The postscript to Re Slodyczka & Farren Pty Ltd [2022] VSC 102 is a decision by Associate Justice Hetyey regarding costs of the application. 

FACTS

in the substantive judgment  the plaintiff’s application to wind up the defendant in insolvency was dismissed.

The relevant facts for the purpose of considering a costs order were:

• whilst the matter was commenced by originating process filed on 11 April 2021, there were delays and adjournments [2] resulted in two previous costs orders being made being:
  • on 7 July 2021, consent orders were made which, among other things, required the plaintiff to pay the defendant’s costs thrown away by reason of an adjournment of the hearing originally scheduled that day (‘the first costs order’).
  • at the next hearing date, on 27 July 2021, it was adjourned at the request of the defendant to enable it to put on supplementary material on the question of solvency, including audited accounts for the 2019/2020 and 2020/2021 financial years. The plaintiff’s costs of the hearing be reserved (‘the second costs order’).

The defendant opposed the winding up application on the following alternative bases [4]:

(a) service of the plaintiff’s statutory demand dated 3 February 2021 (‘the statutory demand’ or ‘the demand’) was defective;

(b) the defendant was solvent and could displace the statutory presumption of insolvency;

(c) the defendant should be given leave pursuant to s 459S of the Corporations Act2001 (Cth) (‘theCorporations Act’) to oppose the winding up application on a ground or grounds it could have relied on for the purpose of an application to set the demand aside. The grounds sought to be raised were: (i) there was a genuine dispute about the amount of the debt claimed in the statutory demand in accordance with s 459H(1)(a); (ii) the defendant had an offsetting claim for the purpose of s 459H(1)(b) of the Corporations Act; and (iii) the demand was defective and a substantial injustice would be caused to the defendant if the demand was not set aside pursuant to s 459J(1)(a) of the Corporations Act; and

(d) pursuant to s 467(1)(a) of the Corporations Act, the Court should dismiss the plaintiff’s application as a matter of discretion.

In the substantive judgment the court held that, [5]:

• the defendant failed to rebut the presumption of service of the statutory demand under s 29(1) of the Acts Interpretation Act 1901 (Cth).
• the defendant succeeded in displacing the statutory presumption of insolvency on the basis that it was cash flow positive and balance sheet solvent. The proceeding was dismissed on this basis.
• the defendant’s application under s 459S of the Corporations Act was not granted because the grounds sought to be raised in respect of the plaintiff’s debt were not material to proving solvency however  had the defendant failed to establish solvency the corut would haveultimately have granted it leave
• the defendant could not to pursue its argument that the Court should dismiss the plaintiff’s application in accordance with the Court’s discretion under s 467(1)(a) of the Corporations Act because of a lack of proper notice to the plaintiff Read the rest of this entry »

Associate Justice Heytey has had a busy start to the year with 2 decisions regarding applications under the Corporations Act 2001; Re Slodyczka & Farren Pty Ltd [2022] VSC 19 and Re Amville Constructions Pty Ltd [2022] VSC 65.  Associate Justice Gardiner considered an application to set aside a statutory demand in Re Wynyard Victoria Pty Ltd [2022] VSC 81.

Re Slodyczka & Farren Pty Ltd [2022] VSC 19

The key issue in this application was whether there was proper service of a statutory demand and whether the presumption of insolvency was rebutted. 

FACTS

Slodyczka & Farren Pty Ltd (‘the defendant’) was first registered on 14 December 2015. In response to the COVID-19 pandemic, it commenced a business in March 2020 for the manufacture and sale of face masks.  Between April 2020 and August 2020, Lion & Horn Pty Ltd (‘the plaintiff’) providing it with marketing services to sell of its masks [1].

In early February 2021, the plaintiff purportedly served the defendant with a statutory demand dated 3 February 2021, which claimed the sum of $36,091.77 in relation to an outstanding invoice dated 28 August 2020 for its marketing services . The defendant did not comply with the demand within the 21-day statutory period.

By originating process filed on 11 April 2021, the plaintiff sought to wind up of the defendant pursuant to ss 459A and 459P of the Corporations Act 2001 (Cth) relying upon the statutory presumption of insolvency contained within s 459C(2)(a) of the Corporations Act.

The Court framed the questions for consideration as being, at [9]:

(a) was service of the statutory demand effective?

(b) is the defendant solvent?

(c) should the Court grant the defendant leave pursuant to s 459S(2) of the Corporations Act to oppose the winding up application on one or more grounds that the defendant could have relied upon in seeking to set aside the demand, but did not so rely? Further, is such a ground material to proving the Company is solvent?; and

(d) should the Court dismiss the plaintiff’s application under s 467(1)(a) of the Corporations Act as a matter of discretion?

DECISION

Service

In reviewing the legislation and legal principles the court Read the rest of this entry »

The European Union has activated its cyber security team to help Ukrainians from Russian cyber attacks.  Actually, more Russian cyber attacks given the US attributed a DDoS cyber attack on the Ukrainian Ministry of Defence to the Russian Main Intelligence Directorate.  On the back of that the Australian Government issued a joint media release by Ministers Andrews, Payne and Dutton (is there an election in the air?) saying the same thing as the US providing:

The Australian Government joins the United States and the United Kingdom in publicly attributing the cyber attacks against the Ukrainian banking sector on 15 and 16 February 2022 to the Russian Main Intelligence Directorate (GRU).

In consultation with our partners, the Australian Government assesses that the GRU was responsible for these distributed denial of service (DDoS) attacks.

The Australian Government stands in solidarity with Ukraine and our allies and partners to hold Russia to account for its ongoing unacceptable and disruptive pattern of malicious cyber activity.

The international community must not tolerate Russia’s misuse of cyberspace to undermine Ukraine’s national security, sovereignty and territorial integrity by seeking to disrupt essential services, businesses and community confidence.

Russia’s actions pose a significant risk to global economic growth and international stability.

The global community must be prepared to shine a light on malicious cyber activity and hold the actors responsible to account. All members of the international community – including Russia – should abide by existing international law and norms of responsible state behaviour which apply in cyberspace. Australia calls on all countries to honour and uphold their commitments.

Australia is committed to upholding the rules-based order online, just as we do offline, and supporting our partners in the face of cyber threats.

Australia will continue providing cyber security assistance to the Ukrainian Government, including through a new bilateral Cyber Policy Dialogue and further cyber security training for Ukrainian officials.

Australia commends the swift action taken by Ukrainian authorities and the private sector to substantially mitigate the impacts of this incident.

Governments, the private sector and households must remain vigilant about the ongoing threats we face in cyberspace.

The Government is taking concrete action to protect Australians against cyber criminals, investing $1.67 billion over 10 years to build new cybersecurity and law enforcement capabilities to protect Australian businesses and communities, and passing new laws to protect our critical infrastructure assets from malicious cyber attacks.

This was picked up in the Australian’s Australia offers cyber security aid to Ukraine. 

The reality of modern conflict is that cyber attacks are Read the rest of this entry »

The SMH reports that there has been a data breach by NSW  Department of Consumer Service in the publication of 500,000 addresses on a government website.  According to the NSW Government the NSW information Commissioner was advised the day after it became aware of the information being in the public domain and that the Commissioner stated that this did not constitute a privacy breach.  That story is based on a Nine News expose. As is the way the embarrassment of the breach is compounded by the negative coverage, going as far as the UK.

If there is some humour to be found in this all too familiar type of breach it is that NSW legislated to ban police from accessing QR code check in data in November last year. 

The SMH article Read the rest of this entry »

It has long been the practice of authorities to provide maximum privacy to complainants in sexual assault and rape cases.  In Australia and most overseas common law jurisdictions reporting of rape cases does not identify the victim.  The report that data from rape kits of victims who alleged they were sexually assaulted are the subject of a data breach is devastating to those individuals.  It also undermines the confidence in the police procedure.  It may also prejudice the prosecution of cases where that data is a crucial piece of evidence.  

What is more than passing strange is that the data breach took place on 18 November 2021 but details of that breach were only provided this week.  The handling of the breach has been dreadful with the the Police Department stating that “certain sensitive personal and health-related information” may have been compromised.  DNA Solutions took a different tack stating “The data did not include social security numbers, driver’s license information, or financial information. We have notified individuals or organizations whose data may have been impacted directly.” DNA Solutions stated what was not included in the data taken or exposed but does not say whether personal information was taken.  That is a non answer answer. 

There have been some very significant data breaches involving DNA data.  On 29 November 2021 DNA Diagnostics Center Inc in Maine USA notified the Attorney General that there had been a data breach, from 24 May until 28 July 2021, which affected 2,102,436 people.  In July 2019 it was reported that a DNA-testing service Vitagene Inc. left thousands of client health reports exposed online for years with more than 3,000 user files remaining accessible to the public on Amazon Web Services cloud-computer servers until 1 July 2019. The reports included genealogy reports which included customers’ full names alongside dates of birth and gene-based health information, such as their likelihood of developing certain medical conditions. Back in 2017 Ancestry.com had a huge, by those standards, data breach involving 300,000 credentials exposed. 

The article related to the Oklahoma breach Read the rest of this entry »

As is tradition I wish all a very Merry Christmas.  Probably a celebration more keenly appreciated and felt this year than most.  This second year of COVID has been a grind and more difficult than 2020 when we first exerienced the effect of restrictions. 

As is my practice I republish one of the most heartfelt and brilliantly written paean to the Christmas celebration and optimism and being unafraid to reject cynicism of our current age; Yes, Virginia: There is a Santa Claus.  It is as apt today as it was in 1897. More so.  The prose is wonderful and little wonder it is history’s most reprinted newspaper editorial.

The article provides:

DEAR EDITOR: I am 8 years old.
Some of my little friends say there is no Santa Claus.
Papa says, ‘If you see it in THE SUN it’s so.’
Please tell me the truth; is there a Santa Claus?

VIRGINIA O’HANLON.
115 WEST NINETY-FIFTH STREET.

VIRGINIA, your little friends are wrong. They have been affected by the skepticism of a skeptical age. They do not believe except they see. They think that nothing can be which is not comprehensible by their little minds. All minds, Virginia, whether they be men’s or children’s, are little. In this great universe of ours man is a mere insect, an ant, in his intellect, as compared with the boundless world about him, as measured by the intelligence capable of grasping the whole of truth and knowledge.

Yes, VIRGINIA, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy. Alas! how dreary would be the world if there were no Santa Claus. It would be as dreary as if there were no VIRGINIAS. There would be no childlike faith then, no poetry, no romance to make tolerable this existence. We should have no enjoyment, except in sense and sight. The eternal light with which childhood fills the world would be extinguished.

Not believe in Santa Claus! You might as well not believe in fairies! You might get your papa to hire men to watch in all the chimneys on Christmas Eve to catch Santa Claus, but even if they did not see Santa Claus coming down, what would that prove? Nobody sees Santa Claus, but that is no sign that there is no Santa Claus. The most real things in the world are those that neither children nor men can see. Did you ever see fairies dancing on the lawn? Of course not, but that’s no proof that they are not there. Nobody can conceive or imagine all the wonders there are unseen and unseeable in the world.

You may tear apart the baby’s rattle and see what makes the noise inside, but there is a veil covering the unseen world which not the strongest man, nor even the united strength of all the strongest men that ever lived, could tear apart. Only faith, fancy, poetry, love, romance, can push aside that curtain and view and picture the supernal beauty and glory beyond. Is it all real? Ah, VIRGINIA, in all this world there is nothing else real and abiding.

No Santa Claus! Thank God! he lives, and he lives forever. A thousand years from now, Virginia, nay, ten times ten thousand years from now, he will continue to make glad the heart of childhood.

The ubiquitous use of some software coupled with their vulnerabilities makes for a massive cyber security headache as the Australian’s article Millions face cyber attack via compromised Log4j Java-based software makes clear.  Log4j Java is installed on more than 100,000 devices, apps etc..  In cybersecurity terms it is a story that has been around for a while.  On 11 December Kaspersky reported on the vulnerability.  The Google Security blog put out a post, Understanding the Impact of Apache Log4j Vulnerability on 17 December. 

The Australian article Read the rest of this entry »

The Court of Appeal upheld the summary judgment decision of Warby J in HRH The Duchess of Sussex v Associated Newspapers Limited [2021] EWCA Civ 1810 which found that Associated Newspapers Limited had breached the Duchess’ reasonable expectation of privacy with the publication of a letter from her to her father Thomas Markle.

FACTS

The court summarised the facts as:

• Mr Markle did not attend the wedding of the Duke and the Duchess on 19 May 2018 [14].
• He was admitted to hospital days beforehand for emergency heart surgery.
• Text messages from the Duchess  made it plain that  before the wedding Mr Markle behaved in ways which caused her

“concern because of the publicity they were likely to and did cause, and the impact on her, [the Duke], and [Mr Markle]”.[14]

• • Mr Markle:
    • engaging with the media (e.g. a front-page Mail on Sunday report on 13 May 2018 was headed “Meghan’s Dad staged photos with the paparazzi”, and reported that Mr Markle was “colluding with the paparazzi to stage a series of lucrative photo opportunities”, for which he apologised by text to the Duchess on 14 May 2018).[15]
    • being well aware that the Duke and Duchess wanted him to avoid engaging with the media, and that all their correspondence was personal and private in character [16].
    • continuing, thereafter, to have dealings with the media which resulted in press articles. The Articles themselves referred to “a series of damaging interviews” given by Mr Markle [16].
  • The Duke texting Mr Markle on 17 May 2018 asking him to “stop talking to the press for your sake and hers”, and expressing concern that Mr Markle had not “returned any of our 20+ calls since we all spoke on Saturday morning” [15]. the run-up to the wedding was fractious, revealing substantial differences of approach to dealing with the media.

The letter

• The Letter was sent on 27 August 2018 with bold text identifying words published in the Articles, and italicised text being the judge’s interpolations [18]:

Read the rest of this entry »

The Prime Minister today foreshadowed legislation to unmask online trolls and amend the law of defamation in response to the High Court decision in Fairfax Media Publications Pty Ltd v Voller; Nationwide News Pty Limited v Voller; Australian News Channel Pty Ltd v Voller [2021] HCA 27.  The necessary bills will be released in the next week.  A mid morning media release on a Sunday, usually a slow news day where editors fret on what will fill the front page the next day, guarantees big coverage on Monday.

Extracting the reforms from the media release the changes will involve:

• legislating a requirement that social media platforms to set up a complaints system so as to remove defamatory remarks;
• establishing a new Federal Court order to require social media giants to identify details of trolls to victims without consent.
• Australians and Australian media organisations will not be considered publishers. 
• social media platforms will be considered publishers though liability may be avoided if they provide information which permits victims to commence defamation proceedings against a troll.

The curious thing is that there is already a process for applying to the Federal Court for an order to a social media platform, search engine or internet service provider to identify an author who is using a pseudonym to defame someone.  I make these applications regularly enough as part of my defamation practice.  The principles are well established and the process is not overly onerous.  What new order is required will be interesting to see. There is also concern raised about social media platforms being required to collect personal information which would be provided if the mooted application is made.  That is not as dramatic as has been reported.  Google and Yahoo and other platforms require email addresses and sometimes phone numbers.  They can provide the isp number. It is relatively easy to identify the author from those details.  Similarly if the social media is put on notice about defamatory posts they may currently lose their protection from suit in the Broadcasting Services Act. 

If the Government were serious about Read the rest of this entry »

The Security Legislation Amendment (Critical Infrastructure) Bill passed both houses of the Commonwealth Parliament on Monday 22 November 2021. 

Key elements of the legislation are:

• Section 8D defines the critical infrastructure sector as being:

Each of the following sectors of the Australian economy is a critical infrastructure sector:

                     (a)  the communications sector;

                     (b)  the data storage or processing sector;

                     (c)  the financial services and markets sector;

                     (d)  the water and sewerage sector;

                     (e)  the energy sector;

                      (f)  the health care and medical sector;

                     (g)  the higher education and research sector;

                     (h)  the food and grocery sector;

                      (i)  the transport sector;

                      (j)  the space technology sector;

                     (k)  the defence industry sector.

• section section 8E defines a critical infrastructure asset as being an asset that relates to a critical infrastructure sector. There are definitions of specific types of critical infrastructure assets
• there are very broad definitions of when assets relate to a sector
• the definition of a relevant impact is broad and general
• Part 2B sets out the obligations of mandatory reporting.  Section 30BC, regarding a critical cyber security incident, provides, in part:

Read the rest of this entry »