Challenging a Statutory Demand in New South Wales

I was cleaning up my bedroom and stumbled across some of my old law school files and found myself engrossed in the statutory powers, which protect corporations against statutory demands served against them by creditors to recover outstanding debts.  I figured that a very tiny percentage of fellow Googlers might actually find the following extract interesting:-

What is a statutory demand and what is its significance?
- It represents the creditors commencement of a winding up order against a debtor.
- The statutory demand must require the company to pay the amount of debt within 21 days after the demand is served on the company (see: s459E(2)c). The demand must also provide an attached affidavit.
- If the company fails to comply with the demand, then the creditor may apply to the Court to wind that company up in insolvency (see: s459Q).

How can a debtor challenge a statutory demand? 
- The company may apply to set aside a statutory demand within 21 days of the demand being served on them. The grounds to set aside are as follows:
     1.There must be a genuine dispute between the parties about the existence or the amount of the debt,  
      to which the demand relates (see: s459H(1)a).
     2. That the company has a claim offsetting that outstanding amount (see: 459H(1)b). An offsetting
      claim means a "genuine counter claim or cross demand against the creditor" (even if it does not  
      arise out of the same transaction or circumstances as a debt to which the demand relates).

How to set aside a demand on other grounds?
- If there is a defect in the demand.
- Substantial injustice will be caused unless the demand is set aside
- There is some other reason why the demand should be set aside.

Order subject to the conditions 
- Respondent may also ask the Court to make an Order subject to the conditions (see: 459M).

Costs
- Where the respondent wins and the demand is set aside the Court may order that person making the demand to pay the Companies costs in relation to the application.

The changing world order

We all appreciate that much of the world's relative wealth is shifting from the western hemisphere to the eastern hemisphere. Research indicates that the actual cost of all things in the western hemisphere will increase. Even though the west will continue to grow to be "bigger and better" than it has ever been. The actual disparity between the haves and the have not nations will decrease. Such non-disparity means that more people will have access to more cash and therefore the actual relative value of that cash in terms of purchasing power will likely decrease. So perhaps China will eventually take the position of the developed world.

Why is the AUD declining?

In the last 30 days the AUD has declined against the USD by about 10.67% from $1.0636 to approx $0.95. Further, the AUD has declined by 9.3% against the Yen, 9% against the Yuan, 5.38% against the Pound and 3.5% against the EURO. It appears that certain proprietory traders must be making a motza out of this decline, because the fundamentals for such a decline simply do not add up. Business Journalists justify the declining AUD by arguing that it has been caused by the Greek debt crisis, declining natural resources and a rumour that the RBA might cut interest rates. But these arguments simply fail to make any funadamental economic sense, when analysed in respect to the global predicament in the US and Europe. In fact Australia is a diversified and modern economy and produces much more than mere iron ore. Moereover, Australia has a growing GDP, whereas the rest of the world does not. So why then is the AUD being punished? The answer is that the market has been indulging in PURE SPECULATION. Unfortunately there is a ridiculous perception that the AUD is completely related to the price of natural resources and that the failure of Greece is going to lead to economic armagedon and thus lower prices of iron ore and cause the AUD to reduce to X. The fact of the matter is that, if Greece defaults, there will be many other dominoes that will fall flat before Australia. Economists doubt that even if Greece, Ireland, Portugal, Spain and Italy fail that it will cause China's demand for natural resources to decline below growth on the year proceeding. The fact of the matter is that Australia will be exporting more goods and services to Asia than the year prior, even if America and Europe slumps into depression. So this argument should not be a question of why the AUD is failing, but rather why its not gaining against the rest due to the inherently bad economies in the EU and USA. Perhaps we should be arguing about why the USD and EURO are trading at such an over inflated level given their domestic predicaments?

Quantitative Easing could mark the beginning of the end for the USD

We all know that the Federal Reserve's quantitative easing is undermining the value and security of the US dollar. In an attempt to kick start domestic product supply chains and to undermine cheap Chinese imports. This type of debasement could very easily spark the end of a US Dollar dominated world. But which currency would be a suitable replacement for the USD? The EURO and the POUND have their own fair share of issues. The YEN represents yesterday's Asia in decline shadowed by the recent economic miracles of China and India. Further, China's pegged YUAN is too highly controlled and exposed to governmental manipulation to be a likely candidate. The AUD and the CHF are perceived to be too small and not liquid enough to be a safe enough bet. So, perhaps the only foreseeable solution will be for countries to hold a bread basket in reserve of an assortment of currencies (i.e. EURO, POUND, YEN, AUD, CHF, USD, YUAN, GOLD). Or, perhaps the Gold or Silver standard will return.

This chart perhaps shows the beginning of the end for the USD.

India's population growth

India has over 1.2 billion people and it is exponentially growing. Unlike China, India is the worlds biggest democracy and has made no attempt at curbing its growth with a one (1) child policy. So, what will happen to a much bigger India with projections of about 1.9 billion in twenty five years, and its resources are already depleted. India will either have to spread its resources more widely amongst its population or face increased polarity between the wealthy and the poor. In essence, India's classes will all grow in number, however they will likely remain as equal fractions. The biggest issue will be food and water, the quality and consumption per head will more likely reduce or be imported from surrounding countries to replenish the gap.

Liability of Airlines for recklessness

Qantas Ltd as an example has had a string of commercial accidents since it was floated on to the market in 1997. In the scenario that an airline suffers fatalities (deaths), which are attributed to by its maintenance, could the airline itself and its Directors be criminally liable under the Commonwealth Criminal Code.

In the scenario that an airline suffers a casualty the company and the Board of Directors could be criminally liable for cutting maintenance, so long as it was sufficiently connected to the fatalities. In this case the Court is empowered to make a finding of recklessness and order a fine on the company and prosecute the Directors individually. Under the Commonwealth Criminal Code at 5.4 (1)(a) a finding of recklessness will be made in the situation where a Director is aware of a substantial risk of death or injury and that the circumstances exist and that it was unjustifiable to take the risk, and the company takes the risk anyway.

Will 2011 doom the EURO?

There have been escalating rumours over the last six (6) months that Germany, the EU's largest economy is planning to announce its withdrawal from the EURO in early January 2011. Although these rumours seem a bit dubious, they allegedly stem from a Bund Employee who alleged on a chat site in early June 2010 that new generation Deutsche Marks were being printed for circulation in Germany, Austria, Netherlands and Finland.

Yet the question remains as to whether this rumour will in fact crystallise into reality in early 2011 and whether this would lead to the eventual demise of the EURO?

The geopolitical ramifications of a German led EU currency exodus would be as follows:

1. Shortly after Germany's announcement, France would make their announcement to exit to the Franc.

2. Thereafter the Eastern and Southern EURO 'basket republics' would be left with an unpredictable dud currency. Perhaps these nations would be able to follow the USA's hyper-inflationary lead and print their way out of debt. Nevertheless within days the EURO would likely par with the PESO's in Latin America.