PMP v Z Computer

[2001] NSWSC 287

CITATION:	PMP v Z Computer [2001] NSWSC 287
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 3817/2000
HEARING DATE(S):	2 April 2001
JUDGMENT DATE:	2 April 2001
PARTIES :	PMP SOFTWARE AUSTRALIA PTY LIMITED v Z COMPUTER CO PTY LIMITED
JUDGMENT OF:	Master Macready at 1

COUNSEL :	K. Odgers for plaintiff B. Vasic for defendant
SOLICITORS:	Duncan Scott Solicitor for plaintiff Wight & Strickland for defendant
CATCHWORDS:	Corporations Law. Application to set aside statutory demand. No matter of principle.
DECISION:	Paragraph 24

- 1 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER MACREADY

MONDAY 2 APRIL 2001

3817/00 - PMP SOFTWARE AUSTRALIA PTY LIMITED v Z COMPUTER CO PTY LIMITED

JUDGMENT

1   MASTER: This is an application to set aside a statutory demand in respect of debts being a balance of invoice dated 30 May plus an invoice dated 30 June for $86,880, which demand was served by the defendant on the plaintiff on 15 August 2000.

2   The parties were involved in the provision of closed circuit TV at railway stations. Apparently the plaintiff was a contractor to the SRA and the defendant was a sub-contractor which was providing software services pursuant to an agreement between the defendant and the plaintiff.

3   That agreement had a number of specific provisions and clause 2 of the agreement provided a minimum of 40 hours' service each week. Under par 4 the defendant was to be remunerated at a rate of $50 per hour and it is apparent from those clauses he was simply paid on a time basis for the work which he did.

4   Importantly, par 9 required that the contractor was required to document all hours used on the site for the client. There is reference to the supply of time sheets, that they are to be signed on a weekly basis and to be delivered to the contractor on a fortnightly basis. There is also a requirement to follow standards and guidelines set by the client in respect of the project management. These included a system of reporting which is documented in what is called a work user guide that required, for instance, work package reports which gave details of the work being done, the progress of the work and other similar matters. Obviously it was a system that was carefully designed to ensure that the plaintiff when dealing with its sub-contractors could have sufficient information so that it could satisfy itself about the performance of the sub-contractor and that it was receiving appropriate value for the amounts being claimed.

5   It is clear from the evidence which has been read before me that during the period that this agreement was in existence there were a number of breaches of the requirements which involved the reporting procedure. For example, the time sheets were not signed on a weekly basis, nor were they provided to the company on a fortnightly basis. Instead there seem to have been batches of time sheets which were presented and they covered a substantial period. The difficulties for the plaintiff in this regard would be fairly apparent.

6   However, the clear fact of the course of the history of the matter up until 30 June is that for a large proportion of the time sheets, particularly the ones in dispute up until March 2000, they were in fact signed notwithstanding that they were supplied late. This was done and the explanation was given was that it was in order to keep the defendant company on the job so that the complete package could be delivered to the SRA.

7   The area which is in dispute is an area which covers the second and the last lot of time sheets which were covered by two invoices given by the defendant company to the plaintiff. In respect of the first which was given in May $40,000 was paid on account. On 30 June the last bunch of time sheets were supplied. They covered the period up to 30 June. On that date the contract between the parties was terminated. It is apparent, therefore, there was no termination during the period in respect of which a claim is made under the invoices that had been sent by the defendant to the plaintiff.

8   The question of what is a genuine dispute has been referred to in many cases. I think probably the most useful summation is given by McLelland CJ 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 words "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 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."

9   In the present case the plaintiff puts his case on the basis of there being a genuine dispute and there also being an offsetting claim. Any claim for an offsetting claim obviously founds itself upon breach of the agreement between the parties.

10   I am satisfied that there were breaches. However, in the present proceedings there is no evidence of what damage has been suffered in respect of the breach. In other words, there is no quantification of what particular damage has been caused by the breach.

11   An example of why this is important appears in respect of some of the types of breaches which have been pointed out in the evidence. One of them was a breach of the requirement that in the reports that have to be made the sub-contractor should provide details of the work done so that obviously if he ceased work the main contractor could arrange for someone else to come in and continue the software design without wasting enormous amounts of time. However, any such breach is quite irrelevant because on the facts it appears to me that the work has been completed. There was never any termination so that that type of matter would not come into play in a factual sense.

12   The reason for there being a need to give some quantification of what the damages might be which would be the amount of the offsetting claim is because the Court is required to determine the amount of the offsetting claim. It cannot do this without evidence, otherwise it is simply guessing in the circumstances as to what might be the damages. Obviously, of course, there is a degree of flexibility in these matters but here there is not even any estimates in the evidence of what might be the damages flowing from the breach. The reason for this probably flows from the matters which I will refer to next.

13   The next matter is whether, of course, there is any genuine dispute. There has been affidavit evidence put on by the plaintiff which clearly makes the point that because of the bad reporting by the defendant company all the way through, or, rather, should I say because of the reporting not in accordance with these contractual requirements, that they can not check whether the work is done.

14   The affidavits drawn on the plaintiff's part are very carefully drawn. They do not have the deponent saying that the work was not done. In fact what they do say, and they make this point on a number of occasions in many of the paragraphs, that the plaintiff can not check whether the work has been done.

15   I am not being critical. In fact it probably indicates a responsible attitude by those who are drawing the affidavits, because clearly the factual situation is the fact that they can not check it rather than say that the work was not done.

16   The evidence is notable for the fact that there is an absence of any material which would suggest that the officer of the defendant company was in fact not working on the project at the times he claimed to be working. The substantial part of his work was at the plaintiff's premises. There are one or two general statements that sometimes he would come in late and leave at the usual time after work finished in the afternoon, but that is unrelated to any particular period or time. There is no suggestion, for instance, in the evidence that at the time he said he was working that in fact he was doing something else.

17   Accordingly, it would seem that all that has been said in the affidavits is that the plaintiff can not determine on the evidence that they accepted during the course of the nine months or so that this project was in place that they could be satisfied that the work was done.

18   There is also the other aspect of whether the said dispute is genuine. In this regard the timing of what happened in the matter is somewhat important.

19   The commencement of work was on 2 March 1999. The first invoice was sent on 30 June 1999 and it was paid on 20 July. Thereafter nothing happened until 30 May 2000 in terms of invoicing, and on that day the second invoice was provided. That covered the period from 30 June in the previous year. On 30 June some $40,000 was paid in part payment of that invoice. On that day the third invoice was delivered together with the time sheets which covered the period March 2000 through until June 2000. Also on that day the contract between the two parties was terminated.

20   One gets a clue as to what is happening when one sees the email which was sent on 20 July from the defendant company to the plaintiff. That is an email from Peter Hojgaard-Olsen to Zoran Tomasevic, both principals of the respective companies. In that Mr Hojgaard-Olsen says that he has not forgotten payment and he is still waiting for Phillips to pay on the contract. He refers to the fact that the defendant has to cut him some room as he has given room to the defendant. He refers to the promises to pay that have been made to him and what he suggests is that something will be paid and he will then want to discuss the second invoice. He asks for patience to be able to pay the first invoice.

21   Up until this time there certainly had not been any suggestion of complaints as to the quality of the work or, more importantly, as to whether the work had been done.

22   There was then, when nothing followed, on 24 July a letter from the defendant company's accountant asking for payment. That was met with a response on 27 July with a request for details saying that without the details they could not check the claim. That really was the first time that there was any suggestion that there was a query about the work that was done, and it was after the event, i.e., after all the work had been done, that the contract was then terminated.

23   In submissions the attitude of the plaintiff to the matter was that simply they could not work it out and that the defendant bore the onus of proving it before it was to be paid. That is not what is involved in determining whether there is a genuine dispute in the debt. Here there is no affidavit evidence saying that the work was not done and there is substantial documentary evidence where the plaintiff has accepted the time sheets put in by the defendant.

24   In my view the evidence does not demonstrate a genuine dispute. Accordingly, I dismiss the summons and order the plaintiff to pay the defendant's costs. The Exhibits may be returned.

oOo

Last Modified: 04/19/2001