Miles v Bidalo

[2004] NSWSC 369

CITATION:	Miles v Bidalo [2004] NSWSC 369
HEARING DATE(S):	Friday 30 April 2004
JUDGMENT DATE:	30 April 2004
JURISDICTION:	Equity
JUDGMENT OF:	Master Macready at 1
DECISION:	See paragraph 6
CATCHWORDS:	Corporations law -- Application to set aside statutory demand under s 459G of the Corporations Act -- Demand reduced -- No matter of principle
CASES CITED:	Edge Technology Pty Limited v Lite-On Technology Corp (2000) 18 ACLC 576 Macleay Nominees Pty Limited v Belle Property East Pty Limited [2001] NSWSC 743
PARTIES :	Miles Special Builders Pty Limited v Bidalo Consulting Pty Limited T/As Fortstaff
FILE NUMBER(S):	SC 1004/04
COUNSEL:	Lovas with Rush - Plaintiff Aldridge SC with Blank - Defendant
SOLICITORS:	Malouf Solicitors Parramatta - Plaintiff KM Harkness & Co - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Master Macready

Friday 30 April 2004

1004/04 Miles Special Builders Pty Limited v Bidalo Consulting Pty Limited T/As Fortstaff

JUDGMENT

1 MASTER: In this matter there is an application to set aside a statutory demand. The statutory demand is one which claims the sum of $421,694.31 and it is dated 11 December 2003.

2 As a result of the rulings on objections to the affidavits during the course of the hearing, the only matter that remains is the question of whether or not there is an off-setting claim which is identified in par 10 of the affidavit of Mr Kovacic.

3 The court’s task in off-setting claims has been dealt with in a number of cases. For instance, in Edge Technology Pty Limited v Lite-On Technology Corp (2000) 18 ACLC 576, Santow J had the following to say at pars 24 and 24:

“It is here again true (as it was in Goldspar Australia Pty Limited v. KWA Design Group Pty Limited (1999) 17 ACLC 456 that it ‘is not my task in the present proceedings to seek to resolve the competing claims of the Plaintiff and the Defendant’: per Austin J at 462. Rather, it is to ‘resolve whether, for the purposes of s 459H(1)(a), there is a genuine dispute between the Plaintiff and the Defendant about the existence or amount of the debt to which the Defendant’s statutory demand relates’: Austin J at 462. Or alternatively, whether there is a genuine counter-claim, set-off or cross-demand against the Defendant and if so, in what amount. In particular, how should it be quantified; at a nominal $1 or at a large figure and if the latter, how is the quantification to be arrived at? The latter question essentially asks whether the counter-claim or set-off is fictitious or merely colourable; Jesseron Holdings Pty Limited v. Middle East Trading Consultants Pty Limited (No 2) (1994) 12 ACLC 490; 13 ACSR 787. In that context, to come up with a plausible contention to (sic) requiring further investigation which, if later established, would preclude there being an off-setting claim. That would not establish that the counter-claim or set-off was fictitious, or merely colourable. In that sense the counter-claim or set-off is not the reciprocal of the statutory demand debt. Rather it is a means of off-setting the statutory demand debt with a genuine counter-claim or set-off.
I adopt the approach of the Full Federal Court in Spencer Constructions Pty Limited v. G & M Aldridge Pty Limited (1997) 15 ACLC 1001 at 1011 (1997) 76 FCR 452 at 464; that a genuine dispute requires that in ‘the dispute be bona fide and truly existing fact’ and that the ‘grounds for alleging the existence of a dispute are real and not spurious, hypothetical, illusory or misconceived’. The same applies to the counter-claim or set-off. One asks: Is it bona fide, is it real and not spurious?”

He later went on to say:

“For the demand to be set aside on the basis of the demand debt being genuinely disputed, it must be established by the Plaintiff that the dispute concerning its existence is bona fide and not spurious, hypothetical, illusory or misconceived: Spencer’s case (supra). In other words, there must be a plausible contention requiring further investigation which genuine puts in dispute the debt which grounds the statutory demand. But the merits are not now to be determined beyond the preliminary testing as to whether there is a serious question to be tried. The alternative basis for the demand to be set aside or reduced by reason of an off-setting claim involves, as I have said, a different test. The question is not whether there is a genuine dispute in the above sense against the off-setting claim. The question is rather whether the ‘off-setting claim’ can be shown to be ‘not frivolous or vexatious’; Chadwick Industries (South Coast) Pty Limited v. Condensing Vaporisers Pty Limited (1994) 13 ACSR 37. That places a heavier onus on the party seeking to maintain its statutory demand, than if it merely had to establish the reciprocal of a genuine dispute against the off-setting claim.”

There has also of course recently been a discussion by Palmer J in Macleay Nominees Pty Limited v Belle Property East Pty Limited - BC 200105055 (2001) NSWSC 743 at par 18 where he said:

“In my opinion, a genuine off-setting claim for the purposes of CA s 459H(1) and 459H(2) means a claim on a cause of action advanced in good faith, for an amount claimed in good faith. ‘Good faith’ means arguable on the basis of facts asserted with sufficient particularity to enable the Court to determine that the claim is not fanciful. In a claim for unliquidated damages for economic loss, the Court will not be able to determine whether the amount claimed is claimed in good faith unless the plaintiff adduces some evidence to show the basis upon which the loss is said to arise and how that loss is calculated. If such evidence is entirely lacking, the Court cannot find that there is a genuine off-setting claim for the purposes of s 459H(1) and s 459H(2).”

The claim that is raised arises in very short compass and in particular is referred to in a tax invoice which is annexure G to the affidavit of Mr Kovacic. The substance of that tax invoice clearly indicates that it is a claim for bus shelters which were manufactured incorrectly, rejected by the architect, and there has been the re-manufacture of parts and the amount charged is $717,000. That is an invoice which pre-dated the statutory demand by some three months and it is what is sometimes called a back-charge for faulty work.

4 In the circumstances, I am satisfied that it is a genuine off-setting claim and, accordingly, I propose to vary the demand.

5 It has been drawn to my attention that the invoice annexure G is in fact for a total including GST of $84,700. It is pointed out in par 6 of the first affidavit of 2 January 2004 the claim was for $77,900 for work done and services provided to bus shelters. It is suggested that the difference cannot be claimed. In my view I think the actual nature of the off-setting claim has been properly flagged in the first affidavit and if there is a change in relation to quantification I think that is a matter which can be done in a later affidavit.

6 Accordingly, the amount which can be claimed is $84,700 and accordingly I vary the demand and reduce it to $336,994.31.

7 In this matter the plaintiff has only been partially successful and there is no way of separating out the amount of time for different issues for things either successful or not. I think, having regard to the extent of the success, I will make no order as to costs with the intent that each party pay its own costs.

8 I think the plaintiff should pay the defendant’s costs of the motion in respect of which costs were reserved.

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Last Modified: 05/07/2004