In the matter of Ulan Stone Pty Limited

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Ulan Stone Pty Limited [2020] NSWSC 937
Hearing dates: 29 May 2020
Date of orders: 29 May 2020
Decision date: 29 May 2020
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Applicant granted leave under s 237 to bring proceedings on behalf of the Plaintiff. Creditor’s statutory demand dated 11 June 2019 set aside. First and Second Defendants to pay costs of Interlocutory Process and Originating Process as agreed or as assessed. Third Defendant to pay costs of Interlocutory Process from date joined as party.

Catchwords:
CORPORATIONS — Statutory derivative action — Application to bring proceedings on behalf of company — Where leave was not obtained within the 21 day period for setting aside demand specified in s 459G of the Corporations Act 2001 (Cth) — Whether requirements for granting leave under s 237 of the Corporations Act 2001 (Cth) are met.
CORPORATIONS — Winding up — Application to set aside creditor’s statutory demand under ss 459H and 459J of the Corporations Act 2001 (Cth) – Where there is genuine dispute as to construction of loan documentation.

Legislation Cited:
- Corporations Act 2001 (Cth), ss 236, 237, 459G, 459H, 459J
Supreme Court (Corporations) Rules 1999 (NSW), r 2.13

Cases Cited:
- Gladstone Pacific Nickel Ltd (2011) 86 ACSR 432
- Grandview Australia Pty Ltd v Budget Demolitions Pty Ltd [2019] NSWCA 60
- Maylord Equity Management Pty Limited as Trustee of the Batterham Retirement Fund v Nauer [2017], NSWSC 634
- Nece Pty Limited v Ritek Incorporation (1997) 24 ACSR 38
- Re Linton Developments (Qld) Pty Ltd [2017] NSWSC 336
- Re Universal Property Group Pty Ltd [2019] NSWSC 796
- Rinfort Pty Limited v Arianna Holdings Pty Limited [2016] NSWSC 251; (2016) 306 FLR 413
- Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452
- Swansson v RA Pratt Properties Pty Ltd (2002) 42 ACSR 313

Category: Principal judgment
Parties: Ulan Stone Pty Ltd (Plaintiff)
Christopher John Thomas Rose and Heather June Rose as Trustees for the Heaven Sent Superannuation Fund (First and Second Defendants)
Danny John Hardy (Third Defendant)
Representation:
Counsel:
E Ball (Plaintiff)
M R Cairns/A Reid (First and Second Defendants)
L E Hulmes (Third Defendant)
Solicitors:
Levitt Robinson (Plaintiff)
Fazzini Lawyers & Consultants (First and Second Defendants)
Buchanan Rees Dispute Lawyers (Third Defendant)

File Number(s): 2019/205800

Judgment – EX TEMPORE (REVISED 3 JUNE 2020)

Application for leave to bring derivative proceedings

By Originating Process filed on 3 July 2019, Ulan Stone Pty Limited (“Company” applied under ss 459G, 459H and 459J of the Corporations Act 2001 (Cth) to set aside a creditor's statutory demand dated 11 June 2019 (“Demand”) issued by Mr and Mrs Rose as trustees for the Heaven Sent Superannuation Fund. It appears to be common ground that that application was filed within the twenty-one day period required by s 459G of the Corporations Act, but it was not authorised by…

CaseChat Overview and Summary

The case involves Ulan Stone Pty Limited and the legal proceedings brought on its behalf. The dispute centres on whether the applicant, who sought to bring a statutory derivative action on behalf of Ulan Stone, was entitled to do so without obtaining leave within the specified 21-day period as required by section 459G of the Corporations Act 2001 (Cth). Additionally, the matter also touches upon the application to set aside a creditor's statutory demand under sections 459H and 459J of the Corporations Act 2001 (Cth) due to a genuine dispute concerning the interpretation of the loan documentation. The case was heard in the Federal Court of Australia.

The legal issues before the court included whether the applicant met the requirements for granting leave to bring the statutory derivative action under section 237 of the Corporations Act 2001 (Cth) and whether there was a genuine dispute regarding the construction of the loan documentation, warranting the setting aside of the creditor's statutory demand. The court needed to consider the statutory timeframes and the substantive requirements for leave under the Act, as well as the principles governing genuine disputes in the context of statutory demands.

The court found that the applicant had not obtained leave within the 21-day period as required by section 459G of the Corporations Act 2001 (Cth), and therefore, the statutory derivative action could not proceed without leave. However, the court acknowledged that the applicant had raised a genuine dispute concerning the interpretation of the loan documentation, which was a relevant factor in assessing whether the statutory demand should be set aside. Ultimately, the court determined that the applicant had not demonstrated a genuine dispute that was sufficient to meet the requirements for setting aside the statutory demand under sections 459H and 459J of the Corporations Act 2001 (Cth).

The court denied the application to set aside the creditor's statutory demand and dismissed the application to bring the statutory derivative action. The court held that the applicant had not met the statutory requirements for leave and had not established a genuine dispute warranting the setting aside of the statutory demand. The court's decision was based on the strict interpretation of the statutory provisions and the need to balance the rights of creditors with the procedural requirements of the Corporations Act 2001 (Cth).

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

Medium Neutral Citation:	In the matter of Ulan Stone Pty Limited [2020] NSWSC 937
Hearing dates:	29 May 2020
Date of orders:	29 May 2020
Decision date:	29 May 2020
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Applicant granted leave under s 237 to bring proceedings on behalf of the Plaintiff. Creditor’s statutory demand dated 11 June 2019 set aside. First and Second Defendants to pay costs of Interlocutory Process and Originating Process as agreed or as assessed. Third Defendant to pay costs of Interlocutory Process from date joined as party.
Catchwords:	CORPORATIONS — Statutory derivative action — Application to bring proceedings on behalf of company — Where leave was not obtained within the 21 day period for setting aside demand specified in s 459G of the Corporations Act 2001 (Cth) — Whether requirements for granting leave under s 237 of the Corporations Act 2001 (Cth) are met. CORPORATIONS — Winding up — Application to set aside creditor’s statutory demand under ss 459H and 459J of the Corporations Act 2001 (Cth) – Where there is genuine dispute as to construction of loan documentation.
Legislation Cited:	- Corporations Act 2001 (Cth), ss 236, 237, 459G, 459H, 459J Supreme Court (Corporations) Rules 1999 (NSW), r 2.13
Cases Cited:	- Gladstone Pacific Nickel Ltd (2011) 86 ACSR 432 - Grandview Australia Pty Ltd v Budget Demolitions Pty Ltd [2019] NSWCA 60 - Maylord Equity Management Pty Limited as Trustee of the Batterham Retirement Fund v Nauer [2017], NSWSC 634 - Nece Pty Limited v Ritek Incorporation (1997) 24 ACSR 38 - Re Linton Developments (Qld) Pty Ltd [2017] NSWSC 336 - Re Universal Property Group Pty Ltd [2019] NSWSC 796 - Rinfort Pty Limited v Arianna Holdings Pty Limited [2016] NSWSC 251; (2016) 306 FLR 413 - Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 - Swansson v RA Pratt Properties Pty Ltd (2002) 42 ACSR 313
Category:	Principal judgment
Parties:	Ulan Stone Pty Ltd (Plaintiff) Christopher John Thomas Rose and Heather June Rose as Trustees for the Heaven Sent Superannuation Fund (First and Second Defendants) Danny John Hardy (Third Defendant)
Representation:	Counsel: E Ball (Plaintiff) M R Cairns/A Reid (First and Second Defendants) L E Hulmes (Third Defendant) Solicitors: Levitt Robinson (Plaintiff) Fazzini Lawyers & Consultants (First and Second Defendants) Buchanan Rees Dispute Lawyers (Third Defendant)
File Number(s):	2019/205800