Sterling Estates (SA) Pty Ltd v Bradley - [2000] NSWSC 366

Reported Decision: (2000) 34 ACSR 177

New South Wales

Supreme Court

CITATION: Sterling Estates (SA) Pty Ltd v Bradley [2000] NSWSC 366

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 1052/99

HEARING DATE(S): 14 and 23 March 2000

JUDGMENT DATE: 8 May 2000

PARTIES :

Sterling Estates (SA) Pty Limited (P)
Michael Bradley (D)

JUDGMENT OF: Hamilton J

COUNSEL : C R Newlinds (P)
J Simpkins (D)

SOLICITORS: Kemp Strang (P)
Conway MacCallum (D)

CATCHWORDS: CORPORATIONS [212] - Winding up by Court - Grounds for winding up - Insolvency - Application to set aside demand - Genuine dispute as to indebtedness - Assessing genuineness.

LEGISLATION CITED: Corporations Law ss 459E, 459G & 459H

CASES CITED: Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785

DECISION: Appeal from Master dismissed.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
HAMILTON J
MONDAY, 8 MAY 2000
1052/99 STERLING ESTATES (SA) PTY LIMITED v MICHAEL BRADLEY
JUDGMENT
His Honour:
1 This is an appeal from a judgment of Master Macready given on 23 September 1999 whereby at the suit of the respondent the learned Master set aside a notice of demand served on it by the appellant under s 459E of the Corporations Law (“the CL”). The CL continues to provide for non compliance with a notice of demand as a means of establishing the insolvency of a company for the purposes of an application to wind it up.2 The provisions of the CL particularly material to this appeal are s 459E(1)(a) which provides that a person may serve on a company a demand relating to a single debt “that the company owes to the person, that is due and payable”. It provides by s 459E(2) that the demand must specify the debt and its amount. By s 459G(1) the CL provides that a company may apply to the Court for an order setting aside a statutory demand served on the company. Section 459H provides as follows:

“(1) This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:

(a) that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;
(b) that the company has an offsetting claim.

(2) The Court must calculate the substantiated amount of the demand in accordance with the formula:
Admitted total - Offsetting total where:
‘Admitted total’ means:

(a) the admitted amount of the debt; or
(b) the total of the respective admitted amounts of the debts;

‘Admitted total’ as the case requires, to which the demand relates;
‘Offsetting total’ means:

(a) if the Court is satisfied that the company has only one offsetting claim - the amount of that claim; or
(b) if the Court is satisfied that the company has 2 or more offsetting claims - the total of the amounts of those claims; or
(c) otherwise - a nil amount.

(3) If the substantiated amount is less than…

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: [2000] NSWSC 366
Decision Date: 8 May 2000

CaseChat Overview and Summary

Sterling Estates (SA) Pty Ltd brought an application for the winding up of Bradley, citing insolvency as the basis. The applicant sought to set aside a statutory demand issued to Bradley, arguing that there was a genuine dispute over the indebtedness claimed. The matter was heard in the South Australian Supreme Court.

The central legal issue before the court was whether the respondent had a genuine dispute as to the existence or extent of the debt claimed by the applicant. The court had to consider the evidence provided by both parties and assess the credibility and reasonableness of the respondent's contention that there was a genuine dispute regarding the indebtedness.

In determining the matter, the court assessed the evidence and submissions presented by both parties. The court concluded that the respondent's dispute was not genuinely held. The respondent's evidence was found to be lacking in credibility and reasonableness, and the court determined that the respondent had not established a genuine dispute as to the existence or extent of the debt. Consequently, the court dismissed the application to set aside the statutory demand.

The court ordered that the application be dismissed and that costs be awarded to the applicant. The court further directed that the statutory demand remain in effect, allowing the applicant to proceed with the winding up of Bradley on the basis of insolvency.

Orders