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Supreme Court of Victoria |
Last Updated: 18 June 2012
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
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JUDGE:
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WHERE HELD:
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Melbourne
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DATE OF HEARING:
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CASE MAY BE CITED AS:
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CORPORATIONS – Application to set aside a statutory demand pursuant to Corporations Act 2001, s 459 – Demand for rental under lease – Landlord in receivership and tenant pays rental to receiver as required by notice served on tenant by receiver – Defendant through its director maintain demand – Demand set aside and order made for indemnity costs.
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APPEARANCES:
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Counsel
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Solicitors
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For the Plaintiff
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Middletons
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For the Defendant
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Champions Lawyers
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For the Controller appointed to the defendant, Mr Anthony Downey
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Mr W Starke
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Frenkel Partners
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1 By an originating process filed 21 February 2012, the plaintiff, Wilson Pateras Pty Ltd (“Wilson Pateras”), makes application to set aside a statutory demand served by Richmond Commercial Pty Ltd (controller appointed) (receiver and manager appointed) (“Richmond Commercial”) on 2 February 2012.
2 The statutory demand, which was accompanied by an affidavit sworn by Warren Thompson on 2 February 2012, demands the sum of $66,308.66. The schedule to the demand describes the debt as being “moneys owing to the creditor by the company pursuant to a lease/loan agreement commencing on 31 January 2010”.
3 Wilson Pateras seeks to set aside the demand pursuant to s 459G, 459H and 459J of the Corporations Act 2001 (Cth). The application is supported by an affidavit of Christopher Wilson, a director of the plaintiff sworn 21 February 2012.
4 Mr Thompson, the director of the defendant, has not sworn any affidavit in opposition to the application. The controller appointed to Richmond Commercial, Mr Anthony Downey, filed an appearance on 2 March 2012 and filed an affidavit sworn on 26 March 2012.
5 The firm of Champions Lawyers filed a Notice of Appearance on behalf of Richmond Commercial on 5 March 2012 but now makes application pursuant to rule 20.03 of the Supreme Court (General Civil Procedure) 2005 (Vic) to file notice of ceasing to act. It relies on an affidavit of Michael Champion of that firm in support of that application. The application for Champions Lawyers to file notice of cease to act is not opposed by the other parties and I will make orders giving Champions Lawyers leave to file such a notice.
6 In October 2007, Richmond Commercial became the registered proprietor of a property at 582 Swan Street, Richmond and granted a mortgage to Owenlaw Trust Limited.
7 In August 2008, that mortgage was assigned by Owenlaw Trust Limited to Owenlaw Mortgage Managers Limited. Shortly afterwards, on 24 September 2008, Richmond Commercial granted a fixed and floating charge to Owenlaw Mortgage Managers Limited as further security for the debt.
8 In November 2009, Wilson Pateras and Richmond Commercial entered into an agreement in respect of a tenancy of the second floor of the property. It is that agreement which is the source of the alleged liability for the claim made in Richmond Commercial’s statutory demand.
9 On 26 August 2011, by reason of a default under the mortgage granted by Richmond Commercial to Owenlaw Mortgage Managers Limited, Mr Downey was appointed as receiver of Richmond Commercial. The ASIC search for Richmond Commercial confirms that on 26 August 2011, Owenlaw Mortgage Managers appointed Mr Downey as controller of the property pursuant to the mortgage. It is yet to move on the registered fixed and floating charge.
10 On 4 November 2011, Mr Downey sent a written direction to Wilson Pateras to pay rent to Owenlaw Mortgage Managers and not to Richmond Commercial.
11 On 2 February 2012, the demand which is the subject of the present application was served on Richmond Commercial.
12 In correspondence during the period 3 to 17 February 2012, Owenlaw Mortgage Managers and Mr Downey confirmed with Wilson Pateras that rental moneys should be paid to Owenlaw Mortgage Managers. Mr Downey withdrew the statutory demand in an open letter, however, Richmond Commercial’s director, Mr Thompson, through his solicitors, maintained the demand.
13 On 21 February 2012 the present proceeding was commenced.
14 The affidavit material filed by Wilson Pateras and by the controller of Richmond Commercial reveal that Wilson Pateras is prepared and able to pay the rental and loan repayments and has in fact been doing so but it is paying them to the mortgagee, Owenlaw Mortgage Managers rather than Richmond Commercial.
15 The factual background of the matter presented by Mr Wilson on behalf of Wilson Pateras is not contradicted by Mr Thompson by any affidavit and as regards to matters material to this application, would appear to be agreed to by the controller, Mr Downey who, in this most unusual case, agrees with the position being put by Wilson Pateras.
16 Mr Downey confirms all the material matters referred to by Mr Wilson. In addition, Mr Wilson states that the debt demanded in the statutory demand was not due and payable at the date of the demand as the requisite notices required under clauses 17 and 21.1(b)(i) of the lease had not been issued. Clause 15(3)(b)(i)(B) of the mortgage provides that mortgagee may demand and recover all the income of which the receiver is appointed and receive in his own name and the name of either the mortgagor or the mortgagee[1] and Mr Downey has done just that.
17 In my view there is no doubt at all that the demand must be set aside. The statutory demand procedure is designed to create deemed acts of insolvency to facilitate the commencement of winding up proceedings where there is no genuine dispute about a debt. In these circumstances, there is no debt due and payable by Wilson Pateras as it has been properly discharging its obligations under the lease/loan by paying the mortgagee in possession. As the controller Mr Downey points out, there has been no compliance with the formal provisions of the lease in respect of notice even if there was rent outstanding, which there is not. Even if the evidence established that there was some controversy as to the validity of the appointment of Mr Downey as controller and therefore his entitlement to demand and receive the rent, and it has not, the statutory demand mechanism is most certainly not the appropriate procedural mechanism to resolve it.
18 An award of indemnity costs is sought by Wilson Pateras. In my view it warranted having regard to the substance of the open correspondence passing between Mr Thompson, the legal representatives of Wilson Pateras and Richmond Commercial. The demand should never have been served and its maintenance of the demand and the failure to put any material in opposition to this application, warrants an order for indemnity costs.
19 I make the following orders:
(1) Champions Lawyers is given leave to file notice of ceasing to act as solicitor for the defendant;(2) the statutory demand dated 2 February 2012 and served on the plaintiff by the defendant is set aside;
(3) the defendant is to pay the plaintiffs’ costs of the proceeding including reserved costs on an indemnity basis.
[1] See generally E L G Tyler, Fisher and Lightwood’s Law of Mortgage, (Australian ed, 1995), [19.35]. See also s 141 of the Property Law Act 1958 (Vic).
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URL: http://www.austlii.edu.au/au/cases/vic/VSC/2012/259.html