Supreme Court New South Wales Medium Neutral Citation: Montage Group Pty Ltd v Wong [2011] NSWSC 726 Hearing dates: 5 and 6 July 2011 Decision date: 06 July 2011 Jurisdiction: Equity Division Before: Black J Decision: Leave to cross examine deponent of affidavit in application to set aside statutory demand not granted. Catchwords: Statutory demand - application to set aside - cross examination Legislation Cited: Corporations Act 2001 (Cth) - s 459G, s 459H Cases Cited: - Browne v Dunn (1893) 6 R 67 HL - Edge Technology Pty Limited v Lite-On Technology Corporation (2000) 34 ACSR 301 - Drillsearch Energy Limited v Carling Capital Partners Pty Limited [2009] NSWSC 1192 - Fitness First Australia Pty Limited v Dubow [2011] NSWSC 531 - Mibor Nominees Pty Limited v Commonwealth Bank of Australia [1994] 2 VR 290 Category: Interlocutory applications Parties: Montage Group Pty Ltd - Plaintiff Ferdinand Wong t/as Creative Blinds Company - Defendant Representation: Counsel: M.S. White, Ms N.M. Shaw - Plaintiff Ms T.L. Wong - Defendant Solicitors: Bruce MacDonald Lawyers - Plaintiff Phan Lawyers - Defendant File Number(s): 10/417017 Judgment - Ex tempore 1Application was made in these proceedings late on the first day of the hearing for leave to cross examine the sole director of the plaintiff, Mr Jolly, whose affidavits are relied upon by the plaintiff in these proceedings. I advised the parties that I would not grant that application for leave and that I would deliver reasons for that decision this morning. These are my reasons for that decision. 2The proceedings concern an application made under ss 459G and 459H of the Corporations Act 2001 (Cth) to set aside a statutory demand served by Ferdinand Wong trading as Creative Blinds Company on Montage Group Pty Limited. The plaintiff has read three affidavits of Mr Jolly sworn 15 December 2010, 13 April 2011 and 4 July 2011. Objections to portions of that affidavit were taken by the defendant and I ruled upon those objections yesterday. 3Counsel for the defendant, Ms Wong, seeks leave to cross examine Mr Jolly. She has indicated that she seeks to cross examine Mr Jolly as to three matters: first, the evidence which Mr Jolly has given in respect of the supply of Basswood shutters to Montage Pty Limited; second, an issue raised in the proceedings as to which of the two sets of invoices were operative; and, third, in relation to affidavits of customers filed by Creative Blinds which contend that, to the contrary of Mr Jolly's evidence, certain goods were not supplied to those customers. Ms Wong contends that such leave should be granted because she will submit that Mr Jolly could not have had any genuine belief that claims in respect of several customers on which the plaintiff relies as offsetting claims existed, and that inconsistencies between Mr Jolly's evidence and evidence led from several of those customers are such that Mr Jolly's evidence should not be accepted except where it is corroborated by other evidence. 4Mr White, in responding to the application for leave, has confirmed that he will not take any point under Browne v Dunn (1893) 6 R 67 HL on the basis that matters have not been put to Mr Jolly in cross examination. He has also resisted leave on the basis that the parties have not had access to the interlocutory steps, such as discovery, which would be available in a trial; that cross examination is not necessary to determine whether there is a genuine dispute in respect of the claims relied on in the statutory demand; and that cross examination would inevitably extend to the merits of the asserted dispute in a manner that is not necessary or appropriate where the court's role in an application to set aside a statutory demand is not to determine the underlying merits of any such asserted dispute but merely to determine whether that asserted dispute is a genuine dispute. 5The question whether leave to cross examine should be granted in matters of this character has been considered in several reported decisions. In Mibor Nominees Pty Limited v Commonwealth Bank of Australia [1994] 2 VR 290 at 292-293, Hayne J observed that the circumstances in which such leave would be granted would be rare, perhaps very rare indeed, and did not grant such leave where a defendant sought to advance a case that the matters relied on in opposition to a statutory demand were a recent invention. 6In Edge Technology Pty Limited v Lite-On Technology Corporation (2000) 34 ACSR 301, Barrett J observed at [45] that: "The threshold presented by the test to set aside a statutory demand does not however require of the plaintiff a rigorous and in-depth examination of the evidence relating to the plaintiff's dispute or offsetting claim. That is why cross examination in contested statutory demands is limited: Hayne J in Mibor Investments Pty Limited v Commonwealth Bank of Australia [1994] 2 VR 290." 7In Drillsearch Energy Limited v Carling Capital Partners Pty Limited [2009] NSWSC 1192 at [45-47], Barrett J observed that cross examination applications to set aside statutory demands are "very rare and allowed only for very good reason in exceptional cases". 8The judgment in Edge Technology was in turn cited and applied in Fitness First Australia Pty Limited v Dubow [2011] NSWSC 531 where Ward J observed that: "... [c]ross examination is rarely permitted on an application such as this, for the reason that the court does not determine the merits of any dispute that may be found to exist but simply whether there is such a dispute and the threshold for that is not high." 9Counsel for the defendant contends that this is an exceptional case in which such leave should be granted. I am not satisfied that that is the case. The plaintiff has led evidence to seek to establish that there is a genuine dispute as to the existence of the debt which supports the statutory demand and that there are offsetting claims which may be taken into account; the defendant relies on several affidavits to impugn that contention; and the plaintiff has in turn led evidence in reply to respond to that attack. A contest of this kind would arise in many, if not most, applications to set aside a statutory demand. 10Since the plaintiff by its counsel has confirmed that it will not take a Browne v Dunn objection arising from a failure to cross examine Mr Jolly, the possibility of such an objection does not require such leave. Nor does fairness to Mr Jolly require such leave, where counsel for the plaintiff of which he is the sole director has opposed it. 11Finally, the grant of leave to cross examine Mr Jolly would, in my view, inevitably lead to cross examination as to the underlying merits of the asserted dispute in a manner which would be inconsistent with the legislative purpose underlying s 459G and s 459H of the Corporations Act ; and with the interests of the just, quick and cheap resolution of the real issues in dispute. In my view, that difficulty is greater where, as in this case, the matters giving rise to the alleged dispute cover a range of issues and the matters identified by counsel for the defendant as topics for cross examination are central to the alleged dispute. 12For these reasons, I decline to grant leave to the defendant to cross examine Mr Jolly in respect of his affidavits sworn in these proceedings. ********** 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. Decision last updated: 13 July 2011