excused from a failure to comply with the requirement to provide an address for

service in the correct State. Dart J followed the decision of Elan Copra Trading Pty

Ltd v JT International Pty Ltd,11 which found that the use of an incorrect interstate

address on a statutory demand was a defect, but that the deficiency did not result in

the invalidity of the demand for the purpose of the Act.12 However, his Honour

considered that it was appropriate to grant an injunction following the decision of

9 (2019) 133 ACSR 504. 10 (2019) 133 ACSR 504. 11 (2005) 226 ALR 349. 12 CF the approach of Brereton J in Re International Materials v Technologies Pty Ltd (1993) 47 FCR

226 at 238.

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Ambrose J in Re Beralt Pty Ltd. The plaintiff contended it had lost the opportunity

to have the Court set aside the statutory demand where there was a genuine dispute

as to a large portion of the claim.

[19] His Honour concluded that it would be unconscientious to allow the defendant the

entitlement to rely on the presumption of insolvency in the foreshadowed winding up

application, given that his Honour was satisfied that the applicant could establish, on

the affidavit material, a genuine dispute and where the applicant had served a statutory

demand containing an address for service at which valid service in compliance with

the Service and Execution of Process Act 1992 (Cth) could never have been effected.

In those circumstances, his Honour found that it would be unconscientious for the

defendant to issue winding up proceedings and that it would be appropriate to grant

an injunction. His Honour also considered that the Court could not have granted leave

under s 459S of the Corporations Act 2001 (Cth), as its ability to grant leave is

restricted to disputes material to the question of solvency and in practical terms that

would usually mean that the debt in dispute is the difference between the company

being solvent or insolvent which was not the case there.

[20] In Sustainable Organics (Wooshaway) Pty Ltd v Ranger and Loaders Pty Ltd,13

Justice Philippides considered the decision of Re Beralt Pty Ltd amongst other

decisions. In that case, the applicant had sought a declaration that the statutory

demand was not a statutory demand for the purposes of part 5.4 of the Corporations

Act 2001 (Cth) and sought injunctive relief to restrain the party responsible for issuing

the statutory demand from relying upon the statutory demand. Her Honour

determined that the failure to specify in the statutory demand an address for service

within the State was an error which rendered the statutory demand defective but did

not have the result that the document which, in its form, purported to be a statutory

demand was incapable of satisfying the description of a statutory demand for the

purposes of s 459E of the Corporations Act 2001 (Cth). Her Honour did not consider

that the applicant had shown the statutory demand was made in circumstances where

there had been an abuse of process, nor did the affidavit material depose to some

substantial injustice which had resulted from the defect in the statutory demand

justifying injunctive relief.

13 [2011] QSC 45.

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Consideration

[21] The applicant submits it would be unconscientious for the second respondent to rely

on her entitlement to file a winding up application for a number of reasons.

No debt

[22] The applicant contends that the first demand does not pertain to a debt and that the

applicant is not indebted to either of the respondents for the amount described in the

first demand or at all.

[23] The statutory demand claims a debt of $300,000.00. It is said to be “as prescribed by

the said executed mortgage and agreed upon as a non-disputable debt.” The mortgage

is a document which purports to be signed by Ms Judy Anne Staker.14 The borrower

is identified as “Cathy Jayne Again Pty Ltd”. The moneys secured include those

advanced to the borrower. It is not signed by the applicant. Moreover, there is no

provision providing for the proposed advance to be an “undisputable debt”. To the

extent the moneys to be advanced are provided for in the loan agreement between the

applicant and the first respondent dated 31 August 2021, that provides that the

borrower is Cathy Jayne Again Pty Ltd. The second respondent and Ms Stoker are

nominated as guarantors in relation to that agreement. According to the terms of the

loan agreement, the first respondent was to provide the applicant with, inter alia, a

mortgage in registerable form over a property owned by Judy Ann Staker, her mother,

and any other document required for registration of the mortgage (as requested by the

lender). The applicant was only required to advance the funds if and when the

preconditions of the advance were satisfied. The applicant contends that the

preconditions were not satisfied15 on the basis of Ms Judy Staker not engaging in the

VOI process. The applicant also contends that the negotiations for the loan came to

an end and to the extent there was a binding agreement, it terminated the loan

agreement on the 7 September 2021. The applicant’s evidence establishes that there

is a genuine dispute as to whether the preconditions required to be fulfilled by the

borrower set out in part 5 of the loan agreement were ever satisfied, such that no

obligation to advance the monies ever arose. More fundamentally, the evidence does

14 That is challenged by the applicant but it is not a matter which I need to consider further for the purpose

of this decision and I will assume it is signed by Ms Staker. 15 Ms Hogben contends otherwise, referring to an email said to be from the applicant’s solicitor. There is

evidence to the contrary provided by the applicant.

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not support there being any debt being due and payable at all. A failure to provide the

monies the subject of the loan would not give rise to a debt owing to the borrower

and certainly not to the guarantor. At its highest, the only claim for failing to advance

the monies in question by the first respondent could be a claim for damages arising

from a breach of contract. It is not a claim for debt. A claim for unliquidated damages

is incapable of supporting a statutory demand.16 Where the debt alleged does not exist

and the claim the subject of a statutory demand is one for an unliquidated sum, that

would provide a proper basis upon which a statutory demand would be set aside.17

[24] The statutory demand is thus misconceived and does not comply with s 459E of the

Corporations Act 2001 (Cth) and would be liable to be set aside had the application

to set aside been served within the time limits of s 459G of the Corporations Act 2001

(Cth), both on the basis of a genuine dispute having been established in relation to the

alleged debt and there is no debt due and owing justifying the issuing of the first

demand at all. There is no question that in those circumstances a substantial injustice

would arise if reliance could be placed upon the statutory demand to give rise to a

presumption of insolvency and the applicant being prevented from relying on the fact

that there is no debt at a winding up due to the failure to comply with the Service and

Execution of Process Act 1992 (Cth).

Abuse of Process

The second ground upon which the applicant states that it would be unconscientious

for the first respondent to be able to rely on the presumption of insolvency is that

there has been an abuse of process. In that regard, it relies on the fact that the

purported debt described in the demand did not exist or is genuinely disputed.

Secondly, there is some evidence raising the genuineness of the signature of the

second respondent’s mother on the mortgage (although Ms Hogben has stated she

assisted her mother due to a condition affecting her mother). Thirdly, the applicant

contends that the second respondent is using the demand for the collateral purpose of

applying to pressure and to harass the applicant. There is some evidence in support

of this claim however, it may be that it is just a misconceived understanding of the

16 First Line Distribution Pty Ltd v Paul Whiley (1995) 18 ASCR 185 at 18; Re Towncars Franchises

Sydney Pty Ltd [2013] NSWSC 1235 at [28] and [29]. 17 Re Towncars Franchises Sydney Pty Ltd [2013] NSWSC 1235 at [30] and [31]. Given that a statutory

demand includes a purported demand, there is little scope for declaring the demand a nullity.

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first and second respondent. Given my other findings I do not need to consider this

matter further.

Defects in the Demand and Affidavit

[25] Thirdly, the applicant contends there are a number of defects in the demand,18 which

would give rise to substantial injustice if the demand were not set aside.

[26] The first demand omits the warning contained in Form 509H “A failure to respond to

a statutory demand can have very serious consequences for a company. In particular,

it may result in the company being placed in liquidation and control of the company

passing to the liquidator of the company”. Further, the first demand did not include

any address for service for the alleged creditor in Queensland. The description of the

debt is said to be nonsensical referring to the “said executed mortgage” which is not

identified, nor is the purported agreement by which the debt is said to be a “non-

disputable debt”. Further, the demand appears to be issued by the second respondent

in her personal capacity although it is executed by the second respondent in her

capacity as the director of the first respondent. As discussed above the second

respondent, Ms Hogben, has no relevant claim as a guarantor.

[27] The failure to provide any address for service of the creditor and in particular, to

provide an address for service in Queensland where the applicant was served the

statutory demand, and to clearly identify the creditor together with the ambiguous and

confusing description of the debt and an identifiable basis on which the debt is owed

either to one or other creditor or jointly, which were defects raised in the application

to set aside the statutory demand and accompanying affidavit of Mr De Pasquale,19

are defects which give rise to a substantial injustice whether on the busis of the

mortgage or some other agreement. The basis on which there is said to be a “non-

disputed debt” for the amount the applicant was to advance to the first respondent

under the loan agreement is not identified, nor any particulars of the mortgage given.

18 The application to set aside was on the basis of both s 459H and s 459J of the Corporations Act 2001

(Cth) and the affidavit of Mr De Pasquale which accompanied the application to set aside (CFI 2) identified defects in relation to the identity of the creditor, the form itself and that the applicant did not know who is to pay the alleged debt owing and the basis of the alleged debt given no money was advanced. This was elaborated upon in his affidavit of 9 November 2021. The deficiencies in the affidavit are not however identified.

19 CFI 2. I have therefore not considered the question of whether additional grounds were raised in the subsequent affidavits.

12

While the accompanying affidavit did provide an address in South Australia, it again

suffered from not making clear who was the creditor in question or if both the first

and second respondent were creditors, or the basis upon which any debt was owed

given it only refers to “a proposed and agreed mortgage” to each of them and whether

it was owed jointly or otherwise. It also fails to identify the document by reference to

a date or the parties to the agreement. The failure in the first demand to identify the

creditor or whether the debt was said to be jointly owed and the basis upon which the

debt was owing to either creditor does give rise to a substantial injustice as does the

failure to provide any address, particularly where the identity of the creditor is

unclear. The defects in the first demand are such that the debtor cannot identify what

the debt is based on, who is to be paid, or where or who documents are to be served

on. While the failure to give the warning alone would not give rise to a substantial

injustice it is a further example of a litany of deficiencies in complying with form

509H.

[28] The applicant contends that the defects in the demand are such that had the applicant

served the application within time, the Court would have found that the demand

should be set aside in accordance with s 459J of the Corporations Act 2001 (Cth) on

the basis that because of the defects in the demands, substantial injustice would be

caused unless a demand was set aside. In relation to the defects discussed above, I

consider that the defects are such to give rise to a substantial injustice and that the

first demand would have been liable to be set side.

Unconscionable

[29] It will be a rare circumstance that the Court will grant injunctive relief, as was granted

in Re Beralt Pty Ltd20 or SP Hay Pty Ltd v David Gray & Company Pty Ltd,21,given

the onerous requirements imposed upon a party to comply with s 459G of the

Corporations Act 2001 (Cth). However, the failure to identify any basis upon which

a debt was owing, and the fact that the evidence reveals any claim by the first

respondent in respect of the proposed advance of $300,000 would sound in damages,

such that there was no debt due and owing and therefore the first demand did not

comply with the fundamental requirement for issuing a statutory demand under s

20 [2001] Qd R 232. 21 (2019) 133 ACSR 504. As was discussed by Philippides J in Sustainable Organics (Wooshaway) Pty

Ltd v Rangers Loaders Pty Ltd [2011] QSC 45.

13

459E, means that it would be insufficient to support a winding up. It would not be a

matter for which leave could be given to be raised under s 459S of the Corporations

Act 2001 (Cth).22 Further the failure by the respondents to provide an address for

service in Queensland resulted in service having to be effected under the Service and

Execution of Process Act 2002 (Cth). The application and supporting affidavit did

come to the respondents’ attention notwithstanding the fatal non-compliance with the

Service and Execution of Process Act 2002 (Cth). The other defects in the first

demand identified above are significant and give rise to a substantial injustice. As set

out above, there is substantial evidence supporting a genuine dispute about the

existence of the debt even if the $300,000 could be characterised as a dispute.

[30] I am satisfied in the particular circumstances of this case where Ms Hogben has stated

her intention to pursue the applicant and bring a winding up application that injunctive

relief should be granted to avoid injustice. Given Ms Hogben’s public postings about

the applicant due to its failure to provide the advance of monies, the applicant would

suffer reputational and other harm if injunctive relief was not granted.

Second Demand – Proceedings BS 12728 of 2021

[31] As to the second demand, which was served on the respondents in accordance with s

459G of the Corporations Act 2001 (Cth) within time, it suffers from the same

deficiencies as the first demand. stating that the debt was $98,452.84 “as described

by the said executed mortgage and agreed upon as a non-disputable debt”. Neither

document is identified. The mortgage is not a document to which the first and second

respondents are parties. Any claim arising out of the non-advancement of monies

under the loan agreement to the first respondent would be one for damages not a debt.

The second demand therefore does not comply with s 459E of the Corporations Act

2001 (Cth). Again, the second demand does not identify the creditor or the basis upon

which a debt is owed to the first or second respondent. No address for service of the

creditor is contained in the second demand. The demand, while signed by Ms Hogben,

in her capacity as director, states that the creditor is Ms Hogben personally. It again

fails to provide the warning of not responding to the statutory demand.

22 SP Hay Pty Ltd v David Gray & Company Pty Ltd (2019) 133 ACSR 504 at [50]. The director of the

applicant in the present case has deposed to the applicant’s insolvency in any event.

14 [32] The accompanying affidavit to the statutory demand appears to again identify Ms

Hogben as well as Cathy Jayne Again Pty Ltd as creditors. It is unclear who is actually

the creditor. The alleged debt is said to be “owed relating to costs relating to the loan

documentation as a result of non-settlement but do not include all damages by which

a notice of default has been set out”. The evidence of Mr De Pasquale demonstrates

that there is a genuine dispute. As set out above, the evidence raises a genuine dispute

as to whether the preconditions of the loan agreement were satisfied for the advance

of monies. If there is any claim, it is one for damages. In any event, how the debt is

calculated and the basis of the alleged debt is unclear. Ms Hogben is a guarantor and

has no identifiable claim. The solicitors for the applicant again wrote to Ms Hogben

outlining the defects in the demand and inviting her to withdraw it on 13 October

2021.

[33] I am satisfied that in relation to second demand, that the demand should be set aside

on the basis that the second demand is not a demand within the meaning of s 459E.

Even if a debt was owing by reason of the loan agreement, there is a genuine dispute

about the existence of the debt and the defects in the second demand give rise to a

substantial injustice given the ambiguity as to the basis of any debt, who it is owed

to, and the absence of any address for service as well as the failure to provide the

warning.

[34] The statutory demand should be set aside under s 459H and s 459J of the

Corporations Act 2001 (Cth), the applicant having established there is a genuine debt

and that the defects in the demand would cause substantial injustice unless it is set

aside.

[35] As to the question of costs, the applicant seeks an order that costs be paid on an

indemnity basis. Given the failure of the applicant to seek to set aside the first demand

as required under s 459G of the Corporations Act 2001 (Cth) within time, even though

the respondents were informed of the deficiencies in the statutory demand by the

applicant’s solicitors prior to the application to set aside being made, I am not satisfied

that I should order indemnity costs in respect of that application. The respondents

did, however, refuse to withdraw the demand despite being informed of its

deficiencies by the applicant’s solicitors and invited to withdraw it. An application

therefore had to be made. The respondents should therefore pay the applicant’s costs

15

on a standard basis. However, in relation to the second demand dated 13 October

2021 (albeit sent by email on 11 October 2021 which is the date of the affidavit), it

would be appropriate to order, in the circumstances, that costs be paid on an indemnity

basis by the first and second respondents. The respondents were given a clear

opportunity to withdraw,23 the statutory demand having been placed on notice by the

applicant’s solicitors as to its deficiencies and that costs would be sought by the

applicant’s solicitor in its letter dated 13 October 2021, a number of those matters

having been raised in the context of the first demand on 28 September 2021.

Notwithstanding that, Ms Hogben refused to withdraw the demand. I am satisfied that

the circumstances warrant an order being made on an indemnity basis. I will therefore

order in both cases that the costs be paid on the standard basis.

Conclusion

[36] I will make the order in terms of the draft provided by the applicant save in relation

to costs for the first demand which the respondents will be ordered to be paid on a

standard basis.

23 Elliott Harvey Securities Ltd v Raynel & Anor [2015] QSC 212.