PBTI v PBT

1 MASTER: I am presently engaged in hearing an application to set aside a statutory demand. The first affidavit in support of the statutory demand is that of Vanita Prasad sworn on 6 June 2003 and which was filed within time as required under the section, namely, twenty-one days. There have been two other affidavits that have been sought to be read, another affidavit of Vanita Prasad of 7 July 2003, and an affidavit of Dennis Flynn also sworn on 7 July 2003. Both of those affidavits, as their dates indicate, were filed and served outside the relevant period. Accordingly they would normally be out of time. 2 The question is, of course, whether they merely amplify the matters set out in the first affidavit or whether they raise new matters. In this respect in Civil Systems Pty Limited v B T Construction Pty Limited, a decision of mine on 15 December 2000, I drew attention in paragraph 11 to the difference first instance decision to which I had been directed at that time. 3 The matter has been dealt with further by a judge of this Court, and also the Full Court of Western Australia. In Process Machinery v ACN 057 260 590 [2002] NSWSC 45, Barrett J decided that a new ground could not be raised in such circumstances. 4 His Honour expressed his views in paragraph 16 and following in the following terms: "Furthermore, the applicant is confined to the grounds shown by the application and supporting affidavit filed and served within the twenty-one day period to which s 459G refers. This last point is important. It was recently confirmed by the Full Court of the Supreme Court of Western Australia in Energy Equity Corp Limited v Sinedie Pty Limited [2001] WASCA 419 (20 December 2001). Wallwork J (with whom Steytler J and Olsson AU agreed) quoted the following passage from the judgment of Perry J in D & S Group of Companies Pty Limited v O'Connor Investments Pty Limited (1975) 15 ACLC 1794 (in which the opening words refer to an observation of Gummow J in David Grant: 'It seems to be implicit in that observation and from the terms of s 459G(3) that if an affidavit is to be used in support of the application, it must be filed within the defined period of twenty-one days. It seems to me then that the affidavit of Mr Savvas having been filed and served well after the expiration of the period of twenty-one days, insofar as it raises any ground offered in support of the application not identified in the affidavit of Mr Gerovasilis filed within time, could not be taken into taken into account in determining the application. Furthermore, David Grant is authority for the proposition that there is no ability to extend the time limit.' Wallwork J also quoted from the judgment of Mandie J in Missay Pty Limited v Seventh Cameo Nominees Pty Limited (in liquidation) [2000] VSC 397:

'I think that there is another reason for refusing special leave because it seems to me that the interpretation of the Corporations Law contained in D & S Group of Companies Pty Limited v O'Connor Investments Pty Limited (1997) 15 ACLC 1794 at 1798 is applicable and should be followed by this Court. If a ground in support of an application to set aside a statutory demand is not identified within the period provided by the Corporations Law, then it seems to me that it cannot be relied upon out of time upon appeal.'

'In my view it now seems to be accepted that an affidavit filed outside the twenty-one day period which raises a new ground or grounds to set aside a statutory demand (as opposed to an affidavit which expands on grounds in an earlier affidavit which have satisfied the threshold test) cannot be used in an application of this nature. The Corporations Law operates throughout Australia and uniformity of approach is desirable.'

This is consistent with the conclusion reached earlier in the same year by Wilson J of the Supreme Court of Queensland in Raffles Corporation Pty Limited v Cech [2001] QSC 129:

'Under s 459G "an affidavit supporting the application" must be filed within the twenty-one days. The affidavit must disclose facts showing a genuine dispute, but it need not go into evidence: as Sunberg J held in Graywinter Properties Pty Limited v Gas & Fuel Corp Superannuation Fund (1996) 14 ACLC 1703, the supporting affidavit filed within the twenty-one days may read like a pleading. It may be supplemented in the sense that a further affidavit containing evidence proving the facts asserted in that affidavit may be filed after the twenty-one days. Indeed, on the hearing of the application, only admissible evidence can be relied upon. However, evidence supporting some other grounds not raised in the affidavit filed within the twenty-one days may not be relied upon. See also Eden Bay Pty Limited v Bennett (1997) 15 ACLC 1634. Accordingly, the present applicant may not rely on grounds not set out in the affidavit filed within the twenty-one days.'

This raises a question about the nature and extent of definition or assertion required. In Energy Equity Corporation the company sought to rely on an offsetting claim in the form of a cause of action in negligence. It was not permitted to do so because this 'was not specifically referred to in the first affidavit'. D & S Group of Companies was also a case in which a particular offsetting claim was raised for the first time after the expiration of the twenty-one day period. In Raffles Corporation, the company wished to argue, as part of an asserted genuine dispute, an alleged oral agreement varying the operation of a lease, an alleged termination of that lease and a calculation of interest in a way said not to be consistent with the lease terms. This was in circumstances where the affidavit dealt only with the identity of the lessor and a particular deduction of $2,500 and did not foreshadow in any way the additional objections later advanced.

It is thus reasonably clear that the relevant concept or 'raising' or 'identifying' a particular ground involves some verbal delineation of that ground in the s 459G(3)(a) affidavit. If a debt of $10,000 were claimed as one year's interest under a contract providing for interest at the rate of nine per cent per annum on a principal sum of $100,000, it would not, in my opinion, be sufficient for the affidavit to annex the loan agreement and say no more. It would have to refer at least to the connection between the contract and the debt claimed and put in issue the calculation of interest - even if it merely said, 'the debt does not accord with the annexed contract'.

The real point is that the application and affidavit filed and served within the twenty-one day period must fairly alert the claimant to the nature of the case the company will seek to make in resisting the statutory demand. The content of the application and affidavit must convey, even if it be by necessary inference, a clear delineation of the area of controversy so that it is identifiable with one or more of the grounds made available by ss 459H and 459J. That process of delineation may not be extended after the end of the twenty day period, although it is open to the plaintiff to supplement the initial affidavit by way of additional evidence relevant to the area of controversy identified within that period." 5 Having regard to his Honour's reasoning, and the cases to which he referred, I think that the better view is as decided by his Honour, namely, that unless the particular dispute is raised in the affidavit filed within time, it cannot be dealt with in later affidavits. 6 One has to therefore look at the earlier affidavit and see whether - in the words of Barrett J - "it fairly alerts the claimant to the nature of the case" or is "a clear delineation of the area of controversy so that it may be amplified later". 7 In this regard and considering this aspect I will have regard to the whole of the affidavit not only those parts which have been admitted in evidence before me. This is because, as has been said in Graywinter Properties Pty Limited, an affidavit can read like a pleading, which is a somewhat strange but that is the law. 8 The earlier affidavit had six paragraphs and they were in the following form: "1. I am the General Manager of PBTI Pty Limited ('PBTI Australia'), the Plaintiff in these proceedings.

On or about 20 May 2003 I received a Statutory Demand from the Defendant. A copy of the Statutory Demand is attached and marked "A".

I have personal knowledge of this matter and I believe that a genuine dispute exists and that the Defendant was aware that a genuine dispute existed at the time of issuing the Statutory Demand attached hereto.

The genuine dispute relates to outstanding invoices and claims, which arose out of dealings between the parties dating back to May 2000. These dealings resulted in unpaid invoices issued by the Plaintiff to the Defendant, unpaid commissions owed by the Defendant to the Plaintiff and the failure of the Defendant to recognise a further payment by the Plaintiff which has caused the Plaintiff a loss of $AU20,000.

Despite representations and assurances from the Defendant that certain of these payments would be made, the Defendant has failed to pay the debts to the Plaintiff.

The Defendant has caused the Plaintiff material loss and the Plaintiff intends to do all the things necessary to defend any future actions if commenced by the Defendant including cross-claiming for those losses." 9 It is only paragraph 4 which gives any clue as to what might be the actual case to be raised. If one looks at the affidavit of Vanita Prasad of 7 July 2002, pars 8 to 10 which are objected to seem to relate to a payment of £5674.93. Apparently the deponent paid that amount by use of her American Express account to the defendant and she claims that a credit has not been given to the appropriate account. 10 Paragraphs 11 to 16 are paragraphs that deal with a dispute about some disputed invoices concerning various credit charges which were the subject of dealings between the parties. 11 Paragraph 18 relates to some future claim in relation to some other dispute but really gives no evidence of any dispute. 12 There is nothing in par 4 of the principal affidavit that actually identifies what are the particular questions or particular invoices which are in dispute. In fact, the first claim that Ms Prasad refers to is one which does not appear to have anything do with invoices but merely some lack of credit. 13 When one looks at the affidavit of Dennis Flynn of 7 July one sees it concerns a cross-claim for approximately $25,000 arising out of a breach of a profit share arrangement between relevant parties. There is absolutely nothing in par 4 of the first affidavit that deals with damages for breach of some profit sharing arrangement. There is really no way that affidavit draws that to one's attention. 14 Whether or not the company might know whether there are disputes about particular items is not relevant because, as has been made plain, the affidavit has to, in order to comply with the Rules, deal with the actual disputes. 15 I think probably the best way to describe par 4 is that it probably perfectly fits what was referred to by Sunberg J in Graywinter Properties Pty Limited v Gas & Fuel Corporation Superannuation Fund, 21 ACSR 581 where his Honour said: "A mere assertion that there is a genuine dispute is not enough. Nor is a bare claim that the debt is disputed is sufficient." 16 In my view the relevant parts of the affidavit seek to raise new matters that were not raised in the original affidavit in support. Accordingly, in respect of the affidavit of Vanita Prasad, I reject pars 6 through to 18, and in the affidavit of Dennis Flynn I rejects pars 4 to 13. In those circumstances there is no evidence of any genuine dispute and, accordingly, I dismiss the summons and order the plaintiff to pay the defendant's costs.

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