The recent decision in the matter of GLFB Pty Ltd trading as Harvest Homes [2018] NSWSC 598 is a lesson to all professionals in all industries on how important being detailed and consistent is in their business dealings.

In this case, one small detail was the reason for a statutory demand for a debt to be set aside by the Court.

Background

The plaintiff, GLFB Pty Ltd trading as Harvest Homes (Harvest), was issued a statutory demand in respect of two unpaid invoices by Zero to Infinity Solutions Pty Ltd (ZTI Solutions).

Harvest and ZTI Solutions were involved in a written agreement where ZTI Solutions would refer potential property purchasers to Harvest’s construction business (Agreement). In this regard, ZTI Solutions issued Harvest with nine invoices for its services under the Agreement (Invoices).

Harvest made an application to set aside the statutory demand under sections 459H and 459J of the Corporations Act 2001 (Cth) (Act). These provisions allow for a statutory demand to be set aside if:

(a) There is a genuine dispute between the parties that the debt is not as is represented in the statutory demand (section 459H); or
(b) There is a defect in the demand; and
(c) It would be substantially unjust to not set it aside (section 459J).

Issue

Harvest claimed that the statutory demand was defective as:

(a) The entity that issued the Invoices was not a party to the Agreement, but a related company owned and operated by the same director, called ZTI Property Investments Pty Ltd (Zero to Infinity Property Investments); and
(b) Despite the ZTI Solutions’ affidavit to the contrary, no verbally agreed variations of the Agreement had taken place to the effect that Zero to Infinity Property Investments was substituted as the payable entity of the Invoices.
The presiding Judge of Appeal, Leeming JA, was to consider whether the irregularity and inconsistency between the statutory demand and the Invoices were enough to set the statutory demand aside.

Decision

His Honour found in favour of Harvest and made orders to set aside the statutory demand on the basis that:

(a) A genuine dispute existed on the evidence as to whether the Agreement was varied, since Harvest and ZTI Solutions had given conflicting affidavits in this respect (satisfying section 459H of the Act); and
(b) The Invoices issued with the incorrect company name constituted a significant enough defect, since a debtor should know exactly which company it is indebted to, so it can properly pay off the debt (satisfying section 459J of the Act).

Finally, his Honour also remarked on ZTI Solutions’ general carelessness in issuing the Invoices, in that none of the companies named on the Invoices were actual companies that the director had incorporated:

(a) The name on the letterhead of the Invoices was actually “Zero to Infinity Property Investment Pty Ltd” (‘Investment’ being singular instead of plural); and
(b) The name of the bank account on the Invoices was “Zero to Infinity Property Pty Ltd” (missing ‘Investments’).

Conclusion

The devil is in the detail, and not being thorough and consistent will almost certainly lead to negative outcomes, especially in legal proceedings relating to statutory demands.