Pekell Delaire Holdings Pty Ltd v Bendigo and Adelaide Bank Limited [2016] VSC 570 (21 September 2016): application to stet aside statutory demand, section 459, Corporations Act

September 23, 2016 |

The Supreme Court in Pekell Delaire Holdings Pty Ltd v Bendigo and Adelaide Bank Limited [2016] VSC 570 considered a statutory demand where a key issue was the effect of settlement of group proceedings acting as a bar to a claim of a genuine dispute to a statutory demand.


In July 2006 the applicant, Pekell Delaire Holdings Pty Ltd (“PDH”)  applied to Great Southern Plantation Projects for two grove lots in the Great Southern Organic Olives Income Project and  four vine lots in the Great Southern Wine Grape Income Project with associated applications for term finance. Finance was approved and funds were advanced on the basis of repayment in seven years of principal and interest. The loans were subsequently assigned and ultimately transferred to Bendigo [6]

Group proceedings were instituted in 2011 against Great Southern Managers Australia Limited arising out of the 2006 Olives Managed Investment Scheme. PDH was recorded as a ‘group member’ in relation to each of those proceedings. On 11 December 2014, Croft J approved settlement of group proceedings in the terms contained in a deed of settlement on 23 July 2014 [7].

PDH claimed the statutory demand was defective because:

  1. Mr Delis (“Delis”), together with his wife, a director of PDH which is the trustee of his family trust. The statutory demand was served on the registered office of PDH on 10 May 2016.  On the previous day  a notice of default was served together with a demand under a guarantee directed to Delis and his wife in respect of PDH’s obligations dated 4 May 2016 at its registered office [8].  Delis claimed that until the demands were received in May neither he nor PDH received any notice relating to default of the outstanding debt[9].
  2. the demand relates to investments made by PDH in managed investment schemes and its related finance arm. Delis states that he believes that PDH only received statements about these investments twice a year with the most recent being for the year ending 30 June 2015.  He was not aware how it is said that the amounts set out in the schedule to the statutory demand were said to be due and payable or whether the amounts are said to be principal, interest or penalties or the basis for their calculations [9].
  3. of the two loan deeds specified in the schedule to the demand, the first loan deed, dated 15 June 2006  has the identifier ‘O01450’ in the top right hand corner of the first schedule of the document but the description of debt to which $27,652.27 is demanded is identified in the schedule to the demand as EV00012364. Delis claimed not to know what this is a reference to and he was unable to say that the liability for the alleged debt under the loan deed of 15 June 2006 is the same as contract EV00012364 [10]. The second loan deed, dated 2 October 2008 is identified as  VO1682 on the top right hand corner of the first schedule to the document and not the identifier EV00012350 as set out in the description of debt to which $25,928.06 is demanded. Delis claimed to be unable to say that the liability for the alleged debt under the second loan deed of 2 October 2008 is the same as contract EV00012350 [11].
  4.  the descriptions of the debts in the schedule of the demand each contend that ‘the creditor is the beneficiary of all of GSF’s right to the loan deed by reason of a series of assignments of those rights to the creditor and/or a transfer of those rights to the creditor pursuant to the Financial Sector (Transfer Of Business And Group Restructure) Act 1999 (Cth). Delis argued that PDH has not been notified of any assignment of the rights of GSF pursuant to any of the loan deeds and that the first that PDH heard of any assignment was the reference in the schedule to the statutory demand.  PDH did not agree to any such assignment [12]
  5. regarding the Olive Grove, the application for term finance is dated 11 July 2006 however, the loan deed was dated 15 June 2006. As at 15 June 2006 there was not any power of attorney appointed by PDH who had the necessary authority to execute the loan deed [13].
  6. regarding the Wine Grape scheme the application for term finance was completed on 11 July 2006, however, the relevant loan deed was not executed until 2 October 2008. The loan deed was with effect from 1 September 2007 however the loan deed had not been executed by the parties as of that date [14].

PDH claims a  complete defence to the claims on the basis that there were misrepresentations made by officers and agents of the schemes [16] – [20].

PDH also claims it was not a client of M+K Lawyers in any of the Great Southern Group proceedings and that it opted out of the group proceedings [36] – [38]

Bendigo claimed:

  1. on or about 11 July 2006, PDH executed an application for term finance  to borrow money to acquire an interest in the Great Southern 2006 Organic Olives Income Project Managed Investment Scheme [23]PDH, entered into a loan deed and on or about 15 June 2006 was paid $16,243.33[25] and later the rights under the first loan deed were assigned and that since 31 October 2009, PDH has failed to make any monthly repayments [28].  A similar fact situation applies to the Great Southern 2006 Wine Grape Income Project Managed Investment Scheme [29] – 30]
  2. PDH was a ‘Group Member’ as that term is used in the decision of Justice Croft in Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (rec and mgr apptd) (in liq) (‘the Great Southern Decision’). PDH is listed as an ‘M + K Client’ in page 70 of schedule 4 to the deed of settlement [31]. The terms of the deed of settlement provide, at [32], that:

    (a) In clause 4.1.4, ‘the Lead Plaintiffs for and on behalf of themselves and all Group Members acknowledge and admit the validity and enforceability of the Lead Plaintiffs’ loan deeds and the Group Member’s loan deeds’;

    (b) In clause 4.1.10, ‘the Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members release the BEN parties and their Related Entities from all claims; and

    (c) In clause 4.1.13, ‘each of the BEN parties and their Related Entities may plead this deed as a bar or defence to any claim or action (including a claim for costs) brought by any of the … Group Members’.

  3.  the loan reference numbers iEV00012364 and EV00012350 referred to in the statutory demand  are the ‘contract numbers’ that were allocated to the first loan and the second loan by Great Southern.[34]

PDH had not opted out because the spreadsheet provided by the Court showing Group Members from whom opt out notices had been received. PDH’s name did not appear on the spreadsheet [39]



The plaintiff’s position, at [5], was that:

  1. the statutory demand was defective;
  2. in any event there are sufficient grounds to establish a genuine dispute or genuine offsetting claim by reason of misleading and deceptive conduct attendant upon entry into each of the loan deeds which are the basis for the debt set out in the schedule to the statutory demand

Bendigo argued that any defence or offsetting claim is barred by a deed of settlement approved by the Supreme Court. That said, if the deed does not operate as a bar, BAB conceded that the statutory demand ought to be set aside on the basis of a genuine offsetting claim [5].

The court rejected PDH’s  submissions that:

  1. the identity and makeup of the alleged debts is unclear in the schedule [41]
  2. the affidavit accompanying the demand is  unhelpful as it does not identify the alleged accounts and provides no detail as to how the alleged debts have been calculated [42].
  3. the ‘contract numbers’ are identified in the schedule – EV00012364 and EV00012350 respectively do not match the numbers imprinted on the schedules to the corresponding loan deeds (O014550 and VO1682 respectively) [43].

on the basis that further documentation was exhibited by officers of Bendigo and Delis admitted that he received statements in respect of the two accounts in June of last year [44]. It is not a requirement of a statutory demand to set out all of those transactions in the schedule.  It was  clear now how the respective amounts claimed on the first and second loans were arrived at.

To the submission that the loan deeds were not executed by the directors of PDH [45] the court did not need to decide the issue but would otherwise regard the execution of the first loan agreement and the assignment of the second loan agreement as requiring investigation.

The key issue in the application was the status of the settlement and whether it acted as a bar to possible defences that may be raised by the PDH.

The court reviewed the authorities and set out the relevant principles regarding the status and rights of parties to group proceedings relevantly, at [84] as:

(a) there is a distinction between settlement of and a judgment in a group proceeding. While s 33ZB operates with respect to a judgment, there is no equivalent provision which bears upon settlement;

(b) the failure to opt out may not be fatal. The records of this Court lead to the conclusion that PDH remained a group member. The onus is upon PDH to demonstrate otherwise. In any event, I decline to determine the issue of whether or not PDH had attempted to opt out and what ensues from such attempt. I do not need to determine that issue given the conclusions in this judgment;

(c) lead plaintiffs are not the privies of group members. The lead plaintiffs did not represent the group members in respect of unpleaded defences and claims;

(d) the lead plaintiffs could not propound the individual group members’ claims as such claims do not have the commonality required by s 33C;

(e) a settlement by the lead plaintiffs will not have any binding effect on group members except insofar as group members take the benefit, they must also share in its burden. That is, settlement may be binding in respect to the group issues;

(f) in considering whether an Anshun estoppel might apply, careful consideration needs to be given to the form of the opt out notice. In this particular instance the opt out notice did not clearly specify all the consequences of opting out;

(g) even if the opt out notice had provided an adequate warning about Anshun estoppel, Part 4A does not treat group members as if they were parties except to the extent provided for in s 33ZB.

The Court accepted PDH’s submission that even if PDH remained a group member of the Great Southern Proceedings it is not shut out from raising its individual defences and that the specific loan deeds are unenforceable on the basis of the alleged misrepresentations as the statement of group issues set out in each further amended statement of claim does not capture the defences or the offsetting claims personal to PDH [53].

The court found  it is still genuinely arguable that notwithstanding the order approving the settlement regard must still be had to whether or not the same precludes the plaintiff from raising a defence or off-setting claim personal to it [85]. Against this the court further considered, at  [86], the  Court of Appeal’s  judgment in Byrne v Javelin Asset Management Pty Ltd where it stated, at [55]:

…there are many instances… where the Court has made an order authorising a plaintiff to enter into and give effect to the settlement on behalf of group members Again, s 33ZF is an available source of power for such an order. In approving the present deed of settlement, Croft J ordered, among other things, that the plaintiffs in the group proceedings ‘have the authority’ of the group members ‘nunc pro tunc, to enter into and give effect to the deed of settlement and the transactions contemplated thereby for and on behalf of’ the group members. In the circumstances, it is not necessary to decide whether, in the absence of an order such as those that might be made under s 33ZF, a settlement of a group proceeding is binding upon group members once approved by the Court, by operation of s 33ZB. It suffices that the present settlement was binding on group members by virtue of the orders made by the Court in this particular case.

While the court noted that in Byrne  the Court of Appeal “..seems to elevate the status of a settlement to a judgment by virtue of the order pursuant to s 33ZF” it did not approach the issue in the same manner as developed by the Court of Appeal in Timbercorp [87].  The court found it  difficult to rationalise the Timbercorp decision with that of Byrne.  That identifies the issue of the bar as being genuinely arguable and warranting further investigation [88].


The question of the status of settlement agreements vis a vis other collateral actions is highlighted by this decision.  The highly technical objections to the demand, in the form of inconsistency in loan document identification had very little traction with the court.  The court was interested in the execution of the loans themselves but did not have to consider that issue in detail as it focused on the uncertainty in the law regarding the status of settlement agreements and whether that had a bar to raising a genuine issue of dispute, in this case a claim of misrepresentation.

One Response to “Pekell Delaire Holdings Pty Ltd v Bendigo and Adelaide Bank Limited [2016] VSC 570 (21 September 2016): application to stet aside statutory demand, section 459, Corporations Act”

  1. Pekell Delaire Holdings Pty Ltd v Bendigo and Adelaide Bank Limited [2016] VSC 570 (21 September 2016): application to stet aside statutory demand, section 459, Corporations Act | Australian Law Blogs

    […] Pekell Delaire Holdings Pty Ltd v Bendigo and Adelaide Bank Limited [2016] VSC 570 (21 September 201… […]

Leave a Reply

Verified by MonsterInsights