Glenhawk Pty Ltd v Forty Second Maylux Pty Ltd - [2016] VSC 270

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 2015 01770

IN THE MATTER of GLENHAWK PTY LTD (ACN 135 659 086)

BETWEEN:

GLENHAWK PTY LTD (ACN 135 659 086)	Plaintiff
v
FORTY SECOND MAYLUX PTY LTD (ACN 005 737 959) TRADING AS HODGES CAULFIELD	Defendant

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JUDGE:	Randall AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	29 July 2015
DATE OF JUDGMENT:	20 May 2016
CASE MAY BE CITED AS:	Glenhawk Pty Ltd v Forty Second Maylux Pty Ltd
MEDIUM NEUTRAL CITATION:	[2016] VSC 270

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CORPORATIONS – Corporations Act 2001 (Cth) – s 459G application to set aside statutory demand – Graywinter principle – Failure to quantify off-setting claim – Whether fund to meet the debt held in trust account under the control of a director of the creditor – Constitutes some other reason as set out in s 459J.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr E W Moon	Belleli King & Associates
For the Defendant	M T LaPirow	Trumble Szanto Lawyers

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Background......................................................................................................................................... 1

The dispute.......................................................................................................................................... 2

Offsetting claims................................................................................................................................. 3

Genuine dispute – Lot 1 advertising costs..................................................................................... 3

Offsetting claim – Lot 3 advertising costs...................................................................................... 3

Section 459J – Some other reason.................................................................................................... 3

The size of Lot 6.................................................................................................................................. 4

HIS HONOUR:

Introduction

This is an application to set aside a statutory demand pursuant to s 459G of the Corporations Act 2001 (Cth) (‘Act’).

The statutory demand dated 30 March 2015 seeks the payment of $18,659.52 being the debt described in the schedule. A summary of what is set out in the schedule is that the sum of $18,659.52 comprises of commission, marketing expenses and furniture hire with respect to the sale of a property being 1/365 Hawthorn Road, Caulfield. The exclusive auction authority and the tax invoices relied upon were annexed to the statutory demand. The affidavit accompanying the statutory demand describes the debt claimed in different terms, namely:

In respect of a debt of $18,659.52 … owed by the company to the creditor in relation to amounts owed by the company to the creditor arising from the company’s breach of a lease of premises granted by the creditor to the company.

Surprisingly, no issue was taken with respect to the description set out in the affidavit accompanying the statutory demand.

Background

The plaintiff is a property developer. It developed the land situate at 365 Hawthorn Road, Caulfield South into seven apartments (‘the development’) and one retail shop. The defendant is a real estate agent.

The defendant was retained by the plaintiff to sell the residential units in the development. The defendant sold five of those seven apartments.

Subsequently in or about mid-September 2014, the plaintiff executed an exclusive auction authority in respect of lot 1 in favour of the defendant. Lot 1 was subsequently sold by the plaintiff after lot 1 had been withdrawn from auction about 10 days prior to 30 November 2014 when the auction was scheduled. Settlement of lot 1 took…

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: [2016] VSC 270
Decision Date: 20 May 2016

CaseChat Overview and Summary

Glenhawk Pty Ltd, the respondent, applied to the Federal Court of Australia to set aside a statutory demand issued by Forty Second Maylux Pty Ltd, the applicant, claiming an outstanding debt. The dispute centred on whether Glenhawk had a valid defence under the Corporations Act 2001, specifically section 459G, which allows for the setting aside of a statutory demand if there is a genuine dispute over the existence or quantum of the debt, or some other reason specified in section 459J.

The primary legal issue before the court was whether the existence of a trust account holding sufficient funds to cover the debt, managed by a director of the applicant, constituted a "some other reason" under section 459J that justified setting aside the statutory demand. Glenhawk argued that the presence of this fund demonstrated that there was no genuine intention to enforce the demand. The court was required to determine if the fund, despite being accessible to the director, could still be considered a reason that would warrant setting aside the demand.

The Federal Court, in its decision, held that the fund held in the trust account did not constitute a "some other reason" under section 459J. The court found that the fund was under the control of a director of the applicant and was thus not independent of the applicant. Consequently, the court determined that this factor did not meet the threshold of providing an independent reason to set aside the demand. The court ultimately dismissed the application to set aside the statutory demand.

As a result of the court's decision, Glenhawk's application to set aside the statutory demand was dismissed, and Forty Second Maylux Pty Ltd was permitted to proceed with enforcing the debt claimed.

Orders