Grass Manufacturers Pty Ltd v. Sraennik Pty Ltd [2003] NSWSC 95

New South Wales Supreme Court

CITATION : Grass Manufacturers Pty Ltd v. Sraennik Pty Ltd [2003] NSWSC 95 HEARING DATE(S) : 24 February, 2003 JUDGMENT DATE : 24 February 2003 JURISDICTION: Equity Division JUDGMENT OF : Palmer J DECISION : Statutory Demand set aside; indemnity costs order not appropriate.

CATCHWORDS : CORPORATIONS - STATUTORY DEMAND - Test as to whether genuine dispute as to debt exists - whether indemnity costs order appropriate. LEGISLATION CITED : Corporations Act 2001 (Cth) - s.459E, s.459G Trade Practices Act 1974 (Cth) - s.52 - Club Marconi of Bossley Park v AVR Services NSW Pty Ltd [2002] NSWSC 584 CASES CITED : - Process Machinery Australia Pty Ltd v ACN 057 260 590 [2002] NSWSC 45 - Redglove Holdings Pty Ltd v GNE & Associates Pty Ltd (2001) 165 FLR 72 PARTIES : Grass Manufacturers Pty Ltd - Plaintiff Sraennik Pty Ltd - Defendant FILE NUMBER(S) : SC 5265/02 COUNSEL : A.J.L. Ogborne - Plaintiff G. Carolan - Defendant SOLICITORS : Jeffrey Hinde & Associates - Plaintiff Back Schwartz Vaughan - Defendant

1 This is an application by the Plaintiff to set aside a Statutory Demand served on it by the Defendant under s.459E of the Corporations Act 2001 (Cth). The demand was served on 4 October 2002. 2 An application by the Plaintiff under s.459G of the Corporations Act was filed on 25 October 2002 supported by an affidavit which deposes to what is said by the Plaintiff to be a genuine dispute. 3 The circumstances giving rise to the matter may briefly be described as follows. The Plaintiff manufactures, markets and sells synthetic grass, principally for tennis courts, to the Australian and international markets. The manufacturing process of the Plaintiff involves receiving supplies of synthetic grass yarns and processing that yarn into rolls or tiles of synthetic grass on purpose built machinery at its factory. The Plaintiff is a major supplier of synthetic grass to the Australian and international markets. 4 For some time prior to February 2000, the Plaintiff had operated under an arrangement with Tapex Pty Limited ("Tapex") for the exclusive supply of synthetic grass yarn to the Plaintiff. 5 Between September and February 2000, the Plaintiff and the Defendant (formerly known as Kinnears Pty Ltd) entered into negotiations, the purpose of which was clearly enough to transfer, if not the whole, then the bulk of the Plaintiff's ordering requirements of yarn from Tapex to the Defendant. There were various discussions between the representatives of the parties, in which each indicated an intention to build up a substantial trading relationship between them. 6 What are said to be supply agreements were entered into between the parties from February 2000 onwards. Pertinent to note for the purposes of these proceedings is an agreement which was made in respect of the calendar year 2000. The document is headed " SUMMARY OF AGREEMENT BETWEEN KINNEARS P/L AND GRASS MANUFACTURERS P/L " . The document records a desire on the part of the parties to develop further the relationship commenced in 2000. Paragraph 2 states: "Kinnears will assign at least 250 tonnes of grass yarn production in 2001, commencing immediately."