New South Wales Supreme Court CITATION : MCG v Bowral [2002] NSWSC 400 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 6086/01 HEARING DATE(S) : 06/05/02 JUDGMENT DATE : 6 May 2002 PARTIES : MCG BRICKS & PAVERS PTY LIMITED v BOWRAL BRICKWORKS PTY LIMITED JUDGMENT OF : Master Macready at 1 COUNSEL : Mr S. Glasscott for plaintiff Mr P. Walsh for defendant SOLICITORS : Strathfield Law for plaintiff Bateman Battersby for defendant CATCHWORDS : Corporations Law. Application to set aside statutory demand. Demand varied. No matter of principle. DECISION : Paragraph 10 - 1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER MACREADY MONDAY 6 MAY 2002 6086/01 - MCG BRICKS & PAVERS PTY LIMITED v BOWRAL BRICKWORKS PTY LIMITED JUDGMENT: 1 MASTER: This is an application to set aside a statutory demand under section 459 G of the Corporations Act. The demand is dated 27 November 2001 and claims $115,535.50 for "goods sold and delivered between 2 January 2001 to 20 April 2001". 2 There are raised both offsetting claims and genuine disputes. In addition it is said in respect of one of the disputes that there is a defect in the demand. The defendant has conceded that there is an offsetting claim for $39,360 and, accordingly, the amount of the demand should be reduced to at least $76,175.50. 3 In respect of the genuine disputes which are said to exist, I note what was said by McLelland CJ in Equity in Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACLC 669. At page 671 his Honour made the following comments in respect of the expression "genuine dispute": "It is, however, necessary to consider the meaning of the expression `genuine dispute' where it occurs in s459H. 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) trust' ( 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 most 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'. In Re Morris Catering (Australia) Pty Limited (1993) 11 ACLC 919 at 922; (1993) 11 ACSR 601 at 605 Thomas J said: `There is little doubt that Division 3 ... prescribes a formula that requires the Court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the Court will examine the merits or settle the dispute. The specified limits of the Court's examination are the ascertainment of whether there is a "genuine dispute" and whether there is a "genuine claim". It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or lack of it) the Court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than the another. The essential task is relatively simply - to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it)'. I respectfully agree with those statements." 4 The first dispute concerns whether there has been taken into account the payments made by the plaintiff which are detailed in paragraph 4 of Mr Kefalas' affidavit of 6 March 2002. There is no doubt that they have been paid to the defendant, but the question is whether they have been taken into account in the calculation of the amount said to be due. Cross-examination demonstrated that there has been a running account for as far back as August 2000 between the two parties for the supply of bricks. Except in respect of a payment of $7,260 in November 2000, cross-examination and details of the account that are now available satisfy me that the claimed payments have been taken into account in the calculation. 5 The plaintiff refers to the demand and suggests that the claim is only for goods sold and delivered between the two dates I have mentioned, namely January 2001 and April 2001. On the facts this is not so as the amount outstanding clearly goes back before January 2001. It was then suggested that there was a defect in the demand in the description of the debt. 6 As the defect was in the demand, it is necessary to show that there has been substantial injustice caused by the defect before it can be set aside under section 459 (J)(1)(a). See Spencer Constructions Pty Limited v GM Aldridge Pty Limited (1997) 15 ACLC 1001. 7 There does not seem to be any evidence of substantial injustice caused by this defect in the demand. The plaintiff was well aware of its course of dealing with the defendant over the years. Its officers regularly met with the officer of the defendant to discuss and reconcile the amounts owing over the years. I am satisfied that in this area the only genuine dispute is in respect of the sum of $7,260. 8 The other area concerns an amount of $29,616.62. This concerned the supply of bricks from 7 March 2001 to 29 March 2001. The evidence discloses that another company, Austral Brick Company Pty Limited, purchased "Bowral", which I take it to be the defendant. It is clear that thereafter invoices were issued by Austral Brick Company Pty Limited and prima facie I would have thought, just on this evidence, the debt would be due to that company. 9 In paragraph 7 of the affidavit of Mr Nurse of 4 March 2002 reference is made to the purchase and that the product came from the same brickworks. It also makes clear that a new accounting system was used using Austral's stationery. All that tells me is that there is some other company that is invoicing the plaintiff for the bricks and there is not a shred of evidence to say, for instance, that there has been some amalgamation of businesses that might in some way mean the original company was still supplying the bricks. 10 On the facts as they are before me, I would have thought it far more likely they were supplied by Austral Brick Company Pty Limited. Clearly there is a genuine dispute in this matter and the amount cannot, on this basis, be included in the demand. I am satisfied that the substantiated amount is $39,298.88. Accordingly, I vary the debt in the demand dated 27 November 2001 by reducing it to $39,298.88 with effect from twenty-one days after service of the demand. 11 There has been substantial success by the plaintiff, although not complete success. The amount of the demand has been reduced substantially. I think in the circumstances the appropriate order is to order the defendant to pay one half of the plaintiff's costs of the application, and I so order. 12 The exhibits are to be returned. ********** Last Modified: 05/08/2002 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.