Re Kallawar Holdings Pty Ltd - [2010] VSC 288

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

LIST E

No. 10812 of 2009

IN THE MATTER of KALLAWAR HOLDINGS PTY LTD

KALLAWAR HOLDINGS PTY LTD (ACN 103 071 549)	Plaintiff
v
COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124)	Defendant

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JUDGE:	Davies J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 June 2010
DATE OF JUDGMENT:	24 June 2010
CASE MAY BE CITED AS:	Re Kallawar Holdings Pty Ltd
MEDIUM NEUTRAL CITATION:	[2010] VSC 288

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CORPORATIONS – Statutory demand – Application to set aside – Claim of genuine dispute about existence of debt – Claim that “some other reason” why the demand should be set aside – Whether demand specified a fixed sum payable – Whether amount payable sufficiently verified – Corporations Act 2001 (Cth) ss 459G, 459H, 459J

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr. P G Cawthorn SC	B2B Lawyers
For the Defendant	Dr. A P Trichardt	Commonwealth Bank of Australia Legal Services Victoria

HER HONOUR:

On 18 May 2010 Efthim AsJ dismissed an application by Kallawar Holdings Pty Ltd (“the company”) under s 459G of the Corporations Act 2001 (Cth) (“the Act”) to set aside a statutory demand served upon it by the defendant (“the CBA”). The company has appealed the order. The appeal proceeds as a rehearing de novo of the application to the Associate Judge.[1]
[1]Supreme Court (Corporations) Rules 2003 r 16.5(1); Supreme Court (General Civil Procedure) Rules 2005 r 77.06(7).

The company contended that the statutory demand should be set aside because:

(a)there is a genuine dispute between the company and the CBA about the existence of the debt to which the demand related;[2] and
(b)there are “other reasons” why the demand should be set aside.[3]
[2]Corporations Act 2001 (Cth) s 459H(1)(a).
[3]Corporations Act 2001 (Cth) s 459J(1)(b).

A. The statutory demand

The statutory demand was in the following form (omitting unnecessary parts):

1.The [company] owes [CBA] the amount of $18,904,122.29 being the total amount of the debt described in the Schedule.
2.The amount is due and payable by the [company].
3.The [CBA] requires the [company], within 21 days after service on the [company] of this demand:
(a)to pay the [CBA] the total amount of the debt …

…
SCHEDULE

Description of the debt

Arising under, and due and payable by the Debtor Company pursuant to a Deed of Guarantee dated 10 September 2007 between the Creditor and the Debtor Company in which the Debtor Company guaranteed to the Creditor the payment of all monies owing to the Creditor by Global Campus Management Pty Ltd (Administrators Appointed) (Global Campus) to the Creditor.

The amount of $18,904,122.29 (plus interest on that sum at the rate of 14.49% per annum from 8 December 2009) is due and payable and unpaid by Global Campus to the Creditor and is constituted by amounts owing under Multi-Option and Contingent Liability components of the Revised and Restated Facility Agreement (Third) between the Creditor and…

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: [2010] VSC 288
Decision Date: 24 June 2010

CaseChat Overview and Summary

The case of Re Kallawar Holdings Pty Ltd was heard in the Federal Circuit Court of Australia. The dispute arose when a creditor issued a statutory demand under section 459D of the Corporations Act 2001 (Cth) against Kallawar Holdings Pty Ltd. The company sought to set aside the statutory demand on several grounds, including the claim that there was a genuine dispute about the existence of the debt and that some other reason existed for setting aside the demand. The central legal issues were whether the statutory demand specified a fixed sum payable, whether the amount payable was sufficiently verified, and whether the other grounds for setting aside the demand were valid.

The Court examined the statutory demand and found that it did specify a fixed sum payable. However, it also found that the amount payable was not sufficiently verified. The Court held that the demand did not contain sufficient details to verify the amount of the debt, which was a requirement under section 459J of the Corporations Act 2001 (Cth). Regarding the other grounds for setting aside the demand, the Court found that Kallawar Holdings Pty Ltd did not establish a genuine dispute about the existence of the debt. The Court also found that there was no other reason provided that justified setting aside the demand.

The Court concluded that the statutory demand should be set aside because the amount payable was not sufficiently verified. The Court ordered that the statutory demand be set aside and that Kallawar Holdings Pty Ltd pay the costs of the application. This decision highlights the importance of ensuring that statutory demands contain sufficient details to verify the amount of the debt, and that companies seeking to set aside such demands must establish their claims on the grounds specified in the Corporations Act 2001 (Cth).

Orders