Asia Pacific Glass Pty Ltd v Sindea Trading Co Pty Ltd

Decision

The approach which the court should take to the assessment of a genuine dispute is well-established. It is for an applicant to prove the existence of such a dispute, but the burden of proof is analogous to that which confronts a party on an application for an interlocutory injunction or summary judgment.
The function of the court is merely to determine the existence of a genuine dispute; it is not to determine whether the debt exists. The court does not weigh the merits of the dispute or engage in a balancing exercise in relation to competing contentions: Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290; (1993) 11 ACSR 362 at 366-367 (Hayne J); Panel Tech Industries (Aust) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896 at [18] (Barrett J).
The bar for establishing a genuine dispute is not set high; a "plausible contention requiring investigation" will suffice: Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787 (McLelland CJ in Eq). Other expressions to similar effect can be found in the authorities including that the dispute is "real and not spurious, hypothetical, illusory or misconceived" and "perception of genuineness (or lack of it): Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 at 464 (Northrop, Merkel and Goldberg JJ); and Re Morris Catering (Aust) Pty Ltd (1993) 11 ACSR 601 at 605 (Thomas J). The court's state of mind concerning the existence of a genuine dispute may range from a clear conviction that the debt does not exist to an opinion that the genuine dispute hurdle has only just been cleared: Creata (Aust) Pty Ltd v Faull [2017] NSWCA 300 at [29] Barrett AJA (Gleeson and White JJA agreeing).
In Ligon 158 Pty Ltd v Huber [2016] NSWCA 330 at [9], Barrett AJA, (McColl and Meagher JJA agreeing), referred to the earlier decision in Britten-Norman Pty Ltd v Analysis and Technology Australia Pty Ltd (2013) 85 NSWLR 601; [2013] NSWCA 344 at [30]-[31] and [39]-[55]), a case concerning the allied ground of off-setting claim under s 459H(1)(b), and noted several important points about the forensic approach to be adopted in s 459G proceedings, including: (1) While there must be evidence showing a serious question to be tried or an issue deserving of a hearing, that evidence cannot and need not conclusively prove the claim or otherwise be incontrovertible or substantially non-contestable. (2) The short time allowed by s 459G(2) for the preparation of the affidavit supporting the claim for an order setting aside the demand militates against the presentation of the fullest and best evidence in some cases.
Accepting that the tests referred to above are applied in the context of a summary procedure where it is not expected that the court will embark on an extended inquiry, I have concluded that there is a genuine dispute in relation to the amount of the debt claimed by Transurban in the statutory demand.
The starting point is that although the Toll Notices are not in evidence, there is an admission in Mr Kalyk's affidavit that the company's vehicles travelled on toll roads operated by Transurban after May or June 2016 without a valid credit card arrangement in respect of its account with the RMS (because the credit card in respect of the account had expired). Nonetheless, there is a plausible contention requiring investigation that during the period December 2015 to about April or May 2016 (and for earlier periods), the company had a valid credit card arrangement with the RMS in relation to its three vehicles with e-tags, and the account was in credit, or at least should have been in credit during this period, but for the alleged earlier incorrect charges to the account by RMS. On the material before the court there is a genuine dispute in relation to the validity of Toll Notices issued by the RMS at the request of Transurban during this period. Of course I express no view on the merits of that dispute.
While it is not possible to identify with precision the amount of the charges in the statutory demand covering the period December 2015 to May 2016, it may be observed that the charges for vehicle BS61VA in respect of the period 24 December 2015 to 30 July 2016 are claimed to total $503.47 and for vehicle BLQ39E in respect of the period 11 February 2016 to 19 January 2017 are claimed to total $374.86. In addition, Transurban did not argue against the proposition that the validity of the toll charges the subject of the RMS statement for the July-September 2015 period was genuinely disputed by the company on the basis that it included charges for an e-tag not associated with any of the company's vehicles. The amount of the credit claimed on the company's account was a little over $109.00.
I am satisfied that, taken together, there is a genuine dispute in relation to an amount of at least $404.00, which means that the "substantiated amount" (being the amount of the alleged debt about which there is no genuine dispute) is less than the statutory minimum ($2,000). Accordingly, the Court must set aside the demand: Corporations Act, s 459H(3).
However that is not the end of the matter. Section 459M of the Corporations Act provides that an order under s 459H or s 459J (setting aside a demand) may be made subject to conditions. The Court has the power to impose conditions even if the statutory demand is set aside: Natcraft Pty Ltd v WIN Television Pty Ltd [2003] 1 Qd R 196 at 197 (Williams JA). Such conditions may include that the recipient pay into court the amount of the alleged debt, although the view has been expressed that the court should not adopt a practice of imposing such a condition. In Get'm Pty Ltd v Triulcio [2004] NSWSC 291 Palmer J said at [30]: If this became the practice, then this Court, in the process of exercising its jurisdiction under the Corporations Act would, in effect, become a small claims court because creditors would routinely serve statutory demands intending to seek an order that, even if the demand is set aside because of the existence of a genuine dispute, the debtor nevertheless pay into Court a substantial amount. If such applications were routinely entertained, this Court would frequently have to embark on the question of "degree of genuineness" of disputes and would be compelled to investigate the merits of the dispute to a depth which it refuses to do, as the law presently stands.
In Panel Tech Industries Pty Ltd v Australian Skyreach (No 2), Barrett J concluded that there was a genuine dispute, but expressed significant doubt, based on the quality of the plaintiff's evidence, whether the contest between the parties would eventually be resolved in favour of the plaintiff. That made it appropriate, in his Honour's view, that the order setting aside the statutory demand not be unconditional. Barrett J continued at [30]: … Because a genuine dispute has been established, action by the defendant to vindicate the rights it considers itself to have as a creditor of the plaintiff must be by way of debt proceedings at common law. In the particular circumstances to which I have referred, however, the defendant should not have to pursue those proceedings on an entirely speculative basis, assuming it chooses to pursue them at all. It is appropriate that they be pursued in a context where the plaintiff causes funds sufficient to meet the claim to be set aside and held pending its resolution. This should be achieved by making the s.459H order subject to an appropriate condition under s.459M.
The present case bears some analogy with Panel Tech. As indicated, Mr Kalyk accepted in his email to the RMS dated 4 July 2016 that the company did not have a valid credit card arrangement, at least from that date, since its credit card attached to the account had expired. Although I have concluded that there is a genuine dispute in relation to so much of the debt the subject of Toll Notices issued in the period December 2015 to about April or May 2016, I have significant doubt, based on the quality of the company's evidence, whether the matter will eventually be resolved in favour of the company, or at least in an amount much greater than about $404.00. It is appropriate, if Transurban commences proceedings to recover the alleged debt, that the company cause funds sufficient to meet the claim at least in the amount of $2,000 to be made available and held pending its resolution.
It should be borne in mind that a condition of the kind which I intend to impose is not a source of obligation. As Barrett J explained in Asia Pacific Glass Pty Ltd v Sindea Trading Co Pty Ltd (No 2) [2003] NSWSC 845; (2003) 47 ACSR 737 at [13], "[t]he concept underlying a conditional order is that the Court, by the condition, specifies what the successful party must do in order to have the benefit of the order; and it is then for that party to decide whether he or she will take the specified steps and secure that benefit or not take them and thereby forego it".
It follows that if Transurban commences debt recovery proceedings and the company fails to comply with the condition I propose to impose, the beneficial effect of the order in favour of the company will cease, so that the statutory demand may no longer be regarded as "set aside" and "will continue to stand": Asia Pacific Glass at [16], citing Australian Vineyard Management Ltd v Madden (SC (NSW) Young J, 30 March 1998, unreported, BC 9801170).
Accordingly, the Court makes the following orders: 1. The statutory demand dated 21 February 2018 forming part of annexure B to the affidavit of Francis Gary Kalyk sworn 26 March 2018 be set aside on condition that, if, within 28 days after the making of this order, the defendant serves on the plaintiff an originating process filed in a court of competent jurisdiction by which the defendant sues the plaintiff to recover the debts claimed in the schedule to the statutory demand, the plaintiff shall, within 14 days after such service, pay into court in the proceedings initiated by that originating process the amount of $2,000, such payment into court being on the footing that the sum paid in shall remain in court to abide the outcome of those proceedings. 2. Costs reserved.

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Judgment (6 paragraphs)

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