Sceam Construction Pty Ltd v Clyne - [2021] VSC 296

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2020 04526

IN THE MATTER OF SCEAM CONSTRUCTION PTY LTD (ACN 141 136 816)

SCEAM CONSTRUCTION PTY LTD (ACN 141 136 816)	Plaintiff
v
JAMES CLYNE and NYREE CLYNE	Defendants

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JUDGE:	Matthews AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	4 May 2021, supplementary submissions filed 11 May 2021
DATE OF JUDGMENT:	27 May 2021
CASE MAY BE CITED AS:	Sceam Construction Pty Ltd v Clyne
MEDIUM NEUTRAL CITATION:	[2021] VSC 296

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CORPORATIONS – Corporations Act 2001 (Cth), s 459 – Application to set aside statutory demand by reason of alleged genuine dispute in respect of the debt or for some other reason – Whether Plaintiff barred from raising grounds to set aside statutory demand by application of Graywinter principle – Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund (1996) 70 FCR 452 – Plaintiff barred from raising grounds – Plaintiff failed to establish the existence of a genuine dispute and there was no other reason relied upon as to why the demand should be set aside – Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330 – 133 Walsh Street Pty Ltd v BMF Pty Ltd [2020] VSC 650.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T Greenway	SLF Lawyers
For the Defendants	Mr D Harrison	Burch + Co Lawyers

HER HONOUR:

Introduction

By its originating process dated 8 December 2020, the plaintiff, Sceam Construction Pty Ltd, seeks orders setting aside a statutory demand dated 1 July 2020 (‘Statutory Demand’) served on it by the defendants, James Clyne and Nyree Clyne.

In support of its application, the plaintiff relies on:

(a) the affidavit of Matthew Charles Allen affirmed 7 December 2020 (‘Allen Affidavit’). Mr Allen is a director of the plaintiff;

(b) the affidavit of Benjamin Howard affirmed 22 February 2021 (‘Howard Affidavit’). Mr Howard is an employee of the plaintiff and a former director of the plaintiff;

(c) written outline of submissions dated 26 March 2021 prepared by the plaintiff’s counsel, Mr Tim Greenway (‘Plaintiff’s Outline’); and

(d) supplementary outline of submissions dated 11 May 2021 prepared by Mr Greenway (‘Plaintiff’s Supplementary Outline’).

In opposition to the application, the defendants rely on:

(a) the affidavit of James Clyne, the first defendant, sworn 12 February 2021 (‘Clyne Affidavit’);

(b) written outline of submissions dated 26 March 2021 prepared by the defendants’ counsel, Mr Daniel Harrison (‘Defendants’ Outline’); and

(c) supplementary outline of submissions dated 11 May 2021 prepared by Mr Harrison (‘Defendants’ Supplementary Outline’).

In addition, both parties relied on the oral submissions made by their respective counsel at the hearing on 4 May 2021.

The application is said to be made under ss 459G, 459H and 459J of the Corporations Act 2001 (Cth) (‘Act’).[1] Nonetheless, it was apparent from the Plaintiff’s Outline and…

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: [2021] VSC 296
Decision Date: 27 May 2021

CaseChat Overview and Summary

Sceam Construction Pty Ltd, the plaintiff, filed an application to set aside a statutory demand issued by Clyne, the defendant. The demand arose from an alleged debt, and the plaintiff sought to have it set aside on the grounds of either a genuine dispute or some other reason. The matter was heard in the Supreme Court of Victoria. The plaintiff argued that there was a genuine dispute over the debt or that there was some other reason to set aside the demand. The defendant contended that the plaintiff was barred from raising these grounds due to the application of the Graywinter principle.

The court examined whether the Graywinter principle precluded the plaintiff from challenging the statutory demand. The principle, as established in Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund, suggests that a party who has been negligent in not challenging the statutory demand within the prescribed period should be barred from raising grounds to set it aside. The court further considered whether the plaintiff had established a genuine dispute or any other reason warranting the setting aside of the demand. In this regard, the court referred to Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd and 133 Walsh Street Pty Ltd v BMF Pty Ltd. The plaintiff did not demonstrate a genuine dispute, nor did it present any other compelling reason for setting aside the demand.

The court found that the plaintiff was indeed barred from raising the grounds to set aside the statutory demand due to the application of the Graywinter principle. The plaintiff's failure to establish a genuine dispute or any other reason to set aside the demand led to the court dismissing the application. The court did not find merit in the plaintiff's arguments and upheld the statutory demand issued by the defendant.

Orders