10. February 2011 09:01
The plaintiff, Carrington, applied under s 459G of the Corporations Act 2001 (Cth) (the Act) to set aside a statutory demand served on it by the defendant, Hyundai: .
Although Carrington admitted the incurring of the debt, it claimed it had offsetting claims that exceeded the amount claimed in the statutory demand, and that therefore the statutory demand should be set aside pursuant to s 459H of the Act: , .
Carrington claimed that it had offsetting claims in contract, as well as arising from estoppel and breaches of the misleading conduct provisions in the Trade Practices Act 1974 (Cth) and Fair Trading Act 1987 (NSW): .
Ward J summarised the applicable principles as follows:
- A company challenging a statutory demand on genuine dispute grounds will fail only if the contentions on which it seeks to rely are so devoid of substance that no further investigation is warranted: .
- A genuine dispute must be found to exist if there is any factor which indicates on reasonable grounds an arguable case, even if the case against the company appears stronger: .
- The court’s task is not to resolve competing claims, but to determine whether there is a genuine dispute regarding the debt or a genuine offsetting claim, and if so, in what amount. It is neither necessary nor appropriate for a court to consider the merits of the dispute or offsetting claim: .
- A genuine dispute is one which is bona fide and truly exists in fact, and is not spurious, hypothetical, illusory or misconceived. It exists where there is a plausible contention which places the debt in dispute and requires further investigation: .
Ward J was satisfied that on the material before her that there was a genuine dispute as to the liability of Carrington to pay the amount claimed in the statutory demand, with regard being had first to the offsetting amounts: . The statutory demand was accordingly set aside and Hyundai ordered to pay the costs of the application.
Relevant paragraphs of Ford:
[27.062], [27.063], [27.067]