6 The affidavit in support, being that of Mr Moffatt of 26 October 2000 was made by him in his capacity as solicitor for the plaintiff. After referring to the statutory demand which he annexed to his affidavit, his affidavit contained the following paragraphs.
"An application has been filed with the Local Court Sydney seeking to set aside Orders made by the Court in the absence of the plaintiff on 28 August 2000. Annexed hereto and marked with the letter "B" is a copy of the Affidavit filed in support of the Local Court Application. The contents of this Affidavit are to my knowledge true and correct.
At the date hereof, I have not been advised of a hearing date for the application to reinstate aspects of the Local Court proceeding, but expect a hearing date within the next 4 to 5 weeks.
The judgment entered in the Local Court was not a judgment on the merits as the Court struck out the Plaintiff's Statement of Claim and Cross-Claim in those proceedings and proceeded to enter judgment in favour of the Defendant without consideration of the original Statement of Claim filed by the Plaintiff and the Defence to the Defendant's Cross-Claim. As the Cross-Claim was not a liquidated demand, I believe that the judgment was entered by the Local Court in the absence of any evidence, other than the material contained in the Defendant's Pleadings.
There is a real issue between the parties as to the Plaintiff's liability to the Defendant and further, there is a claim for moneys due to the Plaintiff by the Defendant."
7 In paragraph 3 above there is a reference to an affidavit which was annexed to the affidavit. All that affidavit did was give some explanation for the failure to attend on the occasion when the default judgment was obtained. The affidavit did, however, in its terms refer to an existing application to set aside the default judgment and referred to the issues in the local proceedings being the plaintiff's liability to the defendant and the claim for monies due to the plaintiff by the defendant.
8 If one looks at the matter at the conclusion of the 21 day period after service of the demand, clearly there was on foot an application to set aside the Local Court judgment but there had been no grant of a stay of execution. In these circumstances the possibility that the judgment might be set aside would not constitute a genuine dispute. See Wilden Pty Ltd v Greenco Pty Ltd 1995 13 ACLC 1039 and Barclays Australia v Mike Gaffikin Marine 21 ACSR 235 and (1996) 14 ACLC 1367. In the latter case His Honour Mr Justice McLelland the Chief Judge in Equity said at ACLC 1370 said:-
"The assertion that there is a genuine dispute about the existence of the debt is in turn based on two grounds. The first relies on the existence of the undetermined appeal, in which orders are sought by Dan (inter alia) that the proceedings brought by Gaffikin Marine be dismissed and that Gaffikin Marine pay the costs of those proceedings. If the appeal succeeds, it is possible that the costs orders of 16 July 1995 (including the order against Barclays, although it is not an appellant) may be set aside. The answer to this submission is that the possibility that a presently existing and enforceable debt may be set aside in the future pursuant to a subsisting appeal does not give rise to a genuine dispute about the existence of the debt within the meaning of s459H (see eg Hoare Bros v Deputy Commissioner of Taxation (1995) 13 ACLC 358; Wilden v Greenco (1995) 13 ACLC 1039). The position would of course be different if there were a stay of proceedings under, or stay of execution of, the costs order against Barclays, but there is not, and in the absence of any such stay and notwithstanding the pendency of the appeal, the costs orders of 16 July 1995 against Barclays (together with the judgment of 16 May 1996), unless and until set aside on appeal, operate as res judicata determining the matter of Barclays' costs liability to Gaffikin Marine (see Spencer-Bower and Turner Res Judicata 2nd ed page 144; Lahoud v B and M Quality Constructions (22 July 1994, McLelland CJ in Eq, unreported))."
9 The question that thus arises is whether it is sufficient for the affidavit in support to identify what might be considered as a conditional genuine dispute a condition in respect of which is satisfied prior to the hearing of the proceedings. Before moving to this point I will refer to the fact that the defendants submitted that the terms of the affidavit would not have disclosed the existence of a conditional genuine dispute. Given that the parties had been locked in litigation with claims and cross claims in the Local Court since August 1998 I would have thought that the very existence of those proceedings continuing to be prosecuted albeit in a somewhat erratic fashion would be sufficient for me to infer the existence of what I have termed a conditional genuine dispute.
10 The circumstances of the present case indicate a fairly common situation in respect of the statutory demand procedure. Default judgments frequently come about because proceedings do not come to the attention of a party. Judgment is obtained and then a statutory demand is served. Not infrequently it is the receipt of a statutory demand which then makes the recipient aware that a judgment has been obtained against him. In these circumstances if the defendant were right not only would the recipient of the demand have to make application to set aside the demand within 21 days, but would also have to have heard an application to set aside the underlying judgment or have obtained a stay pending such a hearing from the Local Court. In Graywinter Sunberg J took the view that the initial affidavit could be supplemented given the fact that the initial affidavit did not have to be in admissible form. He was of the view that an affidavit that did not satisfy the threshold test could not be supplemented at a later stage.
11 There is a clear dispute in the cases at first instance as to whether or not, provided there has been a supporting affidavit filed within the 21 day period, that the application may be amended by allowing additional grounds raised after the 21 day period. In Eden Bay Pty Ltd v Bennett & Co (1997) 15 ACLC 1634 Acting Master Chapman held that a supplementary affidavit could be filed beyond the 21 day period if it was merely supportive of the original grounds of the application but an affidavit could not be filed out of time if it raised a new ground. A similar opinion was expressed by Perry J in D & S Group of Companies Pty Ltd v O'Connor Investments Pty Ltd (1997) 15 ACLC 1794. Lee J also came to the same conclusion sitting in the Supreme Court of Queensland in the matter of Brentwood Terrace Pty Ltd 28 November 1997 unreported. To the contrary are decisions of Ryan J in Re Louisbridge Pty Ltd (1994) 1 Qd R 144 and Hill J in Sandina Pty Ltd v Sydney Autolac Centre Pty Ltd 5 December 1997. This conflict in the authorities was referred to by Beaumont J in Bluecrest Holdings Pty Ltd v Steve Blyth Electrical Engineering & Contracting Pty Ltd 23 February 1998. In that case His Honour did not decide the point as he decided on a case management basis to see whether the ground that was within the original supporting affidavit might be successful.
12 It is s 459H(1) which refers to the determination by the court of whether a genuine dispute exists. Section 459H(1) is in the following terms:-
"This section applies where on an application under s 459G, the court is satisfied of either or both of the following:-
(a) there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;
(b) that the company has an offsetting claim."
13 The decision as to the existence of a genuine dispute is one which is made at the hearing when the court determines the matter.
14 As has been pointed out by Sunberg J in Graywinter and the High Court it was a condition of jurisdiction that there be a supporting affidavit. In the words of Sunberg J for an affidavit to be a supporting affidavit the affidavit must say something that promotes the company's case. It is interesting to note that in Graywinter the initial affidavit was one which is very like the affidavit in question in the present matter. The statutory demand referred to a judgment and the affidavit spoke of facts relating to a compromise and a forebearance to sue. It then referred to the judgment being entered erroneously and that application had been made to set aside the judgment. It then went on to refer to the fact that there was a genuine dispute as to the alleged liability. The decision in the case was that the application and the affidavit to which I have referred, constituted an application for the purpose of s 459G of the Corporations Law. The court also ordered that the applicant be at liberty to file a further affidavit or further affidavits in support of its application. In that case there does not seem to be any reference to the cases to which I have referred above which show that an existing judgment is conclusive and, absent a stay of the judgment, there can be no genuine dispute. One does not know what ultimately transpired in the litigation in Graywinter Properties when the additional affidavits were filed.
15 In the present case, before me, there has been an agreed fact, namely, that the judgment in the Local Court was set aside shortly prior to the commencement of the hearing of the matter before me. This is similar in nature to that of a supplementary affidavit filed outside the 21 day period. This additional fact does not seem to me to really be the raising of a new ground and thus I do not have to resolve the conflict in the cases to which I have referred. The basis of the ground which the court would be asked to find on the hearing seems to have been fully articulated in the affidavit in support. The ground was that it was intended to have the Local Court judgment set aside and that the underlying debt on which the judgment was based was disputed in the Local Court proceedings. In the event that it was not stayed or set aside prior to the hearing there is no doubt the ground would fail. The fact that it was set aside is no more than supplementing the articulated ground in the first affidavit.
16 The requirement under s 459H for the court to determine at the hearing that there is a genuine dispute will no doubt mean in some cases that a perfectly genuine dispute articulated in an affidavit filed within time ceases to exist by reason of some fact occurring after the 21 day period but before hearing. Such fact could emerge through cross examination or defendant's affidavits which are filed after the 21 day period. It is obvious that the court would be required to take such a fact into account. This obverse situation to the present case perhaps assists by drawing attention to when the dispute has to exist. In the present case the affidavit promoted the applicant's case by articulating a ground which would be made out at the hearing the date for which was specified in the revised application. That one of the facts necessary for that ground to exist might only occur after the 21 days and before the hearing does not mean, in my view, that the affidavit failed to promote the applicant's case. To hold otherwise would confuse the two different temporal requirements. One is the establishment at the hearing of the existence of the genuine dispute and the other is the filing of an appropriate affidavit within the 21 days. The legislation in its terms does not also require the establishment of the existence of a genuine dispute at some time within the 21 days.
17 In these circumstances, I am satisfied that the initial affidavit is a sufficient supporting affidavit in order to ground jurisdiction. I am also satisfied, as at the date of hearing this application, having regard to the fact there is no longer any judgment and that there are proceedings on foot in the Local Court regarding the underlying debt, that there is a genuine dispute in relation to the debt.
18 Accordingly, I order:-