ANZ Banking Group Limited v Kamlock Pty Ltd ANZ Banking Group Limited v CMR Builders Pty Ltd

[1993] FCA 291

Re: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
And: KAMLOCK PTY LTD and CMR BUILDERS PTY LTD
Nos. VG3005 and 3006 of 1993
FED No. 291
Number of pages - 3
Corporations
(1993) 10 ACSR 458
(1993) 42 FCR 125

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Heerey J(1)

CATCHWORDS

Corporations - winding-up - notice of demand - notice of demand claiming interest to date of payment - whether notice valid - Corporations Law, s.460(2)(a).

Corporations Law s.460(2)(a)

Deputy Federal Commission of Taxation v Cye International Pty Limited (No.2) (1986) 4 ACLC 281

HEARING

MELBOURNE, 23 April 1993

#DATE 23:4:1993

Counsel for the applicant: I R Jones

Solicitor for the applicant: Freehill Hollingdale and Page

ORDER

The Court Orders that:

1. The applications to review the decisions of the Registrar be

dismissed.

2. The winding-up applications be adjourned to 12 May 1993.

3. Direct that any further affidavits be filed and served by 4 May

1993.

4. No order as to costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court rules

JUDGE1

HEEREY J These winding up applications come before me on an application under s.35A(5) of the Federal Court of Australia Act 1976 to review a decision of Mr Registrar Seccombe made on 2 March 1993. The Registrar held that the notice of demand under s.460(2)(a) did not satisfy the requirements of the Corporations Law. (The amendments introduced by s.57 of the Corporate Law Reform Act 1992 were not yet in operation). There are two cases. Apart from the monetary amounts the facts are identical. I shall for convenience deal with VG 3005 of 1993.

1. On 30 October 1992 the applicant served a notice of demand at the registered office of the respondent company. The notice was dated the same day and was addressed to the company. It recited that the applicant bank had provided the company with "banking facilities", that the facilities were repayable on demand, that the bank on 26 October 1992 had made demand for repayment and that the amount owing by the company to the applicant at the close of business on 19 October 1992 was $3,221,699, which amount was still owing. The notice continued:
   

"NOW TAKE NOTICE that you are hereby required to pay to the Bank $3,221,699.00 plus interest thereon at $1,315.24 per day from 20 October 1992 to date of payment, both days inclusive AND UNLESS you do within three weeks after service of this demand on you, pay the said sum so due or secure or compound the said sum to the reasonable satisfaction of the Bank, you will be deemed, in terms of Section 460 (2) of the Corporations Law, to be unable to pay your debts and proceedings will be instituted against you for your winding up in terms of Section 460 (1) of the Corporations Law; AND FURTHER TAKE NOTICE that the demand herein contained is without prejudice to any other action which the Bank has instituted, or may institute against you for recovery of the said indebtedness due to it."

1. The point raised is whether a notice which includes a demand for payment of amounts which fall due after the date of the demand, as is the case with the interest amounts of $1315.24 per day, can be said to be a demand, answering the description of s.460(2)(a).

2. In my opinion the Registrar was correct in deciding that the notice did not comply with the section. Section 460(2)(a) refers to a creditor "to whom the company is indebted in a sum exceeding $1,000 then due". The demand served on the company must require it to pay "the sum so due". I think that as a matter of ordinary language the amount for which demand is made must be the amount that is actually due at the date of the demand. There is an obvious policy behind this. Because of the serious consequences of non-compliance with the notice, the company is given three weeks to pay before s.460(2)(a) operates to deem the company insolvent, even though legally the debt is immediately due and payable.

3. If the applicant's contention were correct, a creditor could serve a demand which included a demand for a substantial amount not yet due but which was to fall due some time within the three week period. The creditor could then rely on non-payment of such an amount to deem the company insolvent, even though the company might have only had a few days between the time the amount actually fell due and the end of the three week period.

4. I think therefore this demand does not comply with the statute and thus does not raise the statutory presumption of insolvency. The only authority bearing on the point to which I was referred is the decision of Young J in the Supreme Court of New South Wales in Deputy Federal Commissioner of Taxation v Cye International Pty Limited (No 2) (1986) 4 ACLC 281 where his Honour took a similar view.

5. I shall therefore dismiss the application to review the decision of the Registrar but adjourn the further hearing of these applications to give the applicant opportunity to produce other evidence in support of its application.