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Chadmar Enterprises Pty Ltd v IGA Distribution Pty Ltd

Chadmar Enterprises Pty Ltd v IGA Distribution Pty Ltd

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CHADMAR ENTERPRISES PTY LTD v IGA DISTRIBUTION PTY LTD
[2005] ACTSC 39 (10 May 2005)

CORPORATIONS LAW – application to dismiss statutory demand notice – affidavit verifying debt predates demand notice – whether demand notice complies with statutory requirements – whether a defect in demand or a defect in affidavit – whether pre-dated affidavit sufficient to set aside demand notice or whether a need for “substantial injustice” – whether a “genuine dispute” constitutes “substantial injustice”.

Corporations Act 2001 (Cth), ss 459E, 459G, 459H, 459J, 459S, 467A, 1322
Supreme Court (Corporations) Rules 2003 (ACT), r 2.6
Supreme Court Rules 1970 (NSW) r 5.2, Pt 38

David Grant & Co Pty Ltd v WestpacBanking Corp (1995) 184 CLR 265
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452
Topfelt Pty Ltd v State Bank of New South Wales Ltd (1993) 47 FCR 226
B & M Quality Constructions Pty Ltd v Buyrite Steel Supplies Pty Ltd (1994) 15 ACSR 433
Kezarne Pty Ltd v Sydney Asbestos Removal Services Pty Ltd (1998) 29 ACSR 11
Dolvelle Pty Ltd v Australian Macfarms Pty Ltd (1998) 43 NSWLR 717
Dornay Nominees Pty Ltd v Blackbutt Nominees Pty Ltd (2001) 36 ACSR 749
Technology Licensing Ltd v Climit Pty Ltd [2002] 1 Qd R 566
McDermott Projects Pty Ltd v Chadwell Pty Ltd [2002] 2 Qd R 363
Wildtown Holdings Pty Ltd v Rural Traders Company Ltd (2002) 172 FLR 35
Ambir Pty Ltd v Perfect Touch Painting Services Pty Ltd [2003] NTSC 21 (18 March 2003)
Peak Hill Manganese Pty Ltd v HydraplantEquipment Pty Ltd (2003) 179 FLR 382
Tokich Holdings Pty Ltd v Sheraton Construction NSW Pty Ltd(in liq.) (2004) 22 ACLC 955
Lester v Garland (1808) 15 Ves. 248
Clarke v Bradlaugh (1881) 8 Q.B.D. 63
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452
Graywinter Properties Pty Ltd v Gas and Fuel Corporation Superannuation Fund (1996) 70 FCR 452
Goldspar Australia Pty Ltd v KWA Design Group Pty Ltd (1999) 17 ACLC 456

No. SC 657 of 2004

Judge: Higgins CJ
Supreme Court of the ACT
Date: 10 May 2005

IN THE SUPREME COURT OF THE       )
  )          No. SC 657 of 2004
AUSTRALIAN CAPITAL TERRITORY    )

BETWEEN:CHADMAR ENTERPRISES PTY LTD (ACN 008 613 974)
Plaintiff

AND:IGA DISTRIBUTION PTY LTD
(ACN 004 391 422)
Defendant

ORDER

Judge:  Higgins CJ
Date:  10 May 2005
Place:  Canberra

THE COURT ORDERS THAT:

The statutory demand notice be set aside.

This is an application to set aside a statutory demand notice issued 7 September 2004. The application was dated 1 October 2004 and supported by two affidavits of that same date.

Mr Erskine, for the applicant plaintiff (Chadmar), contended that the demand itself was defective and was not validly supported. This is because the demand notice was issued on 7 September 2004; the affidavit purporting to support…

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: [2005] ACTSC 39
Decision Date: 10 May 2005

CaseChat Overview and Summary

Chadmar Enterprises Pty Ltd applied to the Federal Circuit Court of Australia to dismiss a statutory demand notice issued by IGA Distribution Pty Ltd. The demand notice, under section 459E of the Corporations Act 2001, sought payment of a debt of $113,466.12, with a deadline of 21 days for the debtor to either pay the debt or dispute it. The applicant argued that the demand notice was invalid due to a defect in the affidavit verifying the debt, which was dated before the demand notice itself. The applicant contended that this pre-dating of the affidavit rendered the demand notice non-compliant with the statutory requirements of section 459G(2)(a) of the Act.

The court had to determine whether the defect in the demand notice or the affidavit was the primary issue and whether the pre-dating of the affidavit constituted a defect in the demand notice. Additionally, the court examined whether the defect in the affidavit was sufficient grounds to set aside the demand notice or if it needed to be accompanied by a showing of "substantial injustice" to the debtor. The court also considered whether a "genuine dispute" about the debt could be construed as "substantial injustice."

The court found that the defect in the affidavit, due to its pre-dating, was a significant issue that rendered the demand notice invalid. The court held that a pre-dated affidavit did not satisfy the statutory requirements, and the defect in the demand notice was sufficiently grave to warrant its dismissal. The court noted that while a genuine dispute over the debt could constitute substantial injustice, in this case, the defect in the affidavit alone was enough to set aside the demand notice. Consequently, the court ordered that the statutory demand notice be set aside.

Orders

Orders of the court

The statutory demand notice be set aside.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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