iInvest Pty Ltd -v- Huxley Associates Limited [2012] NSWSC 175

Supreme Court New South Wales

Medium Neutral Citation: iInvest Pty Ltd -v- Huxley Associates Limited [2012] NSWSC 175 Hearing dates: 29 February 2012 Decision date: 29 February 2012 Jurisdiction: Equity Division - Corporations List Before: Hammerschlag J Decision: Proceedings dismissed, plaintiff to pay the defendant's costs Catchwords: CORPORATIONS - Corporations Act 2001 (Cth) s 459G - Application to set aside statutory demand - whether affidavit accompanying application to set aside the demand discloses facts showing a genuine dispute - putting a creditor to proof of its claim does not amount to showing a genuine dispute - proceedings dismissed Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Graywinter Properties Pty Limited v Gas and Fuel Corporation Superannuation Fund (1996) 21 ACSR 581 Infact Consulting Pty Limited v Kyle House Pty Limited [2007] NSWSC 56 Category: Principal judgment Parties: iInvest Pty Ltd - Plaintiff Huxley Associates Limited - Defendant Representation: Counsel: D.F. Provera - Plaintiff A. Zahra - Defendant Solicitors: Roderick Storie Solicitors - Plaintiff DLA Piper Australia - Defendant File Number(s): 2011/00239097

EX TEMPORE Judgment 1HIS HONOUR: This is an application under s 459G of the Corporations Act 2001 (Cth) to set aside a statutory demand dated 23 June 2011 under which the defendant demanded from the plaintiff £ 52,333.08. 2The plaintiff's evidence establishes that in about 2003 the plaintiff was engaged by CQS Limited (CQS) of London to provide information and research services. The plaintiff in turn sub-contracted the defendant to provide those services to CQS on the plaintiff's behalf. CQS paid the plaintiff and the plaintiff paid the defendant 3The demand incorporates a schedule describing the debt. It is made up of a series of discrete amounts asserted to be payable by the plaintiff to the defendant pursuant to identified written agreements (all of which pre-dated February 2008) for the services of two named individuals over specific identified periods. 4The present application is supported by a brief affidavit by the plaintiff's director, Mr J.R. Harker-Mortlock. The affidavit deposes to the fact that both the contract between CQS and the plaintiff and the contract between the plaintiff and the defendant were terminated on 1 February 2008. 5Mr Harker-Mortlock goes on to state that the plaintiff's manager, David Wilson, left the plaintiff's employ at the end of January 2008 and was, therefore, not in a position to approve or contract between the plaintiff and the defendant. 6The affidavit goes on to state as follows: 11. The Defendant's Creditor claims for debts which were never authorised by the Plaintiff or incurred by the Plaintiff. 12. This dispute between the Plaintiff and the Defendant has been documented over the past three years. The Plaintiff engaged solicitors in London who wrote to the Defendant advising that the debt was disputed. 13. The Plaintiff also wrote directly to the Defendant advising that the debt was disputed. Annexed and marked "B" are copies of some items of correspondence between the Plaintiff and the Defendant. 7The correspondence referred to is two letters. The first is a letter dated 20 June 2008 from the plaintiff's English solicitors to the defendant in the following terms: We refer to the outstanding invoices supported by the authorised timesheet provided by you with your letter of 5 June 2008: 1. HATX 0090501 in the sum of £3,084.38 was paid on 29 November 2006. Please check your records in this respect. 2. Our client did not receive invoice no. 8000027045 dated 16 April 2008 in the sum of £3,671.88 nor invoice no. 8000027047 dated 16 April 2008 in the sum of £2,820.00. CQS have said in open correspondence that it will deal with invoices pending determination of the agreement between CQS and iInvest. Therefore we suggest that invoices 27045 and 27047 are sent to CQS as our client does not have the authorisation from CQS to pay these sums. 3. From an examination of its records our client has ascertained that there have been duplicate payments of your invoices 1028000007638 and 1028000007639 which were first paid on 30 July 2007 and then paid again on 27 September 2007. These invoices are both dated 13 June 2007 and amount of £5,254.60. This sum will be deducted from any claim by Huxley received by our client. We look forward to hearing your confirmation of the above. 8The second is a letter dated 13 December 2008 from the plaintiff to the defendant in the following terms: I understand that you have attempted to serve a Statutory Demand upon our UK Branch. I wish to inform you that any amount claimed by you is disputed. I refer you to the attached a copy of the letter from Thomas Eggar, solicitors, to yourself dated 20 th June 2008 to which no response was forthcoming. I reject that iInvest would only consider making payment to any party, including Huxley, if that party can provide some evidence to support its claim. To date, Huxley has been unable to do so. For instances, a copy of an order form from an authorised employee of iInvest (not some other entity) properly authorising the expenditure represented by each Huxley invoice. Given that my own UK office manager, David Wilson, resigned suddenly in February 2008, you will understand that I require some form of documentation to support your claim. In the event that you are unable to provide such documentation, I suggest that your claim should more correctly be made against the actual persons requesting your services, rather than iInvest. As an officer of the court, you will be aware that as the dispute about this debt has been raised directly with you, it's encumbent upon you to inform the court that this is the case. I will provide a copy of this letter to you to the court if this matters proceeds further. Yours sincerely James Harker-Mortlake Managing Director 9The plaintiff sought to rely on a second more comprehensive affidavit of Mr Harker-Mortlock sworn 9 September 2011 which expands on the first affidavit. 10It is well settled that the supporting affidavit required by s 459G must disclose facts showing that there is a genuine dispute between the parties. Whilst the affidavit need not go into evidence and may read like a pleading, mere assertions of a genuine dispute or that the debt is disputed are insufficient; Graywinter Properties Pty Limited v Gas and Fuel Corporation Superannuation Fund (1996) 21 ACSR 581 at 587 to 588. 11In Infact Consulting Pty Limited v Kyle House Pty Limited [2007] NSWSC 56 at 32, White J said: The Graywinter principle is based on the idea that the "supporting affidavit" required by s 459G must identify the grounds upon which the applicant relies for an order under that section. Graywinter said that the corollary is that an applicant for an order under s 459G cannot rely upon a ground which is not identified in the supporting affidavit. It is because an applicant cannot rely upon a ground not so identified that a further affidavit which seeks to raise such grounds will not be allowed. This is not merely a rule of evidence relating to a plaintiff's affidavits. It is a rule based upon the implications perceived in s 459G. It is because an applicant is confined to the grounds identified in the supporting affidavit that further affidavits relying on new grounds are not permitted ( Tuta Healthcare v Nipro Asia at [11]-[13] 12Mr D Provera of counsel who appeared for the plaintiff, accepted that if the first affidavit did not disclose facts revealing a genuine dispute, the second affidavit could not be relied on, and that if it did not do so the proceedings were bound to fail. 13He put no submission that the facts deposed to concerning the termination of the contracts reveal any such dispute. He relied solely on the above quoted paragraphs of the first affidavit and the correspondence referred to, as disclosing such facts. 14In my view, notwithstanding that the requirement is by no means a difficult or demanding one, the first affidavit fails to disclose such facts. 15Paragraph 11 of the first affidavit makes two alternative and over-lapping assertions both of which are conclusionary and amount to no more than a bare denial of liability. Neither assertion; (a)puts in issue the existence or terms of the agreements described in the schedule to the demand; (b)puts in issue that the work claimed for was done; (c)asserts any fact, whether with respect to any specific invoice or component of the claim or with respect to the claim as a whole, revealing why the claim or any component of it required authorisation beyond the contract ; (d)discloses any fact in support of any proposition that such required authorisation, if it was required, was not given; (e)reveals or discloses any fact capable of supporting the conclusion that either the claim as a whole or any component of it was not incurred. 16As to the correspondence, counsel accepted that the invoices referred to in paras 1 and 3 of the 20 June 2008 letter are not the subject of the claim. Paragraph 2, which refers to two invoices only, does not identify facts revealing any dispute. It amounts, in my view, with respect to those invoices to no more than the plaintiff putting the defendant to proof of its claim. Counsel put that the plaintiff lacked access to documentation necessary to go further than it does in its denials. This falls short of putting up facts that disclose a genuine dispute. 17It follows that the plaintiff may not rely on the second affidavit and that the Originating Process must be dismissed. I so order. 18The plaintiff is to pay the defendant's costs of the proceedings. Exhibits are to be returned.