HL DIAGNOSTICS PTY LTD -v- PSYCADIAN LTD [2005] WASC 234 (2 November 2005)

Dolvelle Pty Ltd v Australian Macfarms Pty Ltd (1998) 16 ACLC 1371

Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [2001] WASCA 299

Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785

Four Seasons Construction Pty Ltd v Eastern Metropolitan Regional Council [2000] WASC 277

In re Brookers (Aust) Ltd (In Liq); Brooker v Pridham (1986) 41 SASR 380

Joachimson v Swiss Bank Corporation [1921] 3 KB 110

Osborne Cold Stores WA Pty Ltd v Novacastrian Nominees Pty Ltd (1991) 6 WAR 350

1 MASTER NEWNES: This is an application by the plaintiff to set aside a statutory demand served on it by the defendant on 19 April 2005. The plaintiff says first, that the statutory demand is defective in form and secondly, that there is a genuine dispute as to the plaintiff's indebtedness to the defendant.

2 The statutory demand, which is undated, demands payment of the sum of $160,000, said to be due and payable by the plaintiff to the defendant. The schedule to the statutory demand is in the following terms:

"Debts in the sum of $160,000 are due and payable to Dr Stephen Addis upon notice of termination of contract and demand for repayment. These debts have been assigned to Psycadian Pty Ltd. Such notice of the assignment and demand for payment was served on HL Diagnostics on 19 April 2005."

3 In the accompanying affidavit, Mr Solitario, a director of the defendant, says that, on 5 April 2005, by a deed of assignment made between the defendant and Dr Addis, the defendant acquired from Dr Addis debts owed to him by the plaintiff. A copy of the deed of assignment is annexed to Mr Solitario's affidavit. Mr Solitario says he has inspected the records of the defendant and the debts claimed in the statutory demand remain outstanding. He deposes that the debts are due and payable by the plaintiff and there is no genuine dispute about the existence or amount of the debts to which the demand relates.

4 The deed of assignment is dated 5 April 2005. It recites that Dr Addis is the legal and beneficial owner of the debts referred to in the deed and has agreed to transfer them to the defendant in consideration of the issue to him of a convertible note in the sum of $160,000.

5 The deed refers to three debts. The first is an amount of $40,000, said to have been lent by Dr Addis to the plaintiff pursuant to an agreement entered into by those parties on 30 March 2004. The second is an amount of $100,000, said to have been an overpayment by Dr Addis to the plaintiff for a parcel of shares. In connection with that amount, the deed states that by an agreement made on 19 April 2004 between Dr Addis and Triregal Pty Ltd, Triregal agreed to sell to Dr Addis its 10 per cent equity in HL Diagnostics North America for the sum of $100,000 on or before 21 July 2004. The plaintiff received from Dr Addis the sum of $200,000 on behalf of Triregal. The plaintiff accordingly received $100,000 as money had and received for no valuable consideration. The third debt is an amount of $20,000, said to be owing as the result of an agreement between Dr Addis and the plaintiff by which Dr Addis agreed to purchase $20,000 of Alchemist Healthcare Ltd shares and be assigned an additional three shares in the plaintiff. According to the deed, the plaintiff has failed or refused to complete the agreement.

6 By the deed of assignment, Dr Addis agrees to assign the debts to the defendant and to execute notices pursuant to s 20 of the Property Law Act 1969 (WA). Dr Addis expressly warrants to the defendant that the debts are valid and enforceable.

7 The plaintiff took a number of objections to the validity of the statutory demand.

8 First, it was submitted that at the time the statutory demand was served the deed of assignment could not be relied upon by the defendant as establishing the plaintiff's indebtedness because the deed had not been stamped. It was not in dispute that the deed of assignment was a dutiable instrument under the Stamp Act 1921 (WA): s 16, Sch 4. It was argued on behalf of the plaintiff that, accordingly, until the deed of assignment was duly stamped, it was not "good, useful or available in law or equity": Stamp Act, s 27. It was submitted the defendant did not, therefore, have any enforceable claim against the plaintiff at the time the accompanying affidavit was sworn or when the statutory demand was served. It was irrelevant that the deed of assignment has since been stamped, within the period of two months from the date of execution as required under the Stamp Act.

9 Next, the plaintiff argued that the accompanying affidavit, sworn by Mr Solitario on 15 April 2005, did not verify that the alleged debt was due and payable by the plaintiff. The statutory demand refers to service of the notice of assignment having been effected on 19 April 2005 so the statutory demand itself could not have been executed before 19 April 2005. The accompanying affidavit was sworn on 5 April 2005. An accompanying affidavit that is sworn before the statutory demand is executed cannot verify the demand, and accordingly the statutory demand should be set aside. Counsel referred to the decision of the Full Court in Wildtown Holding Pty Ltd v Rural Traders Co Ltd [2002] WASCA 196 at [58] as authority for the latter proposition.

10 It was further argued on behalf of the plaintiff that the claimed debt of $100,000 was a restitutionary claim and therefore not a debt within the meaning of the Corporations Act 2001 (Cth). Counsel relied on Waldron‑Brown v Geraldton Fishermen's Co-operative [1983] WAR 83. It was submitted that a "debt" for the purposes of s 459E of the Corporations Act is a liquidated sum in money presently due and owing, and an amount claimed by way of restitution was not such a sum.

11 The plaintiff also submitted that the affidavit of Mr Solitario did not verify that the amounts claimed were due and payable to the defendant. His affidavit deposed simply to the assignment of the alleged debts owing by the plaintiff to Dr Addis. It did not verify that those debts were, in fact, owing by the plaintiff to Dr Addis or that there was no dispute as to the plaintiff's indebtedness to Dr Addis. Moreover, it did not refer to any basis upon which Mr Solitario could have concluded that the debts were due and owing to Dr Addis and that there was no dispute as to the plaintiff's indebtedness to Dr Addis. There was, accordingly, nothing in the affidavit that verified the existence of the alleged indebtedness said to have been assigned to the defendant. It follows that the statutory requirements for a valid statutory demand have not therefore been met. Counsel referred to IFA Homeware Imports Pty Ltd v Shanghai Jerrys Candle Company Ltd [2003] FCA 533 at [24] ‑ [25].

12 Finally, it was submitted that the defendant acknowledged in the statutory demand that the debts are only repayable on demand and it was not contended by the defendant that such demands had been made. It was not in issue that such demands had not been made before service of the statutory demand. The accompanying affidavit was defective because it purported to verify that the debts were due and payable when the statutory demand itself said that the debts were payable only upon demand. I should say that the plaintiff's counsel did not contend that the statutory demand was defective and he disavowed any reliance on s 459J of the Corporations Act.

13 On the first objection, counsel for the defendant submitted that the fact the deed was not stamped at the time the statutory demand was signed and served was irrelevant, in circumstances where the time period within which it was required to be stamped had not expired and where, within that time, it was duly stamped. Counsel relied upon Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 per Dixon J at 383, for the proposition that once the instrument was stamped, it was valid ab initio.

14 On the second objection, counsel for the defendant sought, and obtained, leave to file a further affidavit to clarify when the statutory demand was executed.

15 In relation to the third objection, it was argued on behalf of the defendant that all of the amounts referred to in the statutory demand constituted debts within the meaning of the Corporations Act. Waldron‑Brown v Geraldton Fishermens Co-operative Ltd was not authority for the proposition that a restitutionary claim could not constitute a debt. That case was concerned with whether a claim on a quantum meruit was a claim for a debt or a sum certain for the purposes of s 32 of the Supreme Court Act 1935 (WA).

16 On the fourth objection, the plaintiff contended that the debts were properly verified by Mr Solitario. In the deed of assignment, Dr Addis had expressly warranted that the debts were valid and enforceable. Mr Solitario had satisfied himself that the debts had been properly assigned to the defendant. Nothing more was required. In particular, the defendant was not required to go behind the express warranties by Dr Addis to satisfy itself that they were well founded, in circumstances where there was no reason to believe they were not. In IFA Homeware Imports, the creditor had not deposed to a belief that there was no genuine dispute about the existence of the amount of the debt. It was not on point.

17 In relation to the fifth objection, counsel for the defendant submitted that it was obvious that the reference in the statutory demand to the debts being payable on demand was simply an error in the statutory demand. It was evident from the deed of assignment in evidence that the debts were payable without demand. That was consistent with the accompanying affidavit, which verified that the debts were due and payable. Counsel submitted that a statement in the statutory demand did not change the true nature of a debt so as to make it payable only on demand.

18 Turning first to the question of the stamping of the deed of assignment, I accept, as contended by the defendant, that the duty having been paid in accordance with the Stamp Act, the deed is valid ab initio. Once it has been duly stamped its validity and operation "as from the beginning" are to be construed as unaffected by s 27 of the Stamp Act: see Shepherd v Felt and Textiles of Australia Ltd (supra). I do not therefore accept that, for the purposes of s 459E of the Corporations Act, at the time the statutory demand was served there was no debt due and payable to the defendant by virtue of s 27 of the Stamp Act.

19 I do not accept the plaintiff's contention that the indebtedness of the plaintiff is not properly verified by the accompanying affidavit as required by s 459E of the Corporations Act.

20 In Azed Developments Pty Ltd v Frederick & Co Ltd (In Liq) (1994) 14 ACSR 54 at 56, Hayne J held that to "verify" under s 459E meant to make "a formal affirmation", rather than to "prove or demonstrate by good evidence or otherwise substantiate", the matters referred to. That decision has been followed in a number of cases: see, for instance, Hamilhall Pty Ltd (In Liq) v A T Phillips Pty Ltd (1994) 15 ASCR 247, Chains & Power (Aust) Pty Ltd v Commonwealth Bank of Australia (1994) 15 ACSR 544, Main Camp Tea Tree Oil Ltd v Australian Rural Group Ltd [2002] NSWSC 219.

21 The capacity of the deponent to the accompanying affidavit to depose to the matters required by r 5.2 of the Supreme Court (Corporations) (WA) Rules 2004 is, however, a matter of substance if the affidavit is to serve its intended purpose. In that regard, I respectfully adopt what was said by McClelland CJ in B & M Quality Constructions Pty Ltd v Buyrite Steel Supplies Pty Ltd (1994) 15 ACSR 433 at 435 where, in respect of the comparable New South Wales rule, his Honour said:

"The requirement of that rule, as to the identity of the person making the affidavit accompanying the statutory declaration, is designed to serve the public interest as well as to protect the company against unwarranted demands, by endeavouring to ensure, within practical limits, that the person who must put his or her oath or solemn affirmation to the relevant matters (and thereby risk a conviction for perjury if a knowingly false statement is made) is the person associated with the creditor who is most likely to have direct knowledge of those matters. It is important in this regard to bear in mind that the relevant matters include not only a belief as to the existence and amount of the debt, but also a belief as to the absence of any genuine dispute about the existence or amount of the debt. The express requirement in the rule that the person making the affidavit depose to his or her belief that there is no genuine dispute is a significant mechanism for filtering out cases where there is in fact such a dispute, so as to prevent such cases from reaching the court on such an application as the present, with a consequent waste of time and resources. This mechanism would be substantially weakened unless a person likely to have personal knowledge of the existence of a dispute if there is one makes the affidavit. A statement of a belief that there is no genuine dispute based solely on hearsay is unlikely to have anything like the same degree of reliability."

22 In support of his contention that the affidavit was deficient, counsel for the plaintiff referred to Financial Solutions Australasia Pty Ltd v Predella Pty Ltd [2002] WASCA 51; (2002) 26 WAR 306, where criticism was made of an affidavit accompanying a statutory demand relating to debts assigned to the defendant. In the affidavit, the deponent for the defendant said that he made the statements contained in it as to the plaintiff's indebtedness from his own knowledge and from the records of the defendant. Parker J pointed out, at [7], that the debt had been assigned to the defendant and substantial parts of the affidavit referred to the plaintiff's indebtedness arising under loan agreements between the plaintiff and the assignor. There was no evidence that the defendant's records contained anything relevant to those dealings.

23 The facts of the present case are somewhat different and I do not consider it is necessary that the defendant separately verify the indebtedness of the plaintiff to Dr Addis. What must be verified is the indebtedness of the plaintiff to the defendant. The defendant took an assignment of debts which were expressly warranted by Dr Addis to be valid and enforceable. There is, on the face of it, nothing to suggest that Dr Addis was not in a position to give that warranty or that the defendant could not rely on it. Mr Solitario has verified the assignment of the debts to the defendant and the fact that the plaintiff has not paid the amount of the debts to the defendant. In my view, Mr Solitario has adequately verified the indebtedness of the plaintiff to the defendant under s 459E of the Corporations Act.

24 As I have said, it was argued on behalf of the plaintiff that the demand was defective because the accompanying affidavit was sworn before the demand was executed. It seems, however, that that point is no longer live. Following the hearing, an affidavit sworn by Mr Solitario on behalf of the defendant was filed, with leave. In it Mr Solitario says that he swore the accompanying affidavit at the offices of his solicitor on 15 April 2005 and the statutory demand was executed by his solicitor on that occasion in his presence. It therefore appears that the reference to the service of the notice of the assignment on 19 April 2005 in the statutory demand was in anticipation of that occurring. In the light of the uncontroverted evidence of Mr Solitario, the contention that the affidavit was sworn before the demand was executed must fail.

25 I should note that it was not contended by the plaintiff that the defendant was not entitled to serve a statutory demand in respect of the debts, or that there were no debts owing by the plaintiff to the defendant within the meaning of the Corporations Act, until the plaintiff had notice of the assignment in accordance with s 20 of the Property Law Act. Counsel for the plaintiff accepted that that was not open in light of the decision in Re Small & Shattell (Sales) Pty Ltd (1992) 7 ACSR 99, where it was held that an assignee in equity was entitled to serve a demand under (then) s 450(2)(a) of the Corporations Law. Although that decision appeared to turn on the reference in s 460(2)(a) of the Law to the right to serve a demand by "a creditor by assignment or otherwise", the provision in s 459E(4) of the Corporations Act, that "a person may make a demand under this section relating to a debt even if the debt is owed to the person as assignee", would appear to have the same effect.

26 The next objection by the plaintiff was to the demand for $100,000, on the basis that it was a restitutionary claim and not, therefore, a debt.

27 There is no definition of "debt" in the Corporations Act, but there is authority for the proposition that the term bears its common law meaning: Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64. It is clear that at common law a debt is distinct from a liability in damages or some other unliquidated obligation: Commonwealth Bank of Australia v Butterell (supra), Jelin Pty Ltd v Johnson (1987) 5 ACLC 463. The essence of a debt at common law is an obligation of one person to pay a certain, or liquidated, sum to another: Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 567. That is, the characteristic of a debt is that it is a liquidated sum of money which is immediately payable or which, by reason of a present obligation, will become payable in the future: In Re European Life Assurance Society [1869] UKLawRpEq 195; (1869) LR 9 Eq 122 at 127; Webb v Stenton [1883] UKLawRpKQB 72; (1883) 11 QBD 518 at 526; Re Australia and New Zealand Savings Bank Ltd [1972] VicRp 79; [1972] VR 690 at 692. In Rothwells Ltd v Nommack (No 100) Pty Ltd (1990) 2 Qd R 85 (at 86) McPherson J described a debt, for the purposes of a statutory demand, as a liquidated sum in money presently due, owing and payable by one person, called the debtor, to another person called the creditor.

28 In Hawkins v Bank of China (1992) 26 NSWLR 562, in considering the meaning of the word "debt" in s 556 of the Corporations Law, Gleeson CJ observed (at 572) that the word "debt" is not a word of precise and inflexible denotation and, wherever it appeared in s 556, it ought to be applied in a practical and commonsense fashion, consistent with the context and the statutory purpose. That observation appears to me, with respect, to be equally applicable to s 459E of the Corporations Act. See also Bank of Australasia v Hall [1907] HCA 78; (1907) 4 CLR 1514, where O'Connor J (at 1535) said:

"Where an ambiguity arises as to whether the legislature has used a general expression in its narrow or in its wider sense, the Court will place that meaning upon the expression which will most effectually carry out the object of the section. In such cases it becomes necessary to examine the context, the subject matter and the object and purpose of the enactment as disclosed by its provisions."

29 In Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbow Ltd [1942] UKHL 4; [1943] AC 32 at 63, the House of Lords described the right of recovery upon a total failure of consideration as follows:

"The gist of the action is a debt or obligation implied, or more accurately, imposed, by law in much the same way as the law enforces as a debt the obligation to pay a statutory or customary impost."

30 The right in Australia to recover payment made for a consideration which has failed or by mistake is now more accurately expressed in the language of restitution, based upon concepts of unjust enrichment: Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662 at 673; Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344 at 375; David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353; Roxborough v Rothmans Pall Mall Ltd [2001] HCA 68; (2001) 208 CLR 516. While it is the case that a claim for restitution is different from a claim for debt under contract, the emphasis in the former being on the position of the beneficiary rather than the loss sustained by the claimant, in my view, having regard to the present context and statutory purpose, the differences are not material. I do not consider that for the purposes of s 459E anything turns on the precise nature of the right available to the claimant to recover a sum of money, so long as the sum of money has the characteristics of a debt and is due and payable to the claimant.

31 In my view, a liability of the plaintiff to pay to the defendant money as the result of an overpayment made by the defendant to the plaintiff would be a debt within the meaning of s 459E(1) of the Corporations Act.

32 Finally, the plaintiff relied upon the schedule to the statutory demand as an acknowledgement by the defendant that the debts in question were only due and payable upon demand being made. It was not suggested by the defendant that such demand had been made when the statutory demand and accompanying affidavit were executed. There was therefore no debt due and payable at the time the statutory demand was executed.

33 I accept the defendant's submission that the reference in the statutory demand to the debts being payable on demand is simply an error in the statutory demand. It is well established that unless the parties agree that a loan shall be repayable only on demand, the loan creates an immediate debt for which an action may be brought for its recovery without any antecedent demand: Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566. In Ogilvie v Adams [1981] VicRp 92; [1981] VR 1041 at 1043, Fullagher J said:

"The common law has always regarded the fact of indebtedness as a continuing detention by the debtor of the creditor's money, and this whether the creditor brought an action of debt or an action in indebitatis assumpsit. Therefore if A lends money to B, then instantly B is detaining A's money. In order to prevent a cause of action for recovery arising in A instantaneously on paying the money, the parties must expressly contract out of that situation by words clearly inconsistent with that situation. The courts have long since settled it that a mere statement or agreement that the money is repayable on demand (or request or at call) is not sufficient to contract out of that situation where all else that is known of the terms of the contract is that A has paid money to B by way of loan. The lender's cause of action still arises instanter on the receipt of the money by the borrower ..."

34 See also Mackenzie v Albany Finance Ltd [2003] WASC 100 at [243] ‑ [245].

35 There is nothing to suggest there was an agreement that the debts in question are payable only on demand, beyond the statement in the schedule to the statutory demand. I should say that I did not understand counsel for the defendant to contend to the contrary. Moreover, the accompanying affidavit verifies that the amounts in question are due and payable.

36 Counsel for the plaintiff did not seek to argue that, if it were simply an error in the statutory demand, it constituted a defect that had caused substantial injustice within the meaning of s 459J of the Corporations Act.

37 It follows, in my view, that the objections by the plaintiff to the form of the statutory demand fail and it is necessary to turn to the plaintiff's contention that there is a genuine dispute as to the plaintiff's indebtedness to the defendant.

38 The relevant principles are well known. They are conveniently summarised in Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294, where Owen J, with whom Pidgeon and Wallwork JJ agreed, said at [27]:

"From the relevant authorities on the issue of what amounts to a 'genuine dispute' under s 459H there can be discerned an emphasis on two overriding considerations. First, that in determining whether there is a genuine dispute a court is required to undertake an investigation that raises much the same sort of considerations as the 'serious question to be tried' criterion which arises in an application for an interlocutory injunction or for the extension or removal of a caveat: Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669 per McLelland J at 671. Further, to reach a finding that there is a genuine dispute the applicant must satisfy the court that:

(a) the dispute is bona fide and truly exists in fact; and

(b) the grounds alleging the existence of a dispute are real and not spurious, hypothetical, illusory or misconceived: Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 15 ACLC 1001 per Northrop, Merkel and Goldberg JJ.

This formulation has been adopted in a number of recent decisions: see Goldspar Australia v KWA Design Group (1999) 17 ACLC 456 per Austin J at 462 and Universal Greening Pty Ltd v Sabine & Anor [1999] FCA 529; (1999) 17 ACLC 880 per Kenny J at 885. In the interests of consistency in the various courts that have to apply the Corporations Law, I think this is the approach to be preferred."

39 On an application of this sort the Court will confine itself to the question whether a real dispute exists rather than attempt to determine the merits of the respective positions of the disputants: PDR Pty Ltd v Cottesloe Constructions Pty Ltd [2000] WASCA 62 at [6] ‑ [7]. In that case the Full Court referred with approval to Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] Vic Rp 61; [1994] 2 VR 290 at 295, where Hayne J, having considered the terms of s 459H and its place in the statutory scheme, said 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."

40 In an affidavit sworn on 6 May 2005 in support of this application, Mr Beard, a director of the plaintiff, says, in relation to the first debt, that on 30 March 2004, he wrote to Dr Addis in the following terms:

"We have set out below the understanding of our agreement.

In consideration of your past efforts and your commitment to work for us in the future, we agree to the following:

1. We provide you with a 5% interest in the Australian market. A new company, Psycadian Australia Pty Ltd will hold the licence for Australia and a 5% equity in this company will be issued to you. This is subject to HeartLink Ltd assigning the rights to Australia.
2. We provide you with 10% of all profits we derive from the home market, in perpetuity. The home market is defined as all services provided within the home, based on our technology or improvements thereto, that is 'non‑medical' in nature.
3. We pay you a salary of $80K per month annum for a minimum period of months
4. Return loan of $40K.

If this meets you your [sic] understanding please sign below."

[parts in italics in handwriting in original]

41 Mr Beard says that when the letter was returned to him, signed by Dr Addis as confirming the agreement, the sum of "80K" and "annum" had been inserted in paragraph 3 and paragraph 4 had been added. Mr Beard says he did not agree with the amendments. He says, "It was not part of any agreement between Dr Addis and the plaintiff. I do not accept that I agreed on behalf of the plaintiff that the plaintiff owed Dr Addis $40,000 pursuant to the letter dated 30 March 2004".

42 In relation to the second debt, Mr Beard says that Dr Addis provided to the plaintiff approximately $200,000 in various instalments over a period of approximately six months between about September 2003 and March 2004, in consideration of an agreement by which Dr Addis was to acquire a 10 per cent share of the market for HeartLink Technology in the United States from Triregal Pty Ltd. Annexed to Mr Beard's affidavit is a letter dated 22 November 2004 from Dr Addis to Mr Beard in which Dr Addis refers to an agreement, apparently with the plaintiff, to purchase 10 per cent of "the US market" for $200,000. The letter refers to discussions with "Ray" about whether the $200,000 investment could be considered a loan. Mr Beard says that the plaintiff did not agree to treat the amount as a loan.

43 In relation to the alleged debt of $20,000, Mr Beard says that he agreed with Dr Addis in November 2001 that Dr Addis would lend the sum of $20,000 to the plaintiff so the plaintiff could purchase shares in Alchemist Healthcare Ltd. However, before the shares could be purchased, the value of Alchemist shares fell and in discussions with Dr Addis it was agreed that, instead of buying Alchemist shares, Dr Addis and the plaintiff would treat the $20,000 as the acquisition by Dr Addis of additional equity in the plaintiff and HeartLink Canada. Annexed to Mr Beard's affidavit is a letter from Mr Beard to Dr Addis of 19 June 2003 in which Mr Beard made a proposal to that effect. Mr Beard says he subsequently spoke to Dr Addis who agreed to the proposal.

44 Mr Beard says that, prior to 19 April 2005, neither Dr Addis nor the defendant had made any claim for repayment of any of the amounts alleged in the statutory demand to be debts, other than an oral request made by Dr Addis to Mr Beard in about March 2005 for an amount of $35,000.

45 An affidavit has been sworn by Dr Addis in response to Mr Beard's affidavit. In that affidavit, Dr Addis denies Mr Beard's account of how the letter of 30 March 2004 came to be signed and says that Mr Beard attended upon him personally with the letter and, after discussion between them, the figure of $80,000 and the return of the loan of $40,000 were added to the letter in handwriting. Mr Beard and Dr Addis then each signed the letter. Dr Addis annexes to his affidavit a letter from Mr Beard to Dr Addis of 31 March 2005 which acknowledges an agreement by the plaintiff to pay Dr Addis a retainer of $80,000 pursuant to an arrangement which commenced in March 2004. There is, however, no reference in that letter to the loan of $40,000.

46 Dr Addis also says that the payment of $200,000 was for the 10 per cent parcel of shares held by Triregal in HeartLink Diagnostic North America Inc, which held the rights to the US market for the HeartLink technology. Annexed to Dr Addis' affidavit is an agreement between himself and Triregal which provides for the payment of $1 for 50 per cent of the HeartLink Diagnostic shares and the grant of an option, exercisable by the payment of a further $100,000 on or before 21 July 2004, to purchase the balance of the shares. Dr Addis says that he has received advice that, as the share acquisition required only the payment of $100,000, the receipt by the plaintiff of $200,000 gives rise to an obligation on the part of the plaintiff to repay the sum of $100,000. However, the relationship between the agreement between Dr Addis and Triregal (in which no reference is made to the plaintiff), and the payments by Dr Addis to the plaintiff, is by no means clear from the evidence before me.

47 In respect of the claim for $20,000, Dr Addis refers to a letter of 31 March 2005 from Mr Beard by which the plaintiff undertakes to pay to Dr Addis the sum of $35,000 on or before 30 July 2005. Dr Addis also annexes a letter dated 1 September 2003 from Mr Beard as evidence of the plaintiff's indebtedness. In the letter, however, Mr Beard thanks Dr Addis for the offer of a loan of $20,000 to the plaintiff and undertakes to repay it by 16 October 2003. It is not clear whether that loan was in fact made. In a letter of 22 November 2004 to Mr Beard, Dr Addis refers to a loan of $25,000 which he says he made to the plaintiff in 2003 and which Mr Beard had agreed would be repaid by 16 October 2003. In any event, it is not clear how either of the letters from Mr Beard relate to an agreement made in about November 2001 for the purchase by Dr Addis of shares in Alchemist Healthcare Ltd and HL Diagnostics Pty Ltd, as referred to in the deed of assignment.

48 I must say that generally the affidavit evidence is in a less than satisfactory state and it is not easy to understand the series of transactions that are referred to in the affidavits. In the end, however, I am satisfied on the evidence before me that there is a genuine dispute as to the plaintiff's indebtedness. Accordingly I would set aside the statutory demand.