LSI Australia v LSI Holdings; LSI Australia v LSI Consulting

[2007] NSWSC 1406

Supreme Court of NSW

Built by Barristers,
For Australian Law.

1. Corporations
2. › Winding up
3. › Statutory demand — application to set aside
1. Corporations
2. › Winding up
3. › Statutory demand — defect — vagueness and ambiguity in description of debt
1. Corporations
2. › Winding up
3. › Statutory demand — substantial injustice — s 459J(1)(a)
1. Corporations
2. › Winding up
3. › Statutory demand — Graywinter principle — grounds in supporting affidavit

A statutory demand that is so vague or ambiguous that it fails to identify to a reasonable person in the shoes of a director of the debtor company the general nature of the debt sufficiently for the director to assess whether there is a genuine dispute or offsetting claim contains a 'defect' within the meaning of s 9 and s 459J(1)(a) of the Corporations Act.
Where the defect in a statutory demand (vagueness/ambiguity) caused the applicant to misunderstand or fail to identify the true nature of the debt, and thereby to omit from the initial supporting affidavit a genuine dispute ground (here, an indemnity defence), substantial injustice within s 459J(1)(a) is established because the Graywinter principle would otherwise preclude reliance on that ground.
The Graywinter principle does not preclude reliance on s 459J(1)(a) where the ingredients of the defect-based claim are evident on the face of the statutory demands and the supporting affidavits filed within the 21-day period, even if the ground was not expressly articulated; later affidavits expanding on those ingredients are permissible supplementary affidavits.