Fina v Hills

4983/03 FINA GROUP PTY LIMITED V HILLS PLUMBING PTY LIMITED JUDGMENT 1 MASTER: This is an application to set aside a statutory demand served by the defendant on the plaintiff dated 27 August 2003 claiming the sum of $23,148. The defendant is a plumbing company and the plaintiff is a company which it is alleged owes money for contract plumbing work carried out on a site at Kings Cross over a period of many months. 2 The plaintiff raises two matters, which it says, are genuine disputes which entitle it to set aside the demand. One of them is whether the correct contracting party was the plaintiff or whether it was another company J D Holdings Pty Limited, which is now in liquidation. 3 The second genuine dispute is in relation to the amount of the claim. I have had various submissions as to the principles to be applied and I think probably the most useful summation of what is a genuine dispute is that given by McLelland CJ in Equity in Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACLC 669. At page 671 his Honour made the following comments respect of the expression "Genuine dispute":

"It is, however, necessary to consider the meaning of the expression 'genuine dispute' where it occurs in s.459H. 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 inquiry 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) 11 ACLC 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 assertion. 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 simply - 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." 4 On the first question, namely the identity of the contracting party, one is of course immediately concerned as to the genuine dispute assertion when one finds that the plaintiff suggests some other company which is now in liquidation was, in fact, the contracting party. 5 Mr Smirneos, the director of the plaintiff company, swore that he was a director of both the plaintiff and J D Holdings Pty Limited. He says in his capacity as a director of J D Holdings Pty Limited he asked for the work to be done. That, of course, is not conclusive about it but the other evidence which goes to this question is basically that given by Mr Younes. He gives evidence of the initial discussions which, in fact, raised the question as to who was the contracting party. He says that he refused to deal with J D Holdings as he understood they were not paying their subcontractors. He said that he was prepared to deal with the Fina Group and he was given a business card by Mr Smirneos which showed him as being the Managing Director of the plaintiff company. That conversation, however, has been denied on oath by Mr Smirneos in para 3 of his affidavit of 23 October. Accordingly, there is a dispute as to that conversation.

6 Another matter which is something perhaps objective going to it is that the registered proprietor of the site and the developer was apparently J D Holdings Pty Limited. It is also worth noting that, in fact, the liquidator of that company now holds all the records in relation to the amounts claimed in this matter. 7 The problem as to identity is not necessarily assisted by some of the other evidence. All the invoices which were sent, were sent to Fina Constructions, which is once again different from the plaintiff. There is evidence from the plaintiff company that payments were not paid by the plaintiff. They were either paid by J D Holdings Pty Limited or one of their mortgagees or financiers. This is contrary to the evidence that is given by the defendant, Mr Younes, that most of the cheques were coming from the Fina Group. It is to be noted he did not really care where the cheques were coming from as long as it got paid. It is not an unnatural sentiment. Given that there is a clear dispute on the affidavit evidence as to the conversations and commencement of the contractual arrangement, it seems to me that there is a genuine dispute. There are some objective matters which might suggest that it is not the plaintiff company. Accordingly, it does appear to me that there is a genuine dispute as to the identity. 8 Ultimately these questions of credit will have to be resolved in the proceedings, which no doubt will be brought to recover the amount. Whoever tries that dispute will have to resolve the serious questions of credit involved and what should be done about any false swearing. 9 The other area is, of course, the amount of the claim. There is a variety of evidence given as to approval of the invoices by the site foreman. More importantly, there are the particular allegation of conversations in para 9 of Mr Smirneos' affidavit of 19 September 2003 where he gives evidence of a meeting he had with Mr Younes in which they sat down and agreed what was owing. According to that conversation, the plumber, Hills Plumbing, had been overpaid by $1,000. That is a substantial admission if that evidence is believed. Strangely, there is no denial of that conversation by Mr Younes and in those circumstances it seems to me there is evidence of a substantial admission that amounts are not owing. 10 There are some difficulties with the claims because the invoices and the amounts claimed in them do not necessarily tally with the amounts claimed in the schedule to the affidavit sworn verifying the statutory demand. The amounts actually claimed, in invoices include amounts which were not paid and, in fact, the defendant company concedes and the way it has drawn the affidavit verifying the statutory demand. 11 In the circumstances, I am satisfied there is a genuine dispute in respect of the whole of the amount claimed in the statutory demand and accordingly I make order 2 in the application. 12 There is an application for indemnity costs from the letter of 17 September. It was foreshadowed the plaintiff did not owe the debt and that there was a dispute about both the existence and the amount of the debt although details of how they were said to arise did not appear in that letter. In my view, I do not think it is a case where it is appropriate for indemnity costs. Accordingly, costs should be on a party and party basis. Exhibits can be returned.

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