Cameron v GBST

6139/02 - CAMERON STOCKBROKERS LIMITED v GBST HOLDINGS PTY LIMITED

1 MASTER: This is an application to set aside a statutory demand. The demand was issued by the defendant and was dated 11 December 2002 in the amount of $28,902.43. The moneys owing were referred to in a series of seven invoices. 2 The plaintiff says that there is a genuine dispute as to who was the contracting party. In this case there was also raised a question of jurisdiction. It is said that in the case the relevant dispute was not raised in the affidavits sworn and filed within the twenty one day period. 3 There is no doubt that it is possible to supplement material filed in time by a later affidavit, and the principles in this regard have been set out by Sunberg J in Graywinter Properties Pty Limited v Gas & Fuel Corporation Superannuation Fund 21 ACSR 581 at 587. 4 There has been a clear dispute on the cases as to whether or not, provided there has been a supporting affidavit filed within the twenty one day period of the application, that it may be amended by allowing additional grounds raised after the twenty one day period. 5 In Civil Systems Pty Limited v BT Constructions Pty Limited, a decision of mine on 15 December 2000, I drew attention in paragraph 11 to the different first instance decisions to which I had been directed at that time. 6 The matter has been dealt with further by a Judge of this Court and also the Full Court of Western Australia. In Process Machinery v ACN 057260590 (2002) NSWSC 45, Barrett J decided that a new ground could not be raised in such circumstances. 7 In paragraph 16 and following his Honour expressed his views as follows: "Furthermore, the applicant is confined to the grounds shown by the application and supporting affidavit filed and served within the twenty one day period to which s459G refers. This last point is important. It was recently confirmed by the Full Court of the Supreme Court of Western Australia in Energy Equity Corp Limited v Sinedie Pty Limited 2001 WASCA 419 (20 December 2001). Wallwork J (with whom Steytler J and Olsson AU agreed) quoted the following passage from the judgment of Perry J in D & S Group of Companies Pty Limited v O'Connor Investment Pty Limited (1975) 15 ACLC 1794 (in which the opening words refer to an observation of Gummow J in David Grant:

'It seems to be implicit in that observation and from the terms of s459G(3) that if an affidavit is to be used in support of the application, it must be filed within the defined period of twenty one days.

It seems to me then that the affidavit of Mr Savvas having been filed and served well after the expiration of the period of twenty one days, insofar as it raises any ground offered in support of the application not identified in the affidavit of Mr Gerovasilis filed within time, could not be taken into account in determining the application. Furthermore, David Grant is authority for the proposition that there is no ability to extend the time limit.' 8 Wallwork J also quoted from the judgment of Mandie J in Missay Pty Limited v Seventh Cameo Nominees Pty Limited (in liquidation) (2000) VSC 397: 'I think that there is another reason for refusing special leave because it seems to me that the interpretation of the Corporations Law contained in D & S Group of Companies Pty Limited v O'Connor Investments Pty Limited (1997) 15 ACLC 1794 at 1798 is applicable and should be followed by this Court. If a ground in support of an application to set aside a statutory demand is not identified within the period provided by the Corporations Law, then it seems to be that it cannot be relied upon out of time upon appeal.' 9 Wallwork J's conclusion was then stated: 'In my view it now seems to be accepted that an affidavit filed outside the twenty one day period which raises a new ground or grounds to set aside a statutory demand (as opposed to an affidavit which expands on grounds in an earlier affidavit which has satisfied the threshold test) cannot be used in an application of this nature. The Corporations Law operates throughout Australia and uniformity of approach is desirable.' 10 This is consistent with the conclusion reached earlier in the same year by Wilson J of the Supreme Court of Queensland in Raffles Corporation Pty Limited v Cech (2001) QSC 129: 'Under s459G 'an affidavit supporting the application' must be filed within the twenty one days. The affidavit must disclose facts showing a genuine dispute, but it need not go into evidence: as Sunberg J held in Graywinter Properties Pty Limited v Gas & Fuel Corp Superannuation Fund (1996) 14 ACLC 1703, the supporting affidavit filed within the twenty one days may read like a pleading. It may be supplemented in the sense that a further affidavit containing evidence proving the facts asserted in that affidavit may be filed after the twenty one days. Indeed, on the hearing of the application, only admissible evidence can be relied upon. However, evidence supporting some other grounds not raised in the affidavit filed within the twenty one days may not be relied upon. See also Eden Bay Pty Limited v Bennett (1997) 15 ACLC 1634. Accordingly, the present applicant may not rely on grounds not set out in the affidavit filed within the twenty one days.'

This raises a question about the nature and extent of definition or assertion required. In Energy Equity Corporation the company sought to rely on an offsetting claim in the form of a cause of action in negligence. It was not permitted to do so because this "was not specifically referred to in the first affidavit". D & S Group of Companies was also a case in which a particular offsetting claim was raised for the first time after the expiration of the twenty one day period. In Raffles Corporation , the company wished to argue, as part of an asserted genuine dispute, an alleged oral agreement varying the operation of a lease, an alleged termination of that lease and a calculation of interest in a way said not to be consistent with the lease terms. This was in circumstances where the affidavit dealt only with the identity of the lessor and a particular deduction of $2500 and did not foreshadow in any way the additional objections later advanced.

It is thus reasonably clear that the relevant concept or "raising" or "identifying" a particular ground involves some verbal delineation of that ground in the s459G(3)(a) affidavit. If a debt of $10,000 were claimed as one year's interest under a contract providing for interest at the rate of 9 per cent per annum on a principal sum of $100,000, it would not, in my opinion, be sufficient for the affidavit to annex the loan agreement and say no more. It would have to refer at least to the connection between the contract and the debt claimed and put in issue the calculation of interest - even if it merely said, 'the debt does not accord with the annexed contract'.

The real point is that the application and affidavit filed and served within the twenty one day period must fairly alert the claimant to the nature of the case the company will seek to make in resisting the statutory demand. The content of the application and affidavit must convey, even if it be by necessary inference, a clear delineation of the area of controversy so that it is identifiable with one or more of the grounds made available by s459H and 459J. That process of delineation may not be extended after the end of the twenty day period, although it is open to the plaintiff to supplement the initial affidavit by way of additional evidence relevant to the area of controversy identified within that period."

Having regard to his Honour's reasoning, and the cases to which he referred, I think that the better view is as decided by his Honour, namely, that unless the particular dispute is raised in the affidavit filed within time, it cannot be dealt with in later affidavits. 11 This is subject to the qualification, of course, that a genuine dispute arising out of a matter of law which does not require evidence to support it would, of course, always be available to be argued. See Callite v Peter John Adams & Ors 2001 NSWSC 52. 12 I turn to the affidavits which were filed and served within time. The first of these is an affidavit of Mr Pritchard and the substantive parts are as follows: "1. I am a director of Cameron Stockbrokers Limited. 2. Annexed hereto and marked with the letter 'A' is a copy of an ASIC search of Cameron Stockbrokers Limited. 3. Exhibited to me at the time of swearing this affidavit and marked with the letter and numeral 'SSP-1' is a copy of an agreement between Henley Underwriting and Investment Co Pty Limited and Star Systems Pty Limited. 4. Annexed hereto and marked with the letter 'B' is a copy of an extract from the National Data Base of the Australian Securities and Investment Commission of Star Systems Pty Limited showing name changed to GBST Holdings Pty Limited. 5. Annexed hereto and marked with the letter 'C' is a copy of an extract from the National Data Base of the Australian Securities and Investment Commission of GBST Holdings Pty Limited. 6. Cameron Stockbrokers Limited is not indebted to GBST Holdings Pty Limited for any of the invoices referred to in the creditors statutory demand dated 11 December 2002." 13 Paragraph 6 was not admitted on the hearing before me but for the purposes of considering whether or not a sufficient affidavit was served, I think it is appropriate to have regard to all the matters in the affidavit, not merely the admissible material. 14 The second affidavit was the affidavit of Mr Cameron and the substantive parts of that affidavit are as follows: "1. I am and have been since its formation in 1994, a partner of Cameron Securities. 2. Annexed hereto and marked with the letter 'A' is a copy of the Business Names Act search of Cameron Securities. 3. Cameron Securities did not at any time (a) enter into any agreement with GBST Holdings Pty Limited or (b) contract with GBST Holdings Pty Limited in any other way for any services." 15 The search referred to by Mr Cameron showed that the persons carrying on business were Mr Cameron and Mr Griffith. At first blush one might wonder what was the relevance of Cameron Securities. It is not the company to whom the demand was issued. However, it was the company to whom the invoices referred to in the demand were issued, although this fact does not appear in the affidavit. 16 If one had regard to only paragraph 6 of Mr Pritchard's affidavit, one might wonder as to its sufficiency. However, when one considers the whole affidavit a different picture emerges. As it was pointed out by Santow J in Zen Aust Imports Pty Limited v Allewak Chemical Works Co Ltd 6 July 1998, it is necessary to consider the terms of the demand as part of the context in which the sufficiency of the affidavits must be judged. 17 The demand relates to a claim for moneys owing for services provided which are specified in certain defined invoices. Accordingly, it would seem to me, that the following seems to appear from the affidavits and the invoices there referred to: (1) The person to whom the invoices were issued denies that there was any agreement for services with him.

(2) The plaintiff identifies itself by reference to statutory records and provides an agreement for the provision of services which is between the defendant and another company.

(3) That agreement replaces an earlier agreement under which services were made available to a third company, Cameron Securities.

(4) At the request of Henley Underwriting Investment Corporation Pty Limited the agreement contemplated, certain third party agreements coming into effect.

(5) The claimed invoices are after the date of the new agreement with Henley. (6) There is the denial of liability in paragraph 6 of Mr Pritchard's affidavit.

18 In these circumstances the two affidavits sufficiently, in my view, put the affidavit on notice as to whether the plaintiff has any contractual liability to the defendant. Therefore, in my view they sufficiently articulate the area of controversy and the appropriate jurisdiction. 19 I have had the benefit of having a number of submissions in respect of the principles to be applied and I think the most useful summation of what is a genuine dispute is that given by McLelland CJ in Eq in Eyota Pty Limited v Hanave Pty Limited 1994 12 ACLC 669. At page 671 his Honour made the following comments in respect of the expression "genuine dispute": "It is however, necessary to consider the meaning of the expression 'genuine dispute' where it occurs in s459H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the 'serious question to be tried' criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the Court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit 'however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be 'not having' sufficient prima facie plausibility to merit further investigation as to (its) truth.' (cf Eng Mee Yong v Letchumanan (1980) AC 331 at 341), or 'a patently feeble legal argument, or an assertion of facts unsupported by evidence' (cf South Australia v Wall (1980) 24 SASR 189 at 194).

But it does mean that, except in such an extreme case, a Court required to determine whether there is a genuine dispute should not embark upon an enquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving such a dispute. In Mibor Investments (at ACLC 1066 ACSR 366-7) Hayne J said, after referring to the state of the law prior to the enactment of division 3 of part 5.4 of the Corporations Law and to the terms of division 3:

'These matters, taken in combination, suggest that at least in most cases it is not expected that the Court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the Court conclude that there is a dispute and that it is a genuine dispute.'

In Re Morris Catering (Australia) Pty Limited (1993) 11ACLC 919 at 922 (1993) 11 ACSR 601 at 605 Thomas J said:

'There is little doubt that division 3 ... prescribes a formula that requires the Court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the Court will examine the merits or settle the dispute. The specified limits of the Court's examination are the ascertainment of whether there is a 'genuine dispute' and whether there is a 'genuine claim'.

It is often possible to discern the spurious, and to identify mere bluster or assertions. But beyond a perception of genuineness (or the lack of it) the Court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another.

The essential task is relatively simple - to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it).'

I respectfully agree with those statements." 20 The evidence establishes that there was the agreement for services with Henley to which I have referred. There was also on 6 June 2002 a letter to Henley Underwriting & Investment Co Pty Limited from GBST Holdings Pty Limited, the defendant, which referred to that agreement and gave notice of termination to be effective on 5 September 2002. 21 There is also in evidence a letter of 19 August 2002 which is apparently from the defendant. It is addressed to Mr Seymour of Cameron Stockbrokers Ltd but may have also gone to Henley Underwriting. 22 That letter reflects agreements that were obviously made prior to the termination date of 15 September arriving and, in particular, the opening paragraph refers to GBST Holdings Pty Limited's notice of termination and in effect it proceeds then to waive the rights in respect of that termination by granting a further extension of the agreement. 23 The terms of the further extension are set out and the extension appears to be that the termination is extended to 30 September 2002. There are amounts that have to be paid by Cameron Stockbrokers Ltd by various instalments. There are also paragraphs 5, 6 and 7 to which I will come back to in a moment, which relate to services to be provided to Cameron Stockbrokers Ltd. 24 One can infer that these must have been sent to Cameron Stockbrokers Ltd because the next document is a fax written in handwriting from Mr Seymour of Cameron Stockbrokers in which he seems to have enclosed a signed agreement, a guarantee of something in regard to an outstanding amount, a copy of a deposit slip and a copy of a cheque. 25 It is apparent that there has been a payment of some $44,000 and no doubt this has been referred to in the letter of 19 August 2002. 26 The other documents are in general incomprehensible. There appears to be one page of something that might come from a guarantee but the whole of the document is not there. There is only page 6. The next document appears to be the last page of some deed. It is numbered 8 but there is no other part to it. 27 Then there appears to be a copy of the last page of the letter dated 19 August 2002, although clearly it is from a different print as there is additional material on this last page. It is only signed by Mr Seymour and arguably not by him on behalf of Cameron Stockbrokers Ltd, although he is a director of that company. 28 The reply which is Annexure D and the fax from Cameron Stockbrokers Ltd does not in any way, I think, effectively purport an acceptance of the letter of 19 August 2002, and even if it did, it is certainly arguable that all the letter of 19 August did was waive the termination for a certain period. 29 If this was its effect, then the liability would be a liability of Henley Underwriting & Investment Co Pty Limited who was the party liable for payments under the original agreement. 30 I have earlier referred to paragraph 5, 6 and 7 of the letter of 19 August. That refers to some payments by Cameron Stockbrokers Ltd for what is described as data extraction and for further software to Cameron Stockbrokers until the period of close of business on 30 September 2002. 31 The problem with this is that the evidence as to what the particular services relate is quite deficient. The only attempt to identify this was in paragraph 7 of the affidavit of Mr Murdoch but that material was rejected. 32 In the circumstances I cannot be certain for instance that the amount of the claims in the invoices relate to something that may possibly be a liability of Cameron Stockbrokers Ltd, if there was to be such an agreement found to have existed with them. 33 It was also suggested that there were other matters which might indicate that there is a liability on Cameron Stockbrokers Ltd and in particular correspondence where one finds, for instance, in letters of 12 December 2002 and 13 December 2002, no denial of a liability but complaints of the amount of claims. 34 All that does is provide additional material which would go to the ultimate resolution of whether there was a contract with Cameron Stockbrokers Ltd. In my view there is a genuine dispute as to who is the contracting party in respect of the invoices in the statutory demand. 35 Accordingly, I make order 1 in the originating process filed 24 December 2002 and will hear the parties on costs. 36 I have heard submissions on costs and in my view there is nothing to detract from the usual rule and I order the respondent to pay the applicant's costs.

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