Valleyarm Digital Ltd v Shanaaz Peake - [2016] VSC 98

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S CI 2014 04274

IN THE MATTER of VALLEYARM DIGITAL LTD (ACN 143 359 568)

VALLEYARM DIGITAL LTD	Plaintiff
v
SHANAAZ PEAKE	Defendant

---

JUDGE:	Randall AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	23 and 28 January 2015
DATE OF JUDGMENT:	15 March 2016
CASE MAY BE CITED AS:	Valleyarm Digital Ltd v Shanaaz Peake
MEDIUM NEUTRAL CITATION:	[2016] VSC 98

---

CORPORATIONS – Corporations Act 2001 (Cth) – Setting aside statutory demand – Genuine dispute – Genuine dispute about breach of consultancy agreement giving rise to an offsetting claim – s 459H – Failure to particularise offsetting claim other than by director’s statement; limitation of liability clause in consultancy agreement – Whether there is ‘a serious question to be tried’ or ‘an issue deserving of a hearing’ or ‘a plausible contention requiring investigation’.

---

APPEARANCES:	Counsel	Solicitors
For Valleyarm	Mr J Kohn	J A Lawyers Pty Ltd
For the Defendant	Mr M Galvin QC	DSA Law — Lawyers & Consultants

HIS HONOUR:

This is an application to set aside a statutory demand pursuant to s 459G of the Corporations Act 2001 (Cth) (‘Act’).

The defendant, Ms Peake (‘Peake’), served a statutory demand on the plaintiff, Valleyarm Digital Ltd (‘Valleyarm’) for the sum of $38,542.59 in unpaid consultancy fees. Valleyarm has applied to set aside the statutory demand on two bases. First, that there is a genuine dispute about the existence or amount of the unpaid fees. Second that Valleyarm has an offsetting claim. Both bases are disputed.

Background

Valleyarm operates a digital music distributor business. In its outline of submissions, Valleyarm described its major business as follows:

… An artist or record label provides Valleyarm with music and/or artwork [which] Valleyarm converts into digital formats required by digital outlets such as iTunes. The digital outlets then place the material in their catalogues which are available to customers to purchase. The digital outlets track how often songs or albums are purchased. The outlets provide a sales report and forward the royalties earned on the sales. Valleyarm collates the information from the outlets and generates its own sales reports for the individual artist or record label. Valleyarm then distributes the royalties to the artists or record label once it receives a tax invoice.
The artists or record labels use Valleyarm’s website to generate tax invoices. The tax invoices are emailed … for payment. Valleyarm uses MYOB to monitor the payments required to be made to the artists or record labels.

Each of the officers of Valleyarm and each of the creditors of Valleyarm were able to monitor what was due from time to time.

Peake was engaged by Valleyarm. Valleyarm and Peake entered into a consultancy agreement bearing date 22 October 2010. The 22 October 2010 consultancy agreement contained the following provisions:

·Recital
… [Valleyarm] desires to engage the services of [Peake] to perform for [Valleyarm] consulting services as a Bookkeeper regarding the functions for the operation…

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.

Continue reading Valleyarm Digital Ltd v Shanaaz Peake

Details

AGLC: Valleyarm Digital Ltd v Shanaaz Peake [2016] VSC 98
Case: [2016] VSC 98
Decision Date: 15 March 2016

CaseChat Overview and Summary

Valleyarm Digital Ltd initiated legal proceedings against Shanaaz Peake, seeking to enforce a statutory demand for payment. The dispute arose from an alleged breach of a consultancy agreement between the parties. The Federal Circuit and Family Court of Australia was tasked with determining whether the statutory demand could be set aside. The primary legal issue was whether Peake had a genuine dispute with Valleyarm Digital that could potentially offset the debt claimed under the statutory demand. This involved examining whether Peake's claims of breach of the consultancy agreement could be considered serious enough to warrant setting aside the demand.

The court considered whether Peake had established a genuine dispute by virtue of her allegations of breach of the consultancy agreement. It was noted that while Peake's statement of claim contained broad allegations of breach, these were not sufficiently particularised to outline the specific nature of the alleged breaches or the extent of any damages. Despite this, the court found that there was a serious question to be tried regarding Peake's claims. This was based on the director's statement which, although not detailed, suggested a plausible contention that Valleyarm Digital had indeed breached the consultancy agreement. Additionally, the court found that the limitation of liability clause in the agreement did not preclude Peake from having a genuine dispute.

In its reasoning, the court held that Peake's claims, though not fully particularised, were plausible enough to constitute a genuine dispute. The court emphasised the need for Peake to provide more detailed particulars of her claims, but found that this did not preclude the existence of a serious question to be tried. Consequently, the court set aside the statutory demand on the basis that there was a genuine dispute which merited further investigation. The court's decision underscored the importance of particularising claims while also recognising that a plausible contention can justify setting aside a statutory demand.

Orders