BHP Steel (JLA) Pty Ltd v Eagle Steel Holdings Pty Ltd

BHP Steel (JLA) Pty Ltd brought an application to wind up Eagle Steel Holdings Pty Ltd under Section 459P of the Corporations Law, claiming that the respondent was insolvent due to its failure to comply with a statutory demand dated 15 April 1999. Eagle Steel Holdings Pty Ltd opposed the application, arguing that it was solvent and seeking to rely on two affidavits to support its contention. The applicant objected to the affidavits on the grounds that they contained evidence of a genuine dispute over the debt on which the statutory demand was based. The applicant argued that leave of the court under Section 459S of the Corporations Law was required before such evidence could be led.

The court considered the legislative intention behind Section 459S of the Corporations Law, which aims to prevent companies from challenging the standing of the applicant late in the day. The court found that a company attempting to establish solvency may produce evidence that the debt on which the demand is based is genuinely disputed, but it cannot lead such evidence unless leave to do so is obtained under Section 459S. The court also considered relevant case law and concluded that the dispute about the debt was clearly material to proving whether or not the company was solvent.

However, the court found that the respondent had not discharged the onus of proving solvency on the basis of the limited and questionable evidence available. The court was satisfied that the presumption of insolvency prevailed and that it was appropriate to order the respondent be wound up.