Re Netzero Solutions Group Pty Ltd
[2024] VSC 678
•9 October 2024 (ex tempore, revised 4 November 2024)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2024 03470
IN THE MATTER of NETZERO SOLUTIONS GROUP PTY LTD (ACN 652 753 814)
BETWEEN:
| NETZERO SOLUTIONS GROUP PTY LTD (ACN 652 753 814) | Plaintiff |
| v | |
| ER BULL ELECTRICAL PTY LTD (ACN 123 985 080) | Defendant |
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JUDGE: | Gardiner AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 9 October 2024 |
DATE OF JUDGMENT: | 9 October 2024 (ex tempore, revised 4 November 2024) |
CASE MAY BE CITED AS: | Re Netzero Solutions Group Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2024] VSC 678 |
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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 was a genuine dispute as to the existence of the debt the subject of the statutory demand and that the plaintiff had an offsetting claim — Consideration of evidence which bears on whether the plaintiff’s disputes and claims are genuine — Principle that plaintiff’s dispute or off-setting claim must have some objective existence and must not be something ‘merely created or constructed in response to the pressure represented by the service of the statutory demand’ — Finding that plaintiff did not discharge the onus of establishing a genuine dispute or offsetting claim — Application to set aside statutory demand dismissed with costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | No appearance | Levant Lawyers |
| For the Defendant | Mr C Jennings (Solicitor) | JAG Lawyers |
TABLE OF CONTENTS
Netzero’s evidence
Bull Electrical’s evidence
Mr Ahmadi’s affidavit of 4 September 2024
Legal principles
Conclusion
HIS HONOUR:
On 14 June 2024, the defendant (‘Bull Electrical’) served a statutory demand on the plaintiff (‘Netzero’), pursuant to s 459E of the Corporations Act 2001 (Cth) (‘Act’). The demand claimed that Netzero was indebted to Bull Electrical in the amount of $27,087.50 under a tax invoice dated 23 December 2023. The demand was accompanied by an affidavit of Erin Bull sworn 14 June 2024. Mr Bull is the director of Bull Electrical.
On 5 July 2024, Netzero made application, by originating process filed under s 459G of the Act, to set aside the demand. The application has been made in compliance with s 459G(3) of the Act.
Netzero relies on the affidavits of its director, Ahmad Reshad Ali Ahmadi, affirmed 4 July 2024 and 4 September 2024.
Bull Electrical relies on an affidavit of Mr Bull affirmed 21 August 2024.
The name of Netzero in the title to the proceeding contained a typographical error, incorrectly identifying it as Netzero Solutions Group Pty Ltd, but with the correct ACN. Leave was given to amend the title of the proceeding to name Netzero Environment Group Pty Ltd as the plaintiff.
Shortly before the hearing, Netzero’s solicitors sought leave to file notice of withdrawal as Netzero’s solicitors, but that application was declined. At the hearing of the application, when the matter was called, there was no appearance for Netzero. I gave an ex tempore judgment and dismissed the proceeding with costs. I indicated that my oral reasons would be the subject of revision.
For the reasons which follow, I consider that Netzero has not satisfied the onus that it has a genuine dispute or, if the evidence is to be construed so as to raise an offsetting claim, an offsetting claim.
Netzero’s evidence
Mr Ahmadi states that Bull Electrical had a trading relationship with Netzero which Bull Electrical has recently terminated.
Netzero is a registered entity with the Clean Energy Regulator (‘CER’) under the Renewable Energy (Electricity) Act 2000 (Cth) and trades Registered Energy Certificates. As part of the regime under that act, Mr Ahmadi states that Netzero ‘may be required to surrender any previously [Registered Energy Certificates] found to be ineligible’, even if those certificates have previously been the subject of approval by the CER. In such circumstances, he says, any payments previously made by Netzero to an installer (in this case, Bull Electrical) who submitted ineligible registrations would be ‘adjusted’ — i.e. the amount of those payments would be deducted from amounts owing by Netzero to the installer by reason of submissions of subsequent registrations.
Mr Ahmadi states that, upon reviewing the job identification documentation submitted by Bull Electrical relating to the debt claimed in the demand, Netzero identified grounds for deeming the job ineffective ‘if called upon’ by the CER. Mr Ahmadi states that the installer carrying out the subject installation provided what he describes as ‘job set up selfies’ and ‘mid-installation check-up selfies’ which ‘provided times that were inconsistent with the expected duration for a standard installation job’.
Mr Ahmadi exhibits what he describes as the ‘Clean Energy Council Install and Supervise Guidelines for Accredited Installers’. Guideline 6.1.1 provides guidelines for the provision of ‘selfie evidence’ to confirm the authenticity of the installation of solar panels.
The alleged shortcomings in the selfie material provided by Bull Electrical are not otherwise specified.
Netzero asserts that it does not owe Bull Electrical the claimed amount, ‘given the financial exposures related to the ineligible registrations.’
I note at this juncture that Mr Ahmadi does not assert the CER has rejected the material in support of Bull Electrical’s installation, nor has the CER indicated the subject registrations were ineligible; rather, Mr Ahmadi’s dispute or claim would seem to amount to an assertion that, at some point in the future, Netzero may potentially have ‘financial exposures related to the ineligible registrations’.
Bull Electrical’s evidence
In his affidavit, Mr Bull states that Bull Electrical is an installer of solar panels on residential and commercial properties and participates in the Federal Government’s Small-scale Renewable Energy Scheme (‘Scheme’).
Mr Bull describes Bull Electrical’s involvement in the Scheme as follows:
(a)it supplies and installs solar panels with combined capacity below 100kw on residential and commercial properties;
(b)upon installation, the Federal Government creates small-scale technology certificates (‘STCs’) and awards the STCs to the owner of the property;
(c)Bull Electrical invoices the owner of the property for the cost of supply and installation of the solar panels, less the value of the STCs that are to be created following the installation;
(d)the owner of the property assigns the STCs to a trader (in this case, Netzero) and the trader pays the installer (in this case, Bull Electrical) an agreed amount for the assignment of the STCs;
(e)the result is that the trader obtains tradable STCs (from the property owner) for a price (payable to the installer), the installer is paid in full for the supply and installation (paid partly by the owner and partly by the trader), and the property owner receives the solar installation at a discounted or subsidised price;
(f)the trader (Netzero) is then entitled to sell/trade the STCs on the STC trading market;
(g)the CER is the organisation that, amongst other things, regulates the ownership and status of the STCs;
(h)organisations who purchase STCs from a trader can then surrender those STCs to meet their regulated clean energy obligations; and
(i)once STCs are surrendered to obtain clean energy credits, the STCs become invalid and can no longer be traded.
Mr Bull states that for a period of approximately two weeks, commencing on 7 December 2023, Bull Electrical supplied and installed a solar panel system under the Scheme at commercial premises in Derrimut, Victoria. The installation of the solar panel system entitled the property owner to 625 STCs and the CER allocated the installation project with the accreditation number, PVD5463173, in respect of the 625 STCs.
Mr Bull states that the total cost of the supply and installation of the panels at the Derrimut property was $67,375. Of this amount, $40,287.50 was paid by the property owner to Bull Electrical and $27,087.50 was to be paid by Netzero to Bull Electrical, as part of the Scheme in return for Netzero taking an assignment of the STCs from the property owner.
Subsequent to the installation, Mr Bull states that 625 STCs were issued by the CER to the property owner.
Mr Bull states that on 23 December 2023, he accessed Netzero’s online customer portal and submitted Bull Electrical’s tax invoice to Netzero for $27,087.50. Netzero’s online customer portal then generated an ‘Installation Job Pack’ in relation to the relevant STCs.
Mr Bull states Netzero’s online customer portal provides that payment to the installer (in this case, Bull Electrical) for commercial installations will be ‘paid upon Approval’ of STCs by the CER. He states that Netzero’s online customer portal shows that the relevant STCs were approved by the CER on 12 April 2024 and confirms the amount payable to Bull Electrical in respect of the STCs was $27,087.50. As such, he says, Bull Electrical’s tax invoice to Netzero claimed in the demand was payable on 12 April 2024.
Mr Bull states that on 17 May 2024, he searched the register maintained by the CER (‘CER Register’) in relation to the transfer history of the subject STCs. He states that the CER Register records that, on 12 April 2024, Netzero transferred the STCs to Emerging Energy Solutions Group Pty Ltd who, in turn, transferred the STCs to Regional Power Corporation. The screenshot of the CER Register in evidence confirms this to be the case.
Mr Bull states that, on the same day, he searched the CER Register in relation to the current status of the STCs. The CER Register records the STCs as being owned by Regional Power Corporation with the narration, ‘Invalid due to surrender’. The screenshot of the CER Register for the STCs is in evidence and demonstrates this.
Mr Bull states that, on 15 July 2024, he made enquiries with the Registry of the CER and was informed and believed that the phrase, ‘Invalid due to surrender’, recorded in the narrative of the CER Register, notes that the STCs were surrendered by Regional Power Corporation to comply with its Clean Energy Requirements. The STCs can only be surrendered or redeemed once and, as such, are now invalid by reason of their being surrendered. Accordingly, they are no longer in circulation.
Mr Bull states that in those circumstances, the sum of $27,087.50 was due and owing by Netzero to Bull Electrical as at the date of Bull Electrical’s demand.
In response to Mr Ahmadi’s affidavit, Mr Bull states:
(a)the issue of the installer ‘job set up selfies’ was resolved by Netzero as part of the process of submitting the STCs to the CER;
(b)he reiterates the evidence above, and states that the STCs were approved by the CER and have been transferred by Netzero and redeemed;
(c)there has been no request by the CER to surrender the STCs on the basis that they are ineligible;
(d)Bull Electrical has not previously taken part in any installations under the Scheme with Netzero, while Netzero was acting as trader. As such, there can be no prior STCs (prior to the subject STCs) which can be deemed ineligible by the CER, resulting in an adjustment of payments previously made by Netzero to Bull Electrical; and
(e)Bull Electrical has previously taken part in installations under the Scheme with a different trader (not Netzero); however, none of the STCs under any of those numerous installations have been deemed ineligible by the CER.
Mr Ahmadi’s affidavit of 4 September 2024
Although this affidavit was ordered to be by way of reply, it repeats the evidence in Mr Ahmadi’s first affidavit . Mr Ahmadi does not address the matters deposed to Mr Bull in respect of the operation of the Scheme, nor does he depose to the matters Mr Bull contends to be the position regarding the subject STCs in this instance, in particular that they have been transferred and discharged.
Legal principles
In my decision earlier this year of Re McKeown Marrs Pty Ltd (‘McKeown Marrs’),[1] I canvassed in some detail the legal principles revealed in the authorities that are to be applied in determining whether an applicant has met the required onus that it bears and established the existence of a genuine dispute or an off-setting claim. Those principles are set out in para [217] and the following of my judgment. I made reference[2] to the decision of Dodds-Streeton J in Powerhouse Australasia Pty Ltd v Viarc Pty Ltd,[3] where her Honour described the approach to be taken in these terms:
While it is not a very exacting standard, on the other hand mere assertion of a dispute or off-setting claim, mere bluster or advancing grounds which are illusory or spurious or insufficiently particularised will not suffice. The Court must not enter into the merits of the dispute, but it is not crossing the line in relation to its legitimate role in these applications to consider evidence which “bears on whether or not the asserted dispute or off-setting claim is genuine”. Indeed, that is its necessary function.
The dispute or off-setting claim should, as has been recognised, have some objective existence, and the plaintiff bears the onus of establishing the genuineness of the dispute or off-setting claim [emphasis added].[4]
[1][2024] VSC 102 (Gardiner AsJ) (‘McKeown Marrs’).
[2]Ibid, [225].
[3]Powerhouse Australasia Pty Ltd v Viarc Pty Ltd [2006] VSC 508 (Dodds-Streeton J).
[4]Ibid, [48]-[49].
I also referred to the observations in Mr Assaf’s text, Assaf’s Winding Up in Insolvency,[5] where he observed that an aspect of assessing genuineness requires that the serious question or plausible contention, which warrants the finding of a genuine dispute or offsetting claim, not be something ‘merely created or constructed in response to the pressure represented by the service of the statutory demand’.[6]
[5]Farid Assaf, Assaf’s Winding Up in Insolvency (LexisNexis, 3rd ed, 2021).
[6]Ibid, 6.18 – 6.23.
Conclusion
I consider that the dispute in respect of the debt claimed in the demand, which is sought to be raised by Netzero, does not meet the threshold for establishing a genuine dispute or, if the evidence is to be construed so as to raise an offsetting claim, an offsetting claim. While Mr Ahmadi’s evidence contains assertions that there were deficiencies in the documentation submitted in support of the claim to the CER, which may possibly result in Netzero’s entitlement being ‘clawed back’ by the CER in future, they are too vague, lack any specificity, and lack any substantiation so as to ground a genuine dispute or claim. The claim which Mr Ahmadi purports to make does not rise above assertion; it is not said the CER has threatened or foreshadowed that the subject STCs would be the subject of subsequent disallowance.
As against this, Mr Bull’s evidence is detailed and cogent, and I consider that it comprehensively overwhelms the vague assertions contained in Mr Ahmadi’s evidence. I note that Netzero does not contradict the evidence of Mr Bull that the relevant STCs have been transferred and ultimately discharged. I consider the position being put up by Netzero has been, to adopt the phraseology of the New South Wales Court of Appeal in Creata (Aust) Pty Ltd v Faull,[7] ‘created or constructed in response to the pressure represented by the service of the statutory demand.’
[7](2017) 125 ACSR 212 at [47] per Barrett AJA.
Among the principles I have extracted from the authorities referred to in the McKeown Marrs decision are that the Court is not to accept the evidence of an applicant uncritically, and that it is part of the Court’s function to consider evidence as to whether the alleged claim is genuine. On an application of these principles referred to in the authorities, I find the alleged dispute or claim is not genuine. Netzero’s application must be dismissed with costs.
SCHEDULE OF PARTIES
| S ECI 2024 03470 | |
| BETWEEN: | |
| NETZERO SOLUTIONS GROUP PTY LTD (ACN 652 753 814) | Plaintiff |
| - v - | |
| ER BULL ELECTRICAL PTY LTD (ACN 123 985 080) | Defendant |
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