Stephanie Roebuck As Executor Of The Deceased Estate Of
Suzanne Florence Bulwinkel (Roebuck) served Bulwinkel Enterprises
Pty Ltd (Bulwinkel) with a statutory demand for the payment of
$990,377.63 monies owing in connection with an unpaid trust
distribution and loan between the parties.
Bulwinkel did not comply with the statutory demand, nor did it
apply to have the statutory demand set aside. After 21 days,
Roebuck applied for an order to wind up Bulwinkel in insolvency
(Application), pursuant to s459P of the
Corporations Act 2001 (Act).
Bulwinkel opposed the Application on the grounds that the amount
in the statutory demand was not owed (Disputed
Debt). However, because Bulwinkel did not apply to have
the statutory demand set aside on this ground prior to the
expiration of the 21 day period, Bulwinkel required leave of the
Court to oppose the Application on that ground pursuant to s459S of
the Act. Such leave is not to be granted by the Court, unless the
ground for opposing the Application "is material to proving
that the company is solvent".
Bulwinkel submitted various personal reasons why no application
to set aside the statutory demand was filed and argued that if the
Disputed Debt was not owing, the company was solvent.
LEAVE TO OPPOSE WINDING UP APPLICATION
In Switz Pty Ltd v Glowbind Pty Ltd1,
Spigelman J articulated the relationship between a disputed debt
and the company's solvency, as having to be directly
"applied to a process" of establishing solvency, as
opposed to being in mere "contemplation before the
Other authorities, as summarised in McPherson's Law of
Company Liquidation, point to "material" meaning
"likely to influence the determination of a cause rather than
to be necessarily decisive of it".
In line with the latter view, Martin J granted leave to
Bulwinkel to oppose the Application, because the Disputed Debt was
"likely to influence the determination" of
SOLVENCY OF BULWINKEL
After considering the financial documents, Martin J found that
the Disputed Debt was in fact owing and, not having the ability to
pay the Disputed Debt, Bulwinkel was in fact insolvent.
Alternatively, Martin J found there was a significant
overestimation in the value of assets, as well as a deficit in
respect of another loan. Therefore, regardless of the Disputed
Debt, Martin J held that Bulwinkel had not shown that is was
The statutory demand procedure is rigid and the threat of
winding up often has the effect of ensuring that recalcitrant
debtors do not seek to exploit the costs and delays that legal
issues impose on commercial transactions.
However, this case makes it clear that where a disputed debt is
likely to influence the determination of a company's solvency,
it will be a material ground pursuant to s459S(2) of the Act and
therefore give rise to leave being granted to oppose a winding up
1 (2000) 48 NSWLR 661.
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When determining if a DOCA is to be terminated, public interest can, and often will, outweigh any benefit to creditors.
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