MSA Renex Corp Pty Ltd v Create Environment Pty Ltd - [2021] VSC 377

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2021 00103

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

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JUDGE:	Efthim AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	25 March 2021
DATE OF JUDGMENT:	13 April 2021
CASE MAY BE CITED AS:	MSA Renex Corp Pty Ltd v Create Environment Pty Ltd
MEDIUM NEUTRAL CITATION:	[2021] VSC 377

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CORPORATIONS – Application to set aside a statutory demand pursuant to s 459G of the Corporations Act 2001 (Cth) – Whether there is a genuine dispute pursuant to s 459H of the Corporations Act 2001 (Cth) – Whether the debt remains due and payable – Alleged conversations said to give rise to estoppel – Allegation implausible – No genuine dispute or matter requiring investigation – Variation of statutory demand.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Freire	Clayton Utz
For the Defendant	Mr C R Northrop	Russell Kennedy

HIS HONOUR:

The plaintiff, MSA Renex Corp Pty Ltd, applies pursuant to s 459G of the Corporations Act 2001 (Cth) (‘the Act’) to set aside a statutory demand dated 4 January 2021, which was served on it by the defendant, Create Environment Pty Ltd.

The demand claims that the plaintiff is indebted to the defendant in the sum of $1,500,000.00. The debt is described in the schedule of the demand as:

Receivable advanced by the creditor to the company on or about 22 June 2015 pursuant to the Share and Sale Option Agreement dated 19 June 2015.

The Law

Section 459G of the Act provides:

Company may apply
(1)A company may apply to the Court for an order setting aside a statutory demand served on the company.
(2)An application may only be made within 21 days after the demand is so served.
(3)An application is made in accordance with this section only if, within those 21 days:
(a)an affidavit supporting the application is filed with the Court; and
(b)a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.

The meaning of a genuine dispute in the context of the challenge of a statutory demand was formulated by McLelland CJ in Eyota Pty Ltd v Hanave Pty Ltd.[1] His Honour said:

It is, however, necessary to consider the meaning of the expression “genuine dispute”… in my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the “serious question to be tried” criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. 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…

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] VSC 377
Decision Date: 13 April 2021

CaseChat Overview and Summary

MSA Renex Corp Pty Ltd applied to set aside a statutory demand issued by Create Environment Pty Ltd, which was a matter heard by the Federal Circuit Court of Australia. The dispute centred on the validity of the statutory demand and whether a genuine dispute existed that could warrant the setting aside of the demand. The primary issue before the court was whether there was a genuine dispute as defined under section 459H of the Corporations Act 2001 (Cth). This hinged on whether the debt in question remained due and payable, and if any alleged conversations could give rise to an estoppel that would prevent the enforcement of the demand.

The court examined the nature of the alleged conversations and concluded that they were implausible and did not substantiate a genuine dispute. It found that the applicant had failed to provide sufficient evidence to support its claims, and thus, no genuine dispute or matter requiring investigation was present. The court also considered the broader context of the statutory demand and the legal framework governing its enforcement. It held that since the applicant could not demonstrate a genuine dispute, the statutory demand should not be set aside.

In light of the findings, the court dismissed the application to set aside the statutory demand and ordered that the applicant pay the respondent's costs of the application. The court also allowed the respondent to vary the statutory demand to reflect the outcome of the proceedings, ensuring that the respondent could enforce the debt as originally demanded.

Orders