In the matter of Samkev Investments Pty Limited [2012] NSWSC 527 (21 May 2012)

Last Updated: 24 May 2012

Supreme Court New South Wales

Case Title:	In the matter of Samkev Investments Pty Limited
Medium Neutral Citation:	[2012] NSWSC 527
Hearing Date(s):	1 May 2012
Decision Date:	21 May 2012
Jurisdiction:	Equity Division - Corporations List
Before:	Black J
Decision:	Plausible contention requiring investigation established. Genuine dispute established. Statutory demand set aside. Parties to be heard as to costs.
Catchwords:
Legislation Cited:	- Corporations Act 2001 (Cth) Pt 5.4, ss 9, 459G(1), 459H, 459H(1)(a), 459J(1)(a), 459J(1)(b)
Cases Cited:	- Arcade Badge Embroidery Co Pty Ltd v Deputy Commissioner of Taxation [2005] ACTCA 3; (2005) 157 ACTR 22 - Beauty Health Group Ltd v Sholl [2011] NSWSC 77 - Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 - Branir Pty Ltd v Ourston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 - Breusch v Watts Development Division Pty Ltd (1987) 10 NSWLR 311 - Central City Pty Ltd v Montevento Holdings Pty Ltd [2001] WASCA 5 - Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 - Coghlan v SH Lock (Australia) Ltd (1987) 8 NSWLR 88 - CP York Holdings Pty Ltd v Food Improvers Pty Ltd [2009] NSWSC 409 - Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 - Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 - Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [97326] - Macquarie Bank Ltd v Thomas [2010] NSWSC 843 - McKay v National Australia Bank Ltd (1988) 5 BPR 11,110 - Meehan v Glazier Holdings Pty Ltd [2002] NSWCA 22; (2002) 54 NSWLR 146 - Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] VicRp 61; [1994] 2 VR 290; (1993) 11 ACSR 362 - Northstate Carpet Mills Pty Ltd v BR Industries Pty Ltd [2006] NSWSC 1057 - Ormwave Pty Ltd v Smith [2007] NSWCA 210 - Panel Tech Industries (Australia) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896 - Pao On v Lau Yiu Long [1979] UKPC 2; [1980] AC 614 - Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 20 ACSR 746 - Re Douglas; Ex parte Starkey (1987)' 15 FCR 475 75 ALR 97 - Reliance Developments (NSW) Pty Ltd v Lumley General Insurance Ltd [2008] NSWSC 172 - V & M Davidovic Pty Ltd v Kodak (Australasia) Pty Ltd t/as Rosier Partners Lawyers [2012] NSWSC 134
Texts Cited:	- JW Carter, Elisabeth Peden & GJ Tolhurst, Contract Law in Australia, 5th ed
Category:	Principal judgment
Parties:	Samkev Investments Pty Ltd (Plaintiff) Berkley Insurance Company (Defendant)
Representation
- Counsel:	Counsel: S. Habib SC/S. Maybury: Plaintiff M. Pesman (Defendant)
- Solicitors:	Solicitors: William Roberts Lawyers (Plaintiff) C.J. Boyd & Co (Defendant)
File number(s):	11/383341
Publication Restriction:

JUDGMENT

1. The Plaintiff, Samkev Investments Pty Limited ("Samkev") applies under s 459G(1) of the Corporations Act 2001 (Cth) to set aside a statutory demand dated 10 November 2011 ("Demand") served on Samkev by the Defendant, Berkley Insurance Company ("Berkley"). The amount claimed under the Demand is $148,555.93 ("Debt") described as amounts due to indemnify Berkley under an Indemnity Agreement made by Samkev on 20 July 2011 in respect of claims made against Berkley under a guarantee dated 20 July 2011. It is plain that the reference to a guarantee dated 20 July 2011 in the Demand is not correct.

2. Samkev seeks orders that the Demand be set aside under s 459H(1)(a) of the Corporations Act, which provides that a statutory demand may be set aside when the Court is satisfied that there is a genuine dispute about the evidence or amount to which that demand relates; under s 459J(1)(a) of the Corporations Act which provides that a demand may be set aside when the Court is satisfied that, because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or under s 459J(1)(b) of the Corporations Act on the basis that there is some other reason why the Demand should be set aside. The application to set aside the Demand is supported by an affidavit of Mr Sam Haoui sworn 30 November 2011. Mr Haoui is a director of Samkev.

The relevant facts

3. Samkev operated service stations at Lakemba and Camden on sites owned by Mobil Oil Australia Pty Limited ("Mobil"), under the terms of an agreement dated 1 October 2010 with another entity, Strasburger Enterprises (Properties) Pty Ltd trading as Quix ("SEP"), which provided for Samkev to operate the service stations and remit the proceeds from sale of petroleum less a commission to SEP ("Commission Agent Agreement"). The Commission Agent Agreement required Samkev to provide security in an amount of $260,000 for the payment of the proceeds to SEP in a form nominated by SEP.

4. Mr Haoui's evidence is that Samkev's practice had been to provide a credit insurance guarantee provided by an insurance company to SEP and the insurance company would seek indemnification from Samkev, Mr Haoui and, for a period, his wife for any amounts paid to SEP under the guarantee. Mr Haoui gives evidence as to the process of obtaining guarantees and providing indemnities in previous years. Mr Haoui's evidence is, in general terms, that he understood from that earlier process that the indemnity would be operative on the insurer's acceptance of his application for an indemnity. However, that process involved a different insurer to Berkley and the parties were not under any obligation to follow that process in late 2010 and 2011.

5. Earlier guarantees ceased to have effect when Convenience Properties (Operations) Pty Ltd ("7-Eleven") took over the Mobil service stations on 4 October 2010 and new guarantees were required to be provided from that date. Mr Haoui did not then complete an application for the new guarantees since, he says, he understood the current guarantees were in place until November and December 2010 and the sites would be closed from November 2010 to be refitted and for 7-Eleven branding to be installed.

6. A representative of a third party which provided administrative services to SEP in respect of the guarantee process, followed up with Mr Haoui on several occasions between October 2011 and April 2011 but he did not complete the application form for the guarantees. His evidence is, importantly, that he had refused to complete that application form in that period because it maintained his wife as a guarantor in circumstances where he was able to list a property owned by him as security.

7. Notwithstanding that Mr Haoui had not completed an application for a guarantee or provided the relevant indemnity, and indeed had refused to do so for the reason noted above, he received, in early April 2011, a letter dated 31 March 2011 enclosing two guarantees ("2011 Guarantees"), issued by Berkley in favour of SEP and 7-Eleven to guarantee the Commission Agent Agreement, which were to commence on 4 April 2011 and expire on 4 October 2011, and a further email requesting a completed application. One of the 2011 Guarantees was in a maximum amount of $110,000 and the other in a maximum amount of $120,000.

8. After the 2011 Guarantees were issued, Mr Haoui sent an application for a guarantee on 5 April 2011 which deleted the reference to his wife as an indemnifier. He also did not sign the application so far as he was to be treated as an indemnifier and that application was not accepted by or on behalf of SEP or Berkley.

9. After further discussions with representatives of SEP, on 12 August 2011, Mr Haoui signed a further document titled Application for a Petroleum Guarantee Bond ("August Application") as a director of Samkev and in his personal capacity, which provided the relevant indemnity ("August Indemnity") to Berkley. That application was then dated 20 July 2011 and Mr Haoui's evidence is that he did not insert that date on it. Mr Haoui contends that, contrary to the usual practice, he was not subsequently advised that the August Application had been accepted and Samkev and Mr Haoui have not paid a premium or an application fee.

Whether a genuine dispute is established

10. Samkev seeks to set aside the Demand on the basis that there is a genuine dispute as to the existence of the Debt, because, it contends, there is not a binding indemnity agreement by Samkev in favour of Berkley. Samkev also contends the payment made by Berkley for which indemnity is sought was not made in respect of a demand which complied with the requirements of any such guarantee.

11. The principles applicable to whether a statutory demand should be set aside under s 459H(1)(a) of the Corporations Act by reason of a genuine dispute as to the existence or amount of a debt are well established. The onus is on Samkev, as the recipient of the Demand, to establish a genuine dispute: Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5 at [15]. The test for a "genuine dispute" used in s 459H of the Corporations Act has been variously formulated as that the dispute is not "plainly vexatious or frivolous" or "may have some substance" or involves "a plausible contention requiring investigation" and is similar to that which would apply in an application for an interlocutory injunction or a summary judgment: Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] VicRp 61; [1994] 2 VR 290; (1993) 11 ACSR 362; Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787. In Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 at 39, Lockhart J observed that:

"The notion of a 'genuine dispute' ... suggests to me that the court must be satisfied that there is a dispute that is not plainly vexatious or frivolous. It must be satisfied that there is a claim that may have some substance. On the other hand the court must be careful, because if all an applicant has to do is to assert both a claim and some basis for it, without more, it would mean in almost every case that the court would set aside statutory demands where application is made to that effect. Plainly that is not what the legislature intended by introducing this new regime."

12. In Panel Tech Industries (Australia) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896 at [17], Barrett J noted that the test for a genuine dispute involved a "plausible contention requiring investigation", "real and not spurious, hypothetical, illusory or misconceived" and "perception of genuineness (or lack of it)". His Honour also noted that the tests for a genuine dispute, applied in the context of a summary procedure where it is not expected that the Court will embark on any extended enquiry, mean 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, and that the company will fail in that test only if it is found, upon the hearing of its 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. His Honour noted that, once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow; and 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.

13. In Central City Pty Ltd v Montevento Holdings Pty Ltd above at [9], Murphy JA (with whom Buss JA agreed) observed that:

"The expression 'genuine dispute' within the meaning of s 459H(1)(a) of the [Corporations] Act, connotes a plausible contention requiring investigation: Createc Pty Ltd v Design Signs Pty Ltd [2009] WASCA 85 at [44]. The demand will be set aside if there is a bona fide disputed issue of fact or law, which is not based on spurious, hypothetical, illusory or misconceived grounds: Createc v Design Signs; Asian Century Holdings Inc v Fleuris Pty Ltd [2000] WASCA 59 at [35]. Once such a dispute is raised, it is not necessary for a company to satisfy the court as to where the merits of the dispute lie: Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294 at [30]. The court will not attempt to weigh or examine the merits of any dispute: Createc v Design Signs; Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] VicRp 61; [1994] 2 VR 290 at 295."

14. The decision of the Court of Appeal of the Supreme Court of Western Australia in Central City Pty Ltd v Montevento Holdings Pty Ltd was in turn followed in Beauty Health Group Ltd v Sholl [2011] NSWSC 77 at [4] and in V & M Davidovic Pty Limited v Professional Services Group t/as Rosier Partners Lawyers [2012] NSWSC 134.

Whether the indemnity was binding and effective

15. Samkev contends that there was no binding agreement because Berkley had not accepted the August Application, although Samkev properly accepted in the course of submissions that acceptance may occur by means other than a specific communication of acceptance. A contractual analysis in the traditional terms of offer and acceptance is not sufficient or necessary to explain all cases and a contract can be inferred from the acts and conduct of the parties as well as or in the absence of their words, and it is not always necessary, in determining whether a contract has been formed, to identify a precise offer or acceptance for the time at which that took place: Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110; Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523; Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSRLW 153 at 74; Branir Pty Ltd v Ourston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424; Ormwave Pty Ltd v Smith [2007] NSWCA 210 at [68]. On the other hand, a stricter view of the requirement for acceptance, in relation to the provision of a guarantee, finds some support from the decision in Northstate Carpet Mills Pty Ltd v BR Industries Pty Ltd [2006] NSWSC 1057, where the Court noted that an application form which contemplated acceptance by an officer of the guaranteed party told against any suggestion that there could be acceptance by conduct.

16. In the present circumstances, it may well be that acceptance can be inferred either from Samkev taking the benefit of the 2011 Guarantees or alternatively by Mr Haoui's signature of the August Application, in circumstances where Berkley had already provided the 2011 Guarantees. However, it is not necessary for me to determine that matter having regard to the other findings that I have reached.

17. Samkev also contends that, even if the August Application was validly accepted by Berkley, the only consideration for the claimed indemnity agreement was past consideration which was not effective. As noted above, the 2011 Guarantees are dated 4 April 2011 and apparently took effect from that date, although they were executed no later than 31 March 2011 when copies of them were provided to Samkev. The application completed by Samkev on 5 April 2011 was not accepted by Berkley and postdated the giving of the 2011 Guarantees in any event. The August Application was signed on 12 August 2011, some four months after the 2011 Guarantees were provided.

18. By the terms of the August Application, the indemnifiers jointly and severally unconditionally and irrevocably indemnify and agree to keep indemnified Berkley against and for all Indemnified Amounts as defined. The term "Indemnified Amounts" is defined to include:

"All amounts paid by [Berkley] under a Guarantee and all costs, expense or loss (including without limitation, all legal fees assessed on a solicitor and own client basis) incurred by [Berkley] in connection with a Guarantee or in connection with this Indemnity.

The term "Guarantee" is in turn defined as "any guarantee provided at any time by [Berkley] for the performance of the obligations of [Samkev] in connection with the supply of motor fuels and/or liquefied petroleum gas and/or lubricants." Accordingly, the August Application purports to extend the indemnity given by Samkev to an amount paid under a guarantee predating it. Clause 2 provides that:

"[Samkev] acknowledges having agreed to give this Indemnity in return for [Berkley] considering a request to provide, or providing, a Guarantee to a Dealer. [Samkev] considers that there is a corporate benefit for providing this Indemnity."

19. However, the August Application is not executed as a deed and cannot take effect as an agreement unless consideration is established. There is no consideration by way of mutual promises in the August Application, since Berkley accepts no obligations to Samkev in it. By the time the August Application was provided, Berkley was not considering a request to provide, or agreeing to provide, a guarantee of Samkev's obligations, because it had previously provided the 2011 Guarantees in favour of SEP and 7-Eleven no later than 31 March 2011. The 2011 Guarantees expressly provided that they remained in effect until 4 October 2011 or otherwise terminated in circumstances which involved Berkley, in effect, meeting its obligations under them, so there was no question of Berkley choosing to continue to provide a guarantee since it already owed binding obligations to SEP and 7-Eleven to do so by the terms of the 2011 Guarantees.

20. Where a guarantee is provided after the entry into a financing facility, good consideration can be established by an advance of money pursuant to a request made contemporaneously with or prior to the guarantee: Coghlan v SH Lock (Australia) Ltd (1987) 8 NSWLR 88; Breusch v Watts Development Division Pty Ltd (1987) 10 NSWLR 311 at 314; Macquarie Bank Ltd v Thomas [2010] NSWSC 843 at [20]. In McKay v National Australia Bank Ltd [1998] 1 VR 173, the Court of Appeal of the Supreme Court of Victoria held that a further guarantee provided after banking accommodation had been provided, where there was no provision of financial accommodation when the guarantee was given and thereafter no forbearance to sue, was unenforceable because there was no consideration. Winneke P observed that a contract of guarantee which is not under seal must be supported by consideration and the onus of proving that there is consideration to support it is on the party who seeks to rely on it; that a mere recital in the document of consideration will not be sufficient to support the guarantee if the evidence demonstrates that no such consideration was given; and that "past" consideration is not sufficient, so that a guarantee given to secure a debt already incurred, but unsupported by any further consideration, will fail for want of valuable consideration (at 177). Ormiston JA noted that mere acquiescence in an existing state of affairs between the relevant parties did not constitute such consideration.

21. In this case, there was neither a request made by Samkev prior to the giving of the 2011 Guarantees, at which time Samkev had declined to sign the application in the circumstances noted above, nor was any further accommodation provided to Samkev in circumstances that Berkley will do nothing other than that which it is already under an obligation to SEP and 7-Eleven to do under the terms of the 2011 Guarantees.

22. I have also considered whether the circumstances by which the August Application was provided can be characterised as "executed consideration", where the act supplied is part of the same transaction as the promise sought to be enforced, rather than a case of past consideration where the promise is made after an independently constituted and concluded transaction: JW Carter, Elisabeth Reden & GJ Tolhurst, Contract Law in Australia, 5th ed, [6.29]. The authors there refer to Pao On v Lau Yiu Long [1979] UKPC 2; [1980] AC 614 and Re Douglas; Ex parte Starkey (1987) 15 FCR 475; 75 ALR 97 and observe that:

"A promise given at the request of the defendant prior to the rendering of services, and on the understanding that the promisor is to be 'paid' will support a subsequent promise by the requesting party to pay for the services rendered."

However, there is also difficulty in applying this characterisation to the present facts, because there was no request of Samkev prior to the provision of the 2011 Guarantees. To the contrary, on Mr Haoui's evidence, Samkev had not been prepared to sign the application at the time the 2011 Guarantees were given by Berkley in favour of SEP.

23. It was not suggested in argument before me that anything done by SEP under the Commission Agent Agreement constituted third party consideration given for the 2011 Guarantees and it is therefore not necessary or appropriate for me to determine that question.

24. In my view, a plausible contention requiring investigation as to whether the August Indemnity was binding on Samkev is therefore established, and this is sufficient to give rise to a genuine dispute as to the Debt.

Whether Berkley was obliged to make payment under the 2011 Guarantees

25. Alternatively, Samkev contends that the payment by Berkley was not required to be made under the 2011 Guarantees and therefore cannot be claimed by Berkley from Samkev pursuant to the August Indemnity.

26. The 2011 Guarantees set out precise requirements for the making of a demand by SEP or 7-Eleven, providing that such a demand must:

• Be made in writing and be signed by a person having the position of General Manager, National Area Manager - Commission Agents or Chief Financial Officer, or any position introduced by [SEP] or 7-Eleven to replace any of these positions.

• Specify:

• That [Samkev] has failed to comply with the obligation to pay [SEP] or 7-Eleven for Petroleum Products supplied to [Samkev] under the Agreement; ...
• The date and nature of the default; ...
• The amount demanded for payment by the financial institution which must not exceed the Guaranteed Sum. [emphasis added]

It is at least seriously arguable that strict compliance with the requirements of the 2011 Guarantees, and in particular the requirement for a valid demand, is required: Reliance Developments (NSW) Pty Ltd v Lumley General Insurance Ltd [2008] NSWSC 172 at [43].

27. The relevant demand made on Berkley ("SEP Demand") was signed by "Jacqui" for Ms Natalie Dalbo who was described as "General Manager of Operations, 7-Eleven Stores Pty Limited". There is no evidence, on the face of the SEP Demand, that Ms Dalbo occupied the position of General Manager with either SEP or 7-Eleven, as distinct from a position with a different legal entity, 7-Eleven Stores Pty Limited. In my view, there is a plausible contention requiring investigation that Ms Dalbo was not a person authorised to sign the SEP Demand. Berkley contended that Samkev had not established that Ms Dalbo did not occupy "any position introduced by [SEP] or 7-Eleven to replace any of these positions". However, I would read this phrase as referring to a replacement position within SEP or 7-Eleven, not a position in another entity and, in any event, a serious question arises because the SEP Demand does not on its face establish that, and Berkley has led no other evidence that, Ms Dalbo in fact occupied such a replacement position.

28. Samkev also argued that the SEP Demand was required to be signed personally by a person holding the specified positions, and not by a person on that person's behalf. It is not necessary for me to determine that matter having regard to the other findings that I have reached.

29. The SEP Demand was for the payment of "[t]he outstanding debt due to 7-Eleven as at 30 September 2011" which was stated to be $148,555.93 (GST inclusive). The SEP Demand did not state that that amount was referable to the supply of Petroleum Products supplied to Samkev under the Commercial Agent Agreement and that is not self-evident where that agreement also provides for several other obligations of Samkev in favour of SEP. In my view, there is a serious question to be tried that the requirements of the 2011 Guarantees as to specification of the relevant failure to comply with Samkev's obligations were not satisfied.

30. For completeness, I should note that Samkev also contended that the SEP Demand did not specify the date and nature of the default. However, I would treat the reference to the outstanding debt, the date upon which it was due and payable and the fact that it was not paid as constituting such a statement. Given the findings which I have made, it is not necessary to determine whether the process of making a single demand on the two guarantees was effective and whether, as Samkev contends, the amount of the SEP Demand should properly be characterised as exceeding the amount of each guarantee, although it did not exceed the total of the two guarantees.

31. In my view, it is at least seriously arguable that the provisions of the August Application give rise to an indemnity only against an amount which is properly payable under the 2011 Guarantees and not against an amount paid by Berkley when it was not obliged to make such a payment. In my view, a plausible contention requiring investigation as to whether Berkley was obliged to pay in response to the SEP Demand, so as to give rise to an entitlement to indemnity, is also established and this is also sufficient to give rise to a genuine dispute as to the Debt.

Whether substantial injustice is established

32. Samkev also seeks to set aside the Demand under s 459J(1)(a) of the Corporations Act on the basis that there is a defect in the Demand which will give rise to substantial injustice unless the Demand is set aside. The reference to a guarantee dated 20 July 2011 in the Demand is such a defect, being a misdescription of the debt or other matter for the purposes of s 9 of the Corporations Act where the only relevant guarantees were dated 4 April 2011. However, the Demand may not be set aside for a defect in it unless it will cause substantial injustice.

33. In the present case, I do not consider that that defect would give rise to any injustice, still less substantial injustice, where Samkev and Mr Haoui had been provided with copies of the 2011 Guarantees at the time they were issued and were provided with further copies of them before they were met by Berkley. Specifically, by letter dated 28 September 2011, Berkley had informed Samkev that it expected a demand to be made on the 2011 Guarantees; that demand was made by SEP on 3 October 2011; Berkley in turn made a demand on Samkev on 5 October 2011; there were subsequent negotiations between Samkev and SEP; and, by letter dated 4 November 2011, Berkley provided a copy of the 2011 Guarantees to Samkev's solicitors and informed them that payment would be made under them on 7 November 2011.

34. Samkev also seeks to set aside the Demand under s 459J(1)(b) of the Corporations Act on the basis that it is an abuse of process, contending that it was served when Berkley was aware of a genuine dispute about the existence of the claimed debt. That section permits the Court to set aside a statutory demand if it is satisfied that, inter alia, there is some other reason that the demand should be set aside. The Court's power under that section exists to maintain the integrity of the process provided under Pt 5.4 of the Corporations Act and is to be used to counter an attempted subversion of the statutory scheme, but is not exercised by reference to subjective notions of fairness: Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 20 ACSR 746; Meehan v Glazier Holdings Pty Ltd [2005] NSWCA 22; (2005) 53 ACSR 229; CP York Holdings Pty Ltd v Food Improvers Pty Ltd [2009] NSWSC 409. A statutory demand may be set aside under that section where it involves conduct which is unconscionable or an abuse of process: Arcade Badge Embroidery Co Pty Ltd v Deputy Commissioner of Taxation [2005] ACTCA 3; (2005) 157 ACTR 22.

35. I have held that, on balance, a genuine dispute is established for the purposes of s 459H of the Corporations Act, for the reasons noted above. However, the issues giving rise to that genuine dispute are somewhat technical in nature and I do not consider that it would necessarily have been evident to Berkley, at the time it served the Demand, that a genuine dispute would have been established. For this reason, I would not hold that the service of the Demand was inconsistent with the statutory scheme or that an abuse of process is established so as to require the Demand to be set aside under s 459J(1)(b) of the Corporations Act.

Conclusion

36. It follows that Samkev has established plausible contentions requiring investigation as to whether the Debt arises under the August Application and a genuine dispute as to the Debt is therefore established so as to require that the Demand be set aside under s 459H of the Corporations Act. I am conscious that some of the bases on which Samkev resists the Demand may be seen as technical, but this does not mean they are not seriously arguable or do not require further investigation. The setting aside of the Demand does not prevent Berkley pursuing its rights, but merely requires it to invoke the usual processes of the Court on the basis that a genuine dispute exists and is properly determined by those usual processes.

37. Accordingly, I order, pursuant to s 459H(1)(a) of the Corporations Act, that the statutory demand dated 10 November 2011 served on the Plaintiff by the Defendant be set aside. I will hear the parties as to costs.

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