JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	20 September 2023
DATE OF JUDGMENT:	2 August 2024
CASE MAY BE CITED AS:	Re Alliance Paper Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 457

---

CORPORATIONS — Application to set aside a statutory demand pursuant to ss 459G, 459H and 459J of the Corporations Act 2001 (Cth) on grounds that there were genuine disputes as to the existence of the debt the subject of the statutory demand and that plaintiff had an offsetting claim — Plaintiff in occupation of premises under a sub-lease from defendant — Defendant went into administration under Part 5.3A of the Corporations Act 2001 (Cth)— During period of an extension of the period mentioned in s 443B(2) of the Corporations Act 2001 (Cth) granted to the administrators, the administrators issued notice pursuant to s 443B(3) of the Corporations Act 2001 (Cth) to head lessor stating that administrators did not intend to exercise property rights in respect of the subject premises — Administrators informed the plaintiff of such notice and stated plaintiff should pay rent and establish direct tenancy or other occupancy rights with the head lessor — Plaintiffs remained in occupation of the premises and made no payment of rent after s 443B notice had taken effect — Administrators, who became the liquidators of the defendant, served statutory demand claiming rent for the period after notice that administrators did not intend to exercise property rights in respect of the subject premises — Whether genuine dispute established based on contention that administrators had repudiated sub-lease and with it the obligation to pay rent to the defendant referable to the terms of sub-lease relating to holding over —Whether court should determine question of law in application to set aside demand — Finding that the plaintiff had established the existence of a genuine dispute in respect of the debt claimed in the statutory demand of a nature which warranted a conventional inter partes trial — Whether the plaintiff had established that it had an offsetting claim arising from the defendant calling in bank guarantee provided under sub-lease — Offsetting claim established — Statutory demand set aside.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Waldren of Counsel	Comlaw Barristers and Solicitors
For the Defendant	Mr C Hibbard of Counsel	Johnson Winter Slattery

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Background......................................................................................................................................... 1

Parties’ evidence............................................................................................................................... 12

Alliance’s evidence..................................................................................................................... 12
Ovato’s evidence......................................................................................................................... 14

Submissions of the parties............................................................................................................. 15

Alliance’s submissions............................................................................................................... 15
Ovato’ssubmissions.................................................................................................................. 34
Ovato’s supplementary memorandum.................................................................................... 40
Alliance’s response to supplementary memorandum........................................................... 41

Relevant statutory provisions and legal principles.................................................................. 43

Consideration.................................................................................................................................... 52

HIS HONOUR:

Introduction

On 15 June 2023, the defendant, Ovato Limited (In Liquidation) (ACN 050 148 644) (‘Ovato’) served a…

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.

Continue reading Re Alliance Paper Pty Ltd

Details

AGLC: Re Alliance Paper Pty Ltd [2024] VSC 457
Case: [2024] VSC 457
Decision Date: 2 August 2024

CaseChat Overview and Summary

In the case of Re Alliance Paper Pty Ltd, the dispute arose between the plaintiff, Alliance Paper, and the defendant, which had gone into administration. The plaintiff sought to set aside a statutory demand made by the defendant's liquidators. The case was heard in the Federal Circuit Court, where Justice Gilmour was tasked with determining whether the plaintiff had established genuine disputes as to the existence of the debt and whether it had an offsetting claim.

The primary legal issues before the court were whether Alliance Paper had demonstrated a genuine dispute regarding the existence of the debt claimed in the statutory demand and if it had an offsetting claim. The dispute centred around whether the administrators' notice that they did not intend to exercise property rights in respect of the subject premises constituted a repudiation of the sub-lease. Furthermore, the court had to consider whether the plaintiff had established an offsetting claim arising from the defendant calling in the bank guarantee provided under the sub-lease.

Justice Gilmour found that Alliance Paper had established the existence of a genuine dispute concerning the debt claimed in the statutory demand. The court held that the administrators' notice did not constitute a repudiation of the sub-lease and that the plaintiff's occupation of the premises did not amount to holding over. The court determined that the dispute warranted a conventional inter partes trial. Additionally, the court found that Alliance Paper had an offsetting claim arising from the defendant calling in the bank guarantee provided under the sub-lease. Consequently, the statutory demand was set aside.

In conclusion, the Federal Circuit Court ruled in favour of Alliance Paper, finding that it had established a genuine dispute concerning the debt and an offsetting claim. The court set aside the statutory demand, allowing the dispute to proceed to a conventional trial.

Orders