Zhen Yun (Australia) Pty Ltd v State Bank of South Australia No. SCGRG 94/225 Judgment No. 4626 Number of Pages 4 Corporations (1994) 12 Aclc 521 (1994) 13 Acsr 801 - [1994] SASC 4626

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA BURLEY J

CWDS
Corporations - application to set aside statutory notice of demand - notice sets out details of alleged debt - accompanying affidavit refers to a debt but differently constituted - whether non-compliance with statutory procedure requires notice to be set aside - notice set aside. Corporations Lawss 459E to 459N.

HRNG ADELAIDE, 18 April 1994 #DATE 1:7:1994

Counsel for plaintiff: Mr C J Townsend with
Mr N Minicozzi

Solicitors for plaintiff: N Minicozzi

Counsel for defendant: Mr R Ross-Smith with
Mr M O'Donnell

Solicitors for defendant: Thomsons

ORDER
Order setting aside the notice dated the 8th February 1994.

JUDGE1 BURLEY J By summons dated the 17th February 1994 the plaintiff seeks, pursuant to Section 459G(1) of the Corporations Law ("the Law"), the following order:-
    "That a purported Statutory Demand served on the
    plaintiff by the defendant dated the 8th February 1994
    be set aside."

2. The plaintiff has complied with the provisions of subsections 459G(2) and
(3) of the Law . The matter came on for hearing on the 18th April 1994 when Mr Townsend appeared for the plaintiff and Mr Ross-Smith for the defendant. Submissions were not completed on that day but leave was given for written submissions to be filed by the parties and these were received by me at a later date.

3. It is common ground that the defendants served upon the plaintiff a statutory demand pursuant to the provisions of Section 459E of the Law ("the notice"). It was accompanied by an affidavit which purported to verify the alleged debt. A copy of the notice and verifying affidavit is exhibit LL1 of the affidavit of Mr Lee affirmed on the 17th February 1994. The debt is described in the schedule to the notice as follows:- "Description of Debt Amount of Debt Amount due and payable $13,301,284.84". by the company to the creditor as at 13 December pursuant to a cross-guarantee and indemnity dated 15 January, 1991 in respect of the debts arising pursuant to a facility agreement dated 23 August 1991 as demanded by notice demand dated 13 December, 1993 The accompanying affidavit was sworn by Mr Ritchie. At paragraph 5 of the affidavit he said:-
    "The debt arises under a cross guarantee and an
    indemnity dated the 22nd November 1990 in respect of
    debts arising pursuant to a facility agreement dated the
    15th January 1991."

4. It is immediately apparent that the affidavit does not support the debt as described in the schedule to the notice. The notice refers to a facility agreement of the 23rd August 1991, whereas the facility agreement referred to by Mr Ritchie was dated the 15th January 1991. In addition, the guarantee referred to in the schedule is dated the 15th January 1991 whereas the guarantee referred by Mr Ritchie is dated the 22nd November 1990. There is a further complication that the date of the facility agreement referred to in the schedule is given as…

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

AGLC: Zhen Yun (Australia) Pty Ltd v State Bank of South Australia No. SCGRG 94/225 Judgment No. 4626 Number of Pages 4 Corporations (1994) 12 Aclc 521 (1994) 13 Acsr 801 [1994] SASC 4626
Case: [1994] SASC 4626
Decision Date: 1 July 1994

CaseChat Overview and Summary

Zhen Yun (Australia) Pty Ltd v State Bank of South Australia involved a dispute between the plaintiff, a company, and the defendant, the State Bank of South Australia. The plaintiff sought to have a statutory demand set aside, which was issued by the defendant under the Corporations Law. The demand was accompanied by an affidavit that did not accurately verify the alleged debt as described in the notice. The case was heard by Burley J in the Supreme Court of South Australia.
The legal issues before the court were whether the statutory demand should be set aside due to the discrepancies between the notice and the affidavit, and if the non-compliance with statutory procedures required the notice to be set aside. The court had to determine whether the failure of the affidavit to verify the debt as described in the notice constituted a significant departure from the required procedures under the Corporations Law.
Burley J held that the statutory demand should be set aside. The court found that the accompanying affidavit did not verify the debt as described in the notice, which was a fundamental procedural error. The court emphasised that the statutory procedures outlined in the Corporations Law must be strictly adhered to, and any significant departure from these procedures warranted setting aside the demand. The court did not find it necessary to address the plaintiff's argument regarding a genuine dispute over the debt, as the procedural error was sufficient to warrant setting aside the notice.
The court ordered that the statutory demand dated 8 February 1994 be set aside. The matter was to be further heard regarding costs.

Orders