Viva 4 Enterprises Pty Ltd v Octobay Pty Ltd - [2011] QSC 281

SUPREME COURT OF QUEENSLAND

CITATION:

Viva 4 Enterprises Pty Ltd v Octobay Pty Ltd [2011] QSC 281

PARTIES:

VIVA 4 ENTERPRISES PTY LTD ACN 115 421 380
(applicant)
v
OCTOBAY PTY LTD ACN 010 838 516
(respondent)

FILE NO:

6936 of 2011

DIVISION:

Trial Division

PROCEEDING:

Originating Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

27 September 2011

DELIVERED AT:

Brisbane

HEARING DATE:

9 September 2011

JUDGE:

Applegarth J

ORDERS:

1. The application is dismissed.

2. The applicant pay the respondent’s costs of and incidental to the application to be assessed on the standard basis.

CATCHWORDS:

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS – ASSESSING GENUINENESS – GENERALLY – where respondent advanced mezzanine finance to applicant property developer – where respondent issued statutory demand – where applicant claimed that the relationship of debtor-creditor had been superseded by a joint venture relationship pursuant to oral agreement – whether assertion of joint venture implausible – whether genuine dispute as to indebtedness

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS – OFFSETTING AND OTHER LIKE CLAIMS – GENERALLY – where respondent as trustee of different unit trusts advanced mezzanine finance to property developer on two occasions, the first as trustee of EM trust, the second as trustee of MM trust – where respondent as trustee of EM trust became third mortgagee – where respondent as trustee of MM trust became fourth mortgagee – where respondent exercised power of sale as third mortgagee in its capacity as trustee of EM trust – where funds raised by sale insufficient to clear applicant’s indebtedness to respondent – where respondent issued statutory demand in its capacity as trustee of MM trust – where applicant advances claim in respect of alleged sale at under-value by the respondent – whether claim against the respondent in its capacity as trustee of one trust is an off-setting claim in respect of statutory demand issued by respondent in its capacity as trustee of another trust – whether mutuality required between debt that is subject of statutory demand and off-setting claim – whether off-setting claim exists

Corporations Act 2001 (Cth), s 459G, s 459H, s 459J
Property Law Act 1974 (Qld), s 85

Australian Aloe Ltd v Export Growth Finance Pty Ltd [2003] NSWSC 252 discussed
Boutique Venues Pty Ltd v JACG Pty Ltd [2007] NTSC 5 discussed
C & E Pty Ltd v Corrigan [2006] 2 Qd R 399; [2006] QCA 47 cited
Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 cited
Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473; [2008] HCA 41 cited
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 cited
Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601 cited
Neutral Bay Pty Ltd v Deputy Commissioner of…

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: [2011] QSC 281
Decision Date: 27 September 2011

CaseChat Overview and Summary

Viva 4 Enterprises Pty Ltd, the applicant, sought to set aside a statutory demand issued by Octobay Pty Ltd, the respondent. The dispute arose from a mezzanine finance arrangement where Octobay, acting as trustee for different unit trusts, provided funding to Viva, a property developer, on two occasions. Following the exercise of a power of sale by Octobay as trustee of the EM trust, Viva owed an outstanding debt to Octobay, as trustee of the MM trust. Octobay issued a statutory demand to enforce the debt, which Viva sought to have set aside on the basis that a joint venture had replaced the debtor-creditor relationship and that there was an offsetting claim regarding an alleged under-value sale by Octobay.

The court examined whether Viva's claim of a joint venture relationship was plausible and if there was a genuine dispute about the debt's existence. The court also considered whether the offsetting claim could be set against the debt in question. It was determined that Viva's assertion of a joint venture was implausible, and therefore, there was no genuine dispute regarding the debt. The court further found that the offsetting claim against Octobay in one capacity did not offset the debt claimed in another capacity, and mutuality was not required between the debt and the offsetting claim.

The application to set aside the statutory demand was dismissed, and Viva was ordered to pay Octobay's costs of and incidental to the application. The court held that there was no genuine dispute about the debt, and the offsetting claim did not affect the demand's validity.

Orders

Orders of the court

1. The application is dismissed.

2. The applicant pay the respondent’s costs of and incidental to the application to be assessed on the standard basis.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Viva 4 Enterprises Pty Ltd v Octobay Pty Ltd [2011] QSC 281
PARTIES:	VIVA 4 ENTERPRISES PTY LTD ACN 115 421 380 (applicant) v OCTOBAY PTY LTD ACN 010 838 516 (respondent)
FILE NO:	6936 of 2011
DIVISION:	Trial Division
PROCEEDING:	Originating Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	27 September 2011
DELIVERED AT:	Brisbane
HEARING DATE:	9 September 2011
JUDGE:	Applegarth J
ORDERS:	1. The application is dismissed. 2. The applicant pay the respondent’s costs of and incidental to the application to be assessed on the standard basis.
CATCHWORDS:	CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS – ASSESSING GENUINENESS – GENERALLY – where respondent advanced mezzanine finance to applicant property developer – where respondent issued statutory demand – where applicant claimed that the relationship of debtor-creditor had been superseded by a joint venture relationship pursuant to oral agreement – whether assertion of joint venture implausible – whether genuine dispute as to indebtedness CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS – OFFSETTING AND OTHER LIKE CLAIMS – GENERALLY – where respondent as trustee of different unit trusts advanced mezzanine finance to property developer on two occasions, the first as trustee of EM trust, the second as trustee of MM trust – where respondent as trustee of EM trust became third mortgagee – where respondent as trustee of MM trust became fourth mortgagee – where respondent exercised power of sale as third mortgagee in its capacity as trustee of EM trust – where funds raised by sale insufficient to clear applicant’s indebtedness to respondent – where respondent issued statutory demand in its capacity as trustee of MM trust – where applicant advances claim in respect of alleged sale at under-value by the respondent – whether claim against the respondent in its capacity as trustee of one trust is an off-setting claim in respect of statutory demand issued by respondent in its capacity as trustee of another trust – whether mutuality required between debt that is subject of statutory demand and off-setting claim – whether off-setting claim exists Corporations Act 2001 (Cth), s 459G, s 459H, s 459J Property Law Act 1974 (Qld), s 85 Australian Aloe Ltd v Export Growth Finance Pty Ltd [2003] NSWSC 252 discussed Boutique Venues Pty Ltd v JACG Pty Ltd [2007] NTSC 5 discussed C & E Pty Ltd v Corrigan [2006] 2 Qd R 399; [2006] QCA 47 cited Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 cited Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473; [2008] HCA 41 cited Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 cited Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601 cited Neutral Bay Pty Ltd v Deputy Commissioner of…