Panel Tech Industries v Pacific Sheet & CoilPanel Tech Industries v Pacific Sheet & Coil [1999] NSWSC 1230

New South Wales Supreme Court CITATION : Panel Tech Industries v Pacific Sheet & CoilPanel Tech Industries v Pacific Sheet & Coil [1999] NSWSC 1230 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 4466/99; 3947/99 HEARING DATE(S) : 18/11/99 JUDGMENT DATE : 17 December 1999

PARTIES : Panel Tech Industries (Aust) Pty Ltd v Pacific Sheet & Coil Pty Ltd (Receiver Manager Appointed) Panel Tech Industries (Aust) Pty Ltd v Pacific Sheet & Coil Pty Ltd (Receiver Manager Appointed) JUDGMENT OF : Master Macready at 1

COUNSEL : Mr R.D. Wilson for plaintiff Mr J. Sheahan SC for defendant SOLICITORS : Coleman & Greig, Parramatta for plaintiff Raj Lawyers Brisbane, Qld for defendant CATCHWORDS : Corporations Law. Application to set aside statutory demand. Demand set aside. No matter of principle. DECISION : Paragraph 44

- 2 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER MACREADY

Friday 17 December 1999

4466/99 PANEL TECH INDUSTRIES (AUSTRALIA) PTY LTD v PACIFIC SHEET AND COIL PTY LTD (RECEIVER MANAGER APPOINTED)

3947/99 PANEL TECH INDUSTRIES (AUSTRALIA) PTY LTD v PACIFIC SHEET AND COIL PTY LTD (RECEIVER MANAGER APPOINTED) 1 MASTER: These are actions to set aside statutory demands which have been served by the defendant upon the plaintiff pursuant to the Corporations Law. I have ordered that both matters be heard together and the evidence in one evidence in the other. In matter 3947/99 the statutory demand was dated 19 August 1999 and demanded payment of $677,000. The parties are agreed that since the demand $82,336.66 has been paid leaving an amount of $595,598.10 claimed under the demand. In matter 4466/99 the demand was dated 1 October 1999 and claimed the sum of $183,624.56. 2 The plaintiff is a manufacturer who produces material for cool rooms and in the process of doing so requires rolls of sheet steel in order to manufacture its products. The defendant is the importer of various types of sheet steel which is manufactured outside Australia. The disputes between the parties relates to the supply of that steel and the terms upon which it was supplied. 3 The plaintiff says that in respect of these demands there is first a genuine dispute as to the trading terms and that as a consequence monies claimed were not due at the date of the issue of the demand. Second, the plaintiff propounds offsetting claims arising out of the defects in the goods supplied. Third the plaintiff submits that there are defects in the affidavits sworn supporting the demands such as would lead the court to set aside the demands. I turn to the first of these matters. 4 Mr White in his affidavit of 13 September 1999 articulated the first dispute in paragraph 6(c) in the following terms:- "Invoice" supply was supplied on terms that payment was due 90 days after the end of the month of supply, or after statement, statements being sent at the end of each month. "Stock" supply was supplied on consignment on terms that payment was to be due upon sale by Panel Tech. In effect, this supply was paid for within 120 days, and if the stock was earlier, Panel Tech paid earlier. This was the manner in which the account was conducted over most of the period of 15 months, and arose from a conversation between me and Craig Corliss at Panel Tech's Silverwater premises in or about July or August 1998. I said to him words to the effect of "Payments from larger clients are stringing over the 60 days. I can pay you before 90, but I really need the extra 30 days". He said words to the effect of "No problem, but just before 90 days, because that's when our insurers get anxious". I said words to the effect of "With the consignment stock, we'll pay at latest within a further month". He said, "OK". Craig Corliss and I had other conversations to similar effect. Although Pacific's invoices stated shorter terms for payment, Pacific has never sought to enforce those terms, so far as I am aware." 5 Mr Corliss of the defendant denied that he allowed Panel Tech to pay outstanding invoices up to a period of 90 days but conceded that he did say words to the effect that he was prepared to extend the terms of payment from 30 to 60 days. There is thus a dispute about the particular conversation which it is said that the terms of payment were agreed. The defendant's case is that there is in fact no a genuine dispute on this aspect. 6 In Eyota v Hanave (1994) 12 ACLC 669 at page 671 McLelland CJ in Equity his Honour made the following comments respect of the expression "Genuine dispute": "It is, however, necessary to consider the meaning of the expression 'genuine dispute' where it occurs in s.459H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the 'serious question to be tried' criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. 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, it may be' not having 'sufficient prima facie plausibility to merit further investigation as to (its) truth' (cf Eng Mee Yong v Letchumanan (1980) AC 331 at 341), or 'a patently feeble legal argument, or an assertion of facts unsupported by evidence' (cf South Australia v Wall (1980) 24 SASR 189 at 194). But it does mean that, except in such an extreme case, a Court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. In Mibor Investments (at ACLC 1066; ACSR 366-7) Hayne J said, after referring to the state of the law prior to the enactment of Division 3 of Part 5.4 of the Corporations Law, and to the terms of Division 3: 'These matters, taken in combination, suggest that at least in those cases, it is not expected that the Court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the Court conclude that there is a dispute and that it is a genuine dispute.'