FAO SpA v F & T Industries Pty Ltd

FAO SpA (the applicant) sought to have F & T Industries Pty Ltd (the respondent) wound up on the grounds of insolvency. The applicant alleged that the respondent had failed to pay a debt of approximately $1.5 million, which was the subject of a statutory demand that had not been satisfied. The application was heard in the Supreme Court of Victoria.

The primary legal issue before the Court was whether the respondent had established a genuine dispute regarding the debt claimed by the applicant. The Court was required to consider whether the respondent had raised a substantial question of fact or law that would justify setting aside the statutory demand and therefore prevent the winding up proceedings from continuing on the basis of the alleged debt.

Justice Ian Thompson found that the respondent had failed to demonstrate a genuine dispute concerning the debt. The Court noted that the respondent’s defence was largely based on allegations of misleading and deceptive conduct by the applicant, which the Court considered to be unsubstantiated and lacking in particularity. The principles applied by the Court centred on the established legal test for a genuine dispute in the context of statutory demands, requiring the dispute to be substantial and not merely a sham or vexatious. The Court concluded that the respondent had not met this threshold.

Consequently, the Court ordered that the respondent be wound up.