Growth Equities Corporation Ltd v Genesis Growth Investments Pty Ltd

Growth Equities Corporation Ltd applied to the Federal Court to set aside a statutory demand issued by Genesis Growth Investments Pty Ltd. The demand was issued pursuant to section 459E of the Corporations Act 2001 (Cth). Genesis claimed that Growth Equities owed it $428,000. Growth Equities denied owing the debt, arguing that the amount claimed was overstated and that there were other debts owed by Genesis to Growth Equities that should be offset against the demand. The court had to determine whether there was a genuine dispute as to the existence or the amount of the debt, and whether it was just and equitable to set aside the demand.

The court considered the evidence and submissions of both parties. It found that there was an obvious dispute over the existence of the debt, and that the dispute was obviously genuine. The court held that the demand should be set aside, and that it was an appropriate case for indemnity costs because the statutory demand was issued without reasonable cause. The court noted that the statutory demand was issued despite Growth Equities' written request for clarification and evidence of the debt, and despite the existence of other debts owed by Genesis to Growth Equities.

The court ordered that the statutory demand be set aside, and that Genesis pay Growth Equities' costs of the application on an indemnity basis. The court also ordered that the parties bear their own costs of the appeal. The court held that the statutory demand was issued without reasonable cause, and that it was an appropriate case for indemnity costs. The court emphasised the importance of creditors providing reasonable evidence of the debt when issuing a statutory demand, and the need for debtors to respond promptly and properly to such demands.