Gramwick Investments Pty Ltd v Advanced Underpinning Pty Ltd

[2000] NSWSC 1131

Reported Decision: [2001] 19 ACLC 593

New South Wales

Supreme Court

CITATION:	Gramwick Investments Pty Ltd v Advanced Underpinning Pty Ltd [2000] NSWSC 1131
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 4356/00
HEARING DATE(S):	1 December 2000
JUDGMENT DATE:	1 December 2000
PARTIES :	Gramwick Investments Pty Limited (P) Advanced Underpinning Pty Limited (D)
JUDGMENT OF:	Hamilton J

COUNSEL :	D R Stack (P) No appearance (D)
SOLICITORS:	Ian D Elvy & Associates (P) No appearance (D)
CATCHWORDS:	CORPORATIONS [211] - Winding up by Court - Grounds for winding up - Insolvency - Application to set aside demand - Extension of time and generally - "May only" be made within limited time - No power to extend time - Whether Court may grant injunction to restrain filing of winding up summons as abuse of process where genuine dispute as to debt and company solvent.
LEGISLATION CITED:	Corporations Law s 459G Evidence Act 1995 s 160
CASES CITED:	David Grant & Co Pty Limited v Westpac Banking Corporation (1995) 184 CLR 265 Re J & E Holdings Pty Ltd and the Corporations Law: J & E Holdings Pty Ltd v Vaughan (1995) 36 NSWLR 541
DECISION:	Injunction to restrain filing of winding up summons granted.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

FRIDAY, 1 DECEMBER 2000

4356/00 GRAMWICK INVESTMENTS PTY LTD v ADVANCED UNDERPINNING PTY LTD

JUDGMENT

1 HIS HONOUR: The defendant company by an originating process filed on 25 October 2000 (“the OP”) made application under s 459G of the Corporations Law for an order that a statutory demand dated 6 September 2000 served on it by the defendant on 6 October 2000 be set aside. As appears from the dates stated above the application was filed within the time limited for the filing of such applications. However, it was served by post and, as a result, the time at which the application and the affidavit supporting it were deemed to be served was outside the statutory time: see Evidence Act 1995 s 160. In those circumstances it appears to me that its application to set aside the statutory demand cannot succeed: David Grant & Co Pty Limited v Westpac Banking Corporation (1995) 184 CLR 265.

2    With this in mind Mr Stack, of counsel for the plaintiff, applied to the Court instead for an injunction restraining the defendant from filing a winding up summons based upon the statutory demand on the ground that the filing of that summons would be an abuse of the process of this Court. The evidentiary material on which he relies in support of that application is affidavit evidence showing that there is a genuine dispute as to the debt on which the demand is based and that the company is able to pay that debt and is otherwise solvent, so that it would be an abuse of process for a winding up summons, with all its potential consequences, to be taken out against a company in that position. The evidence in support of the proposition that there is a genuine dispute is perhaps not the most precise. The claim is for a debt of some $35,000 for the doing of work in underpinning a retaining wall. The defendant contracted to do this work for the plaintiff in September 1999, the work to be concluded by October 1999. The work, however, was not concluded until early 2000. Furthermore, the contract price was some $26,000 and no more and the invoice sent was for some $35,000. As to the difference of $9,000, the plaintiff has undoubtedly established a genuine dispute. The less satisfactory part of the evidence deals with its claim to have a set-off against the first $26,000 of the debt. However, it says that it does have a set-off arising out of the manner of doing the work and its lateness. Its case is made the easier by the fact that the defendant did not appear when the OP was first returned before the Court on 23 November 2000 to argue against the proposition that there was not a genuine dispute as to the whole of the debt. On that day I granted an injunction up to and including today, but declined to grant the injunction in permanent form because, in view of the form of the OP, the defendant did not have notice that a permanent injunction restraining the filing of a winding up summons was sought. That notice that such an application was intended to be made today was served on the defendant along with notice of my earlier order has been proved. The defendant again has not appeared to resist the grant of a permanent injunction. The evidence of the solvency of the defendant is in one sense not entirely satisfactory. Apparently no balance sheet later than 30 June 1996 can be produced to the Court. However, it has been sworn, with some documentary corroboration, that the defendant company has some $100,000 in a bank account and no debts other than the debt to the defendant, which is denied.

3 In David Grant supra the High Court held to be inflexible the regime as to service of statutory demands and their setting aside created under Part 5.4 of the Corporations Law. In that regard Gummow J, delivering a judgment which was concurred in by the other members of the High Court bench, said as follows at 279:

“No doubt, in some circumstances, the new Pt 5.4 may appear to operate harshly. But that is a consequence of the legislative scheme which has been adopted to deal with perceived defects in the pre-existing procedure in relation to notices of demand. It also may transpire that a winding up application in respect of a solvent company is threatened or made for an improper purpose which amounts to an abuse of process in the technical sense of that term, as explained in Williams v Spautz (1992) 174 CLR 509 at 518 - 522, 532 - 537. However, in an appropriate case, injunctive relief may then be available to the company in a court of general equity jurisdiction: Bryanston Finance v de Vries (No 2) [1976] Ch 63; L & D Audio Acoustics Pty Ltd v Pioneer Electronic Australia Pty Ltd (1982) 7 ACLR 180; 1 ACLC 536; Pacific Communication Rentals Pty Ltd v Walker (1993) 12 ACSR 287; 12 ACLC 5; and Re J & E Holdings Pty Ltd (1995) 36 NSWLR 541.”

Earlier the same year in Re J & E Holdings Pty Ltd and the Corporations Law : J & E Holdings Pty Ltd v Vaughan (1995) 36 NSWLR 541 Sheller JA had said at 548:

“While there is no reason for us to decide the point, I do not think that Pt 5.4 in any way inhibits the court exercising its inherent jurisdiction to prevent an abuse of its process by the institution of proceedings for an improper purpose: see generally, Williams v Spautz (1992) 174 CLR 509 at 518 and following.”

4    In the present case I find it has been established that there is a genuine dispute as to the whole of the debt claimed by the defendant as the foundation for the notice of demand and that the plaintiff is both solvent and has adequate funds to meet the defendant's claim if it is proved in appropriate litigation. I hold that it would be an abuse of the process of this Court for a winding up summons to be filed to wind up the company. In those circumstances I am prepared to grant the relief as now sought. There will be orders in accordance with the form of orders initialled by me and placed with the papers.

…oOo…

Last Modified: 03/27/2001