Australian Information Technology Pty Ltd v Prior Art Pty Ltd [1995] FCA 193

CATCHWORDS CORPORATIONS LAW - statutory demand - application to set aside - whether or not genuine dispute between parties as to existence of debt to which statutory demand relates - no issue of principle involved. Corporations Law, ss 459E, 459G, 459H. AUSTRALIAN INFORMATION TECHNOLOGY PTY v PRIOR ART PTY LTD No VG 3062/95

Olney J Melbourne 31 March 1995

IN THE FEDERAL COURT OF AUSTRALIA VICTORIAN DISTRICT REGISTRY GENERAL DIVISION No VG 3062 of 1995

BETWEEN: AUSTRALIAN INFORMATION TECHNOLOGY PTY LTD Applicant PRIOR ART PTY LTD Respondent Coram: Olney J Place: Melbourne Date: 31 March 1995 REASONS FOR JUDGMENT On 17 January 1995 the respondent (Prior Art) served a statutory demand pursuant to s 459E of the Corporations Law on the applicant (AIT). The demand is founded on a claimed debt of $25,950 said to be due and payable by AIT to Prior Art which is described in the demand as: "Loan a/c balance owing by the company to the creditor pursuant to company loan a/c reconciliation of 12 January 1995". The statutory demand was supported by an affidavit of Michael Frederick Prior (Prior) a director of Prior Art to which 2 letters are exhibited namely a letter dated 10 January 1995 written by Prior Art to AIT and a letter dated 12 January 1995 written by AIT to Prior Art. The full text of the letters follows: 10th January 1995 The Secretary Australian Information Technology Pty Ltd Level 13 474 Flinders Street MELBOURNE VIC 3000 ATTENTION: Ms J E Yuille Dear Jane RE: MONIES OWED BY AUSTRALIAN INFORMATION TECHNOLOGY PTY LTD AS TRUSTEE FOR THE AIT UNIT TRUST TO PRIOR ART PTY LTD We hereby request that you provide us with a reconciliation of the monies owed to this company in respect of the period commencing on 1st July 1993 and up to the present time, together with a cheque for the balance of the indebtedness of Australian Information Technology Pty Ltd to this company. Please provide us with this information together with your remittance prior to close of business on \friday, 13th January 1995. If you have any query in relation to this request please do not hesitate to contact me by telephone. Yours faithfully PRIOR ART PTY LTD PER: MICHAEL PRIOR DIRECTOR 12th January 1995 Mr M. Prior, C/- Prior & Co Pty Ltd., 2nd Floor, 3395 Collins Street MELBOURNE Vic, 3000 Dear Mike, I received your letter dated 10 January 1995 and the loan account reconciliation you requested is enclosed. Regarding your request for payment in cash of the Prior Art Pty Ltd loan account balance, at present this is not possible. The AIT Unit Trust does not have available cash to make the payment and, accordingly, an interim F'95 cash distribution would be required from MITS. Also, as it has been normal practice to on-distribute interim cash distributions pro-rata to all unit holders, it would be appropriate for the other unit holders to agree that the funds be paid solely to Prior Art Pty Ltd. In light of the above, your request will need to be discussed by the Board. Accordingly, I will ensure that it is included as an agenda item for the 25 January, 1995 meeting and a copy of your letter and this letter will be distributed with the Board papers. Yours sincerely, J.E. Yuile, Secretary. The letter of 12 January 1995 was accompanied by the following enclosure: