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Re Sneakerboy Pty Ltd

Re Sneakerboy Pty Ltd

Case [2020] VSC 348 15 June 2020

Winding Up & Liquidation

Standing

Offsetting Claim

Insolvency Law

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2020 01321

IN THE MATTER OF SNEAKERBOY PTY LTD (ACN 603 960 961)

COMMISSIONER OF STATE REVENUE	Plaintiff
v
SNEAKERBOY PTY LTD (ACN 603 960 961)	Second Defendant

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JUDICIAL REGISTRAR:	Matthews JR
WHERE HELD:	Melbourne
DATE OF HEARING:	29 April 2020; further written submissions on 1 June 2020
DATE OF RULING:	15 June 2020
CASE MAY BE CITED AS:	Re Sneakerboy Pty Ltd
MEDIUM NEUTRAL CITATION:	[2020] VSC 348

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CORPORATIONS – Application for winding up in insolvency – Application by supporting creditor to be substituted as plaintiff – Whether genuine dispute about debt – Whether genuine offsetting claim – Whether an offsetting claim is a basis for refusing substitution – Corporations Act 2001 (Cth), s 465B – Tokich Holdings v Shearton Constructions (2004) 185 FLR 130 – Re C2C Investments Pty Limited [2012] NSWSC 1443 – Rodenstock v Leahy [2002] NSWSC 957 – In2Ply Pty Ltd v Amerind Pty Ltd (in liq) (recs and mgrs apptd) [2014] VSC 603 – Application for substitution granted

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APPEARANCES:	Counsel	Solicitors
For the Applicant, Unita (Aus) Pty Ltd	Mr S Janczuk, solicitor	contractA Legal, town agent CBL Business Lawyers
For the Second Defendant	Mr C Brown	Logie-Smith Lanyon

TABLE OF CONTENTS

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

Background......................................................................................................................................... 3

Sneakerboy’s objection to aspects of the Third Fraser Affidavit............................................. 8

Applicable law.................................................................................................................................. 10

Applications for substitution as plaintiff in a winding up application.............................. 10
Applications to set aside statutory demands.......................................................................... 12
Is an offsetting claim a basis for refusing an application for substitution?........................ 15

Issues requiring consideration...................................................................................................... 20

Issue 1: Were Unita AUS and Unita ROA creditors of Sneakerboy as at the date upon which the Originating Process was filed?................................................................................................ 20

Unita AUS’s statutory demand................................................................................................. 22
Answer regarding Issue 1.......................................................................................................... 23

Issue 2: Is there a genuine dispute as to the existence of the debt relied upon by Unita? 24

Sneakerboy’s evidence............................................................................................................... 24
Sneakerboy’s submissions......................................................................................................... 26
Unita’s evidence.......................................................................................................................... 27
Unita’s submissions.................................................................................................................... 27
Analysis........................................................................................................................................ 28
Answer regarding Issue 2.......................................................................................................... 33

Issue 3: Does Sneakerboy have a genuine offsetting claim?.................................................. 34

Sneakerboy’s evidence and submissions................................................................................. 34
Unita’s evidence and submissions............................................................................................ 37
Limestone tiles................................................................................................................... 38
Delay claims....................................................................................................................... 39
Defects claims..................................................................................................................... 40

Analysis........................................................................................................................................ 40
Offsetting claim based on delays in completion of works.......................................... 42
Offsetting claim based on defects.................................................................................... 44
Offsetting claims based on limestone tiles..................................................................... 45

Answer regarding Issue 3.......................................................................................................... 45

Should Unita AUS and/or Unita ROA be substituted as plaintiffs in the winding-up application?........................................................................................................................................................ 46

Analysis........................................................................................................................................ 47

Conclusion......................................................................................................................................... 48

JUDICIAL REGISTRAR:

Introduction

This is an application by Unita (AUS) Pty Ltd pursuant to an interlocutory process filed 23 April 2020 to be substituted as plaintiff (‘Application’) in the originating process filed 16 March 2020 (‘Originating Process’).

By the Originating Process, the plaintiff in the proceeding (the Commissioner for State Revenue) sought orders that the defendant companies, Luxury Retail Group Pty Ltd and Sneakerboy Pty Ltd, be wound up in insolvency. At the first return of the originating process,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Sneakerboy Pty Ltd

Details

AGLC: Re Sneakerboy Pty Ltd [2020] VSC 348
Case: [2020] VSC 348
Decision Date: 15 June 2020

CaseChat Overview and Summary

In the matter of Sneakerboy Pty Ltd, the applicant, an entity seeking to be substituted as the plaintiff in a winding-up application, faced off against the company in liquidation, Sneakerboy Pty Ltd, the respondent. The dispute centred around the substitution of the applicant as the plaintiff in a winding-up application initiated by the original plaintiff, a supporting creditor, against the respondent. The court was tasked with determining whether there was a genuine dispute about the debt claimed by the supporting creditor, whether there existed a genuine offsetting claim by the respondent, and whether an offsetting claim could serve as a basis to deny the applicant's substitution as the plaintiff.

The central legal issues the court had to resolve were whether there was a genuine dispute about the debt, whether the respondent had a genuine offsetting claim, and if such a claim could justify the refusal of the applicant's substitution. The court delved into the statutory provisions of the Corporations Act 2001 (Cth) and considered relevant case law, including Tokich Holdings v Shearton Constructions, Re C2C Investments Pty Limited, Rodenstock v Leahy, and In2Ply Pty Ltd v Amerind Pty Ltd. The court scrutinised the evidence and arguments presented by both parties to assess the validity of the claims and counterclaims.

After a thorough examination of the evidence, the court concluded that there was no genuine dispute about the debt claimed by the supporting creditor, and that the respondent had a genuine offsetting claim. The court ruled that the existence of an offsetting claim did not preclude the applicant's substitution as the plaintiff. Consequently, the application for substitution was granted. The court ordered that the applicant be substituted as the plaintiff in the winding-up application against Sneakerboy Pty Ltd.

Orders