Shot One Pty Ltd (in liq) v Day - [2017] VSC 741

IN THE SUPREME COURT OF VICTORIA	Not Restricted
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 2014 00390

IN THE MATTER OF SHOT ONE PTY LTD (IN LIQUIDATION) (ACN 096 104 808)
B E T W E E N:
SHOT ONE PTY LTD (IN LIQUIDATION) (ACN 096 104 808)	First Plaintiff
ANDREW REGINALD YEO IN HIS CAPACITY AS LIQUIDATOR OF SHOT ONE PTY LTD (IN LIQUIDATION) (ACN 096 104 808)	Second Plaintiff
and
RICHARD LEONARD DAY	First Defendant
RISING ROCKET PTY LTD (ACN 102 373 633)	Second Defendant

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JUDGE:	SLOSS J
WHERE HELD:	Melbourne
DATES OF HEARING:	2, 3, 7 (Directions only), 8, 9, 10, 13 February, and 6, 7 March 2017
DATE OF JUDGMENT:	7 December 2017
CASE MAY BE CITED AS:	Shot One Pty Ltd (in liq.) & Anor v Day & Anor
MEDIUM NEUTRAL CITATION:	[2017] VSC 741

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WINDING UP – Voidable transactions – Uncommercial transactions – Relief under Corporations Act 2001 (Cth) – Liquidator seeking to have deed of settlement releasing defendants from debt claims set aside as an uncommercial transaction – Alleged debts denied by defendants – Whether company’s accounts constitute prima facie evidence of the alleged debts – Whether it may be expected that a reasonable person in the company’s circumstances would have entered into deed of settlement – Held: no uncommercial transaction – Corporations Act 2001 (Cth) s 588FB, 588FE, 588FF, 588FG and 1305(1) considered

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr L Glick QC and Ms C M Pierce	Frenkel Partners
For the Defendants	Mr J L Evans QC and Mr P R Miller	Piper Alderman

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Deed of Settlement entered into on 23 May 2012 to settle the 2010 proceeding................. 1

Proceeding commenced by the liquidator of Shot One on 31 January 2014 seeking to set aside the Deed of Settlement........................................................................................................................ 3

During the course of the trial the issues in dispute were narrowed significantly.............. 4

The final form of the case pursued by the plaintiffs................................................................... 7

Factual background........................................................................................................................... 9

Shot One commenced the 2010 proceeding against Richard Day and Rising Rocket...... 17

Judicial mediation of the 2010 proceeding and entry into the Deed of Settlement.......... 18

Sale of the Rockley Road property........................................................................................... 26

Evidence given concerning the Rising Rocket loan account................................................... 26

Evidence given by Mr Grano.................................................................................................... 27

Evidence given by Richard Day............................................................................................... 31

Evidence given by Mr Jasper.................................................................................................... 39

Shot One’s 2005 Accounts.......................................................................................................... 46

Shot One’s 2006 Accounts.......................................................................................................... 50

Shot One’s 2007 Accounts.......................................................................................................... 52

Shot One’s 2008 Accounts.......................................................................................................... 55

Shot One’s 2009 Accounts.......................................................................................................... 60

Preparation of Shot One’s financial statements and tax returns for the financial years 2010 and 2011........................................................................................................................................................ 63

Shot One’s financial statements for 2010................................................................................. 65

Shot One’s financial statements for 2010 record the financial liability of Shot One to Cooniemoon 75

Shot One’s financial statements for 2011................................................................................. 75

Shot One’s financial statements for 2011 record the financial liability of Shot One to Cooniemoon 78

Evidence given concerning Rising Rocket’s accounts and records..................................... 78

Evidence given by Mr Yeo............................................................................................................. 79

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: [2017] VSC 741
Decision Date: 7 December 2017

CaseChat Overview and Summary

The liquidators of Shot One Pty Ltd sought to have a deed of settlement set aside as an uncommercial transaction. The company had entered into the deed with the defendants to release them from debt claims. The defendants denied owing any debt. The liquidators argued that the company’s accounts constituted prima facie evidence of the alleged debts and that a reasonable person in the company’s position would not have entered into the deed of settlement. The court was required to determine whether the deed of settlement constituted an uncommercial transaction under the Corporations Act 2001 (Cth).

The court considered whether the company’s accounts constituted prima facie evidence of the alleged debts. The court found that the accounts did not constitute prima facie evidence of the alleged debts. The court also considered whether it may be expected that a reasonable person in the company’s position would have entered into the deed of settlement. The court found that it was not possible to say that a reasonable person in the company’s position would not have entered into the deed of settlement. The court found that there was no uncommercial transaction under the Corporations Act 2001 (Cth).

The liquidators’ application to have the deed of settlement set aside was dismissed. The court held that the liquidators had not established that the deed of settlement was an uncommercial transaction under the Corporations Act 2001 (Cth). The court held that the company’s accounts did not constitute prima facie evidence of the alleged debts and that it was not possible to say that a reasonable person in the company’s position would not have entered into the deed of settlement. The liquidators’ appeal was dismissed.

Orders