In the matter of Ceerose Pty Limited; In the matter of Prisand Investments Australia Pty Ltd

1. [1]

   Ceerose Pty. Limited and Prisand Investments Australia Pty Ltd have each applied for orders seeking to set aside statutory demands that were served on each of them by The Owners – Strata Plan No 89074.

2. [2]

   There is no dispute that the statutory demands were served. Nor is there a dispute that Ceerose and Prisand are jointly and severally liable to the Owners in respect of a judgment debt.

3. [3]

   Ceerose and Prisand contend that because of a defect in the statutory demands, substantial injustice will be caused unless they are set aside. They seek to engage s 459J(1)(a) of the Corporations Act 2001 (Cth). There is no dispute from the Owners that the statutory demands contain a defect, but it asserts that the defects occasion no substantial injustice. Ceerose and Prisand also rely on some alternative grounds and raise other matters.

4. [4]

   For the reasons given below, the applications fail.

The debt

1. [5]

   There has been a protracted dispute between the parties. Ceerose, as developer, entered into contracts with Prisand, as builder, in 2010 and 2012 for the construction of a 16-storey building on Elizabeth Street in central Sydney, which is known as The Eliza. The Owners is the owners corporation of the building. The Owners commenced proceedings in 2016 in the NSW Civil and Administrative Tribunal. Those proceedings were transferred to the Equity Division of the Supreme Court in 2017. There was prolonged delay as the parties sought to resolve the dispute. The matter eventually was referred to a referee for inquiry and report. A report was produced in June 2024. That report was adopted on 26 November 2024, subject to minor changes: see The Owners – Strata Plan No 89074 v Ceerose Pty Ltd [2024] NSWSC 1494. Judgment was given in favour of the Owners against Ceerose and Prisand in the amount of $1,952,984 (exclusive of GST) on 26 November 2024. An appeal against that judgment was dismissed on 27 October 2025: see Ceerose Pty Ltd v The Owners – Strata Plan No 89074 [2025] NSWCA 235.

2. [6]

   On 20 November 2025, solicitors for the Owners sent a letter to the solicitors for Ceerose and Prisand demanding payment of $1,952,984 pursuant to the judgment debt together with interest. The letter demanded payment within 14 days, failing which the Owners stated that it would be taking enforcement action. There was no payment and no response to the letter.

The statutory demands

1. [7]

   The Owners served a statutory demand dated 19 December 2025 on each of Ceerose and Prisand. Apart from changes to the name of the recipient of the demand, the two demands are identical. The demand issued to Ceerose commences as follows:

2. [8]

   The schedule to the statutory demand includes the following:

3. [9]

   The affidavit accompanying the demand sets out details of the debt owed by Ceerose to the Owners, by reference to the judgment entered on 26 November 2024. It also provides information about how the interest has been calculated.

The defect

1. [10]

   There is an obvious mistake in the statutory demands. As noted above, the second paragraph of the schedule states that: “Further to the above described court judgments, the company is owed $1,952,984.00 (exclusive of GST) by the creditor (Judgment Debt)”. It is not the case that the “company” (i.e. Ceerose) was owed $1,952,984 by the creditor (i.e. Owners). Rather, the company owed $1,952,984 to the creditor. A mistake of the same nature is made in the third paragraph of the schedule. It was not a “debt owed to the company”, rather it was a debt owed by the company. The same errors appear in the Prisand statutory demand.

2. [11]

   The mistake is obvious because the statutory demand and the accompanying affidavit elsewhere explain, correctly, that the company owed $1,952,984 to the creditor. No reasonable person reviewing the statutory demand could possibly think that the Owners was issuing demands to Ceerose and Prisand by which the Owners was asserting that it owed a judgment debt (plus interest) to Ceerose and Prisand. That notion was a plain absurdity.

3. [12]

   Mr Edward Doueihi is a director of Ceerose and Prisand. He gave evidence and was cross-examined. The effect of his evidence is that he received and read the statutory demands. He saw that there was a mistake in the schedules because they twice wrongly stated that the debt was one owed by the Owners to Ceerose and Prisand respectively. Mr Doueihi accepted that he knew that the true position was (and is) that Ceerose and Prisand owed the judgment debt plus interest to the Owners. His evidence is that he was uncertain about the consequences of the mistake, and so sought advice from the companies’ solicitors.

Application of s 459J(1)(a)

1. [13]

   Section 459J(1)(a) provides as follows:

2. [14]

   There is no dispute that there is a “defect” in each statutory demand. The word “defect” is defined in s 9 of the Corporations Act as follows:

3. [15]

   Counsel for the parties relied on various authorities concerning s 459J(1)(a). Counsel for Ceerose and Prisand relied, in particular, on the following statement by Barrett J in Main Camp Tea Tree Oil Ltd v Australian Rural Group Ltd [2002] NSWSC 219; 20 ACLC 726 at [37]:

4. [16]

   He also relied on the following remarks, which were to a similar effect, by Barrett J in A R Pilot Pty Limited v Gouriotis [2007] NSWSC 396 at [29]:

5. [17]

   Counsel for the Owners drew attention to Condor Asset Management Limited v Excelsior Eastern Limited [2005] NSWSC 1139, where Barrett J observed:

6. [18]

   These authorities, and others, inform the proper approach to an application under s 459J(1)(a). However, each case is fact dependent. In each case it is necessary to focus on the defect in the statutory demand and for the Court to consider whether it is satisfied, in the particular circumstances of the case, that because of the defect (or defects) substantial injustice will be caused unless the demand is set aside.

7. [19]

   The substantial injustice that Ceerose and Prisand say will be caused in this case is that the statutory demands will expose them to the risk of the statutory presumption of insolvency in circumstances where Mr Doueihi was uncertain about the consequences of the mistakes in the statutory demands. It was submitted that he should not be placed in a position, particularly given the strict time limits that apply (see s 459G), whereby he has to obtain legal advice before deciding how to respond to the demands.

8. [20]

   I reject this contention. If the statutory demands are not set aside, the consequence will be that Ceerose and Prisand will be required to pay to the Owners the money that everyone agrees is owed by them to the Owners. The effect of s 459F is that if the application by Ceerose and Prisand to set aside the demands fails, they will have 7 days to comply with the statutory demands. Ceerose and Prisand were obliged to pay the judgment debt (plus any interest that had accrued) in late 2024. It is not a substantial injustice that they now be required to pay what they owe, and risk a presumption of insolvency if they fail to do so.

9. [21]

   This case is unlike one where a statutory demand inconsistently demands different amounts, leaving the recipient in some doubt about what must be done to comply with the demand. Properly advised, Ceerose and Prisand cannot have been left in the slightest doubt that the Owners was demanding what was owing to it because of the judgment debt in its favour. It would have been obvious to any reasonable person, and was obvious to Mr Doueihi, that the statutory demands mistakenly suggested that the Owners had a debt to Ceerose and Prisand.

10. [22]

    I accept, of course, that it is highly desirable that statutory demands are free of defects. However, it is plain from s 459J(1)(a) that the mere fact that a statutory demand contains a defect is not a basis to set it aside. It was an inconvenience to Mr Doueihi that he had to seek legal advice about the consequences of the defects. However, I do not accept that gives rise to a substantial injustice unless the demands are set aside. There is no injustice to Ceerose or Prisand if they risk a presumption of insolvency if they fail comply with the statutory demands by failing to meet a judgment debt that was incurred more than 12 months ago. The companies were served with statutory demands that were clearly demanding payment of the judgment debt and that clarity was not materially diminished by the stark error in the schedule.

11. [23]

    In some respects, it might be suggested that the defects were major ones. It is a serious error to switch the creditor and debtor. Counsel for Ceerose and Prisand referred to it as an inversion. But the character of the defect had the consequence that it was obviously a mistake. Elsewhere, the statutory demands correctly identified Ceerose and Prisand as the entities who were indebted to the Owners. The glaring mistake diminished the character of the defect because it was so obvious. It may be said that this rendered the defects to be minor ones.

12. [24]

    Notwithstanding the defects, given what Ceerose and Prisand already knew, the statutory demands contained sufficient information to enable them to assess their liability for the amounts demanded. It would have been fanciful for Ceerose and Prisand to entertain the slightest doubt that payment of the judgment debt was being demanded and that payment of the debt by them would discharge their liability to the Owners. There would be no doubt in the mind of any reasonable reader as to the course he or she had to take to avoid the statutory presumption of insolvency: the reasonable reader would know that he or she had to pay the judgment debt.

13. [25]

    The timing of the demands (together with the defects) does not give rise to substantial injustice. The statutory demands were served on 19 December 2025. In In the matter of Pioneer Cryogenics Pty Ltd [2015] NSWSC 1202; 108 ACSR 461, Black J observed (at [12]):

14. [26]

    I do not consider that the timing of the service of the statutory demands in this case can properly be said to have been calculated to inflict hardship on Ceerose or Prisand. The Court of Appeal dismissed the appeal on 27 October 2025. The Owners, understandably, demanded payment (before serving the statutory demands) by a letter dated 20 November 2025. As I have noted, Ceerose and Prisand ignored that letter. It was only after that demand was ignored that the Owners took the step of serving the formal statutory demands on 19 December 2025. It may be accepted that the timing was inconvenient to Ceerose and Prisand. However, that inconvenience was in large part of their own making. Having chosen to disregard the letter demanding payment, they can hardly have been surprised when the Owners took the formal step of serving statutory demands in the week before Christmas.

15. [27]

    Ceerose and Prisand also point to what counsel called “the source-material and party-description issues” as relevant matters that added to the uncertainty arising from the defects and, in combination with the other matters, gives rise to substantial injustice if the statutory demands are not set aside.

16. [28]

    There were some minor inconsistencies in the references to the parties in the reasons of the Court of Appeal and the orders made by that Court. Following a request from the Owners made on 12 December 2025, the Court of Appeal corrected the description of Prisand by amending the reasons (on 16 December 2025) and issuing corrected orders (on 17 December 2025). In addition:

    1. (1)

       the orders identify Ceerose as “CEEROSE PTY. LIMITED (ACN 088 287 678)”, while the judgment heading identifies Ceerose as “Ceerose Pty Ltd”; and

    2. (2)

       the orders identify the Owners as “STRATA PLAN 89074 (ABN 55 682 252 337)”, while the judgment heading identifies The Owners as “The Owners – Strata Plan No 89074”.

17. [29]

    So far as the statutory demands are concerned (which refer in the schedules to the decision of the Court of Appeal), these matters are minor to the point of inconsequence. The statutory demands correctly identify Ceerose, Prisand and the Owners. Subject to the defects I have already addressed, they also identify the debt with precision. That debt did not come about by the orders of the Court of Appeal. Rather, the debt that the Owners is taking steps to recover is the debt arising from the judgment of the Court on 26 November 2024.

18. [30]

    I do not accept that the defects in the statutory demands will cause substantial injustice unless the demands are set aside.

Application of s 459J(1)(b)

1. [31]

   Section 459J(1)(b) provides:

2. [32]

   The “some other reason” is one other than a defect productive of substantial injustice within s 459J(1)(a) (and also other than by reason of a genuine dispute or an offsetting claim within the meaning of s 459H). It is necessary to consider whether there is a proper reason viewed in the circumstances of the parties taking into account the purposes of Part 5.4 of the Corporations Act: see Meehan and Others v Glazier Holdings Pty Ltd [2005] NSWCA 24; 53 ACSR 229 at [52]. In Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Limited (2008) 232 CLR 314; [2008] HCA 9, Gleeson CJ, Hayne, Crennan and Kiefel JJ remarked (at [14]):

3. [33]

   Ceerose and Prisand relied on the observation by Bryson J in Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd; Olan Mills Studio Pty Ltd v Kodak (Australasia) Pty Ltd [1996] NSWSC 199; 20 ACSR 746 at 758 that the “dominant consideration is the need to ensure the purity of the manner in which creditors follow statutory procedures which are preliminary to litigation and for which verification is required by law”.

4. [34]

   The “some other reason” that is advanced by Ceerose and Prisand is that, against the backdrop of statutory demands served shortly before Christmas, when the Owners was told about the defects in the statutory demands, rather than withdraw the demands, the Owners made the deliberate forensic decision to maintain the pressure of the statutory demands that had been served by insisting on payment in full. It may be accepted that events that take place after the service of the statutory demand can properly be taken into account: see, for example, Tatlers.com.au Pty Limited v Davis [2006] NSWSC 1055; 203 FLR 473 at [11].

5. [35]

   I do not accept that this a reason to set aside the statutory demands in accordance with s 459J(1)(b). I do not consider that the integrity of the Part 5.4 process would be offended by the maintenance of the statutory demands. In circumstances where (a) there is an undisputed debt; (b) the debtors ignored a letter demanding payment; and (c) where the debtors knew (at all times) that the creditor was seeking to engage the provisions of Part 5.4 in respect of that debt, there is nothing wrong with the Owners maintaining the position that the statutory demands served on 19 December 2025 would not be withdrawn. Ceerose and Prisand do not have a lawful basis to continue to refuse to pay the debt. If they fail to comply with the statutory demands, there is a public interest in an early hearing to determine whether they should be wound up in insolvency.

6. [36]

   It might be said that, with the benefit of hindsight, the Owners may have been in a better position if they did withdraw the statutory demands and issue fresh statutory demands. That is because the defects were the foundation of the application to have the statutory demands set aside, which has resulted in giving Ceerose and Prisand extra time to comply with the statutory demands because of the operation of s 459F(2). It is possible that if fresh statutory demands were served, an application to set aside the demands would have been avoided. But this is not a reason to set the statutory demands aside.

Should an order be made under s 459M?

1. [37]

   Ceerose and Prisand submitted that if the Court is minded not to grant immediate relief under s 459J, the proper course is to grant conditional relief under s 459M, rather than allow a presumption of insolvency to operate by reference to a defective demand. They rely on an application for special leave to appeal the decision of the Court of Appeal that has been made in the High Court. Ceerose and Prisand require leave to file that application because it was filed out of time.

2. [38]

   Section 459M provides that “An order under section 459H or 459J may be made subject to conditions”.

3. [39]

   I understand that what Ceerose and Prisand propose, as a fallback position, is that the statutory demands be set aside subject to a condition that requires them, pending the resolution of the proceedings in the High Court, to provide some form of security in respect of the judgment debt, to take a form such as payment into Court, payment into a controlled trust account or the provision of bank security.

4. [40]

   Ceerose and Prisand rely on Barclays Australia (Finance) Ltd v Mike Gaffikin Marine Pty Ltd (1996) 21 ACSR 235 at 238 and Eumina Investments Pty Ltd v Westpac Banking Corporation [1998] FCA 824; 84 FCR 454 at 457–459. In the latter decision, Emmett J observed (at 459):

5. [41]

   In the proceedings before me there was no attempt made to demonstrate that the application for special leave to appeal is advanced on reasonable and arguable grounds. The form of the application for special leave to appeal was not before me and I was not taken to any reasoning on the decision of the Court of Appeal that is said to be wrong.

6. [42]

   Nor was there any suggestion that in the event that the judgment debt (and interest) is paid to the Owners, there is reason to suppose that the Owners would be unable to pay the money back to Ceerose and Prisand in the event that an appeal to the High Court succeeds.

7. [43]

   I am not persuaded that I should make an order under s 459J to set aside the statutory demands on condition that Ceerose and Prisand provide some form of security for the debt.

Should an order be made under s 459H(4)?

1. [44]

   The final alternative contention advanced by Ceerose and Prisand is that an order should be made under s 459H(4) (or under s 459M) to vary the statutory demands “in relation to any amount or component which the Court considers cannot properly support the demand in the form served”.

2. [45]

   There is no reason to make an order along these lines. That is because I am satisfied that the statutory demands, as served, support the demand for the whole of the judgment debt plus interest. As I have said, there is no dispute that Ceerose and Prisand are jointly and severally liable for those amounts.

Conclusion and orders

1. [46]

   The applications fail.

2. [47]

   I make the following orders:

   1. (1)

      The originating process filed on 9 January 2026 in In the matter of Ceerose Pty Limited (2026/10128) is dismissed with costs.

   2. (2)

      The originating process filed on 9 January 2026 in In the matter of Prisand Investments Australia Pty Ltd (2026/10144) is dismissed with costs.