Re Australian Builders Group Pty Ltd [2022] VSC 254 (20 May 2022): statutory demand, s 459G, application to set aside, genuine dispute about existence and/or amount of debt & whether due and payable because condition precedent in deed not met,validity of notice, principles of economic duress

May 23, 2022

In Re Australian Builders Group Pty Ltd [2022] VSC 254 the Supreme Court, per Hetyey AsJ, set aside a statutory demand based on a genuine dispute based on the construction of an agreement and default notice but also by a claim of duress.

FACTS

On or around 1 June 2017 Mind, a not-for-profit organisation providing community-managed specialist mental health services entered into an agreement with Australian Win Win Investment Pty Ltd (‘the landlord’) to lease a property located at 691 High Street, Thornbury, Victoria (‘the property’ and ‘the lease’ respectively) for an amount of $130,000 per annum (approximately $10,833.33 per calendar month) [1].

In early May 2018, Mind and ABG entered into a sublease agreement for the property (‘the sublease’). The parties to the sublease agreed that ABG would pay a reduced amount of rent of $121,000 per annum (approximately $10,083.33 per calendar month) [2].

From February 2019, ABG began to fall into arrears & by 15 April 2021, it owed Mind approximately eight months’ rent, totalling $82,279.92 (‘the arrears’). Pursuant to a repayment deed, ABG agreed to make regular payments of the arrears of $2,500 plus GST, together with interest, per week.

Regarding the repayment Read the rest of this entry »

A & J Morphett Nominees Pty Ltd v JBT Lawyers Pty Ltd & Anor [2022] VSC 238 (17 May 2022): role of Stakeholder, where deposit held by solicitor as stakeholder on behalf of both parties to sale transaction & failed to refund deposit to purchaser who validly terminated the contract.

May 22, 2022

In A & J Morphett Nominees Pty Ltd v JBT Lawyers Pty Ltd & Anor [2022] VSC 238 Justice Dixon in upholding an appeal made important statements for practitioners on the role of stakeholders.

FACTS

On 26 November 2018 the appellant and Chloe Estelle Pty Ltd entered into the contract with the appellant paying the deposit of $42,000 to the respondent on 6 December 2018 [4].

On 21 March 2019, the appellant by written notice terminated the contract and requested that the respondent repay the deposit to it [4].

The appellant, A & J Morphett Nominees Pty Ltd, commenced proceedings against Chloe Estelle Pty Ltd, as first defendant, and the respondent, JBT Lawyers Pty Ltd, as second defendant in the Magistrates Court.  In its defence the respondent admitted that it received the deposit sum as a stakeholder as alleged by the appellant [6].

On 24 June 2019, the appellant entered default judgment in the proceeding against Chloe Estelle Pty Ltd, which included an amount for interest and costs [7]. The appellant did not recover against Chloe Estelle Pty Ltd as it was and on 18 July 2019, an administrator was appointed and it was subsequently ordered to be wound up. The liquidators made no claim for the deposit.

It was never been in dispute that the respondent received that sum as a stakeholder for the appellant and Chloe Estelle Pty Ltd [3].

On 29 March 2019, the Federal Circuit Court, per Small J,made an order in a Family Law dispute between different parties.  It relevantly Read the rest of this entry »

Re Slodyczka & Farren Pty Ltd (Costs) [2022] VSC 102 (4 March 2022): application for costs by the defendant; where presumption of insolvency rebutted, multiple defences relied upon

March 9, 2022

The postscript to Re Slodyczka & Farren Pty Ltd [2022] VSC 102 is a decision by Associate Justice Hetyey regarding costs of the application. 

FACTS

in the substantive judgment  the plaintiff’s application to wind up the defendant in insolvency was dismissed.

The relevant facts for the purpose of considering a costs order were:

  • whilst the matter was commenced by originating process filed on 11 April 2021, there were delays and adjournments [2] resulted in two previous costs orders being made being:
    • on 7 July 2021, consent orders were made which, among other things, required the plaintiff to pay the defendant’s costs thrown away by reason of an adjournment of the hearing originally scheduled that day (‘the first costs order’).
    • at the next hearing date, on 27 July 2021, it was adjourned at the request of the defendant to enable it to put on supplementary material on the question of solvency, including audited accounts for the 2019/2020 and 2020/2021 financial years. The plaintiff’s costs of the hearing be reserved (‘the second costs order’).

The defendant opposed the winding up application on the following alternative bases [4]:

(a) service of the plaintiff’s statutory demand dated 3 February 2021 (‘the statutory demand or the demand’) was defective;

(b) the defendant was solvent and could displace the statutory presumption of insolvency;

(c) the defendant should be given leave pursuant to s 459S of the Corporations Act2001 (Cth) (‘theCorporations Act’) to oppose the winding up application on a ground or grounds it could have relied on for the purpose of an application to set the demand aside. The grounds sought to be raised were: (i) there was a genuine dispute about the amount of the debt claimed in the statutory demand in accordance with s 459H(1)(a); (ii) the defendant had an offsetting claim for the purpose of s 459H(1)(b) of the Corporations Act; and (iii) the demand was defective and a substantial injustice would be caused to the defendant if the demand was not set aside pursuant to s 459J(1)(a) of the Corporations Act; and

(d) pursuant to s 467(1)(a) of the Corporations Act, the Court should dismiss the plaintiff’s application as a matter of discretion.

In the substantive judgment the court held that, [5]:

  • the defendant failed to rebut the presumption of service of the statutory demand under s 29(1) of the Acts Interpretation Act 1901 (Cth).
  • the defendant succeeded in displacing the statutory presumption of insolvency on the basis that it was cash flow positive and balance sheet solvent. The proceeding was dismissed on this basis.
  • the defendant’s application under s 459S of the Corporations Act was not granted because the grounds sought to be raised in respect of the plaintiff’s debt were not material to proving solvency however  had the defendant failed to establish solvency the corut would haveultimately have granted it leave
  • the defendant could not to pursue its argument that the Court should dismiss the plaintiff’s application in accordance with the Court’s discretion under s 467(1)(a) of the Corporations Act because of a lack of proper notice to the plaintiff Read the rest of this entry »

Statutory demands. update Re Amville Constructions Pty Ltd [2022] VSC 65 (17 February 2022), Re Slodyczka & Farren Pty Ltd [2022] VSC 19 (1 February 2022) & Re Wynyard Victoria Pty Ltd [2022] VSC 81 (24 February 2022); insolvency, service, setting aside statutory demands, ss 459A, 459C, 459G, 459H, 459J, 459P, 459S of Corporations Act.

March 6, 2022

Associate Justice Heytey has had a busy start to the year with 2 decisions regarding applications under the Corporations Act 2001; Re Slodyczka & Farren Pty Ltd [2022] VSC 19 and Re Amville Constructions Pty Ltd [2022] VSC 65.  Associate Justice Gardiner considered an application to set aside a statutory demand in Re Wynyard Victoria Pty Ltd [2022] VSC 81.

Re Slodyczka & Farren Pty Ltd [2022] VSC 19

The key issue in this application was whether there was proper service of a statutory demand and whether the presumption of insolvency was rebutted. 

FACTS

Slodyczka & Farren Pty Ltd (‘the defendant’) was first registered on 14 December 2015. In response to the COVID-19 pandemic, it commenced a business in March 2020 for the manufacture and sale of face masks.  Between April 2020 and August 2020, Lion & Horn Pty Ltd (‘the plaintiff’) providing it with marketing services to sell of its masks [1].

In early February 2021, the plaintiff purportedly served the defendant with a statutory demand dated 3 February 2021, which claimed the sum of $36,091.77 in relation to an outstanding invoice dated 28 August 2020 for its marketing services . The defendant did not comply with the demand within the 21-day statutory period.

By originating process filed on 11 April 2021, the plaintiff sought to wind up of the defendant pursuant to ss 459A and 459P of the Corporations Act 2001 (Cth) relying upon the statutory presumption of insolvency contained within s 459C(2)(a) of the Corporations Act.

The Court framed the questions for consideration as being, at [9]:

(a) was service of the statutory demand effective?

(b) is the defendant solvent?

(c) should the Court grant the defendant leave pursuant to s 459S(2) of the Corporations Act to oppose the winding up application on one or more grounds that the defendant could have relied upon in seeking to set aside the demand, but did not so rely? Further, is such a ground material to proving the Company is solvent?; and

(d) should the Court dismiss the plaintiff’s application under s 467(1)(a) of the Corporations Act as a matter of discretion?

DECISION

Service

In reviewing the legislation and legal principles the court Read the rest of this entry »

Omar Property Pty Ltd & Others v Amcor Flexibles (Port Melbourne) Pty Ltd [2019] VSC 446 (3 July 2019); discovery, content of pleadings and redactions

July 22, 2019

In Omar Property Pty Ltd & Others v Amcor Flexibles (Port Melbourne) Pty Ltd [2019] VSC 446 the Supreme Court, per Mukhtar AsJ considered the principles of ambit of discovery and the use of redactions in a hard fought discovery application.

FACTS

The five-day trial dated was vacated because of three intervening discovery fights [1].

This decision related to the first fight.

The proceeding is a dispute over a commercial lease of industrial premises. The question is whether the defendant has validly exercised an option to renew its lease or is entitled to renew the lease. The plaintiff says Read the rest of this entry »

A’la Carte Homes Pty Ltd v AAPD CO P/L [2019] VSC 108 (5 March 2019): application to set aside, section 459J Corporations Act

March 13, 2019

In A’la Carte Homes Pty Ltd v AAPD CO P/L [2019] VSC 108 the Supreme Court, per Randall AsJ, set aside a statutory demand. The key issue was the failure of the assignment of a debt being described in the statutory demand or accompanying affidavit.

FACTS

The application was made under ss 459G, 459H and 459J of the Corporations Act 2001 (Cth). The orders sought were Read the rest of this entry »

Yang v Finder Earth Pty Ltd [2019] VSCA 22 (15 February 2019): application to set aside default judgment, importance of pleading

March 4, 2019

The Victorian Court of Appeal in Yang v Finder Earth Pty Ltd [2019] VSCA 22 again highlighted the caution the courts are now taking in dealing with applications which determine a claim without trial such as summary judgment applications and default judgment applications. It is also a case which highlights the fact that pleadings matter. 

FACTS

Luo and Yang entered into the principal agreement, in October 2015 (the ‘agreement’) [8] for the stated purpose of:

to successfully obtain the 888 visa for Luo and her family to migrate to Australia and to be granted the Permanent Resident Visa (hereinafter referred to as ‘the Immigration Project’).

The agreement:

  • was described as a partnership between Luo and Yang

Read the rest of this entry »

C Tina Pty Ltd v Warners Electroplating Pty Ltd [2019] VSC 66 (18 February 2019): Application to set aside statutory demand, s 459G Corporations Act 2001

February 21, 2019

In C Tina Pty Ltd v Warners Electroplating Pty Ltd [2019] VSC 66 Associate Justice Gardiner set aside a statutory demand.

FACTS

On 1 October 2018, the defendant (‘Warners’) served on the plaintiff (‘C Tina’):

  • a creditors statutory demand for payment of debt; and
  • an affidavit in support sworn by Grant Warner on 26 September 2018 [1].

The Demand related to two invoices totalling $166,332.10 for work and labour done and materials supplied [2].

On 19 October 2018, C Tina made application by originating process to set aside the Demand [3].

The application is based on the ground that C Tina has a genuine dispute in relation to the debt in that it never contracted with Warners and that Read the rest of this entry »

In the matter of Polar Agencies Pty Ltd [2019] VSC 43 (8 February 2019): winding up application, ss 440 & 447A Corporations Acct 2001

February 14, 2019

Judicial Registrar considered an application to wind up a company when administrators had been appointed shortly before the hearing In the matter of Polar Agencies Pty Ltd [2019] VSC 43.

FACTS

The plaintiff  a statutory demand served on the defendant by the plaintiff by post sent on 18 October 2018 [4].  The demand is in respect of debts totalling $558,508.56 for goods supplied by the plaintiff to the defendant and invoiced in the period March to August 2018. The defendant failed to comply with it [4] and made no application to set aside the statutory demand [5] thereby failing to comply with the demand in about midNovember 2018 which gave rise to a statutory presumption of insolvency under s 459C(2)(a) of the Corporations Act (the Act).

By an originating process filed on 16 November 2018 [3] the plaintiff applied for the defendant be wound up in insolvency pursuant to s 459P and s 459Q of the Act [1].

The proceeding first came on for hearing on 19 December 2018 where:

  • the plaintiff appeared and the defendant did not.
  • the Court was informed that negotiations were underway. Directions were made that any request for a further adjournment was to be supported by an affidavit to be filed and served by 4 February 2019,
  • the hearing was adjourned to 6 February 2019 [6].

Read the rest of this entry »

Bensons Property Group Pty Ltd v Commonwealth Bank of Australia Ltd & Anor [2018] VSC 666 (9 November 2018): preliminary discovery, Harman obligations

December 9, 2018

The Supreme Court in Bensons Property Group Pty Ltd v Commonwealth Bank of Australia Ltd & Anor [2018] VSC 666 granted an order for preliminary discovery.  In considering the application the court considered the issues relating to Harman undertakings.

FACTS

Bensons,  a property developer,  engaged the Marcus Group Pty Ltd  “Marcus” as its builder on projects. On 19 April 2018, Bensons received an email, purportedly from the Marcus Group, directing that a payment due to it be made to a Commonwealth Bank of Australia account  (the CBA Account) [5]. On 19 April 2018, Bensons electronically transferred $917,900 to the Relevant CBA Account. As this was not an account maintained by Marcus Bensons was defrauded by person(s) unknown [6].

Bensons reported the fraud to Victoria Police and Read the rest of this entry »