Gelor Pty Ltd v Magic Star (WA) Pty Ltd

Gelor Pty Ltd sought an order for the winding up of Magic Star (WA) Pty Ltd based on the latter's failure to comply with a statutory demand. The primary legal issue was whether Magic Star was entitled to leave to dispute the debt claimed in the statutory demand under s 459S of the Corporations Law. The court had to determine whether Magic Star's grounds for disputing the debt were material to proving its solvency and whether the company's conduct in failing to challenge the demand within the statutory timeframe was reasonable.

The court found that Magic Star had not provided sufficient evidence to satisfy the requirement that its grounds for disputing the debt were material to proving solvency. The court also concluded that Magic Star had not acted reasonably in failing to challenge the demand within the 21-day period, particularly given that the demand was served during the Christmas/New Year holiday period. The court was not persuaded by Magic Star's explanations for its delay in responding to the statutory demand. The court further noted that Magic Star had not provided adequate evidence to support its claim of solvency, such as income tax returns or documents from regulating bodies. Given these findings, the court refused leave to Magic Star under s 459S and ordered the winding up of the company.