Kortz Ltd v Data Acquisition Pty Ltd

REASONS FOR JUDGMENT 1 I have before me an application made under s 459G of the Corporations Act 2001 (Cth) ('the Act') for an order setting aside a statutory demand dated 31 August 2006 served on the Plaintiff on 6 October 2006 by the Defendant in an amount of $10,567.31 together with an affidavit in support of the demand sworn by David Swinnerton on 31 August 2006, the Managing Director of the Defendant. Mr Swinnerton deposes to a belief that the amount recited in the statutory demand is due and payable to the creditor and a belief that there is no genuine dispute concerning the existence or amount of the debt recited in the demand. 2 The Plaintiff relies upon these propositions. 3 First, that by operation of s 459J for the purposes of s 459G, the Court ought to be satisfied that there is a defect in the statutory demand that will give rise to substantial injustice unless the demand is set aside and accordingly the demand ought to be set aside. The defect is this. 4 The statutory demand recites an amount due and owing of $10,567.31 based upon three invoices issued by the Defendant in July 2006 which total $10,857.31. Since the total of the tax invoices attached to the statutory demand is not the amount recited and claimed by the demand, the Plaintiff contends that the demand ought to be set aside as it fails to comply with s 459E(2)(b) of the Act. That section provides that the demand, for the purposes of s 459E, 'must specify the total of the amounts of the debts'. Section 459E(2)(b) is in mandatory terms and thus the failure to 'specify' the total of the amount of the debt is said to be a defect in the demand for the purposes of s 459J(1)(a). 5 Secondly, irrespective of whether substantial injustice will be caused unless the demand is set aside, the demand ought to be set aside pursuant to s 459J(1)(b) for the 'other reason' that the failure to recite the total of the amount of the debt due and payable is a mandatory obligation going to the validity of the statutory demand and since the creditor has failed to comply with that obligation, the statutory demand ought to be set aside per se. 6 Thirdly, the Plaintiff says, based upon the affidavit evidence of Mr Robert McInnes, a Director of the Plaintiff, sworn 26 October 2006 there is a genuine dispute between the Plaintiff and the Defendant as to the 'existence of a debt to which the demand relates' for the purposes of s 459H(1)(a) of the Act on two footings. First, that the goods supplied by the Defendant to the Plaintiff identified in one of the tax invoices are not fit for the purpose for which they were supplied and secondly, that the goods listed in the two other tax invoices making up the amount of the statutory demand were not ordered by the Plaintiff from the Defendant and were not supplied by the Defendant. 7 The Defendant resists the application in reliance upon these contentions. 8 First, notwithstanding that the statutory demand contains an error of calculation reciting a lesser amount of $10,567.31 rather than the correct total of $10,857.31, that failure, by itself, ought not to provide a basis for the exercise of a discretion to set aside the statutory demand. The amount is a lesser amount and the demand attaches the relevant invoices. The demand is not one which requires the Plaintiff to apply a complicated formula to determine the amount owing or a calculation of each of the component integers making up the total amount owing. Nor is the Plaintiff required to undertake a calculation of any complexity such as a calculation of interest. There is simply an error of addition in the amount of three invoices. 9 Secondly, the Defendant says that the Plaintiff has failed to comply with the requirements of s 459G and, in particular, s 459G(3) of the Act. Section 459G confers a jurisdiction upon the Court to entertain an application to set aside a statutory demand which is only enlivened by a company making an application to the Court within 21 days after the demand is served (s 459G(2)) and, within those 21 days, consistent with s 459G(3): '(a) an affidavit supporting the application is filed with the court; and (b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.' 10 The Defendant says that the Plaintiff failed to comply with s 459G(3), compliance with that section goes to jurisdiction, and since the jurisdiction has not been enlivened the Court cannot make an order setting aside the demand either pursuant to s 459H(3) or s 459J(1)(a) or (b). 11 Thirdly, the Defendant says that if the jurisdiction of the Court is properly enlivened, a proper assessment of all of the affidavit material demonstrates that the Court ought not to be satisfied that there is a genuine dispute in relation to the existence of the claimed debt. The Defendant contends, however, that such a question can only arise for consideration if the Court is satisfied that the jurisdiction is properly enlivened. 12 As to the error contained in the statutory demand, it is common ground that the mathematical calculation of the amount said to be due and payable is incorrect. I am satisfied that the Defendant has failed to comply with s 459E(2)(b) of the Act in formulating a statutory demand for the purposes of s 459E(1) and in that sense the demand reflects a defect for the purposes of s 459J(1)(a). However, s 459J(1)(a) requires the Plaintiff to demonstrate a direct causal link between identified substantial injustice and the defect in the demand. It might be that the Plaintiff is in a position to demonstrate a genuine dispute in relation to the amount claimed in the statutory demand and that a failure to set aside the demand in the exercise of the Court's jurisdiction, properly enlivened, on that ground, might be productive of substantial injustice. However, there is no demonstrated injustice 'because of a defect in the demand'. 13 Since the error is transparent; the demand is supported by a copy of the invoices; the aggregate value of the three invoices is recited in the demand in an amount $190.00 less than the total of the three invoices; and the amount of the invoices is not dependent upon any form of complex calculation, I am not satisfied that the demand ought to be set aside by reason of the error itself. 14 In relation to the question arising under s 459G(3), the facts are these. 15 A statutory demand was served by the Defendant upon the Plaintiff on 6 October 2006. 16 The Plaintiff sought to establish the facts of service of particular documents in connection with this application upon the Defendant in reliance upon an affidavit of Timothy David Whitehead sworn 9 November 2006. Mr Whitehead is the solicitor for the Plaintiff. The Defendant objects to the affidavit of Mr Whitehead on the footing that the affidavit fails to exhibit an original of facsimile transmissions to which Mr Whitehead refers in his affidavit. However, the solicitor for the Defendant, Gregory Bevan Porter, swore an affidavit on 9 November 2006 which exhibits material sent by Mr Whitehead to Mr Porter on 26 October 2006 and 27 October 2006 which established the sequence of documents sent by the Plaintiff, through its lawyers, Sharrock Pitman Legal ('SPL') to the lawyers for the Defendant, Cleveland Lawyers. 17 On 26 October 2006, SPL sent by facsimile a letter to the solicitors for the Defendant in these terms: 'We act on behalf of Kortz Ltd and enclose by way of service in accordance with Order 7 of the Federal Court rules: 1. Form 5 Application 2. Affidavit in Support. The above documents have this day been forwarded to the Federal Court of Australia at Brisbane for filing.' 18 That letter attached (by facsimile) an unsigned application document which recited a claim for relief pursuant to ss 459G, 459H and 459J of the Act, an order setting aside the statutory demand, and other relief. The letter also attached an affidavit of Robert McInnes sworn 26 October 2006 at Glen Waverley in Victoria before Timothy Whitehead of SPL. The letter also attached an exhibit to the affidavit of Robert McInnes marked as 'RM1' described at paragraph 3 of the affidavit as a 'true and complete copy of a Company Extract from the records of the Australian Securities and Investments Commission in respect of the Plaintiff'. The Company Extract is dated 26 October 2006. 19 The letter also attached an exhibit marked as 'RM2' to the affidavit of Robert McInnes described at paragraph 4 of the affidavit as a 'true and complete copy of the Creditor's Statutory Demand and the Affidavit in Support sworn by one David Swinnerton on 31 August 2006'. Exhibit 'RM2' is made up of the two page demand, a two page affidavit of David Swinnerton sworn 31 August 2006, an annexure marking sheet identifying annexure 'DS1' to David Swinnerton's affidavit and three invoices issued by the Defendant being the foundation for the amount claimed to be owing by the Plaintiff and attached to the demand. 20 The letter also attached a document marked as 'RM3' to the affidavit of Robert McInnes described at paragraph 20 of the affidavit as 'a true and complete copy' of a letter dated 23 October 2006 from the Plaintiff to the solicitors for the Defendant setting out five paragraphs of information said to identify the facts giving rise to a genuine dispute as to the existence of the debt and, in particular, the contention of the Plaintiff that it would be difficult for the Defendant to substantiate a claim for $9,226.56 for parts. Exhibit 'RM3' comprises two pages. 21 On 27 October 2006, SPL sent a letter by facsimile to the solicitors for the Defendant which is in these terms: 'We act on behalf of Kortz Ltd and enclose by way of service in accordance with order 7 of the Federal Court Rules: 1. Form 2 Application filed on 27 October 2006; 2. Affidavit in Support filed on 27 October 2006. We note that you have previously been served with the exhibits to the enclosed affidavit. We confirm that the Application is listed at 9.30am on Thursday, 9 November 2006.' 22 That letter attached a copy of the sealed and filed application in accordance with Form 2 of the Federal Court (Corporations) Rules 2000 ('F C C R 2000) and a copy of the affidavit of Robert McInnes sworn 26 October 2006 bearing the Court filing stamp dated 27 October 2006. The affidavit is the four page affidavit in precisely the same terms as that attached to the letter of 26 October 2006 which foreshadowed the filing of the affidavit. 23 The short point made by the Defendant is that the Plaintiff did not serve the documents marked 'RM1', 'RM2' and 'RM3' to Robert McInnes's affidavit, as filed. The Defendant says that s 459G(3) contemplates, in effect, a linear progression with the result that a Plaintiff must file an application supported by an affidavit and must then serve a copy of the application as filed and a copy of the supporting affidavit together with the exhibits as filed, upon the Defendant all within 21 days after the demand is served. There is no issue that the application was filed within time. The contention is that the failure to serve the three exhibits to the affidavit of Robert McInnes after they were filed, within the relevant 21 day period, is fatal. The Defendant says that the requirements of s 459G(3) are not only jurisdictional but demand strict compliance consistent with David Grant & Co v Westpac Banking Corporation (1995) 184 CLR 265. 24 Rule 2.2(3) of the F C C R 2000 requires an application pursuant to s 459G(1) to be in accordance with Form 2. Rule 2.4 of the F C C R 2000 requires such an application to be supported by 'an affidavit' stating the facts in support of the application. Rule 2.4A(2) provides that in respect of an application by a company under s 459G, a Plaintiff (the 'plaintiff' for the purposes of the F C C R 2000) may file with the originating process seeking the particular orders, a copy of the statutory demand and a copy of any affidavit that accompanied the statutory demand and rule 2.4A(3) provides that such a plaintiff must no earlier than seven days before the application is filed and no later than the hearing of the application, carry out a search of the records maintained by Australian Securities and Investments Commission ('ASIC') in relation to the plaintiff and either annex a record of that search to the affidavit in support of the application or file the record of the search on the hearing of the application. The form of any affidavit relied upon in any application must comply with the rules of the Federal Court of Australia or, alternatively, the rules of the Supreme Court of the State where the affidavit was sworn. In this case, the affidavit of Robert McInnes in support of the application was sworn at Glen Waverley in the State of Victoria. 25 Each of the exhibits 'RM1', 'RM2' and 'RM3' to the affidavit of Robert McInnes are properly described as 'exhibits' although that term is not used in the body of the affidavit. The form of language adopted in respect of each document is either 'now produced to me and marked with the letters "RM (number)" is a true and complete copy of' or 'produced to me and marked with the letters "RM (number)" is a true copy of'. Accordingly, the deponent has elected to treat each of 'RM1', 'RM2' and 'RM3' as exhibits produced to the deponent at the time of swearing the affidavit. Mr Timothy Whitehead before whom the affidavit was sworn has certified that each document so described is the document produced to the deponent. Each of the exhibits bears a handwritten endorsement by Mr Whitehead that the pages comprising each exhibit make up the 'annexure' marked either 'RM1', 'RM2' or 'RM3'. It seems that Mr Whitehead has proceeded on the footing so far as the production of the documents to the deponent is concerned, that 'RM1', 'RM2' and 'RM3' are annexures to and form part of the affidavit, at least as so described in identifying the document although, in formulating the affidavit, Mr Whitehead has used language descriptive of a process of treating the material making up 'RM1', 'RM2' or 'RM3' as exhibits. Presumably, those documents were referred to in the body of the affidavit by the deponent and produced to the deponent because they are directly or indirectly probative of the existence of a fact in issue in the proceeding. 26 The historical development of the treatment of material referred to in an affidavit as an exhibit and the point of distinction between material 'produced and shown to the deponent' at the time of swearing an affidavit and material annexed to the affidavit is canvassed in the judgment of Kennedy J in the decision of the Full Court of the Supreme Court of Western Australia in Robowash Pty Ltd v Robowash Finance Pty Ltd (2000-2001) 158 FLR 338, at [10] to [23], with whom Wallwork and Anderson JJ agreed. 27 An affidavit in support of an application made under s 459G must be in a form that complies with either the F C C R 2000 or, for the purposes of this application, the rules of the Supreme Court of Victoria. Order 14, rule 4 of the Federal Court Rules provides that any original document to be used in conjunction with an affidavit shall be exhibited and not annexed to the affidavit (O 14, r 4(1)). Any exhibit to an affidavit must be identified by a certificate entitled in the same manner as the affidavit and made by the person before whom the affidavit is sworn (O 14, r 4(2)). Copies of all documents exhibited or annexed to an affidavit shall be served with the affidavit (O 14, r 7(3)). 28 Order 43, rule 43.03 of the Supreme Court (General Civil Procedure) Rules 2005 of the State of Victoria provides that an affidavit shall be confined to facts which the deponent is able to state of the deponent's own knowledge and as to documents referred to by such a deponent O 43, r 43.06 is in these terms: '43.06 Annexure and exhibits (1) A document referred to in an affidavit shall not be annexed to the affidavit but may be referred to as an exhibit. (2) An exhibit to an affidavit shall be identified by a separate certificate annexed to it bearing the same heading as the affidavit and signed by the person before whom the affidavit is sworn. (3) The certificate shall be in Form 43A and shall contain in the bottom right hand corner of the page in bold type and in a font size not less than 20 points, the distinguishing mark of the exhibit and a brief and specific description of the exhibit.' 29 Plainly enough, for the purposes of the Federal Court Rules, any original document relied upon by a deponent in an affidavit to the extent that the document is to be used in conjunction with the affidavit must be marked as an exhibit to the affidavit and any document referred to in an affidavit, for the purposes of the Victorian Supreme Court (General Civil Procedure) Rules, may be referred to in the affidavit as an exhibit but not an annexure. For the purposes of each of these rules and as a matter of principle, documents marked as an exhibit to an affidavit do not form part of the affidavit. 30 Section 459G(3) requires a Plaintiff to serve the supporting affidavit within the relevant time frame. Notwithstanding the distinctions between an exhibit and an annexure to an affidavit, it would seem an odd result in relation to an application to set aside a statutory demand that a Defendant to such an application must be served with any supporting affidavit and any annexures to and thus incorporated within such an affidavit (Robowash Pty Ltd v Robowash Finance Pty Ltd (supra) at [23]), yet no obligation arises to serve documents marked as an exhibit. If the true purpose of s 459G is to cast an obligation upon a Plaintiff to provide the Defendant with a copy of the material relied upon by the Plaintiff so that the Defendant might understand, test and respond before the forum to that material in a way which addresses the merits of the application in the interests of justice, it would be an odd result if that purpose might be defeated by crafting an affidavit in such a way that documents probative of a fact in issue are produced to the deponent, marked as an exhibit and not served upon the Defendant. It seems to me that the reference to 'an affidavit' in s 459G(3) contemplates an affidavit and all documents annexed or exhibited to the affidavit and thus relied upon by the Plaintiff in support of the merits said to be persuasive of the Court making an order in favour of the Plaintiff. 31 Accordingly, in the ordinary course, a Plaintiff would be required to file an application seeking the relevant relief and serve a copy of the application, a copy of the supporting affidavit and a copy of any exhibit or annexure to the affidavit within the time limited by s 459G(3). 32 In this application, the Plaintiff on 26 October 2006 foreshadowed the immediate filing of an application and provided the Defendant with a draft application formulated in accordance with Form 5 of the Federal Court Rules rather than Form 2 of the F C C R 2000 together with copies of the material described at [18], [19] and [20]. On 27 October 2006, the Plaintiff filed a Form 2 application together with a supporting affidavit of Robert McInnes. The Plaintiff did not serve further copies of exhibits 'RM1', 'RM2' and 'RM3' marked with any reference to a filing stamp or date endorsed on any of those documents by the Federal Court Registry. The Plaintiff complied with s 459G(3)(b) by serving upon the Defendant within time a copy of the filed application sealed by the Court and a copy of the filed affidavit of Robert McInnes endorsed by the Court with the filing date. Section 459G(3)(b) speaks of a copy of the supporting affidavit and the need to serve that document within the prescribed time. A copy of each exhibit 'RM1', 'RM2' and 'RM3' was served upon the Defendant although the copy was provided prior to the actual filing of the document. Nevertheless, each exhibit as served upon the Defendant is properly and accurately described as a copy of the exhibits as later filed. There is no point of departure between the form or content of exhibits 'RM1', 'RM2' and 'RM3' as filed and the form or content of those exhibits as served albeit that those documents were served before the documents of which they are a mirror image, were filed in the Court the following day. 33 Provided there is no disjunction between the documents as filed and the documents served, one is truly characterised as a copy of the other unlike the circumstances before the Court in Robowash. In that case, four pages of the annexures to the relevant affidavit supporting the application were missing from the service copy of the affidavit and annexures. The important consideration is whether there is a demonstrated lack of identity between the material as filed and the material served upon the Defendant. In Re Bell Construction Services Pty Ltd; Bell Construction Services Pty Ltd v Form-Kwip Building Services [2001] NSWSC 73, the omitted material was missing from both the filed affidavit and the copy as served. His Honour, Santow J concluded that since there was no lack of identity between the affidavit filed and the affidavit served, s 459G(3) had been satisfied. 34 In Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [2001] WASCA 299, a decision of the Full Court of the Supreme Court of Western Australia, Miller J with whom Wallwork and Burchett JJ agreed, considered at [20] that where any lack of identity between the material filed and the material served is 'slight', the notion that compliance with s 459G(3) is extremely strict and that substantial compliance with the section may be insufficient, 'may be questionable'. In that case, the affidavit in support of the application annexed a copy of Reasons for Decision of Hasluck J and pages of the Judgment were either missing from the annexure as served or duplicated in the annexure as served. There were two copies of page 3 of the Reasons, no page 4; two copies of page 11; no page 12; two copies of page 21 followed by a blank page. The Full Court concluded that since the parties to the application to set aside the demand were parties to the proceeding before Hasluck J, the contents of the Reasons were taken to be known to the respondent to the application and, in any event, since the Reasons of Hasluck J are Reasons of the Court, it was arguably only necessary for the deponent to make reference to the Reasons without the necessity of annexing the Reasons to the affidavit. Accordingly, the Full Court concluded that, 'Any deficiencies in relation to the copy of the Reasons annexed to the affidavit are therefore, in my view, in a different category to the deficiencies which were the subject of the decision in Robowash Pty Ltd v Robowash Finance Pty Ltd'. 35 The significance of an obligation to serve a copy of an application and a copy of an affidavit as filed is the need to inform the Defendant of precisely the final form of the material the Plaintiff relies upon in seeking to advance the merits of the application. In one sense, a Defendant might be entitled to disregard documents sent by facsimile or otherwise in support of an application before the material is filed as the Defendant might not know whether such material will actually be filed, pressed, relied upon or abandoned by the Plaintiff. Accordingly, a Defendant might be reluctant to respond to material unless and until the Defendant is certain that the Plaintiff's foreshadowed material has become the actual material. However, in this application, the Plaintiff provided on 26 October 2006 an actual copy of the affidavit material and exhibits to be filed the following day and on 27 October 2006 confirmed to the Defendant that an application had been filed in accordance with the correct form required by F C C R 2000 supported by the affidavit of Robert McInnes. The Defendant was provided with a copy of the affidavit of Robert McInnes marked with the filing date which was in the same terms as the version provided to the Defendant on 26 October 2006 identifying the three exhibits. The Defendant was also provided with a copy of the filed and sealed application document. 36 It seems to me that it is not correct to say that there must necessarily be in all cases a strict linear sequence in the filing of the affidavit and any exhibits or annexures to the affidavit and then service of that material. In circumstances where the Plaintiff has provided the Defendant with the affidavit material (including any exhibits or annexures to the affidavit) in the immediacy of a foreshadowed application and has then filed material entirely consistent with that material, that is, a copy of that material, and has confirmed the filing, in fact, of the affidavit material, s 459G(3) is satisfied. However, it seems to me that such a principle does not extend to the application document which must issue from the Court and be sealed. The provision of an unfiled and unsealed version of an application to set aside a statutory demand could never be 'a copy' for the purposes of s 459G(3) because such a document would fail to exhibit the issue date, the seal of the Court and a return date for the hearing of the application or alternatively a date for the hearing of a directions hearing concerning the application. In addition, the application document is the foundation document which demonstrates that a plaintiff has sought to enliven the jurisdiction of the Court in a particular way, on a particular footing and in respect of specific identified relief. In this case, a copy of the application document as issued and sealed together with the affidavit of Robert McInnes as filed was served in any event on 27 October 2006. 37 Accordingly, the Federal Court's jurisdiction under s 459G is properly enlivened. 38 Since the jurisdiction is enlivened, the second question to be determined is whether the Plaintiff has demonstrated that 'there is a genuine dispute between the company and the Defendant about the existence or amount of a debt to which the demand relates' or, alternatively, that the Plaintiff has an off‑setting claim, as contemplated by s 459H. 39 The affidavit of Robert McInnes sworn 26 October 2006 deposes to these matters. (a) Robert McInnes is a Director of the Plaintiff company. (b) There is a genuine dispute between the Plaintiff and the Defendant as to the existence and the amount of the debt to which the statutory demand relates. (c) The Defendant delivered invoices to the Plaintiff in relation to work allegedly performed in the period June 2006 to July 2006. (d) The Defendant's invoice described as Invoice No. 0965D is one of three invoices (0964D, 0965D and 0966D) in an amount of $1,496.00 being an amount said to be payable for the manufacture of two 'Final Drive V2 Panels' and two 'Final Control V2 Panels' generally described as 'the Panels'. (e) The Panels do not work and are not fit for the purpose for which they were supplied. (f) Invoices Nos. 0964D and 0966D in a total amount of $9,226.56 are invoices for parts ordered by the Defendant which the Plaintiff says were 'apparently ordered [by the Defendant] with the intention of selling those parts to the Plaintiff'. The Plaintiff generally describes those parts as 'the Parts'. (g) The Plaintiff says it did not request the Defendant to sell the Parts to the Plaintiff and nor did the Plaintiff request the Defendant to order the Parts on behalf of the Plaintiff. (h) The Plaintiff also says that because the Panels do not work, the Parts are of no use to the Plaintiff. (i) The Plaintiff says that it has not received the Parts. (j) The Plaintiff says that on 9 June 2006 a Director of the Plaintiff, Mr Terry Priest, told Mr David Swinnerton that the Panels did not work and demanded that they be fixed. The Plaintiff says Mr Swinnerton refused to fix the Panels unless the amount claimed by the Defendant for the Panels and the Parts was paid. The Plaintiff says Mr Swinnerton told the Plaintiff that no further work would be performed until these payments were made. (k) The Plaintiff refused to make the payment demanded and thus the Plaintiff has a genuine dispute with the Defendant as to the amount of the debt. (l) The Plaintiff says that there is a defect in the demand on the footing that the supporting affidavit recites that there is no genuine dispute about the existence or amount of the debt. The Plaintiff says that on 23 October 2006 the Plaintiff advised the solicitors for the Defendant that there was a genuine dispute in relation to the debt and that it would be 'difficult for the Defendant to substantiate the claim for $9,226.56 for Parts, which represents the majority of the Defendant's claim'. (m) The Plaintiff says that between 23 October 2006 and 26 October 2006 directors of the Plaintiff attempted to contact the solicitors for the Defendant on three occasions and the Defendant failed to return any telephone calls. 40 The question to be determined by the Court is not where the merits lie in any contest but simply whether there is a genuine dispute or a genuine claim. No question of the resolution of any contested question of fact arises. The only question is whether the Plaintiff has deposed to facts which give rise to a conclusion that there is a genuine dispute rather than facts which operate at such a high level of abstraction that the Court might conclude that a failure to deal with the content of the Defendant's claim reflects obfuscation or a lack of genuineness. The supporting affidavit must depose to facts which promote the company's case. A supporting affidavit that fails to satisfy the minimum requirements in this regard, represents a failure of jurisdiction (Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 21 ACSR 581 at 587L, 20 to 40, per Sundberg J). Although an affidavit in support of the application need not go into the evidence supporting the dispute and may assert material facts much in the nature of a pleading, a mere assertion that there is a genuine dispute coupled with a bare claim that the debt is disputed, is not sufficient. What is required, 'in all cases is something between mere assertion and the proof that would be necessary in a court of law. Something more than mere assertion is required because if that were not so then anyone could merely say it did not owe a debt' (John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 at 253, L15-23 per Young J; Re Louisbridge Pty Ltd [1994] 2 Qd R 144 at 145; Dromore Fresh Produce Pty Ltd v W Paton (Fertilisers) Pty Ltd (1997) 23 ACSR 230 at 235 L6-18). 41 The Defendant says that the facts giving rise to the claim are these. 42 In April 2006, the Plaintiff through Mr Terry Priest approached the Defendant with a request to produce printed circuit board layouts to the design and specification of the Plaintiff. On 26 April 2006, the Defendant provided a quotation 'for the generation of new Printed Circuit Board PCB layouts, to upgrade your two prototype PCBs (per samples provided) to Surface Mount'. The Defendant advised that it used the current version of Altium Designer for all PCBs layouts and schematic generation; recommended a four layer PCB and proposed to convert the Plaintiff's schematic files to the appropriate Altium format in order to take advantage of the full design integrity testing offered by Altium Designer. The letter attached the pricing quote for that work. 43 On 2 May 2006, the Plaintiff accepted the pricing for the work. Mr Priest also said, 'I need to know the standards for the parts you require, so I will talk to you shortly about that'. 44 On 22 May 2006, the Plaintiff submitted the designs and specifications for the 'Final Control V2' and 'Final Drive V2' to the Defendant. The Defendant then undertook and completed the initial work and submitted the Printed Circuit Board layouts to the Plaintiff together with a tax invoice for that initial work which was paid by the Plaintiff. 45 On 5 June 2006, the Defendant provided the Plaintiff with a quotation for the manufacture of 1,000 'Final Control V2 PCBs' based upon Surface Mount production. The Defendant's letter noted: 'The attached quotation does NOT include parts costs. We are currently obtaining quotations for the supply of all Surface Mount items, and we will supply these items at cost, plus 10% procurement charge. We expect to be able to provide full parts list costings before cob 9 June 2006. The cost of leaded components is not included.' 46 The attached quotation document confirmed that all Surface Mount parts would be provided on the basis of a cost plus 10% procurement fee arrangement. The quoted total cost price for 'PCB assembly Surface Mount only exclusive of parts' costs, for the supply of 1,000 units constituted $6,884.00 with non-recurring costs such as engineering costs and stencils of $1,287.50. 47 Also on 5 June 2006, the Defendant provided the Plaintiff with a quotation for the supply of 1,000 'Final Drive V2 PCBs'. That letter also noted that the quotation did not include the cost of parts. The Defendant said that it was then obtaining quotations for the supply of all Surface Mount items on the basis of a cost plus a 10% procurement fee. The quote in respect of the manufacture of the Final Drive V2 was $5,499.00 in respect of PCB Surface Mount assembly exclusive of parts costs and non-recurring costs of $1,245.00. 48 Also on 5 June 2006, the Defendant provided the Plaintiff with a quotation for the manufacture of a small prototype run of both the Final Drive V2 PCB and the Final Control V2 PCB. The Defendant's letter of quotation said, 'This process is recommended as a pre‑production "proving" exercise, to ensure both new board layouts perform as required, prior to undertaking any significant production'. The Defendant said that it would utilise Entech prototype services, complete the prototype boards and deliver 20 of each board for engineering evaluation. The quote for that work was $4,010.00. The letter of 5 June 2006 also notes, 'Note 1. Provided the PCBs are error free and there are no changes required prior to production, the stencils will be re-usable for the main production, and the cost quoted for these items in the relevant quotations (MQ/01/606 and MQ/02/606) is not applicable [that is, the stencil element of each quote]'. 49 On 9 June 2006, the Defendant provided the Plaintiff with a quotation for the cost of parts to be used in the production of 1,000 Final Control V2 boards and 1,000 Final Drive V2 boards. The quote exclusive of GST but including the 10% payable to the Defendant for procurement of the parts referred to in the quotation, amounted to $6,452.05. The facsimile of 9 June 2006 set out a detailed list of the component parts. Also on 9 June 2006, the Defendant sent by facsimile to the Plaintiff, quotations received from Entech for the production of prototype boards described in the letter of 5 June 2006 [46]. The Entech letter provided a quote for both the 'Drive' and 'Control' boards. 50 The Defendant contends that Mr Priest on behalf of the Plaintiff accepted the various quotations of 5 June 2006 and 9 June 2006. As a result, the Defendant began acquiring the production parts and building the prototypes of the printed circuit boards for the production runs. The Defendant says that the relevant parts were procured by the end of June 2006 and on 1 July 2006, the Defendant invoiced the Plaintiff in an amount of $9,226.56 reflected in Invoice No. 0964D. That invoice deals solely with parts procurement for the Control and Drive PCBs and includes a procurement charge of 10% in the nature of a commission. 51 The Defendant says that no objection was raised by the Plaintiff to that invoice. 52 The Defendant then raised a further invoice for the acquisition of parts of $134.75 resulting in a debt due to the Defendant of $9,361.31 for procurement of parts required for each 1,000 unit production run for each of the Drive board and the Control board. 53 As to the production of the two prototype boards, the Defendant says this: (a) The prototype boards as manufactured relied upon the technical specifications and designs provided by the Plaintiff on 22 May 2006. The Defendant had no input into the configuration of those designs and specifications. (b) On 15 July 2006, the Defendant received an email from the Plaintiff raising a question in relation to the 'Final Control Board V2' concerning voltage ratings for resistors incorporated in the board. The Defendant says that the Plaintiff failed to disclose that the 'Final Control Board V2' was apparently to carry a high voltage use. The Defendant says that the design and specification documents for the 'Final Control Board V2' and, in particular, the parts list with that documentation did not indicate the requirements for high voltage use. Accordingly, the production and prototype 'Final Control Board V2' could not be used for the purpose intended by the Plaintiff. (c) On 17 July 2006, the Defendant received the first notification of the technical documentation concerning the application of high voltage to the printed circuit boards. On 17 July 2006, Terry Priest sent by email a copy of the main board circuit to the Defendant. The Defendant then made recommendations to the Plaintiff to resolve the problem to enable testing of the board to confirm proper operation. (d) On 24 July 2006, the Defendant says that the Plaintiff accepted that after changing particular components discussed with the Defendant, the boards were operating 'ok'. On 13 July 2006, the Defendant issued a tax invoice for the manufacture of the prototype printed circuit boards in the amount of $1,496.00. 54 As to the Plaintiff's acceptance that each board was functioning properly, the email dated 24 July 2006 from the Plaintiff to the Defendant is in these terms: 'David, we have to talk! The prices are escalating from the original quote, the delivery is nothing like the delivery quoted, and this has thrown us into a very real problem of serious delay! After changing the components we spoke of the boards do operate ok. But if we are looking at the times you spoke of recently we need to do something else, this is not working. We are open to suggestions! This is the problem now. We cannot be the only one to wear increased costs all the time, as there have been things overlooked on both sides. Regards Terry' 55 In the result, the Defendant says that there is no genuine dispute between the parties; the 'Final Drive V2 panel' always worked; the 'Final Control V2 panel' failed to operate due to the high voltage issue but was nevertheless resolved by 24 July 2006; and the parts contemplated by the various quotations submitted to the Plaintiff were procured by the Defendant based on those quotes as accepted by Mr Priest. 56 Having regard to the documents exhibited to the affidavit of Mr David Swinnerton and particularly the quotation documents of 5 June 2006 and 9 June 2006, the high level of abstraction in the responses by Robert McInnes are unsatisfactory. As to the panels, Robert McInnes simply says that they do not work and are not fit for the purpose for which they are supplied. No chronological detail is given of those contentions and no separation seems to have been made between the Final Control and Final Drive panels. As to the invoice for the parts, Robert McInnes says that these parts were 'apparently ordered by the Defendant with the intention of selling those parts to the Plaintiff' and that the 'Plaintiff did not request the Defendant to procure the parts'. These statements are to be seen as matters of generality and high level abstraction in the context of the documents exhibited to the affidavit of David Swinnerton. 57 The only document exhibited to the affidavit of Robert McInnes which attempts to provide any factual content in support of a genuine dispute is exhibit 'RM3' which is a letter by Ian Williams, a Director of the Plaintiff, to the solicitors for the Defendant dated 23 October 2006. 58 Ian Williams says this: (a) In April 2006, the Plaintiff approached the Defendant with two 'through‑hole circuit boards' which the Plaintiff wished to have upgraded to Surface Mount standard and then manufactured. (b) Three steps were required for this work. The first involved the design of the board, secondly the building of prototypes to confirm the design and finally the purchase of parts proven in the prototype and their manufacture. (c) The Defendant provided quotations for each of these processes and the Plaintiff agreed to proceed. (d) On 6 June 2006, the Plaintiff was invoiced for design work in an amount of $1,870.00 and on the same date further invoiced for $2,660.00 for '2 prototypes and 2 stencils'. Those amounts were paid. (e) When the prototypes were produced, the Plaintiff found that the voltage rating instead of being 250 volts ('v') in accordance with the sample, was approximately 100v. Ian Williams says that this meant that the spacing of the board would not be sufficient and a new prototype would be required. This work involved the making of new masks and even though the Plaintiff felt the voltage error was the responsibility of the Defendant, the Plaintiff agreed to pay the additional costs because of the urgency of time. Ian Williams says that the voltage requirement had been discussed several times, the prototype provided by the Plaintiff to the Defendant was rated at 250v and that the voltage requirement was referred to in emails. However, the Defendant produced boards with a voltage of 100v. Ian Williams, in his letter to the Defendant's solicitors, talks in terms of both boards. Ian Williams says that the Plaintiff was told that the Plaintiff would have to also pay for parts to be used in the manufacturing of the production run. This request to pay for parts seemed premature to the Plaintiff as the final parts required for manufacture could not be confirmed and the order for manufacture could not be given until completion of the prototype testing. (f) Ian Williams says that the concept of proving up the prototype before setting up for production ought to have been well known to the Defendant. Ian Williams says that the quotation of 5 June 2006 in relation to the manufacture of the prototype PCB assemblies noted the requirement for approval before a production run could be commenced. Similarly, the quotation of 9 June 2006 was qualified as to procurement of the parts by the Defendant's observation that, 'If you are happy with these prices, and want us to procure (after prototype billed) we will add 10% to cover our time etc'. 59 In the absence of the memorandum by Ian Williams, I would have concluded that the broad generalisations of little utility contained in the affidavit of Robert McInnes are incapable of establishing a 'genuine' dispute in the face of the specific contentions and supporting documents contained in the affidavit material of David Swinnerton. However, it seems to me that the issues raised by Ian Williams in his letter identify contentions of fact which, although not supported by documents, give rise to a controversy of fact as to the basis upon which the parts were to be procured for each board, issues in relation to the relevance and consequences of the controversy concerning the voltage ratings for at least one of the boards and questions going to the approval of the prototypes. It seems to me that in the light of the contentions of Ian Williams there is a genuine dispute as to whether the amount of the statutory demand is due and payable by the Plaintiff. In addition, the email from the Plaintiff to David Swinnerton dated 24 July 2006 although acknowledging the functionality of the boards does raise other issues of contention. 60 I express no view about the merits of any aspect of that controversy. A finding that a genuine dispute is on foot ought not to be understood, by inference or otherwise, as an acceptance of any contention on the facts. Nevertheless, I am satisfied that a genuine dispute arises which requires the resolution of contested questions of fact and a determination of the proper construction to be attributed to the contractual arrangements between the parties. 61 One further matter remains. 62 The Defendant has raised a series of objections to particular paragraphs of the affidavit of Robert McInnes. The grounds include contentions that aspects of the affidavit reflect, hearsay statements inadmissible in an application for final relief; swear the issue without identifying a proper basis in fact for the contention; fail to identify sources of information; and are simply argumentative. I propose to admit the affidavit of Robert McInnes in its entirety. I have already expressed reservation about the utility of the affidavit in terms of establishing a genuine dispute subject to the comments in relation to exhibit 'RM3' which is the letter from Ian Williams to the solicitors for the Defendant dated 23 October 2006. 63 The Defendant objects to paragraphs 20 to 23 of the affidavit of Robert McInnes on the footing that the factual contentions reflected in those paragraphs are irrelevant to the underlying application and the matters discussed in those paragraphs occurred after service of the statutory demand. Paragraph 20 of the affidavit exhibits the letter from Ian Williams dated 23 October 2006 and deposes to the Plaintiff advising the Defendant's lawyers by that letter that a genuine dispute had arisen in relation to the debt by reference to the facts identified in the letter from Ian Williams. Plainly enough, the letter is directed to the primary facts of that dispute and the basis for the dispute. 64 By paragraph 20, Robert McInnes, in effect, adopts the contentions of Ian Williams. 65 I propose to admit paragraphs 20 to 23 of the affidavit of Robert McInnes. 66 The scope of the dispute encompasses the claim by the Defendant for payment of the invoiced amounts in respect of the parts (Invoice No. 0964D - $9,226.56 and Invoice No. 0966D $134.75) constituting $9,361.31. In addition, the dispute encompasses matters going to the functionality of at least one of the prototype boards which brings into dispute at least 50% of the amount of Invoice No. 0965D ($1,496.00), namely $798.00. The amount of the statutory demand is $10,567.31. Having regard to the content of the dispute, an amount of $408.00 remains as a potentially 'substantiated sum' for the purposes of s 459H(3) which is less than the statutory minimum for the purposes of s 459E(1). 67 Accordingly, the Court orders pursuant to s 459H(3) that the demand made by the Defendant pursuant to s 459E of the Act be set aside. 68 Although I am minded to make an order that the Defendant pay the Plaintiff's costs of and incidental to the application, I am willing to receive short submissions in writing from the parties as to the question of costs particularly having regard to the weaknesses inherent in the primary evidence of Robert McInnes on the question of the content of the dispute. Those submissions should be made by Friday, 15 December 2006. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.