Varandra Holdings Pty Ltd v Bevan

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SUPREME COURT OF QUEENSLAND

CITATION:

Varandra Holdings Pty Ltd v Bevan [2024] QSC 203

PARTIES:

Varandra Holdings Pty Ltd

(Applicant)

v
Adam John Bevan

(Respondent)

FILE NO/S:

9161 of 2024

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

5 September 2024

DELIVERED AT:

Brisbane

HEARING DATE:

15 August 2024

JUDGE:

Ryan J

ORDER:

The application is dismissed.

I will hear the parties as to costs by way of written submissions, of no more than two pages, to be delivered by email to my associate, within 14 days.

CATCHWORDS:

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS – ASSESSING GENUINENESS – where the applicant applies to set aside the respondent’s statutory demand – where the applicant says there is a genuine dispute about the debt – whether the applicant’s dispute is a genuine dispute – whether bona fides – whether recent invention.

Corporations Act 2001 (Cth), ss 459G and 459H

Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (2017) 118 ACSR 592
Britten-Norman Pty Ltd v Analysis and Technology Australia Pty Ltd (2013) 85 NSWLR 601
Building Solutions & Waterproofing Pty Ltd v Robin H Wright Pty Ltd [2017] QSC 110
Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37
Creata (Aust) Pty Ltd v Faull [2017] NSWCA 300
Createc Pty Ltd v Designs Signs Pty Ltd (2009) 71 ACSR 602
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
J S W Parts Pty Ltd v Dacaro Pty Ltd, VG 3164 of 1997
John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd  (1994) 14 ASCR 250
Ligon 158 Pty Ltd v Huber (2016) 117 ACSR 495
Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330
McDonald Earthmoving Equipment Pty Ltd v HM Hire Pty Ltd [2023] QSC 148
Polaroid Australia Pty Ltd v Minicomp Pty Ltd (1998) 16 ACLC 529
Scanhill Pty Ltd v Century 21 Australasia Pty Ltd [1993] FCA 618; (1993) 120 ALR 173
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452

COUNSEL:

M K Callanan for the applicant
W Attoh (Solicitor) for the respondent

SOLICITORS:

Hall Lawyers for the applicant
Legal Made Easy for the respondent

Summary

  1. This is an application to set aside a statutory demand.  The applicant/debtor contends that there is a genuine dispute about the debt.  The respondent/creditor contends, in effect, that the raising of a dispute about the debt now is not genuine: it does not rise above the level of a mere assertion.

  2. In short –

    (a)      The creditor (a natural person) says that money is due and payable to him by the debtor under a contract dated 18 June 2021.  In pursuance of the contract, the debtor purchased the creditor’s shares in a company which held an Australian Financial Services Licence, for…

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Details
Case
[2024] QSC 203
Decision Date

CaseChat Overview and Summary

Varandra Holdings Pty Ltd (VH) sought to set aside a statutory demand issued by Bevan. The demand related to an alleged debt of $140,000. The dispute was heard in the Federal Circuit Court of Australia. VH argued that there was a genuine dispute about the existence of the debt, which would justify setting aside the demand under section 459H of the Corporations Act 2001. The court needed to decide if the applicant's dispute was genuine and not a recent invention.

The court examined the evidence provided by Jonathan Timms, the director of VH during the time the debt arose, and Bevan. It was noted that the matter was decided on affidavit evidence, and no objections were raised against the inadmissible parts of the evidence. The court considered the chronology of events between the parties and their associated entities, noting their involvement in the finance industry and various agreements they had entered into. The court focused on whether there was a genuine dispute about the existence of the debt. The applicant's argument centred on the alleged uncertainty about the debt, which was not accepted by the court.

The court held that the applicant's uncertainty about the debt was not genuine and that there was no evidence to support a genuine dispute about the existence of the debt. The court was not satisfied that the applicant's dispute was genuine or that it was not a recent invention. Consequently, the application to set aside the statutory demand was dismissed.

The court ordered that the parties submit written submissions on costs, not exceeding two pages, within 14 days.

Orders

Orders of the court

The application is dismissed.

I will hear the parties as to costs by way of written submissions, of no more than two pages, to be delivered by email to my associate, within 14 days.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Jonathan Timms (JT) was VH’s director when the debt arose.Observation about the evidence The matter proceeded on the basis of affidavit evidence from JT and Bevan and documents exhibited thereto. JT’s affidavit contained a wide-ranging exposition of all financial dealings between JT, his father (TT) and their associated entities on the one hand, and Bevan and his associated entities on the other. It seemed to raise, among other things, issues with the content of the statutory demand and potential offsetting claims. However, VH’s barrister clarified that, in this application, the debtor company wished to rely only on an argument that there was a genuine dispute about the existence of the debt. The affidavits were not confined to admissible evidence. Yet there was no objection to the (inadmissible) statements of opinion, arguments, or evidence of bad character contained therein.Chronology I gleaned the following chronology from the affidavit evidence. I acknowledge that much of this chronology is irrelevant to the issue for me but I have included it to show the relationship between debtor and creditor over time. Bevan had known JT since 2018. Bevan travelled and socialised with JT and thought of him as a close friend. Over the years since 2018, JT, TT, VH, and entities associated with them, entered into various agreements with Bevan and entities associated with him. JT, TT, Bevan and their entities are involved in the finance industry. A person or entity must have an Australian Financial Services Licence (AFSL) to conduct a financial services business. A licence holder may authorise another to be their authorised representative (or AR). AFSLs are granted by ASIC (the Australian Securities and Investments Commission) upon application. AFSL holders are obliged to comply with the conditions of their licence and the relevant provisions of the Corporations Act 2001. In broad terms, licensees have an obligation to provide efficient, honest, and fair financial services. ASIC may vary or cancel an AFSL. ASIC may ban a licence holder or their AR from practicing. According to Bevan, in about August 2020, JT invited him to set up his (Bevan’s) business in the Timms’ office in Charlotte Street, Brisbane, so that their businesses would be close to each other. Bevan did so. He described their businesses as “nestled” side by side. He said he assisted, advised, and “made connections and so forth” for TT, his businesses, business partners and business contacts. In return, Bevan and his team worked out of the Charlotte Street office (rented by an entity which was associated with JT) without paying rent or outgoings. According to JT, in 2021, Bevan told him that he was under investigation by ASIC and that he wanted to sell assets he owned which were connected to the financial services industry. According to JT, when he asked Bevan about ASIC’s investigation, Bevan told him that he could not talk about it, as he was subject to an investigation under “section 19 of the ASIC Act”.[1] JT claimed that his conversations with Bevan left him with the impression that Bevan was “largely unconcerned” with the ASIC investigation. [1]Section 19 of the ASIC Act states:Notice requiring appearance for examination(1) This section applies where ASIC, on reasonable grounds, suspects or believes that a person can give information relevant to a matter that it is investigating, or is to investigate, under Division 1.(2) ASIC may, by written notice in the prescribed form given to the person, require the person:(a)to give to ASIC all reasonable assistance in connection with the investigation; and(b)to appear before a specified member or staff member for examination on oath or affirmation and to answer questions.Note: Failure to comply with a requirement made under this subsection is an offence (see section 63).(3) A notice given under subsection (2) must:(a)state the general nature of the matter referred to in subsection (1); and(b)set out the effect of subsection 23(1) and section 68.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

VH brought an application to set aside the statutory demand under ss 459G and 459H of the Corporations Act 2001.[3] [3] CORPORATIONS ACT 2001 – SECT 459GCompany may apply(1)A company may apply to the Court for an order setting aside a statutory demand served on the company.(2)An application may only be made within the statutory period after the demand is so served.(3)An application is made in accordance with this section only if, within that period:(a) an affidavit supporting the application is filed with the Court; and(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.CORPORATIONS ACT 2001 – SECT 459HDetermination of application where there is a dispute or offsetting claim(1)This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:(a) that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;(b) that the company has an offsetting claim.(2)The Court must calculate the substantiated amount of the demand in accordance with the formula … [Formula omitted] (3)If the substantiated amount is less than the statutory minimum, the Court must, by order, set aside the demand.(4)If the substantiated amount is at least as great as the statutory minimum, the Court may make an order:(a) varying the demand as specified in the order; and(b) declaring the demand to have had effect, as so varied, as from when the demand was served on the company.(5)In this section:“admitted amount”, in relation to a debt, means:(a) if the Court is satisfied that there is a genuine dispute between the company and the respondent about the existence of the debt—a nil amount; or(b) if the court is satisfied that there is a genuine dispute between the company and the respondent about the amount of the debt—so much of that amount as the Court is satisfied is not the subject of such a dispute; or(c) otherwise—the amount of the debt.“offsetting claim” means a genuine claim that the company has against the respondent by way of counterclaim, set-off or cross-demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates).“respondent” means the person who served the demand on the company.(6)This section has effect subject to section 459J. Although JT’s affidavit suggested some uncertainty on his part about the debt the subject of the statutory demand, VH did not rely upon that uncertainty (as, for example, a defect in the demand – see 459J) in this application. JT said that he “guessed” that the demand concerned money which Bevan claimed he was owed under the Agreement relating to Capital Markets. The Agreement had been enclosed with the demand; and was referred to in the solicitor’s letter, under cover of which the demand was sent. Frankly, I doubt the genuineness of JT’s asserted uncertainty. It was plain that the demand concerned the $140,000 payable under the accompanying agreement.