Info v Management

[2001] NSWSC 387

CITATION:	INFO v MANAGEMENT [2001] NSWSC 387
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 1774/01
HEARING DATE(S):	27 April 2001
JUDGMENT DATE:	27 April 2001
PARTIES :	INFO TECHNOLOGY (AUSTRALIA) PTY LIMITED v MANAGEMENT DATA PTY LTD
JUDGMENT OF:	Master Macready at 1

COUNSEL :	J. Gruzman for defendant
SOLICITORS:	Jason Li Lawyers for plaintiff Raj Lawyers for defendant
CATCHWORDS:	Corporations Law. Application to set aside statutory demand. No matter of principle.
DECISION:	Para 20

1   MASTER: This is an application to set aside a statutory demand. The application was filed on 14 March 2001 and apparently was within time. The statutory demand is one seeking payment of the sum of $11,715 for services rendered by the defendant to the plaintiff. The services are set out in the invoice which is referred to in the demand.

2   The demand is sought to be set aside on the basis that there was a genuine dispute in respect of the liability in respect of the demand. The genuine dispute has two basic areas. First the agreement according to the plaintiff was for a fixed amount of $8,000 and secondly, it was for the provision of a complete re-design of the web site.

3   The subject matter of the proceedings between the parties concerns production for the defendant of information technology advice concerning a web site of the plaintiff company which the plaintiff company desired to modify.

4   If one looks first at the affidavit of Mr Kang of 13 March 2001 he in par 5 refers to a meeting on 25 July that he had with Mr Montano who was then an employee of his company. Mr Montano said that he had a friend, Alex, who was from the defendant company and he suggested that he be retained to do it. According to Mr Kang he wanted to pay $8,000 for the whole system. He says that he had no further conversations until 11 August when he had a discussion with Mr Montano and Mr Wang and Alex from the respondent.

5   There was also a corroborative affidavit from Mr Wang, his co-director who says that he attended a meeting on 11 August when apparently, according to him, the proposal for charging by a time basis or a rate basis of charge of $100 per hour was raised.

6   When one then looks at the two affidavits that are filed on behalf of the defendant, one has the affidavit of Mr Alex Kovacheski which was sworn on 6 April 2001. In that affidavit in par 6 he refers to a meeting of 21 July. He sets out that Mr Kang was present and he asked how much it would cost. According to Mr Kovacheski he quoted $100 per hour and that he would have to do an initial investigation before he could advise on what was necessary.

7   Similarly, Mr Montano who is a friend of Mr Kovacheski, also gave an affidavit in which he set out the details of that conversation at that meeting in similar terms. That appears in par 6.

8   The matter was part-heard before me as there was no evidence in reply. The matter has been adjourned until today so there could be evidence in reply. That evidence in reply is that of Mr Kang sworn on 17 April and also a further affidavit of Mr Wang. Mr Kang denies that he was present at the meeting of 21 July 2000 and reiterates that the only relevant conversations which were held with him were in August.

9   The two versions almost pass in the night they are so different. There are some documentary matters which would tend to support the defendants such as the dates and time sheets and it may be that the plaintiff's dates are in error. However, they are completely contrary versions of what might be the basis for any agreement for the provision of these services.

10   In this respect it is necessary for the parties to realise that what has to be determined in the present case is whether there is a genuine dispute about the liability and probably the most useful summation which is given as to the meaning of a genuine dispute is that given by McLelland CJ in Equity in Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACLC 669. At p 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 s 459H. 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) truth' (cf Eng Mee Yong v Letchumanan (1980) AC331 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 deponent whose evidence is relied on as giving rise to the dispute. There is a clear different 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 the 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 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."

11   As his Honour says it is not the province of this Court in determining whether there is a genuine dispute to 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. Because there is such a stark difference between the two versions one could not decide without making some decision on the credit of witnesses. As his Honour points out that is not the function of the proceedings before me. There has been no cross-examination which is the result of the nature of these proceedings and in fact it would be impossible without that cross-examination to form a view on the matter.

12   In my view there is a genuine dispute in respect of the terms upon which the parties contracted. There is no doubt that the plaintiff company probably owes something to the defendant even if the basis was as set out by the officers of the plaintiff. Indeed this much was conceded in part in the conversation between Mr Kang and Mr Kovacheski on 15 August.

13   Mr Kang said that if he could show what had been done and produced a report he would be prepared to consider making some payment of the $8,000 to the defendant. The report was not provided and nothing further has happened.

14   It is, of course, possible for a Court to determine what is a reasonable level of a dispute. Here the time charges substantially exceed what was the plaintiff's lump sum agreement for the one which they propound. There really is not any means whereby on the evidence before me I could apportion some part of that lump sum amount of $8,000 as being in dispute.

15   Accordingly, the only alternative is to set aside the demand. The orders that I make are that the notice of demand served on the plaintiff by the defendant dated 22 February 2001 is set aside.

16   I have heard submissions from counsel and received correspondence which originated before action which invited the withdrawal of the demand, otherwise a claim for indemnity costs would be made.

17   The matter of the meeting of 22 July was raised prior to the hearing before me which was on 12 April. That hearing had to be adjourned to allow further evidence in reply.

18   In the circumstances of that evidence only just now becoming available I do not think it is an appropriate case for indemnity costs and I think there ought to be a special order for 12 April.

19   Accordingly, the order I make is that the defendant pay the plaintiff's costs of the proceedings except for the hearing before me on 12 April 2001.

20   In respect of the hearing before me on 12 April 2001 I order the plaintiff to pay the defendant's costs of that day. The Exhibits may be returned.

Last Modified: 05/16/2001