Re Ox Operations Pty Ltd

Case [2008] FCA 61

FEDERAL COURT OF AUSTRALIA

In the matter of Ox Operations Pty Ltd (ACN 119 184 431) [2008] FCA 61

STATUTORY DEMAND – review of Registrar’s decision dismissing application to set aside statutory demand under s 459H of the Corporations Act 2001 (Cth) – whether review of no utility on basis of deemed insolvency arising from non-compliance with demand within statutory time limit – consideration of alternative bases for review – whether there was a genuine dispute about the existence of the debt – whether monies the subject of transfer held on trust – whether company accounts otherwise sufficient to establish existence of a plausible claim

PRACTICE AND PROCEDURE – whether notice to produce should be set aside under Order 33 r 12(1) of the Federal Court Rules – where documents called upon relate to a ground of review which is not available. 

Corporations Act 2001 (Cth) ss 459G, 459H
Federal Court of Australia Act 1976 (Cth) s 35A(6)
Federal Court Rules O 33 r 12(1)  

Andi-Co Australia Pty Ltd v Meyers [2004] FCA 1358 cited
AussieVic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2007) 63 ACSR 300 applied
Crown Joinery Pty Ltd v Lyleho Pty Ltd [2007] VSC 214 cited
G&J Gears Australia Pty Ltd v Brobo Group Pty Ltd (2006) 229 ALR 638 referred to
Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 applied
Hansmar Investments Pty Ltd v Perpetual Trustee Co Ltd (2007) 61 ACSR 321 applied
Jefferson Ford Pty Ltd v Ford Motor Company of Australia Pty Ltd [2007] VSC 450 cited
John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 applied
Kortz Ltd v Data Acquisition Pty Ltd (2006) 155 FCR 556 cited
Martin v Commonwealth Bank of Australia (2001) 217 ALR 634 cited
Mazukov v University of Tasmania [2004] FCAFC 159 cited
Potts v Dennis Jones & Co Pty Ltd (No. 2) (1995) 58 FCR 61 cited
Spencer Constructions Pty Ltd v G&M Aldridge Pty Ltd (1997) 76 FCR 452 cited
Valoutin Pty Ltd v Furst (1998) 154 ALR 119 cited
Walsh v Salzer Constructions Pty Ltd [2000] VSCA 228 referred to

OX OPERATIONS PTY LTD (ACN 119 184 431) v LAND MARK PROPERTY DEVELOPMENTS (VIC) PTY LTD (IN LIQUIDATION)
VID 532 OF 2007

GORDON J
11 FEBRUARY 2008
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 532 OF 2007

BETWEEN:

OX OPERATIONS PTY LTD (ACN 16 119 184 431)
Plaintiff

AND:

LAND MARK PROPERTY DEVELOPMENTS (VIC) PTY LTD (IN LIQUIDATION)
Defendant

JUDGE:

GORDON J

DATE OF ORDER:

11 FEBRUARY 2008

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The notice of motion dated 11 December 2007 is dismissed.

2.The plaintiff pay the defendant’s costs of the proceeding, to be taxed in default of agreement. 

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 532 OF 2007

BETWEEN:

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AGLC
Re Ox Operations Pty Ltd [2008] FCA 61
Case
[2008] FCA 61
Decision Date

CaseChat Overview and Summary

The case of Re Ox Operations Pty Ltd involved the defendant, Ox Operations, and the liquidator of LMPD, who sought to enforce a statutory demand for payment of a debt. The matter was heard in the Federal Court of Australia. The primary issue before the court was whether the statutory demand could be set aside by Ox Operations under sections 459G and 459H of the Corporations Act 2001 (Cth). The court had to determine whether a genuine dispute existed between the parties regarding the existence or amount of the debt to which the statutory demand related.

The court found that a genuine dispute existed if it was bona fide and truly existed in fact. The court had to assess the affidavits filed by Ox Operations to determine if they deposed to facts that would lead to the conclusion that a genuine dispute existed. The court emphasised that it was not to resolve contested questions of fact or determine the merits of the dispute, but rather to assess whether the facts deposed to in the affidavits supported the existence of a genuine dispute. After reviewing the affidavits, the court found that Ox Operations had not established a genuine dispute, and thus, the statutory demand could not be set aside.

As a result, the court dismissed the notice of motion filed by Ox Operations. The court ordered that Ox Operations pay the costs of the proceeding to the liquidator of LMPD, to be taxed in default of agreement.

Orders

Orders of the court

1. The notice of motion dated 11 December 2007 is dismissed.

2. The plaintiff pay the defendant’s costs of the proceeding, to be taxed in default of agreement.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

GORDON J
However, in order to deal with all issues and to avoid unnecessary costs, in the event that the High Court considers that s 459F(2)(a)(i) of the Act (whether read alone or in conjunction with other provision of the Act) enables a Court to extend the time for compliance with a statutory demand after it has expired, I propose to deal with the merits of Ox Operations application to set aside LMPD’s statutory demand pursuant to ss 459G and 459H of the Act.NATURE OF REVIEW OF THE REGISTRAR’S DECISION The function of the Court, on review of such a decision, is to rehear the case and decide the facts for itself. It is a hearing de novo: s 35A(6) of the Federal Court of Australia Act 1976 (Cth); Mazukov v University of Tasmania [2004] FCAFC 159 at [22] to [27] and Martin v Commonwealth Bank of Australia (2001) 217 ALR 634 at [6] and [12].LEGAL PRINCIPLES – APPLICATION TO SET ASIDE STATUTORY DEMAND The principles to be applied by the Court in determining an application to set aside a statutory demand are not in dispute. In the present case, the Court must be satisfied that there is a genuine dispute between Ox Operations and LMPD about the existence or amount of the debt to which the demand relates: s 459H(1)(a) of the Act. For a genuine dispute to exist, the dispute must “be bona fide and truly exist in fact”. The grounds for alleging the existence of a dispute must be “real and not spurious, hypothetical, illusory or misconceived”: Spencer Constructions Pty Ltd v G&M Aldridge Pty Ltd (1997) 76 FCR 452 at 464. The Court’s role is to determine whether a genuine dispute exists. That issue is determined at the time the Court hears the application: Andi-Co Australia Pty Ltd v Meyers [2004] FCA 1358 at [16]. The manner in which the Court approaches the task is also not in dispute. The Court does not resolve contested questions of fact. The Court does not determine where the merits lie in any contest: Kortz Ltd v Data Acquisition Pty Ltd (2006) 155 FCR 556 at [40]. The Court determines whether the supporting affidavits filed and served by Ox Operations depose to facts from which the Court is able to conclude that a genuine dispute exists. As Young J said in John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 at 253, something between mere assertion and the proof of the existence of the disputed debt is required. ANALYSIS This proceeding raises questions about the manner in which a group of companies described as the Landmark Group were conducted. The Landmark Group included Philidor Pty Ltd, Landmark Realty (Vic) Pty Ltd, Landmark Trading Pty Ltd, Landmark Homes (Aust) Pty Ltd, Landmark Constructions (Aust) Pty Ltd, AssetBuild Finance Pty Ltd, Ox Administration Pty Ltd (“Ox Administration”), LMPD and Ox Operations. LMPD is in liquidation. The liquidator of LMPD submits Ox Operations is indebted to LMPD in the sum of $544,574.60 (“the debt”). On or about 30 May 2007, a statutory demand for payment of the debt was served on Ox Operations (“the statutory demand”). The debt is said to comprise loans made by LMPD to Ox Operations from 17 March 2006 to 18 September 2006. The liquidator contends the debt is recorded in documents (including LMPD’s business records) which came into his possession after his appointment as liquidator of LMPD.

Ratio Decidendi

Legal Principle Established

Established by: GORDON J

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