Woodland Home Products Pty Ltd v Alliance Recruitment Pty Ltd

This is an application to set aside a statutory demand under s 459G Corporations Act 2001 (Cth) on the ground that: – there is a defect in the Statutory Demand, within the meaning of s 459J(1)(a); – there is a genuine dispute as to whether the services said to have been performed by the Defendant, giving rise to the debt, were performed in accordance with the contract alleged by the Defendant.

It is conceded by the Defendant that this application and the supporting affidavit were filed within the time required by s 459G(2).

The Defendant carries on the business of personnel recruitment. These proceedings arise out of the employment by the Plaintiff of a particular employee recruited by the Defendant. The employee left the Plaintiff’s employment after a very short time. The Defendant claims that it is, nevertheless, entitled to its fee for the recruitment. The first point

The Statutory Demand describes the creditor as “Alliance Recruitment Pty Ltd”. The affidavit in support of the demand is by an officer of the Defendant who says no more than that she has checked the accounting records of the Defendant and believes that the Plaintiff is indebted to the Defendant for $11,000 “being for permanent placement fees incurred by the Plaintiff in April 2009” . No details are given of any contract pursuant to which the Defendant performed services for the Plaintiff in respect of which the placement fees are alleged to arise.

On 31 July 2009 the Plaintiff filed an affidavit of Mr Woodland in support of the Originating Process. The only ground of a dispute as to the alleged debt which is set out in that affidavit is that the Defendant failed in its obligation to check properly that the candidates recommended to the Plaintiff were suitable for the position.

In a further affidavit filed on 2 September 2009 Mr Woodland annexes a document which he says is the contract whereby the Plaintiff engaged the Defendant to perform recruitment services. The document is headed “Alliance – Terms and Conditions of Business – Permanent” . Thereunder appears the statement: “These conditions apply to the supply at any time of Permanent Personnel to the Client by Candle Australia Limited (and its group of wholly owned subsidiaries) trading as Alliance Recruitment ABN 43 002 724 334.”

Mr Esplin, who appears for the Plaintiff, says that because the contracting party shown in the document is “Candle Australia Limited” and the creditor shown in the Statutory Demand is “Alliance Recruitment Pty Ltd” , there is a defect in the demand in that the wrong contracting party has been named as creditor. Mr Esplin submits that the Statutory Demand should be set aside under s 459J(1)(a).

I am unable to agree. “Defect” is defined in s 9 as: “ defect , in relation to a statutory demand, includes: (a) an irregularity; and (b) a misstatement of an amount or total; and (c) a misdescription of a debt or other matter; and (d) a misdescription of a person or entity.”

The only category into which the Plaintiff’s criticism in this case could fall is (d) – a misdescription of a person or entity. “Misdescription” is generally understood to occur when there is an error made in setting out the name of the person or entity to which reference is actually intended – as where reference is intended to “John A. Smith Pty Ltd” but the actual description is erroneously given as “John Smith Pty Ltd” . Misdescription does not occur when the party actually intends to refer to “John A. Smith Pty Ltd” but that company ultimately turns out not to be the company with which the alleged debt was contracted.

Here, the Plaintiff wishes to say that if it contracted with anyone for the provision of services, it contracted with Candle Australia Ltd, not with the Defendant. That is no more than a dispute that it entered into any contract with the Defendant and owes any money to the Defendant. That ground of dispute does not appear in the only affidavit filed in support of the Originating Process within the time prescribed by s 459G(2); it cannot, therefore, be relied upon in support of the Plaintiff’s application. The second ground

The only ground relied upon by the Plaintiff in the affidavit filed on 31 July 2009 is that it entered into a contract in terms of the document headed “Terms and Conditions of Business” , that contract was with the Defendant and the Defendant failed to perform that contract. The failure may be understood to be an alleged breach of the Defendant’s obligation in Clause 11 to “take reasonable steps to confirm the qualifications, experience, ability and identity” of the particular candidate submitted, who left the Plaintiff’s employment very quickly, allegedly saying that the job was too difficult for him.

The Defendant responds that there can be no genuine dispute as to the payment of the recruitment fees under the contract even if the candidate it put forward was in fact unsuitable for the position. This is so, the Defendant says, by virtue of the remaining provisions of Clause 11, namely: “… however Alliance makes no representation as to the actual skill level or competence of the Candidate. This means: Alliance will ask its Candidates for proof of identity prior to engagement by the Client. Alliance will accept academic qualifications offered by its Candidates and will only seek confirmation of them at source if Alliance suspects they are not genuine. Alliance will conduct two reference checks on any Candidate (unless otherwise requested by the Client) and will make the results of the checks available to the Client. Alliance will not conduct a police probity check or criminal records search in relation to any Candidate unless requested in writing and paid for by the Client. Alliance will not arrange for any medical checks to be undertaken on any Candidate unless requested in writing and paid for by the Client. Alliance will not conduct any tests of its Candidates skills or proficiency (other than typing, data entry, applications software or similar when deemed necessary) unless requested in writing and paid for by the Client. Details of any specific requirements are set out in the Special Conditions. Alliance does not warrant the accuracy, reliability or completeness of any information supplied by any Candidate.”

I am unable to accept the Defendant’s submission. In my view, there is a reasonable argument that the words “however Alliance makes no representation …” and following relate only to negativing the proposition that Alliance itself is warranting the accuracy of the information provided to it and to negativing a suggestion that it is itself making any representation to the Plaintiff. This protection against liability for warranty or representation may not necessarily absolve the Defendant from failure to “take reasonable steps to confirm” a candidate’s suitability. It is a matter for trial whether this construction of the contract is correct and, if so, whether what the Defendant did amounted to taking “reasonable steps to confirm” the particular candidate’s ability.

For these reasons, I conclude that the Plaintiff has sufficiently demonstrated a genuine dispute as to the existence of the alleged debt. The Defendant’s Statutory Demand dated 8 July 2009 is set aside. The Defendant is to pay the Plaintiff’s costs. – oOo –