New South Wales Supreme Court CITATION : Alstom Power Limited v Harnischfeger of Australia Pty Limited [2001] NSWSC 1185 FILE NUMBER(S) : SC 3085/01 HEARING DATE(S) : 28 August 2001 JUDGMENT DATE : 28 August 2001 PARTIES : Alstom Power Limited (Plaintiff) Harnischfeger of Australia Pty Limited (Defendant) JUDGMENT OF : Master McLaughlin COUNSEL : M. Simpson (Plaintiff) R. Perry (Defendant) SOLICITORS : Sally Nash & Co, Solicitors (Plaintiff) Middletons Moore & Bevins (Defendant) LEGISLATION CITED : Corporations Act Eng Mee Young v Letchumanan [1980] AC 331 CASES CITED : Eyota Pty Limited v Hanave Pty Limited (1994) ACSR 785 South Australia v Wall 24 SASR 189 DECISION : See paragraph 20 IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Master McLaughlin Tuesday, 28 August 2001 3085/01 ALSTOM POWER LIMITED -V- HARNISCHFEGER OF AUSTRALIA PTY LIMITED 1 JUDGMENT 2 MASTER: There is presently before the Court an originating process filed by the plaintiff, Alstom Power Limited, on 14 June 2001. 3 By that originating process the plaintiff claims an order setting aside the statutory demand served upon the plaintiff on or about 25 May 2001 by the defendant, Harnischfeger of Australia Pty Limited. 4 The originating process specifies under the heading "Grounds of Opposition" the following: 1. Solvency. 2. Genuine dispute. 3. Not properly served. 5 As I understand it the only ground upon which the plaintiff now relies is that there is a genuine dispute as to the indebtedness of the plaintiff to the defendant in respect to the amount claimed in the statutory demand. The plaintiff does not raise in support of this originating process either solvency or an assertion that the statutory demand was not properly served. 6 In support of the originating process the plaintiff relied upon a number of affidavits. None of those affidavits annexed a copy of the statutory demand. Had the evidence remained in the condition in which it was at the conclusion of the reading of the affidavits on behalf of the plaintiff, it was inevitable that the originating process would have been dismissed. In that regard I refer to the unreported judgment of Justice Austin in Expressway Stairs Pty Limited v CTK Engineering Pty Limited, 12 December 2000, in particular paragraph 3 of that judgment. 7 However as a result of intervention by me the statutory demand, together with the affidavit in support thereof, was admitted into evidence as exhibit A. By that statutory demand the defendant claims payment to it by the plaintiff of the amount of $72,552.17, being the total of the amounts of the debts described in the schedule. That description is somewhat skimpy. It is as follows: 8 90 days $84,817.76 60 days $ 742.50 Total $85,560.26 Less Credit $ 4,287.18 Less Discount $ 8,720.91 Total Off $13,008.09 Leaving a balance claimed of $72,552.17. 9 The plaintiff was the head contractor of a project which involved construction of a power station in the Hunter Valley. For the construction of that work the plaintiff engaged various subcontractors who included the defendant. 10 The defendant submitted from time to time invoices to the plaintiff in respect to work performed by the defendant. The plaintiff raised queries concerning a number of the invoices, asserting that they did not accord with the precise form of invoice claims which the plaintiff prescribed should be made. 11 After various communications between the parties, both oral and in writing, and meetings between representatives of the parties, the plaintiff sent to the defendant a letter dated 18 April 2001 which referred to a meeting which had been held between representatives of the parties. That letter enclosed various documents including what was described as a summary sheet. That summary sheet set forth the calculations by the plaintiff of the amounts which had been invoiced to it by the defendant; what the plaintiff asserted were the agreed amounts for the various invoices; the difference between the two amounts; and the amounts which had been paid by the plaintiff in respect to the invoices and the amounts which the plaintiff acknowledged were to be paid. 12 The total figure in that summary which the plaintiff as at 18 April 2001 acknowledged was to be paid by the plaintiff to the defendant was $64,384.62. That figure did not however include GST. When GST is included, as it would appear it must be included, the figure of $64,384.62, acknowledged by the plaintiff, would increase to an amount of $70,823.08. 13 The plaintiff asserts that there is a genuine dispute in respect to the amount of the debt to which the demand relates, and submits that in consequence of the provisions of section 459H of the Corporations Act the statutory demand should be set aside. 14 The approach adopted by the plaintiff is clearly that it is for the defendant to substantiate its entitlement to the amount claimed. The plaintiff, however, further submits that since the defendant did not accept, in the manner that the plaintiff required it to do, the breakdown which the plaintiff had calculated in annexure P to the affidavit to which I have already referred, being the letter of 18 April 2001), that non-acceptance of the breakdown being characterised in submissions of the plaintiff as the offer of the plaintiff not having been accepted, therefore there was no agreement by the plaintiff to pay the amount set forth in that letter. 15 Such an approach in my view totally misconceives the effect of the provisions of section 459H of the Corporations Act and the meaning of the phrase "genuine dispute" which appears in subsection (1) of that section. 16 A useful exposition of the test of whether there is a genuine dispute is found in the judgment of Justice McLelland, the then Chief Judge in Equity, in Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACSR 785, where his Honour said at 787: "In my opinion the expression connotes a plausible contention requiring investigation, and raises much the same sort of consideration 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". 17 (See also Eng Mee Yong v Letchumanan [1980] AC 331 at 331; and South Australia v Wall 24 SASR 189 at 194.) 18 In the instant case the Court is not dealing with whether or not a binding agreement between the parties came into existence with the amount claimed by the plaintiff as owing by it to the defendant. The Court is here concerned as to whether there is a genuine dispute as to the indebtedness of the plaintiff to the defendant in the amount claimed in the statutory demand. 19 The plaintiff does not in fact offer any grounds for any dispute at all, let alone a genuine dispute in respect to the summary figure which it prepared and submitted to the defendant under cover of its letter of 18 April 2001. When GST is added to that figure there is an amount which closely approaches the amount of $72,552.17, that being the amount claimed in the statutory demand. 20 Subsection (2) of section 459H sets forth a formula for the calculation of what is described as the substantiated amount of the demand. In the instant case the application of that formula will have the effect that the Court may make an order varying the demand by reducing the amount claimed therein to the amount of $70,823.08. That is what I propose to do, since the plaintiff has not in any way established a genuine dispute in respect to that amount. 21 I make the following orders: (1). I order that the statutory demand referred to in prayer 1 in the originating process be varied by substituting the amount of $70,823.08 for the amount claimed therein, and that the statutory amount be declared to have had effect as so varied as from 25 May 2001 when it was served upon the plaintiff. (2). I order that the plaintiff pay the costs of the defendant. 22 The exhibits will remain with the court file. ******** Last Modified: 01/18/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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