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Re Walker's Doughnuts Bendigo Pty Ltd (Costs)

Re Walker's Doughnuts Bendigo Pty Ltd (Costs)

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Case Copied 30 July 2025 26 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2024 05041

IN THE MATTER of WALKER’S DOUGHNUTS BENDIGO PTY LTD (ACN 648 451 370)

BETWEEN:

WALKER’S DOUGHNUTS BENDIGO PTY LTD (ACN 648 451 370)	Plaintiff
v
DOUGHNUT TRUCK PTY LTD (ACN 644 764 956)	Defendant

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JUDGE:	Hetyey AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers. Written submissions from the plaintiff filed on 14 May 2025 and written submissions from the defendant filed on 21 May 2025.
DATE OF RULING:	30 July 2025
CASE MAY BE CITED AS:	Re Walker’s Doughnuts Bendigo Pty Ltd (Costs)
MEDIUM NEUTRAL CITATION:	[2025] VSC 461

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CORPORATIONS – Corporations Act 2001 (Cth) – Part 5.4 – Insolvency – Statutory demand – s 459G – Application to set aside – Where related oppression proceeding commenced by defendant seeking payment of same debts claimed in statutory demand – Where demand withdrawn by defendant prior to final hearing.

COSTS – Proceeding resolved prior to final hearing – Exceptions to general rule that costs orders will not be made where no hearing on the merits – Whether defendant acted unreasonably or engaged in abuse of process by not withdrawing statutory demand upon filing of oppression proceeding claiming same debts – Whether eventual capitulation by defendant – Order that the defendant pay the plaintiff’s costs.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr E Moore	Twenty20 Legal
For the Defendant	Mr K Baker	Taurus Legal Pty Ltd

TABLE OF CONTENTS

Introduction

Background and procedural history

Relevant legal principles

Costs where no hearing on the merits
Statutory demands and parallel proceedings

Overview of parties’ submissions

Consideration

Conclusion

HIS HONOUR:

Introduction

On or around 30 August 2024, Doughnut Truck Pty Ltd (‘defendant’ or ‘Doughnut Truck’) served a statutory demand on Walker’s Doughnuts Bendigo Pty Ltd (‘plaintiff’ or ‘Walker’s Doughnuts’) claiming debts in the amount of $256,620 (‘demand’ or ‘statutory demand’). The debts comprised alleged unpaid unitholder entitlements of $109,876 and outstanding loan monies in the sum of $146,744.
On 23 September 2024, the plaintiff filed its application by way of originating process to set aside the statutory demand pursuant to ss 459G, 459H and 459J of the Corporations Act 2001 (Cth) (‘Act’) (‘set aside application’). The plaintiff did so on the bases of alleged genuine disputes about the amounts of the debts claimed by the defendant, whether such debts were due and payable, and an alleged abuse of process. The essence of the plaintiff’s abuse of process contention was that the statutory demand was made in the context of an ongoing attempt to mediate a wider legal dispute between the parties in circumstances where the defendant is a shareholder in the plaintiff (as to 51 of the 120 shares in the company) and a unitholder of a trust in respect of which the plaintiff is trustee.
On 1 November 2024, the defendant commenced a separate proceeding…

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: [2025] VSC 461
Decision Date: 30 July 2025

CaseChat Overview and Summary

In the case before the Court, the plaintiff, Walker's Doughnuts Bendigo Pty Ltd, applied for an order setting aside a statutory demand issued by the defendant, as well as an order for costs. The statutory demand was issued under section 459G of the Corporations Act 2001 (Cth) and was subsequently withdrawn by the defendant before the final hearing. The defendant had also filed an oppression proceeding against the plaintiff, seeking payment of the same debts claimed in the statutory demand. The plaintiff argued that the defendant's actions amounted to unreasonable behaviour and an abuse of process, and sought an order for costs.

The court was required to determine whether the defendant's failure to withdraw the statutory demand upon the filing of the oppression proceeding, despite the claims being identical, constituted unreasonable behaviour or an abuse of process. Additionally, the court needed to consider whether the eventual withdrawal of the statutory demand by the defendant constituted a capitulation that warranted an order for costs in favour of the plaintiff.

In reaching its decision, the court found that the defendant's actions were unreasonable and constituted an abuse of process. The court noted that the defendant had an obligation to withdraw the statutory demand upon the filing of the oppression proceeding, and that the defendant's failure to do so amounted to an abuse of the legal process. The court also found that the eventual withdrawal of the statutory demand by the defendant was a capitulation, and that the plaintiff was entitled to an order for costs. The court made an order that the defendant pay the plaintiff's costs.

Orders