Re Shanefield P/L - [1999] QSC 133

IN THE SUPREME COURT
OF QUEENSLAND

No. 1200 of 1999

Brisbane
Before the Hon. Mr Justice Derrington
[Re Shanefield P/L]

IN THE MATTER of the Corporations Law
- and -
IN THE MATTER of Shanefield Pty Ltd
ACN 078 080 669

CATCHWORDS: CORPORATIONS - Practice and Procedure - setting aside statutory notice - whether affidavit in support of application is sufficient - requirements of supporting affidavit - evidence of genuine dispute

Corporations Law s.459G

Counsel:S J Lee for the applicant
S D Guthrie (Solicitor) for the respondent

Solicitors:Parker Simmonds for the applicant
Barwick and Wisewoulds for the respondent

Hearing date: 23 April 1999

REASONS FOR JUDGMENT - DERRINGTON J

Judgment delivered on 29 April 1999

This is an application under s.459G of the Corporations Law to set aside a statutory notice. Preliminary objection to it has been taken by the respondent on the basis that the supporting affidavit, which was required to be filed with it within twenty-one days of service of the statutory demand, is defective. The objection challenges its sufficiency to support the application on the ground of its insufficiency of detail of the defence or set-off upon which the notice is contested.
There is ample authority that it is insufficient for the affidavit merely to allege that the debt is not due or that it does not exceed the statutory minimum. The present affidavit alleges that the full amount due under the parties’ contract has been paid or alternatively that the balance of any indebtedness is below the statutory minimum because the respondent had failed to complete the work under one contract and the work performed on the second was poorly performed, and that it had failed to perform final cleaning up work.
Its relevant terms are as follows:
“11.All works performed by the Respondent on behalf of the Applicant have been paid for.
12.On 12 January 1999 the Applicant caused a letter to be sent to the Respondent in response to an invoice received by the Respondent. Now produced and shown to me and marked with the letter “AOT2” is a true copy of the letter dated 12 January 1999.
13.The letter referred to in the previous paragraph sought from the Respondent full details of his claim. The Applicant to date has received no response from the Respondent.
14.Any monies owed by the Applicant by the Respondent which is denied would be less than $2,000.00.
15.Recently the Applicant engaged the Respondent to perform work with respect to two properties. The Respondent has failed to complete one house and with the second house the work performed by the Respondent was in such poor workmanlike manner that the Applicant has been required to engage alternative bricklayers to complete the work. The Applicant has a set-off or counter-claim against the Respondent for:
(a)completion of work for one property which the Respondent has failed to complete;
(b)rectification of work at the second property;
(c)removal of rubbish, cement and excess debris from the second site.
16.As a result of the Respondent failing to complete the work the Applicant has sustained damages.
17.Upon the completion of the work by an alternative contractor. The Applicant will be able to assess damages incurred as a result of the failure to complete the contract by the Respondent and will be seeking damages and or counter-claim against the Respondent for damages.”
The letter referred to in paragraph 12 which was exhibited to the affidavit reads as follows:
“We have perused an invoice that may be outstanding to your company. We would appreciate that if in the event it is, you provide a further original copy. Our understanding is there is a small amount outstanding for the last house being completed in our Morayfield project.
We would like to resolve and remedy any claim by either party at your earliest convenience. Notwithstanding your delays to the erection of the last two houses in breach of your undertaking, we would like to settle this account in view of maintaining an ongoing relationship.
We were most impressed with the speed and the efficiency used prior to that and also the workmanship used in the erection of all houses. However, it would appear from all our billings you have not allocated any amounts in relation to the provisions of cleaning up, clearing, stacking and/or the removal of the residual broken, cracked bricks, cement and sand along with cleaning of the edging around each house and the excess mortar. Obviously we have had to proceed to clean most of the sites. We would therefore ask you to make good the outstanding works that are still to be completed and also provide a credit note against previous payments relating to the cost of the rectification of the works described herein.
Once we have received these adjustments we will be able to ascertain as to which identity owes what monies if in the event there is any monies outstanding by either party.
We await your response and thereafter hopefully can settle any outstanding matter.”
It will be noted that paragraphs 11 and 14 of the affidavit are in conflict with the letter, which indicates that the applicant did not know whether it owed the respondent monies or not and if so, how much.
An attempt to introduce an argument in support of the affidavit that each contract was total so that nothing was payable unless it was substantially completed, is not permissible. No such suggestion was made in either the letter or the affidavit. If, as was argued, that was the basis of the statement in paragraph 11, it would only demonstrate how defective that was. In the context of the exhibited letter and such other details as were provided in the affidavit, it is plain that no such defence was intended or claimed. The reference to alleged incompleteness of the work in paragraphs 15, 16 and 17 related only to a set-off or counter-claim in respect only of such work as was incomplete.
This argument itself demonstrates why it is necessary that the affidavit should descend to sufficient explanation of any defence to meet the requirements that have been laid down by the authorities as necessary to meet the description of support for the application required by the section.
In Graywinter Properties Pty Ltd v. Gas & Fuel Corporation Superannuation Fund (1996) 14 ACLC 1,703 at 1,708, Sundberg J said:
“It seems to me that s 459G(3) makes plain that the Court can entertain an application to set aside only if within the prescribed period an affidavit supporting the application is filed and copies of the application and affidavit are served. The High Court in Grant said that compliance with the sub-section is a limitation or condition upon the authority of the court to set aside a demand; it is a condition of the jurisdiction that sub-s (3) be observed; if the condition is not observed there is no application before the Court. I am thus unable to agree with the Senior Master that the failure of an affidavit to satisfy the minimum requirements for an affidavit to be a ‘supporting affidavit’ is not a jurisdictional impediment.
The minimum requirements in a genuine dispute case
In order to be a ‘supporting affidavit’, an affidavit must say something that promotes the company’s case. An affidavit which merely says ‘I am a director of the company but am too busy at present to make a full affidavit, and I will do so later’ would not support the application. It would in no way advance, further or assist the company’s cause, which is to have the notice set aside. At the other extreme, the affidavit need not detail, in admissible form, all the evidence that supports the contention of a genuine dispute: John Holland. That evidence must be available at the hearing of the application to set aside, because that application is for final and not interlocutory relief: 71 Paisley Street.
In a s 459H(1)(a) case, the affidavit must in my view disclose facts showing there is a genuine dispute between the parties. A mere assertion that there is a genuine dispute is not enough. Nor is a bare claim that the debt is disputed sufficient. It follows from the fact that the affidavit need not go into evidence, which is the customary function of an affidavit, that it may read like a pleading.
[1709]
An affidavit which exhibits an exchange of correspondence between the parties or between their solicitors from which it appears that a claim is made and rejected for reasons given can qualify as a supporting affidavit. And an affidavit verifying the pleadings in an action may qualify.”
Despite the conflict between the affidavit and the letter exhibited to it, greater weight should be given to the former, and, to the extent that they are consistent, they show that there is some substantial, genuine dispute between the parties, and its nature.
To some extent the affidavit is wanting in its quantification of the alleged deficiencies in the respondent’s work and in its specification of their details. However, between it and the letter, there is an identification of the grounds of counter-claim or set-off and a defence that the amount claimed by the respondent was not payable because the relevant work had not been done; and although it is a very unsatisfactory method of quantifying these matters, the affidavit does imply that together they amount to the sum claimed in the notice or alternatively at least an amount sufficient to bring the debt below the statutory minimum.
It must also be borne in mind that for the determination of the application, the applicant is entitled to supplement the affidavit required to be filed within twenty-one days with further material so that its purpose is not to provide the Court with all the detail that would be necessary to the final determination. This distinction between what is necessary for the Court’s determination of the matter and what is necessary for the supporting affidavit that must be filed within the limited time means that the quality of the latter as to detail need not match the former. But there must be evidence of a genuine dispute of such substance as to enliven, prima facie, the application. The nature of this will vary depending on the circumstances, subject however to the constant need for compliance with the purpose of the requirement. It is a matter of degree related to a fairly imprecise criterion, so that the result is often a matter of impression. It should not be the subject of strict interpretation or criteria.
In the present case, the criticisms that may legitimately be levelled at the supporting affidavit do not defeat its basic sufficiency, though it is close to the borderline. It descends to some detail that supports the existence of a genuine defence, and is itself supported by the letter written before the notice was given.
The preliminary objection is therefore overruled and the application is adjourned for further hearing on the permissible grounds.