Covid-19 Statutory Demands

We recently reported on Justice Black’s dismissal of a winding up application in Ryals Hotel Pty Ltd [2020] NSWSC 1906, in which his Honour had regard to the fact the creditor failed to comply with requirements under Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) (Regulation). His Honour’s findings in that case provided a clear warning for creditors to ensure they have complied with the various Covid-19 legislation enacted last year.

On 15 February 2021, his Honour delivered another judgement in the matter of GT’s Cooking Oils Pty Ltd trading as Filtafry Newcastle [2021] NSWSC 93. His Honour dismissed a winding up application as the creditor had failed to comply with changes enacted by the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (Omnibus Act).

The applicant, Goodman Fielder Consumer Goods Pty Ltd sought to wind up the defendant, GT’s Cooking Oils Pty Ltd, on a presumption of insolvency arising from a failure to comply with a creditor’s statutory demand.

However, the demand only provided the debtor 21 days to comply. At the time the demand was issued, the compliance period for such demands had been extended to 6 months by the Omnibus Act.

His Honour emphasised the extension of the statutory period for compliance was “an essential element of the statutory regime” of the Omnibus Act. Justice Black held that a misstatement of the extended period of payment would give rise to substantial injustice.

The Court, having regard to the misstatement of the statutory period, exercised its discretion and dismissed the winding up application under s 467 of the Corporations Act.

This case serves as another important reminder to creditors to ensure the legislative changes enacted last year are carefully considered, as it is clear the Court will not allow any attempt to circumvent those provisions.