In the matter of Harmon International Holdings Pty Ltd

Harmon International Holdings Pty Ltd sought to wind up a company through a statutory demand, which was contested by the company. The defendant argued that it had been subrogated to the mortgagee’s rights upon the discharge of the plaintiff’s mortgage. The plaintiff contested the defendant's involvement in the transaction and its entitlement to subrogation. The court had to determine whether the defendant's claims constituted a genuine dispute about the existence of the debt claimed by the plaintiff.

The court examined the admissibility of a transcript of the liquidator's examination under section 591(14) of the Corporations Act 2001 (Cth) and its applicability under the Evidence Act 1995 (NSW). The court found that the hearsay rule did not exclude the admissibility of the transcript. Additionally, the court considered the applicability of the hearsay rule in the context of setting aside a statutory demand, determining that second-hand hearsay was admissible if it identified the existence of a genuine dispute. The court also applied the rule in Jones v Dunkel to determine the inferences that could be drawn from the evidence presented.

The court concluded that the defendant had established a genuine dispute about the existence of the debt, primarily due to the plaintiff’s dispute over the defendant's involvement in the transaction and its entitlement to subrogation. As such, the statutory demand was set aside. The court found that the evidence, including the transcript of the liquidator's examination, supported the defendant's claims of a genuine dispute. The court did not speculate on the broader implications of the ruling but focused solely on the facts presented in this particular case.