Axess Debt Management Pty Ltd v Adams

Axess Debt Management Pty Ltd (the applicant) sought to wind up Adams (the respondent) on the basis of insolvency. The applicant claimed that the respondent owed it a debt of $10,000, plus interest and costs, arising from a loan agreement. The respondent disputed the existence and quantum of the debt, alleging that the loan agreement was void for illegality due to breaches of the *Credit Act 1984* (NSW) and the *Consumer Credit Code*. The matter came before Young J in the Supreme Court of New South Wales.

The primary legal issue before the court was whether the respondent was genuinely disputing the debt such that it would be unjust to wind up the company on the grounds of insolvency. This required the court to consider the validity of the loan agreement and the alleged breaches of the *Credit Act 1984* (NSW) and the *Consumer Credit Code*.

Young J found that the loan agreement was indeed void for illegality due to breaches of the *Credit Act 1984* (NSW) and the *Consumer Credit Code*. His Honour noted that the applicant had failed to comply with the requirements of the legislation, rendering the agreement unenforceable. Consequently, the applicant had not established a debt that was genuinely owing by the respondent.

As the applicant had failed to prove the existence of a liquidated and undisputed debt, the application for winding up was dismissed.