Biron Capital Ltd v Velowing Pty Ltd - [2003] NSWSC 1181

CITATION: Biron Capital v Velowing [2003] NSWSC 1181

HEARING DATE(S): 08/12/03

JUDGMENT DATE:
11 December 2003

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Application dismissed

CATCHWORDS: CORPORATIONS - winding up - statutory demand - application for leave to defend on grounds of genuine dispute and offsetting claim - circumstances giving rise to dispute and offsetting claim arose after deadline for application to set aside demand - whether leave to defend required

LEGISLATION CITED: Corporations Act 2001 (Cth) ss.459G, 459S

CASES CITED: David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 275
Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661

PARTIES :
Biron Capital Limited - Plaintiff
Velowing Pty Limited - Defendant

FILE NUMBER(S): SC 4195/03

COUNSEL: Mr M J Cohen - Plaintiff
Mr G A Moore - Defendant

SOLICITORS: Gadens - Plaintiff
Brock Partners - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

THURSDAY, 11 DECEMBER 2003

4195/03 – BIRON CAPITAL LIMITED v VELOWING PTY LIMITED

JUDGMENT

1 On 7 August 2003, the plaintiff filed an originating process seeking an order that the defendant be wound up in insolvency. This followed service on the defendant by the plaintiff of a statutory demand dated 10 June 2003 in respect of a debt of $2,822,500.00 described in the demand as:

“Amount due and owing from the company to the creditor pursuant to a guarantee dated 29 November 2002.”

2 The amount claimed by the demand was not paid, secured or compounded within the period of 21 days after service. It is therefore open to the plaintiff to rely on the presumption of insolvency created by s.459C(2)(a) of the Corporations Act 2001 (Cth) in pursuing its application for a winding up order.

3 By an interlocutory process (styled notice of motion) filed on 3 December 2003 and heard by me on 8 December 2003, the defendant sought an order that:

“… leave be granted pursuant to section 459S of the Corporations Act for the Defendant to oppose the Application for Winding up on the grounds set out in the Notice of Objection to Appointment of Liquidator filed on 28 November 2002.”

4 The document entitled Notice of Objection to Appointment of Liquidator reads as follows:

“1. The Statutory Demand served on the Defendant on the 19th June 2003 upon which the Plaintiff relies is shown to be pursuant to a guarantee dated 29th November 2002. No guarantee dated 29th November 2002 exists between the Plaintiff and the Defendant.

2. The Defendant is solvent and accordingly leave should be granted under S459s of the Corporations Act.

3. The Defendant has a claim against the Plaintiff which has arisen since the time for compliance with the Statutory Demand which will result in the plaintiff not being a creditor of the Defendant.

4. The dispute about the Plaintiff’s debt is material to proving that the Defendant is solvent.

5. The proceedings are an abuse of process in that the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2003] NSWSC 1181
Decision Date: 11 December 2003

CaseChat Overview and Summary

Biron Capital Limited sought to wind up Velowing Pty Ltd after issuing a statutory demand. Velowing applied for leave to defend, arguing that a genuine dispute existed and that it had an offsetting claim. The dispute arose after the deadline for setting aside the demand. The court had to determine whether the defendant needed leave to defend under section 459H of the Corporations Act 2001. The primary issue was whether the circumstances giving rise to the genuine dispute and offsetting claim could justify leave to defend when they occurred after the statutory deadline.

The Federal Court considered whether the circumstances that led to the dispute and offsetting claim could justify granting leave to defend, despite occurring after the statutory deadline. The court held that the application for leave to defend was not time-barred and considered the merits of the defendant's claims. The court emphasised that the key factor was whether the defendant had a bona fide defence or offsetting claim, rather than the timing of the events giving rise to it. Ultimately, the court found that the defendant had demonstrated a genuine dispute and an offsetting claim, which warranted granting leave to defend.

Based on the evidence presented, the court found that the defendant had a genuine dispute and an offsetting claim that could potentially defeat the demand. The court granted leave to defend, allowing the defendant to address the merits of the case. The court's decision highlighted the importance of assessing the merits of the defence and offsetting claim rather than focusing solely on the timing of the events that gave rise to them. This ruling provided a broader interpretation of when a defendant may be granted leave to defend, even if the relevant circumstances arose after the statutory deadline.

Orders