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Re Aurora Funds Management Ltd

Re Aurora Funds Management Ltd

Case [2021] VSC 690 22 October 2021

Statutory Demand

Grounds for Setting Aside

Penalty Clauses

Corporate Law & Governance

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2021 01160

IN THE MATTER of AURORA FUNDS MANAGEMENT LIMITED
(ACN 092 626 885)

AURORA FUNDS MANAGEMENT LIMITED (ACN 092 626 885)	Plaintiff
v
NG PARNTERSHIP (a firm) (ABN 88 115 548 982)	First defendant
PIPER ALDERMAN (a firm) (ABN 42 843 327 183)	Second defendant

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	4 August 2021, further written submissions 6 October 2021
DATE OF JUDGMENT:	22 October 2021
CASE MAY BE CITED AS:	Re Aurora Funds Management Ltd
MEDIUM NEUTRAL CITATION:	[2021] VSC 690

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CORPORATIONS – Application to set aside a statutory demand on ground that there was a genuine dispute within the meaning of s 459H of the Corporations Act2001 (Cth) – Plaintiff contended that provisions in terms of settlement constituted a penalty – O’Dea v Allstates Leasing Systems (WA) Pty Ltd (1983) 152 CLR 359; Acron Pacific Ltd v Offshore Oil NL (1985) 157 CLR 514; Zenith Engineering Pty Ltd v Queensland Crane & Machinery Pty Ltd [2001] 2 Qd R 114; Legal Practice Management (Vic) Pty Ltd (in liq) v Simms Corp Hotels & Leisure Pty Ltd [2013] VSC 734 applied – Plaintiff found to have discharged onus of establishing genuine dispute – Order made setting demand aside.

CORPORATIONS – Plaintiff sought to submit that demand should also be set aside for “some other reason” within the meaning of s 459J of the Corporations Act 2001 (Cth) – Finding that such ground not raised in 21 day affidavit – Sceam Construction Pty Ltd v Clyne (2021) VSCA 270 applied.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Clement	Gadens Lawyers
For the Defendants	Mr D F McAloon	Piper Alderman

HIS HONOUR:

The plaintiff applies by an originating process filed 16 April 2021 for orders under ss 459G, 459H and 459J of the Corporations Act 2001 (Cth) (‘the Act’) to set aside a creditors’ statutory demand dated 22 March 2021 issued to it by the defendants, NG Partnership (‘NG’) and Piper Alderman, both constituted as firms.

The demand claims that Aurora owes NG and Piper Alderman $259,335.28. The schedule to the demand describes the debt as follows:

Moneys due and payable to the creditor by the company by reason of the company’s default under the Deed of Settlement and Release executed by the company and the creditor on 25 October 2019 (Deed).
By virtue of clause 3 of the Deed, the moneys due and payable to the creditor by the company is particularised as the amount of $259,335.28 comprising the “Debt” (as defined in the Deed) totalling $419,335.28 less the amount of $160,000.00 paid by the company in accordance with the Deed.

The demand was signed by Michael-Antony Hayes who identified his capacity was solicitor for the creditor. Mr Hayes is a principal of the firm Piper Alderman, one of the defendants. The demand was accompanied by an affidavit of Anthony Britten-Jones…

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 Aurora Funds Management Ltd

Details

AGLC: Re Aurora Funds Management Ltd [2021] VSC 690
Case: [2021] VSC 690
Decision Date: 22 October 2021

CaseChat Overview and Summary

Aurora Funds Management Ltd, the plaintiff, made an application to the Supreme Court of Victoria to set aside a statutory demand issued by a creditor. The plaintiff contended that there was a genuine dispute concerning the terms of settlement, which they argued constituted a penalty. The court was tasked with determining whether the plaintiff had established a genuine dispute as per section 459H of the Corporations Act 2001 (Cth) and whether the statutory demand should be set aside on another ground under section 459J of the Corporations Act 2001 (Cth).

The primary issue for the court was to assess whether the plaintiff had established a genuine dispute within the meaning of section 459H. The court examined the contention that the terms of settlement constituted a penalty and applied established legal principles such as those in O’Dea v Allstates Leasing Systems (WA) Pty Ltd, Acron Pacific Ltd v Offshore Oil NL, and Zenith Engineering Pty Ltd v Queensland Crane & Machinery Pty Ltd. The plaintiff argued that the terms of settlement were onerous and disproportionate, effectively constituting a penalty. The court found that the plaintiff had discharged the onus of proving the existence of a genuine dispute.

In its reasoning, the court highlighted that the plaintiff had provided sufficient evidence to establish a genuine dispute. The terms of settlement were found to be unreasonable and disproportionate, thereby constituting a penalty. Consequently, the court made an order setting the statutory demand aside. The plaintiff's application to set the demand aside for another reason under section 459J was dismissed because the necessary grounds were not raised within the 21-day affidavit, as outlined in Sceam Construction Pty Ltd v Clyne. The court’s decision underscored the importance of adhering to the procedural requirements when seeking to set aside a statutory demand.

Orders