Australia, June 11 -- New South Wales Land and Environment Court issued text of the following judgement on May 12:

1. By Originating Process filed on 19 February 2025, the Plaintiff, Assetinsure Pty Ltd ("Assetinsure") applies to wind up the Defendant, Brookhollow Investments Pty Ltd ("Brookhollow) on the basis of the presumption of insolvency arising from an unsatisfied creditor's statutory demand ("Demand"). That Demand was issued on 28 October 2024 and claimed the amount of $1,348,668.02 being the total of two amounts paid out by Assetinsure in respect of unconditional undertakings issued by Assetinsure, for which Assetinsure contends that Brookhollow is guarantor, plus a relativity small amount of legal costs. The Demand was issued some six months ago, although the winding up application was filed on 19 February 2025, in the context that no application was made by Brookhollow to set aside the Demand.

2. Now, by Interlocutory Process filed on 9 May 2025, again some six months or so after the Demand, Brookhollow seeks leave under s 459S of the Corporations Act 2001 (Cth) to oppose the winding-up application on the ground that it disputes the debt claimed in the Demand. I will first refer to the applicable evidence, and then to the principles by which this application is to be determined.

Affidavit and other evidence

3. Brookhollow tenders a Deed of Indemnity and Guarantee dated 6 March 2018 ("Deed") between Assetinsure and other parties including Quasar Constructions (Commercial) Pty Ltd ("Quasar Constructions"), which refers to guarantors as specified in item 1 of Schedule 1. The Deed includes a document described as "Schedule", which also has in the top right-hand side of the page a reference to Schedule 2, which records, in part 1, the guarantors as including, inter alia Brookhollow in its own right and as trustee for the Brookhollow Unit Trust.

4. Mr McDonald, who appears for Brookhollow, seeks to develop a point of construction, namely that the Schedule, because it is described at the top right at Schedule 2, does not identify the guarantors, notwithstanding the reference in it in Part 1 to the guarantors, and the identification of Brookhollow as a guarantor. It is not necessary or appropriate to determine the strength of that argument for the purposes of this application. Mr McDonald also points to cl 3.1 of the Deed, which is an unconditional guarantee of Assetinsure's obligations by the guarantors and emphasises the language of that clause in its second sentence, that:

"The guarantor must upon demand immediately pay to Assetinsure any guaranteed money owing by the Contractor under this deed which is not paid on its due date."

5. Mr McDonald also draws attention to an unconditional indemnity in cl 3.2 of the Deed which again requires payment "upon demand". The language of those clauses underpins a dispute that Brookhollow seeks to raise in respect of the debt claimed in the Demand, as to whether Assetinsure has issued the necessary demand for payment of the debt under the guarantee or at least has issued the necessary demand under the guarantee to Brookhollow, prior to issue of the Demand.

6. Brookhollow also reads the affidavit dated 18 March 2025 of Mr Ross, who was, at the date the Demand was issued, one of the two directors of Brookhollow. Mr Ross there sets out the then assets of Brookhollow, prior to a subsequent step taken, to which Mr McDonald draws attention, by which the amount then held by Brookhollow in a bank account was reduced by partial discharge of a liability owed to National Australia Bank in respect of a facility. Mr Ross there refers to the fact that Brookhollow is the registered proprietor of two commercial properties situated at Baulkham Hills; there are several leases registered against the title of one of those properties, which include a lease for two suites to Quasar Constructions which is now in liquidation and is no longer paying rent on the premises; and Mr Ross there refers to the substantial value of the relevant properties, as determined by an external valuation that is, admittedly, now some two or so years out of date.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/196eaa716615d725b3eace8b)

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