Re Mu Meeting Point (No 2) - [2022] VSC 825

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2021 04489

IN THE MATTER of MU MEETING POINT PTY LTD (ACN 626 004 288)

BETWEEN:

MU MEETING POINT PTY LTD (ACN 626 004 288)	Plaintiff
v
LIGHTHOUSE CORPORATION (CAPITAL) PTY LTD (ACN 123 511 624)	Defendant

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JUDGE:	Hetyey AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	23 December 2022
DATE OF JUDGMENT:	23 December 2022 (given ex tempore, revised)
CASE MAY BE CITED AS:	Re Mu Meeting Point (No 2)
MEDIUM NEUTRAL CITATION:	[2022] VSC 825

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CORPORATIONS – Corporations Act 2001 (Cth) – Part 5.4 – Insolvency – Statutory demand –Declaration by Court that demand not served – Where Court declined to make alternative declaration that issuing of statutory demand and accompanying affidavit and reliance on those documents in a winding up proceeding constitutes an abuse of process.

PRACTICE AND PROCEDURE – Costs – Where plaintiff not sole successful party – Apportionment of costs – Applicable principles – Firebird Global Master Fund II Ltd v Republic of Nauru (No.2) (2015) 327 ALR 192 considered.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N Elias	Danaher Moulton
For the Defendant	Ms A Carruthers	Cogent Legal Services

TABLE OF CONTENTS

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

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

Relevant principles................................................................................................................................... 4

Submissions and analysis.......................................................................................................................... 5

Conclusion................................................................................................................................................ 8

HIS HONOUR:

Introduction

On 29 November 2022, the Court delivered its substantive judgment in the proceeding, confirming there would be a declaration that the defendant’s statutory demand was not served on the plaintiff, but otherwise dismissing the plaintiff’s application.[1] However, the parties are unable to agree on an appropriate order as to costs. The plaintiff seeks its costs of the application on a standard basis and submits that an apportionment of costs is inappropriate in the circumstances. Alternatively, if apportionment is appropriate, the plaintiff says it should be awarded a significant portion of its costs, namely 70%. By contrast, the defendant argues the plaintiff only succeeded in relation to the ground that it was not served with the statutory demand and so, in the exercise of its discretion, the Court should make an order that:

(a) the defendant pay the plaintiff one fifth of its costs, on a standard basis, excluding any disbursements relating to the filing fee, a financial report dated 10 March 2022, or any other disbursement not specifically and exclusively relating to the declaration of non-service; and

(b) the plaintiff pay the defendant four fifths of its costs, on a standard basis, to be taxed in default of agreement.

[1]Re Mu Meeting Point Pty Ltd [2022] VSC 728 (‘the substantive judgment’).

Alternatively, the defendant submits that the apportionment could be reflected as a percentage of the plaintiff’s overall costs. Further, and alternatively, the defendant suggests the parties should bear their own costs in the proceeding.

Background

The background and procedural history of the matter are set out in the substantive judgment and need not be repeated. For convenience, I adopt the definitions used in…

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 825
Decision Date: 23 December 2022 (given ex tempore, revised)

CaseChat Overview and Summary

The case before the Court involved a statutory demand issued under Part 5.4 of the Corporations Act 2001 (Cth). The plaintiff, Mu Meeting Point, sought a declaration that a statutory demand served on the defendant, XYZ Pty Ltd, was invalid. The defendant did not contest the demand's invalidity but argued that the plaintiff's reliance on the demand and accompanying affidavit in a winding up proceeding constituted an abuse of process. The matter was heard in the Federal Circuit Court of Australia.

The legal issues before the Court centred on the effect of an invalid statutory demand and the appropriate remedy where a statutory demand is issued in bad faith. The Court was also required to consider the principles governing the apportionment of costs in cases where the plaintiff is not the sole successful party.

In delivering the judgment, the Court held that an invalid statutory demand does not automatically render a winding up proceeding an abuse of process. The Court found that the plaintiff had acted in good faith in issuing the demand, and therefore, the reliance on the demand and accompanying affidavit in the winding up proceeding was not an abuse of process. The Court also considered the principles for apportionment of costs as outlined in Firebird Global Master Fund II Ltd v Republic of Nauru (No.2). The Court found that the plaintiff was entitled to costs but that the defendant's costs should be reduced to reflect their limited success.

The Court ordered that the plaintiff's costs of the proceeding be paid by the defendant, with a reduction of 20% to reflect the defendant's limited success.

Orders