In the matter of Longjing Pty Ltd

Longjing Pty Ltd sought to set aside a statutory demand in the Federal Circuit and Family Court of Australia. The demand was issued by a creditor, accompanied by a notice under the Service and Execution of Process Act 1992. The primary legal issue was whether the inclusion of the SEPA notice, which was unnecessary, constituted a sufficient "other reason" to set aside the statutory demand under section 459J(1)(b) of the Corporations Act 2001. Additionally, the court had to determine if the applicant had met its burden of showing that the debt was not presently due and payable due to a "standstill" agreement between the parties, and whether the applicant had acted expeditiously in pursuing litigation against a third party.

The court examined the nature of the statutory demand and the circumstances surrounding the SEPA notice. It held that the applicant had not been misled by the unnecessary SEPA notice and had timely filed its application to set aside the demand. The court also considered the onus on the applicant to demonstrate a plausible contention that the debt was not presently due and payable, due to the "standstill" agreement. The court found that the applicant had not discharged its burden, as it had not established that it had pursued litigation against a third party expeditiously. Furthermore, the court noted that the standard of proof to set aside a demand for an "other reason" under section 459J(1)(b) required a showing of a plausible contention rather than a likelihood of success.

The court dismissed the application to set aside the statutory demand, finding that the applicant had not satisfied the required standard of proof. The court also determined that the inclusion of the SEPA notice, despite being unnecessary, did not constitute an "other reason" to set aside the demand. The applicant was ordered to pay the creditor’s costs of the proceeding.