1 By its originating process filed on 29 April 2003, the plaintiff, CGI Information Systems and Management Consultants Pty Ltd, makes application under s.459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand dated 1 April 2003 served on it by APRA Consulting Pty Ltd on 9 April 2003. The statutory demand refers to an aggregate sum of $18,557 referable to two invoices issued by APRA to CGI, being invoice No. CG 03014 dated 7 February 2003 for $6,237 and invoice No. CG 03015 dated 12 February 2003 for $12,320.
2 The first invoice has since been paid. The demand now therefore relates only to the sum of $12,320. That sum is said by APRA to be due and payable in consequence of what it regards as termination of a contract between the parties. CGI maintains that the sum is not due and payable on that or any other basis and, in seeking an order setting aside the statutory demand, says that there is a genuine dispute as to the existence of the alleged debt of $12,320, thus activating s.455H(1).
3 The contract in question is in writing and is dated 1 February 2002. By that contract, APRA agreed to provide to CGI the services of Mr Perala, so that CGI in turn might make those services available to its clients or customers. The contract describes CGI as "an IT solutions provider" and it appears that its business is to provide consultancy and advisory services to others. Mr Perala and his wife are the directors and shareholders of APRA. It may be inferred that Mr Perala is a person with skills relevant to the provision of services of the kind CGI supplies.
4 The contract was expressed to subsist for term commencing on 1 February 2002 and continuing for "a minimum period of 100 business days (180 calendar days)" subject to certain other clauses, of which one is relevant for present purposes, namely, clause 3.1 which is as follows:
"This agreement will continue for the Term unless terminated by either party giving either party four weeks written notice."
5 It appears that the sum of $12,320 the subject of the second invoice referred to in the statutory demand represents remuneration or fee at the rate applicable under the contract for a period of four weeks. The invoice itself describes the sum in question as "Notice of termination of services, a period of four weeks."
6 The contention of APRA is thus, clearly enough, that there was a termination of the agreement by CGI before the end of the nominated term and that that termination gave rise to an entitlement on APRA's part to be paid remuneration or fee at the applicable rate for a period of four weeks, being the period of notice by which the contract could be terminated within the nominated term pursuant to clause 3.1.
7 In support of its contention that there is a genuine dispute as to the existence of the claimed debt, CGI says, first, that there has been no termination under clause 3.1 or at all, second, that CGI did not breach the contract and, third, that even if CGI did breach the contract, the resultant claim of APRA would be an unliquidated claim for damages, not a liquidated claim for debt.
8 I need to go briefly to the evidence. Having obtained from APRA the services of Mr Perala, CGI sent Mr Perala to work on a project for CGU Insurance in Melbourne. The project was terminated unexpectedly by CGU Insurance for reasons that are presently irrelevant. There are conflicting accounts of what then happened as regards conversations between Mr Perala and Mr Cookney, the relevant CGI staff member in Melbourne. Mr Cookney deposes that he had a telephone conversation with Mr Perala on 5 February 2003 and told Mr Perala of the termination of the project and said, "There is no work for you here in Melbourne. Go back to the Sydney office." Mr Cookney says that Mr Perala then asked, "What about my termination payment?" to which Mr Cookney replied, "In my opinion you are not entitled to any termination payment according to the terms and conditions of your contract. However, I will refer the matter to Joe. Please talk to Joe on your return to Sydney." Joe is Mr Calavassay, a director of CGI.
9 Mr Perala's account of this telephone conversation accords, to a certain extent, with Mr Cookney's, although there are some differences. In particular, Mr Perala does not refer to any instruction to return to Sydney and says that the question of four weeks' termination payment had been discussed between Mr Cookney and himself on the previous day. Mr Perala refers to a conversation at a coffee shop on 4 February 2003 to which he, Mr Cookney and others affected were parties, in which Mr Perala asked, "When our roles are finished here in Melbourne will there be places for us in Sydney?" to which, according to Mr Perala's account, Mr Cookney replied, "There is no role for you in Sydney as I have stated in our previous conversations". Mr Perala says that he replied, "Should I put in my invoices for the work that I have done and four weeks notice?" to which Mr Cookney replied, "Yes, you should".
10 Mr Cookney, in his affidavit in reply filed in court today, agrees that there was a conversation in the coffee shop on the earlier day but denies having said, "There is no role for you in Sydney as I have stated in our previous conversations."
11 There are thus important and pivotal questions of fact requiring resolution before the true position can be ascertained. It may be that CGI, through Mr Cookney, agreed that a termination payment of four weeks remuneration would be made, regardless of the terms of the contract, or it may be that Mr Cookney made it clear that the contract was ongoing and, in effect, that APRA was to present Mr Perala for duty in Sydney as soon as he returned from Melbourne, or the true facts may reflect neither of these circumstances.
12 One thing, however, seems to be clear, namely, that there was no written notice as envisaged by clause 3.1, which indicates that that clause cannot, of its own operation, have caused the contract to terminate after some period of four weeks. At its highest, therefore, APRA's complaint must be that there was a repudiation or other breach of the contract by CGI, unless it is somehow saying that there was a new and collateral agreement by which CGI agreed to pay four weeks remuneration.
13 The submissions made on behalf of APRA make it clear that the complaint of APRA on which the statutory demand was based (as regards the $12,320) is wholly one of breach of contract. The central contentions are stated in the written outline of submissions as follows:
"1.1 Pursuant to the first element of section 459H(1)(a) of the Corporations Act , 2001 (Commonwealth) ('the Act'), there is no genuine dispute about the existence of the debt of the second invoice No. CG03015 in the amount of $12,320.00.
1.2 The debt arises from a clear breach of the Agreement …
1.3 The term breached is clause 3.1, which states:
'This Agreement will continue for the Term unless terminated by either party giving either party four weeks written notice.'
1.4 The plaintiff breached clause 3.1 as it did not give the defendant 4 weeks' notice …..
1.5 The plaintiff, in paragraph 4 of the affidavit of Jon Cookney sworn 29 April 2003 in the first quote contains evidence that the plaintiff terminated the Agreement, by saying on behalf of the plaintiff:
'Ari, the project and all of us have been terminated forthwith. This is your last day on the project.'
1.6 In those circumstances clause 3.1 of the Agreement must then apply, namely the payment of $12,320.00 in lieu of notice. The invoice the subject of the claim is for payment pursuant to the notice period.
1.7 In those circumstances there can be no genuine dispute about the existence of the debt."
14 Even if APRA is correct in saying that CGI repudiated the agreement (a matter as to which there are clear differences at the factual level), it simply does not follow that a sum of $12,320 then and for that reason became owing, due and payable by CGI to APRA.
15 The statutory demand procedure made available by s.459E may be availed of by a person in respect of a "debt that the company owes to the person". A debt is a sum certain owing, as distinct from a right to recover damages for breach of contract. The assertion of the defendant, as stated in paragraph 1.2 of the submissions, is that the relevant debt "arises from" a breach of contract. Such an assertion might, in concept, be correct where a contract requires a stated sum to be paid on a stated day or event and payment is not then made. The contract between CGI and APR did not work in that way. It bound the parties together for a stated term and contemplated the possibility of earlier termination by notice. If, as APRA contends, CGI repudiated the agreement or purported to terminate it otherwise than in accordance with the provision allowing termination, the most that APRA can have is a right to sue for damages for breach of contract, the damages being such as are found by a court to be necessary to compensate APRA for loss flowing from the breach. The breach APRA postulates is not, on any conceivable basis, one which causes to arise in APRA a right to sue for a liquidated sum (or debt).
16 It is unnecessary to canvass in detail here the scope of "genuine dispute" ground under s.459H as laid down in well known cases such as Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290, Re Morris Catering (Australia) Pty Ltd(1993) 11 ACSR 601 and Spencer Constructions v G & M Aldridge Pty Ltd (1997) 76 FCR 452. It is sufficient that I repeat what I have said in other cases, namely, that the 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.
17 On this basis and having regard to the fundamental distinction between a debt and a claim for unliquidated damages, CGI has clearly and convincingly succeeded in showing that there is a genuine dispute as to the existence of the debt of $12,320 which remains the subject of the statutory demand and has made out an entitlement to order 1 in the originating process. I therefore order that the statutory demand dated 1 April 2003 and served on 9 April 2003 be set aside.