Energy Equity Corporation Ltd v Sinedie Pty Ltd

(2001) 166 FLR 179; [2001] WASCA 419

Western Australia Court of Appeal

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Interrogate

Catchwords

1. Corporations
2. › Statutory demand
3. › Application to set aside
4. › Affidavit in support
5. › 21-day time limit
6. › Whether offsetting claim first raised outside time limit may be relied upon
7. › Whether initial affidavit must identify grounds of dispute or offsetting claim
8. › Corporations Law, s 459G, s 459H(5)
1. Corporations
2. › Statutory demand
3. › Application to set aside
4. › Abuse of process
5. › Whether demand an abuse of process where debtor company has substantial assets but liquidity problems
6. › Corporations Law, s 459G
1. Contract
2. › Penalty clauses
3. › Termination fee
4. › Whether termination fee payable on breach by either party is a penalty
5. › Whether amount extravagant or unconscionable where it does not exceed amount payable had contract run full term

Quick Take

An affidavit filed outside the 21-day period under s 459G of the Corporations Law that raises a new ground to set aside a statutory demand cannot be relied upon; only affidavits that expand on grounds already identified in the initial affidavit (which must itself satisfy the threshold test of stating material facts) may supplement the initial affidavit. A termination fee that does not exceed the amount that would have been payable had the contract run its full term is not a penalty. A statutory demand is not an abuse of process merely because the debtor company has substantial assets, where the evidence shows the company has severe liquidity problems.