Federal Court of Australia|1993-09-15|Before: Heerey J

Felkro Nominees Pty Limited v Austissue Pty Limited [1993] FCA 455; (1993) 11 ACSR 607 (1993) 11 ACLC 1142 (15 September 1993)

FELKRO NOMINEES PTY LIMITED v. AUSTISSUE PTY LIMITED

Corporations - winding-up - statutory demand for sum subject to a genuine dispute - costs once "genuine dispute" established.

Solicitor for the respondent: Freehill Hollingdale and

1. The respndent's demand dated 30 June 1993 be set aside.

2. The respondent pay the applicant's costs including

reserved costs.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

HEEREY J The applicant applied under Part 4 Division 3 of the Corporations Law to set aside a statutory demand which was served on it. The demand was dated 30 June 1993 and claimed $190,866.50 for goods sold and delivered. The respondent consents to the setting aside of that demand and the only question is whether I should, as the applicant requests, make an order for costs under s.459N.

2. The dispute, which it is now conceded is a "genuine dispute" within the meaning of s.459H(1), concerns the question whether the respondent should have given the applicant credit for a bounty which it received from the Commonwealth Government. That bounty was provided as a form of compensation for the Government's declining to exempt the goods in question from sales tax.

3. It is true, as counsel for the respondent points out, that the proceedings in the present application have taken a somewhat messy course with a succession of affidavits on behalf of the applicant seeking to establish that there is a "genuine dispute". There is some force in the criticism which counsel for the respondent makes of the admissibility of some of those affidavits. Nevertheless, I think I should not lose sight of the main purpose for which this Division was introduced into the Corporations Law. The proposition that winding-up proceedings are not to be used to enforce disputed debts hardly needs authority.

4. In the present case there is no evidence of insolvency of the applicant apart from the non-compliance with the demand, as to which it is now accepted, as I say, that there is a genuine dispute. I am told that the respondent will shortly commence proceedings in the Supreme Court of Western Australia to recover its debt. Now that a statutory regime is in force for resolving the often sterile disputes which used to take place about the validity of demands, creditors have to realise that if they invoke winding-up provisions by issuing a statutory demand they run the risk that if a debtor establishes that the amount claimed is subject to a genuine dispute, the debtor will get an order for costs, as s.459N expressly contemplates.

5. Although the applicant is an alleged debtor, this proceeding is one to enforce a statutory right. It is not a case of the applicant seeking some form of discretionary indulgence. The applicant has succeeded and on ordinary principles ought to recover its costs. I will order that the respondent pay the applicant's costs including reserved costs.

Felkro Nominees Pty Limited v Austissue Pty Limited [1993] FCA 455;

At a glance

Court

Decision date

Before

Source

Judgment (12 paragraphs)

Felkro Nominees Pty Limited v Austissue Pty Limited [1993] FCA 455; (1993) 11 ACSR 607 (1993) 11 ACLC 1142 (15 September 1993)

Parties