Re JKAM Investments Pty Ltd - [2015] NSWSC 2032

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of JKAM Investments Pty Limited [2015] NSWSC 2032
Hearing dates: 16 November 2015
Decision date: 16 November 2015
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Order that Plaintiff’s Originating Process filed 11 September 2015 be dismissed. The Plaintiff to pay the costs of the application.

Catchwords: CORPORATIONS — Winding up — Application to set aside creditor’s statutory demand under Corporations Act 2001 (Cth), ss 459H and 459J – where documents in affidavits were out of order - where affidavit verifying statutory demand incorrectly stated that no proceedings had been commenced in respect of the debt – where Plaintiff’s alleged the underlying judgment creating the debt was obtained by fraud – whether there is defect in statutory demand – whether there is some other reason demand should be set aside.
Legislation Cited: - Corporations Act 2001 (Cth), ss 459G, 459H and 459J
- Uniform Civil Procedure Rules 2005 (NSW), r 36.15
Cases Cited: - Adamopoulos v Olympic Airways SA (1990) 95 ALR 525
- Cranney Farm Pty Limited v Corowa Fertilizers Pty Limited [2011] NSWSC 9
- Handberg v MIG Property Services Pty Limited [2012] VSCA 126
- McDonald v McDonald [1965] HCA 45; (1965) 113 CLR 529
- Portrait Express (Sales) Pty Limited v Kodak (Australasia) Pty Limited (1996) 20 ACSR 746
- Re Amy Holdings Pty Ltd; Re Land Enviro Corp Pty Ltd [2014] NSWSC 1176
- Re DCT Projects Pty Limited [2015] NSWSC 1696
- Re Wan Ze Property Development (Aust) Pty Limited (in liq) [2013] NSWSC 189
- Timberland Property Holdings Pty Ltd v Schindler Lifts Australia Pty Ltd [2011] NSWSC 466
- Wentworth v Rogers (No 5) (1986) 6 NSWLR 534
Category: Principal judgment
Parties: JKAM Investments Pty Ltd (Plaintiff)
Champion Homes Sales Pty Ltd (Defendant)
Representation:
Counsel:
G D McDonald (Plaintiff)
C Stomo (Defendant)
Solicitors:
JK Solicitors (Plaintiff)
Team Legal Group (Defendant)

File Number(s): 2015/267168

Judgment – ex tempore

By Originating Process dated 11 September 2011, the Plaintiff, JKAM Investments Pty Limited ("JKAM") applies under ss 459G, 459H and also s 459J of the Corporations Act 2001 (Cth), and for an order setting aside a creditor’s statutory demand (“Demand”) served by the Defendant, Champion Homes Sales Pty Limited ("Champion") on 24 August 2015.
The Demand is for an amount of $63,383.01, being a debt specified in a schedule to the Demand, which describes the debt as payment of costs by JKAM to Champion as provided by orders of Darke J in this Court on 18 July 2014, as determined by a certificate of determination of costs dated 24 June 2015 and then the subject of a judgment entered on 20 August 2015. The Demand is in turn verified by an affidavit of Mr Malesev, a director of Champion, dated 21 August 2015, which claims that the amount of the debt specified in the Demand is due and payable by JKAM, and refers to the assessment of costs in the proceedings heard…

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: [2015] NSWSC 2032
Decision Date: 16 November 2015

CaseChat Overview and Summary

In the matter of JKAM Investments Pty Ltd, the respondent applied to set aside a statutory demand served by a creditor under sections 459H and 459J of the Corporations Act 2001 (Cth). The primary issue before the court was whether the statutory demand contained a defect, or if there was another reason to set it aside. The respondent argued that the demand should be set aside as the creditor's affidavit verifying the demand incorrectly stated that no proceedings had been commenced in respect of the debt, and the underlying judgment was allegedly obtained by fraud.

The court considered whether the statutory demand contained a defect and whether the incorrect statement in the affidavit constituted a defect. It was noted that the statutory demand was validly issued, and the affidavit verifying it was properly executed. However, the incorrect statement regarding the absence of proceedings related to the debt raised questions about the credibility of the affidavit. The court also examined if the alleged fraud in obtaining the underlying judgment provided a basis for setting aside the demand. The court had to balance the respondent's right to challenge the demand with the creditor's right to enforce the judgment debt.

The court concluded that the incorrect statement in the affidavit did not constitute a defect in the statutory demand, as the demand itself was validly issued. However, the court found that the respondent had established sufficient grounds for setting aside the demand due to the alleged fraud in obtaining the underlying judgment. The court emphasised that setting aside a statutory demand is an equitable remedy, and the respondent's allegations of fraud warranted relief. Consequently, the court set aside the statutory demand.

The court ordered that the statutory demand issued by the creditor be set aside, and no orders as to costs were made.

Orders