Re Sebbella Pty Ltd
[2025] VSC 409
•26 June 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2025 01101
IN THE MATTER of SEBBELLA PTY LTD (ACN 151 967 869) (RECEIVERS APPOINTED)
BETWEEN:
| SEBBELLA PTY LTD (ACN 151 967 869) (RECEIVERS APPOINTED) | Plaintiff |
| v | |
| PRETTY CHOOK PTY LTD (ACN 651 817 266) | Defendant |
---
JUDGE: | Efthim AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 12 June 2025 |
DATE OF JUDGMENT: | 26 June 2025 |
CASE MAY BE CITED AS: | Re Sebbella Pty Ltd |
MEDIUM NEUTRAL CITATION | [2025] VSC 409 |
---
CORPORATIONS – Application to set aside a statutory demand – Where debt identified in demand is the subject of the proceeding brought by the defendant in the Victorian County Court – Whether the statutory demand should be set aside for some other reason pursuant to s 459J(1)(b) of the Corporations Act 2001 (Cth) – Whether there is an abuse of process – Re Zarzar Pty Ltd [2017] NSWSC 93, Re Modern Wholesale Jewellery Pty Ltd [2017] NSWSC 236 and Re 47 Industrial Pty Ltd [2024] NSWSC 1166 referred to – Finding that there is no abuse of process.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Purton | DSA Law – Lawyers & Consultants |
| For the Defendant | Mr S Buchanan | Dunemann Sutherland Pty |
HIS HONOUR:
The plaintiff, Sebbella Pty Ltd, applies to set aside a statutory demand served on it by the defendant, Pretty Chook Pty Ltd.
The statutory demand claims that the plaintiff owes $301,737.98. The debt is described in the schedule to the statutory demand as follows:
Creditor’s Loan to Company:
21/04/2023 Loan Advance $117,753.00 21/05/2023 Loan Extension Fee $1,000.00 21/05/2023 Monthly Service fee $800.00 21/05/2024 12 Months Interest on Loan Advance @ 7% per month $98,913.00 21/05/2024 12 Months Service Fees $9,600.00 23/01/2025 Interest on Loan Advance @ 7% per month from 22/05/2024 to 23/01/2025 $67,271.48 23/01/2025 8 Months Service Fees $6,400.00 Total Amount $301,737.98
The plaintiff seeks to set aside the statutory demand on the basis that it is impermissible and an abuse of process to serve a statutory demand while continuing to pursue the debt in substantive proceedings.
Background
On 22 October 2024, the defendant issued proceedings in the Victorian County Court against the plaintiff and David Sottile, the director of the plaintiff, claiming the sum of $424,850.02 in connection with a loan. Under the loan agreement, the defendant lent the plaintiff the sum of $117,753.50 on 21 April 2023. The loan was repayable one month later and the plaintiff did not repay the loan or make any payment towards it, other than the payment of certain fees deducted at the time the loan was advanced.
Under the terms of the loan the plaintiff was required to pay interest at 7% per month, together with fees and interest which, according to the defendant, were compounding monthly.
On 9 January 2025, the plaintiff filed a defence and counterclaim in the County Court, which admitted:
-the loan;
-the advance that was made under the loan;
-that the plaintiff had not repaid the loan;
-that the plaintiff was indebted to the defendant for the principle debt of $117,753.50; and
-that the plaintiff was liable for interest in the amount of 7% per month on a simple basis (not compound basis).
On 7 February 2025, the defendant issued the demand for the principle, admitted together with interest calculated in the form admitted by the plaintiff.
Consideration
Section 459J of the Corporations Act 2001 (Cth) (‘the Act’) provides:
Setting aside demand on other grounds
(1)On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:
(a)because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or
(b) there is some other reason why the demand should be set aside.
The plaintiff seeks to set aside the statutory demand as an abuse of process pursuant to s 459(1)(b) of the Act, as the statutory demand was served by the defendant while at the same time the defendant was pursuing debt recovery proceedings in the County Court.
In Re Zarzar Pty Ltd,[1] Barrett J set aside a statutory demand pursuant to s 459J(1)(b) as an abuse of process where a creditor issued a statutory demand while at the same time pursuing debt recovery proceedings in another forum. His Honour said:
While there is no explicit rule precluding parallel resort by a creditor to both the statutory demand procedure and debt recovery proceedings, the reality is that it is an abuse of the statutory demand process to continue to press and rely on a demand while at the same time suing for the relevant debt or debts. This is because the two procedures have different objectives. The aim in serving a statutory demand is not to recover the debt (although eliciting payment may become a welcome by-product) but to obtain the benefit of a presumption of insolvency through non-compliance with the demand. The aim of recovery proceedings, by contrast, is to compel payment and obtain monetary satisfaction. The same reasoning holds good, in my view, when the alleged indebtedness is asserted by the putative creditor by way of set-off defence in proceedings commenced by the alleged debtor. Again, the putative creditor abandons its stance of waiting for the expiration of a statutory period in order to obtain a presumption of insolvency (or, as an alternative, to obtain voluntary payment by the debtor in the meantime) in favour of positive assertion of the right to be paid as a means of obtaining recovery by way of reduction of a liability.[2]
[1][2017] NSWSC 93.
[2]Ibid [22].
In Re Modern Wholesale Jewellery Pty Ltd,[3] Black J referred to the above comments of Barrett J and said:
It seems to me that there is substantial force in his Honour’s observations in that respect. It also seems to me that there is also a further reason why the contemporaneous, or near contemporaneous, commencement of contested proceedings in respect of a debt and the service of a creditor’s statutory demand in respect of that same debt may amount to an abuse of the creditor’s statutory demand procedure such that the demand should be set aside under s 459J of the Corporations Act. That course has the potential, as this case amply demonstrated, to multiply the costs incurred by the parties, since a recipient who contests the debt will then be required, potentially within similarly short periods, both to file a Defence in the substantive proceedings, or otherwise face the risk of default judgment, and to bring an application to set aside the creditor’s statutory demand in this Court or the Federal Court of Australia. Issues may then arise, as they have here, as to whether two proceedings should proceed in parallel or one should be deferred until the other has been heard. That course will inevitably increase the costs incurred by the parties, but also involves the risk that scarce hearing time in the Courts, which is funded by the community and largely not by the parties, will be devoted to resolving the procedural difficulties which that course has created.[4]
[3][2017] NSWSC 236.
[4]Ibid [31].
More recently, Nixon J in Re 47 Industrial Pty Ltd[5] endorsed the above comments of Barrett J and Black J. His Honour went on to say:
The Defendants submitted that “there is a recognisable value in having both a summary procedure and a substantive procedure for dealing with the same issue”, and that if the Court declined to set aside the Statutory Demand, “it's unlikely … that the Queensland proceeding would go through to finality”. It may be accepted that there is value in a creditor being able to issue a statutory demand in respect of a debt or to commence proceedings for recovery of the debt. However, the issue is whether the creditor should be permitted to issue or maintain a statutory demand in circumstances where a recovery proceeding has been commenced in respect of the same debt. It is necessary to weigh, against any private interest which the creditor might have in asserting the alleged indebtedness in parallel proceedings, the public interest in the timely and efficient resolution of claims within the integrated Australian legal system of which this Court and the Supreme Court of Queensland each form part (see UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45 at [75] per Gageler J).[6]
[5][2024] NSWSC 1166.
[6]Ibid [50].
The plaintiff relies on those three authorities and submits that the statutory demand here is an abuse of process. It says the fact that a portion of the debt may not be disputed does not mean that the defendant is entitled to pursue the plaintiff in two parallel processes.
The defendant submits that the present case distinguishes itself from Re Zarzar Pty Ltd, Re Modern Wholesale Jewellery Pty Ltd and Re 47 Industrial Pty Ltd in that the debt the subject of the demand is admitted in the County Court proceeding, and there can be no dispute that the debt claimed in the demand is not owed.
The defendant contends that as there is no dispute in the County Court proceedings as to the existence of the debt the subject of the demand, there is no overlap in issues to be determined in each of the proceedings, and therefore, no issues arise with respect to duplication of costs or deferral of proceedings of the kind referred to in Re Modern Wholesale Jewellery Pty Ltd.[7] The defendant says that this is particularly so in circumstances where the demand was not served until such time as it was clear that the debt was not in dispute.
[7][2017] NSWSC 236.
The plaintiff referred me to Mala Pty Ltd v Johnston[8] which related to whether there was an abuse of process when a statutory demand and a related civil proceedings were on foot. In that case, the statutory demand was set aside. However, Master Adams said:
As to abuse of process, it is prima facie an abuse of process for any party to institute two proceedings for the one claim. That much, I think, appears from a case cited to me this morning, Portfolio Projects Pty Ltd v Oakes Building Co (1987) 5 ACLC 904. I use the words “prima facie” because there can be an explanation why two proceedings are issued and it is a matter for the court to determine whether the explanation is sufficient. That, I think, appears from the Bond Holdings Ltd case (1990) 1 WAR 465 where there was at the time of the filing of a petition civil proceedings in the court which involved a dispute as to the same amount.[9]
[8](1994) 13 ACLC 100.
[9]Ibid at page 6.
The defendant submits that it is important that the Court should not look at two proceedings and say that it must be an abuse of process. The defendant also submits, prima facie, there may be an abuse of process if there are two parallel proceedings but before it is determined that there is an abuse of process the circumstances giving rise to the two parallel proceedings need to be considered.
In that regard, I also note that Barrett J in Re Zarzar Pty Ltd made it clear that there is no explicit rule precluding parallel resort by a creditor to both the statutory demand procedure and debt recovery proceeding.
In my view, the circumstances in this case are different to those in Re Zarzar Pty Ltd, Re Modern Wholesale Jewellery Pty Ltd and Re 47 Industrial Pty Ltd. Here, the plaintiff has admitted that the debt is owing and an application was not filed until after that admission was made. The principle stated in Re Zarzar Pty Ltd does not apply to this factual situation before me.
I note that the defendant filed a summons for summary judgment in the County Court which was to be heard on 3 June 2025, and was adjourned by the County Court on its own motion to be heard on 26 June 2025. The fact that there is a summary judgment application on foot does not, in my view, make any difference to my decision. The application before this Court concerns whether there is an act of insolvency leading to a winding up of a company.
Conclusion
The application of the plaintiff to set aside the statutory demand will be dismissed as there is no abuse of process in the circumstances of this case.
SCHEDULE OF PARTIES
| S ECI 2025 01101 | |
| BETWEEN: | |
| SEBBELLA PTY LTD (ACN 151 967 869) (RECEIVERS APPOINTED) | Plaintiff |
| - v - | |
| PRETTY CHOOK PTY LTD (ACN 651 817 266) | Defendant |
0
6
0