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Reale Bros Pty Ltd v Reale

Reale Bros Pty Ltd v Reale

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Case Copied 24 July 2003 25 min read

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CITATION: Reale Bros Pty Ltd v Reale [2003] NSWSC 666

HEARING DATE(S): 16/07/03

JUDGMENT DATE:
24 July 2003

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF: Young CJ in Eq

DECISION: Appeal allowed. Application for statutory demand to be set aside dismissed.

CATCHWORDS: CORPORATIONS [212]- Statutory demand- Application to set aside- Requirement to state grounds of dispute with evidence within 21 days- Whether also requirement to provide hearing with admissible evidence as to each element of cause of action in order to demonstrate genuine dispute- What is an equitable debt?- Whether company or another person principal debtor- What is meant by substance of guarantee transaction? WORDS & PHRASES- "Genuine dispute"- "Is satisfied"- "Debt".

LEGISLATION CITED: Corporations Act 2001, ss 459G, 459H(1), 459J
Evidence Act 1995, s 136

CASES CITED: AGC (Advances) Ltd v West (1984) 5 NSWLR 590 (C/A (1986) 5 NSWLR 610)
British Thomson-Houston Co Ltd v British Insulated and Helsby Cables Ltd [1924] 2 Ch 160
Edwards v Lennon (1866) 6 SCR (NSW) (Eq) 18
Energy Equity Corp Ltd v Sinedie Pty Ltd (2001) 166 FLR 179
Ex parte Adamson; Re Collie (1878) 8 Ch D 807
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
FAI v Southern Cross Exploration NL (No 3) (1986) 4 ACLC 447
Financial Solutions Australasia Pty Ltd v Predella Pty Ltd (2002) 167 FLR 106
Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452; 21 ACSR 581
Greenough v McClelland (1860) 2 El & El 429; 121 ER 162
Hollier v Eyre (1842) 9 Cl & Fin 1; 8 ER 313
John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250
Manley v Boycot (1853) 2 El & Bl 46; 118 ER 686
Manzo v 555/225 Pitt Street Pty Ltd (1990) 21 NSWLR 1
Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601
Re Steel Wing Company Ltd [1921] 1 Ch 349
Reale v Reale [2003] NSWSC 293
Rouse v Bradford Banking Co [1894] AC 586
Saunders v Smith (1838) 3 My & Cr 711; 40 ER 1100
71 Paisley Street Footscray Pty Ltd v Vineyards Estate Pty Ltd (Olney J, Federal Court, 18.8.1995)
SMEC International Pty Ltd v CEMS Engineering Inc (2001) 38 ACSR 595
South Australia v Wall (1980) 24 SASR 189
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Wickstead v Browne (1992) 30 NSWLR 1

PARTIES :
Reale Bros Pty Limited (Plaintiff/Respondent)
Ludmilla Marika Reale (Defendant/Appellant)

FILE NUMBER(S): SC 6004/02

COUNSEL: G O Blake SC (Plaintiff/Respondent)
V R W Gray (Defendant/Appellant)

SOLICITORS: N J Papallo & Co (Plaintiff/Respondent)
Lang Gellert & Noonan (Defendant/Appellant)

LOWER COURTJURISDICTION: Supreme Court (Master)

LOWER COURT FILE NUMBER(S): 6004/02

LOWER COURT
JUDICIAL OFFICER : Master Macready

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

YOUNG CJ in EQ

Thursday 24 July 2003

6004/02 – REALE BROS PTY…

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: [2003] NSWSC 666
Decision Date: 24 July 2003

CaseChat Overview and Summary

The case of Reale Bros Pty Ltd v Reale involved the defendant company, Reale Bros Pty Ltd, which had issued a statutory demand against its shareholder, Reale, for an alleged debt. The plaintiff, Reale, sought to set aside the statutory demand on the basis that there was a genuine dispute as to the existence or quantum of the debt. The matter was heard in the Supreme Court of New South Wales. The primary legal issue before the court was whether the respondent, in seeking to set aside a statutory demand, was required to provide evidence as to each element of the cause of action to demonstrate a genuine dispute.

The court held that a party seeking to set aside a statutory demand is not required to provide evidence as to each element of the cause of action, but rather must provide evidence that there is a genuine dispute. The court noted that the statutory demand process is intended to be a summary procedure, and the requirement to provide evidence within 21 days is not intended to be onerous. The court also held that an equitable debt is a debt that is not yet due or is subject to some condition or qualification. In this case, the court found that the debt claimed by the plaintiff was an equitable debt, as it was subject to the condition that the company would not go into liquidation before the debt became due.

The court further held that, in determining whether there is a genuine dispute, the respondent must provide evidence that is capable of substantiating the claim that there is a genuine dispute. In this case, the court found that the respondent had provided sufficient evidence to demonstrate a genuine dispute as to the existence or quantum of the debt. The court also noted that the substance of the guarantee transaction was relevant in determining whether there was a genuine dispute, as it was necessary to consider the circumstances surrounding the guarantee in order to determine whether the respondent had a valid defence.

The court ultimately found in favour of the respondent and set aside the statutory demand. The court ordered that the respondent's costs of the application be paid by the plaintiff. The court's decision provides guidance on the requirements for setting aside a statutory demand and the meaning of certain statutory terms, such as "genuine dispute" and "equitable debt."

Orders