Panel Tech Industries v Pacific Sheet and CoilPanel Tech Industries v Pacific Sheet and Coil

[1999] NSWSC 1230

CITATION:	Panel Tech Industries v Pacific Sheet & CoilPanel Tech Industries v Pacific Sheet & Coil [1999] NSWSC 1230
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	4466/99; 3947/99
HEARING DATE(S):	18/11/99
JUDGMENT DATE:	17 December 1999
PARTIES :	Panel Tech Industries (Aust) Pty Ltd v Pacific Sheet & Coil Pty Ltd (Receiver Manager Appointed) Panel Tech Industries (Aust) Pty Ltd v Pacific Sheet & Coil Pty Ltd (Receiver Manager Appointed)
JUDGMENT OF:	Master Macready at 1

COUNSEL :	Mr R.D. Wilson for plaintiff Mr J. Sheahan SC for defendant
SOLICITORS:	Coleman & Greig, Parramatta for plaintiff Raj Lawyers Brisbane, Qld for defendant
CATCHWORDS:	Corporations Law. Application to set aside statutory demand. Demand set aside. No matter of principle.
DECISION:	Paragraph 44

- 2 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER MACREADY

Friday 17 December 1999

4466/99 PANEL TECH INDUSTRIES (AUSTRALIA) PTY LTD v PACIFIC SHEET AND COIL PTY LTD (RECEIVER MANAGER APPOINTED)

3947/99 PANEL TECH INDUSTRIES (AUSTRALIA) PTY LTD v PACIFIC SHEET AND COIL PTY LTD (RECEIVER MANAGER APPOINTED)

1   MASTER: These are actions to set aside statutory demands which have been served by the defendant upon the plaintiff pursuant to the Corporations Law. I have ordered that both matters be heard together and the evidence in one evidence in the other. In matter 3947/99 the statutory demand was dated 19 August 1999 and demanded payment of $677,000. The parties are agreed that since the demand $82,336.66 has been paid leaving an amount of $595,598.10 claimed under the demand. In matter 4466/99 the demand was dated 1 October 1999 and claimed the sum of $183,624.56. 2   The plaintiff is a manufacturer who produces material for cool rooms and in the process of doing so requires rolls of sheet steel in order to manufacture its products. The defendant is the importer of various types of sheet steel which is manufactured outside Australia. The disputes between the parties relates to the supply of that steel and the terms upon which it was supplied. 3   The plaintiff says that in respect of these demands there is first a genuine dispute as to the trading terms and that as a consequence monies claimed were not due at the date of the issue of the demand. Second, the plaintiff propounds offsetting claims arising out of the defects in the goods supplied. Third the plaintiff submits that there are defects in the affidavits sworn supporting the demands such as would lead the court to set aside the demands. I turn to the first of these matters. 4   Mr White in his affidavit of 13 September 1999 articulated the first dispute in paragraph 6(c) in the following terms:-

“Invoice” supply was supplied on terms that payment was due 90 days after the end of the month of supply, or after statement, statements being sent at the end of each month. “Stock” supply was supplied on consignment on terms that payment was to be due upon sale by Panel Tech. In effect, this supply was paid for within 120 days, and if the stock was earlier, Panel Tech paid earlier. This was the manner in which the account was conducted over most of the period of 15 months, and arose from a conversation between me and Craig Corliss at Panel Tech’s Silverwater premises in or about July or August 1998. I said to him words to the effect of “Payments from larger clients are stringing over the 60 days. I can pay you before 90, but I really need the extra 30 days”. He said words to the effect of “No problem, but just before 90 days, because that’s when our insurers get anxious”. I said words to the effect of “With the consignment stock, we’ll pay at latest within a further month”. He said, “OK”. Craig Corliss and I had other conversations to similar effect. Although Pacific’s invoices stated shorter terms for payment, Pacific has never sought to enforce those terms, so far as I am aware.”

5 Mr Corliss of the defendant denied that he allowed Panel Tech to pay outstanding invoices up to a period of 90 days but conceded that he did say words to the effect that he was prepared to extend the terms of payment from 30 to 60 days. There is thus a dispute about the particular conversation which it is said that the terms of payment were agreed. The defendant’s case is that there is in fact no a genuine dispute on this aspect. 6 In Eyota v Hanave (1994) 12 ACLC 669 at page 671 McLelland CJ in Equity his Honour made the following comments 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) AC 331 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 a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference 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 those 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.'

7 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."

8   The defendants particularly relied upon the statement that the court must accept uncritically every statement:-

'however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself”.

9   In particular it relied upon a course of correspondence commencing on 25 August 1998 and running through to 31 July 1999. In the first piece of correspondence the question of supply arrangement was referred to as having been discussed in Brisbane on 20 August 1998. It specified payment strictly 60 days from statement. The letter also enclosed contracts to be returned and certainly the documentation being the order forms and the invoices similarly showed payment 60 days from statement in contrast to what was contended for by the plaintiff. There is no evidence of any response querying the statement about the agreement which had been reached. By 10 February 1999 the defendant was writing referring to the account being a 60 day account and refusing to deliver until the account which was then 90 days was brought back to 60 days. The response to this letter was not to query the terms of trade but simply to propose a repayment schedule for what must be taken to have been admitted arrears. The correspondence in April also reported Mr White of the plaintiffs having stated that he would be getting the account down to a 60 day payment. 10   In no correspondence prior to the issue of the demands did the plaintiff ever assert that the agreement for payment was in fact 90 days. This is exceedingly strange as one would have thought that it would be the first thing that would be said if there was such an agreement or belief that such an agreement existed. 11   The evidence of Mr White in paragraph 6(c) (see above) is not consistent with the defendant merely tolerating late payment. It goes to the terms of the payment. Accordingly, it is necessary to see whether such evidence does not have “sufficient prima facie plausibility to merit further investigation as to (its) truth”. If it were merely evidence of tolerating late payment one could put it aside as not relevant. As it goes to the terms and is sworn evidence it is very relevant and must be considered. To put it aside involves a process of evaluating other evidence and assessing the credit of Mr White. As indicated in Eyota this is not appropriate. 12   The temptation when given clear documentary evidence to the contrary of the sworn conversation, is to make the final judgment. This I decline to do and I am satisfied that there is a genuine dispute as to the terms of trade. There is, however, some outstanding monies which amount to $46,693.12. Accordingly, the demand should be reduced to $46,693.12 unless the subsequent matters to which I refer provide a different result.

Offsetting claims

13   The areas of offsetting claim are as follows:-

(a) Steel returned and resupplied at the plaintiff’s cost $195,294

(b) Repainting and replacement of steel supplied due to inconsistent colour $65,000

(c) Coils of steel damaged in transit $21,962.44

(d) Loss of goodwill and custom $192,000 - $282,000.

(e) Rectification work at Watsons $300,000.

(f) Acro-refrigeration defects $3,000.

14 Subject to the legal matters to which I am about to turn the first three matters are established to the extent necessary. With regard to the fourth matter the evidence establishes that the plaintiff has lost a customer as result of the supply of faulty steel sourced from the defendant. There is no evidence to suggest that the range of estimated loss of profits based on two years further business with that customer would not be appropriate. Such claims are normally allowable. See GKN Centrax v Matbro (1976) 2 Lloyds Law Reports 555 at 574, Flamingo Park v Dolly Dolly (1985) 65 ALR at 521. 15 Some rectification work at Watsons is likely given the problems with the steel supplied. It is a little early in the dispute to determine whether the whole estimated rectification work of $300,000 will be claimed. It certainly seems that at least $70,000 will be claimed and this is an offsetting claim for at least this amount. The defects for Acro-refrigeration of $3,000 are an existing claim and should be considered as an offsetting claim in this amount. 16 The defendant’s contentions in respect of the offsetting claims are that for a variety of reasons they are not maintainable given the terms of the agreement for the supply of goods between the parties. 17 It is necessary to look a little more closely at the legal basis for the offsetting claims in order to consider the defendant’s submissions. 18 The following causes of action are relied upon to establish the offsetting claims to which I have referred.

(i) Damages for breach of an express condition printed on each sales contract and commercial invoice that “epoxy coating (is) suitable for coolroom sandwich panel adhesion”. Delamination constitutes a breach of this condition.
(ii) Damages under s 52 (misleading, deceptive conduct), s 53(a) (“falsely represent that goods are of a particular standard, quality, grade”) of the Trade Practices Act 1974 arising from a false representation printed on each sales contract and commercial invoice that “epoxy coating (is) suitable for coolroom sandwich panel adhesion”. Delamination establishes the falsity of the representation and the fact that the steel coil is not of a standard or quality suitable for sandwich panel adhesion.
(iii) Damages for breach of an express condition printed on each sales contract, commercial invoice that the steel coil would be prepainted to a particular colour, eg, invoice 621 (p29 White 13/9/99 “Topside: off white…Reverse: foam grey”. Discolouration constitutes a breach of this condition. In addition, this representation founds an action for damages under s 53(a) of the Trade Practices Act - falsely representing that the steel coil would be of a particular quality, standard.
(iv) Damages for breach of an implied condition as to fitness for purpose and merchantability arising at common law. Discolouration and delamination constitute breaches of these conditions.
(v) A defence under s 54(1)(b) of the Sale of Goods Act (1923) NSW, by which breaches of the express and implied conditions in ((i), (iii), (iv) above are “set up…in diminution or extinction of the price” of the steel coil.
(vi) In relation to goods damaged in transit, a defence that the risk had not passed to the plaintiff at the time the damage occurred (see cl 4.3 of terms of trade, s 25 Sale of Goods Act).

19   The plaintiff suggests that the offsetting claims can be supported by the following causes of action.

(a) Steel returned, resupplied at plaintiff’s
cost - causes of action (i) to (v) 195,294.00

(b) Repainting, replacement due to inconsistent
colour - causes of action (iii),(iv), (v) 65,000.00

(c) Coil damage in transit - causes of action (vi) 21,962.44

(d) Loss of goodwill and custom - causes
of action (i) to (iv) 192,000.00
- 282,000.00

(e) Rectification work at Watsons - causes
of action (I) - (v) 70,000.00

(f) Acro Refrigeration - causes of action
(iii), (iv) 3,000.00

20   The application for credit by the plaintiff, which included standard terms of trade, included the following terms:-

“6. Implied Terms - all conditions and warranties expressed or implied by statute the common law equity trade custom or usage or otherwise however are hereby expressly excluded to the medium extent permitted by law. Where so permitted the liability of the company for a breach of a condition or warranty that cannot be excluded is limited at the Company’s opinion, in the case of goods, to the replacement or repair of the goods or the supply of equivalent goods or the cost of replacing or repairing the goods or of acquiring goods and, in the case of services, to the supplying of the services again or the payment of the cost of having the services, to the supplying of the services again or the payment of the cost having the services applied again.
7. Indirect Loss - so far as the law permits the company shall not be liable in any way whatsoever for any indirect or consequential loss or loss of profit including in particular but not limited to any loss by reason of delay, defective or faulty materials or workmanship, negligence or any act or matter or thing done, permitted or omitted by the Company.”

21   In addition the invoices which accompanied the goods included the following conditions:-

“3.1 Any claim against the supplier must be made in writing within 7 days of delivery of goods except claims for non-delivery which must be made in writing within 14 days from the date of delivery. All claims must refer to the original invoice number, date and reason for the claim.
………..
4.3 Risk in the goods shall unless otherwise agreed in writing pass to the customer upon dispatch from the suppliers warehouse save and except where the goods are carried in the suppliers own …in which case the goods shall pass upon delivery to the customer or its agent.
4.4 These terms and conditions do not exclude, restrict or modify the application of any provision of the Trade Practices Act 1974 or any other relevant Federal or State legislation which by law cannot be excluded, restricted or modified.
4.5 Except where goods are
manufactured by the supplier and acquired by the customer for the supply or acquired by the customer as a consumer within the meaning of the Trade Practices Act then the supplier shall not be liable or responsible for any loss, damage, injury to property or persons (including loss of profits or other consequential indirect incidental or special damage) resulting from any defects in the goods or arising out of or in connection with the acquisition, installation, use or possession of the goods and all representations terms, conditions and warranties that the goods
(i) shall correspond with the description
(ii) correspond with any sample
(iii) be of merchantable quality or
(iv) be reasonably fit for a purpose, expressed or implied, by common, law or by Federal, State or territorial laws (that are capable of being excluded) are hereby excluded.
4.6 Where the goods are:
4.6.1 Manufactured by the supplier and acquired by the customer for resupply or acquired by the customer as a consumer and the goods are not of a kind ordinarily acquired for personal, domestic or household use or consumption within the meaning of the Trade Practices Act then, the liability of the supplier for breach of a condition or warranty that the goods shall correspond with any sample, shall be of merchantable quality or shall be reasonably fit for a purpose, shall be limited to
4.6.2 the replacement of the goods or the supply of equivalent goods
4.6.3 repair of the goods
4.6.4 the payment of the cost of replacing the goods or of acquiring goods, or
4.6.5 the payment of the cost of having the goods repaired, whichever the supplier in its absolute discretion shall think fit.”

22   I turn to the individual causes of action to see whether the various exemption clauses could affect the claims.

(i) Damages for breach of an express condition.

23 It is submitted that this claim is excluded by clause 3.1 (time limit for claims and clause 4.5. 24 Clause 3.1 is in a section of the conditions in the invoice which is related to claims, returns and allowances. Notably it is not within the section headed liability. Normally such clauses are construed strictly against the party relying upon it. If a party wishes to exclude the ordinary consequences that would flow in law from the breach of contract it must do so on the clearest of terms. See Duncan v Porter (1953) 90 CLR 295 and World Travel Service Pty Ltd v McNiven (1964-5) NSWR 731. The factual circumstances under consideration in both these cases indicate the clear need to exclude a claim for damages for breach of contract. In the circumstances it would seem to me that it is at least arguable that 3.1 does not apply to this claim. 25 Under clause 4.5 the defendant suggests that that clause would exclude any claims which would be loss or damage resulting from defects in the goods and, secondly because the clause excludes all conditions express or implied that the goods correspond with their description or be reasonably fit for a purpose. Although the express term appears in a heading, “Description of Goods”, it would seem to be able to be construed as an express term as to the colour of the goods and suitability for a particular purpose. In these circumstances it is necessary to see, on the assumption that both the express term and clause 4.5 are contractual terms, whether there is an arguable case that clause 4.5 does not have the effect contended for by the defendant. One of the principles of construction was that the general provisions should be read down so as to give effect to particular provisions. See Penny v Grand Central Car Park (1965) VR 323 at 341 and World Travel Service at 737. 26 As has been pointed out in submissions and the literature (Sutton Sales and Consumer Law 4th Ed at page 4) these decisions were in the time when the doctrine of fundamental breach was in its heyday. The basis now is somewhat different and has been laid down by the High Court in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510. There the High Court said:-

These decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity. Notwithstanding the comments of Lord Fraser in Ailsa Craig 31 [1983] 1 WLR, at 970; [1983] 1 All ER, at 105., the same principle applies to the construction of limitation clauses. As King CJ noted in his judgment in the Supreme Court, a limitation clause may be so severe in its operation as to make its effect virtually indistinguishable from that of an exclusion clause. And the principle, in the form in which we have expressed it, does no more than express the general approach to the interpretation of contracts and it is of sufficient generality to accommodate the different considerations that may arise in the interpretation of a wide variety of exclusion and limitation clauses in formal commercial contracts between business people where no question of the reasonableness or fairness of the clause arises.”

27 The House of Lords had reached a similar result by 1980 when the decision was given in Photo Production Ltd v Securicor Transport Ltd (1980) AC 827. 28 A similar case to the present reached the House of Lords in Tor Line AB v Alltrans Group of Canada Ltd (1984) 1 WLR 48. The charter contained in clause 26 of detailed contractual description of the vessel which was required for roll on - roll off service. Under the sub-heading “Free Height” appeared the statement that in the case of the main deck this was 6.1 metres. In fact it was only 6.05 metres with the result that a trailer with containers could be not be loaded on to that deck. The charterers claimed damages and the owners relied upon clause 13 of the Ball Time Charter second sentence of which read:

“The owners not to be responsible in any other case nor for damage nor delay whatsoever and howsoever caused even if caused by the neglect or default of their servants”.

29   Lord Roskill, who delivered the principal speech, emphasised (at 52C-D; 106E-F) that the charter had “to be construed as a whole” and dealing with the second sentence of cl 13 said (at 53-54; 107-108):

“... If one construes the words ‘in any other case’ literally the second part of the second sentence and indeed the whole of the third sentence ... become surplusage because on that view there would necessarily be no other ‘case’, liability for which is not already excluded. Moreover such a literal construction would mean ... that the owners would be under no liability if they never delivered the vessel at all for service under the charter or delivered a vessel of a totally different description ... My Lords I cannot think that this can be right. Some limitation must be read in the first part of the second sentence.”
He noted (at 55-56; 109) that exception clauses in charters are to be construed contra proferentem and after a close analysis of the clause he concluded that it did not protect the owners from breach of the express description in cl 26. He then added (at 58-59; 111-112):
“... Even had I reached a different conclusion on construction ... I would still have rejected (counsel for the owners’) submissions that there was no relevant limitation upon what he contended was the natural meaning and scope of clause 13. ... if clause 13 were to be construed so as to allow a breach of the warranties as to description in clause 26 to be committed or a failure to deliver the vessel at all to take place without financial redress to the charterers, the charter virtually ceases to be a contract for the letting of the vessel and the performance of services ... and becomes no more than a statement of intent by the owners in return for which the charterers are obliged to pay large sums by way of hire, ... I find it difficult to believe that this can accord with the true common intention of the parties and I do not think that this conclusion can accord with the true construction of the charter. ... ''

30 This case was referred to by His Honour Mr Justice Handley JA in Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd (1993) 40 NSWLR 206. His Honour at page 214 said

In my opinion this reasoning, if I may say so with respect, appears to be a useful illustration of the result in a given case of “construing the (exclusion) clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity”: Darlington Futures Ltd v Delco Australia Pty Ltd (at 510).

31 The factual situation in Tor Line was one concerned with warranties as to description. In relation to the two claims with which I am here concerned at least one of them, the term as to suitability is in the same situation. The case does illustrate how even adopting the modern approach one can still arrive at a result that the general words in an exclusion clause are read down to have regard to the specific express provision in order to properly construe the contract as a whole. 32 The difficulties with this area of the law is well illustrated by the different factual result achieved in Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd and the decision of the Victorian Court of Appeal in Karmel Export (Aus) Pty Ltd v NPL (Australia) Pty Ltd (1996) 1 VR 538. In my view in the present case it certainly is arguable that the clause 4.5 may need to be read down given the express term as to suitability. It would be more difficult to come to this conclusion in respect of the express term as to the colour of the goods. However, the claim which relies upon the express term as to suitability is for a large amount and well in excess of the amount which still remains claimable under the demands as a result of the earlier conclusion I have reached. There is an appropriate off-setting claim which can be advanced under this head.

(ii) Damages under s 52 s 53(a) of the Trade Practices Act.

33 Given the public policy behind the operation of the Trade Practices Act it is unlikely that clauses 3.1 or 4.5 of the invoice terms would exclude these claims. See Henjo v Collins (1988) 79 ALR 83 at 98-99 and 72 ALR 601 at 612-613. See also Petera v EAJ (1984 7 FCR 375. There is, however, a real problem with the plaintiff succeeding in establishing the falsity which arises by the fact of delamination. Normally a warranty as to the quality of goods which will be delivered in the future will not amount to a misrepresentation merely by pointing to its non-fulfilment, see Bill Acceptances Corporation v GWA Limited (1983) 50 ALR 242, Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 88. In these circumstances it would seem that this cause of action would not be sufficient to justify a genuine dispute.

(iii) Damages for breach of an express condition as to the colour of the goods.

34   For the reasons which I have expressed above at least this claim for the express condition may not give rise to a genuine dispute.

(iv) Damages for breach of an implied condition as to fitness for purpose.

35 Given the exclusion of these claims this cause of action would not be maintainable. As has been pointed out in Nissho Iwai Australia Limited v Malaysian International Shipping Corporation, Berhad (1989) 167 CLR 219 at 227 such exclusion clauses are effective and are to be given effect in accordance with their natural and ordinary meaning. Special condition 6 is quite clear in this regard.

(v) Defence under s 54(1)(b) of the Sale of Goods Act

36   This depends upon both the express and implied conditions. The implied conditions would not give rise to such a defence but the express conditions, as I have mentioned above, may well give rise to a genuine dispute in that regard.

(vi) Goods damaged in transit

37 The goods in question here were damaged in transit and it would seem that there is a genuine dispute that the risk had not passed to the purchaser under condition 4.3 at the time the damage occurred. There is thus an appropriate off setting claim. 38 Given my findings above it is clear that there is at least an offsetting claim for an amount in excess of the sum of $46,693.12 which is referred to above. In the circumstances clearly the claims in respect of steel returned and goods damaged in transit are such that they should be allowed as offsetting claims. In these circumstances it is not necessary to deal with the more complex matters as to whether the claim for loss of profits and potential further claims are either excluded by the conditions or are not presently existing claims. See Advance Ship Design Pty Ltd v D.J. Ryan (1995) 16 ACSR 129 at 135.

Defects in the affidavits

39   In the demand in matter 3947 of 1999 the three particular matters complained of are non-compliance with the New South Wales Rules in respect of such affidavits as follows:-

1. It does not state the source of knowledge as required under rule 15(1)(c).

2. It does not state that the deponent believes there is no genuine dispute about the existence or the amount of the debt. Rule 15(1)(e).

3. The affidavit does not contain the statement headed “Important Note” set out in the form rule 15(3)(b).

40   In respect of the demand in matter 4466 of 1999 the areas of non-compliance are:-

1. It does not state the deponent’s knowledge of the matters. Rule 15(1)(c).

41   2. It is not in accordance with the prescribed form as it does not contain the statement headed “Important Note”. See rule 15 3(a)(b). 42   The demands specified two addresses for service, one at Raj Lawyers at an address in Queensland where the defendant is incorporated and the other at Raj Lawyers, Pitt Street, Sydney. It is apparent that the affidavits, or at least the one for the major amount, have been drafted having regard to the terms of the Queensland rules. Those rules simply provide:

“52. The affidavit verifying the statutory demand under s 459E(3) must be sworn by a person having knowledge of the facts”.

43 Clearly, given both the contents of the affidavit and the actual evidence before me as to the part played by the deponent of the affidavit he was a person with knowledge of the facts. Plainly the affidavits do comply with the Queensland Rules. In a similar circumstance to the present one, in Beta Trading Co Pty Ltd v Specialised Laminators 8 November 1996 I decided that the New South Wales Rules were applicable given that the demand was to be served in New South Wales. That decision, however, has been overtaken by the decision of the Full Court of the Federal Court in Spencer Constructions Pty Ltd v G.M. Aldridge Pty Ltd (1997) 76 FCR 452. The court decided that an affidavit may be sworn in any of the forms prescribed by the rules of any court having jurisdiction in respect of the demand or in the event of non-compliance the winding up. Bearing the mind the strictures of the High Court set out in ASC v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492 it is clear that I should follow the full Federal Court decision . Accordingly, as the affidavit does comply with the Queensland Rules it would be inappropriate to set aside the demand on these grounds. 44 Given the conclusions which I have reached it is clear that the demand should be set aside. Accordingly, I order:-

1. In matter No. 3947 of 1999 that the statutory demand dated 19 August 1999 served by the defendant on the plaintiff be set aside.

2. In matter No. 4466 of 1999 that the statutory demand dated 1 October 1999 served by the defendant on the plaintiff be set aside.

3. In each matter order the defendant to pay the plaintiff’s costs.

Last Modified: 06/30/2000