St Hilliers Constructions v Lasbin [2000] NSWSC 211

New South Wales Supreme Court

CITATION : St Hilliers Constructions v Lasbin [2000] NSWSC 211 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 01451/2000 HEARING DATE(S) : 21st and 22nd March 2000 JUDGMENT DATE : 22 March 2000

PARTIES : St Hilliers Constructions (NSW) Pty Ltd v Lasbin Pty Ltd JUDGMENT OF : Master Macready at 1

COUNSEL : Mr M. Ashhurst for plaintif Mr D.M. Flaherty for defendant Starke & Associates Lawyers, SOLICITORS : Suite 8, 70 Walkerville Terrace, Walkerville, SA 5081. for plaintiff Colin Biggers & Paisley DX 280 Sydney for defendant

CATCHWORDS : Corporations Law. Application to set aside statutory demand. Various grounds including defects in the affidavit in support. Demand set aside. CASES CITED : Rothwells v Nommack 6 ACLC 1199 at 1200;First Line Distribution v Paul Whiley 13 ACLC 1216 at 1218; Griffiths Producers Cooperative Ltd v Calabria, McLelland CJ 28/11/96; B&M Quality Constructions v Buyrite (1995) 13 ACLC 88; Beta Trading v Specialised Laminators (8/11/96); Re Mabrouk Pty Ltd (9.2.96); Portrait Express v Kodak (1996) 20 SCSR 746; Kezarne v Sydney Asbestos; Goldspar v KWA Design (1999) 17 ACLC 456; DECISION : Paragraph 26

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THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER MACREADY

WEDNESDAY 22 MARCH 2000

1451/2000 - ST HILLIERS CONSTRUCTIONS (NSW) PTY LTD v LASBIN PTY LTD

JUDGMENT

1 MASTER: This is an application to set aside a statutory demand which was dated 28 February 2000 and served on 1 February 2000. The application and service thereof and of the affidavits was within time. 2 The application to set aside the demand is based upon three separate matters. The first is that there is a genuine dispute. It is said that there are in fact claims which lead to a genuine dispute in respect of the supply of the goods. 3 Secondly, it is said that there is no debt that has yet arisen to support the statutory demand. 4 Thirdly, it is said that pursuant to s 459J(1)(b) there is some other reason why the demand should be set aside. 5 I will deal with each in turn. 6 The way in which the genuine dispute is put concerns the proposed supply of the product which was to be used to remove lead-based paint from a structure that was being demolished. The plaintiff was proposing to use the product that was supplied because it needed to neutralise the lead-based paint so that it could proceed with the demolition. A brochure was received from the defendant, which has been given in evidence, which indicates that a chemical stabilisation process occurs that renders the paint non-hazardous. 7 It turned out afterwards that the rendering harmless of the lead-based paint did not occur until the mixture resulting from the application of the product to the structure was removed from the structure either by grit blasting or water blasting. 8 That caused problems for the plaintiff, who did not want to adopt that form of construction process because of the time involved. 9 The case is put on the basis that there is either misleading or deceptive conduct under s 52 or there would be a breach of the provision of the Sale of Goods Act in that the goods would not be fit for the purpose. 10 The actual representation is contained within the third paragraph of a document which is annexed, which was a brochure that was sent. That indeed refers to the fact that a chemical stabilisation process occurs that renders the paint non-hazardous, according to current EPA regulations, allowing for easy disposal. 11 There clearly will be an argument about whether there is a representation because one only has to look at what is said under "What Is Enviro-Prep System?", which is the first paragraph, which encapsulates the fact that it stabilises the lead as it is removed. Accordingly it would seem to me that at least arguably there is some representation about the stabilisation at the time of application. In those circumstances it would seem that there is somewhat of a genuine dispute in respect of the goods. 12 The second matter is, however, more fundamental and that relates to the basis upon which the goods were supplied. It appears from the annexure to the affidavit in support of the statutory demand, in particular LA7, that the only basis upon which the goods were supplied was that they would be supplied on a cash on delivery basis with payment of clear funds. The evidence is that the goods have been brought from America by the defendant and are waiting for collection and they have not been collected. 13 Given the terms for payment it would seem that there is as yet no liability for a debt and that the current circumstances would indicate that the defendant may have an action for non-performance of a contract for sale, namely a refusal to accept delivery. That would lead to a claim for damages for breach of contract. Such a claim does not include a claim for unliquidated damages - see Rothwells v Nommack (No 100) 6 ACLC 1199 at 1200 and First Line Distribution v Paul Whiley 13 ACLC 1216 at 1218, and also the unreported decision of Griffiths Producers Cooperative Ltd v Calabria, McLelland CJ, 28 November 1996. On this basis there is not an appropriate debt to substantiate the demand. 14 The third matter is one which relates to the affidavit in support of the demand. The affidavit in support is a long one which has been carefully drawn and sworn by Mr Avery, who gives the full details of the contractual arrangements and swears that the debt is due and payable. There was an amendment to the basis for setting it aside to indicate what the true basis was, namely, that there is non-compliance with Pt 80A r 15(1)(e) of the Supreme Court Rules. 15 That rule requires in effect the deponent to include a positive statement in his affidavit that he believes there is no genuine dispute. The failure to include in the affidavit a statement of belief there is no genuine dispute is a matter that has been referred to in a number of cases. 16 In B & M Quality Constructions Pty Ltd v Buyrite Steel Pty Ltd Supplies (1995) 13 ACLC 88 McLelland CJ in Equity had to consider an affidavit sworn by a commercial agent on behalf of the plaintiff which also omitted the statement that there was no genuine dispute. His Honour addressed these two matters in the following terms at pp 90-91: "In my opinion the departure from the relevant rule in respect of the affidavit accompanying the statutory demand is a matter of substance. The requirement of that rule, as to the identity of the person making the affidavit accompanying the statutory declaration, is designed to serve the public interest as well as to protect the company against unwarranted demands, by endeavouring to ensure, within practical limits, that the person who must put his or her oath or solemn affirmation to the relevant matters (and thereby risk a conviction for perjury if a knowingly false statement is made) is the person associated with the creditor who is most likely to have direct knowledge of those matters. It is important in this regard to bear in mind that the relevant matters include not only a belief as to the existence and amount of the debt, but also a belief as to the absence of any genuine dispute about the existence or amount of the debt. The express requirement in the rule that the person making the affidavit depose to his or her belief that there is no genuine dispute is a significant mechanism for filtering out cases where there is in fact such a dispute, so as to prevent such cases from reaching the Court on such an application as the present, with a consequence waste of time and resources. This mechanism would be substantially weakened unless a person likely to have personal knowledge of the existence of a dispute if there is one makes the affidavit. A statement of a belief that there is no genuine dispute based solely on hearsay is unlikely to have anything like the same degree of reliability. I therefore do not regard what has occurred in the present case as a merely technical breach of the rules. It goes to the heart of what Pt 80A r 15 was intended to achieve." 17 His Honour then proceeded to set aside the demand. 18 It can be seen that this was a strong case in that the person making the affidavit would not know whether or not there was a dispute. However, the point remains that his Honour indicated that the statement is a significant mechanism for filtering out cases where a dispute has arisen. 19 I have set aside a demand in Beta Trading Company Pty Ltd v Specialised Laminators (No 1) Pty Ltd (8 November 1996) where the relevant paragraph was omitted and the person in question would have had appropriate knowledge. I also relied on the failure to provide an appropriate address for service in the demand. 20 In other cases, such as Re Mabrouk Pty Ltd (9 February 1996), I have held that it would be appropriate to set aside a notice where the omission of the statement was intentional as the person making the affidavit was well aware that there was a genuine dispute. There are other cases such as Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd, Olan Mills Studio Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 20 ACSR 746 where a demand has been set aside because of a number of matters of non-compliance. There is, as far as I can ascertain, no case where the omission of this statement alone was a sufficient other reason. 21 In addition there have been some recent cases of Mr Justice Austin where he has considered the matter. In Kezarne Pty Ltd v Sydney Asbestos Removal Services there were a number of matters in which the affidavit was deficient, including of course the one in question in this case, namely, the failure to say that there is no genuine dispute. His Honour concluded it was appropriate in those circumstances to set aside the demand. 22 I have also been taken to a case of his Honour's of Goldspar v KWA Design Group (1999) 17 ACLC 456 which concerned one omission from the affidavit. That omission was the statement as to a belief that the matters concerning the debt are true. His Honour particularly referred to B & M Quality Constructions but decided that that omission was nothing more than a technicality. 23 There is, as his Honour pointed out, a substantial difference between the omission in respect of that item and the one which is under consideration. Although there appears only one defect in the demand it is, as pointed out by his Honour Justice McLelland, an important part of the filtering mechanism to make sure that these cases do not come before the Court. 24 An area of additional importance in this case is that the affidavit has clearly been carefully drafted and the relevant paragraph omitted. In Mr Zanon's affidavit of 20 February 2000, par 14, he refers to having a number of conversations in December 1999 and January 2000 with Mr Avery about possible resolutions to the issue of the payment of the defendant's claim. Clearly that indicates, on a prima facie basis, there was discussion about a dispute with respect to the claim. The whole substance of the affidavit raises the question of the dispute. 25 This matter was raised yesterday as a new matter and I gave an adjournment to allow any further evidence to be put on. There has been no evidence by the deponent of the affidavit and one can only conclude that such evidence would not assist its case on this aspect. Accordingly it seems to me that the omission of the paragraph in the affidavit in support of the demand was deliberate because there was knowledge of a genuine dispute. Accordingly that reinforces my view that the demand should be set aside. 26 Accordingly, for all the reasons which I have expressed in this judgment I order that the statutory demand dated 28 January 2000 and served by the defendant on the plaintiff on 1 February 2000 be set aside. 27 So far as costs are concerned, the matter was adjourned yesterday because there was a change in the basis for a defect that required the defendant to at least have an opportunity to obtain instructions about the omissions from the affidavit which it could not deal with at that time. 28 The other matter is that yesterday one of the reasons why the demand should be set aside, namely the lack of a relevant debt, was not raised before me. If it had been the matter might have been dealt with then and there on that basis. 29 In the circumstances the order I make is that the defendant shall pay the plaintiff's costs up to and including yesterday.