Radiancy (Sales) Pty Ltd v Bimat Pty Ltd

[2007] NSWSC 962

Reported Decision: (2007) 25 ACLC 1,216

New South Wales

Supreme Court

CITATION:	Radiancy (Sales) Pty Limited v Bimat Pty Limited [2007] NSWSC 962
HEARING DATE(S):	5 & 6 June 2007
JUDGMENT DATE :	31 August 2007
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	White J
DECISION:	See para 84 of judgment
CATCHWORDS:	CORPORATIONS – Winding up in insolvency – Failure to comply with statutory demand –No application to have statutory demand set aside within time-limit – Factors to be taken into account in determining whether to grant leave under s 459S of the Corporations Act 2001 (Cth) to oppose winding-up application – Leave granted to oppose winding up application – Application for summary dismissal of originating process on grounds of abuse of process – Party who is not a creditor has no standing to bring winding-up proceedings – Creditor’s standing not established where leave has been granted to oppose winding-up application on ground that debt genuinely disputed – Pursuit of winding-up application absent standing constitutes abuse of process – Order that originating process be dismissed. - PRACTICE AND PROCEDURE – Abuse of process – Institution of parallel proceedings not ipso facto an abuse of process.
LEGISLATION CITED:	Corporations Act 2001 (Cth) Supreme Court (Corporations) Rules 1999 (NSW)
CASES CITED:	Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661 House of Tan Pty Ltd v Beachiris Pty Ltd (1996) 21 ACSR 527 State Bank of NSW v Tela Pty Ltd (No. 2) (2002) 188 ALR 702; [2002] NSWSC 20 Braams Group Pty Ltd v Miric (2002) 171 FLR 449; (2002) 44 ACSR 124 Chief Commissioner of Stamp Duties v Paliflex (1999) 149 FLR 179; (1999) 17ACLC 467 Bibby Financial Services Australia Pty Ltd v Wolf Industries Australia Pty Ltd (2004) 182 FLR 49; [2004] NSWSC 134 Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 132 FLR 300; (1996) 14 ACLC 1095 B & M Quality Constructions Pty Ltd v Buyrite Steel Supplies Pty Ltd (1994) 15 ACSR 433; (1994) 13 ACLC 88 Delta Beta Pty Ltd v Vissers (1996) 20 ACSR 583 Anderson Formrite Pty Ltd v CASC Hire Pty Ltd (2005) 147 FCR 379; (2006) 24 ACLC 154 Hamilhall Pty Ltd (in liq) v AT Phillips Pty Ltd (1994) 54 FCR 173 Dolvelle Pty Ltd v Australian Macfarms Pty Ltd (1998) 43 NSWLR 717 Victorian Workcover Authority v Kay’s Pty Ltd (2001) 39 ACSR 281 Williams v Spautz (1992) 174 CLR 509 Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd (2007) 61 ACSR 441; (2007) 25 ACLC 230 Mann v Goldstein [1968] 1 WLR 1091; [1968] 2 All ER 769 CVC Investments Pty Ltd v P & T Aviation Pty Ltd (1989) 18 NSWLR 295 Roy Morgan Research Center Pty Ltd v Wilson Market Research Pty Ltd (1996) 39 NSWLR 311 Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) (2004) 185 FLR 130; (2004) 22 ACLC 955 Masri Apartments Pty Ltd (in liq) v Perpetual Nominees Ltd (2004) 22 ACLC 1,411; (2004) 209 ALR 86 L & D Audio Acoustics Pty Ltd v Pioneer Electronics Australia Pty Ltd (1982) 1 ACLC 536; (1982) 7 ACLR 180 Redglove Holdings Pty Ltd v GNE & Associates Pty Ltd (2001) 165 FLR 72; [2001] NSWSC 867 Brolrik Pty Ltd v Sambah Holdings Pty Ltd (2001) 164 FLR 91; (2001) 40 ACSR 361 Portfolio Projects Pty Ltd v Oakes Building Co. Pty Ltd (1987) 5 ACLC 911
PARTIES:	Radiancy (Sales) Pty Limited v Bimat Pty Limited
FILE NUMBER(S):	SC 1517/07
COUNSEL:	Applicant: P Cutler Respondent: D Bernie
SOLICITORS:	Applicant: Access Business Lawyers Respondent: Williams the Law Firm

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

WHITE J

Friday, 31 August 2007

1517/07 Radiancy (Sales) Pty Limited v Bimat Pty Limited

JUDGMENT

1 HIS HONOUR: This is an application by the defendant, Bimat Pty Limited (“Bimat”), for leave under s 459S of the Corporations Act 2001 (Cth) to oppose a winding-up application on grounds that it could have relied on had it applied to set aside the statutory demand. Bimat also seeks an order that the winding-up application be summarily dismissed.

2 Bimat’s interlocutory process was listed at the same time as the plaintiff’s (“Radiancy (Sales)’s”) originating process to wind up Bimat on the ground of insolvency. In its application to wind up on the ground of insolvency, Radiancy (Sales) relies on the failure of Bimat to comply with the statutory demand. I heard Bimat’s interlocutory process in advance of Radiancy (Sales)’s application to wind up Bimat in insolvency (Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661 at 676 [65]).

3 The grounds upon which Bimat seeks to oppose the winding-up application and to have the winding-up application summarily dismissed are that:

(a) Radiancy (Sales) is not a creditor of Bimat;

(b) the statutory demand was fraudulent;

(c) although the statutory demand was apparently accompanied by an affidavit, in truth, the document described as an affidavit was not an affidavit. No oath or affirmation was administered by a person authorised to do so, and the signature of the purported attesting witness was forged. It followed, so it was contended, that the demand was not a statutory demand;

(d) Radiancy (Sales) had instituted proceedings in the District Court of New South Wales for recovery of the alleged debt; and

(e) it is an abuse of process to use the winding-up proceedings to seek to recover a disputed debt.

Background Events

4 The statutory demand is dated 24 November 2006. Radiancy (Sales) claimed that Bimat owed it $528,000. This debt was described as follows:

” Description of the debt
For 12 HairStation Phototherapy devices sold, supplied and delivered at the request of Bimat Holdings Pty Limited and fully particularised in Invoices, 60912a, 60912b, 60912c and 60912d for the following amounts:
Invoice 60912a, three devices $132,000
Invoice 60912b, three devices $132,000
Invoice 60912c, three devices $132,000
Invoice 60912d, three devices $132,000
The goods have been delivered by TNT, accepted and used by the Company and the debt remains unpaid.
Total Amount of the debt $528,000 ”

5 The demand was signed by Ms Bianca Campbell who described herself as Accounts Officer of Radiancy (Sales). The document was accompanied by a document described as an affidavit. Except in minor respects, it apparently conformed with the requirements of an affidavit accompanying a statutory demand (s 459E(3); Supreme Court (Corporations) Rules 1999 (NSW), r 5.2 and form 7). It was signed by Ms Campbell in the space for the deponent’s signature against the notation “sworn at Tweed Heads on 24th November 2006”. Her signature was purportedly witnessed by an M Simpkins JP. That purported signature was placed on the document in the space for the “signature and designation of person before whom deponent swears affidavit”.

6 In her purported affidavit accompanying the demand, Ms Campbell said that she was familiar with the sales and record-keeping of Radiancy (Sales) and familiar with the details surrounding the sale and delivery of the goods to Bimat in respect of debts totalling $528,000 owed by Bimat for the supply of twelve Hair Station Phototherapy devices, delivered to Bimat in Auburn, and particularised in invoices 60912a, 60912b, 60912c and 60912d issued to Bimat. She stated that she was the person who, on behalf of Bimat, had arranged for delivery of the goods to TNT Freight Depot in Southport, Queensland, and issued to Bimat invoices and demands for payment.

7 The statutory demand was received at the registered office of Bimat on 1 December 2006 by post. It was accompanied by four other statutory demands addressed to Bimat. One dated 24 November 2006 was for $192,500 claimed to be owed by Bimat to Radiancy (Australia) Pty Ltd (“Radiancy Australia”). That demand was signed by a Mr Paul McMahon who described himself as a director of Radiancy Australia. The affidavit accompanying that document appeared to bear the signature of Mr McMahon and to have been affirmed before M Simpkins JP. Another statutory demand addressed to Bimat was from Photofacial Pty Ltd. It was signed by Ms Campbell. The purported affidavit accompanying the demand was signed by her apparently before M Simpkins JP in Sydney on 24 November 2006. It claimed a debt of $264,000 for four SkinStation Phototherapy devices. Two further demands were made by LHE (Corp) Pty Ltd. One dated 20 November 2006 claimed a debt of $95,040 for the supply to Bimat of attachments to Radiancy SkinStation Phototherapy devices. Another dated 25 November 2006 claimed a debt of $55,040 for moneys claimed to have been lent to Bimat on 21 October 2006. Both demands were signed by a Ms Lyndsey Rawling. The affidavits accompanying the demands were purportedly witnessed by M Simpkins JP. Ms Rawling was the wife or partner of Mr McMahon.

8 Mr Peter Colosimo, a manager of Bimat, deposed that each of the demands was false.

9 Three further statutory demands were served at or about the same time on other companies associated with Bimat. A statutory demand dated 25 November 2006 by Mobile Skincare Solutions Pty Ltd signed by Ms Rawling was served on BeSmooth Pty Ltd claiming a debt of $16,725. A statutory demand dated 24 November 2006 by Ms Campbell was also served on BeSmooth Pty Ltd claiming a debt of $5,000 as moneys lent. A statutory demand dated 24 November 2006 was served on Cosmed Investments Pty Ltd by LHE (Corp) Pty Ltd claiming a debt of $8,580. It was signed by Ms Rawling. The affidavits accompanying the demands were purportedly witnessed by M Simpkins JP. All the signatures of M Simpkins JP are similar. Mr Colosimo claims that these demands were also false.

10 It was common ground that Bimat purchased fifteen phototherapy devices called “Radiancy Spa Touch II Photo Epilation Systems” from Radiancy Australia. Radiancy Australia was the distributor in Australia for Radiancy LHE phototherapy devices. Phototherapy devices are used for hair removal and for skin treatments. By 9 July 2006, Radiancy Australia had ceased to be the authorised distributor of these devices. However, Bimat was unaware that Radiancy Australia had lost the distribution rights. By a letter dated 18 July 2006 addressed to the directors of Bimat, and signed by Mr McMahon as Chief Executive Officer of Radiancy Australia, Mr McMahon wrote:

“ We ... acknowledge that you currently have several licensed ‘Hair Free’ salons in NSW which use the Luminex L 600 for hair removal and that you are purchasing the Spa Touch II for the purpose of Skin Rejuvenation, Acne Control and Psoriasis treatments. We acknowledge that you have disclosed that you can not use the Spa Touch II for hair removal as this will be in breach of your current license agreements with Hair Free.

As requested, I also confirm that Radiancy (Australia) will supply three different head pieces for Skin Rejuvenation, Acne Control and Psoriasis. We will provide full training on the use of the Spa Touch II and the applicance that each head piece can be used for. ”

11 It was common ground at the hearing before me that the fifteen phototherapy devices sold by Radiancy Australia could not be used for skin care, even with head pieces.

12 The cost of the fifteen phototherapy devices delivered by Radiancy Australia to Bimat were financed through the National Australia Bank. It became the owner of the equipment and leased them to Bimat.

13 The fifteen phototherapy machines were delivered by TNT Couriers to Bimat on 27 September 2006. Bimat contends that it was induced to arrange the purchase and lease of the fifteen phototherapy devices provided by Radiancy Australia by fraudulent representations made by Mr McMahon that the devices could be used for skin care, and by the non-disclosure that Radiancy Australia had lost its distribution rights.

14 Radiancy (Sales) contends that on 21 September 2006, it delivered another sixteen machines to Bimat. It contends that four of these machines were returned on 20 October 2006. Its statutory demand is for the unpaid price of the remaining twelve machines allegedly delivered on 21 September 2006.

15 Bimat contends that no machines were delivered except the fifteen machines supplied by Radiancy Australia. Those machines were paid for. Bimat says that it had no dealings with Radiancy (Sales). It denies receiving invoices raised by Radiancy (Sales).

Application under Section 459S

16 Section 459S of the Corporations Act provides:

“ 459S Company may not oppose application on certain grounds

(1) In so far as an application for a company to be wound up in insolvency relies on a failure by the company to comply with a statutory demand, the company may not, without the leave of the Court, oppose the application on a ground:
(a) that the company relied on for the purposes of an application by it for the demand to be set aside; or
(b) that the company could have so relied on, but did not so rely on (whether it made such an application or not).
(2) The Court is not to grant leave under subsection (1) unless it is satisfied that the ground is material to proving that the company is solvent. ”

17 Counsel for Bimat’s first submission was that the winding-up proceedings should be dismissed as an abuse of process. The grounds for that contention are set out at para [3] above.

18 Bimat cannot rely on those grounds unless it obtains leave pursuant to s 459S. Bimat could have relied upon all those grounds to set aside the statutory demand, except the ground that proceedings had been instituted for the recovery of the debt in the District Court. That ground is closely related to the grounds which dispute the existence of the debt. If, because of s 459S, Bimat is precluded from denying that it is a debtor of Radiancy (Sales), I doubt that it can maintain that it was an abuse of process for Radiancy (Sales) to make a claim for the debt in proceedings in the District Court and also to seek to wind up the company.

19 In House of Tan Pty Ltd v Beachiris Pty Ltd (1996) 21 ACSR 527, Brownie J held that a company could not avoid the operation of s 459S by contending that the winding-up application was an abuse of process because the debt of the person claiming to be a creditor was genuinely in dispute. If the company had not applied to set aside the statutory demand, it could not rely on that ground unless it obtained leave under s 459S. It did not follow that there may not be other grounds upon which a winding-up application could be stayed or dismissed as an abuse of process to which s 459S would be inapplicable. Such cases would be rare (State Bank of NSW v Tela Pty Ltd (No. 2) (2002) 188 ALR 702 at 706 [14]; [2002] NSWSC 20 at [14]).

20 Where the ground relied on as giving rise to an abuse of process is a ground which could have been availed of to have a statutory demand set aside, s 459S precludes the ground being raised unless leave is obtained under that section.

21 The opening words of s 459S appear to create a barrier to a company’s raising grounds for opposition to a winding-up application only insofar as that application relies on the company’s failure to comply with a statutory demand. The effect of failing to comply with the statutory demand is to create a presumption of insolvency (s 459C(2)(a)). However, the grant of leave under s 459S does not result in the statutory demand being set aside. Nor does it allow an application to be made out of time for the setting aside of the demand. The presumption of insolvency is not displaced by the grant of leave under s 459S (Braams Group Pty Ltd v Miric (2002) 171 FLR 449 at 455-456 [36]; (2002) 44 ACSR 124 at 130 [36]). It would defeat the purpose of Pt 5.4 if a company which has failed to set aside a statutory demand could, as a matter of right, dispute the plaintiff’s standing as a creditor on the hearing of the winding-up application. Hence, it has been decided that, unless leave is given pursuant to s 459S, a company which has not applied under s 459G to set aside a statutory demand cannot dispute the applicant’s standing as a creditor (Chief Commissioner of Stamp Duties v Paliflex (1999) 149 FLR 179 at 190-191 [35]-[39]; (1999) 17ACLC 467 at 478-479 [35]-[39]; State Bank of NSW v Tela Pty Ltd (No. 2); Braams Group Pty Ltd v Miric; Bibby Financial Services Australia Pty Ltd v Wolf Industries Australia Pty Ltd (2004) 182 FLR 49 at 53-54 [19]-[24]; [2004] NSWSC 134 at [19]-[24]).

22 In Chief Commissioner of Stamp Duties v Paliflex Pty Ltd, Austin J said (at 193 [49]):

“ [49] In my opinion the exercise of the discretion to grant leave under s459S(1) involves three considerations, namely:

(i) a preliminary consideration of the defendant's basis for disputing the debt which was the subject of the demand;
(ii) an examination of the reason why the issue of indebtedness was not raised in an application to set aside the demand, and the reasonableness of the party's conduct at that time; and
(iii) an investigation of whether the dispute about the debt is material to proving that the company is solvent. ”

Grounds for Disputing the Debt the Subject of the Statutory Demand

23 There is no question that the debt the subject of the statutory demand was genuinely disputed. It was disputed on two grounds. The first was a matter of sharp contest in which one side or the other was lying. The first ground was that the deliveries, which Radiancy (Sales) contended were deliveries of sixteen phototherapy devices to Bimat, were in fact deliveries of head pieces, cosmoceuticals and brochures to be used with the fifteen machines to be delivered by Radiancy Australia, which were delivered on 27 September 2006. The second ground for disputing the debt was that Bimat had no dealings with Radiancy (Sales). Its only dealings were with Mr McMahon of Radiancy Australia. Mr McMahon was not an officer of Radiancy (Sales). There was no evidence that he was acting on behalf of Radiancy (Sales) or that Bimat intended to deal with any company other than the company it thought was the distributor of Radiancy devices, namely, Radiancy Australia.

24 There is at least a genuine dispute that the goods claimed to have been sold and delivered were not delivered. Radiancy (Sales) contended that the goods were delivered by TNT Couriers on 21 September 2006 in two deliveries. The first is the subject of a consignment note numbered 785037960. The consignment note is for eight cartons of weights of approximately 10.6-12.1 kilograms. The consignment notes identify the sender as Radiancy Australia. The second delivery, also of eight cartons, made on that day also identifies the sender as Radiancy Australia. The consignment note is number 785037971. The cartons are each described as having weights of between 10.55 and 10.95 kilograms. These weights are generally consistent with the weights of the cartons which admittedly contained the fifteen phototherapy machines delivered on 27 September 2006. On 27 September 2006, there was also a delivery of seven silver brief cases for use with the phototherapy machines. These packages were significantly lighter and the cartons were smaller in size.

25 Mr Colosimo and Mr Bouzani of Bimat said that the eight cartons delivered on 21 September 2006 under consignment note 785037960 contained eight silver brief cases to go with the fifteen phototherapy devices to be supplied by Radiancy Australia, and also contained calibration machines and head pieces for acne removal, psoriasis, and skin rejuvenation. The delivery of eight cartons on 21 September 2006 under consignment note 785037971 was, according to Mr Colosimo, a delivery of promotional flyers and brochures to be used to advertise the machines. He proposed to advertise the machines to individual medical centres. In particular, he proposed to advertise the machines to 165 medical centres with whom his wife and her business partner had an association. Mr Colosimo gave evidence that each phototherapy device was to be supplied also with head pieces. There were separate head pieces for skin rejuvenation, acne treatment and psoriasis treatment. Only one head piece came in each silver brief case.

26 No evidence was called for Radiancy (Sales) to rebut the evidence of Mr Colosimo and Mr Bouzani of Bimat as to the contents of the cartons which were the subject of the disputed consignment notes. Notwithstanding that Ms Campbell had signed a purported affidavit stating that she was familiar with the details surrounding the delivery of the goods and was the person who had arranged for the delivery of the goods to the TNT freight depot, she did not give evidence of any personal involvement in having dispatched sixteen phototherapy machines to TNT for delivery to Bimat. She swore an affidavit attaching copies of the consignment notes in which she observed that the dimensions and weight of the eight items collected from Southport and delivered to Mr Bouzani of Bimat matched the weight and dimensions of the fifteen machines admittedly delivered. Moreover, she said that there was no commercial justification or rationale for Radiancy (Sales) to have supplied any sales material to its customer. I take that to be a denial that such sales material was supplied. However, she gave no evidence of having packed, or witnessed the packing of, any materials into the cartons for delivery to TNT.

27 Ms Campbell also gave evidence that no SkinStation upgrade kits were sold by Radiancy (Sales) to Bimat. She said that the goods purchased by Bimat were “just HairStations”: that is, phototherapy devices for hair removal. She said that the goods sold did only hair removals and not skin treatments. Such treatments needed different lamps which sold for an additional $5,500 per kit.

28 Mr McMahon swore an affidavit which was read. He gave no evidence of what was contained in the cartons which are the subject of dispute.

29 It is clear from the letter of 18 July 2006 from Mr McMahon (writing as the CEO of Radiancy Australia) that Bimat made it known that it was purchasing phototherapy devices for the purpose of skin rejuvenation, acne control and psoriasis treatments, and that the devices would be supplied with three different head pieces for those purposes. On the evidence adduced by Radiancy (Sales), if the sixteen cartons which are the subject of consignment notes 785037960 and 785037971 contained sixteen phototherapy machines, then there was no delivery of all the head pieces which were to be supplied in connection with each phototherapy device. All there was was the supply of one head piece for seven machines in the seven silver brief cases supplied under consignment note 785030376. Radiancy (Sales) did not suggest that there were other deliveries of head pieces in connection with the thirty-one phototherapy devices allegedly supplied by Radiancy (Sales) and Radiancy Australia.

30 On Radiancy (Sales)’s case, four of the sixteen phototherapy devices were returned to it. Ms Campbell annexed a copy of a TNT consignment note dated 20 October 2006 for four cartons. However, that consignment note related to a delivery from “Radiancy” at level 1, 38 Lyons Road, Drummoyne to “Radiancy” in Southport in Queensland. The address of 38 Lyons Road, Drummoyne was not an address of premises occupied by Bimat. According to the company search of Radiancy (Sales), it was the address of Ms Campbell. There was no evidence of delivery of four cartons from Bimat to Ms Campbell or Radiancy (Sales).

31 On the evidence adduced before me I conclude, on the balance of probabilities, that the sixteen cartons the subject of the consignment notes of 21 September 2006 contained eight silver brief cases and their contents, plus the additional head pieces, plus calibration machines and brochures or flyers, as Mr Colosimo deposed to and as Mr Bouzani corroborated. In reaching that conclusion, I take into account the absence of any evidence from Mr McMahon or from Ms Campbell of placing the phototherapy devices into the cartons. I also take into account that, if the cartons contained the phototherapy devices as Radiancy (Sales) contends, then the failure of Radiancy Australia to supply all of the head pieces which were promised is unexplained. I do not accept that that failure is sufficiently explained by the terms of the invoices from Radiancy Australia for the fifteen phototherapy devices. Those invoices provide for the supply of six “LUA” value packs. As the devices were being sought by Bimat not for hair removal, but for skin treatment, it was necessary for the devices to be sold with three separate head pieces.

32 There were five alleged invoices from Radiancy (Sales). Bimat disputed the authenticity of the invoices. Each invoice referred to the supply of one “LUA” value pack. Radiancy (Sales) contended that the six LUA value packs referred to in the Radiancy Australia invoices were supplied by the seven silver brief cases delivered on 27 September 2006. If sixteen phototherapy devices were supplied according to the alleged invoices raised by Radiancy (Sales) there was no evidence of the supply of either forty-eight head pieces for skin treatment, or the six LUA value packs.

33 One of the reasons Ms Campbell advanced as to why the cartons in question would not have contained the head pieces for skin treatment for the fifteen machines supplied by Radiancy Australia, as Mr Colosimo and Mr Bouzani asserted, was that such attachments would be of no use. However, that is Bimat’s complaint. It is clear from Mr McMahon’s letter of 18 July 2006 that he did represent that the devices could be used for skin treatment with the different head pieces. One would therefore expect that the head pieces to have been supplied.

34 Even if the sixteen phototherapy machines were supplied and four were returned, it would not follow that Bimat is indebted to Radiancy (Sales) for the supply of the machines. Bimat had no dealings with Ms Campbell. Its dealings were with Mr McMahon. It placed no order with Radiancy (Sales). There is no evidence that Mr McMahon was an agent for that company or that he purported to act on its behalf. Ms Campbell’s evidence was that Radiancy Australia imported the machines and that if she found a buyer for a machine, being an owner or operator as distinct from a financial institution, she would organise the sale and get a commission on the sale. She said she worked on commission if she sold a machine or equipment. She did not negotiate any sale to Bimat. Ms Campbell gave evidence that “they [I infer Mr McMahon] made negotiations for pricing, and basically you just put the sale through my company as it is.” (sic).

35 Ms Campbell produced a letter dated 12 September 2006 signed by her for Radiancy (Sales) addressed to the directors of Bimat demanding payment of $528,000 for sixteen devices the subject of tax invoices 60912a to 60912e. The letter stated that “We note that you have requested that we withdraw invoice 60912e and arrange for return of the goods (4 devices) the subject of that invoice and that you intend to retain and pay for the other goods. Accordingly we have cancelled invoice 60912e and accepted redelivery of 4 devices, which was done on the 20th October 2006 and returned by TNT con note 155452770 and arranged by you.”

36 Mr Colosimo and Mr Bouzani denied receiving the letter. Their evidence is that it was a fabrication, as they had heard nothing about the alleged sales of sixteen devices, or of Radiancy (Sales) until receiving the statutory demand.

37 The letter went on to assert that “we have repeatedly provided you with the opportunity to return the said goods ’and that’ for the past 3 weeks Ada, John, Julie and Peter have promised that finance was forthcoming and that the 12 devices retained and used by you in your hair removal business would be paid out in full. This has not been done and different banks have been used as excuses.”

38 Neither Ms Campbell nor Mr McMahon gave any evidence about such discussions. In her affidavit, Ms Campbell gave hearsay evidence of having been informed of matters of that kind by Mr McMahon. That evidence was rejected. No such evidence was given by Mr McMahon.

39 I accept Mr Colosimo’s and Mr Bouzani’s evidence of not having seen the letter dated 12 September 2006. Not only is the letter wrongly dated; there are internal inconsistencies between the facts asserted in the letter and the facts as established by the evidence. The four devices the subject of the alleged redelivery were not returned by Bimat under cover of a TNT consignment note number 155452770. That consignment note is for delivery of goods from Radiancy at Ms Campbell’s address in Lyons Rd, Drummoyne to Radiancy in Southport. It bears a sender’s signature which is indecipherable, but is not the signature of either Mr Colosimo or Mr Bouzani.

40 Moreover, the assertion by Ms Campbell that the devices had been “used by you in your hair removal business” does not make sense. Bimat was not able to use the devices in its hair removal business because that would put it in breach of licence arrangements with another company. This was acknowledged by Mr McMahon in his letter of 18 July 2006.

41 Accordingly, even if I am wrong in my conclusion that I ought to accept Bimat’s evidence that the only phototherapy machines supplied were the fifteen machines supplied by Radiancy Australia, it would not follow that Bimat is indebted to Radiancy (Sales). There is no evidence of any order having been placed with Mr McMahon by Bimat for the purchase of goods from Radiancy (Sales).

42 Radiancy (Sales) had originally invoiced Bimat for five of the fifteen phototherapy devices supplied by Radiancy Australia which were paid for and financed through the National Australia Bank. In her affidavit of 3 May 2007, Ms Campbell annexed what were purported to be the invoices delivered to National Australia Bank in respect of those machines. The invoices which she annexed had been altered from that which was originally delivered in various respects, including by the substitution of Radiancy Australia for Radiancy (Sales) as the party rendering those two invoices. That does not demonstrate that Radiancy (Sales) did not sell sixteen devices to Bimat. However, it does illustrate that any invoices should be approached with caution if they are to be relied upon as evidence of the identity of the contracting parties. Ms Campbell asserts that such invoices were rendered and the letter dated 12 September 2006 was delivered. The letter cannot have been accurately dated. It refers to events done on 20 October 2006. I do not accept that the letter was sent. I accept Mr Colosimo’s evidence, which is corroborated by that of Mr Bouzani, that Bimat did not receive any letters of demand or correspondence from Radiancy (Sales) asserting a debt prior to the receipt of the statutory demand.

43 It not only follows that the debt the subject of the statutory demand was genuinely in dispute, but also that if leave be given under s 459S to rely upon the ground that no debt was owed, I would find that that ground was established.

Demand Unaccompanied by an Affidavit

44 Bimat contends that the winding-up application should be set aside as an abuse of process because it is based on a statutory demand which purportedly was accompanied by an affidavit when in truth it was unverified and the signature of the purported attesting witness was forged. If this ground is to be relied upon, leave must be obtained under s 459S as this ground also could have been relied upon to have the statutory demand set aside.

45 Counsel for Bimat submitted that the absence of an affidavit verifying the demand meant that the document purporting to be a statutory demand was not a statutory demand. That is not so. It is contrary to authorities which have held that a defect in an affidavit is not a defect in the demand, so that where a demand is to be set aside for a defective affidavit, or because of the absence of an affidavit, it will be set aside for “some other reason” under s 459J(1)(b) (Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 132 FLR 300 at 306-307; (1996) 14 ACLC 1,095 at 1,100; B & M Quality Constructions Pty Ltd v Buyrite Steel Supplies Pty Ltd (1994) 15 ACSR 433 at 436; (1994) 13 ACLC 88 at 91; Delta Beta Pty Ltd v Vissers (1996) 20 ACSR 583 at 589; Anderson Formrite Pty Ltd v CASC Hire Pty Ltd (2005) 147 FCR 379 at 392 [64]; (2006) 24 ACLC 154 at 164 [64]).

46 It might be arguable that a statutory demand not accompanied by an affidavit required by s 459E(3) has not been served as required by s 459E so that non-compliance with the demand does not support a presumption of insolvency (Hamilhall Pty Ltd (in liq) v AT Phillips Pty Ltd (1994) 54 FCR 173 at 175). The better view is that this would not prevent the demand from having come into effect; so that s 459F applies, the company is taken to have failed to comply with the demand, and s 459S also applies (Dolvelle Pty Ltd v Australian Macfarms Pty Ltd (1998) 43 NSWLR 717 at 727; Victorian Workcover Authority v Kay’s Pty Ltd (2001) 39 ACSR 281 at 284-286).

47 The facts are clear. The statutory demand served by Radiancy (Sales), like all of the other statutory demands, was accompanied by a document expressed to be an affidavit where the deponent’s signature was purportedly witnessed by an M Simpkins JP who purportedly stated that the deponent had sworn or affirmed the affidavit before him or her. This was purportedly done on 24 November 2006 in five cases and on 25 November 2006 in two cases at either Sydney or Tweed Heads. All of the signatures are alike. There is only one Justice of the Peace in New South Wales with the surname Simpkins and the initial M. He is a Mr Mark Simpkins who works in the office of McMahon Realty, a real estate business operated by a Mr John McMahon, the brother of Mr Paul McMahon. Mr Mark Simpkins has deposed that he did not witness any of the affidavits and that the signatures on the documents are not his signatures. This evidence was unchallenged.

48 Ms Campbell gave evidence on affidavit that on 24 November 2006, she inquired at a pharmacy at Tweed Heads whether she could swear an affidavit before a Justice of the Peace, and that a person standing near her said that she was a Justice of the Peace and volunteered her services. Ms Campbell deposed that this person then proceeded to witness her signature. In her affidavit of 3 May 2007, Ms Campbell deposed that she had returned to the pharmacy since 24 November 2006 and asked for the person by the name Simpson, Simpkins or Simptins, and was told that the person concerned was most likely a customer on the day in question and that there was no other way for her to locate that person. In oral evidence, Ms Campbell initially confirmed that she had not seen the person who witnessed her signature to the affidavit to the statutory demand since the day it was signed.

49 On 14 February 2007, Ms Campbell swore an affidavit in support of the application for winding-up and insolvency. Her signature to the affidavit was purportedly witnessed by M Simpkins JP. That signature is the same as, or very similar to, the signature on her affidavit verifying the statutory demand, and on the other affidavits verifying the other statutory demands.

50 Ms Campbell was compelled to retract her evidence that she had not seen the person who witnessed her signature to the affidavit verifying the statutory demand after 24 November 2006. She said that she must have signed her affidavit of 14 February 2007 by attending the pharmacy a second time. She said that she could only assume that the woman who witnessed both affidavits worked there, although she did not wear a shop uniform.

51 I reject this evidence. It is fanciful to suggest that a person who is not a New South Wales Justice of the Peace should have twice signed the name M Simpkins JP by attesting Ms Campbell’s affidavits in a pharmacy, being there by chance on each occasion as a customer, or else, having worked in the shop, although nobody in the shop knew of her when Ms Campbell made inquiries about her. Nor is there any innocent explanation for Ms Campbell having given evidence that she had not met the person who witnessed her signature again, after the person witnessed her signature to the statutory demand. Nor can I conceive how the person in the shop on 24 November 2006 could then have witnessed affidavits of others on the same day in Sydney. Moreover, it would be a surprising coincidence that the unidentified person who witnessed the affidavits should have used the name of a Justice of the Peace who worked for Mr McMahon’s brother.

52 Ms Campbell denied that Mr McMahon forged the signature of Mr Simpkins. It was not suggested to her that she had forged the signature. Mr McMahon was not required for cross-examination. I make no finding as to who forged Mr Simpkins’ signature. However, I am satisfied that somebody did so, and that Ms Campbell knew that the signature was forged.

53 In any event, it is quite clear, even on Ms Campbell’s evidence, that no oath or affirmation was administered to her when the document described as an affidavit was signed. The document, although described as an affidavit, was not an affidavit because the deponent did not swear or affirm to the truth of its contents before a person authorised to administer an oath or affirmation. The absence of a verifying affidavit, as required by s 459E(3), is a serious omission which would have resulted in the demand being set aside had application been made under s 459J(1)(b) (Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd at 312; 1,105).

54 It does not follow that Bimat can oppose the winding-up application on the ground that the application is an abuse of process because it relies on a statutory demand accompanied by a purported affidavit containing a forgery. Leave could only be given to rely on such a ground if the ground were material to proof of Bimat’s solvency (s 459S(2)). The absence of verification of the statutory demand is not relevant to Bimat’s solvency.

55 However, this evidence is material to whether leave should be given for Bimat to rely on the ground that Radiancy (Sales) is not its creditor, or that the alleged debt is genuinely disputed.

Reasons why Bimat did not Apply to Set Aside the Demand

56 Mr Colosimo deposed that a reason no proceedings were brought to set aside the statutory demands was that to do so would have involved instituting eight separate proceedings. He said that he did not know which of the statutory demands would be acted on, and that the companies could not afford to undertake so many actions. Another reason proceedings were not brought was because, according to Bimat, the demands were obviously false and that, given what Mr Colosimo understood to be the history of Mr McMahon, he formed the view that Radiancy (Sales) was unlikely to commence proceedings. Much of his affidavit evidence as to what he understood about Mr McMahon’s history was not read. He said in the course of cross-examination that he understood Mr McMahon to be a fraudster and he thought the statutory demands were just threats.

57 Bimat was advised by a firm of solicitors, McCabe Terrill, of its estimated costs of acting for it to set aside the statutory demands. The estimated costs, including expenses and filing fees, up to the point of filing originating process to set aside the demands and the evidence in support of the application, was just under $21,000. An estimate of the costs of proceeding with such actions to the hearing would inevitably have been substantially more than this sum. How much more would depend upon the opposition which might be expected to the application to set aside the statutory demands.

58 The proliferation of statutory demands was likely to place the officers of Bimat in a quandary. I infer that this was a calculated tactic. I can more readily draw that inference from the fact that no action was taken as a result of the non-compliance with any of the statutory demands other than that served by Radiancy (Sales).

59 I am not able to assess Mr Colosimo’s assertion that all of the statutory demands were obviously false. However, he was justified in believing that there was no basis for Radiancy (Sales)’s claim. It does not follow that he was justified in not applying to set aside the demand, but it is a factor to be taken into account in the exercise of discretion under s 459S.

60 It was most unwise for the officers of Bimat to take the position that the statutory demands were just threats which would not be acted on. However, Bimat’s officers could reasonably have taken the view that they should either take no steps to have any of the statutory demands set aside, or else they should bring proceedings to have all eight demands set aside. The cost of the latter course would have been very substantial.

Materiality of the Debt to Proof of Insolvency

61 Bimat accepts that if it were liable for the alleged debt of $528,000, it would have no means of paying it. Whether Bimat is solvent without the debt is an arguable question. There was no cross-examination of any witness on that question. Bimat’s accountant produced the company’s financial statements as at 30 June 2006 and expressed the opinion that the company was solvent. Mr Colosimo deposed that, apart from the demand from Radiancy (Sales), there were no legal proceedings or demands against Bimat and that, with the exception of some minor current creditors, Bimat had paid all its creditors. No further demand has been made by the other alleged creditors who served statutory demands in November 2006.

62 After 30 June 2006, Bimat incurred a substantial debt to the National Australia Bank to finance the purchase of the phototherapy devices from Radiancy Australia. Mr Colosimo deposed that the monthly payments on this debt, and monthly payments on debts owed to other financiers, were being met as they fell due. He deposed that there were no outstanding demands that had not been met by payment.

63 It appears that Bimat acts as a trustee. The accounts of the trust disclosed a deficiency of net assets of $133,164.51 as at December 2006, but such a deficiency of assets to liabilities is not determinative of the question of whether the company is able to pay its debts as and when they become due and payable.

64 The question is not whether the debt demanded by Radiancy (Sales) is determinative of Bimat’s solvency. The question is whether it is material to proving the company is solvent. If the debt is owed, the company is undoubtedly insolvent. If it is not owed, the company may be solvent if Mr Colosimo’s evidence as to the payment of creditors is accepted. Accordingly, s 459S(2) is satisfied in relation to the grounds that Radiancy (Sales) is not a creditor, or that the alleged debt is genuinely disputed.

Leave under Section 459S

65 The scheme of Pt 5.4 requires that disputes about claimed debts should be resolved on an application under s 459G. It is not a sufficient ground for granting leave under s 459S that the company then the subject of a winding-up application can demonstrate that the creditor’s claimed debt is disputed on substantial grounds, and is material to proof of the company’s solvency. Even where the existence of the debt is material to the proof of solvency, sufficient reason must be shown why leave should be given for the company to be able to raise the dispute about the debt on a winding-up application when the scheme of Pt 5.4 is that such disputes, in the ordinary course, be resolved on an application under s 459G. Nonetheless, s 459S is itself part of the scheme in Pt 5.4. It can operate to ameliorate the harshness of the time limits in Pt 5.4. The operation of s 459S is not confined to cases in which the company, through no fault of its own, did not bring an application within the prescribed period of 21 days to set aside the statutory demand. The discretion under s 459S must be exercised with the policy of Pt 5.4 firmly in mind. Nonetheless, in the circumstances of this case, I consider that the discretion should be exercised in favour of granting leave.

66 Bimat took the wrong decision in deciding not to institute proceedings to set aside the statutory demand. Nonetheless, it was faced with the dilemma of having to set aside five statutory demands. Its officers reasonably thought that the choice was in seeking to set aside eight statutory demands or none, and seeing what steps Mr McMahon, Ms Rawlings, and Ms Campbell would take.

67 Bimat would suffer a substantial injustice if leave were not given. It is not indebted to Radiancy (Sales) in any amount.

68 It is also material that Radiancy (Sales) has flagrantly abused s 459E by serving a statutory demand accompanied by a document which appears to be an affidavit but which is not. Radiancy (Sales) should not obtain any advantage from its use of a forged document. Even though s 459S(2) precludes leave being given to Bimat to rely on that matter as an independent ground for summarily dismissing the winding-up application, it is relevant to whether leave should be given to Bimat to rely on the grounds that it does not owe the alleged debt, or, alternatively, that the alleged debt is genuinely disputed.

69 I conclude that such leave should be given pursuant to s 459S(1).

Summary Dismissal of Proceedings as an Abuse of Process

70 Bimat does not contend that Radiancy (Sales) has brought the winding-up proceedings without the intention of pursuing the proceedings to a conclusion. It does not contend that the proceedings are an abuse of process in the sense described by the High Court in Williams v Spautz (1992) 174 CLR 509. There are long-standing principles upon which winding-up proceedings can be dealt with as an abuse of process, notwithstanding that the applicant for winding-up wishes to obtain such an order. In Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd (2007) 61 ACSR 441; (2007) 25 ACLC 230, the Court of Appeal confirmed that those principles still apply (at 450-453 [47]-[57]; 238-240 [47]-[57]). Their application is modified where a statutory demand has been served and not set aside.

71 In Mann v Goldstein [1968] 1 WLR 1,091 at 1,096-1,097; [1968] 2 All ER 769 at 773, Ungoed-Thomas J said:

“ What then is the course for this court to take (i) when the creditor's debt is clearly established; (ii) when it is clearly established that there is no debt; and (iii) when the debt is disputed on substantial grounds?
(i) When the creditor's debt is clearly established it seems to me to follow that this court would not, in general at any rate, interfere even though the company would appear to be solvent, for the creditor would, as such, be entitled to present a petition and the debtor would have its own remedy in paying the undisputed debt which it should pay. ...
(ii) When it is clearly established that there is no debt, it seems to me similarly to follow that there is no creditor, that the person claiming to be such has no locus standi and that his petition is bound to fail. Once that becomes clear, pursuit of the petition would be an abuse of process, and this court would restrain its presentation or advertisement. ...
(iii) When the debt is disputed by the company on some substantial ground (and not just on some ground which is frivolous or without substance and which the court should, therefore, ignore) and the company is solvent, the court will restrain the prosecution of a petition to wind up the company.
...
What, however, if the debt is disputed by the company on some substantial ground but it appears that the company is unable to pay its debts? ”

After a detailed consideration of the authorities, his Lordship concluded (at 1,097-1,099; 773-775) as to this last case:

“ For my part, I would prefer to rest the jurisdiction directly on the comparatively simple propositions that a creditor’s petition can only be presented by a creditor, that the winding-up jurisdiction is not for the purpose of deciding a disputed debt (that is, disputed on substantial and not insubstantial grounds) since, until a creditor is established as a creditor he is not entitled to present the petition and has no locus standi in the companies court; and that, therefore, to invoke the winding-up jurisdiction when the debt is disputed (that is, on substantial grounds) or after it has become clear that it is so disputed is an abuse of the process of the court. ”

72 These principles have been followed in a large number of cases. In CVC Investments Pty Ltd v P & T Aviation Pty Ltd (1989) 18 NSWLR 295, Cohen J said (at 299-300) that:

“ A similar view was expressed by Megarry J in Re Lympne Investments Ltd [1972] 1 WLR 523; [1972] 2 All ER 385, and the passage was specifically approved by the Court of Appeal in Stonegate Securities Ltd v Gregory [1980] Ch 576.
Mann v Goldstein was also followed by Yeldham J in Re Glenbawn Park Pty Ltd (1977) 2 ACLR 288 in circumstances where the evidence showed that the company was probably insolvent at the time of the hearing. The bringing of proceedings for winding up where there is a bona fide dispute on substantial grounds constituting an abuse of the process of the court was also referred to by McLelland J in L & D Audio Acoustics Pty Ltd v Pioneer Electronics Australia Pty Ltd (1982) 1 ACLC 536; 7 ACLR 180. His Honour pointed out that it would also be an abuse of process if the proceedings are bound to fail or if the application is made for some improper purpose. One such purpose would be in order to embarrass the defendant company or to force it to pay a disputed debt in order to avoid being wound up. ”

73 Cohen J said (at 302):

“ The authorities seem almost unanimously to agree that where a claimed debt is bona fide disputed on substantial grounds and there is no basis for regarding the claimant as a contingent or prospective creditor then that claimant has no standing to bring proceedings to wind up the company, and if he does so the bringing of those proceedings is an abuse of process. ”

(See also Roy Morgan Research Center Pty Ltd v Wilson Market Research Pty Ltd (1996) 39 NSWLR 311 at 320; Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) (2004) 185 FLR 130 at 147; (2004) 22 ACLC 955 at 968; Masri Apartments Pty Ltd (in liq) v Perpetual Nominees Ltd (2004) 22 ACLC 1,411 at 1,413; (2004) 209 ALR 86 at 87-88).

74 In L & D Audio Acoustics Pty Ltd v Pioneer Electronics Australia Pty Ltd (1982) 1 ACLC 536; (1982) 7 ACLR 180, McLelland J said (at 538; 183):

“ Proceedings by a person as creditor for the winding up of a company on the ground that it is unable to pay its debts will ordinarily be held to be an abuse of process:
(1) if the winding up proceedings are bound to fail eg if it is clear that the applicant will not be able to prove that he is a creditor within the meaning of s 363(1)(b) of the Code, or will not be able to prove that the company is unable to pay its debts within the meaning of s 364(1)(e);
(2) if the application is made for some improper purpose eg if the applicant is seeking to use the winding up proceedings to coerce a company into paying an alleged debt without affording the company a reasonable opportunity to ascertain or have it established that the debt is properly payable; or
(3) if issues will arise in the winding up proceedings of a kind inappropriate for determination in such proceedings eg a substantial contest as to the existence or enforceability of a debt relied on by the applicant, which should properly be resolved in separate proceedings brought for that purpose. ”

75 The operation of these principles is modified by the provisions of Pt 5.4 of the Corporations Act where the creditor seeking winding-up has served a statutory demand which has not been set aside. However, the principles remain applicable if a winding-up application is made by a person claiming to be a creditor who has not served a statutory demand, or where leave is given under s 459S to a company to oppose the winding-up application on the ground that the person claiming to be a creditor is not a creditor, or that there is a dispute on substantial grounds as to whether the person is a creditor.

76 In State Bank of New South Wales v Tela Pty Ltd (No. 2), Barrett J said (at 705 [11]):

“ [11] The scheme of the legislation makes it clear that a creditor who has duly served a statutory demand which remains unsatisfied for the relevant period has a right to seek winding up. In former times, it was regarded as an abuse of process for such an application to be pursued in circumstances where the debt was disputed or an off-setting claim existed. The rationale was that winding up proceedings were not the appropriate occasion for those matters to be addressed and that the threat of such proceedings, with their serious commercial consequences, involved resort to the particular remedy for a purpose regarded by the law as improper. All that has been changed by Pt 5.4. It is now abundantly clear that, unless the Div 3 process is employed by the company concerned to ventilate in advance, by way of opposition to the statutory demand, any claim it has about the existence or amount of the debt or any off-setting claim, it is perfectly legitimate for the creditor to proceed with a winding up application even though such a dispute or off-setting claim may in fact exist. ”

77 That was said in the context of the company not having leave under s 459S to rely upon a ground for opposing the winding-up application which it could have raised to set aside the statutory demand. Where the company does have such leave, it may be an abuse of process, in the sense in which that term is used in relation to winding-up applications, for the creditor to pursue a winding-up application where the debt is disputed on substantial grounds, because winding-up proceedings are inappropriate for the resolution of such issues.

78 I do not consider that the winding-up proceeding is an abuse of process because proceedings were on foot in the District Court to establish the debt. As no application had been made to set aside the statutory demand, Radiancy (Sales) was entitled to institute proceedings for the winding-up to seek to recover the debt. It was not an abuse of process at that stage to have done so merely because it had other proceedings on foot.

79 Cases in which it has been held that it is, or may be, an abuse of process to institute parallel proceedings for the recovery of the alleged debt and also for the winding-up of the company have to be treated with caution depending on when they were decided. As Palmer J said in Redglove Holdings Pty Ltd v GNE & Associates Pty Ltd (2001) 165 FLR 72 at 77-78; [2001] NSWSC 867 at [29] (quoted with approval by Barrett J in Brolrik Pty Ltd v Sambah Holdings Pty Ltd (2001) 164 FLR 91 at 99; (2001) 40 ACSR 361 at 369 and in State Bank of New South Wales v Tela Pty Ltd (No. 2) at 706) if the debtor company fails to substantiate the dispute of a debt claimed in a statutory demand in the manner required by Pt 5.4, then it is not an abuse of process for the creditors to proceed with a winding-up application, because that is the very procedure which the legislature has devised to secure either the prompt payment of just debts or else the winding-up of insolvent companies unable to pay their just debts. In Braams Group Pty Ltd v Miric, the Court of Appeal cited this reasoning with apparent approval (at 456-457 [42]; 131 [42]).

80 It follows in my view that the institution of parallel proceedings is not ipso facto an abuse of process. Both processes may legitimately be used to seek recovery of a debt where a statutory demand has not been set aside. Earlier cases such as Portfolio Projects Pty Ltd v Oakes Building Co. Pty Ltd (1987) 5 ACLC 911 cited by counsel for Bimat cannot be directly transposed to the current legislative regime. In Roy Morgan Research Center Pty Ltd v Wilson Market Research Pty Ltd, Santow J said (at 317) that, while the institution of such parallel proceedings may be an abuse of process, it could not be said that they must be an abuse of process. I do not consider that the filing of the winding-up application was an abuse of process, even though proceedings were then on foot for recovery of the debt in the District Court.

81 However, that does not mean that the continuation of these proceedings would not be an abuse of process (in the sense that expression is used in this area of the law) once leave is given under s 459S and it is determined on the application for summary dismissal that Radiancy (Sales) is not a creditor, or, at least, that the debt is genuinely disputed.

82 Having granted leave under s 459S, the considerations in Mann v Goldstein apply. In this case, Bimat has shown that Radiancy (Sales) is not a creditor. Even if the goods in question had been delivered, the debt for the supply of the goods would have been owed to Radiancy Australia, not to Radiancy (Sales). There would have been substantial off-setting claims against Radiancy Australia. On the materials on the application before me, I would conclude that the goods were not delivered. Radiancy (Sales) was not entitled to serve the statutory demand and is not a creditor entitled to bring proceedings for the winding-up of Bimat.

83 If I am wrong in concluding that Radiancy (Sales) is not a creditor, and does not have standing to bring the application, the application ought in any event to be dismissed because, leave being given under s 459S to Bimat to rely upon the ground that the debt is disputed, it is inappropriate for the dispute as to the debt to be resolved on the winding-up application (Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) at 147 [72], 149 [82]; 968-969 [72], 970 [82]). The originating process should be dismissed.

84 For these reasons, I make the following orders:

1. The defendant be granted leave pursuant to s 459S of the Corporations Act 2001 (Cth) to oppose the winding-up application on the ground that the plaintiff is not a creditor of the defendant, or that there is a genuine dispute as to the debt claimed to be owing by the plaintiff.

2. The originating process be dismissed.

3. The interlocutory process be otherwise dismissed.

4. The plaintiff pay the defendant’s costs of the proceedings.

5. Exhibits may be returned after 28 days.

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