The High Court dismissed a petition to wind up Riviera Leisure Limited, finding that the company disputed the alleged debt in good faith and on substantial grounds. The court said the creditor could pursue its claim in inter partes proceedings.
SCS Industries Pty Limited, an Australian company, presented the petition on 19 January 2009, claiming Riviera Leisure owed AUD$291,912.45, stated in the petition to be equivalent to €153,935.29, for Signature spas. Justice Laffoy gave judgment on 30 March 2009.
The petition relied on a 9 July 2008 letter sent to Riviera Leisure’s registered office. The court found that the letter had been served because the company acknowledged receiving it. But it did not qualify as a statutory demand under section 214(a) of the Companies Act 1963: it referred to an earlier demand for a larger amount and did not clearly require payment within three weeks with the statutory consequence of non-payment.
The court considered competing accounts of the spa transaction. The company alleged that some spas were used or defective, and raised disputes about shipping costs, repairs and damage to its business. SCS Industries denied or challenged aspects of those allegations. The judgment did not resolve those factual disputes.
Justice Laffoy found the company’s position was bona fide and supported by substantial grounds. She said the court could not resolve the factual conflicts or determine whether they would eliminate or reduce the creditor’s claim to the statutory threshold. The evidence also showed, in her view, that the alleged debt had been disputed before the winding-up process began. A winding-up petition was not a legitimate way to enforce a debt genuinely disputed on substantial grounds.
The company’s director had sworn that it was solvent. The court said there was no evidence contradicting that statement and took it at face value for the purposes of the petition; it did not make a separate finding on the company’s solvency.
The order dismissed the petition. The court’s findings did not determine the underlying debt or the company’s allegations, and SCS Industries remained free to bring inter partes proceedings.