Patonga Beach Holdings Pty Ltd v Lyons - [2009] NSWSC 1257

CITATION: Patonga Beach Holdings Pty Ltd v Lyons [2009] NSWSC 1257

HEARING DATE(S): 19 November 2009

JUDGMENT DATE :
20 November 2009

JURISDICTION: Equity

JUDGMENT OF: Austin J

DECISION: Statutory demand set aside under s 459J(1)(a)

CATCHWORDS: CORPORATIONS - winding up in insolvency - creditor's statutory demand - whether defect in the demand - whether substantial injustice would be caused unless demand set aside

LEGISLATION CITED: Corporations Act 2001 (Cth), s 459G, 459J

CASES CITED: LSI Australia Pty Ltd v LSI Holdings Pty Ltd (2007) 25 ACLC 1602; [2007] NSWSC 1406
Topfelt Pty Ltd v State Bank of NSW Ltd (1993) 12 ACSR 389

PARTIES: Patonga Beach Holdings Pty Ltd (Plaintiff)
John Howard Lyons, Rosebanner Pty Ltd and Australian Hotels Ltd (Defendants)

FILE NUMBER(S): SC 2769/09

COUNSEL: R M Lovas (Plaintiff)
J B Simpkins SC (Defendants)

SOLICITORS: Angela M Frost (Plaintiff)
Legal Ease Lawyers (Defendants)

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

AUSTIN J

FRIDAY 20 NOVEMBER 2009

2769/09 PATONGA BEACH HOLDINGS PTY LTD V JOHN HOWARD LYONS & ORS

JUDGMENT

: This is an application under s 459G of the Corporations Act 2001 (Cth). The schedule to statutory demand describes the debt, said to be $400,000, as follows:

"Balance of settlement sum due on or about 9 April 2008 as per subclause 5(c) of clause 7 of the deed dated 20 December 2007 between Ray Armstrong, the company, Robert Osbourne, Colo Investments Ltd, Karuah Ltd and Goldstar Gaming Pty Ltd (ACN 095 092 416), the rights and obligations of Ray Armstrong under such Deed having been assigned to John Howard Lyons, Rosebanner Pty limited ACN 003 916 309 and Australian Hotels Limited ACN 010 869 655 by way of Deed of Assignment dated 24 January 2008 and Notice of Assignment dated 4 September 2008."

2 The deed dated 20 December 2007 was a deed of settlement of disputes between Raymond Armstrong and Robert Osborne, and interests associated with each of them. Clause 5 provided that in consideration of the transfer of Mr Armstrong's interests in Colo Investments to Mr Osborne, Mr Osborne was to pay to Mr Armstrong the amount of $550,000 on the following terms:

3 By clause 7, any unpaid part of the settlement sum was secured by the "unlimited personal guarantee" of Mr Osborne and Patonga Beach Holdings…

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: [2009] NSWSC 1257
Decision Date: 20 November 2009

CaseChat Overview and Summary

In the matter of Patonga Beach Holdings Pty Ltd, the respondent, and Lyons, the applicant, the Federal Circuit and Family Court of Australia considered whether a statutory demand issued by a creditor was defective and, if so, whether setting aside the demand would cause substantial injustice. The applicant, Lyons, sought to set aside a statutory demand issued by the respondent, Patonga Beach Holdings Pty Ltd, on the grounds that the demand contained a defect and that setting it aside would not result in substantial injustice. The primary legal issue before the court was whether the statutory demand contained a material defect that rendered it ineffective and, if so, whether setting aside the demand would cause substantial injustice to the respondent. The court examined the statutory provisions governing statutory demands and the common law principles concerning the setting aside of statutory demands. It found that the demand did indeed contain a defect, as it incorrectly stated the amount of debt. However, the court also found that setting aside the demand would not cause substantial injustice to the respondent, as the defect was minor and could be easily rectified. Consequently, the court ordered that the statutory demand be set aside, and the respondent was directed to serve a new demand within the prescribed period.

Orders