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[2009] QSC 144
procedural. The statutory demand dated 20 November 2008 was varied by amending the amount claimed thereunder to $747,686.40; the Court reserved further conditions and costs (see [25]).
The contractor served a statutory demand based on architect-certified progress payments. The owner challenged it, alleging over-claiming. The owner filed some evidence within the 21-day window and more detailed evidence later. The Court held that only grounds and quantification properly raised within the 21 days could be relied upon to challenge or offset the demand. The Court accepted the concession on one invoice and the timely part of the owner's expert report, calculated the substantiated amount under s 459H, and varied the demand to $747,686.40 rather than setting it aside.
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Mayaman Development Pty Ltd (the owner) contracted with TQ Constructions Pty Ltd (the contractor) under an ABIC MW-1 form contract dated 8 May 2007 for a resort development (see [1]). The contract nominated an architect to assess progress payment claims and issue certificates identifying amounts due and GST (see [2]). Construction ceased mid-2008 when the owner’s financier went into receivership (see [4]). At that time four architect-issued progress certificates remained unpaid. TQ served a statutory demand dated 20 November 2008 founded upon those unpaid certificates (see [4]).
Mayaman applied under s 459G of the Corporations Act 2001 to set aside the statutory demand. Within the 21-day statutory period the owner served an affidavit of director Alan Gray and exhibited an initial report by Lincoln Ganter (NPR Valuers) assessing certain components of one progress claim and calculating an over-claim of about $2,403,034.75 for those components (see [7], [8]). TQ conceded that one claimed invoice figure was excessive and accepted a reduced liability on that item (see [6]).
After the 21-day period the owner filed more extensive material: affidavits from a former construction manager (Bruce Rodgers), the project manager (Stephen Thomas), a further affidavit from Mr Gray and a much more detailed and higher-quantum Ganter report alleging over-claims in the order of $4.8m–$5.7m (see [10]). The contractor objected to the late material, relying on the rule that applications under s 459G must be confined to grounds and particulars contained in material filed within the 21 days (the so-called Graywinter principle) (see [11], [16]).
Daubney J ruled that the owner could not rely upon new grounds and large, late quantifications first raised after the 21-day window (see [16], [17]). Using only the material properly before the Court within time, namely the conceded part payments and the first Ganter report quantifying an over-claim of $2,403,034.75 for assessed components, the Court calculated the substantiated amount under s 459H as $747,686.40 and varied the statutory demand accordingly (see [24], [25]).
Two legal pillars drove the decision.
First, the nature of architect-issued progress certificates under this form of construction contract. The Court reiterated that such certificates operate as "warrants for payment", they create debts payable as provisional payments on account of a final reckoning (see [3]). Therefore, to challenge a statutory demand founded on such certificates an applicant must do more than dispute the amount allegedly performed; the applicant must impugn the certificates themselves (see [15]). Put differently, ordinary disagreement with the quantum certified is not a sufficient basis to show the absence of a debt which the demand seeks to enforce.
Second, statutory procedure under the Corporations Act governs s 459G applications. The Act prescribes a 21-day window for the applicant to file and serve material supporting its application. Precedent (notably Graywinter and Broke Hills) establishes that the Court must be able to perform the statutory arithmetic under s 459H from material contained within that period; late affidavits cannot be used to create or expand grounds that were not discernible from timely material (see [11], [16], [22], [23]). The Court applied that principle: the owner’s late-filed allegations of fraud and the expanded quantification were new grounds not raised in timely material and thus could not be relied upon to extinguish the demand (see [16], [17], [21]).
Applying these principles, the Court confined itself to the concessions and the quantification advanced in timely documents, performed the s 459H calculation, and varied (rather than set aside) the demand (see [24], [25]).
Before: The law recognised that certificates of progress issued under standard forms (like ABIC) create prima facie payable amounts, subject to later adjustment at the final account (see [3]). Procedural authorities (Graywinter, Broke Hills and others) had already established that s 459G applications are constrained by the 21-day affidavit rule and that the Court requires sufficient material within that period to make the s 459H determination.
After: This decision applies those established principles in the concrete setting of an ABIC MW-1 building contract. It reinforces two practical rules for practitioners:
Thus Mayaman is consistent with existing precedent and clarifies application in construction disputes where expert reports may be time-consuming.
"[such] progress payment certificates have effect as 'warrants for payment' ... provisional and on account of a final reckoning" ([3]).
"it is not enough ... to say that there is a dispute as to the amount ... the applicant needs to impugn the certificates themselves" ([15]).
"material filed within the 21 day period ... did not contain anything like the calculations to enable the statutory exercise ... to be carried out" ([23]).
"the calculation of the 'substantiated amount' ... yields a substantiated amount of $747,686.40" ([24]).
This decision is directly applicable when:
If the applicant leaves detailed expert work until after the statutory period, this case shows the Court will generally exclude that later material for the primary purpose of founding new grounds or quantifying offsetting claims.
This decision is an application of established authorities rather than a departure. Daubney J applied Daysea and Merritt on the contractual status of progress certificates (see [3]) and followed the approach in Broke Hills and Graywinter about timeliness and evidentiary sufficiency (see [22]). Subsequent courts deciding s 459G/459H disputes will treat Mayaman as confirmatory authority emphasising the practical consequence that preliminary timely evidence must contain sufficient particulars and quantification to enable the s 459H calculation. The judgment also demonstrates that a court will, where possible, use timely-conceded figures and timely expert quantification to vary rather than set aside a demand.
Practitioners should treat the case as a cautionary authority: do your quantification and expert work within the 21-day window or risk exclusion.
Scope of 'impugning the certificate': Daubney J required impugning the certificate itself to establish that no debt exists. What precise legal defects qualify? Fraud, forgery, lack of jurisdiction or material misrepresentation appear to be implied but the judgment did not catalogue the full list or the standard of proof required. Practitioners must therefore rely on existing higher court authority for the substantive thresholds.
Admissibility of late material in exceptional circumstances: The judgment excludes late material that raises new grounds. But it remains open whether, in exceptional cases (for example, where late material is unavoidably delayed, or where the other party has full notice and is not prejudiced), a court might admit out-of-time material and exercise discretion to consider it. Mayaman does not explore the outer bounds of judicial discretion to admit late material.
Interaction with urgent interlocutory relief: The case deals with s 459G/459H. If an applicant files contemporaneous substantive court proceedings containing the detailed expert material, might that alter the outcome or the timeliness calculus? Mayaman confines itself to s 459G process and does not address strategic interplay with parallel litigation.
Degree of specificity required within 21 days to quantify offsetting claims: The decision applies Broke Hills and requires sufficient material to enable the statutory arithmetic. What is the minimal content of such material in differing factual matrices remains a practical question. Mayaman shows that a preliminary quantified expert opinion for some components can suffice to permit a partial offset, but it leaves open the margin between 'sufficient' and 'insufficient' particularity in other contexts.
Procedural consequences where the timely material identifies a 'nature' of an offset but lacks full quantification: Mayaman rejected relying on later fuller quantification. However, if timely material shows a clear method for quantifying the offset and the parties do not dispute the method, can courts extrapolate? The judgment suggests caution; further authority would be helpful.
Practical takeaways: prepare quantified evidence within the 21-day period; if alleging the certificate is vitiated, plead and support that allegation within time with particularity; expect courts to perform the s 459H calculation using only timely material except in compelling circumstances.
[1] By a building contract dated 8 May 2007, and generally in the form of the
ABIC MW-1 2003 Major Works Contract, the applicant, as owner, contracted with the respondent, as contractor, for the construction of a resort complex at
Agnes Waters. The contract price, before adjustments allowed for under the contract, was some $19,000,063 (inclusive of GST). The contract nominated a specific architect to administer the contract.
[2] Special Condition N4, in Schedule 2 to the contract, set out the scheme for progress payments under the contract. Conformably with contracts of this nature, it provided (Clause N4.1) for the architect to assess a claim for a progress payment and issue to the parties a certificate setting out, relevantly, any payment due to the contractor. The architect was to issue this certificate within 10 business days after receiving the claim for progress payment, and the certificate was required to identify the amount of GST included (Clause N4.3). Special Condition N6 then required that the amount stated by the architect as owing in a certificate "must be paid within 15 days after the earliest of the date of submission to the architect of a claim for a progress claim ...".
[3] It is well established that such progress payment certificates have effect as "warrants for payment", notwithstanding that the payments under those certificates should be regarded as provisional and on account of a final reckoning between the parties at the time of completion of the contract - in that regard, it is sufficient to refer to the judgment of Williams JA, with whom the other members of the Court of Appeal agreed, in Daysea Pty Ltd v Watpac Aust Pty Ltd,[1] and the previous judgment of the Court of Appeal in Merritt Cairns Constructions Pty Ltd v Wulguru Heights Pty Ltd.[2] In that latter case, McPherson JA referred to the principal under such a contract being bound to pay the amount certified regardless of claims which the principal might have which are not covered by the certificate and which are to be resolved at the stage of final resolution of any dispute between the parties (at 527). See also, to similar effect, Sabemo Pty Ltd v de Groot[3] and
Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd.[4]
[4] In mid-2008, the construction of the resort stopped before completion because the applicant's financier went into receivership. At the time work stopped, there were four certified progress claims unpaid by the applicant. These unpaid progress certificates founded the statutory demand dated 20 November 2008 served by the respondent on the applicant, and which the applicant now seeks to set aside. The amounts claimed under the statutory demand were:
- $844,075.98, said to be the balance owing under the respondent's Invoice No 303, which was the subject of Progress Certificate 14 issued by the architect and dated 17 March 2008;
- $1,334,700.16, being the whole amount owing under the respondent's Invoice No 306, which was the subject of Progress Certificate 15 issued by the architect and dated 10 April 2008;
- $801,780.30, being the whole amount owing under the respondent's Invoice No 312, which was the subject of Progress Certificate 16 issued by the architect and dated 30 April 2008; and
- $623,884.48, being the whole amount owing under the respondent's Invoice No 313, which was the subject of Progress Certificate 17 issued by the architect and dated 3 June 2008.
[5] I interpolate here that the progress certificate numbers I have just referred to are those which appear on the face of the respective progress certificates. There is, in the material before me, some confusion in relation to the progress certificate numbers, due to the fact that the first progress certificate (applicant's certificate no 1) was a claim solely by the applicant, but in assigning numbers to the progress certificates issued by the architects, the architects did not take that first certificate into reckoning when numbering the certificates.
[6] It is also convenient to note here that the respondent conceded in submissions before me that the amount claimed in the statutory demand for the first of these items (i.e. the balance owing under the respondent's Invoice No 303) was excessive for failing to take into account other part payments which had been made by the applicant. The respondent conceded that the amount owing in respect of that invoice was $390,356.21.
[7] Only one affidavit in support of the application to set aside the statutory demand was filed and served within the 21 day period prescribed by s 459G of the Corporations Act, that being an affidavit of Alan Gray, a director of the applicant. In that affidavit, Mr Gray:
(a) took issue with the amount alleged to remain owing under the respondent's Invoice 303, asserting that the amount which had been part paid in respect of that invoice was $364,466.54, and that the balance unpaid was $520,355.80 (including GST);
(b) confirmed that payment had not been made under any of the progress certificates relating to the respondent's Invoices 306, 312 and 313;
(c) said that on 25 November 2008, the applicant commissioned
Mr Lincoln Ganter of NPR Valuers Pty Ltd "to review the progress payments claimed by the respondent". I observe parenthetically that this retainer of Mr Ganter to undertake this review occurred only after service of the statutory demand, which had been served on
(d) contended that, by reference to Mr Ganter's report (to which I will refer in some more detail shortly), there was a difference between the amount quoted by the respondent for the various trade cost codes and trades and the amount invoiced for those cost codes and trades, that being the difference between $6,218,742 and $4,233,950.75;
(e) said that he had been informed by the applicant's project manager that Mr Ganter had only dealt with particular cost codes and trade items "due to time restraints to meet the timing of the statutory demand";
(f) asserted further that "due to the time constraints there has not been enough time to get a complete analysis done of the progress claims made by the respondent;"
(g) then deposed as follows:
"31. I believe that Lincoln Ganter's opinion that the progress claims have been overstated by approximately $2.4 million in relation to the particular cost codes and trades is correct. Because of the nature and extent of the overstatement the applicant is concerned that the overstatement is not accidental. I have no reason to believe that the overstatement in the progress claims is restricted to the particular cost codes and trades examined by Lincoln Ganter. I believe that if a full analysis of the progress claims is done the amount by which the progress claims have been overstated will exceed the amount claimed in the statutory demand.
32. The applicant relies on Lincoln Ganter's report in support of its contention that there is a genuine dispute about the debt claimed to be owing by the applicant to the respondent. Alternatively the applicant relies upon Lincoln Ganter's report in support of its contention that the applicant has an offsetting claim which exceeds the debt claimed to be owing by the applicant to the respondent.
33. The overstatement of the progress claims has caused the applicant other loss and it has resulted in the applicant paying additional interest to its lender on the amount from time to time of the overstatements.
34. Further, on the material referred to in the statutory demand and the affidavit that accompanied that statutory demand there is no contractual basis upon which these progress claims have to be paid.
35. On the basis of the matters set out in this affidavit there is a genuine dispute about the whole of the debt claimed to be owing by the respondent or alternatively the applicant has an offsetting claim against the respondent for an amount which is at least equal to the amount of the debts claimed by the respondent in the statutory demand."
[8] A report by Mr Ganter was exhibited to Mr Gray's affidavit. Mr Ganter examined the property on 5 December 2008. He described the site and his observations of the constructions thereon. He then gave an assessment of the degree of completion, or "stage of construction", of the various elements within each of the buildings in the complex, expressing the view that "overall the subject site is considered to be between 45% and 50% complete". He then undertook an assessment of "certain of the components of the amount invoiced and claimed by the builder". Specifically, Mr Ganter undertook an assessment of the components for which certification had issued under claim 17, and concluded:
In relation to the components which I have assessed, progress claim 17 shows that the builder claimed payment for $4,233,950.75 in respect of these components.
My assessment of the work done in relation to these components is that the amount properly payable, calculated by multiplying the "Quote Amount" by my assessment of "Actual %" completed, in respect of these components is $1,830,916.
In summary it appears from these preliminary investigations that based on my inspection and the information provided to MPR, an approximate amount of $2,403,034.75 has been over claimed by the builder (TQ Constructions) in relation to these components of progress claim no. 17.
I note that the above figures do not include unfixed items.
It was clear from our inspection that the site has unfixed, construction items, fixtures and fittings. These include:-
We also note that several locked rooms were located in the basement to which no access was gained.
I emphasise that my assessment within this report should be used as a guide only and NPR advises for a more definite financial account of what is in place then MPR should be provided with all the necessary documentation for further analysis."
[9] An affidavit by Mr Anthony Stephens, director of the respondent, was filed in response to the application. Mr Stephens recited the contractual relationship between the parties, and the mechanism by which the architect assessed each of the progress claims submitted by the respondent. He said that, in addition to the architect's assessment, a quantity surveyor scrutinised the claim, and reported to the applicant owner and its lender. He exhibited to his affidavit a full copy of the quantity surveyor's Progress Assessment No 18, part of which had been exhibited to Mr Gray's affidavit. He also exhibited to his affidavit full copies of each of the relevant architect's progress certificates. In relation to Invoice 303, he effectively confirmed the need for there to be an accounting in respect of part payments resulting, as I have observed above, in a concession that the amount owing in respect of Invoice No 303 was $390,356.21. He then took issue at some length with the matters raised in Mr Ganter's report, noting that the first time the respondent had become aware of any such dispute was when it received the application and the affidavit of Mr Gray. The basis for disputing Mr Ganter's report included, for example, that it was limited by its assumptions and lack of access to areas in the project, such as the basement, which Mr Stephens said contained floor tiles, air conditioning, kitchens and joinery, plumber's hardware and fittings, and the fact that Mr Ganter did not appear to have access to all of the services associated with the development site, such as hydraulic services, storm water management, fire services, sewerage, electrical ground work, basement pumps stored off-site, pool filtration rooms and units stored. He also reviewed at some length the correspondence which had passed between the parties during the second half of 2008.
[10] Well after the 21 day period prescribed by s 459G, the applicant filed and served further affidavits, and sought to rely on them in the hearing. Those were:
(a) An affidavit by Bruce Rodgers, formerly the respondent's construction manager on-site, who deposed to, among other things:
(i) conduct on the part of the respondent by which it was claiming payment for work which he said had not actually been performed;
(ii) his agreement with Mr Ganter's assessment of the percentage of work completed, but saying that the work was about 60 per cent complete on-site; and
(iii) the disposition of some of the plant and equipment (such as air conditioning) which had been delivered to the site for use in the project, but which was subsequently removed.
(b) A further affidavit by Mr Gray, in which he deposed further to the dealings between the parties and said:
"When the financier went into liquidation, we were forced to negotiate with TQ to try and work together to complete the project. I had no reason to doubt the claims TQ had made to date. It was not until we were served with the Statutory Demand dated 20th November 2008 that it became necessary to calculate exactly what owed."
(c) An affidavit by Stephen Thomas, a principal of and project manager for the applicant, who inspected the site on 28 and 29 January 2009 and described his observations of the degree of completion of the project, including:
"In my experience, I would estimate that the actual project is only 50 to 55% completed but TQ have claimed an approximate average amount of sum 78.96%. For instance the foreman's wages are 90% completed and paid yet the project in TQ's view is 78.96% completed on average as stated in their progress report for claims. See QS certification number 18 which reflects this figure direct from TQ's paper work lodged for payment."
(d) An affidavit by Mr Ganter, exhibiting a further, and much more extensive, report than that exhibited to the original affidavit filed in support of the application, and in which Mr Ganter made a critical assessment of all of the progress claim certificates by reference to the quantity surveyor's progress assessment report as at June 2008 (when construction ceased), and stated the opinion that "the construction company has over-claimed the developer between $4,768,470.77 and $5,721,620.77 inclusive of GST".
[11] The respondent largely objected to the receipt of this further material, principally on the basis that it had not been filed and served within the prescribed 21 day period, and further that it raised grounds for setting aside the statutory demand beyond those stated in, or discernible from, the material which had been filed and served within time, i.e. it offended the so-called "Graywinter principle".[5]
[12] The applicant contended that the material evidenced a genuine dispute about the existence of the debt asserted under the statutory demand, or at least a genuine offsetting claim in an amount greater than the demand. As to the first point, the applicant (obviously relying on all the material which it had filed) submitted that the evidence raised questions as to whether the relevant progress claim certificates were vitiated by fraud and that:
"21. In this case, the evidence of Mr Rogers creates a genuine dispute as to the validity of the certificates obtained by the Builder. Without certificates, the amount, if any, owed to the Builder would require an investigation into the amount of work actually performed by the Builder. Given the evidence of Mr Ganter, that there has been over claims by the Builder between $4.8 and $5.7 million, a genuine question is raised as to the existence of the debt in the Builder's demand. At the very least, further investigation is warranted to determine the extent of the Builder's over claiming to which Mr Rogers deposes."
[13] In support of its offsetting claim, the applicant pointed to the later evidence, particularly that of Mr Ganter, to submit:
"26. Thus, if the Court accepts that the Builder holds valid unpaid certificates entitling it to payment of $3,150,721.15 (contrary to the Developer's submissions) the Developer nonetheless has a genuine claim for between $4.7 million and $5.8 million against the Builder. This claim is based on the evidence of Mr Rogers, Mr Ganter and Mr Thomas, which indicates a genuine claim to an amount in excess of any amount that the Court may consider to be substantiated by the Builder. Certainly, the Developer's evidence in support of its Application warrants further investigation."
[14] Section 459H of the Corporations Act provides:
"459H Determination of application where there is a dispute or offsetting claim
(1) This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:
(a) that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;
(2) The Court must calculate the substantiated amount of the demand in accordance with the formula where:
(b) the total of the respective admitted amounts of the debts;
(a) if the Court is satisfied that the company has only one offsetting claim - the amount of that claim; or
(b) if the Court is satisfied that the company has 2 or more offsetting claims - the total of the amounts of those claims; or
(3) If the substantiated amount is less than the statutory minimum, the Court must, by order, set aside the demand.
(4) If the substantiated amount is at least as great as the statutory minimum, the Court may make an order:
(a) varying the demand as specified in the order; and
(b) declaring the demand to have had effect, as so varied, as from when the demand was served on the company.
(a) if the Court is satisfied that there is a genuine dispute between the company and the respondent about the existence of the debt - a nil amount; or
(b) if the Court is satisfied that there is a genuine dispute between the company and the respondent about the amount of the debt - so much of that amount as the Court is satisfied is not the subject of such a dispute; or
"offsetting claim" means a genuine claim that the company has against the respondent by way of counterclaim, set-off or cross-demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates).
"respondent" means the person who served the demand on the company.
(6) This section has effect subject to section 459J."
[15] The applicant's argument that there is a genuine dispute between the parties about the existence of the debt claimed under the statutory demand is founded on the contention that the progress certificates are vitiated by fraud. In that regard it is important again to note that the debts claimed under the statutory demand are debts due pursuant to the "warrants for payment" constituted by the progress certificates. It is also important to note that the long-standing approach to such progress certificates, in the broader context of a construction contract, is that the amounts certified under the certificates are payable, with any dispute as to the correctness of the amounts certified to be referred for determination pursuant to the relevant dispute resolution procedure under the particular contract and accounted for as part of the final reckoning between the parties. Thus, in the present case, it is not enough for a party in the position of the applicant to say that there is a dispute as to the amount which was certified in respect of each of the payment certificates. Rather, the applicant needs to impugn the certificates themselves. The applicant has sought to do so by reference now to allegations of fraud in connection with the issuing of the certificates. Those allegations of fraud, however, were only made for the first time in material which was filed and served after the 21 day period prescribed by s 459G.
[16] I have set out above the relevant paragraphs of the affidavit of Mr Gray which was filed and served within the 21 day period. At its highest, this affidavit raised concerns as to there being overstatements in the progress claims on which the progress certificates were founded. But that contention, namely that there has been an "over-claiming" in the certificates, is a far cry from an assertion that the certificates themselves ought be vitiated for fraud. The applicant, in supplementary submissions delivered to me, conceded that, on the hearing of the application, the applicant was restricted to advancing the grounds "which can be discerned" from material filed within the 21 day period. In that regard, reference may be made to the very useful summary by Barrett J in Saferack Pty Ltd v Marketing Heads Australia Pty Ltd.[6]
[17] In my view, the ground now sought to be relied on by the applicant, namely that there is a genuine dispute between the applicant and respondent about the existence of the debt founded in the contention that the progress certificates may be vitiated by fraud, is not one which was discernible from the material filed by the applicant within the 21 day period. The applicant is therefore, not entitled for the purposes of the present application to rely on the affidavit material filed after the 21 day period in which that ground is sought to be raised.
[18] Accordingly, there is no basis in the material on which the applicant may rely for the present application to support its contention that there is a genuine dispute about the existence of the debt to which the demand relates.
[19] In relation to the contention that there is an off-setting claim, the applicant seeks to rely on the second report of Mr Ganter to say that there were over-claims by the respondent of between (in round figures) $4.8 million and $5.7 million, which would yield an "offsetting total" under s 459H sufficient to extinguish the amount claimed under the statutory demand.
[20] The difficulty for the applicant, however, is that this quantum of offsetting amount is derived from evidence of Mr Ganter which was filed and served for the first time only long after the 21 day period had expired.
[21] True it is that in the affidavit of Mr Gray filed in support of the application, he referred in general terms to a belief that "if a full analysis of the progress claims is done the amount by which the progress claims have been overstated will exceed the amount claimed in the statutory demand". However, neither his affidavit, nor the first report of Mr Ganter exhibited to that affidavit, gave any detail as to the quantum, beyond that which was referred to by Mr Ganter as quantification of an overstatement of about $2.4 million.
[22] In Broke Hills Estate Pty Ltd v Oakvale Wines Pty Ltd,[7] Gzell J said:
"[25] In this case, the applicant sought to read affidavits by Peter Poulos, which in part sought to remedy the void. I indicated that I would not admit paras 16, 18 and 19 of Mr Poulos's affidavit sworn on 9 June 2005 and paras 6 to 13 of Mr Poulos's affidavit sworn 20 June 2005. I indicated that I was prepared to admit the affidavit of Graham Fleet sworn 9 June 2005 since a copy of his report was annexed to the statutory affidavit.
[26] In my view, the task required of a court by the Corporations Act 2001 (Cth), s 459H(2) requires evidence to be put on within the statutory 21-day period enabling the Court to make a determination of the offsetting total. That means that some evidence of quantum must be contained in the affidavit to enable the Court to take that course.
[27] Minimum requirements of an affidavit in support of a disputed debt under the Corporations Act 2001 (Cth), s 459H(1)(a) were described by Sundberg J in Graywinter Properties at 459:
An affidavit which exhibits an exchange of correspondence between the parties or between their solicitors from which it appears that a claim is made and rejected for reasons given can qualify as a supporting affidavit. And an affidavit verifying the pleadings in an action may qualify.
[28] It was submitted that an affidavit in support that is more than a mere assertion but less than final proof is insufficient. In my view it is insufficient if it does not contain material from which a Court, in a case under the Corporations Act 2001 (Cth), s 459H(1)(b), can make an estimate of the amount of an offsetting claim.
[29] I was invited not to follow my decision in National Telecoms Group. I decline that invitation.
[30] In Fords Principles of Corporation Law, Butterworths, Australia, 2000 at p 27, 162 the authors say this:
Because the court is required by s 459H(2) to determine "the amount of the claim" or "the total of the amounts of those claims", a company which alleges that it has an offsetting claim must adduce some evidence to show the basis upon which its loss is said to arise and how that loss is calculated.
[31] That does not mean that a party is required to swear to matters of final proof. What it does require is sufficient material indicating the nature of the offsetting claim and the way in which it is calculated to enable the statutory exercise under the Corporations Act 2001 (Cth), s 459H(2) to be carried out by the Court.
[32] In this case, there is no evidence in the statutory affidavit that answers that requirement and I have excluded evidence by supplementary affidavit to fill that void. The consequence must be that the applicant has failed. I dismiss the originating process."
[23] In my view, the same considerations apply in the present case. Whilst the material filed within the 21 day period indicated the nature of the offsetting claim, it certainly did not contain anything like the calculations to enable the statutory exercise under the Corporations Act to be carried out by the Court in the manner now contended for by the applicant in reliance on the subsequent report of
[24] On the basis of those findings, therefore, the calculation of the "substantiated amount" under s 459H calls for a reduction in the total amount of the statutory demand to $3,150,721.15 (to take account of the conceded part payments in relation to Invoice No 303) and then to offset against that the amount of $2,403,034.75, being the extent of the over-claim quantified in Mr Ganter's first report. That yields a substantiated amount of $747,686.40.
[25] Pursuant to s 459H(4), I would order:
(a) that the statutory demand dated 20 November 2008 issued by the respondent to the applicant be varied by amending the amount claimed thereunder to be $747,686.40.
[26] I will hear the parties as to any further conditions which might be sought and as to costs.
[5] Graywinter Properties Pty Ltd v Gas and Fuel Corporation Superannuation Fund [1996] FCA 822; (1996) 70 FCR 452.
Mayaman Developments Pty Ltd
TQ Constructions Pty Ltd [2009] QSC 144
(1996) 70 FCR 452
(2007) 214 FLR 393
The statutory demand dated 20 November 2008 was varied by amending the amount claimed thereunder to $747,686.40; the Court reserved further conditions and costs (see [25]).