Ralph Lauren 57 Pty Ltd v Conley

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SUPREME COURT OF QUEENSLAND

CITATION:

Ralph Lauren 57 Pty Ltd v Conley [2015] QSC 90

PARTIES:

RALPH LAUREN 57 PTY LTD (as trustee)
ACN 079 745 056

(applicant)

v

MICHAEL CONLEY (as trustee for the Cindy Fleming Trust)

(respondent)

FILE NO/S:

SC Nos 2270 – 2273 of 2015

SC Nos 2275 – 2284 of 2015

DIVISION:

Trial Division

PROCEEDING:

Originating applications filed 5 March 2015

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

17 April 2015

DELIVERED AT:

Brisbane

HEARING DATE:

30 March 2015

JUDGE:

Douglas J

ORDER:

Applications to set aside 14 statutory demands dated 12 February 2015 granted

CATCHWORDS:

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS – where the applicant applied pursuant to s 459G of the Corporations Act 2001 (Cth) to set aside 14 statutory demands – whether there had been several loans repayable on demand or a series of contributions of capital effectively into a partnership account – whether this was a genuine dispute about the indebtedness pursuant to s 459H(1)(a) of the Corporations Act 2001 (Cth)

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – FOR DEFECT OR SOME OTHER REASON – SOME OTHER REASON – where the applicant applied pursuant to s 459G of the Corporations Act 2001 (Cth) to set aside 14 statutory demands – where the subject of the statutory demands was both contested in and undetermined by the Family Court of Australia – whether this constituted some other reason why the demands should be set aside pursuant to s 459J(1)(b) of the Corporations Act 2001 (Cth)

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – FOR DEFECT OR SOME OTHER REASON – SOME OTHER REASON – where the applicant applied pursuant to s 459G of the Corporations Act 2001 (Cth) to set aside 14 statutory demands – whether the applicant was solvent such that the statutory demands were not served for the purposes for which Part 5.4 of the Corporations Act 2001 (Cth) applies – whether in those circumstances the service of the statutory demands was vexatious, oppressive and constituted an abuse of process – whether the statutory demands were effectively served – whether the alleged defective service of the statutory demands constituted some other reason why the demands should be set aside pursuant to s 459J(1)(b) of the Corporations Act 2001 (Cth)

Corporations Act 2001 (Cth), s 459G s 459H(1)(a), s 459J(1)(b)
Family Law Act 1975 (Cth), s 90SM(4)(a)

Ambassador at Redcliffe Pty Ltd v Barreau Peninsula Property Pty Ltd [2007] 2 Qd R 199; [2006] QSC 247 referred
Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd (2013) 85 NSWLR 601; [2013] NSWCA 344 referred
Haller v Ayre [2005] 2 Qd R 410; [2005] QCA 224 referred
Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC…

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Details
Case
[2015] QSC 90
Decision Date

CaseChat Overview and Summary

In the case of Ralph Lauren 57 Pty Ltd v Conley, the applicant sought to set aside 14 statutory demands made under the Corporations Act 2001 (Cth). The demands were issued by the respondent, who was the administrator of the estate of Cindy Fleming-Conley, and trustee of the Cindy Fleming Trust. The applicant, Ralph Lauren 57 Pty Ltd, was the trustee of 13 unit trusts and sole director of the applicant company. The statutory demands related to alleged debts owed by the applicant to the Fleming-Conley estate. The dispute centred on whether the debts existed, the nature of the indebtedness, and whether the statutory demands were properly served.

The court was required to determine several legal issues, including whether there was a genuine dispute about the indebtedness as per s 459H(1)(a) of the Corporations Act 2001 (Cth). The applicant argued that the nature of the indebtedness was a genuine dispute, particularly because the subject of the statutory demands was contested in and undetermined by the Family Court of Australia. Additionally, the court had to consider whether there was some other reason for setting aside the demands as per s 459J(1)(b) of the Act, including whether the service of the statutory demands was vexatious, oppressive, or constituted an abuse of process.

The court found that there was a genuine dispute about the nature of the debt claimed and whether it was payable immediately. This was partly due to the ongoing Family Court proceedings which were likely to address some of the factual issues in contention. The court also concluded that it was not appropriate to proceed with the winding up application when the Family Court was better placed to deal with the factual issues. Consequently, the court granted the applications to set aside the statutory demands, noting that the parties would be heard as to costs.

In summary, the court granted the applicant's applications to set aside the 14 statutory demands dated 12 February 2015. The decision was based on the existence of a genuine dispute about the nature of the debt and the appropriateness of the Family Court handling the underlying factual issues.

Orders

Orders of the court

Applications to set aside 14 statutory demands dated 12 February 2015 granted

Background

Background to the litigation

The applicant applies to set aside 14 statutory demands dated 12 February 2015. Separate applications are required in respect of each statutory demand.[1][1] See Ambassador at Redcliffe Pty Ltd v Barreau Peninsula Property Pty Ltd [2007] 2 Qd R 199, 203; [2006] QSC 247 at [16]-[17].Background The background facts were summarised in the applicant’s written submissions in the following terms which were not controversial. “2. Robert John James (James) and Cindy Fleming-Conley (Fleming) resided together in a de facto relationship between 2002 and 2009. Subsequent to the breakdown of that relationship, on 5 November 2011 Fleming commenced a proceeding in the Family Court of Australia against James seeking orders for the adjustment of property interests pursuant to section 90SM of the Family Law Act 1975 (Cth) (FCA proceeding).[2] The FCA proceeding is contested by James.3. Fleming died on 3 September 2014. Michael Conley (the respondent), Fleming’s husband at the date of her death, was appointed administrator of her estate and the trustee of the Cindy Fleming Trust. The respondent was substituted as Legal Personal Representative for Fleming by an order of the Family Court dated 10 November 2014 for the purposes of the FCA proceeding.4. Trial directions were made in the FCA proceeding on 16 February 2015, and the FCA proceeding is listed for a compliance mention on 14 May 2015 for the potential allocation of the matter in that Court’s June callover list for trial dates.[3]5. James is the sole director of the applicant. The applicant is the trustee of each of the 13 unit trusts described in the heading to this application. Each unit trust is the holder of an interest as partner in the Centro 3, 4 & 6 Partnership (3, 4 & 6 Partnership).6. The 3, 4 & 6 Partnership was formed in July 2003 and is registered for business and taxation purposes.[4] It acquired real property at 23, 27 and 31 James Street, Fortitude Valley in August 2003 for $9,200,000.00, funded by a combination of commercial borrowings (NAB loan $6,300,000.00) and equity contributions.[5] The equity contributions were required to meet the National Australia Bank’s loan to value ratio as part of its lending criteria.[6]”[2] Affidavit of Robert John James sworn 26 March 2015, para 3.[3] Affidavit of Robert John James sworn 26 March 2015, paras 4, 5.[4] Affidavit of Robert James filed 5 March 2015 (proceeding 2270/15), para 32.[5] Affidavit of Robert James filed 5 March 2015 (proceeding 2270/15), para 34.[6] Said to be based on the affidavit of Robert James sworn 26 March 2015, para 15 but perhaps derived from his affidavit filed 5 March 2015 in proceeding 2271/15. The applicant’s assertion that the assets held by the 3, 4 & 6 Partnership (comprising the James Street and other properties) were part of the property in dispute in the Family Court proceedings was not conceded. The respondent’s argument was that that property, since the death of Mrs Fleming, was held by the respondent in trust for his and Mrs Fleming’s children as to two-thirds and for himself as to one-third. Accordingly, it was submitted that it was not part of the property in dispute in the Family Court proceeding, although Mr Hackett conceded that the value of that property could be taken into account by the Family Court in adjusting rights as between Mr James and Mrs Fleming’s estate. Mr Conley also conceded in his oral evidence that his contention in the Family Court proceedings was that his wife had contributed a lump sum equity contribution to the 3, 4 & 6 Partnership.[7] [7] See T1-23 ll 1-5.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The other evidence has satisfied me, however, that there is a genuine dispute about the proper characterisation of the claim on behalf of Mrs Fleming’s estate, something that is also likely to be considered in the Family Court proceedings. Conclusion The result is that the applicant has satisfied me that there is a genuine dispute about the nature of the debt claimed and whether it is payable immediately. Nor is it appropriate to deal with the matter when the Family Court of Australia is likely to be required to deal with at least some of the factual issues sought to be debated here. The consequence is that the applications to set aside the statutory demands should be granted. I shall hear the parties as to costs.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.