Case: Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560
Outcome: followed
In Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560 at [7] , Barratt J, echoing comments he had previously made in Process Machinery Australia Pty Ltd (t/as DCL Engineering) v ACN 057 260 590 Pty Ltd [2002] NSWSC 45 at [21] - [22] , said of the " Graywinter principle": What it means is that the application ... and the affidavit in support of that application, both filed and served within the 21 day period stipulated in s 459G(3) , must fairly alert the claimant to the nature of the case the company will seek to make in seeking to have the statutory demand set aside. 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 for setting aside statutory demands. The process of delineation may not be extended after the end of the 21 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 the period. 19 In Hansmar Investments Pty Ltd v Perpetual Trustee Co Ltd (2007) 61 ACSR 321, White J expressed the view that test enunciated by Barratt J in Process Machinery [2002] NSWSC 45 and Elm Financial Services [2004] NSWSC 560 , in so far as it requires the ground of challenge to be raised expressly or by necessary inference, is too strict. His Honour accepted the implication from the statute that the grounds for applying to set aside a statutory demand must be raised in the supporting affidavit but observed at 326: It is one thing to draw that implication from the requirement that an application be accompanied by a supporting affidavit. It is quite another to imply from the requirement that there be a supporting affidavit anything as to the precision with which such a ground must be expressed, other than that it be raised. Whether it is raised expressly, by necessary inference, or by a reasonably available inference, provided it is raised, in my view the requirements of s 459G are satisfied. 30 In my view the first affidavit of Dr Chisholm meets the requirements of s 456G. It "promotes the company's case", and clearly stakes out the grounds of the dispute, namely the dual problems of thickening and composition afflicting the dye. Although the affidavit does not annexe invoices from the defendant, it is explicit that the plaintiff was dealing with "Anar" in 2005, after the incorporation of the defendant. The area of controversy has, by necessary inference, been clearly delineated; Elm Financial Services [2004] NSWSC 560 at [7] ; or is at the very least raised by a reasonably available inference; Hansmar Investments 61 ACSR at 326. 58 There is some discrepancy between the profit margin of 30 per cent claimed in Dr Chisholm's first affidavit and his evidence in cross-examination. Whilst the Court does not require evidence of a standard expected on a final claim in applications of this kind, contradictions in evidence can be fatal if they make the claim as a whole implausible; see Edge Technology [2000] NSWSC 471 ; 34 ACSR 301. In the circumstances of Dr Chisholm's unexpected cross-examination, I am not willing to draw such a conclusion. It is accepted that the amount claimed by the plaintiff may have "elements of uncertainty"; Elm Financial Services [2004] NSWSC 560 at [19] .