JUDGE:	GARDINER AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	28 June 2012
DATE OF JUDGMENT:	5 September 2012
CASE MAY BE CITED AS:	Innovision Developments Pty Ltd v Martorella and anor
MEDIUM NEUTRAL CITATION:	[2012] VSC 390

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CORPORATIONS – External administration – Application to set aside statutory demand under Section 459G of Corporations Act2001 – Offsetting claims – Whether plaintiff has “cross demand” within the meaning of Section 459H(5) definition of “offsetting claim” by reason of claim to recover monies paid as deposit pursuant to contract which was rescinded – Whether such claim “sounded in money” – Plaintiff found to have offsetting claim – Demand set aside.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr B. Devanny (solicitor)	Russell Kennedy
For the Defendants	Mr M. Gronow	Davies Moloney

HIS HONOUR:

On 24 June 2011, Dixon J made orders that Innovision Developments Pty Ltd (“Innovision”) pay the costs of the defendants, (“the Martorellas”) in a proceeding in this Court.[1] Those costs were taxed on 10 April 2012 and fixed at $59,352.41.
[1]Martorella v Innovision Developments Pty Ltd [2011] VSC 282.

On 2 May 2012, the Martorellas served a statutory demand on Innovision demanding payment of that sum.

On 28 May 2012, Innovision made application pursuant to s 459G of the Corporations Act2001 (“the Act”) to set aside the demand. The application was supported by an affidavit of Paul Riggs sworn 28 May 2012. The Martorellas opposed the application and relied on an affidavit of Stephen Martorella sworn 14 June 2012.

Was the application to set aside the statutory demand filed on time?

When this matter first came on for directions, I invited submissions as to whether the application had been made within the 21 day period prescribed by s 459G as the evidence was not clear in this regard. Ultimately, this issue was held over for determination at the hearing of the originating process. Mr Gronow of Counsel, who appeared on behalf of Martorellas at the hearing of this proceeding on 28 June 2012, conceded that on an application of the relevant authorities and having regard to the state of the evidence on this issue , the application was within time.

The debt claimed in the demand, being a judgment debt, is not susceptible of being the subject of a genuine dispute.[2] Innovision’s case is based on the contention that it has an offsetting claim as defined in s 459H(5) of the Act. That sub‑section defines an offsetting claim as:

A genuine claim that the company has against the respondent by way of counterclaim, setoff or cross demand (even if it does not arise out of…

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.

Continue reading Innovision Developments Pty Ltd v Martorella

Details

AGLC: Innovision Developments Pty Ltd v Martorella [2012] VSC 390
Case: [2012] VSC 390
Decision Date: 5 September 2012

CaseChat Overview and Summary

In the Federal Court of Australia, Innovision Developments Pty Ltd sought to set aside a statutory demand issued by Martorella. The dispute centred around a contract between the parties, which was subsequently rescinded. Innovision applied to the court to nullify the statutory demand under Section 459G of the Corporations Act 2001, claiming it had an offsetting claim against Martorella. The key issue before the court was whether Innovision's claim to recover a deposit paid pursuant to the rescinded contract constituted a cross-demand as defined in Section 459H(5) of the Act, and if such a claim indeed "sounded in money."

The court considered whether Innovision's claim to recover the deposit constituted an offsetting claim under the Act. It was necessary to determine whether this claim could be categorised as one that "sounded in money" for the purposes of the legislation. The court concluded that Innovision's claim to recover the deposit did indeed qualify as an offsetting claim because it was a monetary claim arising directly from the contract that formed the basis of the statutory demand. The court found that such claims are intended to be taken into account when assessing the defendant's ability to pay the amount claimed in the demand.

As a result, the court set aside the statutory demand, recognising that Innovision's claim to recover the deposit was a valid offsetting claim. This decision underscores the importance of considering cross-demands when evaluating the enforceability of statutory demands under the Corporations Act. The final orders of the court reflected this reasoning, with the statutory demand being nullified in its entirety.

Orders