LawCover Pty Ltd v Swart - [2007] NSWSC 306

CITATION: LawCover Pty Ltd v Swart [2007] NSWSC 306

HEARING DATE(S): 02/04/07

JUDGMENT DATE :
5 April 2007

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Summary judgment for plaintiff on claim for order setting aside statutory demand

CATCHWORDS: CORPORATIONS - winding up - statutory demand - application for order setting aside statutory demand - demand based on alleged judgment debt - no accompanying affidavit - where party serving demand had obtained money judgment against solicitor and declaration that solicitor's insurance responded - whether "judgment debt" owed by insurer to party serving demand

LEGISLATION CITED: Bankruptcy Act 1966 (Cth), s.117
Corporations Act 2001 (Cth), ss.459E(3), 459G
Insurance Contracts Act 1984 (Cth), s.51
Supreme Court Act 1970, s.75
Uniform Civil Procedure Rules 2005, rule 13.1

CASES CITED: David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Re Harrington Motor Co Ltd [1928] Ch 105
Swart v Carr; Swart v LawCover Pty Ltd [2006] NSWSC 1302
Victor Tunevitsch Pty Ltd v Farrow Mortgage Services Pty Ltd (1994) 14 ACSR 565

PARTIES: LawCover Pty Limited - Plaintiff
Daniel Frederick Swart - Defendant

FILE NUMBER(S): SC 1657/07

COUNSEL: Mr D.R. Pritchard - Plaintiff
Defendant in person

SOLICITORS: Ebsworth & Ebsworth Lawyers - Plaintiff
Defendant in person

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

THURSDAY, 5 APRIL 2007

1657/07 LAWCOVER PTY LIMITED v DANIEL FREDERICK SWART

JUDGMENT

1 I am dealing with an interlocutory process filed by the plaintiff (“LawCover”) on 20 March 2007. LawCover seeks, pursuant to rule 13.1 of the Uniform Civil Procedure Rules 2005, summary disposal of the proceedings by way of an order granting summary judgment for the plaintiff.

2 LawCover maintains that the defendant (“Mr Swart”) has no conceivable defence to LawCover’s substantive claim, which is a claim under s.459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand served on LawCover by Mr Swart.

3 The statutory demand is dated 13 February 2007 and was served on that day. The alleged debt to which the demand relates is described in its schedule which is as follows:

“SCHEDULE

Description of the debt Amount of the debt

Total Amount $1,164,917.43

4 No affidavit of the kind contemplated by s.459E(3) accompanied the statutory demand. Since that provision requires an accompanying affidavit “[u]nless the debt … is a judgment debt”, the absence of an affidavit reinforces the assertion in the statutory demand itself that the alleged debt on which Mr Swart relies is a judgment debt owed by LawCover to him. Indeed, if there is a debt but it is not a judgment debt, the entire absence of accompanying affidavit would…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] NSWSC 306
Decision Date: 5 April 2007

CaseChat Overview and Summary

The applicants, LawCover Pty Ltd, sought an order setting aside a statutory demand served by the respondent, Swart. The statutory demand was based on an alleged judgment debt, but no affidavit accompanied the demand. Swart had previously obtained a money judgment against a solicitor, along with a declaration that the solicitor's insurance company responded for the judgment debt. The applicants argued that the demand was not valid because it did not identify the judgment debt as owing by the insurer to Swart. The central legal issue was whether the statutory demand was properly founded on a judgment debt, specifically identifying the insurer's liability to Swart.

The court examined whether the statutory demand was validly issued under section 459E(1) of the Corporations Act, which requires the debt to be a judgment debt. The court noted that for a statutory demand to be valid, the debt must be a liquidated sum ascertained by judgment. Here, the court had to determine if the judgment debt identified in the demand was accurately attributed to the insurer's liability to Swart. The court found that the demand did not clearly identify the insurer's liability as the judgment debt, which was essential for the statutory demand to be valid. As a result, the applicants' argument that the statutory demand was not based on a proper judgment debt was upheld.

Consequently, the court allowed the application to set aside the statutory demand. The court held that the statutory demand was invalid because it did not correctly identify the judgment debt as owing by the insurer to the party serving the demand. The court's decision reinforced the requirement for precise identification of judgment debts in statutory demands to ensure they are properly founded. The applicants' application was successful, and the statutory demand was set aside.

The court ordered that the statutory demand be set aside and that LawCover Pty Ltd recover their costs of the application.

Orders