BETWEEN: ALUMINIUM FAST FERRIES AUSTRALIA PTY LTD (ACN 010 977 275)

AND: MARINE CONSTRUCTION AND MAINTENANCE PTY LTD (ACN 010 060 607)

1 This is an application to set aside a statutory demand served pursuant to s. 459E of the Corporations Law.

2 The respondent creditor is Marine Construction and Maintenance Pty Ltd.

(a) That the demand was not accompanied by an affidavit as required by s. 459E(3); and

(b) That there is a genuine dispute as to the existence of the debt.

4 The demand was served on 1 March 1999. It is common ground that no affidavit was served with it. Indeed, none was served until after the company had filed its application to set aside the demand.

(1) [Power to set aside demand] On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:

(a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or

(b) there is some other reason why the demand should be set aside.

(2) [Mere defect not ground to set aside] Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect."

This is not a case of a defect in the demand. In my view the failure to serve an affidavit verifying the debt at the same time as the demand is "some other reason why the demand should be set aside" within s. 459J(1)(b).

6 A creditor wishing to rely on the presumption of insolvency which arises on non-compliance with a statutory demand must itself comply with the requirements of s. 459E. I respectfully agree with what Cox J. of the Tasmanian Supreme Court said about this in Victor Tunevitsch Pty Ltd v Farrow Mortgage Services Pty Ltd (in liq.) [1994] TASSC 121; (1994) 14 ACSR 565 at 568.

7 The statutory demand must be set aside if there is a genuine dispute about the existence or amount of the debt to which it relates: Corporations Law s. 459H. It is not for the court hearing such an application to determine the ultimate merits of the dispute, but merely whether the dispute is bona fide and truly exists in fact and whether the grounds for alleging the existence of the dispute are real and not spurious, hypothetical, illusory or misconceived: Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452 at 464; Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601 at 605.

8 The demand is for $28,700 slipping fees relating to the vessel "Seri Anna".

9 Aluminium Fast Ferries Australia Pty Ltd ("the company") carries on the business of the construction and maintenance of ferries and other vessels at premises on the Brisbane River at Bulimba. There is a slipway at the premises purchased by the respondent from the previous occupier of the land. By an agreement between the company and the respondent the company allowed the respondent to leave the slipway plant and machinery on the premises; the company had the right to use this plant and equipment; and the company was to pay the respondent slipping fees.

10 The company built the vessel "Seri Anna" for Interhill Industries Sdn Bhd. It was launched on or about 27 March 1998, but not handed over to Interhill Industries because of a dispute as a result of which the final payment for the construction was not paid. In the latter part of 1998 the company pulled the vessel from the water on the slipway. It is in relation to that slippage that the respondent claims slipping fees.

11 The company says there was an oral agreement that it should pay the slipping fees only when it was paid by Interhill.

12 Interhill commenced proceedings in rem as a result of which the vessel was arrested while on the slipway on 23 December 1998. It remains under arrest, although by arrangement with the Marshall it has been taken to a marina.

13 On the material I am satisfied that there is a genuine factual dispute whether there was an oral agreement that the fees not be paid until the company was paid by Interhill. The respondent submitted that even if there were such an agreement, it amounted to a condition precedent to payment, and that that condition precedent had been discharged because the arrest of the vessel had made performance of it impossible. I am inclined to the view that the arrest did not give rise to impossibility of performance, but simply delay. However, in all the circumstances I express no concluded view on that.

14 The respondent submitted that if I were to set aside the demand, I should do so on condition that the amount of the debt be paid into court. I am not prepared to impose such a condition in the present case where my primary reason for setting aside the demand is the respondent creditor's failure to serve an affidavit with the demand.

15 I order that the statutory demand served on 1 March 1999 by Marine Construction and Maintenance Pty Ltd be set aside. I order the respondent creditor to pay the applicant's costs of and incidental to the application to be taxed.

[Aluminium Fast Ferries Australia P/L v Marine Construction and Maintenance P/L]

BETWEEN: ALUMINIUM FAST FERRIES AUSTRALIA PTY LTD (ACN 010 977 275)

AND: MARINE CONSTRUCTION AND MAINTENANCE PTY LTD (ACN 010 060 607)

CATCHWORDS: CORPORATIONS LAW - application to set aside a statutory demand - demand not accompanied by affidavit - genuine dispute

Victor Tunevitsch Pty Ltd v Farrow Mortgage Services Pty Ltd

(in liq.) [1994] TASSC 121; (1994) 14 ACSR 565

Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452

Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601