D.A.G. International P/L v D.A.G. International Group P/L [2005] NSWSC 1036

New South Wales Supreme Court

CITATION : D.A.G. International P/L v D.A.G. International Group P/L [2005] NSWSC 1036

HEARING DATE(S) : 9 September 05

JUDGMENT DATE : 9 September 2005

JUDGMENT OF : Brereton J

CATCHWORDS : CORPORATIONS - Winding up - creditors statutory demand - where no application made to set aside demand - application for leave to rely on ground which could have been relied on in such application - materiality of ground to proof of solvency - where dispute tends to rebut inference of insolvency by explaining non-compliance with demand

LEGISLATION CITED : Corporations Act s459S

Chief Commissioner of Stamp Duties v Paliflex Pty Limited (1999) 149 FLR 179; [1999] NSWSC 15 CASES CITED : David Grant & Co P/L v Westpac Banking Corporation (1995) 184 CLR 265 Switz Pty Ltd v Glowbind Pty Ltd (2000) 33 ACSR 723

D.A.G. International Pty Limited (plaintiff) PARTIES : D.A.G. International Group Pty Limited (defendant)

FILE NUMBER(S) : SC 4719 of 2005

S Gallant (solicitor) (plaintiff) COUNSEL : VRW Gray (defendant)

Nash O'Neill Tomko Lawyers (plaintiff) SOLICITORS : George Mallos Lawyer (defendant)

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BRERETON J

Friday 9 September 2005

4719/05 D.A.G. International P/L v D.A.G. International Group P/L

JUDGMENT (ex tempore) (revised 21 October 2005) 1 HIS HONOUR: On 31 May 2005 the plaintiff D.A.G. International Pty Limited (in liquidation), to which for the sake of convenience I shall refer to as "the creditor", served a creditor's statutory demand under Corporations Law s 459E on the defendant D.A.G. International Group Pty Limited, to which for the sake of convenience I shall refer to as "the debtor", claiming a sum of $24,452.75. 2 On 21 June 2005, being the 21st and last day for compliance with the creditor's statutory demand, the debtor filed an originating process claiming an order setting aside the creditor's statutory demand. However, the debtor failed to serve that originating process on the creditor until two days later. The creditor taking the point, the debtor accepted that it was irretrievably out of time to proceed with that application: see David Grant and Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265. Accordingly, that application was, on the application of the debtor, dismissed on or about 22 July 2005. 3 On 26 August 2005, the creditor filed an originating process claiming an order winding up the debtor in insolvency pursuant to s 459A, and or on the just and equitable ground pursuant to s 461(1)(k). The originating process and the evidence filed in support of it, however, relies only on non-compliance with the creditor's statutory demand, and the consequent presumption of insolvency arising from the operation of s 459C. That presumption, of course, is rebuttable, operating only except so far as the contrary is proved for the purposes of the relevant application (see s 459(3)). In the present context, the relevant application is the winding up application. 4 By interlocutory process filed on 7 September 2005, which was made returnable pursuant to an abridgment of time on 8 September 2005, the debtor now seeks leave, under s 459S, to rely in defence of the winding up application on grounds on which it could have relied but did not on an application to set aside the creditor's statutory demand: namely, that the debt claimed in the creditor's statutory demand is the subject of a bona fide dispute. 5 On an application for leave under s 459S the essential issues are: