Re Wynyard Victoria Pty Ltd - [2022] VSC 81

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2021 00928

IN THE MATTER of WYNYARD VICTORIA PTY LTD (ACN 605 452 873)

WYNYARD VICTORIA PTY LTD (ACN 605 452 873)	Plaintiff
v
STEVEN KENNETH RENTOUL	Defendant

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	30 July 2021, last submissions 13 August 2021
DATE OF JUDGMENT:	24 February 2022
CASE MAY BE CITED AS:	Re Wynyard Victoria Pty Ltd
MEDIUM NEUTRAL CITATION:	[2022] VSC 81	First Revision: 2 March 2022

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CORPORATIONS – Application to set aside statutory demand under ss 459G and 459J of the Corporations Act 2001 (Cth) – Loan by shareholder to company – Absence of formal written documentation – Disparity in evidence as to the terms of the loan including when it was to be repaid – Finding that there was a genuine dispute in respect of the debt claimed in the demand which warranted a conventional inter partes trial – Submissions that demand should be set aside under s 459J rejected – Demand set aside.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R Ouk (solicitor)	Ouk Legal
For the Defendant	Ms R McCarthy	Indigo Associates

HIS HONOUR:

By originating process filed on 30 March 2021, the plaintiff, Wynyard Victoria Pty Ltd (‘Wynyard’) applies pursuant to s 459G of the Corporations Act (2001) Cth (the ‘Act’) to set aside a creditor’s statutory demand (the ‘demand’) dated 10 March 2021 issued to it by the defendant, Steven Rentoul and served on it on that date. Wynyard claims that the demand should be set aside pursuant to ss 459H, 459J(1)(a) and 459J(1)(b) of the Act.

The demand claims that Wynyard is indebted to Mr Rentoul for $72,694.34. The debt is described in the schedule to the demand as follows:

The company defaulted on the payments under a loan agreement dated 1 February 2019 to pay the Creditor as set out in the attached affidavit of Steven Kenneth Rentoul pursuant to a loan agreement dated 1 February 2019.

The demand was accompanied by an affidavit of Mr Rentoul affirmed 10 March 2021 which verified that the amount of the debt was due and payable to him.

In support of its application, Wynyard relies on two affidavits of its sole director, Kirbie Ellira Tate affirmed 30 March 2021 (and filed within the period of compliance with the demand) and 26 May 2021. Mr Rentoul relies on his affidavit affirmed 10 May 2021. Each party also filed two sets of written submissions.

This application concerned a loan made by Mr Rentoul who was also a 50% shareholder in the company to which the funds were advanced. While there are some contemporaneously generated written documents in respect of the subject transaction to which reference is made in these reasons, the terms of the advance were not the subject of written formal documentation. There are disparities in the evidence between Wynyard’s and Mr Rentoul’s accounts of the events giving rise to the transaction…

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: [2022] VSC 81
Decision Date: 24 February 2022

CaseChat Overview and Summary

Wynyard Victoria Pty Ltd applied to the Federal Circuit Court of Australia to set aside a statutory demand issued by a creditor. The dispute centred on whether the company owed the debt claimed in the demand. The statutory demand was issued under sections 459G and 459J of the Corporations Act 2001 (Cth), which allows a creditor to make a demand for payment of a debt owed by a company. The court had to determine whether there was a genuine dispute over the debt, which would warrant setting aside the demand and proceeding to a conventional inter partes trial.

The central issue for the court was whether there was a genuine dispute over the existence or the amount of the debt claimed in the statutory demand. The company argued that there was a genuine dispute due to the absence of formal written documentation and conflicting evidence about the terms of the loan, including the repayment date. The creditor maintained that the debt was undisputed. The court had to weigh the evidence and decide whether the dispute was genuine enough to warrant setting aside the demand and allowing a trial.

In considering the evidence, the court found that there was indeed a genuine dispute over the debt. The lack of formal written documentation and conflicting evidence regarding the terms of the loan created sufficient uncertainty about the debt's existence and amount. The court held that the dispute warranted setting aside the demand and proceeding to a conventional inter partes trial to resolve the matter. Consequently, the court set aside the statutory demand under section 459J of the Corporations Act.

The court ordered that the statutory demand be set aside, and the matter would proceed to a conventional inter partes trial to determine the existence and amount of the debt. This decision highlights the importance of clear and formal documentation in loan agreements between shareholders and companies to avoid disputes over the terms of such agreements.

Orders