Re Sterling & Freeman Advisory Pty Ltd - [2023] VSC 709

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2023 03013

IN THE MATTER of STERLING & FREEMAN ADVISORY PTY LTD (ACN 606 745 340)

BETWEEN:

STERLING & FREEMAN ADVISORY PTY LTD (ACN 606 745 340)	Plaintiff
v
CALLISI PTY LTD (ACN 077 538 106)	Defendant

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	14 November 2023
DATE OF JUDGMENT:	30 November 2023
CASE MAY BE CITED AS:	Re Sterling & Freeman Advisory Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 709

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CORPORATIONS — Application to set aside a statutory demand pursuant to s 459J(1)(b) of the Corporations Act 2001 (Cth) — Creditor served demand relying upon judgment given in the Supreme Court of Victoria after inter partes trial — Application for leave to appeal judgment not yet determined and no order staying execution of judgment – Plaintiff contended that there was ‘some other reason’ why the demand should be set aside, pointing to circumstances surrounding the subject transaction – Application to set aside the demand under s 459J(1)(b) refused – Application dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Evans KC	Blue Rock Law (Melb) Pty Ltd
For the Defendant	Mr P Fary SC	Davies Moloney

TABLE OF CONTENTS

Factual background........................................................................................................................... 1

The prior proceeding......................................................................................................................... 3

Sterling’s submissions...................................................................................................................... 7

Callisi’s submissions....................................................................................................................... 13

Consideration.................................................................................................................................... 20

HIS HONOUR:

By an originating process filed on 10 July 2023, the plaintiff, Sterling & Freeman Advisory Pty Ltd (ACN 606 745 340) (‘Sterling’) makes application under s 459G of the Corporations Act 2001 (Cth) (‘Act’) to set aside or vary a statutory demand dated 16 June 2023 (‘demand’) which had been served on it by the defendant, Callisi Pty Ltd (ACN 077 538 106) (‘Callisi’), on 19 June 2023.

The demand claims Sterling owes Callisi $830,375.00 in respect of a judgment given against Sterling in favour of Callisi by M Osborne J of this Court on 6 June 2023 (‘judgment’) in proceeding number S ECI 2021 04840, in which Callisi was the plaintiff and Sterling was the first defendant (‘prior proceeding’).

Sterling’s application claims relief under ss 459H and 459J(1)(b) of the Act. The application under s 459H, which was ultimately not pressed, relied on a contention that Sterling has a genuine offsetting claim against Callisi arising from two untaxed costs orders that it obtained against Callisi in the prior proceeding. The application under s 459J(1)(b) relies on the existence of an application for leave to appeal filed by Sterling in the Victorian Court of Appeal on 18 July 2023 in respect of the judgment in the prior proceeding, together with what are contended to be several particular circumstances surrounding the transaction which gave rise to the judgment, which, when considered together, warrant the exercise of the discretion in the subsection to set aside the demand.

Sterling’s application is supported by the affidavits of David Leggatt sworn 10 July 2023, 16 August 2023 and 8 November 2023. Callisi relies upon an affidavit of…

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.

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Details

Case: [2023] VSC 709
Decision Date: 30 November 2023

CaseChat Overview and Summary

Sterling & Freeman Advisory Pty Ltd applied to the Federal Circuit Court of Australia for leave to set aside a statutory demand made by a creditor. The demand was based on a judgment from the Supreme Court of Victoria, rendered after a contested trial. The applicant argued that there were other reasons justifying the setting aside of the demand, citing specific circumstances related to the transaction in question. The court had to determine whether the statutory demand should be set aside under section 459J(1)(b) of the Corporations Act 2001 (Cth).

The primary legal issue was whether the applicant could demonstrate "some other reason" for setting aside the statutory demand, beyond the mere existence of a proceeding for leave to appeal the underlying judgment. The applicant contended that the circumstances surrounding the transaction warranted relief, but the court needed to assess whether these circumstances were sufficient to warrant setting aside the demand. The court considered whether the applicant had established a valid reason to challenge the demand, given that the appeal application was pending and no order had been made to stay the execution of the judgment.

The Federal Circuit Court found that the applicant had not provided sufficient grounds to set aside the statutory demand. The court reasoned that the mere existence of an appeal application, without any indication of its likely success or other compelling reasons, did not constitute "some other reason" for setting aside the demand. The court concluded that the applicant had not met the threshold for relief under section 459J(1)(b) of the Corporations Act. Consequently, the application to set aside the demand was dismissed.

The court did not make any orders staying the execution of the judgment, nor did it grant leave to appeal the judgment. The applicant's application to set aside the statutory demand was refused in its entirety.

Orders