Linecrest Pty Ltd v Makekadi Mining Services (NT) Pty Ltd - [2025] WASC 253

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   LINECREST PTY LTD -v- MAKEKADI MINING SERVICES (NT) PTY LTD [2025] WASC 253
CORAM:   FORRESTER J
HEARD:   9 MAY 2025
DELIVERED          :   27 JUNE 2025
FILE NO/S:   COR 185 of 2024
BETWEEN:   LINECREST PTY LTD
Plaintiff
AND
MAKEKADI MINING SERVICES (NT) PTY LTD
Defendant

Catchwords:

Corporations - Statutory demand - Application to set aside statutory demand on grounds of genuine dispute - Validity of service of SEPA Notice - Whether there is a genuine dispute - Application dismissed

Legislation:

Corporations Act 2001 (Cth)
Corporations Regulations 2001 (Cth)
Service and Execution of Process Act 1992 (Cth)
Service and Execution of Process Regulations 2018 (Cth)

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	Mr M Priestly
Defendant	:	Mr L Gunthorpe

Solicitors:

Plaintiff	:	Pacer Legal
Defendant	:	Stratos Legal

Cases referred to in decision:

Arcade Badge Embroidery Co Pty Ltd v Deputy Commissioner of Taxation [2005] ACTCA 3; (2005) 157 ACTR 22
CA Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31
Chief Commissioner of State Revenue (NSW) v Boss Constructions (NSW) Pty Ltd [2018] NSWCA 270; (2018) 98 NSWLR 473
David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265
Elan Copra Trading Pty Ltd v JK International Pty Ltd [2005] SASC 501; (2005) 226 ALR 349; (2005) 195 FLR 229
Energy Conservation Systems Pty Ltd v Downer EDI Engineering Electrical Pty Ltd [2008] NSWSC 1139; (2008) 221 FLR 393
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669
Joe Mangraviti Pty Ltd v Lumley Finance Ltd [2010] NSWSC 61
Marlan Financial Services Pty Ltd v New England Agricultural Traders Pty Ltd [1999] VSC 435; (1999) 158 FLR 256
Old Kiama Wharf Co Pty Ltd v Deputy Commissioner of Taxation [2005] NSWSC 929
Owners Corp SP66609 v Perpetual Trustee Co Ltd [2010] NSWSC 497
Re Black Tie Holdings Pty Ltd [2022] NSWSC 781
Re LDW Constructions Pty Ltd [2019] NSWSC 1159
Re MHC Pathology Pty Ltd [2020] VSC 789; (2020) 356 FLR 222
Roberts v Wayne Roberts Concrete Constructions Pty Ltd [2004] NSWSC 734; (2004) 208 ALR 532
Rochester Communications Group Pty Ltd v Lader Pty Ltd (1997) 143 ALR 648; (1997) 15 ACLC 570
Slap Corporation Pty Ltd v Civil, Infrastructure and Logistics Pty Ltd [2017] VSC 168; (2017) 50 VR 542; (2017) 317 FLR 456
Tekno Autosports Pty Ltd v Jenkins [2014] FCA 774
Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) [2004] NSWSC 527; (2004) 185 FLR 130; (2004) 22 ACLC 955
Ultimate Manufacturing Pty Ltd v Lyell Morris Pty Ltd (1995) ACLC 1268
WA Glass Pty Ltd v Auto Control Systems Pty Ltd [No 2] [2023] WASCA 85
Woodgate v Garard Pty Ltd [2010] NSWSC 508; (2010) 239 FLR 339

FORRESTER J:

Introduction

On or about 4 November 2024, the Defendant sent a statutory…

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: [2025] WASC 253
Decision Date: 27 JUNE 2025

CaseChat Overview and Summary

Linecrest Pty Ltd filed a statutory demand against Makekadi Mining Services (NT) Pty Ltd, seeking payment of a debt. Makekadi Mining Services sought to set aside the statutory demand on the grounds that there was a genuine dispute about the debt. The matter was heard in the Federal Circuit Court of Australia. The primary legal issue was whether Makekadi Mining Services could successfully challenge the statutory demand on the basis of a genuine dispute over the existence or amount of the debt. This involved determining whether Makekadi Mining Services' claims met the legal criteria for a genuine dispute as outlined in the relevant statutes and case law.

The Court considered whether Makekadi Mining Services' application to set aside the statutory demand was valid and whether the statutory demand had been served correctly. It also assessed the substantive merits of the dispute as outlined by Makekadi Mining Services. The Court found that Makekadi Mining Services' application to set aside the statutory demand was not in accordance with the statutory requirements, which rendered it invalid. Additionally, the Court found that the statutory demand had been served properly. On the merits, the Court determined that Makekadi Mining Services had not provided sufficient evidence to establish a genuine dispute about the debt, as required by the legal principles established in cases such as Eyota Pty Ltd v Hanave Pty Ltd and WA Glass Pty Ltd v Auto Control Systems Pty Ltd [No 2].

The Court dismissed Makekadi Mining Services' application to set aside the statutory demand. The Court held that the statutory demand was valid, and there was no genuine dispute about the debt. Consequently, the presumption of insolvency under s 459C(2) of the Corporations Act continued to apply, as the statutory period for setting aside the demand had not been met within the legal timeframe. The Court also noted that if the application to set aside the demand was not made in accordance with the statutory provisions, it was doubtful that the statutory period could be extended under s 459F(2)(a). Therefore, Makekadi Mining Services was not entitled to rely on the presumption of insolvency since more than three months had passed since the Plaintiff's failure to comply with the statutory demand.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

More fundamentally, however, if the Plaintiff's Application was not made in accordance with s 459G, it is, also in my view, doubtful that s 459F(2)(a) has any application in this case to extend the statutory period beyond 21 days.[88][88] David Grant & Co Pty Ltd v Westpac Banking Corporation (278). If that is the case, the statutory period expired in early December 2024 and the Defendant is no longer entitled to rely upon the presumption of insolvency provided for by s 459C(2) of the Act, as more than three months have passed since the Plaintiff's failure to comply with the statutory demand. Notwithstanding my conclusion as to the invalidity of the Plaintiff's Application, it remains appropriate to briefly deal with the bases on which the Plaintiff sought to set aside the statutory demand. The legal principles applicable to the determination of whether there is a 'genuine dispute' for the purposes of s 459H(1) of the Act were recently summarised by the Court of Appeal, in WA Glass Pty Ltd v Auto Control Systems Pty Ltd [No 2],[89] in the following terms:[89] WA Glass Pty Ltd v Auto Control Systems Pty Ltd [No 2] [2023] WASCA 85 (WA Glass).There are numerous cases which have discussed what is required to constitute a genuine dispute about the existence or amount of a debt. In CA & Associates Pty Ltd v Fini Group Pty Ltd Buss P and Vaughan JA summarised the effect of the authorities. Buss P and Vaughan JA stated that it is well-established that:1.The court's function is to determine whether there is a genuine dispute; the court is not expected to undertake an extended inquiry or attempt to weigh the merits of the dispute. It is not part of the court's function to resolve the dispute.2.It suffices if there is a 'plausible contention' requiring 'further investigation' - something that may be equated to the criterion of whether there is a 'serious question to be tried'.3.However, the applicant must establish that: (a) the dispute is bona fide and truly exists in fact; and (b) the grounds alleging the existence of the dispute are real and not spurious, hypothetical, illusory or misconceived.[90] (citations omitted)Buss P and Vaughan JA also referred with approval to the often-cited words of McLelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd. Having said that the expression 'genuine dispute' connotes a plausible contention requiring investigation, thus raising much the same sort of considerations as 'serious question to be tried' criteria, his Honour stated:This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit 'however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be' not having 'sufficient prima facie plausibility to merit further investigation as to [its] truth', or a patently feeble legal argument or an assertion of facts unsupported by evidence.[91] (citations omitted) Eyota Pty Ltd v Hanave Pty Ltd is the ultimate source for the many authorities that have accepted that, for the purpose of s 459H(1)(a) of the Corporations Act, a genuine dispute is established where a company applying to set aside a statutory demand raises a plausible contention requiring investigation.Thus there must be an evidential basis for the asserted dispute. Mere assertion is insufficient. So too a claim that is spurious or fanciful is insufficient. The dispute must have a sufficient objective existence and prima facie plausibility.The requirement is to refer to something more than the mere 'raising' of a dispute or, in the context of an offsetting claim, the mere 'making' of a claim. The provisions assume that the dispute or offsetting claim have an 'objective' existence the genuineness of which is capable of being assessed. The word 'genuine' is included to sound a note of warning that the propounding of spurious disputes or claims is to be expected but must be excluded from consideration.[92] (citations omitted).[90] CA Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31 [35].[91] Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669, 787 (Eyota).[92] WA Glass [46] - [50].