NA Investment v Perpetual - [2010] NSWSC 248

CITATION: NA Investment v Perpetual [2010] NSWSC 248

HEARING DATE(S): 16/03/2010

JUDGMENT DATE :
8 April 2010

JURISDICTION: Equity Division

JUDGMENT OF: Macready AsJ at 1

DECISION: I dismiss the proceedings with costs.

CATCHWORDS: Corporations Act. Application to set aside statutory demand under s 459G of the Corporations Act. Whether proceedings were in breach of the terms of a facility agreement between parties. Held not. Offsetting claim not sufficiently quantified. Proceedings dismissed.

PARTIES: NA Investment Holdings Pty Limited v Perpetual Nominess Limited

FILE NUMBER(S): SC 2009/00291026

COUNSEL: Mr S Duggan for plaintiff
Mr RD Marshall for defendant

SOLICITORS: Argyle Lawyers Pty Ltd for plaintiff
Middletons for defendant

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

Associate Justice Macready

Thursday 8 April 2010

4994/09 N A Investments Pty Limited v Perpetual Nominees Limited

JUDGMENT

: This is the hearing of an application to set aside a statutory demand under s 459 G, s 459H and s 459J of the Corporations Act 2001. The demand, which was served by the defendant on the plaintiff, was dated 28 September 2009 and it was in respect of an amount of $7,655,603.93. The description of the debt in the demand was as follows:

“Being the total of the debts owing as at 23 September 2009 in respect of a commercial advance facility provided to Future Fuels Australia Pty Limited (in liquidation) ACN 116 448 143 on the terms and conditions set out in a Facility Agreement dated 3 July 2006, as varied on 11 January 2007 and on 28 June 2007 and amended and restated on 15 October 2008, calculated as follows: …“

2 There were then set out calculations of interest in tabular form giving the amount of claim of being both principal and interest.

Background facts

3 These are helpfully set out in the parties’ submissions which I will incorporate with some amendment. It may be necessary to refer in more detail to events referred to in this part of the judgment.

4 In 2005 N A Investments Holdings Pty Ltd (“N A Investments”) was the holding company and 100% shareholder of three entities, namely, Future Fuels Australia Pty Ltd (“FFA”), FFA Properties (“FFA Properties”) Pty Ltd and FFA Equipment Pty Ltd (“FFA Equipment”) (collectively known as “the FFA Group”).

5 In August 2005 the FFA Group purchased property and equipment in Moama being a refinery plant which at that time was not a going concern.

6 In June 2006 Perpetual Nominees Limited (“Perpetual”), through its agent MFS Investment Management Limited, agreed to provide a facility of $23M to FFA to fund the continuing development of the bio-diesel plant in Moama. A Facility Agreement was subsequently executed on 3 July 2006. N A Investments, Messrs Nabil and Adil Magar guaranteed the obligations of FFA under the Facility Agreement.

7 After the full $23 M was drawn on the facility two further amendments were made to the Facility Agreement on 11 January 2007…

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: [2010] NSWSC 248
Decision Date: 8 April 2010

CaseChat Overview and Summary

In the matter of NA Investment versus Perpetual, the Federal Court was called upon to determine whether the respondent's proceedings were in breach of the terms of a facility agreement between the parties. The applicant, NA Investment, sought to set aside a statutory demand issued by Perpetual, which was based on a debt owed by NA Investment. NA Investment argued that the proceedings were in breach of the facility agreement because they did not comply with certain conditions outlined in that agreement. The court was required to determine whether the respondent's proceedings breached the facility agreement and, if so, whether the applicant's application to set aside the statutory demand should be successful.

The court examined the terms of the facility agreement and found that the respondent's proceedings did not breach the agreement. The court also considered the applicant's argument that the respondent's claim was offset by an amount that the applicant owed to the respondent. However, the court found that the applicant had not sufficiently quantified the amount of the offset claim, and therefore could not rely on it as a defence to the statutory demand. As a result, the court dismissed the applicant's application to set aside the statutory demand.

The court's reasoning was based on a careful analysis of the terms of the facility agreement and the evidence presented by both parties. The court found that the respondent's proceedings were in compliance with the terms of the agreement, and that the applicant had not established a valid defence to the statutory demand. The court emphasised the importance of parties adhering to the terms of their agreements, and the need for claimants to provide sufficient evidence to support their claims. The court's decision provides guidance to parties entering into facility agreements and pursuing statutory demands, and highlights the importance of complying with the terms of those agreements.

The final orders of the court were that the application to set aside the statutory demand was dismissed, with no orders as to costs.

Orders