Re Nature One Dairy Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2023 02240

IN THE MATTER of NATURE ONE DAIRY PTY LTD (ACN 602 371 684)

BETWEEN:

NATURE ONE DAIRY PTY LTD (ACN 602 371 684)	Plaintiff
v
SANSTON SECURITIES AUSTRALIA PTY LTD (ABN 61 156 057 064)	Defendant

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	3 August 2023
DATE OF JUDGMENT:	21 September 2023
CASE MAY BE CITED AS:	Re Nature One Dairy Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 571

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CORPORATIONS — Application to set aside a statutory demand pursuant to s 459G of the Corporations Act 2001 (Cth) on grounds that there were genuine disputes as to the existence of the debts the subject of the demand — Defendant’s claim made under a contract in writing — Plaintiff a member of a corporate group — Finding that there were genuine controversies as to whom the defendant had performed work and incurred disbursements on behalf of that gave rise to matters that warranted further investigation — Finding that plaintiff had established genuine disputes and that the demand should be set aside.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P Noonan	Jasper Lawyers
For the Defendant	Mr J Ribbands	Melbourne Legal Chambers

TABLE OF CONTENTS

Background......................................................................................................................................... 2

Parties’ evidence................................................................................................................................. 7

Nature One Dairy’s evidence...................................................................................................... 7
Sanston’s evidence in opposition to the application.............................................................. 13
Nature One Dairy’s evidence in reply..................................................................................... 19
Further affidavit of Francesco Licciardello............................................................................. 23
Further affidavit in reply of Mr Dimopoulos.......................................................................... 26

Submissions of the parties............................................................................................................. 34

Nature One Dairy’s submissions.............................................................................................. 34
Sanston’s submissions................................................................................................................ 39

Relevant statutory provisions and legal principles.................................................................. 41

Consideration.................................................................................................................................... 44

SCHEDULE A................................................................................................................................... 48

SCHEDULE B................................................................................................................................... 50

HIS HONOUR:

On 10 May 2023, the defendant, Sanston Securities Australia Pty Ltd (‘Sanston’), served a statutory demand dated 9 May 2023 on the plaintiff, Nature One Dairy Pty Ltd (‘Nature One Dairy’), which claimed that Nature One Dairy was indebted to Sanston for $367,505.40.

The demand was accompanied by an affidavit of Francesco Licciardello sworn 9 May 2023 which verified the debt as required by s 459E of the Corporations Act 2001 (Cth) (‘Act’). The schedule to the demand described the debt by reference to 29 invoices ranging in dates from 9 November 2022 to 2 May 2023. The debts were said to relate to ‘professional services provided and reimbursement of expenses incurred pursuant to an agreement dated 10 April 2019’, the terms of which are detailed below.

On 26 May 2023, Nature One Dairy made application by originating process to set aside the demand under s 459G of the Act. The application sought relief under both ss 459H and 459J of the Act however the application ultimately relied on a contention that there were genuine disputes in respect of the debts claimed in the demand and no relief was pursued under s 459J.

Nature One Dairy relies on the affidavits of one of its directors, Nick Dimopoulos, sworn 26 May 2023, 14 July 2023, and 1 August 2023.

Sanston relies on the affidavits of its sole director, Francesco Licciardello, sworn 23 June 2023 and 21 July 2023, together with an affidavit of its solicitor, Mario Merlo, sworn 26 July 2023 (‘Merlo affidavit’).

The application was made in compliance with s 459G(3) of the Act.

The parties filed a voluminous quantity of evidence for an application of this character. As the case law extracted below indicates, applications to set aside statutory demands involve a summary procedure,[1] whereby the jurisdiction of the court is confined to determining whether the applicant has a genuine dispute and/or an offsetting claim which warrants investigation.[2] The authorities extracted below indicate that the threshold that an applicant must pass is a low one.[3] Here, the volume of evidence was of the order that would be expected in a conventional inter partes trial by affidavit. In the later affidavits filed by the parties, there was considerable repetition of the previous evidence that had been filed, which went nowhere in advancing the outcome of the application.
[1]See Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA & Pharmagel SpA (1994) 15 ACSR 347, 353 (Lindgren J) and the commentary in Farid Assaf, Assaf’s Winding Up in Insolvency (Lexis Nexis, 3^rd ed, 2021) [6.19].
[2]Or whether there is ‘some other reason’ why the demand should be set aside under s 459J of the Corporations Act 2001 (Cth).
[3]See also Chadwick Industries (Southcoast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37, 39 (Lockhart J).

In particular, I note that on 24 July 2023, Sanston filed a further affidavit of Mr Licciardello when there was no provision for the filing and service of such an affidavit. I convened a directions hearing on 27 July 2023 to consider and determine whether leave should be granted for such affidavit to be filed. I reluctantly granted leave subject to Nature One Dairy’s right to file any affidavit in response to the matters raised by Mr Licciardello’s further affidavit, together with any supplementary submissions.

For the reasons that follow, I am satisfied that Sanston has established the existence of genuine disputes in respect of the claims made in the demand and that the demand should be set aside.

Background

The directors of Nature One Dairy are Mr Dimopoulos and Masie Ng-Dimopoulos. The holding company of Nature One Dairy is Nature One Dairy (Australia) Pte Ltd, a company registered in the Republic of Singapore (‘Singapore company’).

Mr Licciardello is the sole director of Sanston. Of the 3,100 issued shares, Kit Foo Chye holds 49 shares. An entity named A.A.S. Pty Ltd holds the remaining 3,051 shares.

Sanston’s claims in the demand are made pursuant to liabilities allegedly to have been incurred by Nature One Dairy under a document described in the evidence as the Mandate (‘Mandate’), entered into by Nature One Dairy and Sanston on 10 April 2019. Under the terms of the Mandate, Nature One Dairy appointed Sanston to advise on:

(a) a capital raising by the issue of convertible notes in Nature One Dairy (‘capital raise’);

(b) a sell down of the then shareholders’ shares in Nature One Dairy (‘sell down’); and

(c) listing of Nature One Dairy on the Australian Securities Exchange (‘ASX’) through an initial public offering (‘IPO’).

It is appropriate at this juncture to refer to several provisions of the Mandate which are relevant to this application.

The introduction to the Mandate refers to ‘recent discussions’ between Nature One Dairy and Sanston ‘regarding the proposed Capital Raise and IPO listing of Nature One Dairy Pty Ltd on the ASX in conjunction with a contemporaneous Capital Raising (“IPO”)’.[4] Clause 1.1 of the Mandate states that:

The company [i.e., Nature One Dairy] was incorporated in October 2014 in Mascot, NSW with the vision to manufacture and produce natural high-quality dairy food products globally from its “state of the art” Infant formula and Milk Powder manufacturing facilities in Carrum Downs, Victoria, Australia.

[4]Emphasis in original.

The first page of the Mandate, in its opening section, is headed:

NATURE ONE DAIRY PTY LTD – (“the Company”)
Mandate to Act as Corporate Advisor to Proposed Capital Raise and IPO

Nature One Dairy observes in its submissions that cl 3.1 confines the obligations arising under the Mandate to ‘the Company’,[5] that is Nature One Dairy.

[5]In the text of the Mandate, there are a number of instances where the lower case is adopted in reference to ‘the company’. When regard is had to the context, this was apparently inadvertent and the intention was to refer to ‘the Company’ i.e. Nature One Dairy.

Clause 2.1 of the Mandate, under the heading ‘Proposed Offer’ and subheading ‘Structure’, states:

We understand that it is proposed to raise a minimum of $20.0 million and up to $25.0 million as part of this IPO listing. This will be confirmed with you closer to the time of the IPO process being kicked off with the agreement of the company [i.e., Nature One Dairy] planned for late 2019 and a listing timeframe of second quarter 2019-20 financial year.
In addition, based on the cost estimate of transaction costs relating to the IPO process and the immediate working capital requirements of the company it has been agreed that a minimum of $3.5 million AUD will be raised by the company [i.e., Nature One Dairy] by way of issue of convertible notes in the company [i.e. Nature One Dairy]. The basic terms of the notes to be issued are as follows …

Clause 3 of the Mandate, headed ‘Participation and the Role of Sanston’ provides:

Sanston will act as sole corporate advisor for the Pre IPO-Convertible Note Capital Raise and any IPO subject to satisfaction of the conditions in section 4.
…
In its role as corporate advisor to the Pre IPO-Convertible Note Capital Raise and any IPO, Sanston’[s] tasks and responsibilities will be to provide the Company with all necessary assistance in undertaking the IPO as is customary and appropriate in transactions including the matters set out in this section.

Clause 3.1, headed ‘Issue Management’, provides:

Sanston will, as required and/or necessary:
(a)develop and manage the IPO timetable in conjunction with the Company’s agreement.
(b)familiarise itself to the extent deemed appropriate and necessary with the Company’s business operations, properties, financial condition and prospects, it being understood that we shall, during the course of such familiarisation, rely entirely on publicly available information and any other information supplied by the Company and its advisers without independent investigation or verification.
(c)assist the Company as required by the company with any due diligence process (subject to section 6.2 below).
(d)advise and input on prospectus framework and content, together with the Company and its legal, accounting and other advisers.
(e)on the share allocation policy.
(f)participate in float related meetings, including any with regulatory authorities such as ASIC and ASX, as and when required.
(g)coordinate and exclusively manage the overall offer process through its various offices.

Clause 4 is headed ‘Conditions to the Mandate’ and provides:

Sanston’s participation and assistance as corporate advisor to the IPO is subject to the following conditions, which must be satisfied in Sanston’s sole and absolute opinion (or subsequently waived by Sanston in writing) before any obligation of Sanston will result from this Mandate:
(a)The opportunity to both participate as an observer in, and review, the due diligence conducted by the Company and any reports commissioned by the Company for the IPO process when agreed by the company [i.e., Nature One Dairy] to commence.

(b) A satisfactory outcome to the Company’s due diligence process.
(c)The Company finalises its capital structure, IPO pricing and timing parameters to Sanston’s satisfaction and with the company’s [i.e., Nature One Dairy’s] agreement.
(d)The Company prepares a prospectus that fully complies with all relevant aspects of the Corporations Act (Including ASIC policy), the ASX Listing Rules and the Constitution of the Company, the terms and contents of which prospectus are to Sanston’s satisfaction.
(e)A legal sign off letter being provided to the Company’s due diligence committee by the Company’s solicitors to the satisfaction of Sanston and addressed to be for the benefit of Sanston confirming that:
(i)the due diligence investigations have been implemented and completed …
(ii)the verification and sign-off procedures for the prospectus have been conducted …
(iii) the due diligence investigations and the sign-off procedures for the prospectus referred to above constitute all inquiries and precautions that are reasonable in the circumstances and involved the exercise of due diligence by the directors of the Company to ensure that all material statements in the prospectus are not misleading or deceptive and that there are no material omissions from the prospectus.

(f)The Company conducts a series of formal presentations to our senior advisers, and certain key investors as arranged by Sanston.
…
(j)Final approval by our New Issues committee following the report back from the due diligence committee and our own review of the due diligence material and the prospectus (including its verification).
(k)Sanston executing a formal consent to be named in the company’s [i.e., Nature One Dairy’s] prospectus as Corporate Advisor in any IPO agreed to by the company [i.e. Nature One Dairy].

Clause 5 of the Mandate provides for Sanston’s remuneration for performing its obligations under the Mandate. Among other things, cl 5 states that Sanston’s fees will consist of a ‘Corporate Advisory Fee’, and is in the following terms:

The Company will pay Sanston a monthly retainer fee of $20,000 plus GST per month payable in advance, only once the IPO process has commenced as agreed by the company[6] with the first instalment payable once the company[7] has formally decided to proceed with the IPO (subsequent to attaining CFDA[8]) or as agreed with the company.[9] Each subsequent instalment is payable on or before the first day of each month. These fees are non-refundable. (emphasis added)
(‘advisory fee’)

It will be seen that a number of the invoices claimed in the schedule to the demand relate to the advisory fee.

[6]In lower case in the text of the Mandate.

[7]In lower case in the text of the Mandate.

[8]The Chinese Government Food and Drug Administration

[9]In lower case in the text of the Mandate.

The Mandate further provides in cl 5 that:

In addition to the above fees, the Company must reimburse Sanston in respect of any out-of-pocket expenses (together with any applicable GST) directly related to this transaction (whether or not the Pre-IPO and IPO proceeds). These expenses may include, but are not limited to, legal fees of Sanston’s own legal advisors, travel and accommodation (for due diligence and marketing), marketing and communication costs, printing, couriers and other distribution costs and postage. Sanston will obtain the Company’s consent prior to incurring any single expense greater than $2,000.
(emphasis added) (‘reimbursement claim’)

It will be seen that several of the invoices claimed in the demand are in respect of reimbursement claims by Sanston under this provision. The only parties to the Mandate are Nature One Dairy and Sanston. ‘Transaction’ is not defined in the Mandate, but it seems clear for the purposes of the present context that it is intended to refer to the capital raise and IPO listing of Nature One Dairy and not to works performed for other members of its corporate group.

Clause 5 goes on to provide that:

In the event that the Company terminates this Mandate for any reason, or Sanston terminates this Mandate for cause, in accordance with sub-section 6.13 below, Sanston will be entitled to:
·$100,000 plus GST as a termination fee to be paid in Cash; and
·The reimbursement of any incurred or accrued fees expenses up to the date of termination.

(emphasis added) (‘termination fee’)

The last invoice claimed in the demand, for $110,000, is in respect of a termination fee claimed under this provision.

The Mandate was signed on 10 April 2019 by Mr Licciardello as managing director of Sanston and Mr Dimopoulos as chief executive officer of Nature One Dairy.[10]
[10]The Mandate contains other terms making provision for GST (cl 5.1), stamp duty (cl 5.2), indemnity (cl 6.3), conduct of proceedings (cl 6.4), and confidentiality (cl 6.5), which are not relevant in the present context.

There are a number of corporate entities in the Nature One Dairy Group that are mentioned in the evidence which bear similar names. To assist in the reading of this judgment they are identified by reference to their relationship with each other in Schedule B to this judgment.

Parties’ evidence
Nature One Dairy’s evidence.

In his affidavit of 26 May 2023, Mr Dimopoulos makes reference to the Mandate and to what he considers to be the terms which are relevant in the context of this application. Those terms are extracted above. After observing that Mr Licciardello is the sole director of Sanston, he notes that Mr Licciardello was also:

(a) a director and chair of the Singapore company, Nature One Dairy (Australia) Pte Ltd from 21 July 2020 to 26 April 2023;

(b) a director of a Hong Kong registered company, Nature One Dairy (Hong Kong) Limited (‘Hong Kong company’ from 13 May 2022 to 26 April 2023). The Hong Kong company is a wholly owned subsidiary of the Singapore company;[11] and

(c) a director of Nepean River Dairy Pty Ltd (ACN 603 943 942) (‘Nepean River Dairy’), which was also a wholly owned subsidiary of the Singapore company, from 23 September 2021 to 26 April 2023.[12]

[11]At para 13(b) of his affidavit sworn 26 May 2023, Mr Dimopoulos refers to ‘Nature One Dairy (Australia) Pty Ltd’ as the holding company of Nature One Dairy (Hong Kong) Limited. From the context, this appears to be a typographical error and meant to be a reference to the Singapore company, that is ‘Nature One Dairy (Australia) Pte Ltd’.

[12]This is also apparently intended to be a reference to the Singapore company, i.e. ‘Nature One Dairy (Australia) Pte Ltd’.

Mr Dimopoulos states that Mr Licciardello:

(a) in addition to the above three companies, has served as a director of other entities which he describes collectively as the ‘Nature One Dairy Group’; and

(b) has been involved in relation to other transactions undertaken by the Nature One Dairy Group, including the acquisitions of the ‘Nepean River Dairy’ and ‘Feifah Medi Balm’ enterprises.

Mr Dimopoulos states the services provided by Sanston in respect of these transactions were not provided to Nature One Dairy and were not performed pursuant to the Mandate or any other agreement with Nature One Dairy.

Mr Dimopoulos states that in mid–April 2021 he had a conversation with Mr Licciardello in which Mr Licciardello said words to the effect that Sanston would not invoice Nature One Dairy and that Sanston would only require payment for any work it had done for the Nature One Dairy Group after the successful completion of the IPO. He states, however, that he and Mr Dimopoulos have not discussed nor agreed to Sanston’s fees and terms of engagement in respect of that work.

Mr Dimopoulos also states that Nature One Dairy did not commence the IPO process, nor did it formally decide to proceed with the IPO as contemplated by the Mandate. This contention is central to Nature One Dairy’s contention that there is a genuine dispute in respect of the claim for the advisory fees.

Mr Dimopoulos states that in about early March 2023, a dispute arose between him and Mr Licciardello regarding:

(a) the conflict of interest between Mr Licciardello’s roles as corporate advisor and director of members of the Nature One Dairy Group; and

(b) the management of the Nature One Dairy Group, particularly the management of the Hong Kong company and the conduct of its then director, Lawrence Lau Guan Chew.

Mr Dimopoulos states that in May 2023, Mr Licciardello caused the demand to be issued to Nature One Dairy. In addition, a further dispute arose after Mr Licciardello sought to convene an extraordinary general meeting of the Singapore company, purportedly on behalf of the board of that company, but without the authority of its board.

Mr Dimopoulos states that on 2 May 2023, Mr Licciardello sent him an email attaching:

(a) a copy of the Mandate;

(b) a spreadsheet entitled ‘Receivables Reconciliation [Detail] as of 18/04/2023’ (‘spreadsheet’);

(c) a tax invoice #2249 addressed to Nature One Dairy entitled ‘Termination Fee Invoice’ dated 2 May 2023 (‘termination fee invoice’), for $110,000; and

(d) a letter to Nature One Dairy dated 2 May 2023, with a subject line ‘Re: Termination of Mandate to Act as Corporate Advisor’ (‘termination letter’).

(‘termination email’)

In the termination email, Mr Licciardello:

(a) describes the various capital raising services and business acquisition services that Sanston has allegedly rendered to Mr Dimopoulos and Nature One Dairy; and

(b) claims that a total sum of $1,228,85.54 is owed to Sanston.

In the spreadsheet, there are seven invoices totalling $861,349.14 issued to the Singapore company and 29 invoices, totalling $367,505.40, issued to Nature One Dairy. The invoices directed to Nature One Dairy are those claimed in the demand and are the subject of this application.

Mr Dimopoulos states that Sanston did not provide Nature One Dairy with any of the services referred to in the termination email and denies that Nature One Dairy is liable to pay any of the 36 invoices referred to in the spreadsheet.

On Mr Dimopoulos’ instructions, Jasper Lawyers, the solicitors for Nature One Dairy, wrote to Sanston on 8 May 2023, stating:

(a) there was no outstanding invoice payable by Nature One Dairy to Sanston under the Mandate at the time when the termination letter was served on Nature One Dairy;

(b) Nature One Dairy has not breached the terms of the Mandate by failing to pay the invoices referred to in the spreadsheet;

(c) Sanston is not entitled to terminate the Mandate on the ground set out in the termination letter;

(d) Nature One Dairy is not liable to pay the termination fee under the Mandate; and

(i) by Sanston’s conduct and Mr Licciardello’s express oral agreement and representation, any invoices issued by Sanston to Nature One Dairy were only payable after the successful completion of the IPO;

(ii) the termination fee is not a genuine pre-estimate of the losses that Sanston would suffer due to the termination of the Mandate for cause (which is denied);

(iii) the termination fee is a penalty;

(iv) the termination fee is unenforceable; and

(v) Nature One Dairy would vigorously defend any attempts by Sanston to enforce the payment of the termination fee.

In response, the solicitors for Sanston, Melbourne Legal, responded on 9 May 2023 contending that:

(a) Sanston has carried out work for both Nature One Dairy and the Singapore company pursuant to the Mandate;

(b) Nature One Dairy’s failure to pay the invoices as and when they fell due constituted a material breach of the terms of the Mandate and entitled Sanston to:

(i) to terminate the Mandate; and

(ii) to charge Nature One Dairy the termination fee, which is not a penalty.

Mr Dimopoulos observes that, notwithstanding that Sanston and its solicitors were aware of Nature One Dairy’s dispute concerning the alleged debts, Sanston proceeded to serve the demand upon Nature One Dairy and Mr Licciardello deposed in his affidavit accompanying the demand that he believed that there was no genuine dispute about the existence or amount of any of the debts claimed in the demand.

Mr Dimopoulos then detailed the nature of the disputes in respect of the 29 invoices claimed in the demand.

As regards invoices #2198, #2204, #2208, #2212, #2216, and #2245 (‘advisory fee invoices’), which are each for $22,000 issued by Sanston for the period between 18 November 2022 and 17 May 2023, Mr Dimopoulos states that Sanston is not entitled to receive payment for any of those invoices on the following grounds:

(a) Nature One Dairy has neither commenced the IPO process nor formally decided to proceed with the IPO and the necessary conditions for payment referred to in cl 5 of the Mandate concerning remuneration which are extracted above have therefore not been met;

(b) since about October 2019, Sanston has ceased to carry out any work for Nature One Dairy that might be said to be within the scope of the works described in the Mandate; and

(c) Sanston is precluded from demanding payment for the advisory fee as that is inconsistent with the agreement and representations made by Sanston.[13]

[13]See [27] of these reasons.

As to the invoices in respect of the reimbursement claim (‘reimbursement invoices’),[14] Mr Dimopoulos states that these invoices were issued by Sanston retrospectively over a six-day period on 23, 24, and 29 March 2023 making claims for reimbursement purportedly due under cl 5 of the Mandate. He refers to cl 5 of the Mandate which provides that Nature One Dairy is required to reimburse Sanston in respect of any out-of-pocket expenses (together with any applicable GST) that were, he emphasises, ‘directly related’ to the transaction referred to in the Mandate (whether or not the pre-IPO and IPO proceeded).
[14]Invoices #2222, #2223, #2224, #2225, #2226, #2227, #2228, #2229, #2230, #2231, #2233, #2234, #2235, #2236, #2237, #2238, #2239, #2240, #2241, #2242, #2243, and #2244 (‘reimbursement invoices’).

Mr Dimopoulos states that the out-of-pocket expenses claimed in the reimbursement invoices were not ‘directly related’ to any transaction contemplated under the Mandate and Nature One Dairy is therefore not liable for any of the reimbursement invoices.

Mr Dimopoulos then refers to each of the 22 reimbursement invoices in turn, describing in brief terms why they were not directly related to any transaction under the Mandate and that they were not payable by Nature One Dairy. In Schedule A to these reasons, there appears a short narrative in respect of each reimbursement invoice as to why it is not payable.

In respect of the termination fee invoice, Mr Dimopoulos states that this is not payable as Sanston did not terminate the Mandate with ‘cause’. He contends that Nature One Dairy was not liable to pay either the monthly fee invoices or the reimbursement invoices and their non-payment did not give rise to a right by Sanston to terminate the Mandate for cause under cl 6.13.

In addition, Mr Dimopoulos states that if the Mandate was terminated by Sanston in accordance with cl 6.13, the termination fee is not a genuine pre-estimate of the losses that Sanston would suffer due to the termination of the Mandate. It is therefore said to be a penalty that is not recoverable against Nature One Dairy.

Sanston’s evidence in opposition to the application

In his affidavit of 23 June 2023, Mr Licciardello deposes that Sanston specialises in assisting businesses with corporate advice and finance, including:

(a) arranging finance for growth and acquisitions;

(b) restructuring debt;

(c) capital raising by accessing equity capital markets in Australia, Malaysia, Singapore, Hong Kong, Taiwan, and China;

(d) assisting with initial public offerings, being the process of offering shares of a private company to the public in a new stock exchange, issued for the first time, which enables the company to raise equity capital from public investors; and

(e) assisting with listings on the Australian and Asian stock exchanges.

He confirms that Nature One Dairy is a wholly owned subsidiary of the Singapore company and that on 10 April 2019, it entered into the Mandate with Sanston, pursuant to which it engaged Sanston as corporate adviser for the purposes of, among other things, an IPO and raising a minimum of $20 million capital by various means.

Mr Licciardello makes reference to cl 5 of the Mandate providing for Sanston’s entitlements to remuneration, including the advisory fee of $20,000 per month plus GST payable in advance, together with the reimbursement of expenses and the termination fee. Mr Licciardello states that under the terms of the Mandate, all fees and expenses were to be paid by Nature One Dairy within seven business days of the presentation of a valid tax invoice.

Mr Licciardello states that under the Mandate, Sanston provided services to Nature One Dairy including, but not limited to:

(a)completion of a convertible note capital raise for which Sanston was paid the general advisory fee;
(b)the sell down of $10 million of equity for which Sanston was paid the equity sell down success fee;
(c)the pre-IPO offer for which it was paid the pre-IPO success fee;
(d)monthly corporate advisory service fees for which were paid up to and including October 2022…; and
(e)the acquisitions of Nepean River Dairy and Feifah Medi Balm in Hong Kong.

Mr Licciardello deposes that from 21 July 2021 to 26 April 2023 he was a director and chair of the Singapore company and the Hong Kong company, which he confirms is also a wholly owned subsidiary of the Singapore company. He states that from 23 September 2021 to 7 March 2023, he was a non-executive director of Nepean River Dairy, which is also a wholly owned subsidiary of the Singapore company, but he resigned from this role on 7 March 2023.

Mr Licciardello states that pursuant to the terms of the Mandate, Sanston issued the advisory fee invoices to Nature One Dairy. He states that the invoices were rarely paid on time. However, all the invoices issued by Sanston for the advisory fee were paid, save for the invoices issued from November 2022 to April 2023, totalling $132,000 inclusive of GST. These invoices remain outstanding. In March 2023, Sanston issued the reimbursement invoices claimed in the demand totalling $125,505.40.

Mr Licciardello states that on 20 October 2022, he received an email from Peter Vaughan, the then company secretary and group chief financial officer of Nature One Dairy and the Singapore company, advising that he had ‘taken up an accrual of $60,000 for [Mr Licciardello’s] travel costs which [Mr Licciardello] hasn’t billed to [Nature One Dairy] yet’ and requesting that Mr Licciardello provide an estimate of the further costs and disbursements to be incurred and reimbursed to Sanston.

Mr Licciardello states that on 27 April 2023, he sent a text message to Mr Dimopoulos, stating, ‘I want my expenses paid and commissions on the moneys you guys have received paid first’, to which Mr Dimopoulos replied by text on 28 April, stating, ‘will arrange to get this paid asap’. It will be seen that Mr Dimopoulos complains in his affidavit evidence in reply that these messages omit other messages in the chain and the texts referred to by Mr Dimopoulos are not given their proper context.

Mr Licciardello states that by reason of the non-payment of the outstanding invoices, Sanston terminated the Mandate and issued the termination fee invoice. He asserts that the liabilities owed to Sanston by Nature One Dairy and the Singapore company have been accepted and acknowledged by these companies by being recorded in the companies’ financial reports which are independently audited, and which are circulated to the directors each month.

Mr Licciardello states that on 27 April 2023, he sent an email to Mr Dimopoulos requesting payment of Sanston’s outstanding invoices and enclosing a reconciliation of the outstanding invoices as of 18 April 2023. He did not receive a response.

On 8 May 2023, Mr Licciardello received a letter from Nature One Dairy’s solicitors challenging the termination of the Mandate. He states that Jasper Lawyers incorrectly contended, among other things, that:

(a)the allegation that [Nature One Dairy] had failed to pay outstanding invoices was wrong;

(b) the termination of the Mandate was wrong;
(c) [Nature One Dairy] was ‘examining the validity of the invoices’;
(d) ‘regardless of whether the invoices are valid or not, or whether the amounts invoiced are correct or not, there was no outstanding invoice payable by [Nature One Dairy] to [Sanston] at the time when [Sanston] served the termination letter upon [Nature One Dairy]’;
(e)[he] made an express oral representation to “[Nature One Dairy’s] representatives’ that invoices issued by Sanston to [Nature One Dairy] are only payable after [Nature One Dairy] is successfully listed on the Australian Securities Exchange;
(f)Sanston in effect terminated the Mandate without cause and thereby repudiated the Mandate;

(g) the demand for payment of the termination fee is ill-conceived; and
(h) the termination is in effect a penalty and unenforceable.

Shortly afterwards, Sanston’s solicitors served the demand on Nature One Dairy.

Mr Licciardello then proceeded to address the evidence of Mr Dimopoulos. He denies that he had the conversation referred to by Mr Dimopoulos in mid-April 2021 in respect of payment for work for the Nature One Dairy Group referred to at paragraph 27 above. He deposes that the terms of the Mandate were never amended nor varied to record the agreement now contended for by Mr Dimopoulos. In this regard, he states that there was no guarantee that an IPO could be delivered, and its success was dependent on a number of factors that were outside Sanston’s control. He states that Sanston would never have agreed to act and undertake the significant work that it did if payment was conditional upon a successful IPO. He deposes that contrary to Mr Dimopoulos’ assertion that Sanston would not invoice Nature One Dairy, numerous invoices were issued by Sanston to Nature One Dairy and to the Singapore company after mid-April 2021. The invoices were recorded in the companies’ financial accounts which were audited, and a number of the invoices issued to Nature One Dairy were paid.

As to Mr Dimopoulos’ evidence that Nature One Dairy neither commenced the IPO process contemplated by the Mandate nor formally decided to proceed with the IPO as contemplated by the Mandate, Mr Licciardello states that Sanston raised pre-IPO funds on a number of occasions and was paid its fees for doing so under the terms of the Mandate. He states that Nature One Dairy issued term sheets and ‘slide decks’ to investors, which confirmed the pre-IPO funds that were raised. Prior to Sanston commencing the IPO process, it charged Nature One Dairy fees of $5,000 per month. Once the board of directors agreed to commence the IPO process, the advisory fees charged by Sanston increased to $20,000 per month. He states that Nature One Dairy also engaged lawyers and accountants to assist it with the IPO process and shareholder updates and timetables were sent to confirm the commencement of the IPO. He contends there are numerous documents confirming this, including emails and a draft prospectus.

He denies that a dispute arose between him and Mr Dimopoulos regarding any conflict of interest or management issues. He states that no such issues have ever been raised with him and that the reports of Nature One Dairy specifically record any potential conflicts in a section titled ‘Declared Interest Register’.

Mr Licciardello disputes the assertions made by Mr Dimopoulos in respect of the payment of the advisory fees. He states that the invoices for advisory fees have been recorded as a liability in Nature One Dairy’s financial accounts which have been audited. He states that the assertion that since October 2019, Sanston had ceased to carry out any work for Nature One Dairy that might be said to be within the scope of the Mandate is a ‘fabrication and entirely disingenuous’. He contends that Sanston undertook significant works for Nature One Dairy and was paid for its work up to but not including November 2022.

As to the reimbursement invoices covering out-of-pocket expenses not being ‘directly related’ to any transaction contemplated by the Mandate, Mr Licciardello states that each of these expenses were incurred by Sanston in the process of it undertaking its obligations under the Mandate in connection with , among other things, assisting the sell down of equity, the capital raise, and the acquisition of other businesses. Mr Licciardello refers to the email from Mr Vaughan of 20 October 2022 in his reference to the taking up of an accrual of $60,000 for travel costs. He also refers to the text message sent by Mr Dimopoulos on 28 April 2023, in which Mr Dimopoulos agreed to reimburse Mr Licciardello’s expenses and make any payment of Mr Licciardello’s commission as soon as possible. Mr Licciardello states that many of the expenses paid by Sanston were for and on behalf of Mr Dimopoulos himself, including for travel, accommodation, and meals. He states that Mr Dimopoulos’ evidence is the first time that Sanston’s entitlement to reimbursement of these expenses has been challenged.

As to the evidence of Mr Dimopoulos regarding the termination fee invoice, Mr Licciardello states that the assertion by Mr Dimopoulos that Nature One Dairy was not liable to pay the advisory fee invoices and the reimbursement invoices is disingenuous. He refers to the terms of the Mandate, which he states requires the payment of such expenses and the failure on Nature One Dairy’s part to pay such invoices, he says, gives rise to a right to terminate the Mandate and charge the termination fee. Mr Licciardello asserts that the termination fee is not a penalty and is a genuine pre-estimate of the losses that Sanston has suffered and will continue to suffer by reason of the termination of the Mandate. He does not substantiate or elaborate on the amount of such losses, other than those relating to non-payment of the monthly advisory fee. In addition, he contends Sanston is still entitled to be paid 2.25% on any further consideration paid by the Nature One Dairy Group to the original vendor of Feifah Medi Balm in Hong Kong. I observe that Mr Licciardello does not explain how the indebtedness of one or another of the Nature One Dairy Group is relevant to a consideration as to whether there is a genuine dispute in respect of the claims made in the demand.

Mr Licciardello concludes his first affidavit by stating that Nature One Dairy paid all invoices issued by Sanston up to, and including, October 2022, but that it has thereafter failed to pay any invoices subsequently issued, despite acknowledging and accepting those invoices by recording, in its financial accounts, its liability to pay them.

Nature One Dairy’s evidence in reply

In his affidavit of 14 July 2023, Mr Dimopoulos takes issue with Mr Licciardello’s interpretation of Sanston’s entitlements under cl 5 of the Mandate. He contends that the advisory fee would only become payable if and when certain conditions were met, and they were not.

Mr Dimopoulos contends that Mr Licciardello’s description of the terms regarding the reimbursement invoices and the termination fee is inaccurate and misleading and do not reflect the written terms of the Mandate and are described in such a way so as to make the entitlements more favourable to his interests than the actual terms of the Mandate. Mr Dimopoulos says the issue of entitlement to reimbursement of expenses that are only recoverable if they are ‘directly related’ to the transaction under the Mandate is particularly relevant in circumstances where Mr Licciardello was undertaking work in other capacities and for other Nature One Dairy Group entities. Even assuming that the expenses were properly incurred in the course of performing work for a Nature One Dairy entity, they are not claimable from Nature One Dairy under the terms of the Mandate.

In response to Mr Licciardello’s evidence referred to in paragraph 48 above, Mr Dimopoulos states that:

(a) Sanston did broker convertible note subscriptions for Nature One Dairy in 2019. However, as Mr Licciardello states, Sanston has already been paid for that service and it was deducted from amounts paid by the subscribers to Sanston’s bank account;

(b) contrary to what Mr Licciardello contends, Sanston did not provide Nature One Dairy with any services concerning the selldown of $10 million of equity. Nor did Nature One Dairy pay Sanston any fees in connection with this;

(c) in the absence of any specific detail, he does not know what ‘pre-IPO offer’ and ‘pre-IPO success fee’ Mr Licciardello is referring to. Aside from Sanston having brokered convertible note subscriptions for Nature One Dairy in 2019, Sanston did not provide Nature One Dairy with services relating to the ‘pre-IPO offer’. Nor did Nature One Dairy pay Sanston any ‘pre-IPO success fee’ as Mr Licciardello contends.

Mr Dimopoulos states that for the reasons set out in his first affidavit, to which reference has been made in paragraphs 27, 28 and 39 above, Sanston is not entitled to receive payments for any advisory fees under the Mandate.

Mr Dimopoulos also states that Sanston did not provide Nature One Dairy with any services in connection with the acquisitions of Nepean River Dairy and Feifah Medi Balm in Hong Kong.

In response to Mr Licciardello’s evidence about the meeting of the directors of the Singapore company held on 27 July 2021, where it was resolved that Sanston be paid a fee of 2.25% of the transaction value of $36.5 million in recognition of its efforts in procuring the acquisition of Nature One Dairy Group, Mr Dimopoulos observes that Nature One Dairy, the Singapore company and other subsidiaries of the Singapore company, including Nepean River Dairy and the Hong Kong company, are separate legal entities.

Mr Dimopoulos states that Mr Licciardello’s affidavit and his claims repeatedly conflate his dealings with Nature One Dairy, the Singapore company and other subsidiaries of the Singapore company, including Nepean River Dairy and Nature One Dairy. He states that the minutes to which reference is made are minutes of the Singapore company, not Nature One Dairy, and are therefore irrelevant to this application, the demand or the alleged debts claimed in the demand.

In respect of Mr Licciardello’s observation regarding the unpaid invoices of the Singapore company, by which some $861,349.14 remains outstanding, Mr Dimopoulos responds that that liability is with the Singapore entity, not Nature One Dairy, and therefore has no relevance to this proceeding, the demand or the alleged debts. Mr Dimopoulos observes that this illustrates the repeated conflation by Mr Licciardello of the different corporate entities within the Nature One Dairy Group. It also confuses the fact that the claims in the demand and the works said to underpin those claims, whether or not they give rise to any claim against some other entity in the group, do not relate to Nature One Dairy.[15]
[15]Mr Dimopoulos states in his affidavit of 14 July 2023 (at [11]) that Mr Licciardello’s reference to the Singapore company in his affidavit of 23 June 2023, at [17], where Mr Licciardello describes the rendered invoices for the total sum of $1,111,349.14 (in respect of the Nepean River Dairy acquisition), is indicative of Mr Licciardello’s ‘conflation of different corporate entities’.

Mr Dimopoulos refers to Mr Licciardello’s evidence that the monthly invoices were paid to April 2023. He says that to the extent that any such amounts were paid for advisory fees, they ought not to have been paid and Nature One Dairy intends to claim from Sanston in restitution for unjust enrichment for any such fees that it has been wrongly charged and invoiced.

In respect of the evidence of Mr Licciardello referred to in paragraphs 51 to 53 above regarding Sanston’s out-of-pocket expenses, Mr Dimopoulos says that this is another instance of Mr Licciardello conflating his dealings with the various entities in the Nature One Dairy Group in his roles as directors of members of the group (except for Nature One Dairy). He states that Mr Licciardello also conflates the amount claimed in the demand with claims that that would be payable by different entities in the Nature One Dairy Group (if they were payable at all). As to the reference to the email of Mr Vaughan of 20 October 2022, Mr Dimopoulos says that that email does not state anything to the effect alleged by Mr Licciardello i.e., that Nature One Dairy has budgeted for or is liable to pay Sanston the reimbursement invoices or any reimbursements under the Mandate. Mr Dimopoulos states that Nature One Dairy has not budgeted for and is not liable for those amounts.

Mr Dimopoulos states that he did not, by his message to Mr Licciardello on 28 April 2023, acknowledge that Nature One Dairy is or was liable to pay the reimbursement invoices or any fees under the Mandate. He states that Mr Licciardello’s evidence is misleading because it does not include all the messages passing between them in their actual order. He then substantiates his explanation for this assertion by a detailed description of the exchanges that occurred between them. I do not consider it useful in the context of an application of this character to descend into an analysis of the minutiae of the exchanges that are catalogued in Mr Dimopoulos’ affidavit.[16] He exhibits a number of emails, together with screenshots of WhatsApp messages, which, on their face, plausibly support his assertions.
[16]See affidavit of Nick Dimopoulos sworn 14 July 2023, [14].

As to Mr Licciardello’s evidence that as a result of the non-payment of the outstanding invoices owed to Sanston and Sanston terminating the Mandate and issuing a claim for the termination fee, Mr Dimopoulos says the Mandate was not terminated ‘as a result of the non-payment of the outstanding invoices’, as claimed by Mr Licciardello. Rather, the termination followed a dispute between Mr Licciardello and Mr Dimopoulos in about March 2023, which has been described by Mr Dimopoulos in his earlier affidavit. Mr Dimopoulos states that in circumstances where Nature One Dairy had, in any event, not proceeded with the IPO process contemplated by the Mandate and given how the Nature One Dairy business and corporate structure had developed by that time, including the role of the Singapore company, it was clear that Nature One Dairy had no plans to proceed with the IPO process.

Mr Dimopoulos refers to the evidence of Mr Licciardello in his affidavit where he had stated that the liabilities owed to Sanston by Nature One Dairy and the Singapore company had been accepted and acknowledged by those companies as being recorded in those companies’ financial reports. Mr Dimopoulos describes this evidence as being vague and states that Mr Licciardello does not identify which parts of the financial report support the position that he contends for. Mr Dimopoulos states that, under cover of this objection, the accounts payable section of the December 2022 financial report of Nature One Dairy includes advisory fees that Sanston has invoiced. Mr Dimopoulos states that the financial report was prepared by Mr Vaughan and Pri Gunasekara, who were employees of the group of companies owned by the Singapore company, the holding company, on the instructions and directions of Mr Licciardello himself, in his capacity as the chairman of the Singapore company.

Mr Dimopoulos states that the financial report is not audited and is an internal accounting record of the Singapore company made on the basis of information it had on hand at the time, including invoices received that may be subject to dispute. The financial report was circulated amongst the board members of the Singapore company and marked ‘STRICTLY CONFIDENTIAL Documents are not to be copied or distributed beyond their original distribution’. Mr Dimopoulos states that the report was not intended for circulation to external parties and did not constitute an acknowledgment of any debts. He states that the fact that those amounts were included on Mr Licciardello’s instructions does not reflect any obligation on Nature One Dairy to pay Sanston any money or otherwise alter the parties’ agreement or rights.

In conclusion, Mr Dimopoulos repeats his evidence that Nature One Dairy has not commenced or agreed to commence any IPO process under the Mandate. He contends that Mr Licciardello conflates the affairs of Nature One Dairy, the Singapore company, other subsidiaries of the Singapore company, and his roles as a director of those companies (save for Nature One Dairy). Mr Dimopoulos says he believes that since as early as about October 2019, Sanston started to provide investors with term sheets and slide decks to be issued by the Singapore company (that is, not Nature One Dairy), prepared by Mr Licciardello.

Mr Dimopoulos states that Mr Licciardello has failed to identify what work he alleges Sanston performed for Nature One Dairy under the Mandate since October 2022. In the absence of any detail or evidence from Mr Licciardello beyond the mere assertions he has made, he states he is unable to make any more detailed responses, other than to say that no such work has been completed by Sanston for Nature One Dairy.

Further affidavit of Francesco Licciardello

As I have said, with some reluctance, I granted retrospective leave for the reception of Mr Licciardello’s further affidavit filed 24 July 2023. When analysed, the affidavit, while providing some additional evidence going to whether the disputes raised by Nature One Dairy are genuine, consists, in a large part, of assertions unsupported by the evidence, is argumentative, takes the form of submissions, repeats evidence that was contained in his earlier affidavit and indulges in unhelpful, colourful rhetoric. Among other things, Mr Licciardello speaks of Mr Dimopoulos’ evidence as containing ‘deliberate falsehood[s]’, of him mistaking the facts and ‘deliberately seeking to mislead’ the Court. In my view, the affidavit is of little utility in resolving the outcome of this application and goes no way towards dispelling Nature One Dairy’s submission that there are genuine disputes in respect of the debts claimed in the demand. What follows is a summation of that affidavit.

Mr Licciardello’s further affidavit is divided into three segments. The first deals with the claim for the advisory fee. He states that the IPO process was approved by Nature One Dairy and commenced in July 2020, despite approval not having been obtained from the Chinese Government’s Food and Drug Administration.

Mr Licciardello denies that such an approval by the Chinese Government was a pre-condition for payment of the advisory fee.[17] Mr Licciardello asserts that once the IPO process was approved by Nature One Dairy, Sanston became entitled to the monthly advisory fee once the IPO process commenced, irrespective of whether the IPO was completed. He repeats his evidence that between August 2020 and April 2023, Sanston issued monthly invoices for the advisory fees and all of those invoices have been paid, save for those issued between November 2022 and April 2023, which he contends confirms that Sanston did commence the IPO process and is entitled to those fees.
[17]I note that clause 5 of the Mandate under the heading ‘Corporate Advisory Fee’ provides ‘The Company will pay Sanston a monthly retainer fee of $20,000 plus GST per month payable in advance, only once the IPO process has commenced as agreed by the company with the first instalment payable once the company has formally decided to proceed with the IPO (subsequent to attaining CFDA) or as agreed with the company.(Emphasis added)

Mr Licciardello then refers to various matters that he states cut across Mr Dimopoulos’ assertions regarding the IPO. He describes a series of events commencing in June 2020 in support of his contention that the IPO process was undertaken pursuant to the Mandate and that Sanston was entitled to be paid the monthly advisory fee. These events include the engagement of Nicholson Ryan Lawyers and a firm of investigating accountants, RSM Corporate Australia Pty Ltd (‘RSM’); the conduct at meetings of the board of Nature One Dairy; the incorporation of an Australian public company (Nature One Dairy Group Ltd (ACN 645 578 801)); the obtaining of procurement proposals from a firm, Market Eye, to provide strategic investor relations and advice; and the issuing of regular updates to investors and shareholders. All of these matters are said to confirm the progress of the IPO. It is also said that Nature One Dairy engaged Frost and Sullivan to undertake an independent market review of the dairy and dairy alternatives market in the Asia-Pacific region as part of the IPO. It engaged a corporate advisor identified as ‘Henslow’ as lead manager in December 2021. Mr Licciardello deposed that in February 2022, Nature One Dairy issued a draft document titled ‘Draft Due Diligence Planning Memorandum’ with respect to the IPO.

Mr Licciardello asserts that Sanston raised more than $25 million of investors’ funds based on the proposed IPO and this would not have occurred if there was no intention of pursuing the IPO.

As to the invoices claimed in the demand concerning reimbursement of expenses, Mr Licciardello criticises Mr Dimopoulos’ evidence where it is contended that the expenses claimed are not directly related to the transaction under the Mandate. Mr Licciardello asserts that all of the work undertaken and expenses incurred by Sanston were pursuant to the Mandate; there is no other agreement between Sanston and Nature One Dairy or any other entity and the reimbursement of previous expense claims were paid by Nature One Dairy.

Mr Licciardello concludes his affidavit with a statement that the non-payment of the invoices entitled Sanston to terminate the Mandate and charge the termination fee as well as reimbursement of all incurred and accrued fees and expenses.

In an affidavit sworn 26 July 2023, Mr Mario Merlo, the solicitor for Sanston, exhibits an ASIC extract of a company named Nature One Dairy Group Ltd (ACN 645 578 801)[18] the public company referred to in Mr Licciardello’s second affidavit.[19] Mr Merlo states that the ASIC extract records the appointment and removal of Mr Jasper Kwok, the principal of Nature One Dairy’s solicitors, as a director of that company. Mr Merlo states he is instructed by Mr Licciardello and believes that this company was registered as part of the IPO process and was to be used as the vehicle for the intended ASX listing of Nature One Dairy’s business.
[18]In his affidavit, Mr Merlo incorrectly describes this company as Nature One Dairy Group Pty Ltd; the ASIC search is in respect of a public company by that name, i.e. Nature One Dairy Group Ltd, an Australian public company, limited by shares, registered on 2 November 2020.
[19]See [15(j)] of Mr Licciardello’s affidavit filed 24 July 2023.

Further affidavit in reply of Mr Dimopoulos

Nature One Dairy filed a further affidavit of Mr Dimopoulos sworn 1 August 2023, pursuant to the leave I granted in that regard on 27 July 2023. In this affidavit, Mr Dimopoulos responds to the matters raised by Mr Licciardello in his second affidavit and, in reaction to Mr Licciardello’s further affidavit, goes over ground already covered, beginning by summarising the position as deposed to in his two earlier affidavits.

He first states that the Mandate provided for a capital raising and an IPO listing Nature One Dairy Pty Ltd on the ASX. Mr Dimopoulos states that Sanston has been paid in relation to some matters contemplated under the Mandate insofar as they proceeded, but that the dispute raised in this application substantially relates to the IPO. Mr Dimopoulos again deposes that Nature One Dairy never proceeded with the IPO contemplated by the Mandate however, within the Nature One Dairy Group, different fundraising alternatives were explored and pursued by different entities to varying degrees at different times, including, in particular, the Singapore company.

Mr Dimopoulos also repeats his previous contention that Mr Licciardello’s evidence wrongly conflates different corporate entities such as the Singapore company and Nature One Dairy and different fundraising proposals by the Singapore company and other Nature One Dairy Group entities with the IPO contemplated to be undertaken by Nature One Dairy under the Mandate.

He contends that this conflation has been repeated in Mr Licciardello’s second affidavit. In this regard, Mr Dimopoulos notes that Mr Licciardello uses the word ‘plaintiff’ and ‘the company’ interchangeably in his affidavit. He states that notwithstanding that Nature One Dairy, its holding company (the Singapore company), and the other subsidiaries of the Singapore company are separate legal entities, and this had been adverted to in Mr Dimopoulos’ first affidavit and his affidavit in reply, Mr Licciardello persists in conflating transactions relating to the Singapore company and its subsidiaries with transactions related to Nature One Dairy. In addition, Mr Dimopoulos states that Mr Licciardello conflates transactions relating to a different entity, Nature One Dairy Group Ltd (ACN 645 578 801), with transactions involving Nature One Dairy.

In response to Mr Licciardello’s evidence in his second affidavit which seeks to support the assertion that he makes in paragraph 82 above, Mr Dimopoulos says that Nature One Dairy did not engage Nicholson Ryan Lawyers to provide legal services in respect of Nature One Dairy’s IPO. Rather, the Singapore company engaged those solicitors in relation to the Singapore company’s planned fundraising and planned IPO. Mr Dimopoulos s states this is clear from the document itself as Nicholson Ryan’s letter of 23 June 2020 is not addressed to Nature One Dairy or to Mr Dimopoulos as a director of that company but as managing director of the Singapore company. In addition, the first sentence of that letter from Nicholson Ryan refers to ‘a costs proposal to act as the Australian legal advisors to Nature One Dairy (Australia) Pte Ltd’, that is, the Singapore company. He states that although Mr Licciardello is correct to say that he ‘accepted and signed’ Nicholson Ryan’s letter, contrary to his evidence, he did not do so as a director of Nature One Dairy and could not have done so because Mr Licciardello was not a director of that company. Instead, he signed the letter for the Singapore company, of which he was a director, and as such was able to sign in that capacity.

Mr Dimopoulos states that the Nicholson Ryan letter of 23 June 2020 is also relevant because it confirms that the Singapore company invited Nicholson Ryan to submit a costs proposal to act as Australian legal advisors to Nature One Dairy Australia Pte Ltd [i.e. the Singapore company] on its proposed initial public offering. That letter also confirms that the company referred to by the acronym ‘NOD’ in the letter is a reference to the Singapore company. Mr Dimopoulos states this demonstrates that there was already an understanding as early as 23 June 2020 that prior to listing [the Singapore company] will undertake a corporate restructure by incorporating a new Australian holding company for [Nature One Dairy] group. The new holding company will be the entity that undertakes the IPO and seeks admission to the official list of ASX.

As to Mr Licciardello’s evidence of the meeting of 23 July 2020, Mr Dimopoulos states that this was not a meeting of the directors of Nature One Dairy, as Mr Licciardello has deposed, but rather a meeting of the advisory board to the directors of the Singapore company. For this reason, the document is headed Nature One Dairy (Australia) Pte Ltd (i.e. the Singapore company) and records that it was attended by the directors of the advisory board to the directors of the Singapore company, including Jan Cameron who is not a director of Nature One Dairy. Mr Dimopoulos states that the Nicholson Ryan letter of 23 June 2020 was tabled and discussed at that meeting and it is apparent from the documents tabled at the meeting that the ‘IPO’ referred to in that meeting was a reference to the Singapore company’s proposed IPO process, as referred to in the Nicholson Ryan letter of 23 June, and not a reference to the IPO of Nature One Dairy. In particular, there is a document titled ‘Nature One Dairy — indicative IPO timetable (draft)’ prepared by Nicholson Ryan, which states the following:

18 July-17 Aug
Incorporate NewCo
NewCo to own 100% of NOD
Finalise Board and Management

Mr Dimopoulos observes that the letter of RSM, the investigating accountants, of 4 August 2020, was addressed to Nature One Dairy Australia Pty Ltd, not Nature One Dairy, and the letter does not relate to matters involving Nature One Dairy. Mr Dimopoulos states that Nature One Dairy Australia Pty Ltd (ACN 633 981 665) is another wholly-owned subsidiary of the Singapore company. He exhibits an ASIC search in respect of that company to demonstrate this.[20]
[20]The ASIC search, which is dated 25 July 2023, records a company by the name of Nature One Dairy Australia Pty Ltd, an Australian proprietary company limited by shares and registered on 7 June 2019. The registered office of that company is at 724 Botany Road, Mascot NSW 2020. Steven Dimopoulos, Nick Dimopoulos and Masie Ng-Dimopoulos have been the directors of that company since its registration. The Singapore company owns all 1,600 ordinary shares in the company.

Mr Dimopoulos states that Mr Licciardello was not a director of Nature One Dairy Australia Pty Ltd and he was not authorised to countersign this letter as a director of that company. He states that he does not recall this letter, nor does he know why Mr Licciardello has purported to sign this letter as a director of Nature One Dairy Australia Pty Ltd. He states there was no plan for Nature One Dairy Australia Pty Ltd to be listed on the ASX, as incorrectly stated in the RSM’S letter of 4 August 2020. He states that Mr Licciardello introduced RSM to the Singapore company and on Mr Licciardello’s advice the Singapore company retained RSM as the investigating accountant for the proposed IPO process referred to in the letter of Nicholson Ryan to the Singapore company of 23 June 2020. He understands that RSM was required to investigate and report on the financial information in respect of the subsidiaries of the Singapore company.

Mr Dimopoulos then refers to the evidence of Mr Licciardello in respect of the planning meeting of 6 August 2020. He states this was not a meeting of the directors of Nature One Dairy as Mr Licciardello has incorrectly deposed. Rather, the meeting was of the advisory board to the directors of the Singapore company and was called by Nicholson Ryan in connection with the proposed IPO process referred to in Nicholson Ryan’s letter of 23 June 2020. Item 10 of the planning meeting agenda refers to a ‘top hat’ structure that was intended for the proposed IPO being considered by the Singapore company. Mr Dimopoulos states that a ‘top hat structure’ or ‘top hat restructure’ is an expression for an IPO process as contemplated by the Singapore company and referred to above. Under the proposed top hat structure, a new Australian public company would be registered as the listing entity and this entity would become the holding company of the Singapore company. Mr Dimopoulos describes it as ‘effectively a backdoor or backflip listing of [the Singapore company]’.

Mr Dimopoulos then addresses Mr Licciardello’s evidence regarding the letter from RSM to Nature One Dairy dated 10 August 2020. He states that whereas RSM’s letter of 4 August 2020 referred to a retainer by ‘Nature One Dairy Australia Pty Ltd’, RSM’s letter to Nature One Dairy of 10 August 2020 instead states that its engagement was ‘in relation to the initial public offering for Nature One Dairy Pty Ltd (“Nature One”)’ and that ‘Nature One intends to list on the Australian Securities Exchange (“ASX”) via an Initial Public Offering (“IPO”)’. Mr Dimopoulos states that the only IPO under contemplation by any Nature One Dairy entity at that time was the top hat structure IPO contemplated by the Singapore company, as described in the other documents.

Mr Dimopoulos states that like Mr Licciardello, RSM, in its letters of 4 August 2020 and 10 August 2020, seems to have conflated the Singapore company and various other Nature One Dairy Group entities, including Nature One Dairy. He states he did not detect this mistake at the time and did not expect that an error made in RSM’s letter would be relied on by Mr Licciardello to suggest that an IPO of Nature One Dairy was intended. Mr Dimopoulos states that the error in the letter from RSM was of no consequence at that time, but in any event, he believes RSM certainly was or became aware of the proposed ‘top hat’ structure and that Nature One Dairy was not intended to be listed on any stock exchange. RSM prepared a ‘Nature One Dairy Pre-IPO Restructure Plan’ dated 28 August 2020, which contains eight organisational charts showing how the proposed top hat structure would be implemented. This was said to involve four steps: (1) the incorporation of a new public company ‘IPO Ltd (Australia)’, which would hold 100 per cent shares in the Singapore company, and the Singapore company would in turn hold 100 per cent shares in each of its subsidiaries, including Nature One Dairy; (2) current convertible notes holders in the Singapore company being issued shares in the ‘IPO Ltd (Australia)’; (3) the ‘IPO Ltd (Australia)’ would acquire the Singapore company’s subsidiaries, including Nature One Dairy; and (4) the ‘IPO Ltd (Australia)’ would form a tax consolidated group with Nature One Dairy Australia Pty Ltd and the plaintiff.

Mr Dimopoulos then proceeds to substantially restate what he had already deposed to earlier in the same affidavit, namely that the 23 July 2020 meeting was not a meeting of the directors of Nature One Dairy, contrary to Mr Licciardello’s evidence, but instead, a meeting of the advisory board to the directors of the Singapore company.[21] References to the ‘IPO kick off’, ‘IPO Progress’, or ‘IPO valuation’ in that meeting’s agenda were said to be references to the top hat structure, to which reference has already been made above.
[21]See [96] of these reasons.

As to Mr Licciardello’s evidence that an ASX suitability statement had been prepared by Nature One Dairy on 20 August 2020, Mr Dimopoulos states that the ‘Application for In-Principle Advice’ was not prepared by, nor made on behalf of, Nature One Dairy. That application was instead made on behalf of a ‘not yet incorporated’ entity by the name of Nature One Dairy Ltd. Mr Dimopoulos makes reference to the ‘Corporate Details’ section of the ‘Application for In-Principle Advice’, which provides, inter alia:

Date of incorporation or establishment

Not yet Incorporated (see details of existing corporate structure below)

Nature One Dairy Pte Ltd (Singapore entity) is the current holding company for the Nature One Dairy Group. It is proposed that Nature One Dairy will undertake an internal “top-hat” restructure under which each of the existing shareholders will agreed [sic] to contribute all of their ordinary shares in Nature One Dairy Pte Ltd [the Singapore company] (representing 100% of the issued capital of Nature One Dairy Pte Ltd) for the issue of ordinary Shares in FloatCo (a new Australian public company limited by shares). The result of this share exchange will be an identical proportionate shareholding structure in Floatco as was the shareholding structure of Nature One Dairy Pte Ltd [i.e. the Singapore company].

In regards to Mr Licciardello’s evidence that Nature One Dairy issuing regular updates to investors and shareholders, which confirmed the progress of the IPO and the steps being taken to maximise the IPO, Mr Dimopoulos responds by stating that the ‘Nature One Dairy IPO Due Diligence Questionnaire’ prepared by Nicholson Ryan was said to be ‘prepared for Nature One Dairy (Australia) Pte Ltd’ (i.e. the Singapore company).

As to the incorporation of Nature One Dairy Group Ltd (ACN 645 578 801) on 2 November 2020, Mr Dimopoulos asserts that the top hat structure for the Singapore company’s IPO process required the incorporation of a new public company ‘for the intended and approved IPO process’, upon the advice of Mr Licciardello. Nature One Dairy Group Ltd (ACN 645 578 801) was said to be still owned by Sanston.[22] Further, Mr Dimopoulos states that in about late October 2020, and prior to the incorporation of Nature One Dairy Group Ltd (ACN 645 578 801), he invited Mr Jasper Kwok, who is the principal of Nature One Dairy’s solicitors, to be a director of that company and informed him about the top hat structure and that it was intended that Nature One Dairy Group Ltd (ACN 645 578 801) would be the listing entity. Mr Dimopoulos states that in his second affidavit Mr Licciardello once again conflates the expression ‘IPO’ as defined in the Mandate with the ‘IPO process’ relating to the Singapore company and Nature One Dairy Group Ltd (ACN 645 578 801).
[22]An ASIC Form 201, ‘Application for Registration as an Australian Company’, proposes for the registration of a public company limited by shares, by the name of Nature One Dairy Group Ltd, with Sanston’s address being listed as the registered office an address in St Kilda Road, Melbourne.

Mr Dimopoulos states that in respect of the proposal from Market Eye to provide strategic investor relations and market advice, that proposal was procured by Mr Licciardello. The letter from Market Eye of 2 November 2020 was addressed to Mr Licciardello who was not a director of Nature One Dairy.

Further, regarding the regular updates to investors and shareholders that were said by Mr Licciardello to be issued by Nature One Dairy to confirm the progress of the IPO and steps being taken to maximise the IPO, Mr Dimopoulos states that the December 2020 and May 2020 updates were both issued by the Singapore company to that entities’ shareholders and, contrary to Mr Licciardello’s evidence, were not documents issued by Nature One Dairy.

Mr Dimopoulos goes on to state that Nature One Dairy did not engage the services of Frost & Sullivan to undertake an independent market review of the dairy and dairy alternatives market in Asia Pacific as part of the proposed IPO. The letter of engagement referred to by Mr Licciardello was said to be ‘clearly issued by Frost & Sullivan to [the Singapore company] and countersigned by [Mr] Licciardello on behalf of [the Singapore company]’.

Similarly, Mr Dimopoulos denies that Nature One Dairy had engaged the services of Henslow as a corporate adviser and lead manager in connection with the IPO, as Mr Licciardello has deposed. He states that the engagement letter of 22 December 2022 was clearly issued by Henslow to the Singapore company and countersigned by Mr Dimopoulos on behalf of the Singapore company on the same day. Mr Dimopoulos makes reference to the ‘Scope of Services’ section of the engagement letter, where Henslow expressly provides that:

We understand that Nature One Dairy (Australia) Pte Ltd [the Singapore company] is looking to list on the Australian Securities Exchange (ASX) …

In addition, contrary to Mr Licciardello’s evidence, Mr Dimopoulos states that Nature One Dairy did not issue the draft ‘Due Diligence Planning Memorandum’. That memorandum was said to be prepared by Nicholson Ryan for Nature One Dairy Group Ltd (ACN 645 578 801), solely in relation to the proposed IPO of the shares in that company under a top hat restructure.

Mr Dimopoulos then goes on to address Mr Licciardello’s allegations of ‘deliberate falsehood’ and ‘deliberately seeking to mislead this Honourable Court’,[23] which he rejects. Mr Dimopoulos notes that Mr Licciardello has failed to specify in his second affidavit filed on 24 July 2023 which paragraphs of his previous affidavits are said to be false and misleading.
[23]See [79] of these reasons.

Mr Dimopoulos concludes his affidavit of 1 August 2023 by stating that in summary, in respect of the genuine dispute point, the documents exhibited to Mr Licciardello’s second affidavit (filed 24 July 2023) contradicts Mr Licciardello’s statement regarding Nature One Dairy’s IPO. It was said that those documents instead support his evidence referred to at paragraphs 39 and 87 these reasons.

Submissions of the parties
Nature One Dairy’s submissions

Nature One Dairy filed two sets of submissions, the second in response to Sanston’s additional affidavit material.

In its initial submissions, attention was drawn to the involvement of Mr Licciardello and his roles in companies that were related to Nature One Dairy, namely the Singapore company, the Hong Kong company, and Nepean River Dairy. Reference was made to the period in which Mr Licciardello was a director of those companies. Nature One Dairy contended that in his capacity as directors of those companies, Mr Licciardello provided services, as director, to those companies and to others in the Nature One Diary Group. In addition, it is said that he was involved with other transactions undertaken by the Nature One Dairy Group, including the purchase of the Nepean River Dairy and Feifah Medi Balm enterprises.

Nature One Dairy points to its evidence that in about March 2023, a dispute arose between Mr Licciardello and Mr Dimopoulos concerning, first, the conflict of interest between Mr Licciardello’s roles as corporate advisor and director to members of the Nature One Dairy Group and, secondly, the management of Nature One Dairy Group, specifically, the management of the Hong Kong company and the conduct of its director, Lawrence Lau Guan Chu. The demand was issued by Sanston following and in the context of that dispute (i.e., after March 2023). In this regard, in March and April 2023 Mr Licciardello resigned from his various directorships in the Nature One Dairy Group and on 9 May 2023 the demand was issued by Sanston.

The submissions then particularise the disputes in respect of the three heads of claim made in the demand. As to the advisory fees claim, Nature One Dairy says that under the express terms of the Mandate, the monthly payments were payable:

…only once the IPO process has commenced as agreed by [Nature One Dairy] with the first instalment payable once [Nature One Dairy] has formally decided to proceed with the IPO (subsequent to attaining CFDA approval).

Nature One Dairy contends that it never decided, formally or otherwise, to proceed with the IPO and, that in fact, the IPO process did not commence. Nature One Dairy criticises Mr Licciardello’s evidence in his affidavit of 23 June 2023, and contends that he materially misdescribes the critical term of the Mandate pursuant to which the monthly fees are claimed, cl 5.4.

It is submitted that despite Mr Dimopoulos’ evidence that Nature One Dairy never decided, formally or otherwise, to proceed with the IPO and that the IPO process did not commence, Mr Licciardello does not counter this with any evidence that Nature One Dairy decided to proceed with the IPO process. Mr Licciardello asserts that the process commenced but provides no detailed description or other evidence to substantiate that assertion.

With respect to Mr Licciardello’s evidence, which seeks to support Sanston’s monthly fees claims by reference to the fact that monthly fees were paid by Nature One Dairy and were included in its accounts, Nature One dairy submitted that this cannot determine the question of liability; the accounts may be right or wrong, but ultimately the issue is determined by the identification of the contractual obligation and whether the facts gives rise to the alleged liability in question. The submissions pointed to Mr Dimopoulos’ evidence which was that these payments, which took place on Mr Licciardello’s own instructions, ought not to have occurred and that Nature One Dairy would pursue recovery of these amounts. It is observed that if any amount is ultimately found to be otherwise payable by Nature One Dairy to Sanston, the payment of these amounts to Sanston, on Mr Licciardello’s instructions, would establish an offsetting claim but this was not contended to be an offsetting claim in this application.

The submissions then turned to the claims for payment of the reimbursement invoices. In this regard, Nature One Dairy pointed to its evidence that Mr Licciardello performed a number of different functions for the different entities in the Nature One Dairy Group. While it appears to be accepted that he may have expenses that he might claim against one or another entity in the Nature One Dairy Group, under the terms of the Mandate, Mr Licciardello’s expenses are claimable from Nature One Dairy only if ‘directly related to this transaction’, that is, the particular transaction for Nature One Dairy under the Mandate.

The submissions again emphasise Mr Dimopoulos’ contention in his evidence that Mr Licciardello repeatedly conflates his dealings with Nature One Dairy and the other entities in the Nature One Dairy Group and his roles as director of the entities other than Nature One Dairy. In his evidence Mr Dimopoulos contended that the claimed expenses are not ‘directly related’ to any transaction contemplated under the Mandate and provided a specific response in respect of each claim. In response, Mr Licciardello deposes that he ‘disputes the assertions made by Mr Dimopoulos’, but aside from that ‘formal joinder of issue’, does not provide any evidence to substantiate Sanston’s position. It is submitted that he does not identify how the claimed expenses are said to ‘directly relate’ to the transaction under the Mandate nor he does not respond at all to Mr Dimopoulos’ itemised response to each claimed expense.

In his evidence, Mr Licciardello deposed that Mr Dimopoulos had said to Mr Licciardello in an exchange of messages that the reimbursement invoices would be paid. In response, Mr Dimopoulos deposed that this is not so, and that Mr Licciardello has misrepresented the exchange of messages by excluding some messages and emails. To make good that proposition, Mr Dimopoulos exhibits the full series of messages and emails.

It is said that the claim for reimbursement of expenses cannot be sustained, and it is the subject of a genuine dispute.

As to the last category of claim, the termination fee claim, reference was made by Nature Clear to the terms of the Mandate, which provides that they are only payable if ‘[Nature One Dairy] terminates this Mandate for any reason, or [Sanston] terminates the Mandate with cause’.[24] In this regard, Sanston relies on the non-payment of the monthly fees claim and the expenses claim as constituting cause. Nature One Dairy submits that it was Sanston that terminated the Mandate and, to be entitled to claim the termination fee it must establish that it did so ‘with cause’.
[24](emphasis in original).

As such, Sanston’s entitlement to the termination turns on its right to the monthly fees and expenses claim and unless it can substantiate and sustain those claims, the termination fee claim also falls away.

Nature One Dairy submits that for the reasons submitted in respect of the monthly fees claims and the expenses claim not being sustained on the evidence and being the subject of a genuine dispute, the termination fee is accordingly not sustained and is also the subject of a genuine dispute.

In its further submissions, which were delivered in response to Sanston’s additional affidavits, it is submitted that Sanston’s position is made even worse by its later evidence than it was on the initial evidence upon which it relied.

On the question of whether the IPO commenced or was proceeded with, which is central to the disputes raised by Nature One Dairy, the submissions point to the evidence of Mr Dimopoulos that the IPO listing of Nature One Dairy on the ASX did not proceed nor was there any decision ever made to proceed. It was contended, as it was in the evidence, that Sanston’s claims and affidavits wrongly conflated different corporate entities, such as the Singapore company with Nature One Dairy, and also conflated Mr Licciardello’s roles, including as director of other Nature One Dairy Group entities, such as Nature One Dairy (Australia) Pte Ltd (the Singapore company). In addition, in purporting to provide evidence of the IPO listing of Nature One Dairy under the Mandate, Sanston wrongly conflated entirely different fundraising proposals involving Nature One Dairy (Australia) Pte Ltd and other entities within the group with the IPO contemplated to be undertaken by Nature One Dairy under the Mandate. Nature One Dairy submits that when the second affidavit of Mr Licciardello and Mr Merlo’s affidavit are examined, they in fact contradict Sanston’s claims and further confirm the position of Nature One Dairy in its previous affidavits and submissions. In this regard, rather than exhibiting documents establishing an IPO listing of Nature One Dairy on the ASX as provided for in the Mandate, the affidavits instead exhibit, as purported documents of Nature One Dairy:

(a) the Singapore company’s minutes, that is not Nature One Dairy’s minutes (despite that same conflation of the Singapore company’s minutes with Nature One Dairy’s minutes being expressly raised in Nature One Dairy’s earlier evidence);

(b) the minutes of meetings of individuals who are members of the advisory board of the Singapore company, not directors of Nature One Dairy;

(c) the evidence of corporate advisors advising the Singapore company, not Nature One Dairy;

(d) the evidence of a plan to incorporate a separate entity to hold the shares in the Singapore company and to list that entity in a ‘top hat’ or reverse listing of the Singapore company; and

(e) documents identifying that the relevant entity to be listed in this ‘top hat’ or reverse listing of the Singapore company is a subsidiary of Sanston itself.

The submissions observe that Mr Licciardello also seeks to support his claims that the IPO of Nature One Dairy commenced by deposing that he signed off on documents as a director of ‘the Company’, which he separately defines as ‘the plaintiff’ (i.e., Nature One Dairy). However, Mr Licciardello was not a director of Nature One Dairy. He was a director of the Singapore company and presumably signed off documents as director of that company.

The submissions contend, in summary, that the documents exhibited, and the later material filed by Sanston established that:

(a) there were steps taken in furtherance of a proposal to list a separate entity owned by Sanston that would hold the shares in the Singapore company, as a top hat or reverse listing of the Singapore company; and

(b) the proposal to list Nature One Dairy on the ASX as contemplated by the Mandate did not proceed in any way.

It is observed, by way of final observation, that Sanston has filed 600 pages of affidavit material and exhibits, with the first Licciardello affidavit and exhibits totalling 324 pages and the second Licciardello affidavit and exhibits totalling 260 pages, but that the volume of material that Sanston has asked the Court to examine and analyse does not support its submission that there is no genuine dispute.

Sanston’s submissions

In its submissions, Sanston addresses the three categories of claim made in the demand. The first, concerning the advisory fee under cl 5 of the Mandate, is said to be payable ‘once the IPO process has commenced as agreed by the Company with the first instalment payable once the company has formally decided to proceed with the IPO’.

In response to Nature One Dairy’s contention that the entitlement never arose because it ‘neither commenced the IPO process or formally decided to proceed with the IPO’, Sanston says that that contention is ‘plainly false’ and the assertions on this point are simply implausible. Sanston contends that Mr Dimopoulos’ assertion in this regard can be demonstrated to be ‘palpably false’ and points to the copies of what it describes as Nature One Dairy agendas, investor updates, and copies of engagement letters for consultants who were engaged to undertake the IPO process. Sanston contends that a range of consultants, including Sanston, were engaged by Nature One Dairy to progress the IPO towards an actual offering and listing and that it is the IPO process that triggers the obligations to pay the advisory fee. Sanston points to the payment of invoices from August 2020 being, it says, a month after the IPO commenced (until October 2022), and other consultants engaged in the IPO process were also paid for their services.

Sanston submits that to the extent that Nature One Dairy asserts this dispute is genuine, it lacks cogency. It has, adopting the expression borrowed from the authorities, no ‘sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion’. It is said that the evidence as to the commencement of the IPO process, with the agreement of Nature One Dairy, is clear and incontestable and Nature One Dairy’s claim to the contrary is ‘a mere bluster or assertion’.

As to the claim for the reimbursement for out-of-pocket expenses, Sanston points to the terms of the Mandate providing for this:

[T]he Company must reimburse Sanston in respect of any out-of-pocket expenses (together with any applicable GST) directly related to this transaction (whether or not the Pre-IPO and IPO proceeds).

Sanston appears to accept that the reference to ‘this transaction’ can only be a reference to those transactions that are undertaken by Sanston for Nature One Dairy, as described in cl 3 of the Mandate. It says that Mr Licciardello confirms they are properly incurred, and that Nature One Dairy is liable for them and Nature One Dairy bears the onus of establishing otherwise.

In this regard, they point to the evidence of Mr Dimopoulos, who deposes as to each invoice for expenses that the claimed expenses ‘was not directly related to any transaction under the Mandate’. It is submitted that those are bare assertions and are nothing more than conclusions or statements of opinion that are unsupported by facts. Sanston states the mere assertion that there is a dispute does nothing to establish the existence of a genuine dispute.

Sanston contends that each of these expenses were properly incurred and, in many instances, directly involved Mr Dimopoulos. It says that Mr Dimopoulos responded to Mr Licciardello’s affidavit, but chose not to engage with Mr Licciardello on this point and his reply affidavit did not address Mr Licciardello’s first affidavit in this regard.

Sanston submits that, as with the first claim in respect of the advisory fee, to the extent that Nature One Dairy asserts that this dispute is genuine, it lacks cogency and has no ‘sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion’.

Sanston concludes its submissions with observations regarding the termination fee claim. It says that Nature One Dairy disputes Sanston’s claims for the termination fee, but only on the basis that the entitlement to it turns upon Sanston’s right to terminate the Mandate for failure to pay the monthly fees and expenses. Sanston states because Nature One Dairy’s contentions in respect of the advisory fee in the reimbursement claims fail, so does the position it puts in respect of the termination fee claim.

Relevant statutory provisions and legal principles

Section 459G of the Act provides that:

(1)A company may apply to the Court for an order setting aside a statutory demand served on the company.
(2)An application may only be made within the statutory period after the demand is so served.
(3)An application is made in accordance with this section only if, within that period:
(a)an affidavit supporting the application is filed with the Court; and
(b)a copy of the application, and a copy of the supporting affidavit, are served on the company.

Section 459H of the Act relevantly states that:

(1)This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:
(a)that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;

(b) that the company has an offsetting claim.

In Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) (‘Malec’),[25] Kyrou, Ferguson and Kaye JJA summarised the applicable principles in establishing a genuine dispute under s 459H of the Act:[26]

The terms of s 459H of the Corporations Act and the authorities make clear that, on an application to set aside a statutory demand, the applicant is required only to establish a genuine dispute or offsetting claim. The applicant is required to evidence the assertions relevant to the alleged dispute or offsetting claim only to the extent necessary for that primary task. It is not necessary for the applicant to advance a fully evidenced claim.[27] Therefore, the task faced by an applicant is by no means at all a difficult or demanding one.[28]
In determining such an application, it is not necessary or appropriate for a court to engage in an in-depth examination or determination of the merits of the alleged dispute.[29] This is because an application alleging a genuine dispute or offsetting claim is akin to one for an interlocutory injunction[30] and requires the applicant to establish that there is a ‘plausible contention requiring investigation’ of the existence of either a dispute as to the debt or an offsetting claim.[31] It is therefore not helpful to perceive that one party is more likely than the other to succeed or that the eventual state of the account between the parties is more likely to be one result than another.[32] Further, the determination of the ‘ultimate question’ of the existence of the debt at a substantive hearing should not be compromised.[33]
The court is required to determine whether the dispute or offsetting claim is ‘genuine’. It has been said that the criterion of a ‘genuine’ dispute requires that the dispute be bona fide and truly exist in fact and that the grounds for alleging the existence of a dispute be real and not spurious, hypothetical, illusory or misconceived.[34] It has also been observed that the dispute or offsetting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion. It must also have sufficient factual particularity to exclude the merely fanciful or futile.[35] A rigorous curial approach is essential to the effective operation of the statutory scheme.[36]
The court is not required to accept uncritically every statement in an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be, as it may not have sufficient prima facie plausibility to merit further investigation as to its truth.[37] The court is also not required to accept uncritically a patently feeble legal argument or an assertion of facts unsupported by evidence,[38] although this should not be read as suggesting that the applicant must formally or comprehensively evidence the basis of its dispute or offsetting claim.[39] Except in such extreme cases, the court should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on by the applicant to set aside a statutory demand.[40]

[25][2015] VSCA 330.

[26]Ibid [47]–[50].

[27]Citing TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd (2008) 66 ACSR 67, 79 [71] (Dodds-Streeton JA, Neave JA agreeing at 68 [1], Kellam JA agreeing at 68 [2]) (‘TR Administration’).

[28]Citing Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC 411, [23] (Barrett J).

[29]Citing TR Administration (n 27) 77 [57]; Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, 787 (McLelland CJ) (‘Eyota’).

[30]Citing TR Administration (n 27) 77 [57].

[31]Citing Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd (2013) 85 NSWLR 601, 608 [31], 609 [36], 613 [54]–[55], 615 [70] (Beazley P, Meagher and Gleeson JJA) (‘Britten-Norman’).

[32]Citing Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601, 605 (Thomas J).

[33]Citing TR Administration (n 27) 77 [57], 78 [64].

[34]Citing Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452, 464 (Northrop, Merkel and Goldberg JJ).

[35]Citing TR Administration (n 27) 79 [71].

[36]Ibid 80 [72].

[37]Citing Eyota (n 29) 787, quoted in TR Administration (n 27) 78 [64]; Britten-Norman (n 31) 611 [46], 613 [53].

[38]Citing South Australia v Wall (1980) 24 SASR 189, 194; Eyota (n 29) 787; TR Administration (n 27) 78 [64], 79 [66], [71].

[39]Citing TR Administration (n 27) 79 [71].

[40]Citing Eyota (n 29) 787; TR Administration (n 27) 78 [64]; Britten-Norman (n 31) 611 [46].

In Ligon 158 Pty Ltd v Huber,[41] Barrett AJA described the role of the Court in the following way:

The issue for the Court is not whether the company would succeed on those grounds in defending a debt recovery action brought against it by the person who served the statutory demand. Rather, the Court must decide whether the grounds of dispute delineated by the affidavit are grounds which, when viewed in the whole of the circumstances emerging from the evidence, indicate a plausible defence propounded in good faith and not one merely constructed in response to the pressure represented by the statutory demand. Issues of credibility will generally be confined to the question whether the asserted grounds are of that quality, as distinct from questions going to the ultimate merits of the postulated defence itself …[42]

[41](2016) 117 ACSR 495.

[42]Ibid 499 [10] (McColl JA agreeing at 496 [1], Meagher JA agreeing at 496 [2]).

In Yoogalu Pty Ltd v Intentia Australia Pty Ltd,[43] Barret J stated:

The learned Master was echoing sentiments expressed by Young J in John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 … it was emphasised that a court considering a s.459G application is not a debt collecting court. Its sole function is to determine whether or not the state of account between the parties is (as to the particular matters referred to in s.459H(1)) so clear-cut and uncontroversial that non-payment of the sum demanded by the defendant should, entirely of itself and without further inquiry, mean that the plaintiff must, in a subsequent winding up proceeding, be regarded as insolvent unless it can itself affirmatively prove its solvency.[44]

[43][2006] NSWSC 278.

[44]Ibid [32].

In Panel Tech Industries (Australia) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2),[45] Barrett J described the threshold to be passed in order for an applicant to succeed in its application to set aside a demand as follows:

Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger.[46]

[45][2003] NSWSC 896.

[46]Ibid [18].

The Court of Appeal in New South Wales observed in Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd, that inconsistent contemporaneous documents are not necessarily sufficient to displace the existence of a genuine dispute or offsetting claim, notwithstanding that they might pose difficulties for the ultimate proof of the claim.[47]
[47]Britten-Norman (n 31) 615 [70].

Consideration

Sanston’s claims made in its demand are contractual and are said to arise by reason of various terms of the Mandate. In my view, Nature One Dairy, which bears the onus, has established that the evidence demonstrates there are genuine disputes in respect of each of the three heads of claim made in the demand.

As to the first of these heads, the monthly advisory fee claim, the Mandate provided that those fees were payable ‘only once the IPO process has commenced as agreed [by Nature One Dairy] with the first instalment payable once [Nature One Dairy] has formally decided to proceed with the IPO (subsequent to attaining CFDA)’.

Nature One Dairy contends that it never decided, formally or otherwise, to proceed with the IPO and the process never in fact commenced. It presents cogent and plausible evidence in support of that proposition, including evidence supporting its contention that Sanston has conflated tasks undertaken for other entities in the corporate group. In response, Sanston did not, in my opinion, successfully confront Nature One Dairy’s evidence in that regard. It seems clear that Sanston conducted work in respect of an IPO for one or other members of the so-called Nature One Dairy Group. Mr Licciardello’s evidence in response that Nature One Dairy did in fact embark on an IPO in terms of the Mandate does not rise above assertion. I agree with Nature One Dairy’s submission that Sanston’s own evidence appears to evidence tasks undertaken on behalf of other members of the Nature One Dairy Group, in particular the Singapore Company, rather than Nature One Dairy. Sanston’s claims are made under the Mandate and I consider that Nature One Dairy has successfully established there are genuine disputes in respect of whether the work that Sanston performed was for Nature One Dairy itself and not other members of the Nature One Dairy Group. The position in that regard is given some colour by the various roles that Mr Licciardello had within the group, which include acting as a director of other Nature One Dairy Group companies, such as the Singapore company.

Sanston had contended that its claim in respect of the monthly advisory fee is made out by reason that Nature One Dairy has previously paid invoices for such claims and the liability to meet these expenses appears in its accounts. Mr Dimopoulos contends that the accounts were prepared and the payments were made on the instructions of Mr Licciardello, who was chairman of the Singapore company, the holding company. I consider that Nature One Dairy has established there are plausible contentions requiring investigation as to Sanston’s entitlement to charge the advisory fees claimed in the demand.

I have come to the same opinion in respect of the reimbursement claims made in the demand. In my opinion, Nature One Dairy has, by its evidence, established plausible disputes that warrant investigation in respect of the reimbursement claims, based on a contention that Sanston was incurring expenses and performing various tasks for one or other members of the Nature One Dairy Group that were not undertaken pursuant to the Mandate. In particular, I consider that there are plausible disputes that warrant investigation as to whether the reimbursement claims were ‘directly related to this transaction’ so as to be recoverable under the Mandate. The ‘transaction’, while not defined, is apparently a reference to the capital raise and IPO described in the introductory segment of the Mandate to be undertaken by Nature One Dairy. In my opinion, Sanston has not, by its evidence, met the contentions made by Nature One Dairy in Mr Dimopoulos’ first affidavit, where he provides a response to each claim for reimbursement by pointing to features of that evidence, which render it implausible or untenable. Those responses contended that the claims were not ‘directly related’ to the performance by Sanston under the Mandate and were therefore not recoverable as a reimbursement claim under cl 5.

In my opinion, Nature One Dairy has also established that the third head of Sanston’s claim in respect of the termination fee is also the subject of a genuine dispute. I consider that by reason that I have determined there are genuine disputes in respect of the advisory fee and reimbursement claims, Sanston did not have ‘cause’ to terminate the Mandate and claim the termination fee.

For the foregoing reasons, I will order that the statutory demand dated 9 May 2023 and served on Nature One Dairy by Sanston be set aside. The ordinary rule is that costs follow the event, and that Nature One Dairy should get its costs of the application, including reserved costs. If the parties propose that a different order should be made in that regard, they should contact my Associate and file and serve short written submission of no more than three pages in support of the position as to costs by 4:00pm on Thursday 28 September 2023.

I will determine the position as to costs, if that need arises, on the papers.

SCHEDULE OF PARTIES

S ECI 2023 02240
BETWEEN:
NATURE ONE DAIRY PTY LTD (ACN 602 371 684	Plaintiff
- v -
SANSTON SECURITIES AUSTRALIA PTY LTD (ABN 61 156 057 064)	Defendant

SCHEDULE A — NATURE ONE DAIRY’S POSITION AS TO WHY THE REIMBURSEMENT CLAIMS ARE NOT CLAIMABLE UNDER THE MANDATE

(a)Invoice #2222 (at ND1-85 to ND1-91) claims for travel expenses relating to the acquisition of Feifah Medi Balm; this was not directly related to any transaction under the Mandate;
(b)Invoice #2223 {at ND1-92 to ND1-97) claims for travel expenses relating to Nepean River Dairy; this was not directly related to any transaction under the Mandate;
(c)Invoice #2224 (at ND1-98 to NDl-109) claims for travel expenses relating to the acquisition of Feifah Medi Balm {due diligence meeting and negotiations); this was not directly related to any transaction under the Mandate;
{d)Invoice #2225 (at NDl-110 to ND1-113) claims for travel expenses relating to Nepean River Dairy ; this was not directly related to any transaction under the Mandate;
{e)Invoice #2226 {at ND1-114 to ND1-120) claims for travel expenses relating to Nepean River Dairy, ; this was not directly related to any transaction contemplated under the Mandate;
(f)Invoice #2227 (at NDl-121to ND1-127) claims for travel expenses relating to a meeting with Mr Dimopoulos in Sydney which include accommodation for him between 2 May 2022 and 4 May 2022. The invoice does not provide inadequate particulars of the costs to enable a proper assessment of the claim. But in any event the costs of providing accommodation, meals and entertainment to Mr Dimopoulos by Mr Licciardello are not in any way out-of-pocket expenses incurred by Sanston directly related to the transaction contemplated under the Mandate;
(g)Invoice #2228 (at ND1-128 to ND1-132) claims for travel expenses relating to a meeting with me in Sydney which include accommodation for Mr Dimopoulos between 17 May 2022 and 19 May 2022. The invoice does not provide adequate particulars of the costs to enable a proper assessment of the claim. But in any event the costs of providing accommodation, meals and entertainment to by Mr Dimopoulos to Mr Licciardello were not in any way out-of-pocket expenses incurred by Sanston directly related to the transaction under the Mandate;
(h)Invoice #2229 (at ND1-133 to ND1-141) claims for travel expenses to Singapore and Malaysia for meetings with Feifah, that were not directly related to any transaction under the Mandate;
(i)Invoice # 2230 (at ND1-142 to ND1-145) claims for travel expenses relating to conversion of convertible notes not issued by Nature One Dairy, that was not directly related to any transaction under the Mandate;
(j)Invoice #2231 (at ND1-146 to ND1-151) claims for travel expenses to Singapore for a conference relating to the Singapore company which was not directly related to any transaction under the Mandate;
(k)Invoice #2233 (at ND1-152 to ND1-159) claims for Mr Dimopoulos’ and Mr Licciardello’s travel expenses, meals and entertainment in the United States, that was not directly related to any transaction under the Mandate;
(I)Invoice #2234 (at ND1-160 to ND1-171} claims for Mr Licciardello's travel expenses, meals and entertainment in the United States, that was not directly related to any transaction under the Mandate;
(m}Invoice #2235 (at ND1-172 to ND1-182) claims for Mr Licciardello's travel expenses and meals in Singapore and Hong Kong that was not directly related to any transaction under the Mandate;
(n)Invoice #2236 (at ND1-183 to ND1-189) claims for Licciardello's travel expenses and meals in Singapore and Perth relating to conversion of convertible notes not Issued by Nature One dairy, that was not directly related to any transaction under the Mandate;
(o)Invoice #2237 (at ND1-190 to NDl-191) claims for an·investor lunch, that was not directly related to any transaction under the Mandate;
(p)Invoice #2238 (at ND1-192 to NDl-193) claims for an investor lunch, that was not directly related to any transaction under the Mandate;
(q)Invoice #2239 (at ND1-194 to ND1-195) claims for an investor dinner, that was not directly related to any transaction under the Mandate;
(r)Invoice #2240 (at ND1-196 to ND1-199) claims for meals and entertainment provided to Mr Dimopoulos and Mr Licciardello in New York and Washington, that was not directly related to any transaction under the Mandate;
(s)Invoice #2241(at ND1-200 to NDl-201) claims for postage to Hong Kong, that was not directly related to any transaction under the Mandate;
(t)Invoice #2242 (at ND1-202 to NDl-203) claims for meals and entertainment provided to Mr Dimopoulos and Mr Licciardello in New York and Washington, that was not directly related to any transaction under the Mandate;
(u)Invoice #2243 (at ND1-204 to ND1-208) claims for taxi and parking expenses that were not directly related to any transaction under the Mandate; and
(v)Invoice #2244 (at NDl-209 to ND1-211) claims for accommodation provided to Mr Dimopoulos in Sydney, that was not directly related to any transaction under the Mandate.

SCHEDULE B

[2023] VSC 571

21 September 2023