MSA Renex Corp Pty Ltd v Create Environment Pty Ltd - [2021] VSCA 178

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2021 0042

MSA RENEX CORP PTY LTD (ACN 133 138 593)	Applicant
v
CREATE ENVIRONMENT PTY LTD (ACN 604 342 154)	Respondent

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JUDGES:	FERGUSON CJ, KYROU and WALKER JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	25 May 2021
DATE OF JUDGMENT:	24 June 2021
MEDIUM NEUTRAL CITATION:	[2021] VSCA 178
JUDGMENT APPEALED FROM:	MSA Renex Corp Pty Ltd v Create Environment Pty Ltd (Unreported, Supreme Court of Victoria, Efthim AsJ, 13 April 2021)

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CORPORATIONS – Setting aside statutory demand – Money paid under 2015 share sale agreement – Total failure of consideration – Mechanism for repayment of share price provided for in 2019 agreement subject to satisfaction of condition precedent – 2019 agreement containing acknowledgment of debt and entire agreement clause – Condition precedent not fulfilled – Statutory demand served for ‘receivable advanced pursuant to‘ 2015 agreement – Debt not expunged – No genuine dispute as to debt – Corporations Act 2001 (Cth), s 459G, Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330 applied.

CORPORATIONS – Setting aside statutory demand - Alleged conversations said to give rise to estoppel – Allegation implausible – No genuine dispute or matter requiring investigation – Corporations Act 2001 (Cth) s 459G.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr S Freire	Clayton Utz
For the Respondent	Mr C Northrop with Ms A Singh	Russell Kennedy

FERGUSON CJ
WALKER JA:

The Renex Group of companies was established for the purpose of conducting a hazardous and industrial waste business. On 19 June 2015, Create Environment Pty Ltd (‘Create’) and MSA Renex Corp Pty Ltd (‘MSA’) entered into a share sale and option agreement. Under this agreement, Create paid $1.498 million to MSA for the purchase of shares in one of the companies in the Renex Group – Renex Holdings (Dandenong) 1 Pty Ltd (‘Renex Holdings’).[1] No shares were transferred.
[1]At the direction of MSA Renex Corp Pty Ltd, the money was paid to Premier Developments Pty Ltd, a company associated with the director of MSA Renex.

On 9 October 2015, Renex Holdings was placed into voluntary administration. Renex Founder Hold Co Pty Ltd (‘Renex Founder’) (a company owned by Create and MSA) purchased the assets of Renex Holdings from the administrators.

On 16 September 2019, Create and MSA entered into a second share sale agreement. Under this agreement, Create agreed to sell its 50 per cent shareholding in Renex Founder to MSA for a purchase price of $18.5 million. The purchase price was payable in instalments, the second of which was $7 million to be paid by 31 July 2020. By that date, MSA was also to pay Create the ‘Renex 1 Receivable.’ The ‘Renex 1 Receivable’ was defined in the agreement to mean:

the amount of $1,500,000 paid by [Create] to [MSA] … on or about 19 June 2015 and which [MSA] acknowledges is repayable to [Create].

The obligations to buy and sell the Renex Founder share and…

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: [2021] VSCA 178
Decision Date: 24 June 2021

CaseChat Overview and Summary

In the case of MSA Renex Corp Pty Ltd v Create Environment Pty Ltd, the Federal Court was tasked with deciding whether a statutory demand should be set aside. The dispute between the parties revolved around a series of agreements and payments made in the context of a share sale. The court was required to determine whether the debt claimed in the statutory demand could be expunged and if there was a genuine dispute as to the debt.

The primary legal issues before the court were whether the condition precedent outlined in the 2019 agreement had been fulfilled and whether the statutory demand could be set aside based on the alleged conversations that gave rise to an estoppel. The court examined the language of the 2019 agreement, which contained an entire agreement clause and an acknowledgment of debt, and considered the parties' conduct in light of these provisions.

The court held that the condition precedent was not satisfied and that the debt was not expunged because there was no genuine dispute as to the debt. The court found that the alleged conversations said to give rise to an estoppel were implausible and did not constitute a genuine dispute or matter requiring investigation. The court applied the principles from Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd and sections 459G of the Corporations Act 2001 (Cth) in reaching its decision.

As a result, the statutory demand was not set aside and the orders of the court enforced the debt claimed by MSA Renex Corp Pty Ltd against Create Environment Pty Ltd. The court found that the condition precedent had not been met and that there was no genuine dispute as to the debt.

Orders