Rules of the Supreme Court 1971 (WA), O 37 r 6(1)

Akins v National Australia Bank (1994) 34 NSWLR 155

Asian Century Holdings Inc v Fleuris Pty Ltd [2000] WASCA 59

Australian Democrats WA Division Inc & Ors v Australian Democrats VIC Division Inc [1998] WASCA 275

Australian Electrical Electronics Foundry & Engineering Union (Western Australia Branch) v Hamersley Iron Pty Ltd (1998) 19 WAR 145

Birch Investments Pty Ltd v Lim, unreported; SCt of WA; Library No 7396; 12 July 1988

David Grant & Co Pty Ltd v Westpac Banking Corp [1995] HCA 43; (1995) 184 CLR 265

Doherty v Liverpool District Hospital (1991) 22 NSWLR 284

Energy Equity Corporation Ltd v Selvendra [2001] WASC 246

Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785

Gabstone Pty Ltd v Gumina Investments Pty Ltd [2000] WASC 149

Greater Wollongong City Council v Cowan [1955] HCA 16; (1955) 93 CLR 435

Ladd v Marshall [1954] EWCA Civ 1; [1954] 1 WLR 1489

Lewkowski v Bergalin Pty Ltd, unreported; FCt SCt of WA; Library No 7675; 26 May 1989

Lill v Merchant Capital (WA) Ltd (1996) 15 WAR 536

Marks v GIO Australia Holdings [1998] HCA 69; (1988) 196 CLR 494

Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] VicRp 61; [1994] 2 VR 290

Orr v Holmes [1948] HCA 16; (1948) 76 CLR 632

Rohalo Pharmaceutical Pty Ltd v R P SchererSpA (1994) 15 ACSR 347

Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452

1 TEMPLEMAN J: This is an appeal against a decision of a Master of this Court who declined to set aside a statutory demand served on the present appellant by the present respondent. The appeal raises a short point and that is the adequacy of the affidavit filed on behalf of the appellant which was relied on as demonstrating a genuine dispute about the amount the subject of the demand.

2 Very shortly the facts are these: the respondent worked on a commission basis for the appellant. The agreement was set out in a letter dated 14 September 2000 which is signed by Mr Richard Beck, the managing director of the appellant. That letter constituted the agreement. The demand which the respondent served on the appellant was based on some invoices and arising from work which the appellant carried out under the letter agreement. There was some small variation to the agreement but nothing turned on that as the Master said.

3 The dispute was sought to be raised in an affidavit sworn by a Mr Carey, that is, Norman Phillip Carey, who described himself in his affidavit as a director of the present appellant and said he was authorised to swear the affidavit on its behalf.

4 In his affidavit Mr Carey referred to the statutory demand, referred to the circumstances in which the respondent had been engaged by the appellant and referred to certain payments which were to be made. In his affidavit Mr Carey said at [11]:

"As the arrangement with the respondent clearly was not working, we informed him that our initial letter agreement would not continue. A new arrangement was made with the respondent to pay him a commission of 10 per cent of moneys raised with no monthly retainer. This commission was to be offset against the retainer of $15,000 (plus GST) already paid to him."

"In March and April 2001 a total of only $75,000 was raised for which we agreed to pay a 10 per cent commission to be offset firstly against the retainer of $15,000 plus GST paid pursuant to the original agreement."

5 It is not necessary for present purposes to go into the detail of the agreement between the appellant and the respondent. The simple point is this: if par 11 and 12 and in particular par 11 were admissible, then that would raise a genuine dispute which would justify the statutory demand being set aside. If the evidence were not admissible, there would not be a genuine dispute raised and the demand would not be set aside. The Master said of those paragraphs:

"I consider that is not admissible. Setting aside a statutory demand is not an interlocutory application. It is a final one and therefore hearsay is not normally allowable - see Asian Century Holdings Inc v Fleuris [2000] WASCA 59 per Kennedy J. Even if I were to permit hearsay, this is not in the right form. It needs to give the sources of information and belief. It needs to say, for example, 'Beck told me this and I verily believe it to be true.'

In this case I do not think I would have allowed hearsay, given the importance of the matter being deposed to, and Beck should have given evidence. He is a director. There is no evidence that he is not available, so I consider Carey's evidence is not admissible to rebut Goakes', that is, the respondent's, evidence of the contractual arrangements."

6 It is perhaps a little surprising at the outset to see the Master refer to par 11 and 12 as constituting hearsay. But the reason for that emerges once it is known that the respondent, in an affidavit, had deposed to the fact that he had dealt exclusively with Mr Beck and that he had not dealt with Mr Carey. The appellant was given leave to answer the respondent's affidavit, but did not do so. The respondent's evidence that he had dealt only with Mr Beck was therefore uncontradicted.

7 It follows that when Mr Carey said that "We informed the respondent" of certain matters and "We agreed" to do certain things or to make certain payments, since he had not himself dealt with Mr Beck, he could only have been giving hearsay evidence.

8 The learned Master was perfectly correct in saying that this was not an interlocutory application and it was a final one and that hearsay was not normally allowable. In that statement the Master clearly had in mind O 37 r 6 of the Rules of the Supreme Court 1971 (WA) which provides for the contents of affidavit evidence. In O 37 r 6(1) it is provided that an affidavit must be confined to such facts as the deponent is able of his own knowledge to prove. Subrule (2) goes on to say that an affidavit used for the purposes of interlocutory proceedings may contain statements of information or belief and (2)(a) provides that an affidavit containing statements of information or belief must set out the sources or grounds of that information or belief.

9 In my view, therefore, the Master was entirely correct first of all, in the circumstances, in holding that the statement in paragraph 11 was hearsay. He was equally correct in saying it was not admissible. Even if hearsay was admitted, the evidence did not comply with the rule to which I have referred because the affidavit did not set out Mr Carey's source of knowledge or belief.

10 Mr Hershowitz for the appellant today submits that Mr Carey's knowledge can be inferred from the fact that he is, as he deposes to be, a director of the appellant, but in my view that does not take the matter anywhere. The mere fact that he is a director does not give rise to the inference that he knew anything at all about the matters in question. Indeed, as I have already said, it is clear from the respondent's uncontradicted affidavit that Mr Carey could only have had second-hand knowledge of the matters about which he deposed.

11 The appellant relied on a decision of Sundberg J in Graywinter Properties Pty Ltd v Gas and Fuel Corporation Superannuation Fund [1996] FCA 822; (1996) 21 ACSR 581. In that case Sundberg J gave some attention to the minimum requirements for an affidavit relied upon in support of the contention that there was a genuine dispute in opposition to a statutory demand. His Honour said (at 587):

and I pause there to say that this is such a case; his Honour went on -

"the affidavit must in my view disclose facts showing there is a genuine dispute between the parties. A mere assertion that there is a genuine dispute is not enough. Nor is a bare claim that the debt is disputed sufficient. It follows from the fact that the affidavit need not go into evidence, which is the customary function of an affidavit; that it may read like a pleading."

A little earlier in his judgment his Honour had said:

"... the affidavit need not detail, in admissible form, all the evidence that supports the contention of a genuine dispute: John Holland. That evidence must be available at the hearing of the application to set aside, because that application is for final and not interlocutory relief."

12 The case does not, in my view, assist the appellant. The case I think is authority for the proposition that provided evidence is available at the hearing in a proper form, the fact that an affidavit which may read like a pleading may be acceptable is sufficient to establish a genuine dispute application or to support a genuine dispute application to set aside a statutory demand. But in my view, any affidavit relied upon in these circumstances, if no other evidence is available, must comply with O 37 r 6. This affidavit did not do so and in those circumstance, in my submission, the learned master was right in excluding par 11 and 12. That being so, it seems to me that the appeal must fail and should therefore be dismissed.

13 WHEELER J: I am generally in agreement with the reasons of Templeman J and wish to add only the following observation. It appears to me that for the disposition of this matter, it is of no importance whether the proceeding the subject of the appeal is interlocutory or final. If it is final in nature, then hearsay evidence is not admissible.

14 If the proceeding is interlocutory, the Rules require that the statements of information or belief must set out sources or grounds of that information and belief. The requirement is an important one for a number of reasons. It reveals the original source of the hearsay information and provides some opportunity to an opponent to counter or to challenge it and it enables prosecution for perjury in a proper case if necessary. Further, in a case such as the present, where a judge or a master hearing such an application may refuse to accept an assertion in an affidavit if it appears inherently incredible or inconsistent with contemporary documents or for a number of other reasons which are well understood, then sources of information and belief assist in the determination of whether the assertion should be accepted. It is not, therefore, a requirement of the Rules which may be ignored in the preparation of such an affidavit. I too would dismiss the appeal.

15 McKECHNIE J: For the reasons given by Templeman J and Wheeler J, I would also dismiss the appeal. I would perhaps reserve for another day the issue whether hearsay is allowable in relation to a statutory demand but in any event, for the reasons expressed by Wheeler J and Templeman J, this application should nevertheless be dismissed.