Supreme Court of Western Australia
Last Updated: 19 November 2015
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION : SEDUCE PTY LTD -v- THE TRUST COMPANY (AUSTRALIA) LTD  WASC 441
CORAM : ACTING MASTER GETHING
HEARD : 28 OCTOBER 2015
DELIVERED : 19 NOVEMBER 2015
FILE NO/S : COR 203 of 2015
BETWEEN : SEDUCE PTY LTD
THE TRUST COMPANY (AUSTRALIA) LTD as trustee for the RAINE SQUARE TRUST
Corporations law - Application to set aside statutory demand -
Retail shop lease - Whether genuine dispute or offsetting claim arises
out of a
claim by a lessee against lessor as a result of misleading conduct of a former
lessor - Whether claims barred by a deed
of settlement - Whether lease precludes
a cross claim being raised as an offsetting claim - Whether the statutory demand
by reason of an inadequate description of the debt
Commercial tenancy - Whether lessee can seek orders against lessor as a result of misleading conduct of a former lessor
Tenancy (Retail Shops) Agreements Act 1985
(WA), s 16C, s 16D,
Corporations Act 2001 (Cth), s 459H, s 459J(1)(b)
Property Law Act 1969 (WA), s 20, s 77, s 78
Plaintiff : Mr K A Dundo
Defendant : Mr M G Hales
Plaintiff : HopgoodGanim
Defendant : Minter Ellison
Case(s) referred to in judgment(s):
1 ACTING MASTER GETHING: The Trust Company (Australia) Ltd is the custodian of Charter Hall Wholesale Management Ltd, which in turn is the trustee of the Raine Square Trust. The Trust is the owner of the Raine Square shopping centre (Raine Square). Raine Square was previously owned by Westgem Investments Pty Ltd (receivers and managers appointed) (in liq) (Westgem). In May 2013, Westgem entered into a lease of one of the shops in Raine Square with Seduce Pty Ltd (Seduce) (Lease). Seduce carries on the business as a retail clothing outlet. In June 2013, the Trust became the lessor under the Lease by reason of its acquisition of Raine Square.
2 By December 2013, Seduce was incurring loss and damage, among other things, as a result of representations it says were made to it on behalf of Westgem not coming to fruition. By 15 July 2014, Seduce was in arrears under the Lease in the amount of $95,975.06. It failed to make payment in response to a letter of demand issued by the Trust pursuant to the Lease. Consequently, on 15 August 2014, the Trust commenced proceedings against Seduce in the District Court with respect to the unpaid rent, outgoings and expenses. On 31 October 2014, Seduce and the Trust agreed to a Deed of Settlement and Release (Deed) in which they agreed that Seduce would pay the Trust the sum of $120,300.03, and the District Court proceedings would be dismissed by way of consent. The District Court proceedings were subsequently dismissed by consent.
3 Seduce paid some money pursuant to the Deed. However, by 23 July 2015, the Trust says that Seduce owed it $93,566.69 pursuant to the Deed.
4 The Trust also asserts that Seduce continued to be in breach of the Lease after execution of the Deed by failing to pay rent, outgoings and other expenses. The Trust issued a further letter of demand pursuant to the Lease in March 2015. Seduce failed to make the payment demanded. On or about 11 June 2015, Seduce abandoned the premises and ceased trading. Following this, the Trust exercised its right to terminate the Lease for breach, and issued a notice of termination on 1 July 2015. By 23 July 2015, the Trust says that Seduce owed it $147,064.88 pursuant to the Lease.
5 On 23 July 2015, the Trust issued a creditor's statutory demand for payment of the debt to Seduce (Statutory Demand). This was in the amount of $240,631.57, comprising the $93,566.69 due pursuant to the Deed, and $147,064.88 due pursuant to the Lease.
6 In response, by application dated 17 August 2015, Seduce sought to set aside the Statutory Demand pursuant to Corporations Act 2001 (Cth) (CA) s 459H and/or s 459J(1)(b). As an alternative, it sought an order that the time for compliance with the Statutory Demand be extended until seven days after the determination of an application brought by Seduce pursuant to Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (CTRSA) s 16D(1). The application under the CTRSA is against the Trust for orders arising out of misleading and deceptive conduct by Westgem. Further, on 27 October 2015, that is the day before the hearing, Seduce paid the amount of $93,566.69 into Court, this being the amount owing pursuant to the Deed. This is perhaps best seen as an invitation to the court to set aside the Statutory Demand subject to payment of the amount owed pursuant to the Deed into Court.
7 The plaintiff filed two affidavits in support of its application. The first was that of David Li, a director of Seduce, sworn 14 August 2015. The second was filed by Andrew Clements, a solicitor employed by Seduce's lawyers, sworn 26 October 2015.
8 In opposition, the Trust filed an affidavit of Andrew John Page, the general manager of Raine Square, sworn 15 September 2015.What issues arise for determination?
9 The application by Seduce to set aside the Statutory Demand was made within 21 days of the date of its service as required by CA s 459G, and otherwise complies with the formal requirements of that section.
10 In his affidavit, Mr Li identifies three grounds to set aside the Statutory Demand. The first two, the existence of a genuine dispute and an offsetting claim, relate to its claim that representatives of Westgem engaged in misleading and deceptive conduct in contravention of CTRSA s 16C. If the contravention is established, Seduce says that the State Administrative Tribunal (SAT) can make an order for compensation against the Trust pursuant to CTRSA s 16D(1) (giving rise to the offsetting claim) and can set aside the Lease pursuant to CTRSA s 26 (giving rise to the genuine dispute). CA s 459H(1) grants the court jurisdiction to set aside or adjust a statutory demand where there is a genuine dispute about the existence or amount of the debt or an offsetting claim.
11 The Trust asserts that any misleading or deceptive conduct was by Westgem and not it, and that SAT does not have jurisdiction to make orders against it as a party who did not engage in misleading or deceptive conduct. It further asserts that, if there is a claim, pursuant to the terms of the Lease it cannot be raised as an offsetting claim justifying nonpayment of rent. It finally asserts that, if there is a claim which Seduce can make against it, the claim is barred by the Deed.
12 The third ground asserted by Seduce is that the Statutory Demand is defective. By CA s 459J(1)(a), the 'Court may by order set aside the demand if it is satisfied that ... because of a defect in the demand, substantial injustice will be caused unless the demand is set aside'.
13 Seduce does not assert that there is a genuine dispute in relation to the amounts due under the Deed, that is, it does not assert that it has a claim against the Trust to set aside the Deed as a result of the misrepresentations which it alleges were made by representatives of Westgem. Rather, it says that the quantum of the offsetting claim which it has against the Trust exceeds the amounts due under both the Deed and the Lease.
14 The onus is on Seduce as the recipient of the Statutory Demand to establish a genuine dispute, offsetting claim, or a sufficiently serious defect in the demand.
15 On the submissions and affidavits before me, five issues arise for determination:
16 Before considering this issue, it is necessary to briefly consider the strength of the claim which Seduce has to establish in order for there to be a genuine dispute or offsetting claim.
17 The principles which the court must apply in determining whether to set aside a statutory demand on the basis of a genuine dispute were conveniently summarised by Murphy JA, with whom Buss JA agreed, in Central City Pty Ltd v Montevento Holdings Pty Ltd:
The expression 'genuine dispute', within the meaning of s 459H(1)(a) of the Act, connotes a plausible contention requiring investigation: Createc Pty Ltd v Design Signs Pty Ltd  WASCA 85 . 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  WASCA 59 . 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  WASCA 294 . 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  Vic Rp 61;  2 VR 290, 295.
Any claim by the company in dispute of the debt must be one which is 'genuinely believed [by the company] to exist': John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250, 253.
This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit, however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent or inherently improbable in itself: Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, 787; Createc v Design Signs . Nor does it require the acceptance of a 'patently feeble legal argument' or 'matters of fact unsupported by evidence': Eyota v Hanave (787); Jarpab Pty Ltd v Winter t/as Boldon Haulage (1994) 14 ACSR 255, 261
18 An 'offsetting claim' means 'a genuine claim that the company has against the respondent by way of counterclaim, setoff or crossdemand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates)'. Like a 'genuine dispute', a 'genuine claim' connotes a 'plausible contention requiring investigation'. There must be a bona fide disputed issue of fact or law, which is not based on spurious, hypothetical, illusory or misconceived grounds.
19 In his affidavit, Mr Li says that Seduce disputes the existence and the amount of the two debts in the Statutory Demand 'on the basis deposed to in pars 7, 8, 9 and 16 above'. Those paragraphs of Mr Li's affidavit are in the following terms (along with par 6 to provide context):
(a) the fact that the number of vacancies at Raine Square resulted in a significantly lower volume of foot traffic visiting Raine Square;
(b) the majority of retailers at Raine Square did not trade on Sunday, contrary to Schedule 1, Item 21 of the Lease and Part 8 of the Disclosure Statement, which reduced the volume of foot traffic and sales; and
(c) the representations deposed to in paragraphs 7, 8 and 9 above did not come to fruition; and
(d) the Defendant had little regard to the tenancy mix in Raine Square and the matters deposed in paragraphs 7, 8 and 9 above made it impossible for the Plaintiff to trade profitably at Raine Square.
20 Mr Li continues:
(a) the Plaintiff claims that the total amount of the debts, which are the subject of the Statutory Demand, are subject to a genuine dispute on the basis of the matters deposed to above (Genuine Dispute);
(b) on the basis of paragraphs 7, 8 and 9 above, the Plaintiff has an offsetting claim for misleading and or deceptive conduct pursuant to section 16D(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (Retail Shops Act) in excess of the amount the subject of the Statutory Demand (Offsetting Claim);
(c) on 13 August 2015, the Plaintiff submitted its Offsetting Claim for certification with the Small Business Commissioner, as required pursuant to 26D of the Retail Shops Act;
(d) pending certification of the dispute with the Small Business Commissioner, the Plaintiff intends to file its Offsetting Claim with the State Administrative Tribunal; and
(e) the Statutory Demand contains defects (Defective Demand).
21 Mr Li describes his claim under the CTRSA in the following terms:
(a) the representations made as deposed to in paragraphs 7, 8 and 9 above were misleading and/or deceptive;
(b) the Lease between the Plaintiff and the Defendant is null and void;
(c) the Defendant pay $590,547.59 compensation for the losses and damage incurred to the Plaintiff as set out in paragraph 26 above; and
(d) any other relief the Tribunal determines is appropriate.
22 Mr Li goes on to state in his affidavit that as a result of the representations made by Westgem not coming to fruition, Seduce has suffered trading losses totalling $527,047.59 for the years ending 30 June 2013, 30 June 2014 and 30 June 2015.
23 Mr Clements in his affidavit provides an update of progress of the claim under the CTRSA, stating that Seduce has filed an application for mediation with the Small Business Commissioner.
24 The CTRSA contains a prohibition on the parties to a lease engaging in misleading conduct in familiar terms:
16C. Parties to lease not to engage in misleading etc. conduct
A party to a retail shop lease must not, in connection with the lease, engage in conduct that is misleading or deceptive to another party to the lease or that is likely to mislead or deceive another party to the lease.
25 Seduce does not allege that the Trust contravened CTRSA s 16C, rather representatives of Westgem. In its evidence and submissions before me, the Trust asserted that the alleged statements made on behalf of Westgem were not misleading or deceptive. However, as a result of the other submissions by the Trust which I have accepted, I do not need to consider this issue. For the purposes of analysis, it is sufficient for me to assume that there is a plausible contention requiring investigation that representatives of Westgem contravened CTSRA s 16C and inquire whether Seduce has any remedy against the Trust for this contravention.
26 Seduce identified two bases on which it could bring its claim for misleading conduct against the Trust:
(a) properly construed, each of CTRSA s 16D and CTRSA s 26 empower the court to make orders against a current lessor in relation to contraventions by a former lessor; and
(b) an 'assignee to a lease, takes the lease subject to the equities available against the assignor'.
27 As the cases referred to by counsel deal with both the issues raised by Seduce, I will do likewise.
28 It is convenient to commence the analysis of the cases cited to me with the decision of Branson J in Krambousanos v Jedda Investments Pty Ltd. The applicants were postwar immigrants from Greece who were found to have little formal education and no command of the English language. They entered into a second ranking mortgage on their home, which they sought to have set aside on the basis that it was procured by, among other causes of action, unconscionable conduct and circumstances involving a contravention of Trade Practices Act 1974 (Cth) (TPA) s 52. The mortgage had been assigned. The assignee was the first respondent. The assignee crossclaimed to enforce the mortgage.
29 The allegation of misleading conduct was against the assignor who was not a party to the litigation. Branson J held that the claim for relief against the assignee by reason of the misleading conduct of the assignor must fail. Her Honour stated:
Section 82 of the Trade Practices Act makes it plain that an action for damages brought by a person who suffers loss or damage by conduct of another that was done in contravention of a provision of Pt IV or V of that Act may only be brought against the person who contravened the Act or a person involved in the contravention.
Section 87(1) of the Trade Practices Act similarly requires, in my view, that the person or persons against whom orders may be made under that subsection:
(a) was or were the person or persons who engaged in the conduct complained of or was or were involved in such conduct; and
(b) is a party or are parties to the proceedings.
Section 87(1 A), in my view, is to be similarly construed. Section 87(2), which particularises the orders referred to in s 87(1) and (1A), can not be construed as widening the powers given to the Court in s 87(1) and (1A).
30 Branson J noted the comments of Lockhart and Gummow JJ in Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd to the effect that the TPA was to be construed broadly, consistent with being legislation of a remedial character:
As is the case with Pt IV of the TP Act, the evident purpose and policy underlying Pt V, which includes s 52, recommends a broad construction of its constituent provisions, the legislation being of a remedial character so that it should be given the silent relief which the fair meaning of its language will allow.
Her Honour then observed that: 'Nothing said by their Honours in that case, in my view, can fairly be understood as being intended to address the difficulty which the applicants face here'.
31 In relation to the claim for unconscionable conduct, Branson J found that the applicants were under a special disability in dealing with the assignor (that is, the original mortgagee) which was sufficiently evident to the assignor through two named officers to make it unconscionable for the assignor to accept the applicants' assent to the mortgage in the circumstances in which it was given. The same two officers were involved in the management of the assignee. For that reason, her Honour found that the assignee took the transfer of the mortgage with notice of the circumstances giving rise to the unconscionable conduct. As the assignee could not show that the mortgage was fair, just and reasonable, the mortgage was set aside.
32 The decision in Krambousanos was followed by Burchett J in Oraka Pty Ltd v Leda Holdings Pty Ltd. That decision, like the present case, involved a lease. Burchett J found that the plaintiff, Oraka Pty Ltd, had entered into a lease as a result of the misleading conduct of the original lessor, Leda Holdings Pty Ltd. In relation to the decision in Krambousanos his Honour stated:
[T]he lease has been assigned to someone not a party to this action, and the question arises whether in those circumstances the court can grant effective relief under section 87 of the Trade Practices Act 1976, or is confined to a remedy in damages. There is authority that the court could not set aside an instrument such as a lease so as to affect the rights of an assignee who was not a party to the contravention of section 52: Krambousanos v Jedda Investments Pty Ltd (1996) 64 FCR 348 at 355356. (The subsequent appeal, which was dismissed, did not involve this point: Jedda Investments Pty Ltd v Krambousanos (unreported, Burchett, Carr and Kiefel JJ, 4 February 1997).)
33 Burchett J proceeded to make orders pursuant to TPA s 87, as follows:
In my opinion, it is open to the court to make orders under section 87 in order to remedy the situation. Although subsection (2) of section 87 lists specific forms of order 'referred to in subsection (1) and (1A)', which it says 'are' the orders referred to therein, subsection (1A) itself is unconfined as to the form of remedy. It refers to 'such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention', and then adds in parenthesis 'including [emphasis added] all or any of the orders mentioned in subsection (2)'. I propose to make orders under section 87(1A) which will have the effect of setting aside any obligation of Oraka to pay rent or make any other payment whatever under the lease to the respondent during the period prior to the assignment and of requiring the respondent to indemnify Oraka and Mr Johnson [the managing director of Oraka] against any liability to make any payment whatever to any person under the lease thereafter. I shall also order that the guarantee given by Mr Johnson to Leda be set aside ab initio. The wide view I have taken of the powers conferred on the Court by section 87 is, I think, supported by the decision of the Full Court in Munchies Management Pty Ltd v Belperio  FCA 413; (1988) 58 FCR 274; and see also the wide orders made in Deane v Brian Hickey Invention Research Pty Ltd (1988) 10 ATPR [40-889].
His Honour thus declined to set aside the lease with the assignor. Further, in neither of the two cases referred to by his Honour, Munchies Management Pty Ltd v Belperio or Deane v Brian Hickey Invention Research Pty Ltd  did the Court make an order against a party who was not involved in the contravention.
34 The principal case relied on by counsel for Seduce was the decision of White J in HP Mercantile Pty Ltd v Dierickx. This decision concerned an agricultural managed investment scheme known as the Tumut River Orchard Project (Scheme). Mr and Mrs Dierickx acquired two farming allotments in the Scheme. To do so they borrowed money (Debt) from Tumut River Orchard Management Limited (TROM). The Scheme was not a success. In the course of financial restructuring, TROM assigned the Debt. The applicant was HP Mercantile Pty Ltd (HPM). HPM asserted that through two subsequent assignments it acquired the Debt. White J found that TROM was estopped from denying that HPM was an equitable assignee of the Debt and that HPM was entitled to sue Mr and Mrs Dierickx.
35 Mr and Mrs Dierickx asserted that they entered into the loan agreement giving rise to the Debt as a result of misleading and deceptive conduct by TROM in breach of TPA s 52. White J agreed. His Honour also found that TROM had breached a fiduciary duty which it owed to Mr and Mrs Dierickx.
36 Mr and Mrs Dierickx sought to rely on these breaches by way of equitable setoff against the claim by HPM. The starting point in the analysis was that 'HPM acquired no better title to sue for the debt than TROM had' and that any 'defence, setoff or crossclaim that Mr or Mrs Dierickx could assert against TROM can be asserted against HPM'. As his Honour's footnote reference to Meagher, Gummow & Lehane's Equity: Doctrines & Remedies makes clear, this is an incident of HPM being only an equitable assignee. Had TROM sued Mr and Mrs Dierickx, they could have defended the suit by seeking an order for rescission of the loan agreement as a result of the breach of fiduciary duty by TROM. As this suit impeached TROM's title to sue, it also impeached HPM's title to sue, and established an equitable setoff.
37 Mr and Mrs Dierickx also sought orders rescinding the loan agreement pursuant to TPA s 87 by reason of the breach of TPA s 52, which for limitation reasons they could only raise as a setoff in their defence. White J held that this was permissible. This was met by the contention on behalf of HPM that 'such relief under s 87 could only be sought against a contravener or a party involved in the contravention, and was not available in defence of the suit brought by HPM'. White J observed in response:
It must be recalled that the debt HPM seeks to enforce is owed to TROM. TROM is a party to these proceedings, both as third defendant to HPM's claim and as a crossdefendant to Mr and Mrs Dierickx's crossclaim. HPM's title to the debt is no better than TROM's. Why then should HPM be entitled to say that any relief that Mr and Mrs Dierickx may be entitled to against TROM is irrelevant because it is HPM that is seeking to enforce the debt?
38 His Honour then distinguished the decisions in Oraka and Krambousanos on the basis that these cases were not concerned with 'a case of an assignee who took subject to equities'. Relevantly for present purposes, his Honour continued:
Oraka Pty Ltd v Leda Holdings Pty Ltd concerned the making of orders that would set aside or vary a lease that had been assigned. An assignee of the reversion does not take subject to all equities that bind the assignor.
39 His Honour concluded that Mr and Mrs Dierickx were entitled to rely upon their right to avoid the loan agreement in their defence to HPM's claim in debt.
40 HPM successfully appealed the first instance decision. Emmett JA, with whom Meagher JA agreed, held that the representation relied on by Mr and Mrs Dierickx to found the misleading conduct was not in fact made by TROM, and that there was no breach of fiduciary duty. Emmett JA went on to make some observations about the relief sought, concluding that if Mr and Mrs Dierickx 'had established that there was a contravention of s 52 as alleged, or that there was a breach of fiduciary duty as alleged, those claims would relevantly impeach the entitlement of TROM and, therefore, the entitlement of HPM, to sue on the Loan Agreement'.
41 Returning to the first basis relied on by Seduce, the power of SAT to award damages is set out in CTRSA s 16D in the following terms.
16D. SAT's powers as to misleading etc conduct
(1) A party, or former party, under a retail shop lease or former retail shop lease who suffers, or is likely to suffer, loss or damage because of misleading or deceptive conduct of another party or former party to the lease may apply in writing to the Tribunal for an order that the other party, or former party, pay compensation in respect of the loss or damage, or for other appropriate relief.
42 Seduce invites the Court to construe CTRSA s 16D(1) in the following way:
A party [Seduce] ... under a retail shop lease ... who suffers, or is likely to suffer, loss or damage because of misleading or deceptive conduct of another ... former party to the lease [Westgem] may apply in writing to the Tribunal for an order that the other party [the Trust] ... pay compensation in respect of the loss or damage, or for other appropriate relief.
43 This is an extraordinary outcome: a party who has not engaged in any misleading or deceptive conduct is liable to pay damages as a result of the misleading or deceptive conduct of another party. Counsel for Seduce submitted that this somewhat extraordinary outcome is justified by the beneficial nature of the legislation, protecting tenants who operate retail businesses. Any injustice, it says, can be dealt with by the Trust joining Westgem and seeking an indemnity from it. However, as I have noted, the conclusion of Branson J in Krambousanos was made cognisant of the remedial character of the legislation. CTRSA is in even narrower terms than TPA s 82 and s 87 considered in Krambousanos and Oraka, which empowered the court to also make orders against a person 'involved in' a contravention. If it was the intention of Parliament to empower SAT to grant relief against a party who did not contravene the CTRSA, then it would have been clearly expressed; it is not.
44 The Trust submits that CTRSA s 16D(1) makes it clear that damages may only be claimed by a party against another party, or a former party, by whose misleading or deceptive conduct it suffers, or is likely to suffer, loss or damage. Thus, the section could be used by Seduce to claim damages against Westgem, a former party, for loss suffered because of misleading or deceptive conduct by Westgem.
45 The approach taken by Branson J in Krambousanos, that the remedial provisions in the TPA, properly construed, only allow the court to make orders against the person who contravened the TPA or a person involved in the contravention, has been consistently followed. Counsel for Seduce was not able to draw my attention to any decided case in which an entity which had not engaged in misleading or deceptive conduct (nor was involved in a contravention) had been ordered to pay damages to another entity who had suffered loss as a result of the misleading or deceptive conduct of a third entity.
46 I agree with the construction proposed by the Trust, which reflects the approach taken by Branson J in Krambousanos. Seduce has not satisfied me that there is a plausible contention requiring investigation that it has an offsetting claim for damages against the Trust pursuant to CTRSA s 16D as a result of the contravention of CTRSA s 16C by Westgem.
47 The power in CTRSA s 26 is, relevantly, as follows:
(1) Without limiting any power to make an order that is conferred by the State Administrative Tribunal Act 2004 but subject to this Act the Tribunal may make -
(a) an order that requires a party to any matter before it to pay money to a person specified in the order; or
(b) an order for a party to any matter before it to do, or refrain from doing, anything specified in the order; or
(c) an order dismissing any matter before it.
(1a) The power in subsection (1)(b) includes power for the Tribunal to order the parties to enter into an agreement varying a retail shop lease as specified in the order where the Tribunal has found that the tenant under the lease was before entering into the lease misled by the landlord as to the meaning or effect of a term or condition of the lease.
(1aa) The Tribunal may, where it considers it appropriate to do so to resolve the matter concerned, make an order terminating a retail shop lease.
(4) The Tribunal may allow any equitable claim or defence, and give any equitable remedy, in a matter before it that the Supreme Court may allow or give.
48 CTRSA s 26(1aa) gives SAT the power to make an order terminating a retail shop lease, though there is no express power to void or set aside a retail shop lease ab initio. However, it is clearly arguable that the relief which SAT may grant pursuant to CTRSA s 26(4) includes the remedy of rescission. For the same reasons as I set out in relation to CTRSA s 16D, I do not discern anything in CTRSA s 26 indicating an intention on the part of Parliament to empower SAT to grant relief against a party who did not contravene the CTRSA. Seduce has not satisfied me that there is a plausible contention requiring investigation that it can claim relief against the Trust pursuant to CTRSA s 26 to set aside the Lease as a result of the contravention of CTRSA s 16C by Westgem.
49 The issue then becomes whether Seduce can assert an equity to set aside the Lease which may have accrued against Westgem, and which it can assert against the Trust. If it can so assert an equity, then it is arguable that CTRSA s 26(4) allows SAT to give effect to the equity.
50 As to the second basis asserted by Seduce, the assignment of the Lease arose as a result of the Trust becoming the registered proprietor of Raine Square. On 18 June 2013 Westgem gave Seduce a Notice of Attornment pursuant to Property Law Act 1969 (WA) s 20 (PLA). This referred both to the Trust acquiring freehold title to the leased premises and to Westgem assigning its rights under a guarantee to the Trust.
51 The effect of PLA s 20 is that an assignment of 'any debt or legal chose in action' which complies with that section is 'subject to equities having priority over the right of the assignee'. In this context, 'equity' means 'a defence, setoff or counterclaim which the person subject to the obligation is entitled to oppose to the claim of the person entitled to the benefit'. The context of the discussion by White J in HP Mercantile of assignees taking subject to equities was that of an equitable assignment of a debt. However, PLA s 20 has no application in the present case as what the Trust was assigned was freehold title to Raine Square, and with that the reversion of the Lease, and not a debt or legal chose in action. The rights and obligations of the Trust as assignee of the reversion are dealt with under PLA s 77 and s 78. Neither PLA s 77 nor s 78 provide that the interests of the assignee of the reversion are subject to any equities that the lessee could have exercised against the initial lessor (the assignor of the reversion). Hence the comment by White J in HP Mercantile that an 'assignee of the reversion does not take subject to all equities that bind the assignor'. Thus, even if Seduce could establish that Westgem engaged in misleading conduct in contravention of CTRSA s 16C, this would not give rise to any equity binding upon the Trust, even if it could give rise to an equity binding on Westgem.
52 In addition, this is not a case like Krambousanos in which the assignor had engaged in conduct giving rise to the right to relief in equity (in that case, rescission for unconscionable conduct), of which the assignee had notice.
53 The notice given under PLA s 20 in this case no doubt catered for any obligations that did not fall within PLA s 77, in particular, the guarantee. Counsel for Seduce did not draw my attention to any other basis on which PLA s 20 may apply. In any event, the covenant which the Trust seeks to enforce is the covenant to pay rent, which is identified in PLA s 77 as being a covenant which the assignee of the reversion may sue upon under that section.
54 Returning to the language of CTRSA s 26(4), Seduce has not satisfied me that there is a plausible contention requiring investigation that it has an equitable claim or defence, or other entitlement to an equitable remedy, which it could have asserted against the Trust had the matter been before the Supreme Court.
55 For these reasons, Seduce has not satisfied me that there is a plausible contention requiring investigation that it has an equity which it can assert against the Trust's claim under the Lease.If Seduce has an offsetting claim against the Trust, can it be set-off against the amounts due under the Lease?
56 The Trust asserts that there is a further matter why there is no offsetting claim. This is because cl 5.1(1) of the Lease provides that Seduce must pay rent to the Trust without any right of setoff. This clause would not be void pursuant to CTRSA s 15 as it does not seek to exclude the application of any provision of that Act.
57 In his comprehensive treatise on the subject of statutory demands, Mr Farid Assaf identifies a divergence in the authorities as to whether a debtor may be prevented from raising an offsetting claim in response to a statutory demand because of a contractual stipulation intended to segregate the particular debt. The decision of Austin J in Jem Developments Pty Ltd v Hansen Yuncken Pty Ltd  upheld the contractual stipulation preventing the claim from being asserted as an offsetting claim. Barrett J came to the same conclusion in Blue Hills Village Management (Liverpool) Pty Ltd v Babcock & Brown International Pty Ltd. In Property Builders Pty Ltd v Carlamax Properties Pty Ltd  White J allowed an offsetting claim notwithstanding the existence of the contractual stipulation. The reasoning of White J was based on the decision of the Full Court of the Federal Court in John Shearer Ltd v Gehl Company that a cross demand does not have to be capable of operating as a setoff against the company in order to be an offsetting claim. When given another opportunity to consider the issue, Barrett J in Bakota Holdings Pty Ltd v Bank of Western Australia Ltd followed the decision in Property Builders, noting that the decision in John Shearer was not drawn to the attention of the judges sitting in Jem Developments and Blue Hills, and declining to follow those decisions.
58 In this jurisdiction, the decision in Bakota was recently followed by Master Sanderson in Qube Logistics (Vic) Pty Ltd v United Equipment Pty Ltd, though with some reservations. I do not share these reservations. In my respectful view, the decisions in Property Builders and Bakota more faithfully give effect to the appellate decision in John Shearer and the wide language of the definition of 'offsetting claim' in CA s 459H(5), and is the preferable approach.
59 Accordingly, if Seduce otherwise had a counterclaim or crossclaim against the Trust in relation to its non-payment of rent under the Deed, the existence of cl 5.1(1) of the Lease would not have precluded the claim from being an offsetting claim for the purposes of CA s 459H(1)(b).If Seduce has a claim against the Trust under the Lease, is it barred by the Deed?
60 The Trust then submits that if Seduce does have a claim against it for misleading and deceptive conduct, this claim is within the terms of the absolute bar in the Deed. Seduce asserts that the scope of the release and bar in the Deed was limited to the Trust's claim for nonpayment of rent, outgoings and expenses.
61 The recitals to the Deed refer both to the Trust's claim for non-payment of rent, outgoings and other expenses and to settlement of 'all disputes'.
62 The relevant operative clauses are cl 2 cl 6:
2.1 Settlement Sum
The Tenant agrees to pay to the Landlord the Settlement Sum in full and final settlement of the Disputed Matters between the Landlord and the Tenant.
2.2 Payment of Settlement Sum
The Settlement Sum must be paid in nine instalments of $13,366.67 on the first date of each month commencing 3 November 2014.
2.3 Effect of Settlement Sum
(a) The Landlord acknowledges and agrees that, provided the Tenant performs its obligations under clause 2.2, clause 3 and pursuant to the Lease, that it will accept payment of the Settlement Sum in full and final satisfaction of any Claims relating to the Disputed Matters.
(b) The Tenant acknowledges and agrees that, if it does not perform its obligations under this clause 2.2, clause 3 and pursuant to the Lease, then the full Settlement Sum will become immediately due and payable.
The Tenant agrees to pay the Landlord half of the Costs within 14 days of the Execution Date.
The Parties agree to execute consent orders dismissing the Proceedings.
In consideration of receiving the Settlement Sum referred to in clause 2 and the Costs referred to in clause 3 the Landlord:
(a) absolutely and irrevocably releases and forever discharges the Tenant from all or any Claims which they have or, but for the execution of this Deed, may have had against the Tenant in relation to the Disputed Matters;
(b) will cause the consent orders referred to in clause 4 to be filed in the District Court and served on the Tenant within three days of receipt of the first instalment of the Settlement Sum;
(c) after the final payment of the Settlement Sum is received, the Landlord, within 7 business days of receiving a written request from the Tenant's solicitors, will produce to the Tenant a letter to acknowledge that the Tenant does not owe the Landlord any moneys referred to in the Statement of Claim dated 15 August 2014 in the Proceedings.
The Parties acknowledge and agree that subject to the provisions of clauses 2, 3, 4 and 5 above, any party to this Deed is entitled to enforce this Deed as against any other party and may plead this Deed in bar to any claim, suits, demands or actions commenced by any party arising out of, pursuant to, or related to, the subject matter of this Deed (except if this Deed expressly provides otherwise).
63 The term 'Disputed Matters' is defined in cl 1.1 to mean 'all of the issues raised by the Parties relating in any way whatsoever to the nonpayment of money under the Lease prior to the Execution Date'.
64 The Trust asserts that the dispute as to the misrepresentations had been raised by Seduce prior to execution of the Deed. Specifically, it points to a letter dated 1 August 2014 from Seduce in the following terms:
Further to your letter received on the 17th July 2014 with relation to the alleged breach of lease on the premises occupied by Seduce Pty Ltd, Raine Square, Corner Murray and William Street, Perth, TM5, Murray St Level (Premises), we wish to advise that we will pass this matter to our lawyers as the landlord misrepresented the shopping centre and the intended use of the retail tenancies to us.
With evidential information we strongly urge that the landlord repeal the notice that has been issued by you as there is no legal basis given the misrepresentation that has been made by them. Given the above circumstances we will be pursuing costs on this store, we look forward to resolving the matter amicably.
65 By way of context, this letter was dated after the Trust had made a demand for nonpayment of rent, outgoings and expenses to Seduce, but prior to commencement of the District Court action.
66 The Deed is a commercial contract, and is to be construed in the manner described by the High Court in Electricity Generation Corporation v Woodside Energy Ltd:
The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties ... intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'. (footnotes omitted)
67 There is a certain level of reluctance to determine construction issues in the context of an application to set aside a statutory demand. However, in the present case the issue is sufficiently clear, and is not dependent upon any factual issues.
68 Seduce argued that, in the context of the Deed as a whole, the term 'Disputed Matter' is limited to the Trust's claim for non-payment of money under the Lease. It says this for two reasons. The first is that Recital B only refers to this claim. However, Recital C refers to settlement of 'all disputes between them however arising'. The second is because the release in cl 5 is only a release by the Trust of any claims it may have. However, the bar in cl 6 refers to 'any claim, suit, demand or actions commenced by any party'.
69 The bar is expressed in general words. A release expressed in general words will usually be read down by reference to what was in the contemplation of the parties at the time of the execution of the release. It is not yet settled as to whether this applies to a bar. For present purposes, I will assume that it does.
70 What was in the contemplation of the parties is clearly seen in the definition of 'Disputed Matters'. This provides a concise limitation on the scope of the bar: 'all of the issues raised by the Parties relating in any way whatsoever to the nonpayment of money under the Lease prior to the Execution Date'. Like the expressions 'in connection with', 'arising out of', and 'in respect of', the expression 'relating in anyway whatsoever to' in its ordinary usage is of wide connotation.
71 In my view, in any action commenced by Seduce in which it sought to raise a claim or defence based on misrepresentations by representatives of Westgem, the Trust could successfully assert in the bar in cl 6 of the Deed. The claim was raised by Seduce prior to the execution of the Deed as required by the definition of 'Disputed Matter'. The claim was asserted in response to the issue of a demand for payment of rent, and therefore is aptly described as 'relating in any way whatsoever to the non payment of money under the Lease prior to the Execution Date', and is thus within the term 'Disputed Matter'. The payment of the settlement sum is in 'full and final satisfaction of the Disputed Matters' between the Trust and Seduce (cl 2.1). The bar in cl 6 is mutual, which only makes sense if there is settlement of claims both by the Trust against Seduce and Seduce against the Trust. The evident commercial result which the parties sought to achieve from the Deed was to resolve all the issues which had been raised by the Trust or Seduce prior to the Execution Date relating in any way whatsoever to the nonpayment of money under the Lease.
72 Another way to test this conclusion is to consider what would have happened had there been no settlement of the District Court action. In this scenario, consistent with the arguments made by Seduce in the present application, Seduce would have pleaded the alleged misleading conduct by representatives of Westgem in its defence by way of equitable set-off and would have counterclaimed for rescission of the Lease and damages. A reasonable commercial interpretation of the Deed would construe it as having the commercial purpose of an agreement by Seduce to give up this right in return for the agreement of the Trust to limit the amount payable to the settlement sum. From the Trust's perspective, the Deed had the commercial purpose of buying out the risk of a successful setoff or counterclaim by Seduce in return for a reduction in the amount owed. Having given up this right in the District Court action, Seduce cannot now assert the same right in a subsequent action for recovery of amounts due under the Lease which postdated the Deed and were not the subject of the District Court action. This would make commercial nonsense of the Deed.
73 For these reasons, I do not consider that there is a plausible contention requiring investigation that the terms of the Deed do not include the claim by Seduce against the Trust for misrepresentation. In my view, the Deed clearly precludes Seduce from asserting a genuine dispute or offsetting claim based on the misrepresentations said to have been made by representatives of Westgem at the time it entered into the Lease.Is there a sufficiently serious defect in the Statutory Demand?
74 By CA s 459J(1)(a), the 'Court may by order set aside the demand if it is satisfied that ... because of a defect in the demand, substantial injustice will be caused unless the demand is set aside'.
75 In his affidavit, Mr Li identifies the following defects in the Statutory Demand:
(a) paragraph 1 of the Statutory Demand states that the total amount of the debts is $240,631.57;
(b) the amount due and owing in the Schedule does not refer to how Debt 1 is calculated or reconciled against that of Debt 2 given that both debts arise from the Lease; and
(c) the Plaintiff does not accept the calculation of Debt 1 as the basis for that calculation is unknown to it.
76 The defect identified by Mr Li cannot be described as an 'irregularity', 'a misstatement of an amount or total', 'a misdescription of a debt or other matter' or 'a misdescription of a person or entity' so as to fall within the inclusive definition of 'defect' in CA s 9. Rather, it is an assertion that the description of the debt is vague or ambiguous. As Austin J observed in LSI Australia Pty Ltd v LSI Holdings Ltd it is a question of degree as to whether vagueness or ambiguity may constitute a defect:
A statutory demand is required by Form 509H to 'describe' the debt that is claimed. If the demand is so vague or ambiguous that it fails to identify, to a reasonable person in the shoes of a director of the debtor company, the general nature of the debt to a sufficient degree that the director can assess whether there is a genuine dispute as to the existence or amount of the debt or an offsetting claim, then there is a lack of something necessary for completeness, and therefore a defect in the demand.
77 In Main Camp Tea Tree Oil Ltd v Australian Rural Group Ltd Barrett J relevantly observed:
An essential feature of a statutory demand is that it inform the addressee company in unambiguous terms what it must do to forestall the statutory presumption of insolvency. The debtor is not expected (indeed, cannot be expected) to guess which of several possible courses suggested by the terms of the document is demanded of it, or to initiate inquiries of its own in order to ascertain the required course. Some familiarity on the debtor's part with the relevant subject matter may be presumed, but it is not obliged to speculate exactly what it is that the creditor demands. ... Where, as here, the demand, because of its form and phraseology, leaves its recipient in the unfair and invidious position of not knowing with certainty how much it is expected to pay, substantial injustice will be caused unless that recipient is relieved of the consequences of failure to comply.
78 Counsel for Seduce stated that the lack of details in the Statutory Demand did not make it possible for Seduce to identify whether the Trust had claimed for rent and other moneys arising in the period covered by the Deed.
79 Mr Page's evidence is that the moneys the subject of the Statutory Demand were incurred since December 2014, that is, after the Deed was executed (being 31 October 2014). It is thus clear that the Trust is not seeking to claim for any amounts the subject of the Deed.
80 The amount which Seduce had to pay to forestall the statutory presumption of insolvency was clearly and unambiguously stated in the Statutory Demand. There is no assertion that the amount was incorrect or overstated. Moreover, the source of the debt, namely the Lease, is also clear. The existence of any lack of detail has not prevented Seduce from raising a comprehensive argument as to why there is genuine dispute and an offsetting claim. Counsel for Seduce did not identify specific injustice which will be caused unless the demand is set aside. Seduce has not discharged the onus on it to establish either that the Statutory Demand was defective or that, if it was defective, substantial injustice will be caused unless it is set aside for the purposes of CA s 459J(1)(a).What final orders are appropriate?
81 The Trust also referred to cl 1.19 of the Lease which contained a release in favour of the receivers of Westgem and an acknowledgment that no representations had been made by their agents or employees in connection with the premises or the Lease. However, by reason of CTRSA s 15, I consider that there is a plausible contention that the Trust cannot contract out of the requirements of the CTRSA. It is not necessary for me to consider this argument further.
82 In summary terms, I am of the view that there is no plausible contention requiring investigation that:
(a) Seduce has a genuine dispute or offsetting claim against the Trust pursuant to CTRSA s 16D or s 26 as a result of the contravention of CTRSA s 16C by representatives of Westgem;
(b) the terms of the Deed do not include any claim by Seduce against the Trust for misrepresentation by representatives of Westgem; and
(c) Seduce can assert as against the Trust an equity in the nature of a setoff or right to rescind arising out of these misrepresentations.
83 Accordingly, Seduce has not satisfied the onus upon it to establish the existence of a genuine dispute or offsetting claim in response to the Statutory Demand. Nor has it satisfied the onus on it to identify a sufficiently serious defect in the Statutory Demand. Accordingly, the application should be dismissed and the demand stand.
84 As an alternative, Seduce sought an order that the time for compliance with the Statutory Demand be extended until seven days after the determination of the application brought by Seduce pursuant to CTRSA s 16D(1). The power of the court to make an order in these terms is found in CA s 459F(2). However, in view of the reasons set out above, I am not satisfied that an order in these terms is appropriate.
85 I will hear from counsel on the form of the orders and costs. This should include the issue of what should happen to the money paid into court by Seduce.
For ease of reference I will simply refer to 'the
 Which I will refer to as the 'Li affidavit'.
 Which I will refer to as the 'Clements affidavit'.
 Which I will refer to as the 'Page affidavit'.
 Central City Pty Ltd v Montevento Holdings Pty Ltd  WASCA 5  (Murphy JA, Buss JA agreeing); KEP Management Service Pty Ltd v Goldwest Enterprises Pty Ltd  WASC 132  (Gething AM); Kellogg Brown & Root Pty Ltd v Doric Contractors Pty Ltd  WASC 206  (Gething AM).
 Central City  . See also Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [No 3]  WASCA 132  (Reasons of the Court); Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd  WASCA 91  (Pullin JA, Newnes & Murphy JJA agreeing).
 CA s 459H(5).
 Pravenkav ; Central City .
 Diploma Construction ; Central City .
 Li affidavit, par 31.
 Li affidavit, par 23.
 Li affidavit, par 34.
 Li affidavit, par 26.
 Clements affidavit, pars 4 9.
Plaintiff's submissions, 6 October 2015 ,
 Krambousanos v Jedda Investments Pty Ltd (1996) 64 FCR 348.
 Krambousanos (355).
 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470, 503.
 Krambousanos (360).
 Krambousanos (360).
 Oraka Pty Ltd v Leda Holdings Pty Ltd  FCA 297.
 Oraka (10).
 Oraka (10 11).
Munchies Management Pty
Ltd v Belperio  FCA 413; (1988) 58 FCR 274, 287 (the
 Deane v Brian Hickey Invention Research Pty Ltd (1988) 10 ATPR 40889, 49611 (Burchett J).
 HP Mercantile Pty Ltd v Dierickx  NSWSC 1005.
 HP Mercantile .
 HP Mercantile  .
 HP Mercantile  .
 HP Mercantile .
 HP Mercantile , referring to Meagher RP, Heydon JD & Leeming MJ, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (4th ed, 2002, LexisNexis Butterworths) , .
 HP Mercantile .
 HP Mercantile .
 HP Mercantile , following the decision in Bitannia Pty Ltd v Parkline Constructions Pty Ltd  NSWCA 238; (2006) 67 NSWLR 9.
 HP Mercantile .
 HP Mercantile .
 HP Mercantile  .
 HP Mercantile Pty Ltd v Dierickx  NSWCA 479 (HP Mercantile (Appeal)). The High Court refused special leave: Dierickx v HP Mercantile Pty Ltd  HCATrans 107 (16 May 2014).
 HP Mercantile (Appeal)  (Meagher JA), ,  (Emmett JA),   (Beazley P dissented, endorsing the reasoning of White J).
 HP Mercantile (Appeal) .
 See for example: Prosperity Group International Pty Ltd v Queensland Communication Company Pty Ltd (No 3)  FCA 1122  (Logan J).
 Page affidavit, par 9.
 Page affidavit, annexure AJP2 (pages 133 134).
 Heydon JD, Leeming MJ & Turner PG, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (5th ed, 2015, LexisNexis Butterworths) .
 I am not told whether the Lease was registered under the Transfer of Law Act 1983 (WA), however, it matters not, as the PLA applies in that event: TLA s 69.
 HP Mercantile .
 See generally: Edgeworth B, Rossiter C, Stone M & O'Connor P, Sackville & Neave Australian Property Law (9th ed, 2013, LexisNexis Butterworths) [8.134] [8.141], [9.23].
 See generally: Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd  HCA 10; (2008) 234 CLR 237   (Judgment of the Court).
 Assaf F, Statutory Demands and Winding Up in Insolvency (2nd ed, 2012, LexisNexis Butterworths) [6.18] [6.19].
 Jem Developments Pty Ltd v Hansen Yuncken Pty Ltd  NSWSC 1308; (2006) 205 FLR 432  (Austin J).
 Blue Hills Village Management (Liverpool) Pty Ltd v Babcock & Brown International Pty Ltd  NSWSC 87 ,  (Barrett J).
 Property Builders Pty Ltd v Carlamax Properties Pty Ltd  NSWSC 1068; (2011) 85 ACSR 596  (White J).
 John Shearer Ltd v Gehl Company  FCA 1789; (1995) 60 FCR 136, 139 143 (Judgment of the Court).
 Bakota Holdings Pty Ltd v Bank of Western Australia Ltd  NSWSC 1277   (Barrett J).
 Qube Logistics (Vic) Pty Ltd v United Equipment Pty Ltd  WASC 70  (Sanderson M).
Page affidavit, par 48, attachment AJP9
 Page affidavit, par 49.
 Electricity Generation Corporation v Woodside Energy Ltd  HCA 7; (2014) 251 CLR 640  (French CJ, Hayne, Crennan & Kiefel JJ).
 See for example: Apex Gold Pty Ltd v Atlas Copco Australia Pty Ltd  WASC 49  (Pritchard J).
 Grant v John Grant & Sons Pty Ltd  HCA 23; (1954) 91 CLR 112, 123 124 (Dixon CJ, Fullagar, Kitto & Taylor JJ); Butler v St John of God Health Care Inc  WASCA 174   (Buss JA),   (Newnes AJA), (McLure JA agreed with Buss JA & Newnes AJA).
 Butler  .
 Any suggestion by Seduce that it would not have done so would call into question in the present application whether the dispute was genuine.
 Li affidavit, par 35.
 LSI Australia Pty Ltd v LSI Holdings Ltd  NSWSC 1406.
 Main Camp Tea Tree Oil Ltd v Australian Rural Group Ltd  NSWSC 219; (2002) 20 ACLC 726 .
 Page affidavit, pars 24 26, 51.
 See also: Oraka (9).