//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2013] QSC 180
defendant. The statutory demand dated 19 March 2013 was set aside. Costs reserved.
A company called Welldog bought drilling equipment from World Oil Tools, but claimed the equipment was defective and caused them to lose a major contract. The parties negotiated a settlement in June 2012 where Welldog would pay the debt in instalments. However, in August 2012, World Oil Tools backed out of this deal. Despite this, they later issued a statutory demand for the exact amount owed under the settlement they had abandoned. The Court ruled that because World Oil Tools had repudiated the settlement agreement, there was a genuine dispute about whether Welldog actually owed the money. The statutory demand was set aside. The Court also indicated that Welldog likely had valid counterclaims for its losses that would have exceeded the debt claimed.
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
No linked legislation citations have been extracted yet.
[1] This is an application pursuant to s 459G of the Corporations Act to set aside a statutory demand issued by the respondent and served on the applicant.
[2] By the statutory demand dated 19 March 2013, the respondent claimed that the applicant owed the respondent US$249,216.15 "being the total of the amounts of the debts described in the Schedule". The Schedule to the statutory demand particularised those debts as follows:
Description of the debt Amount of the debt ($US)
Tax invoice number 17114 dated 1 September 2011 $245,721.00
Tax invoice number 17115 dated 1 September 2011 $43,950.00
Tax invoice number 17119 dated 1 September 2011 $212,848.57
Tax invoice number 17146 dated 18 October 2011 $4,037.20
Tax invoice number 17152 dated 25 October 2011 $2,850.00
Tax invoice number 17223 dated 13 January 2012 $15,705.19
Less payments received from the company as particularised
[3] The statutory demand was supported by an affidavit sworn by the respondent's chief financial officer, Mr William Heath, who asserted both that the said US$249,216.15 was "due and payable by" the applicant and that he believed "there is no genuine dispute about the existence or amount of the debt".
[4] On 11 April 2013, the applicant's solicitors wrote to the respondent's solicitors, stating, inter alia:
"We are instructed that the debt alleged in your client's statutory demand ("the Disputed Debt") is the subject of an ongoing dispute which your client is well aware of.
In 2011, our client entered into a commercial relationship with your client for the supply of, inter alia, drilling equipment ("the Tools"). The Disputed Debt is directly related to your client's supply of the Tools.
During the period of 2011 - 2012 your client delivered some of the Tools to our client and within a very short time our client discovered that the Tools were defective. In some instances the Tools were incomplete and/or not the correct products ordered by our client ("the Tool Issues").
In about April 2012 your client conceded the Tool Issues and in June 2012 it agreed to a resolution which included, inter alia, the following terms:
(a) an extended payment schedule for any current invoices; and
(b) any spare parts required by our client, to maintain the operation of the Tools, would be supplied expeditiously and the cost of those spare parts would be added to the current balance of invoices and incorporated into the extended payment schedule.
In late July 2012 our client was urgently awaiting the supply of spare parts from your client. Our client's numerous attempts to contact your client were unanswered until in August 2012 it finally responded by email noting:
'our financial controls were very loose over the past year, and I will be making a major effort to get our house back in order.'
'I do not mind carrying the current balance remaining from Welldog. However, for all new purchases, we will require full payment prior to shipment.'
On 4 August 2012 our client responded by email noting that your client was 'unilaterally voiding this agreement', in other words our client was of the view that your client's conduct was a repudiation of the Agreement.
That email correspondence also referred to other serious complaints by our client which included your client's continual delays in providing spare parts and its failure to provide tools of sufficient quality which had resulted in a 'direct loss of customers, embarrassment in the market and significant delays in earning revenue ...'
Our client requested a prompt reply and did not receive any communication from your client until some 3 months later on 29 November 2012 when your client sent an email demanding payment of $249,216.15 and acknowledging that there was an 'issue with the tools'.
As a result of your client's conduct which includes (but is not limited to):
(b) failure to provide adequate (or any) warranty support of its products; and
our client has not only suffered a significant loss of income but has been left with defective tools which have been inoperable since about March 2012.
Clearly in the above circumstances, the debt alleged by your client's statutory demand is the subject of a genuine dispute. Please provide us with written confirmation that your client has withdrawn the statutory demand by no later than 4pm on Friday 12 April 2013.
If your client refuses or fails to withdraw the statutory demand by the nominated time, we have instructions to file an application in the Supreme Court seeking that it be set aside.
Further, in circumstances where your client is fully aware that the debt alleged is the subject of a genuine dispute and it refuses to withdraw the statutory demand, our client will seek any costs associated with having the statutory demand set aside, including any court filing costs, on an indemnity basis."
[5] Some correspondence then passed between the solicitors, the upshot of which was that the respondent's solicitors contended that there was no genuine dispute as to the existence of the debt.
[6] The present application was then filed. It was supported by an affidavit by Mr Michael David Thomas, the applicant's Chief Operations Officer.
[7] When the matter came on for hearing, the only material relied on by the respondent was:
(a) an affidavit by the respondent's solicitor exhibiting copies of the correspondence which had passed between the solicitors, and
(b) an affidavit by the respondent's solicitor, filed by leave at the hearing, to which was exhibited a copy of an affidavit sworn by Mr Heath (who resides in Canada). The draft of his affidavit was first sent to Mr Heath two days before the hearing and he emailed the sworn version of it to his solicitors only on the day before the hearing. Importantly, Mr Heath's affidavit did not controvert, or in any way impugn, the matters stated in Mr Thomas' affidavit, but was limited to exhibiting copies of documents (emails, invoices and a credit note) sourced from the respondent's file.
[8] At the hearing, a further affidavit by Mr Thomas was filed. This had the effect of correcting an error he had made in his previous affidavit with respect to a particular date.
[9] The applicant is in the business of coal seam gas testing. In 2011, the applicant entered into a contract with the respondent, a company incorporated in Canada and trading from offices in Calgary, Alberta, to purchase certain permeability testing equipment (described in Mr Thomas' affidavit as "the Tools"). The applicant required the Tools in order to provide services under a contract the applicant had entered into with AGL Energy Ltd ("AGL"). That contract required the applicant to carry out coal seam gas well testing at sites in the Cooper Basin in early October 2011.
[10] In purported performance of its agreement with the applicant, the respondent supplied equipment to the applicant in early September 2011. It is apparent from the material, however, that many components were missing. Further investigation showed that much of the equipment which had been supplied was also defective. These issues were the subject of emails sent by the applicant to the respondent containing increasingly urgent complaints and requests for rectification during September 2011.
[11] The extent of the respondent's failure to supply in accordance with its agreement is summarised in an internal email from the applicant's field engineering supervisor to Mr Thomas dated 10 October 2011. That email lists no less than 12 broad areas of defective supply (including the failure to supply manuals, tool drawings and specification sheets) and lists 29 instances of defects in the products which were supplied by the respondent.
[12] By October 2011, as a consequence of the defective and incomplete supply by the respondent, the applicant was constrained to engage a subcontractor to perform the applicant's work under its contract with AGL. Mr Thomas says that:
(a) this contract with AGL was for a series of well tests, for which the applicant was to be paid a total of $350,000;
(b) the applicant was to be paid $60,000 for the first of those tests;
(c) in fact, it cost the applicant $90,000 to have the first of the tests completed on its behalf.
[13] It is also clear that, by reason of its inability to perform on the first of the AGL well tests, the applicant lost the AGL contract. An email from AGL to the applicant dated 14 October 2011 stated:
"As you know, AGL have a further 3 wells in our firm Cooper Basin oil exploration program. WellDog were invited to undertake DST operations based upon a few assumptions that you had personally assured me would be under control. These included that WellDog would have all of their own gear ready for the program and that Craig would personally be onsite to oversee the job.
Neither of these things occurred and the communication of these issues to the AGL representatives happened in an indirect and very last minute matter. Regarding Craig's inability to make it out to site, we were notified indirectly 12 hrs prior to mobilisation via the crew list issued to site. Despite the fact your guys are experienced, this was a request and requisite condition of awarding the work.
Regarding gear, WellDog were not tooled up for the job, despite the program being 3 weeks behind the schedule initially given. As a result, almost the entire job was farmed out to a competing company, of whom we had tendered to and did not award the work. The communication of this issue was also handled poorly, the first time AGL was made aware that OzDST were undertaking the job was when they contacted us to enquire about the job specifications. This obviously caused a lot of confusion and frustration internally, our safety managers nearly pulled the pin on the job as OzDST are also not pre-qualified to work on an AGL site. As a smaller issue, the fact real time telemetry does not work below 1200m and we had 2 reservoir engineers on standby overnight to monitor a DST at 1590mKB was a fair oversight also.
All in all Nick we have been pretty disappointed with the way the operation was handled and a far from premium service was delivered as guaranteed. As such, AGL will not be engaging WellDog to undertake any further DST's as part of the Cooper Basin exploration program, this will not however exclude you from future tenders."
[14] The reference in that email to the applicant not being "tooled up" for the job clearly cross-references to the fact that the respondent had failed in its supply of the Tools to the applicant.
"19. The loss suffered by WellDog from the termination of the AGL Contract is at least $300,000 but I believe it is significantly more and up to $1 million dollars by reason of the loss of continued contracts which ozDST have now secured and WellDog would have been awarded if the Tools had been delivered on time, complete and not defective."
[16] Despite the respondent's failure to supply the Tools, the applicant persevered in attempting to deal with the respondent. Mr Thomas' further uncontroverted and unchallenged evidence was as follows:
"20. It was not until about Feb, 2012 that WOT delivered the necessary parts to enable the Tools to function.
[17] On 29 February 2012, Mr Thomas sent the following email to Mr Dennis Makar of the respondent:
This memo is designed to summarize the problems that we have encountered with our purchase of a 5″ inflate DST tool and a Slim Hole inflate DST tool from World Oil Tools in August of 2011. You and I have had numerous conversations about this situation as well as conversations with Curtis, Muyi and Bill in your organization. Additionally, Craig Thorne, Robin Brooks and Dave Ramage have had conversations with your team many times. I am sending this memo to you now because we believe that we finally have the tools that we purchased from you in a place where we can actually use them with some confidence. This has not been an easy undertaking and certainly not what we expected when we bought the tools from you. Below is an outline of the activities, efforts and the situation that we have encountered since the purchase in August:
Dennis, Please review this information and then let's discuss. Please contact me anytime at the contact details below or by return email.
[18] Negotiations then ensued via emails and in meetings between representatives of the parties with a view to settling the amount which the applicant would pay to the respondent for goods supplied to date and the terms on which the parties would trade in the future.
[19] Mr Thomas deposes, and it is not contradicted, that in June 2012 the parties agreed that:
(a) the sums which had been invoiced to the applicant for the Tools would be payable by instalments over a period of 12 months;
(b) the invoiced sums would be reduced by $100,000;
(c) any further spare or replacement parts related to the Tools and which were required by the applicant to operate the Tools would be added to the current balance of the invoices and incorporated into the extended payment arrangement.
[20] It is also clear from the correspondence between the parties that this June agreement was intended to be a compromise of the claims which the applicant had against the respondent arising out of the failure to supply the tools under the original contract - see, for example, the email from Mr Heath of the respondent to Mr Thomas on 9 April 2013, in which Mr Heath said:
"Assuming that we are able to agree to a resolution of our past shipments and billings, I believe that we can guarantee a better ongoing business relationship than you have experienced in the past."
[21] This email also referred to Mr Heath requiring further information from Mr Thomas in order to determine the "amount of the financial responsibility that [the respondent] is willing to accept", said that the respondent was looking forward to working with the applicant in the future and said that Mr Heath was "sure that we can get this unfortunate situation behind us".
[22] On 13 July 2012, the applicant made the first instalment payment to the respondent pursuant to the June compromise agreement.
[23] On 27 July 2012, the respondent sent the applicant a "current statement of account and calculation of monthly payments". That statement recorded:
1-Sep-11 IN17114 $ 114,787.95 -50,000.00 $ 64,787.95
OUTSTANDING BALANCE AS OF JULY 27, 2012 $ 249,216.15
[24] Whilst formatted differently, it is clear that the balance of $249,216.15 referred to in that statement is the same as the debt calculated in the Schedule to the statutory demand.
[25] The July compromise agreement was short-lived, and was effectively repudiated by the respondent on 3 August 2012 when Mr Makar of the respondent sent the following email to Mr Thomas:
"Mike, sorry about taking so long to reply. We are currently in a very difficult situation with your company. Quite frankly our line of credit at the bank is maximized and we too are hurting financially. Our financial controls were very loose over the past year, and I will be making a major effort to get our house back in order.
Two other customers from Australia currently purchase DST equipment from our company. Both of these provide full payment prior to shipment of tools from Calgary. In addition, inspection and approval for shipment of tools take place in Calgary prior to submitting the final payment. This works out very well for both sides, and the equipment appears to function very well after arrival in Australia.
I do not mind carrying the current balance remaining from WellDog. However, for all new purchases, we will require full payment prior to shipment."
[26] In his response of 3 August 2012, Mr Thomas said:
"Thanks for your reply. Firstly, I agree that the way to purchase equipment from you is to have it inspected and tested in Calgary prior to shipment. In fact when we had conversations with your staff early in the year, attempting to get a back-up pump for the 5″ tool, we had someone standing by in Calgary ready to inspect and test before shipment. It turned out that you either would not or could not accommodate the testing and shipment of the pump so we still do not have a spare.
I have two serious issues with the other position that you have identified in your email:
1. I sat in your office with yourself and Bill at the end of June and discussed/negotiated the payment schedule which included adding to the current amount owing the new spares that we required. You and Bill agreed that if we begin making payments (which, in good faith, we have) you would add any spares that were shipped to WellDog to the amount owing and amortize the new balance over the months remaining on the payment plan (ending June 30, 2013). It appears that by your statements below you are unilaterally voiding this agreement, which if so is a serious problem. Is this what you are saying?
2. When in your office in June we also discussed the urgent need we had for a spare pump for each of our tools. After discussing this with Curtis on the phone, you committed to me that you would have both spare pumps available to pick up by the end of July. I have been trying to find out the status of these pumps for over two weeks and so far no one has even responded to my questions as to the availability of the pumps. Dennis, are the pumps available and ready to be picked up now?
As a final note, please remember that the reason we are having the discussions we have been having over the last 10 months is because of the extremely poor quality of the tools that were delivered to us last fall by World Oil Tools. Regardless of the issues, we have been trying to
re-establish the relationship between World Oil Tools and WellDog for many months with multiple personal visits by myself, Dave Ramage and Robin Brooks. Additionally we have been trying to find workable solutions to allow us to work together, regardless of the fact that the poor tool quality cost us the direct loss of customers, embarrassment in the market and significant delays in earning revenue for this business line in Australia. Please note that the credit World Oil Tools provided WellDog only covers a small portion of the losses WellDog has incurred as a result of receiving such poor quality equipment from World Oil Tools.
Dennis, I look forward to your prompt reply to my two questions above."
[27] The applicant received no further communication from the respondent until 29 November 2012, when Mr Makar sent an email to Mr Thomas saying:
"An outstanding amount of $249,216.15 still payable from WellDog to World Oil Tools and we have received no payment for some time now. Clearly if there is an issue with the tools, then have that equipment returned to us. Otherwise, we require full payment to be made immediately. Legal documents will be prepared and served to your Australia and US offices if this is not resolved within seven days."
[28] The statutory demand was then issued on 19 March 2013.
[29] The applicant submitted that the statutory demand ought be set aside because:
(a) there was a genuine dispute between the applicant and the respondent about the existence of the debt to which the demand related; or
(b) alternatively, the applicant has an "off-setting claim" (as that term is defined in s 459H) of such an amount as would lead to the "substantiated amount" being less than the "statutory minimum", i.e. $2,000.[1]
[30] For the respondent, it was submitted simply that on the applicant's material "there is nothing to suggest that the amounts claimed by the respondent in the statutory demand are not genuinely due and owing" and that no challenge was made to the invoices claimed or to their amounts. Having so disposed of the applicant's primary contention, the respondent turned to argue at some length that the applicant's material did not substantiate an off-setting claim.
[31] Section 459H of the Corporations Act provides:
"459H Determination of application where there is a dispute or offsetting claim
(1) This section applied 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:
(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."
[32] In Rhagodia Pty Ltd v National Australia Bank Ltd[2], Robson J usefully collated the following judicial expositions on the proper approach to be adopted in determining whether there is a genuine dispute as to the existence of a debt or whether there is an off-setting claim (omitting footnotes and citations):
"[91] In TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd Dodds-Streeton JA (with whom Neave and Kellam JJA concurred) said:
'[56] The court, in the context of an application to set aside a statutory demand, must determine whether there is a genuine dispute about the existence or amount of the debt or whether the company has a genuine off-setting claim.
[57] No in-depth examination or determination of the merits of the alleged dispute is necessary, or indeed appropriate, as the application is akin to one for an interlocutory injunction. Moreover, the determination of the "ultimate question" of the existence of the debt should not be compromised.'
'[71] As the terms of s 459H of the Corporations Act 2001 and the authorities make clear, the company is required, in this context, only to establish a genuine dispute or off-setting claim. It is required to evidence the assertions relevant to the alleged dispute or off-setting claim only to the extent necessary for that primary task. The dispute or off-setting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile. As counsel for the appellant conceded however, it is not necessary for the company to advance, at this stage, a fully evidenced claim. Something "between mere assertion and the proof that would be necessary in a court of law" may suffice. A selective focus on a part of the formulation in South Australia v Wall, divorced from its overall context, may obscure the flexibility of judicial approach appropriate in the present context if it suggests that the company must formally or comprehensively evidence the basis of its dispute or off-setting claim. The legislation requires something less.'
[93] In Eyota, McClelland CJ of the Supreme Court of New South Wales said:
'It is, however, necessary to consider the meaning of the expression "genuine dispute" where it occurs in s 450H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the "serious question to be tried" criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit "however equivocal, lacking precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be" not having "sufficient prima facie plausibility to merit further investigation as to [its] truth" (cf Eng Mee Yong v Letchumanan), or "a patently feeble legal argument or an assertion of facts unsupported by evidence": cf South Australia v Wall.'
But if it does mean that, except in such an extreme case, a court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. In Mibor Investments Hayne J said, after referring to the state of the law prior to the enactment of Div 3 of Pt 5.4 of the Corporations Law, and to the terms of Div 3:
'These matters, taken in combination, suggest that at least in most cases, it is not expected that the court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weight the merits of that dispute. All that the legislation requires is that the court conclude that there is a dispute and that it is a genuine dispute.'
In Re Morris Catering (Aust) Pty Ltd Thomas J said:
'There is little doubt that Div 3 ... prescribes a formula that requires the court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the court will examine the merits or settle the dispute. The specified limits of the court's examination are the ascertainment of whether there is a "genuine dispute" and whether there is a "genuine claim".
It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it), the court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another.
The essential task is relatively simple - to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it).'
[94] In TR Administration, Dodds-Streeton JA (with whom Neave and Kellam JJA concurred) cited this passage with apparent approval and noted it was also cited by the Full Federal Court in Spencer Constructions Pty Ltd v GAM Aldridge Pty Ltd:"
[33] I note that this summary of the applicable principles was recently referred to with approval by the Victorian Court of Appeal in Troutfarms Australia Pty Ltd v Perpetual Nominees Ltd[3].
[34] On the facts of this case as I have outlined them above, it is, with respect, difficult to see how it can blithely be said by the respondent that there is no genuine dispute with respect to the debt claimed in the statutory demand. As is apparent from the facts of this case, the debt claimed in the statutory demand is one and the same as the debt said to be owing pursuant to the compromise agreement entered into by the parties in June 2012. The respondent itself repudiated that agreement. The applicant, in Mr Thomas' email of 3 August 2012, challenged that repudiation and sought further information from the respondent. That further information was never forthcoming. The only further contact from the respondent was to demand payment of the amount said to be owing under the compromise agreement which the respondent itself refused to perform. Contrary to the submissions of the respondent, it is clear that there is a genuine dispute as to the ongoing existence of any debt pursuant to the June compromise agreement.
[35] The respondent would, it seems, seek to airbrush the dispute about the June compromise out of existence, and focus rather on amounts said to be owing for the delivery of goods pursuant to the original supply contract. Even if it were able to do that, it is equally clear that there was a genuine dispute between the parties as to the debt claimed by the respondent for the original delivery of those goods. It is clear enough that, by reason of the respondent's failure to supply in accordance with its original agreement, there was a dispute between the parties as to the applicant's indebtedness to the respondent, and the extent to which the applicant itself had claim against the respondent for the damages suffered as a consequence of the respondent's breach of the supply agreement. That there was such a genuine dispute is undoubted, in light of the fact that the parties then entered into extended settlement negotiations, the outcome of which was the June 2012 compromise agreement.
[36] In Solarite Airconditioning Pty Ltd v York International Australia Pty Ltd[4], Barrett J said that the tests for establishing the existence of a genuine dispute must:
"[be applied in the context of a] summary procedure where 'it is not expected that the Court will embark on any extended inquiry', [and] mean that the task faced by a company challenging a statutory demand on the 'genuine dispute' ground is by no means at all a difficult or demanding one. The company will fail in that task only if it is found upon the hearing of its section 459G application that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted. Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The Court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger."[5] (emphasis added)
[37] For the reasons I have mentioned, it seems to me that the applicant has clearly demonstrated that there is a genuine dispute with respect of the existence of the debt claimed in the statutory demand, given, as I have repeatedly observed, that this is one and the same as the debt owing under the June 2012 compromise agreement which the respondent, by its conduct, repudiated.
[38] In light of my clear view as to the existence of a genuine dispute, it is unnecessary for me to dwell on the respondent's arguments concerning the sufficiency of the evidence adduced by the applicant as to the existence of off-setting claims. The points sought to be made on behalf of the respondent were that:
(a) the applicant had not disclosed any invoices or other supporting material to substantiate the claim for costs incurred of $90,000 to carry out the first AGL test, and
(b) the applicant had not disclosed a contract or any other material to support the claim made by Mr Thomas that the losses from the AGL contract were between $300,000 and $1 million.
[39] In support of these arguments, counsel for the respondent relied particularly on the observations of Burley J in Sewmail (Australia) Pty Ltd v Booby Traps Pty Ltd[6] where his Honour, on the facts of the case before him, was satisfied by the plaintiff's evidence that a genuine off-setting claim existed, but was not satisfied of the amount of that claim. His Honour said[7]:
"To support the genuineness of an offsetting claim amounting to $50,000, the plaintiff relies upon the unsubstantiated assertion of Mr Taylor, a director of the plaintiff, that the offsetting claim amounts to $50,000. That in my view is not sufficient. There needs to be evidence supporting the quantum of the offsetting claim so that the court may determine whether or not there is a genuine offsetting claim of a given amount. It is not necessary that the evidence be such as might be advanced at a trial but it is, in my view, necessary to adduce some evidence in that regard: Scanhill Pty Ltd v Century 21 Australasia Pty Ltd [1993] FCA 618; (1993) 47 FCR 451 at 460 and 463; [1993] FCA 618; 120 ALR 173; 12 AQCSR 341; Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund [1996] FCA 822; (1996) 21 ACSR 581; 14 ACLC 1703 at 1706. In the absence of such evidence it is impossible for the court to determine whether or not the statutory demand must be altered or set aside in accordance with the provisions of s 459H of the Law. For these reasons the ground relied upon by the plaintiff in relation to the offsetting claim must fail."
[40] It is not immediately clear from the report of that case whether there was any evidence at all, or any sworn statement at all, to support the quantification of the off-setting claim. Immediately preceding the passage from the judgment I have just quoted are the following observations by Burley J:
"The plaintiff contends that it has an offsetting claim amounting to some $50,000 but there is no evidence to support the contention that the offsetting claim may amount to something in the vicinity of $50,000. Indeed, the evidence does not even permit an estimate that the offsetting claim is greater than $13,699.60 which amount represents the difference between the lowest amount referred to in the statutory demand ($15,699.60) and the statutory minimum of $2,000."
[41] In Broke Hills Estate Pty Ltd v Oakvale Wines Pty Ltd[8], the affidavit filed in support of the application to set aside a statutory demand contended that the company had suffered loss and had an off-setting claim, but said nothing at all about the quantum of that claim or whether it exceeded the debt. Gzell J said:
"[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."
[42] In the present case, the respondent's objection that the applicant did not disclose invoices or other supporting material to substantiate its claim for costs of $90,000 cannot be sustained. The applicant was not required to adduce final proof of those costs. The uncontroverted, and unchallenged, evidence of Mr Thomas deposed to the nature of that part of the off-setting claim, and the way in which it was calculated. That evidence would, in my view, have been sufficient for present purposes.
[43] With respect to the objection that the applicant had not disclosed a contract or any other material to support the claim that the losses from the AGL contract were between $300,000 and $1 million, it is to be noted that the material exhibited to Mr Thomas' affidavit clearly evidences the loss by the applicant of the benefit of its then contractual arrangement with AGL. At the very least, in addition to the extra costs of $90,000 that evidence of the loss of the AGL contract indicates the nature of that component of the off-setting claim. Mr Thomas' evidence also permits a calculation of the base loss as a consequence of the loss of that contract of $300,000.
[44] Later in his affidavit, Mr Thomas deposed to the following:
"I estimate that the loss and damage arising from the failure of the Tools and failure by [the respondent] to properly warrant the Tools and supply spare and replacement parts exceeds $1 million."
[45] In my view that bare assertion is insufficient for the purposes of the Court making a determination with respect to an off-setting claim. It is nothing more than a contention, and in no way indicates the way in which the claimed losses are calculated.
[46] Be that as it may, the combination of the claim for costs of $90,000 and the uncontroverted loss of the benefit of the AGL contract, and the loss of revenue as a consequence, would likely have been sufficient for the purposes of the applicant mounting an off-setting claim of a sufficient quantum to exceed the amount of the statutory demand. It is, however, not necessary for me to reach a final conclusion on this matter, in light of my finding that there was a genuine dispute with respect to the debt claimed under the statutory demand.
[47] It follows that there will be an order that the statutory demand be set aside.
Welldog Pty Ltd
World Oil Tools Inc [2013] QSC 180
(1993) 47 FCR 451
The statutory demand dated 19 March 2013 was set aside. Costs reserved.