Case: TR Administration Pty Ltd v Frank Marchetti &amp; Sons Pty Ltd [2008] VSCA 70 ; (2008) 66 ACSR 67
Outcome: applied
The principles to be applied by the Court in determining an application to set aside a statutory demand are also not in dispute. The Court must be satisfied that there is a genuine dispute between Ultradrilling and West about the existence or amount of the debt to which the demand relates: s 459H(1)(a) of the Act . That issue is determined at the time the Court hears the application: Andi-Co Australia Pty Ltd v Meyers [2004] FCA 1358 at [16] . For a genuine dispute to exist, the dispute must "be bona fide and truly exist in fact". The grounds for alleging the existence of a dispute must be "real and not spurious, hypothetical, illusory or misconceived": Spencer Constructions Pty Ltd v G&amp;M Aldridge Pty Ltd [1997] FCA 681 ; (1997) 76 FCR 452 at 464; see also John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 at 253 and TR Administration Pty Ltd v Frank Marchetti &amp; Sons Pty Ltd [2008] VSCA 70 ; (2008) 66 ACSR 67 at 79. 9 The test to be applied in determining whether an offsetting claim exists is the same as that applied in ascertaining the existence of a genuine dispute: TR Administration Pty Ltd 66 ACSR at 79. 10 As noted earlier, Ultradrilling was engaged by West as a subcontractor on the Project to undertake extensive drilling work. West in turn had been hired by head contractor Macmahon Contractors Pty Ltd ("Macmahon"). The Statutory Demand issued by Ultradrilling claims an amount that is said to represent the balance due to it from West for the drilling work done pursuant to the contract. The genuine dispute alleged by West is whether certain amounts are in fact payable and owing under the contract; the offsetting claim is for losses said to arise out of Ultradrilling's breach of the contract due to its delay in completing the work. 11 West contends that of the $155,397 remaining unpaid on the Statutory Demand, there is a genuine dispute in relation to $47,916 arising from excessive and incorrect charges by Ultradrilling. 28 There is sufficient objective evidence to establish a prima facie allegation of delay on the part of Ultradrilling caused by its own conduct. It is important to note that Ultradrilling's contentions proceeded not on the basis that there could be no implied term relating to time but that the legal argument there existed one or more implied terms covering all of the instances set out in the schedule to the letter dated 7 February 2008 was "patently feeble". That contention is understandable. However, the evidence before the Court on these issues (including the terms of the contract) is not exhaustive: cf TR Administration 66 ACSR at 81-82. Indeed, what evidence was before the Court suggested that there was in fact no formal, integrated written contract, but instead a series of emails, purchase orders, and invoices, including the Purchase Order partially set out above. 37 Ultradrilling submitted that the fact that West now puts forward these details of the offsetting claim to overcome the difficulties identified by the Deputy Registrar should tell strongly against the genuineness of the claim, both on the issue of whether the delays are recoverable by West against Ultradrilling and the amount of any such claim. In any event, Ultradrilling contends that the evidence now provided does not rise above mere assertion and should be rejected on that basis alone: see Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560 at [18] - [19] and TR Administration 66 ACSR at 79-80. Ultradrilling focused, in particular, on the charges for "lost mark up" and the "lost profit" on the pumps (see [35] above). Ultradrilling contended that if, as was required, a line was drawn to distinguish between evidence that was merely spurious, bluster or assertion and evidence which provided sufficient factual particularity to exclude the merely fanciful or futile, the offsetting claim would be dismissed: TR Administration at 79-80.