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Sheslow v Diamond Rose NL

Sheslow v Diamond Rose NL

Case [2005] NSWSC 492 23 May 2005

Winding Up & Liquidation

Statutory Interpretation

Corporate Law & Governance

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Reported Decision:
54 ACSR 376

New South Wales

Supreme Court

CITATION:
Sheslow v Diamond Rose NL [2005] NSWSC 492

HEARING DATE(S): 23/05/05

JUDGMENT DATE :

23 May 2005

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF:
Barrett J

DECISION:
Winding up application dismissed

CATCHWORDS:
CORPORATIONS - winding up - application based on alleged non-compliance with statutory demand - demand not stated to be under Corporations Act and omitting much required content - held not "statutory demand" - in any event served long before start of s.459C(2)(a) period

LEGISLATION CITED:
Corporations Act 2001 (Cth), ss.459C(2), 459E, 459Q
Corporations Regulations 2001 (Cth), Form 509H

CASES CITED:
Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd (1994) 51 FCR 446
Pinn v Barrowleg Pty Ltd (1997) 23 ACSR 541
Topfelt Pty Ltd v State Bank of New South Wales (1993) 47 FCR 226
Vicbar Pty Ltd v Development Constructions (Newcastle) Pty Ltd (1995) 13 ACLC 1220

PARTIES:
Richard Myron Sheslow - Plaintiff
Diamond Rose NL - Defendant

FILE NUMBER(S):
SC 3009/05

COUNSEL:
Plaintiff in person
Mr M.P. Cleary - Defendant

SOLICITORS:
Plaintiff in person
Corrs Chambers Westgarth - Defendant

LOWER COURT JURISDICTION:

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

BARRETT J

MONDAY 23 MAY 2005

3009/05 - RICHARD MYRON SHESLOW v DIAMOND ROSE NL

JUDGMENT

1 The plaintiff seeks an order for the winding up of the defendant. His originating process is expressed to be based on s.459Q of the Corporations Act 2001 (Cth) and, by that reference and otherwise, makes it clear that winding up is sought on the ground of insolvency. The supporting affidavit shows that non-compliance with a supposed statutory demand is the sole basis on which the case of insolvency is advanced.

2 The defendant says that the application is devoid of merit and has filed an interlocutory process claiming an order that it be dismissed or struck out. The defendant makes two basic points: first, that the supposed statutory demand is not a statutory demand at all; and, second, that the timing specification in s.459C(2) of the Corporations Act is, in any event, not satisfied.

3 The so-called statutory demand is in evidence. I set it out in full:

“Statutory Demand under section 123(1)(a) or 222(1)(A) of the Insolvency Act 1986

This demand is served on you by the creditor:

Name: Richard Myron Sheslow

The creditor claims that the company will owe the sum of $21,755.00, particulars of which are set out on page 2.

The creditor demands that the company do pay the above debt or secure or compound for it to the creditor’s satisfaction.

Signature of individual: (sgd) Richard M. Sheslow

Name (Block Letters): RICHARD MYRON SHESLOW

Date: 26 August 2004

Page 2:

The creditor is a Non-Executive Director of the debtor company, a position he has held for almost 7 years. The…

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.

Continue reading Sheslow v Diamond Rose NL

Details

AGLC: Sheslow v Diamond Rose NL [2005] NSWSC 492
Case: [2005] NSWSC 492
Decision Date: 23 May 2005

CaseChat Overview and Summary

The case of Sheslow v Diamond Rose NL involved an application by a creditor to wind up a company based on alleged non-compliance with a statutory demand. The plaintiff, Sheslow, sought to wind up Diamond Rose NL under section 459D of the Corporations Act 2001 (Cth), claiming that the company had failed to comply with a statutory demand. The demand in question was issued by Sheslow, but it was noted that the demand did not explicitly state it was made under the Corporations Act and omitted much of the required content. The matter was heard by the Federal Court of Australia.

The primary legal issue before the court was whether the demand made by Sheslow constituted a "statutory demand" under the Corporations Act, and if so, whether it was validly served. The court also had to determine if the demand was served within the required timeframe under section 459C(2)(a) of the Act. The court examined the form and content of the demand and the timing of its service to ascertain its validity.

The court found that the demand did not qualify as a "statutory demand" under the Corporations Act because it lacked essential components such as the statement that it was made under the Act and the notice of the right to apply to the court to have the demand set aside. Even if it had been a valid statutory demand, the court noted that it was served well before the period specified in section 459C(2)(a) began, rendering the demand invalid. The court dismissed the application for winding up the company, concluding that the statutory demand was not valid due to its improper form and untimely service.

The final order of the court was that the application by Sheslow to wind up Diamond Rose NL was dismissed. The court held that the demand issued by Sheslow did not meet the statutory requirements and was therefore not a valid statutory demand. As a result, the application to wind up the company was properly dismissed.

Orders