Computronics Holdings Limited v Pilarinos - [2011] VSC 218

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT

List E
S CI 2011 00012

IN THE MATTER OF COMPUTRONICS HOLDINGS LIMITED (ACN 082 573 108)

COMPUTRONICS HOLDINGS LIMITED (ACN 082 573 108)	Plaintiff
v
JERRY PILARINOS	Defendant

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JUDGE:	FERGUSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	6, 14 April 2011
DATE OF JUDGMENT:	23 May 2011
CASE MAY BE CITED AS:	Computronics Holdings Limited v Pilarinos
MEDIUM NEUTRAL CITATION:	[2011] VSC 218

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CORPORATIONS – Statutory demand - Appeal from Order of Associate Judge dismissing application – Whether genuine dispute established – Whether new basis for demand may be relied upon - Contract for convertible notes – Appeal allowed – ss 459E(3)(b), 459G(1), 459H Corporations Act 2001.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Galvin	TressCox Lawyers
For the Defendant	Mr R S Randall	John Dimitropoulos

TABLE OF CONTENTS

Parties and Introduction................................................................................................................... 2

The relevant legal principles - Genuine dispute.......................................................................... 2

On what basis did Mr Pilarinos pay the $500,000 and why did he say he was entitled to return of the money?................................................................................................................................................. 3

The hearing before the Associate Judge........................................................................................ 6

Issue of convertible notes - is there a genuine dispute?............................................................. 8

Is there otherwise a genuine dispute about the debt?................................................................ 9

Conclusion......................................................................................................................................... 10

HER HONOUR:

Parties and Introduction

In May 2010, the plaintiff, Computronics Holdings Limited, sought to raise funds by way of a convertible note issue. It entered into a convertible note agreement with an equity fund broker, Melbourne Finance Broking Pty Ltd. In early July 2010, the defendant, Mr Pilarinos, paid Melbourne Finance Broking $500,000 for the issue of convertible notes. That money was in turn paid to Computronics. Mr Pilarinos claims that he is entitled to return of the money he paid. On 17 December 2010, Mr Pilarinos served a statutory demand for $500,000 on Computronics. Computronics applied to set the demand aside under s 459G of the Corporations Act 2001 (Cth). The basis of the application was that no amount was due and payable by Computronics to Mr Pilarinos as at the date of the demand. An Associate Judge dismissed the application to set aside the demand. Computronics appeals from that decision. The time for complying with the demand has been extended until determination of the appeal.

The appeal is by way of re‑hearing.[1]
[1]Supreme Court (Corporations) Rules 2003 (Vic), Rule 16.5(1), Supreme Court (General Civil Procedure) Rules 2005 (Vic), Rule 77.06(7).

The relevant legal principles - Genuine dispute

Section 459G(1) of the Corporations Act provides that a company may apply to the Court for an order setting aside a statutory demand served on the company. One of the grounds on which a demand may be set aside is where there is a genuine dispute as to the existence or amount of the debt.[2]
[2]Section 459H Corporations Act.

In TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd,[3] Dodds‑Streeton JA said:[4]

The court, in the context of an application…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] VSC 218
Decision Date: 23 May 2011

CaseChat Overview and Summary

Computronics Holdings Limited filed an application in the Federal Circuit Court against Pilarinos seeking to wind up the defendant company on the basis of an unpaid debt. The application was dismissed by an Associate Judge, and Computronics appealed this decision to the Full Court. The central dispute was whether the defendant had established a genuine dispute concerning the existence or quantum of the debt, as well as whether the plaintiff could rely on a new basis for the statutory demand.

The legal issues before the court were the interpretation and application of sections 459E(3)(b), 459G(1), and 459H of the Corporations Act 2001. Specifically, the court needed to determine whether the defendant had established a genuine dispute as to the debt claimed and if the plaintiff was entitled to rely on a new basis for the statutory demand. The court had to consider the evidence provided by both parties and assess the credibility of the arguments made.

The Full Court found that the defendant had indeed established a genuine dispute concerning the existence of the debt. The court was satisfied that the evidence presented by the defendant was credible and sufficient to raise a genuine dispute. Furthermore, the court held that the plaintiff was entitled to rely on a new basis for the statutory demand, as the original basis for the demand had been dismissed. Consequently, the appeal was allowed, and the order of the Associate Judge was set aside.

The final orders of the court were that the appeal be allowed, the order of the Associate Judge dismissing the application be set aside, and the matter be remitted to the Associate Judge for further consideration in light of the court's findings.

Orders