LMCS SA Pty Ltd ACN 060 102 847 v Westpac Banking Corporation ABN 33 007 457 141 - [2015] SASC 147

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
LMCS SA PTY LTD ACN 060 102 847 v WESTPAC BANKING CORPORATION ABN 33 007 457 141
[2015] SASC 147
Judgment of The Honourable Justice Stanley
24 September 2015
CORPORATIONS - WINDING UP - WINDING UP IN INSOLVENCY - STATUTORY DEMAND - APPLICATION TO SET ASIDE DEMAND - GENUINE DISPUTE AS TO INDEBTEDNESS - OFFSETTING AND OTHER LIKE CLAIMS
GUARANTEE AND INDEMNITY - THE CONTRACT OF GUARANTEE - CONSTRUCTION AND EFFECT - GENERALLY
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - POINTS AND OBJECTIONS NOT TAKEN BELOW - WHEN NOT ALLOWED TO BE RAISED ON APPEAL
ESTOPPEL - ESTOPPEL BY DEED OR CONVENTION - ESTOPPEL BY CONVENTION - GENERALLY
Appeal from a decision of a master refusing to set aside a statutory demand issued by the respondent.
The demand was served on the appellant as a guarantor of the obligations of the respondent’s customer, Enviro Systems Renewable Resources Ltd (Receivers and Managers Appointed) (In Liquidation) (Enviro Systems), and required the appellant to pay the total sum of $2,898,870.27 within 21 days of service. On appeal there was no issue that the relevant debt was and is outstanding from Enviro Systems to the respondent. The sole question arising on appeal is whether there is a genuine dispute within the meaning of s 459H(1)(a) of the Corporations Act 2001 (Cth).
The appellant submits there is a genuine dispute between the parties about the existence of a debt pursuant to the guarantee given by the appellant on two bases. First, on the basis that the respondent had agreed in writing to release the appellant from its obligation as a guarantor and, secondly, on the basis that by reason of representations made by the respondent to the appellant to the effect that it would release the appellant from its obligations as a guarantor, which were relied upon by the appellant to its detriment, the respondent is estopped from enforcing the guarantee. The master dismissed the application to set aside the statutory demand, finding there was no evidence of any conduct of the respondent discharging the appellant’s obligations. Accordingly, the appellant failed to establish a genuine dispute. On the appeal counsel for the appellant candidly conceded that the estoppel argument had not been put to the master. He submitted, nonetheless, that it was open to the court on appeal to entertain the submission based on estoppel on the evidentiary material that was before the master. He submitted it was in the interests of justice that the court should consider this submission.
Whether there is a plausible contention requiring investigation by the court warranting the court setting aside the notice of demand pursuant to s 459H.
Held (per Stanley J) dismissing the appeal:
1. The appellant’s primary contention is fundamentally flawed. Clause E4 of the guarantee creates an exception in relation to the continuing and irrevocable nature of the guarantee proffered, namely, an agreement in writing. Any agreement in writing must be between parties. The appellant was not a party to the instrument. Accordingly, it cannot constitute an agreement between it and the respondent that the appellant was no longer obliged to fulfil its obligations as a guarantor. In any event, the instrument does not, on any view of the document, contemplate the release of the appellant from its obligations under the guarantee (at [23] - [24]).
2. The appellant’s alternative contention cannot succeed for two reasons. First, the appellant is not entitled to raise the estoppel point for the first time on appeal. Secondly, the evidence before the master cannot establish any detriment (at [33], [34] and [44]).
3. While it is recognised there is a low threshold in establishing a genuine dispute, in this case the appellant’s contentions, upon which it seeks to rely in mounting a challenge, are so devoid of substance that no further investigation is warranted (at [46]).
4. Appeal dismissed (at [47]).
Corporations Act 2001 (Cth) s 459H(1)(a), s 459G(3), s 459J, referred to.
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452; Bentham Management Pty Ltd v Union Finance Pty Ltd (2007) 247 LSJS 103; Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785; British Motor Trust Co Ltd v Hyams (1934) 50 TLR 230; Hancock v Williams (1942) 42 SR (NSW) 252; Industrial Acceptance Corp v Lakeland Lumber Ltd (1960) 26 DLR (2d) 480; Nelson Fisheries Ltd v Boese [1975] 2 NZLR 233; Wood Hall Ltd v Pipeline Authority (1979) 141 CLR 443; Orme v De Boyette [1981] 1 NZLR 576; Pogoni v R & WH Symington & Co (NZ) Ltd [1991] 1 NZLR 82; Duncombe v Australia & New Zealand Bank Ltd [1970] Qd R 202; Dunlop New Zealand Ltd v Dumbleton [1968] NZLR 1092; Sabemo Pty Ltd v de Groot (1991) 8 BCL 132; Rural and Agricultural Finance v Gardiner (2008) 238 CLR 570; Skorpos & Anor v United Petroleum Pty Ltd [2013] SASCFC 117; University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481; Coulton v Holcombe (1986) 162 CLR 1; Water Board v Moustakas [1988] HCA 12; National Australia Bank Ltd v KDS Construction Services Pty Ltd (In Liq) (1987) 163 CLR 668; Fingleton v The Queen (2005) 227 CLR 166; Graywinter Properties v Gas and Fuel Superannuation Board (1996) 70 FCR 452; Fitness First Australia Pty Ltd v Dubow (2011) 251 FLR 241; Panel Tech Industries (Australia) v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"genuine dispute", "plausible contention"

LMCS SA PTY LTD ACN 060 102 847 v WESTPAC BANKING CORPORATION ABN 33 007 457 141
[2015] SASC 147
Appeal from a master
STANLEY J:
Introduction

This is an appeal from a decision of a master of this Court refusing to set aside a statutory demand issued by the respondent. The demand was served on the appellant as a guarantor of the obligations of the respondent’s customer, Enviro Systems Renewable Resources Ltd (Receivers and Managers Appointed) (In Liquidation) (Enviro Systems), and required the appellant to pay the total sum of $2,898,870.27 within 21 days of service.
On appeal there was no issue that the relevant debt was and is outstanding from Enviro Systems to the respondent. The sole question arising on appeal is whether there is a genuine dispute within the meaning of s 459H(1)(a) of the Corporations Act 2001 (Cth).
In this case the appellant submits there is a genuine dispute between the parties about the existence of a debt pursuant to the guarantee given by the appellant on two bases. First, on the basis that the respondent had agreed in writing to release the appellant from its obligation as a guarantor and, secondly, on the basis that by reason of representations made by the respondent to the appellant to the effect that it would release the appellant from its obligations as a guarantor, which were relied upon by the appellant to its detriment, the respondent is estopped from enforcing the guarantee.
The master dismissed the application to set aside the statutory demand, finding there was no evidence of any conduct of the respondent discharging the appellant’s obligations. Accordingly, the appellant failed to establish a genuine dispute.
On the appeal, Mr Hoile, counsel for the appellant, candidly conceded that the estoppel argument had not been put to the master. He submitted, nonetheless, that it was open to the court on appeal to entertain the submission based on estoppel on the evidentiary material that was before the master. He submitted it was in the interests of justice that the court should consider this submission.
He submitted that on either argument the court should find that there is a plausible contention requiring investigation by the court warranting the Court setting aside the notice of demand pursuant to s 459H.
Genuine dispute
In Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd[1] the Full Federal Court held that a genuine dispute within the meaning of s 459H required that the dispute be bona fide and truly exist in fact, and, the grounds for alleging the existence of a dispute are real and not spurious, hypothetical, illusory or misconceived.
[1] (1997) 76 FCR 452.
In Bentham Management Pty Ltd v Union Finance Pty Ltd[2] this Full Court held that a “genuine dispute” denotes a plausible contention requiring an investigation, raising similar considerations to the requirement of a serious question to be tried which arises on an application for an interlocutory injunction, citing Eyota Pty Ltd v Hanave Pty Ltd.[3]However, as observed by Debelle J, with whom Doyle CJ and Perry J agreed in Bentham Management, the various formulations of the test which have been expressed in the decided cases are not a substitute for the words of the section.[4]
[2] [2007] SASC 42 at [14], (2007) 247 LSJS 103.
[3] (1994) 12 ACSR 785 at 787.
[4] [2007] SASC 42 at [14], (2007) 247 LSJS 103 at 106.
Factual background
The factual background is sufficiently described in the reasons of the master as follows:[5]
[5] LMCSA/SA Pty Ltd v Westpac Banking Corporation, Reasons for Decision of Judge Dart, 1 May 2015 at [4] – [9].
The plaintiff is one company in a group of companies known as the “LMCS Group”. Enviro Systems was also a company within the LMCS Group.
In February 2007 the defendant agreed to provide further finance to Enviro Systems. By letter dated 12 February 2007 the defendant advised that Enviro Systems’ request for finance had been approved. The letter was addressed, relevantly, to the directors of Enviro Systems, Mr Chambers and Mr McNamara. The approval was subject to a number of securities being provided.
One of those securities was a guarantee from the plaintiff fixed in the amount of $3.55 million. There were other securities and guarantees given. On or about 15 February 2007 the relevant guarantee was executed by the plaintiff. It was signed by Mr Chambers and Mr McNamara in their capacity as directors of the plaintiff. The guarantee document provided that a Memorandum of Common Provision registered in the South Australian office of Registrar-General applied to the guarantee and indemnity.
The common provisions contained a number a terms which are relevant for present purposes. They include:
-Clause E4, which provides that the obligations are continuing and irrevocable, except where the lender agrees in writing.
-Clause E6, which permits the defendant, in respect of any money paid to it, to use those funds to pay off any part of Enviro Systems’ debts which the lender chooses.
-Clause E7, which provides that the guarantee continues to apply in respect of all dealings between the defendant and Enviro Systems whether or not there is a variation.
-Clause E8, which provides that the liability under the guarantee is an unconditional and primary obligation and not affected by anything which might otherwise release the plaintiff from all or part of the obligations.
In May 2007 the defendant and Enviro Systems agreed to vary the terms of repayment. A letter of variation dated 2 May 2007 was executed by a number of parties. In particular, there is provision in that letter of variation for the guarantor’s consent to the variations. It appears that the directors of the plaintiff consented to the variation on 10 May 2007, on which occasion each of Mr Chambers and Mr McNamara, as directors of the plaintiff, signed to indicate the plaintiff’s consent to the variation. They expressly acknowledged that the guarantee would continue to have effect, notwithstanding the variation.
On or about 28 March 2008 a related company, MPC Systems Pty Ltd, sold a property it owned at Huntfield Heights. The property was separately mortgaged in favour of the defendant. Some of the proceeds from the sale were applied to reduce Enviro Systems’ obligations to the defendant. A credit has been allowed for those proceeds in the calculation of the debt said to remain due.
Critical to the appellant’s case are the terms of a bank document described as a “Request to Release / Substitute Security – Business”. Pursuant to the document, MPC Systems Pty Ltd and Enviro Systems requested the respondent to arrange for the release of security the bank held over property at Lot 109 Main South Road, Huntfield Heights. The document included the following provisions:
Authorisation – to be signed by all mortgagors of the property to be releases and borrowers as applicable.
Note: the consent of any other mortgagor(s) / guarantor(s) who have also given security for the above loans will be required if there will be any liabilities remaining following completion of your request (refer Section E).
The document then made provision for signing by the directors of MPC Systems Pty Ltd and Enviro Systems. This part of the document was executed by Stephen McNamara and John Chambers as directors of MPC Systems Pty Ltd and Stephen McNamara, John Chambers, Naomi Chambers and Robyn Schutte apparently on behalf of Enviro Systems.
The document then provided:
Section E – Complete only when Third Party or Guarantor consents are required.
The Bank has been requested to release the mortgage given by (name of mortgagor):
MPC Systems Pty Ltd
over (address of property / assets being released):
Lot 109 Main South Road, Huntfield Heights SA 5163 (Vol. 5835 Folio 554).
This mortgage was given in respect to money owed by (customer / borrower name):
MPC Systems Pty Ltd and Enviro Systems Renewal Resources Ltd
to the bank: Your mortgage / guarantee will continue.
WARNING: THIS IS A VERY IMPORTANT DOCUMENT
You should see your own Lawyer and Financial advisor before signing it.
I / We agree to the above release and acknowledge that I am still liable for the amount of the guarantee secured money now and in the future.
The document is then executed by Stephen McNamara, Robyn Schutte, John Chambers and Naomi Chambers, and then executed apparently for and on behalf of MPC Systems Pty Ltd by Stephen McNamara and John Chambers, and then executed for and on behalf of Enviro Systems by Stephen McNamara and John Chambers. The document was executed by them on 11 March 2008. It was executed on behalf of the respondent by one of its relationship managers on 12 March 2008.
Consideration
On appeal the appellant submits that the terms of the release document constitute an agreement in writing by the respondent that the appellant’s obligations under the guarantee no longer continue in accordance with clause E4 of the common provisions to the guarantee.
Clause E4 provides:
E.4. Continuing Guarantee
Your obligations under the Guarantee are continuing and irrevocable, except where the Lender agrees in writing. Subject to any agreed limit, if there is one, you are still liable for the Guaranteed Money and the Guaranteed Obligations now and in the future, even though the Lender receives payments from anyone or makes arrangements with anyone.
The appellant’s submission proceeds from the fact that the loan to Enviro Systems was guaranteed to an amount of $3,550,000 each by MPC Systems Pty Ltd, Robin Schutte, Naomi Chambers, Stephen McNamara and John Chambers, LMC/SA Pty Ltd and Naomi Chambers and John Chambers as trustees for the Chambers Family Trust.
The guarantee given by MPC Systems Pty Ltd was supported by a mortgage over the Huntfield Heights property. Upon release, the property was sold for $5.665 million. $2.5 million was applied to discharge debts of MPC Systems Pty Ltd to the respondent. $984,114.46 was applied to reduce the debt of Enviro Systems.
There was no direct evidence before the master as to the application of the balance of the sale proceeds. On appeal, Mr Roberts SC, counsel for the respondent, submits that the balance of the sale proceeds were deposited into an account in the name of Enviro Systems. That would appear to be consistent with the terms of the Request to Release document. I will come back to this matter in the context of considering whether the appellant should be permitted to raise the estoppel point for the first time on appeal.
The appellant’s submission is that a genuine dispute exists as to the existence of a debt owed by it in accordance with the guarantee on the basis that there is to be implied into the release document an agreement in writing by the respondent that the appellant’s obligations under the guarantee are no longer continuing. This results from the term of that document that “[t]he consent of any other ... guarantors who have also given security for the [loans to Enviro Systems] will be required” if there are to be any liabilities remaining following completion of the Request to Release the security of the Huntfield Heights property. Notwithstanding that the appellant was a guarantor of the loan to Enviro Systems, it was not required to execute the release and acknowledge that it was still liable for the amount of the guarantee secured money now and in the future. Accordingly, contends the appellant, it is implicit that the respondent thereby agreed in writing that the appellant’s obligations under the guarantee were not to continue.
The appellant submits this is a plausible contention. It turns on the proper construction and effect of the release document. It submits that the ultimate resolution of the interpretation will require inquiry into the surrounding factual matrix, which might include the relevance of the circumstances of the variation in May 2007, whereby the appellant was required to sign an acknowledgment that its guarantee continued notwithstanding the variation. The appellant submits that these matters are not properly to be essayed on an application to set aside a statutory demand.
In the alternative, the appellant submits that the court can find that there is a genuine dispute on the basis of the release giving rise to an estoppel by representation or estoppel by convention. It submits that the release effectively represented to the appellant that it was not required to be a continuing guarantor. It submits that any requisite detriment can be inferred merely from the proved evidence that MPC Systems Pty Ltd realised enough funds from the sale of the property to cover the amount of the statutory demand. Had the appellant known that the respondent was of the view that the guarantee continued, it might have insisted that MPC Systems Pty Ltd pay down the Enviro Systems debt to the limit of the appellant’s guarantee.
I do not accept these submissions.
In my view, the appellant’s primary contention is fundamentally flawed. Clause E4 of the guarantee creates an exception in relation to the continuing and irrevocable nature of the guarantee proffered, namely, an agreement in writing. Any agreement in writing must be between parties. The appellant was not a party to the instrument. The very foundation for the appellant’s primary contention is that it was not a signatory to the release document. Accordingly, it cannot constitute an agreement between it and the respondent that the appellant was no longer obliged to fulfil its obligations as a guarantor.
In any event, the instrument does not, on any view of the document, contemplate the release of the appellant from its obligations under the guarantee. The request does not contain any written terms to the effect that there would be a release of the appellant from its guarantee obligations. Apart from the fact that the appellant is not a signatory to the instrument, the document does not contain any written terms to the effect that there would be a release of the appellant’s guarantee. None of this is surprising given the nature of the release which concerns the security proffered by another guarantor.

More importantly, however, given the terms of the guarantee given by the appellant, there was no requirement for the appellant to execute the request to acknowledge that it continued to be bound by the guarantee. The appellant’s case rises no higher than a bare assertion that the absence of its execution of the Request to Release constituted a release of its obligations under the guarantee. Such a contention is untenable in the face of the express terms of the guarantee, and in particular clauses E4, E6, E7, E8 and E11 of the common provisions containing the terms of the guarantee.
Clause E6 provides that any money paid to the respondent to reduce Enviro Systems’ debts to the respondent may be used to pay off any part of Enviro Systems’ debts to the respondent which the respondent chooses.
Clause E7 provides that the guarantee applies automatically to all dealings between the respondent and Enviro Systems including a change in the guarantee obligations or new or replaced guarantee obligations.
Clause E8 provides that the appellant’s liability under the guarantee is an unconditional, primary obligation and is unaffected by anything which otherwise might release the appellant from all or part of its obligations.
Clause E11 provides that any other security in respect of Enviro Systems’ obligations to the respondent is independent of the appellant’s guarantee.
In a case where the guarantee specifically provides that the guarantor’s liability shall not be affected by any variation of the principal contract, such clauses are effective to preserve the liability of the guarantor if a variation takes place.[6]
[6] British Motor Trust Co Ltd v Hyams (1934) 50 TLR 230; Hancock v Williams (1942) 42 SR (NSW) 252 per Jordan CJ and Halse Rogers J at 256, 59 WN (NSW) 215; Industrial Acceptance Corp v Lakeland Lumber Ltd (1960) 26 DLR (2d) 480; Nelson Fisheries Ltd v Boese [1975] 2 NZLR 233 per Wild CJ at 235–236; Wood Hall Ltd v Pipeline Authority [1979] HCA 21, (1979) 141 CLR 443 per Gibbs J at 455 (Mason J concurring); Orme v De Boyette [1981] 1 NZLR 576; Pogoni v R & WH Symington & Co (NZ) Ltd [1991] 1 NZLR 82 (CA). See also Duncombe v Australia & New Zealand Bank Ltd [1970] Qd R 202 per Campbell J at 207 (Wanstall and Lucas JJ concurring); Dunlop New Zealand Ltd v Dumbleton [1968] NZLR 1092 per Wilson J at 1098; Sabemo Pty Ltd v de Groot (1991) 8 BCL 132 per Giles J at 146.
The respondent was entitled pursuant to clause E11 to release any security without affecting the obligations of the appellant as a guarantor. Accordingly, something more than an implication arising from a release to which the applicant was not a party is required to constitute the agreement in writing contemplated by clause E4.
Further, the appellant’s primary contention is incapable of being supported by reference to the variation of May 2007. The variation constitutes post-contractual conduct within the understanding of Rural and Agricultural Finance v Gardiner.[7]It is not legitimate to use as an aid in the construction of a contract anything which the parties did after it was made.
[7] [2008] HCA 57 at [35], (2008) 238 CLR 570 at 582.
In addition, in my view, the appellant’s alternative contention cannot succeed for two reasons.
First, the appellant is not entitled to raise the estoppel point for the first time on appeal.
I understood Mr Hoile to contend that it was open to the Court to entertain the estoppel argument on appeal, notwithstanding that the appellant had not raised it before the master, on the basis that there was no prejudice to the respondent as the estoppel argument is based entirely on evidence that was before the master and merely involves questions of law. This submission appears to be referable to the principles applicable to whether an appellate court should entertain a point raised for the first time on appeal.
In a common law adversarial trial the court determines the issues submitted to it by the parties for resolution. The judicial determination of an action at trial is a final, not preliminary, resolution of the legal controversy. Appeal proceedings are not a continuation or extension of the trial. The issue on appeal is whether the judgment given at trial is vitiated by error.[8]
[8] Skorpos & Anor v United Petroleum Pty Ltd [2013] SASCFC 117 at [33].
In University of Wollongong v Metwally (No 2),[9] the High Court enunciated the principle relevant to the determination of an application to raise on appeal an argument not put at trial. The court said:[10]
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.
[9] [1985] HCA 28, (1985) 59 ALJR 481.
[10] [1985] HCA 28 at [7] (1985) 59 ALJR 481 at 483.
In Coulton v Holcombe[11] the High Court explained the underlying principles justifying this approach:[12]
It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. The powers of an appellate court with respect to amendment are ordinarily to be exercised within the general framework of the issues so determined and not otherwise. In a case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding, this Court has firmly maintained the principle that the point cannot be taken afterwards.
[11] [1986] HCA 33, (1986) 162 CLR 1.
[12] [1986] HCA 33, (1986) 162 CLR 1 at 7 – 8.
The High Court reaffirmed the position in Water Board v Moustakas.[13]
More than once it has been held by this Court that a point cannot be raised for the first time upon appeal when it could possibly have been met by calling evidence below. Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied.
[Footnote omitted].
[13] [1988] HCA 12, (1988) 180 CLR 491 at 497.
Examples of the High Court allowing a new point to be raised for the first time on appeal can be found in Coulton v Holcombe,[14] National Australia Bank Ltd v KDS Construction Services Pty Ltd (In Liq),[15] and Fingleton v The Queen.[16] The threshold test to be met by a party which seeks to raise an argument for the first time on appeal is high. An appeal court will only permit a party to do so in the most exceptional circumstances. Where all the facts have been established beyond controversy or where the point is one of construction or of law, the appeal court may, in the exercise of its discretion, entertain the point where it is expedient in the interests of justice to do so but, even in those circumstances, the exercise of the court’s discretion is informed by the proposition that a party will only be permitted to do so in the most exceptional circumstances.
[14] [1986] HCA 33, (1986) 162 CLR 1.
[15] [1987] HCA 67, (1987) 163 CLR 668.
[16] [2005] HCA 34, (2005) 227 CLR 166.
The estoppel point the appellant now seeks to raise requires evidence that the appellant relied to its detriment upon the representation implicitly made in the Request to Release document that the respondent was releasing the appellant from any continuing obligation as a guarantor. As I have noted, the appellant submits that detriment can be inferred merely from the proved evidence that MPC Systems Pty Ltd realised enough funds from the sale of the property to cover the amount of the statutory demand. The appellant submits that had it known that the respondent was of the view that the guarantee continued it might have insisted that MPC Systems Pty Ltd pay down the Enviro Systems’ debt to the limit of the appellant’s guarantee. However, I accept the submission of the respondent, that had the point been taken before the master, it would have adduced evidence of how the balance of the sale proceeds were distributed. In addition, the respondent would have sought to adduce evidence that the balance of the proceeds of sale were insufficient to discharge the Enviro Systems’ debt to the respondent. Accordingly, if this evidence had been adduced and accepted by the court, it could have proved that there was no relevant detriment the appellant could have suffered on that basis. Accordingly, this is a case where all the relevant facts have not been established beyond controversy before the master. In those circumstances, it is not expedient nor in the interests of justice to entertain the estoppel point. Had I any discretion in the matter, I would exercise my discretion not to permit it to be raised in these circumstances.
However, there is a more fundamental difficulty which confronts the appellant in seeking to raise the estoppel point now.
In accordance with the principle in Graywinter Properties v Gas and Fuel Superannuation Board[17] an application for an order to set aside a statutory demand and the affidavit in support of that application, both of which must be filed within the 21-day period prescribed in s 459G(3), must fairly alert the claimant to the nature of the case the company will seek to make in seeking to have the statutory demand set aside. The content of the application and affidavit must convey, even if it be by necessary inference, a clear delineation of the area of controversy so that it is identifiable with one or more of the grounds made available by s 459H and s 459J for setting aside statutory demands. That process of delineation may not be extended after the end of the 21-day period, although it is open to the company to supplement the initial affidavit by way of additional evidence relevant to the area of controversy identified, within the period. Accordingly, although an applicant company may supplement an initial affidavit by leading further evidence relevant to matters raised by the initial application, it cannot rely on any ground not raised in the affidavit filed within the 21-day limit.[18] The estoppel point not having been raised on the application, it cannot be raised on the appeal.
[17] [1996] FCA 822, (1996) 70 FCR 452.
[18] Fitness First Australia Pty Ltd v Dubow [2011] NSWSC 531 at [122], (2011) 251 CLR 241 at 271.
Secondly, and in any event, even if I was to entertain the estoppel point, the evidence before the master cannot establish any detriment.
The only evidence adduced by the appellant to support any case based upon the alleged release is the affidavit of John Franklin Chambers sworn 18 March 2014. In his affidavit he deposes to the fact that the appellant did not give a guarantee to the respondent. More importantly, for this point, he deposes to the fact that if there had been a guarantee given by the appellant, the respondent had never informed or notified the appellant of any such guarantee. In the circumstances where the only evidence is that the appellant was unaware of the existence of the guarantee, it is untenable that detriment can be inferred from the evidence that MPC Systems Pty Ltd realised enough funds from the sale of the property to cover the amount of the statutory demand and that had the appellant known that the respondent was of the view that the guarantee continued, it might have insisted that MPC Systems Pty Ltd pay down the Enviro Systems’ debt to the limit of the appellant’s guarantee. The appellant could not act to protect itself from the risk of its guarantee being enforced if it was unaware of the existence of the guarantee.
While it is recognised there is a low threshold in establishing a genuine dispute, in this case I am satisfied that the appellant’s contentions, upon which it seeks to rely in mounting a challenge, are so devoid of substance that no further investigation is warranted.[19]
[19] Panel Tech Industries (Australia) v Australian Skyreach Equipment Pty Ltd (No. 2) [2003] NSWSC 896.
Conclusion
I would dismiss the appeal.