Metro Glass Pty Ltd v Dconstruct Pty Ltd - [2024] WASC 42

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   METRO GLASS PTY LTD -v- DCONSTRUCT PTY LTD [2024] WASC 42
CORAM:   ACTING MASTER MCDONALD
HEARD:   8 SEPTEMBER 2023
DELIVERED          :   27 FEBRUARY 2024
FILE NO/S:   COR 74 of 2023
BETWEEN:   METRO GLASS PTY LTD
Plaintiff
AND
DCONSTRUCT PTY LTD
Defendant

Catchwords:

Corporations - Statutory Demand - Application to set aside statutory demand - Offsetting claim - Whether defendant agreed to supply goods to plaintiff - Effect of quotations - Defendant claimed no contracts entered into with plaintiff for supply of goods - Whether sufficient evidence to establish offsetting claim - Corporations Act 2001 (Cth), s 459H

Legislation:

Corporations Act 2001 (Cth), s 459H

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	IR Gillon
Defendant	:	M Vallve

Solicitors:

Plaintiff	:	Lawton Gillon
Defendant	:	Vallve Legal

Cases referred to in decision:

Byrne Lewis v Colt Tollfab [2009] NSWSC 706
Crontec Automotive Tooling v Allsteel [2006] NSWSC 555
Dream Money [2016] WASCA 193
Edge Technology Pty Ltd v Lite-On Technology Corp [2000] NSWSC 471; (2000) 34 ACSR 301
Harvey v Facey [1893] AC 552
Hvar Steel Services [2017] WASCA 63
Kiewit Australia Pty Ltd v New Energy Corporation Pty Ltd [2018] WASCA 180
Re Senator Webster (1975) 132 CLR 270; (1975) 6 ALR 65
Royal Premier Pty Ltd v Taleski [2001] WASCA 48

ACTING MASTER MCDONALD:

This is an application to set aside a statutory demand. For the following reasons the application is dismissed. However, I will extend the time in which to comply with the statutory demand and I will hear the parties as to the date for compliance.

Application

The defendant in this proceeding issued a statutory demand to the plaintiff dated 28 April 2023 (Statutory Demand) in relation to money owed to the defendant for the supply of glass to the plaintiff in its regular course of business. The Statutory Demand is for the sum of $187,016.36 for goods supplied to the plaintiff from 3 May 2022 to 15 June 2022.
The plaintiff has applied by way of originating process dated 17 May 2023 (Application) to set aside the Statutory Demand pursuant to s 459G, s 459H and s 459J of the Corporations Act 2001 (Cth) (the Act) and, in the alternative, to extend time for compliance with the Statutory Demand pursuant to s 459F(2) of the Act.
The following affidavits were filed by the parties:
(a)the affidavit of Mr Mark Vincent Cirillo, a director of the plaintiff, sworn on 16 May 2023 (First Cirillo Affidavit);
(b)the affidavit of Mr Mark Vincent Cirillo sworn on 17 May 2023 (Second Cirillo Affidavit);
(c)the affidavit of Mr Mark Vincent Cirillo sworn on 3 August 2023 (Third Cirillo Affidavit); and
(d)the affidavit of Mr Douglas Charles Hudson Stewart, who is the sole director of the defendant, sworn on 29 June 2023.
I have also read the plaintiff's written submissions filed on 23 August 2023 in support of the Application (Plaintiff's Submissions) and the defendant's written submissions…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] WASC 42
Decision Date: 27 FEBRUARY 2024

CaseChat Overview and Summary

In the matter of Metro Glass Pty Ltd v Dconstruct Pty Ltd, the court was tasked with determining an application to set aside a statutory demand. The plaintiff, Metro Glass Pty Ltd, issued a statutory demand to the defendant, Dconstruct Pty Ltd, under section 459H of the Corporations Act 2001 (Cth). The defendant contested the statutory demand on the basis of an offsetting claim, arguing that it had a genuine claim against the plaintiff for the supply of goods that the plaintiff had failed to pay for. The case required the court to decide whether the defendant had established a genuine offsetting claim, and if so, whether the statutory demand should be set aside or varied.

The central legal issue in the case was whether the defendant had provided sufficient evidence to establish a genuine offsetting claim. The court was required to assess the evidence provided by the defendant to determine if it met the threshold for a genuine claim under the relevant legal principles. These principles, as outlined in Kiewit Australia Pty Ltd v New Energy Corporation Pty Ltd, required the defendant to demonstrate a plausible contention that warranted investigation, and that the claim was made in good faith and had a coherent basis for quantifying the loss. The court was not required to decide the merits of the offsetting claim, but rather to assess whether the claim was sufficiently quantified to offset the amount of the debt demanded.

The court found that the defendant had not provided sufficient evidence to establish a genuine offsetting claim. The evidence presented by the defendant was deemed insufficient to show the basis upon which its loss was said to arise and how that loss was calculated. The court noted that while detailed evidence was not required, some evidence was necessary to demonstrate the basis of the claim and to enable the court to determine whether the claim was made in good faith. In this case, the evidence provided by the defendant did not meet this threshold. As a result, the application to set aside the statutory demand was dismissed, and the defendant was ordered to pay the plaintiff's costs of the application.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The relevant legal principles are not in dispute. Those principles were set out by the Court of Appeal in Kiewit Australia Pty Ltd v New Energy Corporation Pty Ltd [2018] WASCA 180 at [50]:(1)The onus is on the recipient of the statutory demand to establish the offsetting claim.(2) The expression 'genuine claim' connotes a plausible contention requiring investigation and raises similar considerations as 'the serious question to be tried' criterion on an interlocutory injunction. (3) Rather than deciding the merits of the alleged claim, the court examines whether there is a genuine claim sufficiently quantified to give rise to an offsetting amount. The court must identify the alleged claim which must 'be bona fide and truly exist in fact' and assess whether it is a genuine claim. If such a claim is raised, the court does not attempt to resolve the claim or predict its outcome. (4) The demand must be set aside or varied if there is a genuine claim which is not based on spurious, hypothetical, illusory or misconceived grounds.(5) This does not mean that the court must accept uncritically as giving rise to a genuine dispute, or a genuine claim, 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. Nor does it require the acceptance of a 'patently feeble legal argument' or 'matters of fact unsupported by evidence'. (6) A company seeking to set aside or reduce a statutory demand on the basis of an offsetting claim does not need to set out evidence supporting the amount of the claim in meticulous detail. It is enough that the company provides evidence of a plausible and coherent basis for quantifying the claim which it genuinely asserts or showing that the claim exceeds the amount of the debt demanded. Precise quantification is unnecessary. (Footnotes omitted). It is neither necessary nor appropriate for the court to consider the merits of the offsetting claim or its likely prospects of success.[27] Although particularly detailed evidence is not required, a company alleging that it has an offsetting claim must adduce at least some evidence sufficient to show the basis upon which its loss is said to arise and how that loss is calculated to enable the court to determine whether the offsetting claim is made in good faith and estimate the amount of the claim.[28][27] Edge Technology Pty Ltd v Lite-On Technology Corp [2000] NSWSC 471; (2000) 34 ACSR 301 [27] - [28].[28] Hvar Steel Services [2017] WASCA 63 [37] Dream Money [2016] WASCA 193 [60] Royal Premier Pty Ltd v Taleski [2001] WASCA 48 [57]. There were objections to the evidence in the affidavits made in the course of the hearing which were necessary to be determined once all the evidence was considered by the court. The defendant objected to paragraph [23] of the First Cirillo Affidavit and the second sentence of paragraph [11] of the Third Cirillo Affidavit. Counsel for the plaintiff objected to paragraphs [47] and [48] of the Stewart Affidavit, in that they relied on facts in an annexure that was not attached. That objection was conceded and no reliance was placed on paragraphs [47] or [48] of the Stewart Affidavit.