Kirrak Pty Ltd v Compass Scaffolding & Plant Hire Pty Ltd [2007] NSWSC 1002

New South Wales Supreme Court

CITATION : Kirrak Pty Ltd v Compass Scaffolding & Plant Hire Pty Ltd [2007] NSWSC 1002

HEARING DATE(S) : 20 August 2007 JUDGMENT OF : Hammerschlag J

EX TEMPORE JUDGMENT DATE : 20 August 2007

DECISION : Application dismissed. Plaintiff to pay 80 per cent of the defendant's costs of the application.

CATCHWORDS : CORPORATIONS – Application under s 459G of the Corporations Act 2001 (Cth) to set aside statutory demand on grounds of genuine dispute about existence of debt and offsetting claim for unliquidated damages – Evidentiary material failed to meet low threshold with respect to both bases of claim – Application dismissed

LEGISLATION CITED : Corporations Act 2001 (Cth)

Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC 411 CASES CITED : Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 Sewmail (Australia) Pty Ltd v Booby Traps Pty Ltd (1997) 23 ACSR 339

PARTIES : Kirrak Pty Ltd ACN 112 914 940 Compass Scaffolding & Plant Hire Pty Ltd ACN 112 914 959 (Controller Appointed)

FILE NUMBER(S) : SC 2958/2007

COUNSEL : B. Gillard (Solicitor) (Plaintiff) A. Busby (Solicitor) (Defendant)

SOLICITORS : Gillard Consulting Lawyers (Plaintiff) PMF Legal (Defendant)

- 3 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

HAMMERSCHLAG J

20 AUGUST 2007

2958/2007 KIRRAK PTY LTD -V- COMPASS SCAFFOLDING & PLANT HIRE PTY LTD JUDGMENT 1 HIS HONOUR: This is an application under s 459G of the Corporations Act 2001 (Cth) ("the Act") to set aside a statutory demand dated 7 May 2007 by which the defendant demanded from the plaintiff $65,555.28. The demand shows the amount to be derived from two tax invoices of $43,750.02 and $64,805.26 respectively, less an amount paid of $43,000. 2 The plaintiff asserts both the existence of genuine dispute about the existence of the debt to which the demand relates and an offsetting claim for unliquidated damages. 3 The test which the plaintiff must meet under s 459H of the Act to establish a genuine dispute is a low one and by no means difficult or demanding. The plaintiff will fail only if it is found that the contentions upon which it seeks to rely are so devoid of substance that no further investigation is warranted. Once the company shows that even one issue has a sufficient degree of cogency to be argued, a finding of genuine dispute must follow. However, a genuine dispute still requires that it be bona fide and truly existing in fact, and that the grounds for alleging it are real, not spurious, hypothetical, illusory, or misconceived: Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC 411 at [23]; Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785. 4 To successfully raise an offsetting claim for unliquidated damages, it is incumbent upon a plaintiff, at least, to set out some basis, (not to the extent it would be required at a trial), but sufficient for the court to determine that damages to a particular level might be available to it: Sewmail (Australia) Pty Ltd v Booby Traps Pty Ltd (1997) 23 ACSR 339 at 342-343. 5 The plaintiff relies principally on the affidavit evidence of its director Mr Stepan Rakiwskyj. In addition the plaintiff relies on an affidavit of its solicitor Brian James Gillard sworn 20 August 2007 and an affidavit of Rosann Kirk sworn 9 August 2007 attaching the invoices and a company search of the defendant. 6 In paragraph 4 of his affidavit dated 30 May 2007, Mr Rakiwskyj says: "The Defendant contracted to supply scaffolding to the Plaintiff in accordance with an arrangement involving the Plaintiff, myself, the Defendant, David Kirk, Rosann Kirk and Hopkins Project Management Pty Ltd (ACN 113 384 026 – "Hopkins")."