Gucce Holdings Pty Ltd v Bank of Queensland Limited [2017] FCA 12 (19 January 2017): application to set aside staututory demand, section 459G Corporations Act

February 5, 2017 |

In Gucce Holdings Pty Ltd v Bank of Queensland Limited [2017] FCA 12  the Federal Court considered whether a sale for undervalue, or at least a claim as such, was a basis for an offsetting claim (and what is required) as well as whether a special leave application was sufficient to set aside a statutory demand.


Gucce Holdings Pty Ltd (ACN 099 191 714) filed an application, [1], with an  affidavit of  Tina Michelle Bazzo, director of Gucce,[2], on 29 December 2015 pursuant to s 459G of the Corporations Act 2001to set aside a statutory demand made by the Bank of Queensland Limited.

Bazzo stated that on 17 December 2015 she received a statutory demand dated 16 December 2015, which related to a judgment of 27 November 2015 entered on the counterclaim of the Bank in a Supreme Court of Western Australia action  (Supreme Court proceeding). [3] The plaintiffs in the Supreme Court proceeding were George 218 Pty Ltd, Prada Pty Ltd, herself and Gucce. She was also the director and secretary of George 218 and Prada. In December 2013, George 218, Prada and she jointly commenced the Supreme Court proceeding against the Bank seeking declarations that it was not entitled to any payment under guarantees given to StateWest Credit Society Pty Ltd on or about 24 April 2006 [6].

Bazzo swore that at the time of making her affidavit in December 2015, she had given instructions for an appeal to be filed from the judgment in the Supreme Court proceeding [5].

Previously, on 19 December 2014, the Bank provided a statutory demand to Gucce in respect of the claim by the Bank on the guarantee given by Gucce to StateWest on or about 24 April 2006 [7]. Gucce applied to set aside that statutory demand. Orders were made, by consent, on 18 February 2015, setting aside that statutory demand [8].  Gucce was then joined as a fourth plaintiff in the Supreme Court proceeding [9].

Gucce stated that in the Supreme Court proceedings:

  • the Bank admitted that the relevant properties were sold for $5.7 million, leaving a shortfall of $2,274,515.87 after the sale of the securities; and
  • the evidence of the Bank tendered at the trial was that the relevant properties had a value of $14.29 million as at February 2010, having regained “prior decreases caused by the GFC” [21]

On that basis Gucce contends that:

  • as the judgment debt relied on by the Bank was significantly less than the difference of $8,570,000, it has an offsetting claim which would completely exhaust the amount of the debt.
  •  the judgment debt had been reduced by payments made since December 2015 to the extent of $700,000, referred to below, and by a further payment of $100,000 in March 2016 [22].

Gucce contends that if it  successful in the Supreme Court proceeding/appeal from the judgment of Mitchell J the Bank would be required to repay Gucce the $800,000 paid to date, and any further amount paid, in addition to having its claim extinguished [23] – [24]. There is an offsetting claim by Gucce and the other plaintiffs in the Supreme Court proceeding, in relation to the conduct of the Bank in allowing a sale of  property at undervalue [13].  Further the claim against the Bank in respect of the sale of the properties at less than market value was deferred by the orders of Mitchell J which were a legal, rather than a practical, bar to the offsetting claim being dealt with in the hearing before him [20].

As a result of the above Gucce submitted, [16], that there were three issues, any one of which was sufficient to meet the well understood test to have the statutory demand set aside:

  • the Supreme Court proceeding includes an offsetting claim by the plaintiffs, including Gucce, which would completely extinguish the debt claimed by the Bank;
  • the demand relates to a claim which was previously the subject of a statutory demand dated 15 December 2014, which was set aside in earlier proceedings on 18 February 2015; and
  • the judgment of Mitchell J is subject to appeal where the appeal has been found to be arguable.

On 26 October 2016, the Court of Appeal delivered its reserved judgment and dismissed the appeal [17].  Gucce submitted that she intended to apply for special leave to appeal from that decision to the High Court of Australia, something it did soon after [18].


The Bank’s position was:

  • that the statutory demand in question relates to the Bank’s demand for payment of the judgment sum of $2,555,309.53 awarded in its favour by Mitchell J in the Supreme Court proceeding, in which Gucce was, as Ms Bazzo says, one of four plaintiffs and the Bank was the defendant [31] after a trial of preliminary issues in which the Bank was entirely successful [32]
  • that at the date of making an affidavit in response there was no application having been made by Gucce or any of the other plaintiffs for a stay of execution of the judgment in the Supreme Court proceeding [35].
  • there is no specific sum constituting an offsetting claim [36]

The Bank submitted, [44], that the application was fundamentally flawed because:

(1) There must be an offsetting claim for money and here, Gucce seeks declaratory relief only.
(2) Even if the relief is for a monetary amount, Gucce has not discharged its onus of proving that it has an offsetting claim. It has not adduced any evidence in support of its claim.
(3) Even if the claim is a monetary one and Gucce has adduced some evidence, it has not claimed against the correct party, the reason being the Bank did not effect the sale of the properties as suggested, but the receiver and manager did.

The Bank also submitted there is a failure by Gucce to actually quantify the value of its counterclaim [47] and even assuming that the market value of the properties was $5.9 million, being the top of the range ascribed by a valuer , the difference between that value and the value the properties were sold  is only $112,500, which is not sufficient to reduce the debt owed to the Bank below the statutory minimum and accordingly the application must fail [59].

The Court, at [61], accepted the Bank’s submissions concerning an undervalue sale stating that the claim is ultimately based on a suggestion that an internal Bank document from 2010, three years before the material valuation dates and an estimate made by Ms Bazzo, an officer of Gucce, somehow provides a plausible basis for proving a later undervalue sale by receivers [62].

The court found there was nothing exceptional about the process by which the security land was sold [64].

Accordingly the court was not satisfied that Gucce has demonstrated to the requisite standard, having regard to relevant evidence, that it has an offsetting claim equal to, or in excess of, the judgment debt in this case that forms the basis of the statutory demand [65].

The court regarded the second demand issued by the Bank, in reliance on the recently obtained judgment debt as a standalone demand. Critically the question of the judgment debt upon which it is based has not been determined in any prior proceeding [71].  Further the court noted that  a party may issue separate demands [72].

The court rejected the submission that the special leave application is reasonable and arguable, and is sufficient to set aside the demand [77].


Offsetting claims must be properly particularised.  There must be some form of figuring.  Other Otherwise they will note clear the relatively low bar for being accepted as a basis to set aside a statutory demand. Here the issue was undervalue.  It was a fatally flawed claim because it relied on out of date valuations which were likely not going to alter the sum in issue.


One Response to “Gucce Holdings Pty Ltd v Bank of Queensland Limited [2017] FCA 12 (19 January 2017): application to set aside staututory demand, section 459G Corporations Act”

  1. Gucce Holdings Pty Ltd v Bank of Queensland Limited [2017] FCA 12 (19 January 2017): application to set aside staututory demand, section 459G Corporations Act | Australian Law Blogs

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