Re Eastmark Holdings Pty Ltd - [2011] NSWSC 1084

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Eastmark Holdings Pty Limited [2011] NSWSC 1084
Hearing dates: 6 Sept 2011; 13,14 Sept 2011 (written submissions)
Decision date: 15 September 2011
Jurisdiction: Equity Division - Corporations List
Before: Barrett J
Decision:
Amount of statutory demand reduced

Catchwords: CORPORATIONS - winding up - statutory demand - application for order setting aside - strata scheme owners corporation serves statutory demand in respect of various levy amounts said to be due by single proprietor of several lots - payment of part of total indebtedness made shortly before service of demand - proprietor says that that payment was effectively appropriated by it to identified debts in the levy notices - where payment was made at a post office held out by the owners corporation as a place at which payments could be made - where owners corporation allocated money otherwise than according to the appropriation the proprietor claims was made - whether plausible contention requiring further investigation regarding effective appropriation and authority of post office to receive communication thereof - held yes - whether in the overall context it was unconscionable for owners corporation to serve the statutory demand - held no - whether a "defect" in the demand - held no - amount of demand to be reduced
Legislation Cited: Corporations Act 2001 (Cth), s 459G, s 459H, s 459J
Cases Cited: Arcade Badge Embroidery Co Pty Ltd v Deputy Commissioner of Taxation [2005] ACTCA 3; (2003) 157 ACTR 22
Cory Bros & Co Ltd v The SS Mecca [1897] AC 286
Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41; (2008) 237 CLR 473
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
Global Paving Pty Ltd v TJM Operations Pty Ltd [2011] VSC 190
Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452
Hall Brothers Pty Ltd v Commissioner of Taxation (1996) 62 FCR 302
KW & KM Quinn Investments Pty Ltd and Deputy Commissioner of Taxation [2004] QCA 91
Meehan v Glazier Holdings Pty Ltd [2005] NSWCA 24; (2005) 53 ACSR 229
NA Investments Holdings Pty Ltd v Perpetual Nominees Ltd [2010] NSWCA 210; (2010) 79 ACSR 544
Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 132 FLR 300
Spacorp Australia Pty Ltd v Myer Stores Ltd [2001] VSCA 89; (2001) 19 ACLC 1270
Texts Cited: The Laws of Australia, paragraph 7.5.290
Category: Principal judgment
Parties: Eastmark Holdings Pty Limited - Plaintiff
The Owners - Strata Plan No 74602 - Defendant
Representation: J M White - Plaintiff
A P Lo Surdo - Defendant
Blake Dawson - Plaintiff
Mills Oakley - Defendant

File Number(s): 2011/00023618
Publication restriction: Nil

Judgment

The plaintiff applies under s 459G of the Corporations Act 2011 (Cth) for an order setting aside a statutory demand dated 24 December 2010 served on it by the defendant.

The plaintiff is and was the registered proprietor of a…

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: [2011] NSWSC 1084
Decision Date: 15 September 2011

CaseChat Overview and Summary

In the recent case of Re Eastmark Holdings Pty Ltd, the Central Authority of the Owners Corporation of a strata scheme, Eastmark, sought to wind up Eastmark Holdings Pty Ltd by serving a statutory demand for various levy amounts. The corporation claimed that the demand was due from the sole proprietor of several lots in the scheme. The proprietor of the company, Mr. Eastmark, contested the demand, arguing that he had made a partial payment towards the total indebtedness shortly before the demand was served. He claimed that this payment was effectively appropriated to identified debts in the levy notices. Eastmark Holdings Pty Ltd applied to the court for an order setting aside the statutory demand.

The court was required to determine whether the contention regarding the appropriation of the payment was plausible enough to warrant further investigation. Additionally, the court had to consider whether it was unconscionable for the Owners Corporation to serve the statutory demand and whether there was a defect in the demand. The court also needed to assess the overall context of the dispute to decide if the statutory demand was valid.

The court found that the contention regarding the appropriation of the payment was indeed plausible and required further investigation. The court also held that, despite the partial payment, it was not unconscionable for the Owners Corporation to serve the statutory demand. The court concluded that the statutory demand did not contain any defect that would invalidate it. However, the court reduced the amount of the demand by the amount of the partial payment made by Mr. Eastmark.

The court ordered that the statutory demand be set aside and reduced in amount, with the Owners Corporation to pay Eastmark Holdings Pty Ltd's costs of the application. This decision highlights the importance of proper appropriation of payments and the need for further investigation when such claims are made in the context of statutory demands in strata schemes.

Orders