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Judgment 1By Originating Process filed on 23 May 2012, the Plaintiff, Teratrust Pty Limited ("Teratrust") moves to set aside a statutory demand dated 2 May 2012 ("Demand") served by the Defendant, Westpac Banking Corporation ("Westpac"). The Originating Process refers to s 459H(1)(a) and s 459J of the Corporations Act 2001 (Cth) but the primary basis of the application to set aside the Demand appears to be that there is a genuine dispute as to the debt claimed by Westpac. 2The Demand was for an amount of $23,870.86 and relies on a default judgment given in the Magistrates Court of Queensland on 14 March 2011 in the amount of $29,561.77 against Teratrust, against which a credit has been given for a payment of $5,690.91 in partial reduction of the judgment debt. The Demand was verified by an affidavit sworn 2 May 2012 by Mr Stewart Meager, who is the Manager Legal, Dispute Resolution Group (Qld) of Westpac. 3Following the service of the Demand, Teratrust's solicitors advised Westpac's solicitors by letter dated 21 May 2012 that deposits amounting to $20,000 had been made to Westpac's account by Teratrust's Company Secretary Mr Hinton and proposed monthly payments to pay the balance of the debt of $9,561.77 which Teratrust then acknowledged to be owing. While that letter was marked "without prejudice except as to costs", Teratrust tendered it without objection in this application. Deposit records referred to in that letter show deposits were made by Teratrust of $5,000 on 28 September 2011, 17 October 2011, 16 November 2011 and 15 December 2011 to an account held at Australia and New Zealand Banking Group in the name of Minter Ellison, Westpac's solicitors. 4By letter dated 22 May 2012, Westpac's solicitors responded that the relevant deposits had been made in accordance with an agreement reached with Mr Harry Londy ("Mr Londy"), which provided for a payment to be made on 27 September 2011 and thereafter for monthly payments. That letter indicated that the $20,000 in payments had been allocated toward the debt owed by Mr Londy, interest under a default judgment against him and costs, totalling $15,309.09, and the balance of $5,690.91 had been allocated to the debt owed by Teratrust which had been guaranteed by Mr Londy. Mr Londy was at that time and subsequently a director of Teratrust; the registered office of Teratrust was at Mr Lundy's address; and Mr Londy was also a guarantor of financial arrangements between Teratrust and Westpac. 5By letter dated 22 May 2012, Teratrust's solicitors took issue with Westpac's position and contended that Teratrust had paid the amount of $20,000 towards its debt not Mr Londy's debt, with the funds being paid from an account of Teratrust and by Teratrust's Company Secretary not Mr Londy. Teratrust similarly contends in these proceedings that the entirety of those payments were made by Teratrust for its own benefit and should have been allocated to the debt owed by it. There is no issue in these proceedings as to the manner in which the payments were allocated as between different amounts owed by Mr Londy, who is not party to the proceedings. 6 Dealings between Westpac, Teratrust and Mr Harry Londy 7The background to this dispute turns on the dealings between Westpac, Teratrust and Mr Londy. In summary:

• By a Guarantee and Indemnity dated 27 March 2006, Mr Londy guaranteed to Westpac liabilities and obligations of Teratrust as trustee for the Jason Londy Investment Trust under a business finance agreement dated 27 March 2006. Mr Londy also guaranteed debts owed to Westpac by another entity, Australian Property and Management Pty Limited, under a standard commercial hire purchase agreement dated 7 December 2007.
• Westpac subsequently obtained default judgment against Mr Londy and also against Teratrust. By letter dated 18 April 2011, Minter Ellison wrote to Mr Londy enclosing a sealed copy of the judgment obtained by Westpac against him and requesting payment of the amount of that judgment by cheque to Minter Ellison's offices. A bankruptcy notice was subsequently issued on 3 August 2011 to Mr Londy requiring payment of the debt claimed within 21 days.
• By letter dated 1 September 2011, Mr Londy's solicitors advised Westpac's solicitors that Mr Londy did not have the capacity to make any payment at that time, but "[b]ased upon certain arrangements with his son's business that are unfolding over the next 3 weeks" offered a payment of $5,000 on or before 20 September 2011 and monthly payments of $5,000 on or before the seventh day of every month thereafter until the debt was paid out.
• A further offer was made by Mr Londy's solicitor on 22 September 2011, containing minor amendments, and accepted by Westpac, by its solicitors, on 23 September 2011. The arrangement contemplated payments of $5,000, with the first payment on 27 September 2011 and payments thereafter at monthly intervals on the 17th of each month to be made to the Minter Ellison Trust Account, and Westpac indicated that it would, inter alia, withhold serving a statutory demand on Teratrust while the payment arrangement was complied with.
• A first payment was made by Teratrust into the relevant account on 28 September 2011, a day later than contemplated by the arrangement with Mr Londy. By email from Westpac's solicitors to Mr Londy's solicitors dated 4 October 2011, Minter Ellison followed up on the 27 September 2011 payment by Mr Londy, which had apparently not yet come to its attention. The next day, 5 October 2011, Mr Hinton (who is now the Company Secretary of Teratrust) sent a facsimile to Minter Ellison enclosing the deposit slip for the deposit made by Teratrust on 28 September 2011 and a copy of the letter dated 20 September 2011 referring to the settlement between Westpac and Mr Londy and the payments to be made under it, with a handwritten tick next to the entry reading "$5,000 on or before 23 September 2011". Further payments were made by Teratrust into Minter Ellison's account on 17 October 2011, 16 November 2011 and 14 December 2011.
• By letter dated 25 January 2012, Minter Ellison wrote to Mr Londy recording his advice that he could not pay the instalment due on 17 January 2012. Whether a genuine dispute is established 8The Court may set aside, or vary, a statutory demand under s 459H(1)(a) where it is satisfied that, relevantly, there is a genuine dispute between the company and the party that served the statutory demand as to the existence or amount of a debt to which the demand relates. 9The principles applicable to whether a statutory demand should be set aside under s 459H(1)(a) of the Corporations Act by reason of a genuine dispute as to the existence or amount of a debt are well established. The test for a "genuine dispute" used in s 459H of the Corporations Act has been variously formulated as that the dispute is not "plainly vexatious or frivolous" or "may have some substance" or involves "a plausible contention requiring investigation" and is similar to that which would apply in an application for an interlocutory injunction or a summary judgment: Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290; (1993) 11 ACSR 362; Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787. In Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 at 39, Lockhart J observed that: "The notion of a 'genuine dispute' ... suggests to me that the court must be satisfied that there is a dispute that is not plainly vexatious or frivolous. It must be satisfied that there is a claim that may have some substance. On the other hand the court must be careful, because if all an applicant has to do is to assert both a claim and some basis for it, without more, it would mean in almost every case that the court would set aside statutory demands where application is made to that effect. Plainly that is not what the legislature intended by introducing this new regime." 10In Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5 at [9], Murphy JA (with whom Buss JA agreed) observed that: "The expression 'genuine dispute' within the meaning of s 459H(1)(a) of the [Corporations] Act, connotes a plausible contention requiring investigation: Createc Pty Ltd v Design Signs Pty Ltd [2009] WASCA 85 at [44]. The demand will be set aside if there is a bona fide disputed issue of fact or law, which is not based on spurious, hypothetical, illusory or misconceived grounds: Createc v Design Signs; Asian Century Holdings Inc v Fleuris Pty Ltd [2000] WASCA 59 at [35]. Once such a dispute is raised, it is not necessary for a company to satisfy the court as to where the merits of the dispute lie: Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294 at [30]. The court will not attempt to weigh or examine the merits of any dispute: Createc v Design Signs; Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290 at 295." 11Something more than assertion is required to establish a dispute sufficient to set aside a statutory demand, since otherwise any company could simply contend that it did not owe the relevant debt: John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 at 253. In Central City Pty Ltd v Montevento Holdings Pty Ltd above at [11], [15], Murphy JA observed that the Court will not accept "matters of fact unsupported by evidence" and that it will not "accept uncritically as giving rise to a genuine dispute, every statement in an affidavit, however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent or inherently improbable in itself". 12In order to establish a genuine dispute, Teratrust relies on an affidavit of its Company Secretary, Mr Ian Hinton, dated 23 May 2012. The first question is whether the evidence that the amount of $20,000 was paid by Teratrust from its own funds, together with Mr Hinton's evidence as to the circumstances of that payment and the deposit receipts to which I will refer below, establish a plausible contention requiring further investigation that Teratrust paid that amount for its own benefit, not Mr Londy's benefit, and that the amount owed by Teratrust is not $29,561.77 but (subject to an additional argument raised by Teratrust to which I will refer below) $9,561.77. I do not consider that, even on the undemanding standard applicable in matters of this kind, such a contention is raised. 13Teratrust contends that it directed Westpac to apply the relevant monies to its debt owed to Westpac by the four deposit receipts in respect of the relevant payments. The first deposit receipt dated 28 September 2011 was sent to Westpac under cover of a facsimile dated 5 October 2011 signed by Mr Hinton. That deposit receipt refers, under the heading agent deposit reference, to "Teratrust Pty Ltd as trustee for the Jason Londy Investment Trust" and indicates the deposit is for the credit of Minter Ellison. It does not contain any statement or direction that the amount deposited was for the benefit of Teratrust on the one hand or Mr Londy on the other. Mr Hinton's facsimile of 5 October 2011 followed immediately upon Minter Ellison's inquiry of 4 October 2011 as to the status of the payments to be made by Mr Londy, and that facsimile strongly supports an inference that the payment made by Teratrust on 28 September 2011 was made in discharge of the amount due by Mr Londy under the settlement with him. There is no other conceivable explanation for Mr Hinton having sent a copy of the letter dated 20 September 2011 referring to the settlement between Westpac and Mr Londy together with deposit slip recording that payment to Minter Ellison, apparently in response to an inquiry as to the status of the payment due by Mr Londy. 14A second deposit receipt dated 17 October 2011 contains a reference under the heading "for credit of" to "Teratrust P/L J/L Investment a/c" but there is no evidence that deposit slip was transmitted to Minter Ellison or Westpac to take effect as a direction to Westpac. A third deposit receipt dated 16 November 2011 contains no such reference although another part of the document, which was not identified by evidence, refers to Teratrust Pty Ltd Jason Londy Investment a/c; and a fourth deposit receipt dated 15 December 2011 states the deposit is for the credit of Minter Ellison. 15The payments made by Teratrust were also in the same amounts and on substantially the dates contemplated by the arrangement with Mr Londy. Teratrust's case therefore requires acceptance of the highly implausible proposition that it, coincidentally, made payments in the same amount and dates as those due by Mr Londy to discharge its debt rather than his debt, and without ever informing Westpac or its solicitors that it was doing so. While Teratrust has established that it made the relevant payments, I do not consider that it has established a plausible contention requiring further investigation that they were made in discharge of its own debt to Westpac, as a matter of fact, as distinct from Mr Londy's debt. 16Mr Michos, who appears for Teratrust, emphasised that there was no evidence of any arrangement between Teratrust and Westpac for it to discharge Mr Londy's debt or of any obligation that it do so. I accept that submission, but the question here is whether there is a plausible contention requiring investigation that the payments were made, as a matter of fact, to discharge Teratrust's debt rather than Mr Londy's debt. The fact that Teratrust was under no obligation to make such payments for Mr Londy's benefit does not raise any question requiring further investigation as to the fact that it chose to do so, having regard to the matters to which I have referred above. It seems to me that the only available inference from the relevant dealings is that payments were in fact made by Teratrust for Mr Londy's benefit and, to the extent that Westpac allocated those payments to discharge Mr Londy's debt rather than Teratrust's debt, it did so in accordance with the basis on which those payments were made. This is not, as Teratrust contends, a matter of Westpac relying on agreements with Mr Londy to which Teratrust was not party to treat payments made by Teratrust on its own behalf as made on Mr Londy's account, but rather a matter of Westpac accepting the payments made by Teratrust on the basis on which they were made. 17For these reasons, I do not consider that a genuine dispute as to the amount claimed in the Demand is established, and the Demand should not be set aside under s 459H of the Corporations Act. 18I should add that, even if I were incorrect in my view as to the amount of $20,000 paid by Teratrust, the Demand would still not have been set aside under s 459H of the Corporations Act. The judgment debt owed by Teratrust was $29,561.77; the amount Teratrust claims to have paid to discharge that debt was $20,000; and, even if I accepted its case in its entirety, the admitted amount of the debt for the purposes of s 459H(5) of the Corporations Act, being the amount of the debt that is not the subject of a dispute, would be $9,561.77, and the admitted total for the purposes of s 459H(2) of the Corporations Act would be the same amount. I would therefore have varied the Demand to that amount under s 459H(4) of the Corporations Act, and that amount would have exceeded the statutory minimum so the Demand would not have been set aside. 19Teratrust seeks to avoid that result by contending that it was required to commence these proceedings because of Westpac's failure to accept that the debt was only $9,561.77. However, where Teratrust itself accepts that that amount is due and unpaid, the proceedings could, at best, have resulted in a variation of the Demand rather than the order sought by Teratrust to set aside the Demand. There would therefore be no reason to order costs in Teratrust's favour in the proceedings; the most likely result is that costs would be ordered against it since it would have failed to set aside the Demand but, at best, there would have been no order as to costs in its favour. Accordingly, even apart from the fact that no offsetting claim was identified in the original affidavit in support of the application to set aside the Demand, an offsetting claim in respect of the amount of costs arising from the proceedings could not be established. Whether there is some other reason to set aside the Demand 20The Originating Process also refers to s 459J of the Corporations Act. As I have noted above, Teratrust primarily put its case on the basis that there was a genuine dispute as to the amount of the debt claimed, which would support relief under s 459H rather than s 459J of the Corporations Act. 21A statutory demand may be set aside under s 459J(1)(a) of the Corporations Act if the Court is satisfied that, because of a defect in the demand, substantial injustice will be caused unless the demand is set aside. The term "defect" is defined in s 9 of the Corporations Act as including an irregularity, misstatement of an amount or total; misdescription of a debt or other matter; or misdescription of a person or entity. The findings I have reached above have the result that there is no such defect by way of misstatement of an amount in the Demand. 22A statutory demand may also be set aside under s 459J(1)(b) of the Corporations Act on the basis that there is some other reason why the demand should be set aside. The Court's power under that section exists to maintain the integrity of the process provided under Pt 5.4 of the Corporations Act and is to be used to counter an attempted subversion of the statutory scheme, but is not exercised by reference to subjective notions of fairness: Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 20 ACSR 746; Meehan v Glazier Holdings Pty Ltd [2005] NSWCA 24; (2005) 53 ACSR 229; CP York Holdings Pty Ltd v Food Improvers Pty Ltd [2009] NSWSC 409. A statutory demand may be set aside under that section where it involves conduct which is unconscionable or an abuse of process: Arcade Badge Embroidery Co Pty Ltd v Deputy Commissioner of Taxation [2005] ACTCA 3; (2005) 157 ACTR 22. In some circumstances, a genuine dispute as to the existence or amount of the debt may allow a statutory demand to be set aside under s 459J(1)(b), without establishing that it would give rise to substantial injustice: Chippendale Printing Co Pty Ltd v Commissioner of Taxation (1995) 55 FCR 562. However, the findings which I have reached above indicate that no such genuine dispute, unconscionability or abuse of process was established. 23Accordingly, no basis to set aside the Demand under s 459J of the Corporations Act was established. Costs 24Section 98(1) of the Civil Procedure Act 2005 (NSW) relevantly provides that: "Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court; and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis." Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) in turn provides that, where the Court makes an order as to costs, the Court is to order that costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs. 25The principles underlying an award of costs include that costs are awarded to compensate the successful party for the expense of being put to the necessity of litigation; a wholly successful defendant should ordinarily receive its costs unless good reason is shown to the contrary; and the discretion to order costs must be exercised judicially and not against the successful party except for some reason connected with the proceedings: Milne v Attorney-General (Tas) [1956] HCA 48; (1956) 95 CLR 460 at 477; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97-98 per McHugh J, at 129-123 per Kirby J; Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at 234; Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd [2010] FCAFC 5; (2010) 182 FCR 84 at [17]. 26In the present case, Teratrust's application to set aside the Demand has been unsuccessful, and in the ordinary course costs should follow the event. Any party which seeks to vary that position may provide written submissions as to that matter to the other party and my Associate within 7 days of the date of this judgment. 27Accordingly, I order that:

1. The Originating Process filed on 23 May 2012 be dismissed.
2. Subject to further order, the Plaintiff pay the Defendant's costs of the proceedings. 3 Any party which seeks to vary order 2 above have leave to provide to my Associate, and serve, written submissions as to that matter within 7 days of the date of this judgment.