Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd

The affidavit evidence

1. By way of background, it appears that EPAQ sells consumer products into China, largely or entirely through internet sites. Brandcraft provides advice as to branding and communication strategies and designs artwork and packaging for such products and provided such services to EPAQ.
2. EPAQ relies on an affidavit dated 7 July 2017 of a director of EPAQ, Mr Andrew Brown, in support of the application to set aside the Demand. Brandcraft relies, in response to the application to set aside the Demand, on affidavits of its directors, Mr Beckhurst dated 21 July 2017 and Mr Sauerman dated 23 July 2017. Mr Beckhurst's affidavit exhibits voluminous contemporaneous documentation dealing with the relationship between EPAQ and Brandcraft and the work undertaken by Brandcraft on EPAQ's account and also takes issue with Mr Brown's evidence. Although orders were made by the Court permitting reply evidence, Mr Brown did not respond to that evidence. It is not possible, in an application of this kind, to reach findings as to the credit of Mr Brown on the one hand and Messrs Beckhurst and Sauerman on the other, particularly where none of them was cross-examined. In this context, I recognise that Brandcraft unsuccessfully sought an adjournment, in the midst of the hearing, in order to give notice requiring Mr Brown for cross-examination, which it had not previously done. That adjournment was not permitted for reasons that I indicated in a separate judgment.
3. Mr Brown's evidence, by way of assertion (Brown [3]) is that: "There is no contract for services between [EPAQ] and [Brandcraft]." Mr Brown's evidence (Brown [4], [6]) is also that he said to Mr Beckhurst from Brandcraft that: "We have marketing opportunities to put products on the Seabird Website to become part of the Seabird's platform" and that: "We are pitching for business and if you assist us with the marketing, we are trying to get Seabirds to take on the Natural Brand Company products and Ce Soir." Mr Brown also refers (Brown [8]-[9]) to an exchange with Mr Beckhurst to the effect that: Brown: "If Seabirds picks up the brands, we order from the manufacturer, add on our margin and ship the products to China. They pay half when the order is placed which pays for the manufacturing. The other half is paid once it is loaded on the ship. That is when we get paid." Beckhurst: "We think this is a big opportunity. We are happy to get on board and work with you. I am happy to wait until the product is taken up for you to pay me."
4. Brandcraft tenders documentary evidence which suggests that these conversations cannot have occurred in the terms set out in Mr Brown's affidavit, at least at the commencement of the relationship between EPAQ and Brandcraft. The contemporaneous correspondence and meeting notes, including an email sent by Mr Brown to Messrs Beckhurst and Sauerman on 19 November 2015, suggest that EPAQ was not dealing with the "Seabirds" website or the "Seabirds' platform" when it first sought Brandcraft's services. It appears that EPAQ was dealing with another Chinese entity, Quanjian, in late 2015 (Beckhurst [11]; Ex D1, 3) and was then looking to place products on the "WeChat" platform (Beckhurst [14]-[15]; Sauerman [8]-[9]) rather than on the "Seabirds" platform. The contemporaneous evidence, including several of the reports prepared by Brandcraft in the course of its work for EPAQ (Ex D2), also indicates that the brand names "Natural Brand Company" and "Ce Soir" were only later developed by Brandcraft, probably in January 2016, as part of the services that it provided to EPAQ. Mr Brown's evidence (Brown [10]) is also that: "Neither of the Natural Brand products or the Ce Soir Products have been taken up by Seabirds as yet. However we believe they will be taken up by the end of the year. When this occurs and orders are placed, [Brandcraft] will be compensated for their work."
5. Mr Brown's evidence (Brown [11]) is also that: "We did not discuss what they [Brandcraft] would be paid. We agreed there would be nothing paid until after the products they worked on took off and started to make a profit." Mr Brown's evidence as to that matter is inconsistent with a substantial amount of contemporaneous discussion addressing the terms on which Brandcraft would be paid. These include, for example, price estimates given by Brandcraft dated 22 December 2015 (Ex D1, 31-45); 24 December 2015 (Ex D1, 47-61) and 25 January 2016 (Ex D1, 67-80). A proposal dated 14 December 2015 provided for EPAQ to pay 50% of Brandcraft's fees for the first 30 products payable at commencement of work January 2016 ($116,085) and thereafter monthly retainer payments for the balance in February-December 2016 of $59,800 per month (Ex D1, 28). A similar structure was set out in summary and payment schedules dated 22 December 2015 (Ex D1, 44), 24 December 2015 (Ex D1, 60) and 25 January 2016 (Ex D1, 79).
6. Mr Brown's evidence is that the several payments that were in fact made by EPAQ to Brandcraft were made towards expenses and the hiring of external staff by Brandcraft (Brown [12]-[14]). That evidence anticipates the possibility that it would be, and it was, put that the fact of those payments is inconsistent with the suggested agreement that EPAQ would not be required to pay Brandcraft's fees until the relevant products were taken up. Mr Brown also refers (Brown [15]) to protests made by him, after the Demand was issued, that that "was never the arrangement" and to an offer then made by EPAQ for part payment of the amount claimed, on the basis that the balance would be released, and to Brandcraft's counter-offer to accept a payment, with the balance to be dealt with by a payment plan, which was not accepted by EPAQ. Mr Brown also leads evidence (Brown [16]), not in admissible form and without any detail, that other contractors to EPAQ have also worked on the project on a speculative basis.
7. Mr Brown also anticipates the evidence led by Brandcraft of invoices issued to EPAQ by responding that he would advise Mr Beckhurst, on receipt of such invoices, that that was "not agreement between our companies that you will be paid in accordance with these invoices" and that Mr Beckhurst responded that he was just recording the work that had been done by Brandcraft. Mr Brown's evidence (Brown [20]) is also that EPAQ has never agreed or signed any costs estimates provided by Brandcraft and that (Brown [21]): "EPAQ has no obligation to pay Brandcraft any monies now. In the future, once Seabird has taken up the products worked on by Brandcraft, EPAQ will pay Brandcraft a fee for their work."
8. Turning now to the affidavit evidence on which Brandcraft relies, Mr Beckhurst acknowledges that he had a conversation with Mr Brown in relation to an opportunity for EPAQ to put products on the "Seabirds" website, but dates that conversation in 2016, consistent with the contemporaneous correspondence relating to the development of that opportunity, rather than 2015. Mr Beckhurst refers to the fact that, in 2015, again consistent with the contemporaneous correspondence, EPAQ was dealing with the Quanjian Group as its potential Chinese client rather than with the "Seabirds" website. Mr Beckhurst gives a detailed account, supported by contemporaneous documentation, of the subsequent development of the relationship, and rejects Mr Brown's evidence that there was no discussion about what Brandcraft would get paid or that there was an agreement that Brandcraft would be paid nothing until the products that it worked on "took off and started to make a profit". Mr Beckhurst in turn refers to numerous price estimates given in the course of Brandcraft's work for EPAQ, again reflected in the contemporaneous correspondence, and to negotiations for a volume discount and an instalment payment regime on the basis that EPAQ was a new company and would give Brandcraft a lot of work.
9. Mr Beckhurst's evidence (Beckhurst [26]) is that, on 24 December 2015, Mr Brown directed Brandcraft to go ahead with work on the proposed additional brands for the China market, on the basis of a new price estimate and payment proposal issued by Brandcraft on that day, Mr Beckhurst indicated that he would send the first invoice for an upfront amount due to Brandcraft and Mr Brown said that he would "look after the payment". Mr Beckhurst also refers to a further conversation on 25 January 2016, which implicitly acknowledges an obligation to make payment, by Mr Brown apologising for not having done so (Beckhurst [28]). Mr Brown did not lead evidence to respond to those conversations in reply, although his evidence in chief would be inconsistent with that evidence.
10. The first reference to dealings between EPAQ and "Seabirds" appears to occur in early March 2016, when Mr Brown refers to an expected "big deposit" from "Seabirds" as the means by which EPAQ will pay Brandcraft the amount that it is owed (Beckhurst [40]). Again, Mr Brown leads no evidence to challenge that conversation, in reply, although it is inconsistent with the evidence which he leads in chief. Mr Beckhurst refers to a further conversation with Mr Brown in September 2016 (Beckhurst [42]) in which Mr Brown again referred to an imminent payment from China and to his wish to pay Brandcraft, and requests that the "People for Plants" work be taken off the summary account invoice to facilitate that payment (Beckhurst [42]). Mr Beckhurst also refers to email correspondence following up on payment, including an email dated 17 March 2016 (Ex D1, 98) where Mr Beckhurst asked Mr Brown to "work out a plan B regarding paying us", where Mr Brown had not heard from China, and Mr Brown responded on 17 March indicating that EPAQ was expecting a deposit payment from "Seabirds" to be transferred as soon as possible (Ex D1, 98). Mr Beckhurst also denies Mr Brown's evidence that nothing was due to Brandcraft until products were taken up by Seabirds (Beckhurst [51]).
11. Mr Sauerman also denies any agreement to the effect that Brandcraft would only get paid when the products that it worked on "took off and started to make a profit" (Sauerman [4]) and his evidence is that he had never entered into such an agreement in 30 years in advertising and brand creation and development and that: "[i]t would be commercially unsustainable if we agreed to spend large sums of money on behalf of our client's [sic] without knowing if our client was going to pay us". Mr Sauerman also refers to discussion as to pricing for the work and to the development of the project, with EPAQ initially dealing with the Quanjian Group, then with the "WeChat" platform in China, and only subsequently with the "Seabirds" platform.
12. Mr Sauerman also refers to representations made by Mr Brown as to payment to Brandcraft, from monies to be sent by its "China partners" in January 2016 (Sauerman [10]) and to subsequent reasons given by Mr Brown for EPAQ's inability to pay Brandcraft (Sauerman [11]). Mr Sauerman also refers to a conversation on 25 May 2016, recorded in contemporaneous handwritten notes (Ex D3, 4) which refer to a drawdown in funds by Quanjian at the end of June, for $20 million, of which 80% would be allocated to brands that Brandcraft had been working on so that EPAQ "will finally be able to pay all of your outstanding invoices". That evidence, if accepted at a substantive hearing, would be inconsistent with Mr Brown's evidence that no amounts were due.
13. The first invoice that is the subject of the Demand, relating to work on the "People for Plants" products, was sent by Brandcraft to EPAQ on 2 February 2016 (Beckhurst [33]; Ex D1, 81-84). Several payments were made by EPAQ to Brandcraft after that invoice, in the first half of February 2016 (Ex D1, 86, 90). A second invoice that is the subject of the Demand, also relating to work on the "People for Plants" products, was issued on 9 March 2016 (Beckhurst [39]; Ex D1, 91). The third and largest invoice relates to the "Natural Brand Company" and "Ce Soir" branded products.
14. Both parties also rely on an email dated 10 May 2016, by which Mr Beckhurst wrote to Mr Brown and others at EPAQ advising that: "It was disappointing to hear again last night that payment from China is being delayed once again. Several times since early February, specific dates for payment have been told to us which have gone past and come to nothing. … We consider your project a special case for its obvious future potential, which is why we have been extremely patient. We'd appreciate some integrity and commitment in return because our other projects cannot possibly cover the missing funds from EPAQ's non-payment for work which was done over a 4 month period. … We've done a lot for you, how about being reasonable and giving something back to us even while your Chinese partners hold back paying you? We really need you to find some funds to pay us something to cover the debts we have because of your project - even a partial amount like $30K would make a massive difference. Are you able to do this now? We are the ones at the bottom of the pile here and suffering the most." Mr Brown responded, by email on the same date, to the effect that: "Nick, in [sic] working on something for you. I'll be in soon and discuss with you." It seems to me that this email neither establishes, nor undermines, a genuine dispute, since Mr Beckhurst's email is framed as a request for payment on a commercial basis and Mr Brown's response is of a similar character, and neither email supports or excludes the existence of an obligation to pay the amounts claimed prior to EPAQ's receipt of payment from China or the products being taken up in China.

The applicable legal principles

1. I now turn to the applicable legal principles, which are well established although not always easy to apply to the facts of particular cases. Mr Johnson refers to my summary of the relevant case law in Re Creata (Aust) Pty Ltd (No 2) [2017] NSWSC 1090 at [13]-[22], and I have drawn on that summary below. Section 459H(1)(a) of the Corporations Act 2001 (Cth) 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 of a debt to which that demand relates. The test for a "genuine dispute" has been variously 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 ("Eyota"). McLelland CJ in Eq also there observed that the Court need not: "accept uncritically as giving rise to a genuine dispute, every statement in an affidavit 'however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be'".
2. 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. 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."
3. 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) similarly noted that the question for a primary judge, in determining an application to set aside a statutory demand under s 459H(1)(a), is: "to 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."
4. In Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344; (2013) 85 NSWLR 601, the Court of Appeal at [30]-[31] and [39]-[55], the Court of Appeal in turn referred to the relatively low minimum requirements for demonstrating a genuine dispute or an offsetting claim, although the Court was there addressing the latter. The Court of Appeal there 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'."
5. The Court of Appeal also observed (at [36]) that, although there must 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 as to the existence of an offsetting claim: "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." 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." 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." The Court of Appeal also observed at [53] that: "all that is necessary is there be a plausible basis for the claim that there is a disputed debt or an off-setting claim … To the extent that there are sometimes found in these cases statements that there must be a "plausible and coherent basis" for such contention, we do not consider that any more is intended to be said than the test stated by McLelland CJ in Eq in Eyota, which we consider and understand to be the correct statement of the law."
6. In Re Diveva Pty Ltd [2015] NSWSC 509, I observed (at [26]) 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."
7. In Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330 ("Malec Holdings") at [47]-[50], the Court of Appeal of the Supreme Court of Victoria described the applicable principles as follows (omitting citations): "The terms of s 459H of the Corporations Act and the authorities make clear that, on an application to set aside a statutory demand, the applicant is required only to establish a genuine dispute or offsetting claim. The applicant is required to evidence the assertions relevant to the alleged dispute or offsetting claim only to the extent necessary for that primary task. It is not necessary for the applicant to advance a fully evidenced claim. Therefore, the task faced by an applicant is by no means at all a difficult or demanding one. In determining such an application, it is not necessary or appropriate for a court to engage in an in-depth examination or determination of the merits of the alleged dispute. This is because an application alleging a genuine dispute or offsetting claim is akin to one for an interlocutory injunction and requires the applicant to establish that there is a 'plausible contention requiring investigation' of the existence of either a dispute as to the debt or an offsetting claim. It is therefore not helpful to perceive that one party is more likely than the other to succeed or that the eventual state of the account between the parties is more likely to be one result than another. Further, the determination of the 'ultimate question' of the existence of the debt at a substantive hearing should not be compromised. The court is required to determine whether the dispute or offsetting claim is 'genuine'. It has been said that the criterion of a 'genuine' dispute requires that the dispute be bona fide and truly exist in fact and that the grounds for alleging the existence of a dispute be real and not spurious, hypothetical, illusory or misconceived. It has also been observed that the dispute or offsetting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion. It must also have sufficient factual particularity to exclude the merely fanciful or futile. A rigorous curial approach is essential to the effective operation of the statutory scheme. The court is not required to accept uncritically every statement in an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be, as it may not have sufficient prima facie plausibility to merit further investigation as to its truth. The court is also not required to accept uncritically a patently feeble legal argument or an assertion of facts unsupported by evidence, although this should not be read as suggesting that the applicant must formally or comprehensively evidence the basis of its dispute or off-setting claim. Except in such extreme cases, the court should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on by the applicant to set aside a statutory demand."
8. In Ligon 158 Pty Ltd v Huber [2016] NSWCA 330; (2016) 117 ACSR 495 ("Ligon 158") at [8], to which Mr Cornish referred, Barrett AJA (with whom McColl and Meagher JJA agreed) in turn referred to Re Wollongong Coal Ltd [2015] NSWSC 1680; (2015) 110 ACSR 134 at [9]-[22] and summarised the relevant principles as follows: "(1) A dispute is "genuine" if it is not "plainly vexatious or frivolous" or "may have some substance" or "involves a plausible contention requiring investigation". A genuine dispute requires that it be bona fide and, to that effect, be premised on sufficiently particularised grounds that are "real and not spurious, hypothetical, illusory or misconceived" and which demonstrate the dispute's "objective existence" and "prima facie plausibility". (2) The test is governed by principles analogous to those which underpin an application for an interlocutory injunction or summary judgment. The court must, however, guard against setting the threshold too low for that is liable to defeat the legislative purpose of the section. (3) 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. Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow and the demand will be set aside. A finding to the contrary could only be arrived at if the contentions advanced are so devoid of substance that no further investigation is warranted. (4) The function of the court is merely to determine the existence of a genuine dispute. While this neither requires nor invites it to weigh or assess the merits of the dispute, the court will not exceed its legitimate function by having regard to evidence which bears upon whether the asserted dispute is genuine." [citations omitted]

Whether a genuine dispute is established in respect of the invoice referable to the "Natural Brand Company" and "Ce Soir" branded products

1. I did not understand Mr Johnson, who appears for EPAQ, to submit that the course of dealings between EPAQ and Brandcraft could not have created a contract, and given rise to a debt due and payable by EPAQ to Brandcraft, subject to Mr Brown's evidence as to its terms. The case law indicates that strict requirements of offer and acceptance may not apply where an ongoing relationship between the parties develops over time: Ormwave Pty Ltd v Smith [2007] NSWCA 210 at [65]-[75]; Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313; (2015) 90 NSWLR 605 at [110]. Mr Johnson instead identified the essence of the "genuine dispute" on which EPAQ relies as that arising from paragraph 9 of Mr Brown's affidavit, to which I have referred above, as amplified by paragraphs 10-14 and 18 of his affidavit. Mr Johnson relied, in substance, on the existence of an agreement that payment need not presently be made by EPAQ to Brandcraft in accordance with Mr Brown's evidence. Mr Johnson submitted that nothing in the estimates relied on by Brandcraft detracts from that agreement as it was carried into effect. Mr Johnson also submitted that the email sent on 10 May 2016 from Mr Beckhurst to Mr Brown, to which I referred above, supports EPAQ's position. As I noted above, it is not apparent to me that that email either advances or undermines the claim that a genuine dispute arises. Mr Johnson submitted that the evidence indicates that there is a plausible question to be tried and that a genuine dispute as to the debt claimed is established. In reply, Mr Johnson also submitted that, so far as the principles arising in an application of this kind are analogous to those which would arise in an interlocutory injunction or summary judgment, the matters relied on by Brandcraft would not have permitted summary judgment in its favour in a claim for debt or a contractual claim against EPAQ (T37).
2. Mr Cornish, who appears for Brandcraft, identified two elements of the dispute raised by EPAQ. He referred, first, to a dispute as to the terms of the agreement as to remuneration to be paid by EPAQ to Brandcraft, arising from Mr Brown's assertion that he never discussed with Brandcraft what it would be paid for its services. Mr Cornish also recognised that a second dispute arises as to whether payment was due "until the product is taken up", at least by the operators of the "Seabirds" website in China. Mr Cornish submitted, with substantial force, that Mr Brown's evidence as to those matters cannot be reconciled with the contemporaneous documentary record and submits that that evidence is "unsustainable". Implicitly, Mr Cornish there recognises the low threshold which EPAQ must pass to establish a genuine dispute, in submitting that Mr Brown's evidence does not reach that threshold. Mr Cornish submitted, and I accept, that Mr Brown's evidence that there was no discussion as to the remuneration to be paid to Brandcraft is inconsistent with a substantial amount of contemporaneous documentation, including the several proposals issued by Brandcraft to EPAQ for the provision of the relevant services in December 2015.
3. Mr Cornish also submitted that Brandcraft issued invoices for work done in respect of the "Natural Brand Company" and "Ce Soir" branded products, although I referred above to Mr Brown's evidence that he responded and Mr Beckhurst accepted that those invoices did not record amounts then payable. Mr Cornish also submitted, with substantial force, that the correspondence between Mr Brown and Mr Beckhurst between March 2016 and June 2017, discussing payment arrangements, largely appears to be inconsistent with Mr Brown's evidence that Brandcraft would not be paid until the "Natural Brand Company" and "Ce Soir" products were taken up. Mr Cornish also submitted that the asserted dispute in respect of the debt is "merely constructed" in response to the Demand, rather than evincing a plausible defence propounded in good faith.
4. In oral submissions, Mr Cornish submitted (T22-23) that Mr Brown's evidence was "unsatisfactory" in respect of each of the propositions on which EPAQ relied to establish a genuine dispute, namely that Mr Brown's approach to Mr Beckhurst was initially directed to products to be placed on the Seabirds website; that Mr Beckhurst then accepted that payment would only be made by EPAQ to Brandcraft when products were shipped; that Mr Beckhurst and Mr Brown did not discuss the amount that Brandcraft was to be paid and agreed that nothing would be paid until after the products that Brandcraft worked on took off and started to make a profit; that those payments that were in fact made by EPAQ to Brandcraft were to offset costs of external consultants; and that Mr Brown responded to invoices issued by Brandcraft testing that there was no agreement or payment in accordance with those invoices. Mr Cornish also submitted (T23) that Mr Brown's evidence was in largely conclusory form which, although admissible in an application of this kind, had little weight.
5. Mr Cornish submitted (T34) that EPAQ's case does not raise a serious question to be tried as to Brandcraft's claim, absent reliance on any contemporaneous documents to support that claim, or any detail in Mr Brown's evidence of the relevant conversations. While Mr Cornish accepted (T34) that the Court will generally not engage in an inquiry as to the credit of a deponent in an application of this kind, he nonetheless emphasised the observations of McLelland CJ in Eq in Eyota and submitted that EPAQ's case does not have sufficient prima facie plausibility to merit further investigation and is no more than assertions of fact unsupported by evidence. Mr Cornish also emphasised (T35) the inconsistency between Mr Brown's evidence that there was no discussion of what Brandcraft would be paid and the extent of contemporaneous documentation dealing with that question. Mr Cornish also pointed (T35) to the absence of any dispute of Brandcraft's entitlement to payment before the Demand was issued, although the weight to be given to that matter may be limited by the fact that both EPAQ and Brandcraft appear to have approached the question of delays in payment, or non-payment, in commercial terms rather than by a discussion of their respective legal rights. In summary, Mr Cornish submits (T36) that EPAQ's claim for a genuine dispute is implausible and fails to rise even to the limited threshold necessary to establish a genuine dispute.
6. I am not satisfied that a genuine dispute is established as to the amount claimed in respect of the third invoice in respect of the "Natural Brand Company" and "Ce Soir" brands. I proceed on the basis that, as Mr Cornish fairly accepted in submissions (T8-9), if a serious question exists as to whether the conversations of which Mr Brown gave evidence occurred at the commencement of the relationship between EPAQ and Brandcraft, in or substantially in the terms set out in his evidence, then a serious question must arise that the debts claimed by Brandcraft in respect of the work done on the "Natural Brand Company" and "Ce Soir" brands are not due and payable until those products are taken up by Chinese distributors. I also recognise that Mr Brown was not cross-examined and that I cannot and should not reach a credit finding as to his evidence. However, it is not plausible that the conversations at the commencement of the relationship between EPAQ and Brandcraft took place in the form in which Mr Brown deposes to them, where the "Seabirds" proposal and "Natural Brand Company" and "Ce Soir" brand names did not exist at that time. It also seems to me that Mr Brown's evidence as to discussions as to the invoices is directed to recognition of an earlier agreement that amounts were not then payable, not to the creation of a new agreement that did not previously exist. That evidence does not suggest that, if a term that the relevant amounts were not payable until the products were taken up in China was not agreed at the commencement of the relationship, when Mr Brown says it was agreed, then Brandcraft later accepted a condition depriving it of a right to payment that it had not previously agreed at the commencement of the relationship. These conclusions are reinforced by, although they do not depend on, the fact that the proposals and invoices issued by Brandcraft contemplated that payment would be made on the basis of the specified payment schedules and Mr Brown's emails did not take issue with that position, although they pointed to various anticipated receipts from which payment was expected to be made at various times.
7. I also recognise that, as Mr Johnson pointed out, the case is not one in which summary judgment would likely have been given in favour of Brandcraft in substantive proceedings, where the defence raised by EPAQ raises questions of contested fact. However, it seems to me that the analogy with summary judgment is helpful but not determinative in applications of this kind, and there can be cases in which a factual dispute is raised with so little basis that it would neither support injunctive relief, in another analogy that is sometimes adopted, nor establish a serious question to be tried or a genuine dispute as to a creditor's statutory demand. One example of that situation, which has something in common with the present case, would be the situation where a debtor's case to set aside a creditor's statutory demand is no more than an assertion, inconsistent with or unsupported by any other evidence, that the creditor orally represented that the debtor need not pay until an indeterminate time in the future. If a creditor's statutory demand could be set aside on no more than such an assertion, then few such demands would survive and the statutory regime would be substantially undermined.
8. In these circumstances, Mr Brown's evidence, taken at its highest, seems to me to be so inconsistent with the contemporaneous documents and the chronology of events that it cannot give rise, in the language of Eyota and Malec Holdings, to a dispute that has "some substance" or gives rise to a "plausible contention requiring investigation" or has a sufficient objective existence or prima facie plausibility to establish a genuine dispute. It also seems to me that, in a proper case, the Court can and should reach such a finding to preserve the effective operation of the scheme, as the Court of Appeal of the Supreme Court of Victoria recognised in Malec Holdings and the Court of Appeal of this Court also recognised in Ligon 158 in its observation that the Court must "guard against setting the threshold too low for that is liable to defeat the legislative purpose of the section". For these reasons, a genuine dispute is not established in respect of the third invoice relating to the work done on the "Natural Brand Company" and "Ce Soir" brand products.

Whether a genuine dispute is established in respect of the invoice referable to the "People for Plants" branded products

1. The first two invoices claimed in the Demand relate to work undertaken by Brandcraft in respect of "People for Plants" branded products, which it appears that EPAQ intended to supply in China until the "Natural Brand Company" and "Ce Soir" brands were developed. Mr Beckhurst gives evidence of a conversation on 20 January 2016 in which Mr Brown requested a quote for design concepts, design development and artwork production for those products (Beckhurst [30]); that Brandcraft issued quotes for those products on 21 and 22 January 2015 (Ex D1, 65-66); and that Mr Brown acknowledged receipt of those prices on 22 January 2015 and instructed that the work on those products be completed as quickly as possible (Beckhurst [32]). Mr Brown does not reply to or seek to contradict that evidence. Mr Brown's evidence otherwise contests an obligation to make payment specifically in respect of the "Natural Brand Company" and "Ce Soir" products and does not address that issue in respect of the "People for Plants" products.
2. Mr Cornish submitted that Brandcraft issued invoices for the work done in respect of the "People for Plants" products; that it is unclear whether Mr Brown's evidence of his comments that invoices did not record amounts then due for payment extended to those invoices; and that, even if they did so, that position would not be justified by the earlier conversations to which he had referred, which were limited to the "Natural Brand Company" and "Ce Soir" branded products. Mr Cornish submitted that, even if the Court did not accept that no genuine dispute arose in respect of the invoice relating to work done on the "Natural Brand Company" and "Ce Soir" branded products, then no genuine dispute arises in respect of the two invoices relating to the "People for Plants" branded products.
3. The evidence to which I refer above seems to me to be sufficient to establish the contractual basis for the provision of Brandcraft's services in respect of the "People for Plants" products and the terms on which they were to be provided. Mr Brown's evidence concerning payment arrangements in respect of the "Natural Brand Company" and "Ce Soir" products did not address the terms on which Brandcraft was to provide services in respect of the "People for Plants" branded products or raise any serious question or genuine dispute as to Brandcraft's entitlement to payment for services in respect of those products.
4. Had I held that a genuine dispute was established in respect of the amount of Brandcraft's invoice relating to work done on the "Natural Brand Company" and "Ce Soir" products, it would have been necessary to calculate the "substantiated amount" of the Demand under s 459H of the Corporations Act and to vary the Demand accordingly, where the substantiated amount was not less than the statutory minimum. Had I reached that result, I would have held that the substantiated amount of the Demand, referable to the two invoices referable to "People for Plants" branded products, was $33,244.20; the substantiated amount would have been substantially greater than the statutory minimum of $2,000; and I would therefore have made an order under s 459H(4) of the Corporations Act varying the Demand to that amount. An order of that kind is not necessary or appropriate where a genuine dispute was also not established in respect of Brandcraft's claim in respect of the "Natural Brand Company" and "Ce Soir" products.

Orders and costs

1. Accordingly, I order that the application to set aside the creditor's statutory demand dated 18 June 2017 be dismissed with costs.

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