Re Wollongong Coal Ltd

[2015] NSWSC 1680

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Wollongong Coal Limited; In the matter of Wongawilli Coal Pty Ltd; In the matter of Wollongong Coal Limited [2015] NSWSC 1680
Hearing dates:	9 October 2015
Decision date:	12 November 2015
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Parties to bring in short minutes of order to give effect to this judgment within 7 days.
Catchwords:	CORPORATIONS – winding up – application to set aside creditors’ statutory demands under Corporations Act 2001 (Cth) s 459H and 459J — where application required consideration of interrelationship between purchase orders and invoices – whether a genuine dispute has been established – whether defects in demands gave rise to substantial injustice – whether some other reason for statutory demand to be set aside – whether to vary statutory demands under Corporations Act 2001 (Cth) s 459H(4)
Legislation Cited:	- Corporations Act 2001 (Cth) pt 5.4, ss 459G, 459H(1), 459H(2), 459H(3), 459H(4), 459J, 459J(1) - Oaths Act 1867 (Qld) - Supreme Court (Corporations) Rules 1999 (NSW), Form 7 - Uniform Civil Procedure Rules 2005 (NSW) r 35.1
Cases Cited:	- Britten-Norman Pty Ltd v Analysis and Technology Australia Pty Ltd [2013] NSWCA 344; (2013) 85 NSWLR 601 - Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5 - CGI Information Systems & Management Consultants Pty Ltd v APRA Consulting Pty Ltd [2003] NSWSC 728; (2003) 47 ACSR 100 - Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 - Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 - Fastlink Calling Pty Ltd v Macquarie Telecom Pty Ltd [2008] NSWSC 299; (2008) 217 FLR 366 - First State Computing Pty Ltd v Kyling (1995) 13 ACLC 939 - Growth Equities Corporation Ltd v Genesis Growth Investments Pty Ltd [2010] NSWSC 1302 - Infratel Networks Pty Ltd v Gundry’s Telco & Rigging Pty Ltd [2012] NSWCA 365; (2012) 92 ACSR 27 - John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 - Panel Tech Industries (Australia) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896 - Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 20 ACSR 746 - Powerhouse Australasia Pty Ltd v Viarc Pty Ltd [2006] VSC 508 - Re Diveva Pty Ltd [2015] NSWSC 509 - Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601 at 605; 11 ACLC 919 - Re UGL Process Solutions Pty Ltd [2012] NSWSC 1256 - Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452 - Spinoccia Compressor & Air Tools Sales and Service Pty Ltd v Challenger Managed Investments Ltd [2010] NSWSC 1310 - TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd [2008] VSCA 70; (2008) 66 ACSR 67 - Troutfarms Australia Pty Ltd v Perpetual Nominees Ltd [2013] VSCA 176 - Wildtown Holdings Pty Ltd v Rural Traders Company Ltd [2002] WASCA 196 - Windridge Farms (Holdings) Pty Ltd v BMG Environmental Group Pty Ltd [2009] NSWSC 506
Category:	Principal judgment
Parties:	2015/213266 Wollongong Coal Limited (Plaintiff) Cougar Stratajacks Pty Ltd (Defendant) 2015/213267 Wongawilli Coal Pty Ltd (Plaintiff) Cougar Mining Group Pty Ltd (Defendant) 2015/213268 Wollongong Coal Limited (Plaintiff) Cougar Mining Group Pty Ltd (Defendant)
Representation:	Counsel: C. Withers (Plaintiffs) M. Fantin (Defendants)   Solicitors: Acorn Lawyers (Plaintiffs) Mackay Solicitors (Defendants)
File Number(s):	2015/2132662015/2132672015/213268

Judgment

1. In these three proceedings, Wollongong Coal Limited (“WCL”) applies (in proceedings 2015/213266 and proceedings 2015/213268) to set aside creditors’ statutory demands issued by Cougar Stratajacks Pty Limited (“CSJ”) and Cougar Mining Group Pty Limited (“CMG”). Wongawilli Coal Limited (“Wongawilli”) also applies (in proceedings 2015/213267) to set aside a creditor’s statutory demand served by CMG. WCL operates, or operated, a mining business in the southern coal fields region of New South Wales. CSJ provides products for use at mine sites and CMG, the Defendant in proceedings 2015/213267 and 2015/213268, provides support services and equipment to mining companies and has provided such services to Wongawilli and WCL from time to time.

2. The proceedings raised similar issues and they were heard together and an order was made that evidence in one be evidence in the other. Counsel agreed largely not to object to the affidavit evidence led by the parties, although numerous objections had been notified, on the basis that issues as to the form of that evidence could be treated as going to its weight. Counsel also did not seek to cross-examine the relevant witnesses.

Whether there is a defect in the affidavits verifying the demands

3. Each of the creditor’s statutory demands served by CSJ and CMG was verified (or, WCL would submit, purportedly verified) by an affidavit of Mr Zelko Biki dated 26 June 2015. WCL and Wongawilli rely, in each of the proceedings, on an error which occurs in each of the affidavits of Mr Biki verifying the relevant creditor’s statutory demands, which each commenced with the statement that Mr Biki “solemnly and sincerely affirm and declare[d]” the specified matters but concluded with a statement that it was sworn by Mr Biki.

4. Mr Withers, who appears for WCL and Wongawilli, submits that that defect in the affidavits amounted to either a failure to comply with Form 7 in the Supreme Court (Corporations) Rules 1999 (NSW) or to the affidavits being invalidly taken under the Oaths Act 1867 (Qld) which provides for an affirmation to be made or an affidavit to be sworn on oath. Mr Fantin, who appears for CSJ and CMG, responds that the reference to Mr Biki having affirmed and declared the affidavits, when the jurat referred to the affidavits having been sworn, was not fatal to the demands because that language sufficiently complied with Form 7 specified under the Supreme Court (Corporations) Rules. It seems to me that that submission would not provide an answer to the difficulty with the affidavits, if Mr Biki had not in fact either sworn the affidavits or affirmed them in a proper manner or if there was no evidence as to what had occurred. However, the evidence as to what had occurred, which I note below, addresses that issue.

5. I pause to note that the case law differs as to whether a court should only set aside a creditor’s statutory demand where substantial injustice is established, where a defect is not in the demand itself, but in the accompanying affidavit. It is not necessary to address that question, to which the parties gave little attention, and it is sufficient, for present purposes, that I proceed on the basis that the requirement for verification in an affidavit supporting a creditor’s statutory demand is of fundamental importance and, if the creditor’s statutory demands had not been verified by an affidavit that was in fact either sworn or affirmed by Mr Biki, that would likely have given rise to substantial injustice to WCL and Wongawilli for the purposes of s 459J(1)(a) of the Corporations Act 2001 (Cth) and would also likely have given rise to some other reason to set aside the demands under s 459J(1)(b) of the Corporations Act.

6. In Fastlink Calling Pty Ltd v Macquarie Telecom Pty Ltd [2008] NSWSC 299; (2008) 217 FLR 366, Barrett J noted that the Court may receive evidence of the circumstances surrounding the creation and signing of a document said to be an affidavit, and also drew attention to r 35.1 of the Uniform Civil Procedure Rules 2005 (NSW) which provides that an affidavit may, with the Court’s leave, be used despite any irregularity in form. In that case, Barrett J held that the relevant document was not shown to be an affidavit, but only by reason of the inadequacy of the evidence seeking to establish that matter. By his further affidavit dated 12 August 2015, Mr Biki confirmed that, on or about 26 June 2015, he had sworn the relevant affidavits. Mr Biki was not cross-examined as to that evidence and I accept it.

7. I accept, of course, that the taking of an oath or the making of an affirmation are alternatives: Spinoccia Compressor & Air Tools Sales and Service Pty Ltd v Challenger Managed Investments Ltd [2010] NSWSC 1310. However, where Mr Biki’s evidence establishes that the relevant affidavits were in fact sworn by him, notwithstanding the incorrect reference to affirmation in them, they comply with the requirements of the Oaths Act. In those circumstances, there is no basis for a finding that the affidavits did not in fact verify the demands, and it does not seem to me that the defects arising from the incorrect inclusion of words of affirmation in the affidavits give rise to either substantial injustice for the purposes of s 459J(1)(a) of the Corporations Act or some other reason to set aside the demand under s 459J(1)(b) of the Corporations Act. The position is distinguishable from that in Spinoccia Compressor & Air Tools Sales and Service Pty Ltd v Challenger Managed Investments above because there is uncontested evidence in this case that an oath rather than an affirmation was in fact taken. WCL and Wongawilli can have been in no doubt that Mr Biki was claiming to verify the amounts claimed in the demands, although they could have fairly been in doubt as to whether he had done so on oath or an affirmation; he had in fact done so on oath; and WCL and Wongawilli have had the benefit of the verification of the amount claimed in the creditor’s statutory demands which the Act requires, notwithstanding the error that appeared on the face of the affidavits.

8. I note, for completeness, that the name “Wollongong” was incorrectly spelt in the header to the affidavits verifying the creditor’s statutory demands at issue in proceedings 2015/213266 and 2015/213268. Neither party raised that typographical error and I need not address it further.

The principles applicable to determining whether a genuine dispute is established for the purposes of s 459H(1)(a) of the Corporations Act

9. A second issue that arises, in each of the proceedings, is whether a genuine dispute is established as to the debt claimed in the creditor’s statutory demands, so as to require that the demands be set aside under s 459H(1)(a) of the Corporations Act. The principles applicable to a determination whether a genuine dispute is established are not controversial in their content. In this case, it is clear that WCL and Wongawilli claim to dispute the amount of the debts claimed by CSJ and CMG but that is presumably the case in any application to set aside a creditor’s statutory demand on the basis of an allegation of a “genuine dispute”. An issue that arises in this case is whether that dispute can properly be characterised as “genuine” and the scope within which a Court may find that such a dispute is not genuine.

10. Section 459H(1)(a) of the Corporations Act provides that a creditor’s statutory demand may be set aside when the Court is satisfied that there is a genuine dispute about the existence or amount to which that demand relates. Mr Withers refers to the well-established proposition that a genuine dispute may be established if the dispute is not plainly vexatious or frivolous, or a plausible connection requiring investigation exists or there exists matters that, on rational grounds, indicate an arguable case. He also points out, and I accept, that the threshold for establishing a genuine dispute is not a difficult or demanding one. I refer to the relevant authorities below.

11. The test for a genuine dispute has been formulated as requiring that the dispute is not “plainly vexatious or frivolous” or “may have some substance” or involves “a plausible contention requiring investigation” and is similar to that which would apply in an application for an interlocutory injunction or a summary judgment: Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787; Re UGL Process Solutions Pty Ltd [2012] NSWSC 1256 at [6]. In Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 at 39, Lockhart J observed that:

“The notion of a ‘genuine dispute’ … suggests to me that the court must be satisfied that there is a dispute that is not plainly vexatious or frivolous. It must be satisfied that there is a claim that may have some substance. On the other hand the court must be careful, because if all an applicant has to do is to assert both a claim and some basis for it, without more, it would mean in almost every case that the court would set aside statutory demands where application is made to that effect. Plainly that is not what the legislature intended by introducing this new regime.”

The latter observation ought particularly to be borne in mind in this case.

12. In John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 at 253, Young J noted that there may be cases where the Court will look not only to an assertion of a dispute, but some material short of proof which backs up the claim that the amount is disputed; and that, in a sizeable construction case, a disputing of the figures may establish a genuine dispute about the amount of the debt without review of the evidence that backs them up. In Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452 at 464, the Full Court of the Federal Court held that a “genuine dispute” must be bona fide and truly exist in fact, and the grounds for that dispute must be real and not spurious, hypothetical, illusory or misconceived.

13. In CGI Information Systems & Management Consultants Pty Ltd v APRA Consulting Pty Ltd [2003] NSWSC 728; (2003) 47 ACSR 100 at [16], Barrett J summarised the principle as follows:

“[T]he task faced by the company challenging a statutory demand on the genuine dispute grounds is by no means at all a difficult or demanding one. The company will fail in that task only if it is found, upon the hearing of its s 459G application, that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted. Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The Court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that on rational grounds indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger.”

14. In Panel Tech Industries (Australia) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896 at [17], Barrett J similarly noted that the test for a genuine dispute involved a “plausible contention requiring investigation” which was “real and not spurious, hypothetical, illusory or misconceived” and a “perception of genuineness (or lack of it)”. His Honour also noted that the tests for a genuine dispute, applied in the context of a summary procedure where it is not expected that the Court will embark on any extended enquiry, mean that the task faced by a company challenging a statutory demand on the “genuine dispute” ground is by no means at all a difficult or demanding one, and that the company will fail in that test only if it is found, upon the hearing of its application, that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted.

15. Mr Fantin also draws attention to the observation of Dodds-Streeton J in Powerhouse Australasia Pty Ltd v Viarc Pty Ltd [2006] VSC 508 at [48] that:

“While there is not a very exacting standard, on the one hand, mere assertion of a dispute or off-setting claim, mere bluster or advancing grounds which are illusory or spurious or insufficiently particularised will not suffice. The Court must not enter into the merits of the dispute, but it is not crossing the line in relation to its legitimate role in these applications to consider evidence which ‘bears on whether or not the asserted dispute or off-setting claim is genuine’. Indeed that is its necessary function.”

It seems to me that her Honour’s observation is correct, so far as the question whether a dispute is “genuine” may well require the consideration of evidence that may support the existence of that dispute or indicate that it does not have any genuine basis.

16. In TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd [2008] VSCA 70; (2008) 66 ACSR 67 at [71], Dodds-Streeton JA observed that a company which seeks to establish a genuine dispute or offsetting claim:

“… is required to evidence the assertions relevant to the alleged dispute or off-setting claim only to the extent necessary for that primary task. The dispute or off-setting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile. … [I]t is not necessary for the company to advance, at this stage, a fully evidenced claim. Something ‘between mere assertion and the proof that would be necessary in a court of law’ may suffice.”

17. In Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5 at [9], Murphy JA (with whom Buss JA agreed) observed that:

“The expression ‘genuine dispute’ within the meaning of s 459H(1)(a) of the [Corporations] Act, connotes a plausible contention requiring investigation: Createc Pty Ltd v Design Signs Pty Ltd [2009] WASCA 85 at [44]. The demand will be set aside if there is a bona fide disputed issue of fact or law, which is not based on spurious, hypothetical, illusory or misconceived grounds: Createc v Design Signs; Asian Century Holdings Inc v Fleuris Pty Ltd [2000] WASCA 59 at [35]. Once such a dispute is raised, it is not necessary for a company to satisfy the court as to where the merits of the dispute lie: Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294 at [30]. The court will not attempt to weigh or examine the merits of any dispute: Createc v Design Signs; Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290 at 295.”

18. In Infratel Networks Pty Ltd v Gundry’s Telco & Rigging Pty Ltd [2012] NSWCA 365; (2012) 92 ACSR 27 at [44], Young AJA (with whom Hoeben JA and Ward J agreed) referred to Eyota Pty Ltd v Hanave Pty Ltd above and noted that the question for a primary judge, in determining an application to set aside a statutory demand under s 459H(1)(a), is:

“[T]o determine whether there was a genuine dispute, that is one in which a plausible contention has been raised by the company on which the statutory demand was served.”

19. In Britten-Norman Pty Ltd v Analysis and Technology Australia Pty Ltd [2013] NSWCA 344; (2013) 85 NSWLR 601 at [30]–[31] and [39]–[55], in dealing with the question whether an offsetting claim was established under s 459H(1)(b) of the Corporations Act, the Court of Appeal referred to the “relatively low minimum requirements” for demonstrating an offsetting claim and noted at [30] that:

“It is settled law that s 459H requires the court to be satisfied that there is a ‘serious question to be tried’: see Scanhill v Century 21 Australasia at 467, or ‘an issue deserving of a hearing’ as to whether the company has such a claim against the creditor: see Chase Manhattan Bank Australia Ltd v Oscty Pty Ltd [1995] FCA 1208; 17 ACSR 128 at [42] per Lindgren J; Eumina Investments Pty Ltd v Westpac Banking Corp [1998] FCA 824; 84 FCR 454 per Emmett J (as his Honour then was). The claim must be made in good faith: Macleay Nominees v Belle Property East Pty Ltd. In that case, Palmer J observed, at [18], that good faith, in this context, meant that the offsetting claim was arguable on the basis of facts that were asserted ‘with sufficient particularity to enable the court to determine that the claim is not fanciful’.”

20. The Court of Appeal there observed at [36] that there must, relevantly, be evidence that satisfies the Court that there is a “serious question to be tried” or “an issue deserving of a hearing” or a “plausible contention requiring investigation” of the existence of an offsetting claim. The Court also observed that:

“It is apparent, therefore, that evidence sufficient to satisfy this test, given the time period in which the affidavit must be filed, cannot and need not conclusively prove the claim or otherwise be incontrovertible or substantially non-contestable.” (at [36])

The Court of Appeal also observed at [46] that:

“In determining whether there is evidence of a genuine dispute as to the debt, or that there is an offsetting claim, except in extreme cases, the Court is not concerned to engage in an enquiry as to the credit of the deponent of the affidavit filed in support of the application.”

At the same time, the Court of Appeal referred to Eyota Pty Ltd v Hanave Pty Ltd above and recognised that the Court is not required to accept uncritically every statement in an affidavit, where it is inconsistent with undisputed contemporary documents, inherently improbable, does not have sufficient prima facie plausibility to merit further investigation or is an assertion of facts unsupported by evidence. The Court of Appeal summarised the position (at [47]) as being that the Court’s role is:

“to determine whether there was plausible evidence to establish the existence of a genuine dispute [or offsetting claim], not whether the evidence was disputed or even likely to be accepted on a final hearing of any such claim.”

21. The Court of Appeal also there did not accept that inconsistent contemporaneous documents were sufficient, or were necessarily sufficient, to displace an offsetting claim notwithstanding that they might pose “difficulties for the ultimate proof of the claim” (at [70]). I do not understand that observation to amount to a proposition of law that such matters may not be relevant to whether a genuine dispute is established. Whether such inconsistencies exclude a genuine dispute must be partly a question of fact to be determined in the particular case, as is illustrated by the approach adopted by Osborn JA (with whom Ashley JA agreed) in Troutfarms Australia Pty Ltd v Perpetual Nominees Ltd [2013] VSCA 176 at [28]ff. In Re Diveva Pty Ltd [2015] NSWSC 509 at [26], I noted that:

“I do not understand the Court of Appeal’s approach in Britten-Norman above to require the Court to eschew any evaluative exercise as to whether there is a plausible basis for an offsetting claim, where such an evaluation is contemplated by the earlier cases to which they refer, and seems to me to be necessarily required by any determination of whether there is a serious question to be tried, an issue deserving of a hearing, or a plausible contention requiring investigation.”

I take the same view in respect of a genuine dispute. That is a matter of some importance to the findings that I reach below.

22. I proceed, following Britten-Norman, on the basis that it is not necessary for a party seeking to set aside a demand to lead admissible evidence to establish a “genuine dispute” and that the absence of contemporaneous documentation to support the existence of the dispute, or the existence of contemporaneous documentation inconsistent with a dispute, will not necessarily deprive it of a genuine character. Having said that, it seems to me that there must be a point at which the Court can conclude that a dispute is in fact not “genuine” – or, in the language of the earlier case law, that it amounts to a spurious claim, mere bluster or assertion or does not raise a plausible contention requiring investigation – by reason of a combination of those matters. Otherwise it is difficult to see any circumstance in which any dispute asserted to exist would not be treated as a genuine dispute, and a creditor’s statutory demand would not be set aside, as long as a deponent of an affidavit in support of an application to set aside a demand was prepared to assert and verify its existence.

Proceedings 2015/213266 Application by WCL to set aside creditor’s statutory demand served by CSJ

23. By Originating Process filed on 21 July 2015, WCL applies to set aside the creditor’s statutory demand dated 26 June 2015 served by CSJ on WCL on 30 June 2015, on the basis that there is a genuine dispute as to the existence and quantum of the debt claimed in the demand. The demand was in the amount of $264,400.87 and the schedule to the demand described the debt as follows:

“The creditor provided goods and services as requested by and for the benefit of [WCL] during the period of approximately January 2015 to May 2015.”

The demand in turn referred to seven invoices issued to WCL which were identified as due and owing and noted that WCL had failed to pay the amount owing on the invoices despite demand.

24. As I noted above, the demand served by CSJ on WCL was verified by Mr Biki’s affidavit dated 26 June 2015. I have dealt with the issue as to the manner in which that affidavit was sworn above. Mr Biki’s affidavit indicated he was the Group General Manager of CSJ; he had inspected CSJ’s books and records in relation to its account with WCL; he confirmed that WCL was indebted to CSJ in the amount claimed, and he indicated his belief there was no genuine dispute about the existence or amount of the debt.

25. Mr Withers contends that there is a genuine dispute as to the existence of the entirety of the debt, referable to all the invoices, because WCL did not authorise, permit, induce or otherwise request the supplies from CSJ, did not raise a valid purchase order or orders for the goods and/or services supplied, and did not approve the delivery or supply of the goods and/or services. Each of these propositions depends on conclusory statements in Mr Sharma’s affidavit sworn 21 July 2015, to which I will refer below. Mr Withers also submits that a genuine dispute exists so far as it is contended that the invoices do not relate to, or go beyond, any valid purchase order.

26. Mr Fantin responds to WCL’s reliance on the absence of purchase orders by submitting that such purchase orders were not necessarily organised or created prior to the provision of services or supply of goods, by reason of the “ad-hoc nature of running a mine” and the fact that mine managers would deal with emergencies with paperwork following the event. Mr Fantin also refers to evidence led by CSJ, including that of WCL’s former chief financial controller Mr Hutton (to which I will refer below) and submits that the non-payment of CSJ’s invoices initially arose from a backlog of outstanding purchase orders arose in WCL’s system rather than any failure by CSJ to provide services or goods, that there was never any confusion with purchase order numbers or references, and it was clear to both parties that the relevant services and goods were supplied by CSJ in accordance with the mine manager’s instructions. Mr Fantin also submits that WCL has not itself adhered to its purchase order process, procedure or policy. I would not have accepted that the propositions put by Mr Fantin excluded a genuine dispute, if such a genuine dispute were otherwise established, since they are directed to a merits dispute of the kind that would properly be determined in a substantive hearing rather than in a summary hearing such as an application to set aside a creditor’s statutory demand.

27. In oral submissions, Mr Fantin relied on the decision of Barrett J in Growth Equities Corporation Ltd v Genesis Growth Investments Pty Ltd [2010] NSWSC 1302 at [4], where his Honour noted that an invoice was not the source of a debt, but was a request or demand for payment in respect of an amount for which liability had already arisen from some independent source, such as the supply of goods or services. Mr Fantin also relies on the decision of Brereton J in Windridge Farms (Holdings) Pty Ltd v BMG Environmental Group Pty Ltd [2009] NSWSC 506 at [10], where Brereton J similarly observed that:

“The existence of a debt does not depend upon the provision of an invoice; typically it arises from the delivery of the goods, being a debt for goods sold and delivered, as distinct from a debt from goods invoiced.”

It does not seem to me that this proposition assists CSJ or CMG since, to the extent that the relevant debts arise from the provision of goods or services rather than from the invoices, the Court must still determine the question whether the matters raised by WCL and Wongawilli give rise to a genuine dispute as to the debt.

The affidavit evidence

28. Each party relies on several affidavits in respect of this application. I will first refer to those affidavits in general terms, and then to the categories of invoices in issue and the evidence led in respect of them. WCL relies on the affidavit of its company secretary, Mr Sanjay Sharma dated 21 July 2015, which was the original affidavit filed by WCL in support of the application to set aside the demand. That affidavit recognises that WCL and CSJ and its related companies had a commercial relationship that included supply of goods or services by CSJ and its related companies to WCL from time to time. Mr Sharma indicates, in two paragraphs which set out the substance of the alleged dispute as to the invoices issued by CSJ to WCL, which were admitted subject to weight, that:

“As is the general practice in the industry and otherwise, in engaging [CSJ], it was agreed that a formal request in the form of a ‘Purchase Order’ would be issued by [CSJ] to [WCL] from time to time, particularising the supply of goods and/or services required from [CSJ], the specifications and terms relating to such supply.

It was the understanding and agreement of both [WCL] and [CSJ] that no supply of goods and/or services would be committed or performed by [CSJ] without a valid Purchase Order issued by [WCL].”

Mr Sharma also indicated, by way of assertion, that:

“[WCL] did not authorise, permit, induce or otherwise request these supplies and no valid Purchase Orders were issued for the goods and/or services supplied.”

Mr Sharma also asserts that WCL has advised CSJ “that it did not issue any Purchase Order for the goods and/or services supplied and, therefore, had not requested supply of such goods and/or services”. The “therefore” in this proposition appears to assume, as Mr Sharma contends, that a request for supply of goods or services, and an obligation to pay for them when supplied, can only arise by means of a purchase order.

29. Several matters may be noted about Mr Sharma’s first affidavit. The first is that Mr Sharma is the company secretary of WCL and appears to have had little involvement in the supply of goods or work done by CSJ that is the subject of the demand. The second is that Mr Sharma largely does not seek to challenge that the relevant goods or services were supplied or that the invoices issued for them were at appropriate rates. He refers to an asserted understanding or agreement, to which CSJ is said to be party, that no supply of goods or services would be committed or performed by CSJ without a valid purchase order issued by WCL. He does not identify any communication or act by CSJ by which it is said to have assented to the suggested understanding and agreement. An obvious difficulty with the assertion of that understanding or agreement is that, on WCL’s own case, the supply of goods and/or services for WCL’s benefit in fact occurred, on several occasions, without a valid purchase order being issued by WCL. The last paragraph noted above is no more than a bare assertion that WCL did not authorise, permit, induce or request the relevant supplies. There is no indication how Mr Sharma has knowledge of that matter, and the statement is plainly incorrect, so far as a purchase order exists at least for the last of the invoices issued by CSJ.

30. CSJ relies on Mr Biki’s affidavit dated 11 August 2015, which referred to the provision of stratajacks by CSJ to WCL and to a subsequent request for a quotation to conduct a void fill project. Mr Biki refers to several invoices which have been paid by WCL in respect of the stratajack trial and void fill project that are the subject of the invoices referred to in the demand and also sets out the nature of the goods and services that are the subject of the unpaid invoices, in terms that broadly reflect the description of those services in the invoices. I will refer to other aspects of Mr Biki’s evidence below.

31. CSJ also relies on the affidavit of its director, Mr Pike, dated 11 August 2015. Mr Pike accepts, in that affidavit, that purchase orders may not have been issued, implicitly for some invoices, but his evidence is that discussions took place where senior WCL staff requested CSJ staff to conduct various works. He in turn identifies the persons who requested the relevant works. Mr Pike’s affidavit sets out the circumstances of the stratajacks trial and his evidence is that it was agreed between CSJ and WCL that WCL would pay for all consumables and costs in respect of the stratajacks trial. Mr Pike’s affidavit evidence is also that CSJ was requested to quote to conduct the void fill project and he refers to the quoted charge to be made for that work and an agreement that WCL would be responsible for specified additional expenses. An exchange of emails between Mr Pike and Mr Saini (who gives evidence for WCL) and others is in evidence (Ex D2), by which WCL’s mine manager confirmed his agreement to the relevant charges and observed that:

“I want this void pumped, it is stretching out on our agreed timelines.”

The emails attached to Mr Pike’s affidavit also include the original quotation for the void fill project; an email dated 13 February 2015 from Mr Saini to Mr Way, copied to Mr Pike, expressly stating that the existing purchase order should be used to cover works over the weekend on the basis that details could be reconciled on Monday; further emails from Mr Pike to Mr Way of WCL, copied to Mr Saini, as to the relevant charges, and a request from Mr Pike by email dated 16 February 2015 for new purchase orders to cover particular items. Mr Saini does not refer to any of this correspondence in his affidavit in reply.

32. CSJ relies on a further affidavit of Mr Barnett dated 11 August 2015. Little turns on that affidavit, since its substance was rejected so far as it addressed matters subject to without prejudice privilege. CSJ also relies on the affidavit of Mr Ehsman dated 12 August 2015 dealing with the detail of several invoices to which I will refer below. CSJ also relies on an affidavit of Mr Hutton, the former chief financial controller for WCL, dated 13 August 2015. Mr Hutton’s evidence, in contrast with that on which WCL relies, is that most work undertaken by CSJ was arranged verbally with Mr Stone, the former mine manager of WCL, and he points to subsequent difficulties in obtaining approval to pay CSJ’s invoices. His evidence is that, in June 2015, Mr Way of WCL advised him that CSJ’s invoices needed to be approved and that he should work towards this being done. He refers to a subsequent process by which management of WCL determined when payments could be made. I will refer to Mr Hutton’s evidence as to particular invoices below.

33. By a further affidavit dated 27 August 2015, Mr Sharma responded to affidavit evidence led on behalf of CSJ in the application. Some parts of that affidavit were not read, to the extent that part of the evidence led by CSJ had been excluded on the grounds of without prejudice privilege. Mr Sharma’s affidavit in reply is largely directed to statements that Mr Sharma does not know particular matters led in CSJ’s evidence and to a further assertion of the existence and desirability of the practice of purchase orders to which Mr Sharma had referred in his earlier affidavit. Mr Sharma also leads further evidence, again in conclusory form, of the process for the issue of purchase orders. That affidavit also includes further assertions of CSJ’s knowledge of those matters, again in conclusory form, and without any indication that Mr Sharma was party to any conversation or communication which allowed him to make the relevant assertion. Mr Sharma’s affidavit also states that when a valid purchase was made and the work as requested performed, payment was made (Sharma 27.8.15). Little weight can be given to that statement where the contrary emerges in respect of at least the last of the invoices on which CSJ relies.

34. Mr Sharma also relies, in his affidavit in reply, on an email sent by WCL’s mine manager, Mr Stone, to WCL employees on 4 November 2014 which emphasised that requirements for goods and services were to be “forwarded to commercial who will arrange for quoting/contracts” and that “any individual committing the business to spend without an approved requisition and an associated authorised p[urchase] o[rder] is putting their employment in jeopardy”. Since this application does not require findings on the merits, as distinct from a finding whether a genuine dispute is established, I leave aside the question whether that email would more readily support an inference that there then existed an issue as to non-compliance with WCL’s asserted policy not to acquire goods or services without issuing valid purchase orders, which WCL was seeking to address by reminding employees not to commit the business to spending without an approved requisition, and threatening them with termination of their employment for non-compliance with that policy.

35. WCL also relies on the affidavit of Mr Ravinder Saini dated 27 August 2015, Mr Singh is the procurement officer for WCL and his evidence deals with the process for obtaining quotes for work and the issue of purchase orders, and he also makes conclusory statements that, without a purchase order, a contractor is not engaged and not permitted to do work for WCL. I will refer to other aspects of Mr Saini’s evidence as to particular invoices below.

Whether there is a genuine dispute as to work invoiced in respect of invoices CSJI0002-0003 and CSJI0008-CSJI0011

36. The relevant invoices are in evidence (Ex D13) and it will be necessary to deal with each of these invoices to establish whether a genuine dispute is established by reference to the criteria noted above. Mr Withers noted in oral submissions that Mr Biki’s affidavit identified six invoices as relating to purchase order number 159768 and submitted that that purchase order was not in evidence and WCL disputed that the purchase order covered the invoices.

37. The first invoice that is the subject of the demand, and relates to that purchase order, is invoice CSJI002 dated 6 January 2015 in the amount of $32,735.47 inclusive of GST which describes the goods supplied as 68 bags of Cougar hydragrout power. The second invoice that is the subject of the demand and relates to that purchase order is invoice CSJI003 dated 6 January 2015 in the amount of $10,153 inclusive of GST which describes the goods supplied as 13 stratajacks and installation fitting kits. The third invoice that is the subject of the demand is invoice CSJI008 dated 19 February 2015 in the amount of $75,672.29, after allowing a credit, which relates to labour and travel hours. There are signed shift reports for the shifts claimed in invoice CSJI008 in evidence (Ex D6, pp 1–5). The fourth invoice that is the subject of the demand is invoice CSJI009 dated 23 February 2015 in the amount of $45,943.07 inclusive of GST which also relates to labour and additional items. The fifth invoice that is the subject of the demand is invoice CSJI010 dated 2 March 2015 in the amount of $50,068.43 inclusive of GST that relates to freight costs as well as damaged and unusable bags of hydragrout. The sixth invoice that is the subject of the demand is invoice CSJI011 dated 17 March 2015 in the amount in the amount of $1,442.10 inclusive of GST that relates to a freight charge for the transport of a pumping system from WCL.

36. CSJ relies on Mr Biki’s affidavit, which sets out the circumstances in which invoice CSJI003, originally issued for 36 stratajack units, was reduced to 13 units, after 22 uninstalled units were removed from WCL’s site due to outstanding payments. Mr Biki’s evidence is that these invoices relate to payment for works conducted on WCL’s Russell Vale Collier Long Wall mine site and the CSJ’s workers would not be able to gain access to the site or commence work underground without WCL’s consent. There is evidence that purchase order 159768, referred to in invoices CSJI002–CSJI003 exists; it is referred to in Ex D5 as having a total value of $108,041.36, although that document also refers to a second purchase order of the same number in the amount of $97,225.44 as awaiting approval.

37. CSJ also relies on Mr Ehsman’s evidence that invoices CSJI002–CSJI003 were initially issued with a reference to the former mine manager of WCL, Mr Stone, in place of the purchase order number, at Mr Stone’s direction, and were reissued on 22 June 2015 and the purchase order number changed on both invoices, with a reduced value due to a reduced number of stratajacks used in the trial. There is evidence that the updated invoices were sent to Mr Hutton and Mr Way of WCL on 22 June 2015 and, by email dated 24 June 2015, Mr Way confirmed that he had changed the original purchase order (Ex D1). By a further email from Mr Richard Hutton of WCL to Mr Pike dated 24 June 2015, Mr Hutton advised Mr Pike that four orders were awaiting purchase order approval for stratajacks trial and one for the void fill, and would be approved in WCL’s system by the following Friday (Ex D3).

38. By a further email dated 16 July 2015 from Mr Biki (Ex D4) to Mr Saini and others, Mr Biki expressed the view that any issue in CSJ’s invoices without purchase orders was caused by WCL’s internal processes only, and pointed to the emails relating to the provision of the relevant products, services and price; noted that verbal and written agreements were formed with the then and current mine managers and neither of them had disputed the quality or value of the work carried out; noted that purchase order requisitions had been raised by WCL in line with invoices CSJI002–CSJI003 and CSJI010–CJSI011; and stated that a contract had been formed notwithstanding WCL’s internal processes relating to the purchase orders. WCL objected to the tender of its response on the basis of without prejudice privilege, and that response was not admitted on that basis.

39. Mr Hutton, who as I noted above was the chief financial controller for WCL at the relevant time, confirms Mr Pike’s evidence that he had instructed Mr Pike to amend invoices CSJI002–CSJI003 to show purchase order reference 159768, in place of the earlier purchase order reference to the mine manager, Mr Stone, and that he had assured Mr Pike that the invoices would be paid, and his evidence is that it was acknowledged at that time that the work had been performed. Mr Hutton’s evidence is that he was not able to complete the process of loading the invoices into WCL’s system because he went on leave and his employment with WCL ended after he returned from leave. Mr Hutton’s affidavit also annexes an email dated 24 June 2015 by which he advised Mr Pike, with a copy to Mr Way of WCL, that four orders were awaiting purchase order approval for the stratajacks trial and one for the void fill, which would be approved in WCL’s system by Friday (Ex D5).

40. Mr Sharma’s evidence (Sharma 21.7.15) is that the invoice CSJI002 refers to a purchase order “which was not a valid purchase order and did not even exist at that time”. WCL also relied on evidence that the first two invoices, CSJI002 and CSJI003, had been reissued on 23 June 2015 in different amounts. Mr Sharma’s affidavit in reply attaches (Sharma 27.8.15 Annexure “B”) an earlier invoice CSJI003 dated 6 January 2015 in the amount of $28,116 for stratajacks, later reduced in the invoice relied in the demand. Mr Sharma notes, in his affidavit in reply, that the reduction of invoice CSJI003 to $10,153 is only explained for the first time in Mr Biki’s affidavit evidence (Sharma 27.8.15 [25]). Accepting that may be so, it seems to me that that matter would only create a genuine dispute as to the amount claimed in the demand in respect of those invoices if it impeached CSJ’s right to payment for the underlying work.

41. Mr Saini’s evidence is in turn that invoices CSJI002 and CSJI003 (and other invoices to which I have referred above) that are claimed on the basis of purchase order 159768 do not relate to the project that is the subject of the relevant purchase order and that the invoices rendered by CSJ relating to that purchase order total $216,014 whereas that purchase order authorises work to the value of approximately $120,000. As I have noted above, there is evidence that purchase order 159768, referred to in these invoices, exists; it is referred to in Ex D5 as having a total value of $108,041.36, although that document also refers to a second purchase order of the same number in the amount of $97,225.44 as a purchase order awaiting approval. Mr Saini indicates, in respect of invoice CSJI009, that it relates to work done during night shifts and damaged bags of dry powder. Mr Saini does not seek to give evidence either that the work done in night shifts were not performed or that the bags were not damaged. His evidence is that the purchase order stated was for the void fill project and no purchase order was issued for any additional work.

42. I have reminded myself in having regard to the evidence as to these matters that the Court’s role in respect of an application to set aside a creditor’s statutory demand is not to assess the weight of evidence, but instead whether the evidence led by the party seeking to set aside the demand gives rise to a genuine dispute. Equally, I should remind myself that, in order to set aside a statutory demand, a dispute must not only be asserted, but must give rise to more than a spurious claim, mere bluster or assertion and must raise a plausible contention requiring investigation as to whether the amount claimed in the demand is due and payable. I assume, without deciding, that there is in this case a genuine dispute as to whether purchase orders were issued in accordance with WCL’s processes in respect of several of these invoices, although a Court at a merits hearing might well conclude that any failure in that regard was WCL’s not CSJ’s.

43. I am comfortably satisfied, however, that any dispute as to that issue does not establish a genuine dispute as to CSJ’s right to payment for the invoiced amounts that amounts to more than a spurious claim or mere bluster or assertion, and that that dispute does not raise a plausible contention requiring investigation as to CSJ’s entitlement to payment of the amount claimed. The dispute as to whether WCL issued purchase orders in accordance with its internal systems does not raise a serious question that WCL requested that the work be done or that the work was in fact done or that the work done was in fact charged on the agreed basis or that management of WCL had acknowledged its obligation to pay for it. WCL’s claim that a genuine dispute is established also seems to me to depend on an assertion that CSJ’s right to payment, under the terms of the arrangement between WCL and CSJ, was conditional on WCL’s issue of a purchase order that was valid, and that CSJ had no right to payment if WCL failed to issue that purchase order or issued it invalidly or instructed CSJ to take a different approach. However, the evidence of any such condition does not rise beyond conclusory assertions in Mr Sharma’s and Mr Saini’s affidavits, which seem to me to be mere bluster and assertion. No genuine dispute is established as to these invoices.

Whether there is a genuine dispute as to work invoiced in respect of invoice CSJI020

46. The seventh invoice that is the subject of the demand is invoice CSJI020 dated 11 May 2015 in the amount of $48,386.51 inclusive of GST which relates to freight, labour and a pump repair. That invoice refers to purchase order 160422 which is in turn recorded in Ex D5 in an amount (exclusive of GST) that is (as Mr Fantin points out) only slightly different to that ultimately invoiced, and corresponds to the copy of that purchase order in evidence (Ex D13). Mr Saini’s evidence is that, based on his review of purchase order 160422, the work set out in invoice CSJI020 which is stated to relate to that purchase order does not relate to it. Mr Saini does not indicate that he has any personal knowledge as to the nature of the work performed and it seems to me that this statement does not rise beyond bare assertion, and no evidence of substance is led to identify any dispute that the work was done or as to the rates charged for it. No genuine dispute has been established as to this invoice.

Conclusion as to genuine dispute in respect of invoices by CSJ to WCL

47. I have been conscious, as I noted above, that the role of the Court in an application of this kind is to assess whether a dispute is genuine, not to weigh its merits. However, it seems to me that there is a threshold level which a dispute must reach before it can be properly characterised as genuine. It seems to me that the evidence led by WCL as to these invoices does not reach that threshold, and the demand should not be set aside on this basis. I address a further issue raised by WCL in support of its application to set aside this demand in paragraphs 81–86 below.

Proceedings 2015/213267 Application by Wongawilli to set aside demand served by CMG

48. By Originating Process dated 21 July 2015, Wongawilli seeks to set aside a creditor’s statutory demand dated 26 June 2015 served on it by CMG. The demand is in the amount of $187,201.26 and is verified by an affidavit of Mr Biki also dated 26 June 2015. The debt is described as follows:

“The creditor provided goods and services as requested by and for the benefit of [Wongawilli] during the period of approximately March 2014 to March 2015.”

49. Mr Withers submits that there is a genuine dispute as to the existence and quantum of the debt to which the demand issued to Wongawilli relates for the purposes of s 459H(1)(a) of the Corporations Act by reason that one invoice has been paid (as is common ground) and that the relevant invoices:

“… are not identified by [CMG] as relating to any particular Purchase Order, or Orders. [Wongawilli] denies that any agreement was entered into in the absence of any valid Purchase Orders and denies the existence of the debt on this basis.”

Mr Withers also identifies, in respect of each invoice, an objection that CMG has not identified a purchase order relating to the invoice. That proposition, however, adds little of substance to the general objection that is taken.

50. Mr Fantin takes issue with Wongawilli’s claim that there was a strict policy and procedure on purchase orders being issued prior to the commencement of any work and submits there were many occasions where services and goods were supplied prior to the issue of a purchase order. He also submits that each invoice in this demand has a valid purchase order and points out that invoices CMH 2232 and CMH 3992 were in fact part paid by Wongawilli. He also submits (as the evidence to which I refer below demonstrates) that invoices CMH 3813, CMH 3992, 704642, 704248 and 704442 relate to the hire of an underground loader, CMW06, between October 2014 and March 2015, excluding December 2014 when the invoice was incorrectly sent to WCL. He points out that the hire of the underground loader was in accordance with a Master Hire Agreement executed on behalf of CMG and Wongawilli by Messrs Biki and Saini respectively on 10 and 11 February 2014 (Biki 11.8.15, Ex D8, ZB 3), to which I will also refer below.

51. CMG relies, albeit in proceedings 2015/213268 (the evidence in which is also in evidence in these proceedings) on Mr Biki’s affidavit sworn 11 August 2015, which refers to the Master Hire Agreement dated 10 February 2014 between CMG, WCL (formerly known as Gujarat NRE Coking Coal Ltd) and Wongawilli (formerly known as Gujarat NRE Wonga Pty Ltd). The change of name of those entities is established by company searches that are in evidence (Ex D8, ZB 1, ZB 2) and Wongawilli and Gujarat NRE Wonga Pty Limited also have the same Australian business number. Mr Biki’s evidence is that, pursuant to the Master Hire Agreement, Wongawilli (then known as Gujarat NRE Wonga Pty Ltd) hired plant number WMC207, which was subsequently replaced by plant number CMW06 after an engine failure in the former, as was noted on the hire schedule (Ex D8, ZB 4). A purchase order number 528781 was issued by Wongawilli to CMG for the hire of JUG CMW06 in November 2014 (Ex D8, ZB 5). That Master Hire Agreement is in evidence and refers to equipment described initially as JUG-A-0V2 (WMC207), with a note recording a change to “CMW06” and to JUG-A-071, which corresponds to the description of the equipment on the relevant purchase orders and the invoices.

52. This creditor’s statutory demand is referenced to seven invoices totalling $187,201.26. Those invoices are in evidence (Ex D14) and I will refer to them below. Invoice CMH1868 dated 31 March 2014 in the amount of $16,562.71 (inclusive of GST) is described as relating to hire for the period March 2014. Mr Sharma notes, and it is now common ground, that this invoice was paid on or about 9 July 2014, and the demand will need to be varied under s 459H(4) of the Corporations Act to take account of that matter, if it is not otherwise set aside. Mr Withers submits that there is a “defect” in the demand by reason of the inclusion of this invoice. I am satisfied that no substantial injustice arises in respect of that matter, since the error was readily identified and CMG has not sought to press that invoice in this application, and the demand should not be set aside on that basis.

53. Invoice CMH2232 dated 13 June 2014 in the amount of $210 is described as relating to a tow pin and regulator and make up tank. Invoice CMH3813 dated 31 October 2014 in the amount of $35,074.24 (inclusive of GST) is described as relating to hire for the period October 2014, and that invoice refers to purchase order number 523909 dated October 2012. Mr Withers submits that invoice number CMH3813 for a total of $35,074.24 cannot be correlated to purchase order 523909 and that WCL has an arguable case that the purchase order did not cover that invoice. However, as I will note below, there seems to me to be no genuine dispute that the Master Hire Agreement did support that hire charge. Invoice CMH3992 dated 30 November 2014 in the amount of $28,245.87 (inclusive of GST) is described as hire for the period November 2014. Invoice 704248 dated 31 January 2015 in the amount of $35,074.24 is described as relating to January 2015 hire of loader CMW06. Invoice 704442 dated 28 February 2015 in the amount of $31,679.96 (inclusive of GST) is described as hire of the same loader for February 2015; and invoice 704642 dated 31 March 2015 in the amount of $40,354.24 (inclusive of GST) as hire and demobilisation of the same loader.

54. Copies of purchase orders 528781, 528939 and 523909 are in evidence, and relate to hire of that loader for particular periods and the latter also includes demobilisation charges. Two of those purchase orders are issued by Wongawilli and the third under another name of a Gujarat entity, but with the same Australian business number as Wongawilli. CMG also relies, in respect of this application, on Mr Biki’s affidavit dated 11 August 2015, which confirms that invoices other than invoice number CMH1868 remain unpaid. CMG also relies on Mr Barnett’s affidavit dated 11 August 2015, which was of limited significance given the exclusion of without prejudice communications.

55. Wongawilli’s application to set aside the demand is supported by a further affidavit of Mr Sharma dated 21 July 2015, which did not raise any issue relating to purchase orders in respect of this demand within the 21 day period specified in s 459G of the Corporations Act. I would have allowed the parties a further opportunity to be heard as to that issue, which was not raised in submissions, had it been necessary to do so. However, given the result which I reach on other grounds, it is not necessary to do so.

56. By an affidavit dated 27 August 2015, in reply, Mr Sharma first raises a suggestion that there is no purchase order relating to invoice CMH3813 in the amount of $35,074.24 (although purchase order number 523909 is stated on that invoice) and that there is no purchase order relating to invoice 704442 (Ex D14) which refers to purchase order 528939. In oral submissions, Mr Withers fairly acknowledged that there is a possible correlation between that invoice and purchase order 523909 (implicitly by reason of a typographical error) but indicated that he had not been able to take instructions from WCL in that respect (T36). In fairness, that appears to have arisen in circumstances that WCL had not anticipated that the relevant invoices and purchase orders would be tendered by CMG at the hearing. Mr Sharma also makes several conclusory statements as to the importance of the purchase order procedure of a similar character to those made in his evidence in proceedings 2015/213266. Taking Mr Sharma’s evidence at its highest, two invoices are subject to challenge by reason of the suggested absence of purchase orders, although that challenge may arise from misprints in purchase order numbers, and four invoices are not.

57. I am again conscious that the issue for the Court is not to weigh the merit of the dispute in an application of this kind but to determine whether a dispute is genuine in character. I am satisfied that, for the two invoices as to which Mr Sharma seeks to raise a dispute on the basis of absence of purchase orders, that dispute is mere bluster and does not have a genuine character. Even putting aside the question of misprints in the purchase order numbers, that dispute is not genuine because Wongawilli had entered a written hire agreement, by which it was obliged to pay the relevant hire charge, and any failure on its part to issue purchase orders in respect of the monthly hire payments which it was already contractually obliged to make did not remove or qualify that obligation.

58. As I noted above, it is common ground that one of the invoices the subject of this demand, invoice CMH1868 in the amount of $16,562.71, is not properly the subject of the demand because it was previously paid. If the Court is satisfied that there is a genuine dispute as to the existence or amount of a debt to which the demand relates, the Court is required to calculate the "substantiated amount" of the demand by deducting any disputed amounts from the admitted amount of the debt, being that part of the debt as to which no genuine dispute exists: s 459H(2). The Court must set aside a statutory demand if the substantiated amount is less than the statutory minimum: s 459H(3). If the substantiated amount is at least as great as the statutory minimum, the Court can make an order varying the demand as specified in the order and declaring the demand to have had effect, as so varied, as from when the demand was served on the company: s 459H(4). In Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601 at 605; 11 ACLC 919, Thomas J observed that the intention of these provisions is that:

“A company should pay the undisputed part of a demanded debt even if the demand may have been excessive, but that it should not be placed under pressure of being wound up with respect to any part of the debt that is genuinely disputed, or where there is any genuine contra-claim, whether or not it arises out of the same transaction as the debt to which the demand relates.”

59. If the substantiated amount exceeds the statutory minimum, the Court will generally vary the demand pursuant to s 459H(4), unless the demand was so grossly inflated, or comprised matters which were so obviously in dispute, that the service of the demand amounted to an abuse of the regime under Pt 5.4: First State Computing Pty Ltd v Kyling (1995) 13 ACLC 939; Re UGLProcess Solutions Pty Ltd above at [12]. I do not accept that is the case here, for reasons that I indicate below in dealing with WCL’s and Wongawilli’s further submission in that respect. After excluding invoice CMH1868 in the amount of $16,562.71, the substantiated amount that is properly the subject of the creditor’s statutory demand by CMG to Wongawilli is $170,638.55. The demand should be varied accordingly under s 459H(4), and Wongawilli’s claim to set aside this demand on the basis of a genuine dispute is otherwise not established.

Proceedings 2015/213268 WCL’s application to set aside creditor’s statutory demand served by CMG

60. By Originating Process filed on 21 July 2015, WCL applies to set aside a creditor’s statutory demand dated 26 June 2015 issued by CMG. This demand relates to a claim of $313,554.02 and is again verified by an affidavit of Mr Biki dated 26 June 2015. The debt is described as:

“The creditor provided goods and services as requested by and for the benefit of [WCL] during the period of approximately December 2014 to May 2015.”

The demand is in turn particularised by reference to 22 invoices dated between 16 September 2014 and 25 February 2015. The relevant invoices are in evidence (Ex D15) and I will refer to them below. Mr Biki’s affidavit verifying the demand is of a similar form to the affidavits to which I have referred above in respect of the other demands and I have addressed the manner in which it was sworn above.

61. Mr Withers submits there is a genuine dispute as to the existence and quantum of the debt to which the demand relates on the basis that WCL did not authorise, permit, induce or otherwise request the supplies from CMG and did not raise a valid purchase order, or orders, for the goods and/or services supplied. Mr Withers also submits that individual invoices are subject to a genuine dispute, although the nature of that genuine dispute, in respect of the bulk of the invoices, is that WCL did not authorise, permit, or request the goods or services identified in the invoice, which adds nothing to WCL’s general attack on the demand. Mr Fantin responds that WCL’s contention as to the absence of purchase orders relating to the invoices and defect with the demand are shown to be inaccurate and lacking in substance. Mr Fantin submits that all invoices that are the subject of this demand have a valid purchase order, other than for one invoice relating to a request by Mr Brown to investigate the causes of issues with JUG002, an underground loader.

62. WCL again relies on an affidavit of Mr Sharma dated 21 July 2015 in its application to set aside the demand. That affidavit is in substantially the same form as his affidavit filed in proceedings 2015/213266, so far as it raises the issue of invoices allegedly not supported by purchase orders. I refer to the conclusions that I have reached above in respect of the corresponding affidavit and corresponding submission in those proceedings. Mr Sharma also identifies a miscalculation in this demand, such that the total amount of the claim in the demand is $313,554.02 and the invoices add up to $313,554.01. He concedes that that calculation error does not materially affect the quantum of the debt claimed against WCL. Notwithstanding that concession, he indicates that WCL denies the existence of the debt and denies its quantum, both as a result of the miscalculation (in the amount of one cent) and by reason of unidentified breach of agreements.

63. CMG relies on several affidavits to which I will refer below in respect of particular invoices and also relies on Mr Barnett’s affidavit dated 11 August 2015, which was of limited relevance where evidence of a without prejudice communication was excluded.

64. By a further affidavit dated 27 August 2015, in reply, Mr Sharma gives similar evidence to that which he gave in reply in proceedings 2015/213268 as to the importance of the purchase order regime for WCL. I refer to my comments in respect of that evidence above. Mr Sharma responds to Mr Hutton’s affidavit sworn 13 August 2015 by indicating that he is not aware of the arrangements between Mr Stone and CMG referred to in that affidavit, although Mr Sharma’s lack of awareness of particular arrangements does not seem to me to raise any genuine dispute as to their existence. Mr Sharma also indicates that he is not aware of various conversations or meetings referred to in Mr Hutton’s affidavit, a proposition which also takes matters no further. Mr Sharma responds to Mr Reid’s affidavit dated 11 August 2015, again by reasserting the requirement for purchase orders, and responds to Mr Moore’s affidavit dated 11 August 2015 on the same basis.

65. WCL also relies on Mr Saini’s affidavit in reply dated 27 August 2015. Parts of that affidavit were in identical form to his affidavit evidence led in proceedings 2015/213266 and I repeat my comments as to that affidavit above. However, Mr Saini also advanced comments as to the relevant invoices and purchase orders, which appeared to me largely to amount to no more than his description of what he understood those invoices and purchase orders to mean. Mr Saini’s evidence did not indicate that he had any particular contemporaneous knowledge of those matters.

66. I now turn to the particular invoices that are the subject of this demand. Invoice CMH2660 dated 16 September 2014 in the amount of $26,361.34 (inclusive of GST) relates to the repair of a hydraulic pump on JUG002 pursuant to a quotation. Mr Saini’s evidence in respect of invoice CMH2660 acknowledges that a quotation was received for the repair of the pump but relies on the absence of a purchase order. Mr Withers submits that a quotation was requested in relation to the work identified in this invoice, but the quotation was not accepted and a purchase order was not raised.

67. CMG in turn relies on an affidavit of Mr Chris Moore dated 11 August 2015, which refers to the provision of a quotation number 1763FS relating to repairs to a hydraulic pump bearing plant number JUG002, in respect of invoice CMH2660 issued 16 September 2014, which bears that quotation number. CMG also relies on Mr Reid’s affidavit dated 11 August 2015, which refers to his involvement in preparing quotation number 1763FS, referred to in invoice CMH2660, at the request of the surface maintenance coordinator at WCL, Mr Brown, and refers to the repair work on the hydraulic pump undertaken under his supervision. Email correspondence between CMG and Mr Brown of WCL relating to the reasons for the failure of the hydraulic pump is in evidence (Ex D10, NR 2) as are worksheets in respect of the relevant work (Ex D10, NR 1) and quotation number 1763FS (Ex D10, NR 3). It seems to me that where work was quoted, WCL permitted the work to be done, and WCL’s evidence of any agreement with CMG that any payment obligation depended on its issuing a purchase order is (as I have noted above) no more than mere assertion, no genuine dispute is established in respect of the debt arising from that work.

68. Invoice 704023 relates to an outstanding balance of $97.10 in respect of an alternator. Mr Fantin points out that invoice 704023 was part paid by WCL, leaving the residual amount of $97.10. That matter undermines any claim to a genuine dispute in respect of that invoice, and no such genuine dispute is established.

69. Invoice 704081 in the amount of $35,074.24 (inclusive of GST) issued on 31 December 2014 relates to the December hire of JUG CMW06 by Wongawilli and bears purchase order number 528781 which, as I noted above, was issued by Wongawilli to CMG for the hire of JUG CMW06 in November 2014 (Ex D8, ZB 5). Mr Sharma’s evidence is that WCL did not request the hire of equipment referred to in this invoice. That proposition is at best seriously incomplete, and requires the substantial qualifications that Wongawilli had hired that equipment, WCL was invoiced in error for that month’s hire and, it appears, WCL had accepted that charge rather than requiring that invoice to be reissued.

70. Mr Biki’s evidence is that CMG incorrectly invoiced WCL rather than Wongawilli in respect of one month’s hire of JUG CMW06. His evidence is that he is informed that Mr Hutton, then chief financial controller of WCL, who was satisfied to leave the invoice as issued to WCL, instructed WCL’s finance manager, Mr Ehsman, to make no amendments to the invoice. Mr Biki’s evidence is that subsequent invoices were correctly issued to Wongawilli, and I have referred to those invoices in dealing with the creditor’s statutory demand issued by Wongawilli above. CMG also relies on Mr Ehsman’s affidavit dated 12 August 2015, which indicates that he has seen Mr Biki’s affidavit and offers substantially the same account in respect of the hire invoice addressed to WCL rather than Wongawilli. An email from Mr Hutton dated 14 January 2015 noted that the invoice showed WCL but should be addressed to Wongawilli and instructed:

“Leave this one as is, but for the future ones, please change to Wongawilli.” (Ex D11).

71. CMG also leads evidence of Mr Hutton, who was (as I noted above) formerly the chief financial controller for WCL, who confirms that he identified the incorrect invoicing of WCL rather than Wongawilli for the higher charge and instructed Mr Ehsman to leave the invoice as issued to WCL, rather than withdrawing and replacing it with an invoice issued to Wongawilli. Mr Hutton also leads evidence corresponding to that which he leads in other proceedings as to his having assured Mr Pike, one of the directors of CMG, that invoices would be paid and that internal approvals of WCL were being sought and obtained.

72. With some hesitation, I have concluded that a genuine dispute is established in respect of this claim, the dispute being that WCL did not itself hire the equipment and, although WCL did not expressly take this further step, the liability for this amount was properly that of Wongawilli under the Master Hire Agreement. Although the evidence in support of this claim suggests that CMG might well succeed in a contested claim for this amount against WCL, on the basis that WCL had subsequently accepted liability for this amount, that proposition does not seem to me to be sufficient to exclude the conclusion that the dispute is a genuine one. The demand will have to be varied accordingly, if it is not set aside.

73. Invoice 704148 dated 7 January 2015 in the amount of $13,200 relates to two rear axle cores. That invoice refers to purchase order 158914; that purchase order is in evidence and refers to the purchase of six adjustable axle cores to be supplied on request (Ex D18). Invoice 704158 dated 9 January 2015 in the amount of $2,812.88 relates to transmission to rear axle. A quotation numbered SP 500113 provided to WCL is in evidence (Ex D8, SB 7). Mr Biki refers to, but does not annex, an email subsequently sent providing a link to a purchase number in respect of that quotation, being purchase number 158975, and that purchase order is not in evidence. Invoice 704222 dated 23 January 2015 in the amount of $2,627.46 relates to an alternator. There does not seem to be any specific dispute in respect of these invoices.

74. Invoice 704231 dated 28 January 2015 in the amount of $24,200 relates to two rear axle service exchanges. Invoice 704353 dated 11 February 2015 in the amount of $24,200 is also described as relating to two axles, and is in the same amount as invoice 704231 and refers to the same item codes. Invoice 704674 dated 27 March 2015 in the amount of $13,090 relates to a front axle service exchange for one axle, and carries the same item number as invoice 704231 dated 28 January 2015. Mr Withers relies on overlap between invoices 704231, 704353 and 704674, contending that it is unclear which of the invoices is correct. Mr Fantin submits that WCL’s observation that invoices 704231, 704353 and 704674 are duplicates, because they have the same purchase order, is incorrect, and that “[I]t is not uncommon to have the same p[urchase] o[rder], especially if the goods are from the same consignment stock”. It seems to me that that response, which has limited evidentiary support, would not be sufficient to exclude a genuine dispute so far as an allegation of duplication arises in respect of those invoices.

75. Mr Saini’s evidence is that invoice 704231 refers to purchase order 158953 and invoices 704353 and 704674 refer to purchase order 159229, but Mr Saini’s evidence is that the latter purchase order was created to the value of $1.00 requesting that the orders be put on hold pending a purchase order for their actual supply. Mr Saini acknowledges that two axles with the relevant serial numbers were delivered to WCL and annexes a delivery docket in respect of those two axles. Mr Saini indicates that, to his knowledge and belief, only the two axles noted under the delivery docket were supplied to WCL. Although Mr Saini does not explain the source of that knowledge or belief, it seems to me that his evidence confirms that no genuine dispute exists in respect of the delivery of two axles invoiced by CMG in the amount of $24,200 and is sufficient to raise a genuine dispute as to the charge for additional axles on the basis that only two axles may have been supplied or used, and that the axles were only to be invoiced when utilised. The demand will have to be varied accordingly, if it is not set aside.

76. Invoice 704285 dated 30 January 2015 in the amount of $2,305.82 relates to an alternator. Invoice 204286 dated 30 January 2015 in the amount of $319 relates to a control cable. Invoice 704288 dated 30 January 2015 in the amount of $2,290.48 relates to an alternator service exchange. There does not seem to be any specific dispute as to these invoices, and no genuine dispute in respect of them is established.

77. Invoices 704347 and 704352 dated 11 February 2015 in the amounts of $11,899.21 and $11,650.61 relate to the replacement and repair of hydraulic pumps. Invoice 704347 refers to purchase order 159488; however that purchase order was not led in evidence. Mr Saini’s affidavit dated 27 August 2015 indicates that invoices 704347 and 704352 relate to purchase order 159488 which covers the replacement of a hydraulic pump. Mr Saini notes that both invoices were rendered the same day and refer to the same purchase order and that invoice 704347 is in the sum of $11,899.21 and invoice 704352 is in the sum of $11,650.61; both invoices reference a similar job number (with a misprint in the number in one) and the same purchase order; and the purchase order authorises expenditure of approximately $12,000. Although Mr Saini does not suggest that he has any direct knowledge of the matter, he identifies the possibility that work has been conducted without a purchase order or there has been a duplication in the invoices. Mr Withers relies on the fact that these invoices were issued on the same day, reference similar job numbers and are for similar amounts, and appear to involve duplication, so that it is unclear which of the invoices is correct. In submissions, Mr Fantin accepts that invoice 704347 in the amount of $11,899.21 is a duplicate invoice and that the amount in the demand should be varied accordingly under s 459H(4) of the Corporations Act, if not otherwise set aside.

78. WCL appears to proceed on the basis that, if there has been a duplication in the invoices, that creates a genuine dispute as to both invoices and not merely the duplicate invoice. I do not accept that proposition. It seems to me that a genuine dispute is raised, but only in respect of one of the invoices, and that the Court may properly proceed by treating the larger of the two invoices, invoice 704347 in the amount of $11,899.21 as subject to a genuine dispute and invoice 704352 in the amount of $11,650.61 as not subject to a genuine dispute. The demand will have to be varied accordingly to the extent that it is not set aside.

79. Invoice 704401 dated 20 February 2015 in the amount of $4,125.54 relates to an alternator service exchange. Invoice 704427 dated 24 February 2015 in the amount of $4,305.40 refers to an item fitted to JUG001; invoice 704471 dated 27 February 2015 in the amount of $4,829.51 relates to a quoted item; invoice 704511 dated 4 March 2015 in the amount of $2,513.50 relates to repairs to an alternator; invoice 704720 dated 31 March 2015 in the amount of $1,056.55 and invoice 704928 dated 11 May 2015 in the amount of $1,056.55 also relate to other items as quoted by CMG. Invoice 704433 dated 25 February 2015 in the amount of $123,252.40 (inclusive of GST) relates to JUG001 Code D (which appears to be a form of service of the equipment) and repairs. That invoice refers to purchase order 159282; that purchase order is in evidence (D16) as is the associated job quotation (Ex D16A) and corresponds to the description of the work in relation to a code and repairs on the purchase order. Invoice 704054 dated 19 December 2014 in the amount of $2,286.43 relates to a transfer pump. There does not appear to be any specific dispute in respect of these invoices and no genuine dispute in respect of them is established.

80. After excluding the claim in the amount of $35,074.24 as to which there is a genuine dispute by reason of the fact that one month’s hire of JUG CMW06 was chargeable to Wongawilli rather than WCL (see paragraphs 69-72 above), the claim as to which there is a possibility of duplication in respect of three axles (see paragraph 75 above) and the duplicate claim for a hydraulic pump (see paragraphs 77-78 above), the substantiated amount of the demand for the purposes of s 459H(4) of the Corporations Act is $229,290.57. The demand should be varied accordingly under s 459H(4), and the application to set aside this demand should otherwise be dismissed.

Whether the demands should be set aside under s 459J of the Corporations Act by reason of claims for amounts not properly due

81. Mr Withers acknowledges that, as I have noted above, the Court may vary a demand under s 459H(4) of the Corporations Act if the substantiated amount exceeds the statutory minimum of $2,000, but relies on the principle that a demand may be set aside under s 459J of the Corporations Act if the amount of the demand was so “grossly inflated” or comprised matters which were so “obviously in dispute”, that the service of the demand amounted to an abuse of the regime under Pt 5.4.

82. In some circumstances, the inclusion in a creditor’s statutory demand of substantial amounts that are not properly due may be a defect in the demand that would give rise to substantial injustice, by requiring the recipient of the demand to move to set aside that demand, even if it paid any amount of it which was otherwise properly due: Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 20 ACSR 746 at 750; Re UGL Process Solutions Pty Ltd above at [42]. The inclusion of amounts not properly due in a demand may also support the setting aside of the demand under s 459J(1)(b) as an abuse of the statutory procedure under Pt 5.4 of the Act. In First State Computing Pty Ltd v Kyling above, on which Mr Withers relies, Santow J observed that a statutory demand could be set aside under s 459J(1)(b) by reason of a substantial overstatement in the amount claimed, and that, where a statutory demand has been so grossly inflated as to comprise matters which it should have been obvious from the outset were in genuine dispute between the parties at the time the demand was served, then an order under s 459J(1)(b) setting aside that statutory demand may well be required to prevent such an abuse of the regime under Pt 5.4 of the Act. In Wildtown Holdings Pty Ltd v Rural Traders Company Ltd [2002] WASCA 196 at [41], Templeman J (with whom Steytler J and Miller J agreed) observed that an error of $31,000 in a total of $131,000 was not a minor misstatement as to the quantity of a debt. That is, of course, a matter of degree, to be determined in the circumstances of the particular case. In Re UGL Process Solutions Pty Ltd above at [44], I similarly observed that:

“… in my view, a statutory demand for a substantially overstated amount, where more than half of the amount claimed was conceded to be genuinely disputed, and substantially all of the balance of the debt claimed was found to be genuinely disputed at the hearing, is nonetheless inconsistent with the proper use of the statutory regime. In my view, the Demand therefore should also be set aside in its entirety under s 459J(1)(b) of the Corporations Act.”

83. In my view, the factual basis for WCL’s submission that the overstatements in two of the demands gave rise to substantial injustice or were an abuse of the statutory demand procedure are not established in this case, given the findings that I have reached above. The issue does not arise in respect of proceedings 2015/213266 brought by WCL to set aside the demand served by CSJ, since I have not held that any genuine dispute existed in respect of the amounts claimed.

84. In respect of proceedings 2015/213267 brought by Wongawilli to set aside the demand served by CMG, Mr Withers submits that an error of $51,000 out of a total of $187,000 in the creditor’s statutory demand, being the amount of $16,562.71 in invoice CMH1868 which had previously been paid and the amount in invoice CMH3813 (T35) is a substantial error. The amount referred to in that submission depends on the submission that there is a genuine dispute as to the amount claimed in invoice CMH3813 which I have not accepted. Mr Fantin submits that, where the error in respect of invoice CMH1868 was identified, there is no substantial injustice to Wongawilli because no prejudice was caused to it. The error of $16,562 as to invoice CMH1868, which was readily identified and conceded, does not give rise to any injustice or prejudice to Wongawilli or any abuse of the demand process and is a matter that is properly addressed under s 459H(4) of the Corporations Act.

85. In proceedings 2015/213268, I have held that there is a genuine dispute as to the amounts claimed for one month’s rental of JUG CMW06 charged to WCL rather than Wongawilli in error and as to two invoices in respect of axles, and CMG has conceded a genuine dispute exists as to invoice 704347 in the amount of $11,899.21 on the basis that it is a duplicate invoice. I accept that the amounts claimed are significant, but in each case it seems to me that the amounts were claimed in good faith and, in respect of the rental claim for JUG CMW06, I have concluded that the dispute raised by WCL is genuine with hesitation. It seems to me that the amounts involved are also such that they should properly be adjusted under s 459H(4) of the Corporations Act, and that neither substantial injustice to WCL nor an abuse of the statutory demand procedure are established.

86. WCL’s and Wongawilli’s claims to set aside the creditor’s statutory demands on this basis also fail.

Orders and costs

87. WCL and Wongawilli have substantially failed in their applications to set aside the demands and my preliminary view is that they should pay the costs of the respective proceedings, as agreed or as assessed, although I will afford the them an opportunity to be heard if they contend to the contrary. The parties should bring in agreed short minutes of order to give effect to this judgment within 7 days or, if there is any dispute between them, including as to costs, their respective draft orders and short submissions as to the differences between them.

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