Re Life Springs Pty Ltd - [2022] VSC 406

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2021 02643

IN THE MATTER of LIFE SPRINGS PTY LTD (ACN 164 473 670)

BETWEEN:

LIFE SPRINGS PTY LTD (ACN 164 473 670)	Plaintiff
v
IDEVELOPMENT GROUP PTY LTD (ACN 134 745 716)	Defendant

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	29 October 2021
DATE OF JUDGMENT:	19 July 2022
CASE MAY BE CITED AS:	Re Life Springs Pty Ltd
MEDIUM NEUTRAL CITATION:	[2022] VSC 406

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CORPORATIONS – Application to set aside statutory demand pursuant to s 459G of the Corporations Act 2001 (Cth) – Sections 459E, 459G, 459H, 459J – What grounds are ‘supported’ by statutory period affidavit – Application of Sceam Constructions Pty Ltd v Clyne (2021) 64 VR 404 – Whether there is genuine dispute as to the existence or amount of the debt – Finding that there was a genuine dispute in respect of approximately half of the amount claimed in the statutory demand – Whether there is ‘some other reason’ to set aside the statutory demand in its entirety – UGL Process Solutions [2012] NSWSC 1256 applied – Statutory demand set aside.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr B Fry of counsel	Koya & Co
For the Defendant	Mr L Wirth of counsel	WBM Lawyers

HIS HONOUR:

Introduction

By originating process filed 27 July 2021, the plaintiff, Life Springs Pty Ltd (ACN 164 473 670) (‘Life Springs’) applies to set aside a statutory demand dated 7 July 2021 (‘Demand’) served upon it by the defendant, iDevelopment Group Pty Ltd (ACN 134 745 716) (‘iDevelopment’).

iDevelopment claims that $351,358.17 is owing to it by Life Springs.

The schedule to the Demand describes the debt being claimed as follows:

Amount owing by the company to the creditor in respect of the HIA Medium Works Commercial Contract dated 28 October 2020 relating to 24 McLean Street, West Brunswick (as particularised in the Letter of Demand forwarded by the creditor to the company dated 26 March 2021 and as further demanded in the letter dated 4 June 2021 to the company from WMB Lawyers).

The Demand was accompanied by an affidavit of Maurice Randello (‘Mr Randello’), a director of iDevelopment, sworn 7 July 2021 and both those documents were attached to the originating process. The Demand exhibits two letters of demand dated 26 March 2021 and 4 June 2021 referred to in the schedule to the Demand (‘Schedule’) together with a statement on iDevelopment’s stationery dated 26 March 2021 which lists and attaches a copy of each of the tax invoices constituting the claim made in the Demand.

The originating process seeks an order that the Demand be set aside pursuant to ss 459H and 459J of the Corporations Act 2001 (Cth) (‘Act’ or ‘Corporations Act’). The application has been made within the time specified in s 459G of the Act.

iDevelopment’s claim arises from a construction project at McLean Street in West Brunswick (‘McLean Street Property’).

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: [2022] VSC 406
Decision Date: 19 July 2022

CaseChat Overview and Summary

The matter of Re Life Springs Pty Ltd involved an application to set aside a statutory demand made under the Corporations Act 2001 (Cth). The application was lodged by Life Springs Pty Ltd against a creditor, and the case was heard in the Federal Circuit and Family Court of Australia. The central dispute was whether the statutory demand should be set aside based on the grounds outlined in the application, specifically concerning the existence or amount of the debt and whether there was any other reason to justify setting aside the demand in its entirety.

The primary legal issues before the court were the interpretation of the statutory provisions, namely sections 459E, 459G, 459H, and 459J of the Corporations Act, and the applicability of recent case law, particularly Sceam Constructions Pty Ltd v Clyne (2021) 64 VR 404, to the facts of the case. The court needed to determine whether there was a genuine dispute regarding the existence or amount of the debt as claimed in the statutory demand and whether there were any other reasons to justify setting the demand aside. The application hinged on the credibility of the evidence provided and the interpretation of the relevant statutory provisions.

In considering the application, the court examined the evidence provided by Life Springs Pty Ltd and the creditor. It found that there was a genuine dispute as to the existence or amount of the debt in respect of approximately half of the amount claimed in the statutory demand. This finding was influenced by the principles established in Sceam Constructions Pty Ltd v Clyne. Furthermore, the court found that there were additional reasons to set aside the statutory demand in its entirety, drawing on the reasoning in UGL Process Solutions [2012] NSWSC 1256. Consequently, the court exercised its discretion under section 459G of the Corporations Act to set aside the statutory demand.

The final orders of the court included setting aside the statutory demand made against Life Springs Pty Ltd. This decision provided relief to Life Springs Pty Ltd and highlighted the importance of a rigorous examination of the evidence and statutory provisions when considering applications to set aside statutory demands.

Orders