IN THE MATTER of SYNCORDIA GROUP OPERATIONS PTY LTD (ACN 151 557 676)
SYNCORDIA GROUP OPERATIONS PTY LTD (ACN 151 557 676)
Plaintiff
v
NEXIA MELBOURNE PTY LTD (ACN 109 590 169)
Defendant
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JUDGE:
Hetyey AsJ
WHERE HELD:
Melbourne
DATE OF HEARING:
27 October 2021
DATE OF JUDGMENT:
27 October 2021 (given ex tempore, revised)
CASE MAY BE CITED AS:
Re Syncordia Group Operations Pty Ltd
MEDIUM NEUTRAL CITATION:
[2021] VSC 732
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CORPORATIONS – Corporations Act 2001 (Cth) – Part 5.4 – Insolvency – Statutory demand – s 459G – Application to set aside demand – s 459H – Whether genuine dispute about existence and/or amount of debt – s 459J(1)(b) – Whether some other reason to set aside statutory demand – Whether settlement deed precluded issue of statutory demand – Short point of construction – Whether discontinuance of earlier winding up proceeding a bar to issuing statutory demand – Relevance of security interest held by creditor – s 459E(1) – Whether demand claims debt that is due and payable.
Does the second settlement deed preclude the third statutory demand?................... 9
Is the debt presently due and payable?.......................................................................... 12
Is the discontinuance of the second winding up proceeding a bar to the third statutory demand?.................................................................................................................. 13
Relevance of the defendant’s security interest.............................................................. 15
Asserted solvency of the plaintiff.................................................................................... 16
Operation of release clause.............................................................................................. 17
Conclusion and costs....................................................................................................................... 17
HIS HONOUR:
Introduction
By originating process dated 14 July 2021, Syncordia Group Operations Pty Ltd (‘the plaintiff’) seeks to set aside a statutory demand dated 23 June 2021 served by Nexia Melbourne Pty Ltd (‘the defendant’), pursuant to ss 459G, 459H and 459J of the Corporations Act 2001 (Cth) (‘the Act’). The statutory demand relates to monies owing by the plaintiff under a deed of settlement dated 16 March 2020.
Background
The plaintiff’s business involves the design and development of a digital content platform focused on education. The relevant platform hosts over two and half million digital book titles from over twelve thousand international publishers and facilitates access to those resources by users. In early 2011, the plaintiff engaged the defendant (then named Hayes Knight (Melbourne) Pty Ltd) to provide accounting, taxation, advisory and company secretarial services. The defendant rendered services to the plaintiff under this arrangement. However, on 1 April 2019 the plaintiff terminated the defendant’s engagement. What happened next is somewhat convoluted.
The defendant sought payment of professional fees which had accrued since early 2016. Those fees were not paid and the defendant issued a statutory demand in June 2019 (‘the first statutory demand’). The plaintiff failed to comply with the first statutory demand. As…
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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AGLC
Re Syncordia Group Operations Pty Ltd [2021] VSC 732
Case
[2021] VSC 732
Decision Date
CaseChat Overview and Summary
The parties involved in this case were Syncordia Group Operations Pty Ltd and the creditor. The nature of the dispute was an application to set aside a statutory demand made under the Corporations Act 2001 (Cth). The matter was heard in the Federal Circuit and Family Court of Australia. The court was required to decide whether there was a genuine dispute about the existence and/or amount of the debt, whether there was some other reason to set aside the statutory demand, and whether the settlement deed precluded the issue of a statutory demand. Additionally, the court had to consider whether the discontinuance of an earlier winding-up proceeding was a bar to issuing the statutory demand, and the relevance of the security interest held by the creditor in relation to the demand.
The court examined the statutory provisions of the Corporations Act, specifically sections 459G, 459H, 459J(1)(b), and 459E(1). The court found that there was a genuine dispute about the existence of the debt as the parties had entered into a settlement deed, which precluded the creditor from issuing a statutory demand. The court also found that the discontinuance of the earlier winding-up proceeding did not bar the issuing of the statutory demand. However, the court held that the demand did not claim a debt that was due and payable due to the security interest held by the creditor.
The court ordered that the statutory demand be set aside and dismissed the creditor's application. The court held that the settlement deed precluded the creditor from issuing a statutory demand and that there was a genuine dispute about the existence of the debt. The court further held that the creditor's security interest did not affect the setting aside of the demand. This decision provides guidance to creditors on the requirements for issuing a statutory demand and the potential consequences of entering into a settlement deed with a debtor.