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Varandra Holdings Pty Ltd v Bevan[2024] QSC 203

Varandra Holdings Pty Ltd v Bevan[2024] QSC 203

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. [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. [2]
    In short –
    1. 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 $140,000.  The $140,000 has never been paid.
    2. The debtor says there is a genuine dispute about the debt because the creditor made a false representation to its director, upon which it relied in entering into the contract –
      1. if it had known about the true state of affairs, then it would not have entered into the contract;
      2. if it had not entered into the contract, then nothing would be owed by it to the creditor;

therefore;

  1. it disputes the existence of the debt.
  1. The creditor says, in effect, that there is no genuine dispute about the existence of the debt because –
    1. there was no misrepresentation – the debtor knew the true state of affairs when it entered into the contract;
    2. even on its own case, the debtor knew the true state of affairs one month after the execution of the contract, in about July 2021, yet it retained the benefit of the contract for years without making any attempt to have the contract set aside;
    3. the debtor made no prior complaint about the alleged misrepresentation when it had the perfect opportunity to do so;
    4. the debtor admitted the debt in November of last year;

and 

  1. the “dispute” now raised, in the face of the statutory demand, is neither genuine nor bona fide.
  1. [3]
    For the reasons which follow, I dismiss the application to set aside the statutory demand.  I find that there is no genuine dispute about the debt.  In brief: while the applicant may have hoped to never pay the amount it owed under the contract, it acknowledged the debt as recently as November of last year and only claimed that nothing was owed to the respondent because of his alleged misrepresentation under the pressure of having been served with the statutory demand. 
  2. [4]
    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.

Parties

  1. [5]
    The creditor is Adam John Bevan (Bevan). 
  2. [6]
    The debtor is Varandra Holdings Pty Ltd (VH). 
  3. [7]
    Terrance, or Terry, Timms (TT) is the current director of VH.  He was appointed on 14 March 2022. 
  4. [8]
    His son Jonathan was its previous director.  Jonathan was appointed on 10 April 2019 and ceased as director on 14 March 2022. 
  5. [9]
    Jonathan Timms (JT) was VH’s director when the debt arose.

Observation about the evidence

  1. [10]
    The matter proceeded on the basis of affidavit evidence from JT and Bevan and documents exhibited thereto. 
  2. [11]
    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.
  3. [12]
    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

  1. [13]
    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.
  2. [14]
    Bevan had known JT since 2018.  Bevan travelled and socialised with JT and thought of him as a close friend.
  3. [15]
    Over the years since 2018, JT, TT, VH, and entities associated with them, entered into various agreements with Bevan and entities associated with him. 
  4. [16]
    JT, TT, Bevan and their entities are involved in the finance industry. 
  5. [17]
    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. 
  6. [18]
    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. 
  7. [19]
    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. 
  8. [20]
    Whether Bevan was concerned about ASIC’s investigation or not, I note that JT was, by his own admission, aware that Bevan was under investigation before VH entered into the agreement with Bevan said to give rise to the debt.  And he was aware that Bevan wished to sell the company, the subject of the agreement, because he was under investigation.
  9. [21]
    On 26 May 2021, ASIC banned Bevan as a Financial Services Representative for five years until 26 May 2026.  Material exhibited to JT’s affidavit reveals that Bevan was an AR of Trade Wind Financial Services Pty Ltd between 25 July 2017 and 18 May 2022.  He was also its sole director.  ASIC found that he did not act in the best interests of three Trade Wind Financial Services’ clients; and that he was not a fit and proper person.  ASIC also cancelled Trade Winds Financial Services’ AFSL for several reasons, which I need not go into.
  10. [22]
    Bevan said he was open with JT about the investigation and the ban because they were close.  He said that JT’s business partners and other staff “in the office”, who were not as close to Bevan as JT was, also knew. 
  11. [23]
    On 18 June 2021, under a Share Sale and Purchase Agreement (the Agreement), VH agreed to buy all of Bevan’s shares in Trade Wind Capital Markets Pty Ltd (Capital Markets) for $140,000, payable in three instalments. 
  12. [24]
    When the shares were purchased, Capital Markets held an Australian Financial Services Licence (No 235362).  It was plain from the Agreement that Capital Market’s worth lay in its AFSL – see especially paragraph 3, set out in the footnote.[2] 
  13. [25]
    Capital Markets, which is now known as Akela (see below), still holds that licence. 
  14. [26]
    The first payment was due on completion ($10,000); the second on “the Second Payment Date” ($65,000 on 20 June 2022); and the third on “the Third Payment Date” ($65,000 on 20 June 2023). 
  15. [27]
    The Agreement was signed by Bevan and by JT, as the Sole Secretary/Director of VH.
  16. [28]
    Under the Agreement, Bevan was obliged to cause Capital Markets to appoint TT as a director and secretary; and to himself resign as a director and secretary.  As per the Agreement, TT was appointed director on 20 June 2021 and Bevan ceased as director and secretary on that same date.
  17. [29]
    VH did not make the first payment to be made to Bevan under the Agreement on the completion date, 20 June 2021, as required.  JT’s affidavit said nothing about why the payment was not made.
  18. [30]
    JT claimed that he first learnt of Bevan’s alleged misrepresentation about a month after they entered into the Agreement – that is around 20 July 2021.  He said (my emphasis):

[6] On 18 June 2021, the Applicant [VH] entered a share purchase agreement with the Respondent, Bevan, to purchase all of his shares in Capital Markets …

[7] About four weeks later I discovered that the ASIC had banned Adam Bevan, prohibiting him from owning a financial services … business or having anything to do with a business associated with the financial services industry …

  1. [31]
    Notwithstanding his alleged acquisition of knowledge of the ban in about July of 2021, JT did not suggest that he, or TT or VH raised the issue with Bevan at that time, or at any time thereafter, until the present application.
  2. [32]
    Another limb of VH’s misrepresentation argument appears to be that Bevan was not in fact prohibited from talking about ASIC’s investigation when he first disclosed it to JT because he had already been banned. 
  3. [33]
    On 10 August 2021, Capital Markets changed its name to Akela Ventures Pty Ltd.
  4. [34]
    At the end of 2021, (with admitted knowledge that Bevan had been banned) JT lent Bevan $40,000 in cash.  The loan was to be repaid within three months.  According to JT, 90 days later, Bevan asked for another loan of $35,000, which JT made, in cash, repayable within 2 months (the Cash Loans). 
  5. [35]
    The Cash Loans were repaid.   
  6. [36]
    The second payment to be made by VH to Bevan under the Agreement was not made on 20 June 2022 as required.  JT’s affidavit said nothing about why the second payment was not made. 
  7. [37]
    On 10 November 2022, VH/JT leased premises at Spring Hill to a business or businesses associated with Bevan.  A draft lease document, later produced: (a) named the tenant as “Trade Wind Pty Ltd – Therese Jarrett”; (b) was backdated to 10 November 2022; and (c) stated that the lease term was to end on 10 February 2024.  Under the lease, a bond of $3000 was required, with rent set at $1500 per week. 
  8. [38]
    The premises at Spring Hill were owned by Roma Developments (Leichhardt Street) Pty Ltd, which was, according to Bevan, a corporate vehicle for JT and TT. 
  9. [39]
    Bevan said that the Spring Hill premises were run down and that JT wanted “him” in the premises so that there would be the appearance of professional activity in the building. 
  10. [40]
    According to Bevan, and contrary to the lease arrangement asserted by JT, as had been the case when Bevan and his related businesses were in Charlotte Street, the arrangement was that neither he nor his related businesses would pay rent or outgoings in return for Bevan providing JT with, inter alia, his knowledge and connections “in the financial services and investment space”.   
  11. [41]
    According to JT, 12 months after the Cash Loans were made – that is, around the end of 2022 – he asked Bevan to repay the loans and the amount owing in relation to the property at Spring Hill.  He said Bevan was unable to do so.  JT said he “secured the amount owing through a general security agreement on Mr Bevan’s personal property with another of my family’s corporate entities, Seneca Holdings Pty Ltd”. 
  12. [42]
    On 31 January 2023, Seneca Holdings and Bevan entered into a General Security Deed and Loan Facility Agreement.  The Deed recited that, from time to time, “the Grantor” may wish one or more “Beneficiaries” to provide financial accommodation to it.  The Deed secured payment of that accommodation.  Bevan was the Grantor.  Seneca Holdings was the Secured Party and a Beneficiary.  TT was its director/secretary.  Under the Loan Facility Agreement, Seneca Holdings was the Lender and Bevan was the Borrower.  The Loan amount was $65,000.
  13. [43]
    According to JT, three months later, at about the end of April 2023, Bevan paid what was owed, but JT asserted that Bevan, Market Hand, and Wealth Management continued to accrue debts relating to the rent of the Spring Hill property.  He therefore provided Bevan with a default notice (under TT’s hand) on 7 November 2023 (see below). 
  14. [44]
    The third payment owing under the Agreement was not made by VH to Bevan on 20 June 2023 as required.  JT’s affidavit said nothing about why payment was not made.
  15. [45]
    To demonstrate TT’s “bad character” – and without objection – Bevan exhibited to his affidavit a copy of pages from an on-line Australian Financial Review article, dated 16 July 2023, which was critical of TT.  Its headline read: “Millions frozen in venture capital land as investor visas go awry”.  The article implied that a company called Estrala Capital was involved, and set out TT’s links to that entity.  It also referred to litigation involving Estrala and noted that TT was its director when the events, the subject of the litigation, occurred. 
  16. [46]
    To further demonstrate TT’s bad character, Bevan attached to his affidavit a copy of a printout from “Today’s Paper”, dated 17 July 2023, with the headline: “VC firm chairman not “fit and proper’ to run mum’s estate”.  There was no objection to this exhibit. 
  17. [47]
    On 25 September 2023, JT was appointed a director and secretary of Roma Developments (Leichhardt Street) Pty Ltd, taking over from TT who ceased as director and secretary on that same day.
  18. [48]
    In October 2023, Bevan discussed repayment of the $140,000 with JT.  (According to Bevan, this was not the first time that payment was discussed.)  Bevan had found someone prepared to pay $200,000 for the AFSL.  JT turned down that offer.
  19. [49]
    On 6 November 2023, Bevan made another request to JT for payment of the $140,000.  He said that JT was evasive and came up with excuses. 
  20. [50]
    Then, within one or two days, on about 7 or 8 November 2023, TT sent an undated letter to Bevan – the default notice referred to above.  It is worth setting it out in full.  Bevan submits, and I agree, that it includes an admission that the debt of $140,000 is owed (my emphasis):

Dear Mr Bevan,

As you are aware, Varandra Holdings has undertaken responsibility of covering the rental expenses and associated bills for Market Hand and Tradewind Wealth Management Pty Ltd.

During these 21 months, Varandra Holdings has maintained management of the following financial obligations on behalf of Tradewind and your associated operations.  See below a summary statement of account of expenses paid on your behalf to date.  These include:

1 Rental Payments:  We accounted for $1,500 a week rent at fair market rate; $6,300 per month, for a grand total of $132,000 in rent expenses over the last 21 months of occupancy.

2 Car Parking:  Varandra Holdings secured and covered the costs of four parking spots for Tradewind staff over the same period of 21 months, holding these back from the contracted car park revenue pool managed by Parkable; incurring expenses amounting to $22,680 over the 21-month period.

3 Electricity Bills Varandra Holdings has covered the cost of outgoings to Origin Energy, paying a total of $60,000 for the 21-month period.  Tradewind and associated companies’ contributions was 50% of that amount in electricity bills, averaging $3,000 per month; Tradewind’ share amounting to $30,000 over the occupied period.

4 Internet Bills:  All internet bills have been taken care of by Varandra Holdings, resulting in a sum of $1,050 over the 21-month period.

The total debt owed to Varandra Holdings by Tradewind stands at $186,030 as of Tuesday, November 7th 2023.

Meaning there is an outstanding figure of $46,030 payable.  Please transfer this outstanding amount to Varandra Holdings within 14 business days.

…

We understand that unforeseen circumstances can sometimes lead to financial challenges, we aim to reach an agreement that allows Tradewind Wealth Management to manage this obligation in a manner that aligns with its financial obligations and its ongoing operational priorities.  Please execute the attached general tenancy agreement.

Sincerely,

Terry Timms

  1. [51]
    The $46,030 said to be payable is the $186,030 said to be owed by Trade Wind less the $140,000 payable under the Agreement.  In this way, the letter is an admission by TT, on behalf of VH, that the debt is due and payable. 
  2. [52]
    The General Tenancy Agreement (GTA) which was sent with the letter identifies the tenant as “Trade Wind Pty Ltd – Therese Jarrett” – and not Bevan.  It nominates “Varandra Holdings – Jonathan Timms” as the lessor.  The GTA was not executed. 
  3. [53]
    For what it is worth (because no offsetting claim is alleged) Bevan denied that there was ever an agreement for the payment of rent and outgoings by Trade Wind, relying upon the fact that the GTA was not presented to him until November 2023. 
  4. [54]
    Bevan said that, after receiving the letter, he left the Spring Hill premises and JT began to bully him.  In his affidavit, he detailed the alleged bullying, which I will not detail here.

The statutory demand

  1. [55]
    Bevan claimed that, since 18 June 2021, he asked for payment of the money owed under the Agreement about 20 times.  He said his early pleas were “gentle” but became firmer over time. 
  2. [56]
    Bevan instructed his solicitors to serve a statutory demand on VH, care of TT. 
  3. [57]
    The demand and accompanying affidavit were both signed on 21 June 2024.  They were served on 28 June 2024.  A copy of the Agreement (the Share Sale and Purchase Agreement of 18 June 2012), out of which the debt was said to arise, was served with them.

VH’s response to the statutory demand

  1. [58]
    VH brought an application to set aside the statutory demand under ss 459G and 459H of the Corporations Act 2001.[3]
  2. [59]
    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.
  3. [60]
    Be that as it may, JT then said that neither VH, TT nor himself owed Bevan any money because of a misrepresentation made by Bevan.  JT referred to the serious nature of the misrepresentation and VH’s reliance upon it as follows (my emphasis):

[7] …The extent of the ASIC investigation, the seriousness of the breaches of his obligation and the banning order were not known to me when entering the share purchase agreement for the shares in Capital Markets Pty Ltd.  [He then referred to the detail of the banning order].

[8] Capital Markets held an Australian Financial Services Licence … and carried on the business, contrary to the ASIC Ban on Mr Bevan.  Had the applicant known that Mr Bevan was a banned individual or under investigation for a serious breach of the ASIC Act and regulations, the Applicant would have never purchased the shares in Capital Markets.  Further, it would have never agreed to pay the stipulated purchase price for the shares in that company ($140,000.00) because the value of Capital Markets was nominal, bearing in mind that that business was being conducted illegally and unprofessionally.  Mr Bevan’s ASIC ban evidences this.

  1. [61]
    In response to paragraph 8, Bevan submitted that the assertions therein had no basis because Akela was a different entity; he was not the responsible manager for Akela; nor had it been the subject of any action by ASIC. 
  2. [62]
    JT emphasised the impact of the alleged misrepresentation later in his affidavit evidence at [17] – although here he focused on the amount VH paid for the shares, which was not something pursued before me, in that VH raised no issue about the amount of the debt.  However, the timing of JT’s investigation into the “real” value of the shares is, in my view, significant.  He said (my emphasis):

[17] Before swearing this affidavit [that is, before 15 July 2024] I engaged an expert valuer … to determine the value of the shares in Capital Markets.  On Friday, 12 July 2024, I spoke to him by telephone.  During that call he informed me, and I verily believe that in light of the true facts concerning Mr Bevan’s previous conduct, had that been known at the time of the entry of (sic) the Capital Markets share sale agreement, the market value of those shares was considerably less than what was agreed to.  He thereafter sent me an email confirming his views.  I believe that the Applicant was misled and deceived by Mr Bevan in the period leading up to the entry of the Capital Markets share sale agreement.[4]

  1. [63]
    In my view, the timing asserted reveals that JT, on behalf of VH, took no steps in response to the alleged misrepresentation, or the risk of overpayment for the shares, until VH was served with the statutory demand. 
  2. [64]
    Additionally, VH, via JT’s affidavit, made an argument that it had an off-setting claim (which it did not pursue before me), as follows (my emphasis):

[9] Further, at the time the Applicant entered the share sale agreement for the shares in Capital Markets, Adam Bevan, his marketing company (Market Hand …) and the financial planning business Trade Wind Wealth Management Pty Ltd (Wealth Management) were given office space and car parking spaces in Spring Hill in [a certain building] … by a company which my father owns namely Roma Street Developments Pty Ltd.  Mr Bevan and I also agreed that Mr Bevan would personally pay any money owing by himself, Market Hand and Wealth Management to any entity associated with my father and me.  Any such outstanding money could be offset against any funds payable under the Capital Markets share sale agreement. 

  1. [65]
    Notwithstanding the content of this paragraph of JT’s affidavit, I did not treat it as an admission by VH that the debt was owed/due and payable.  However, other evidence of such an admission was placed before me by both JT and Bevan.
  2. [66]
    With respect to the potential offset, Bevan said that it was not until he demanded payment for his shares on 6 November 2023 that VH made any claim for rent, outgoings, or other expenses.  The contemporaneous documents, including the backdated GTA, support that proposition. 
  3. [67]
    Bevan complained that VH retained the benefit of Akela’s AFSL for years without paying for it.  Bevan asserted that VH used or benefitted from Akela’s licence in that it used it for commercial purposes: “to seek to work or monetise relationships with financial advisors and other participants in the financial services industry, by using the AFSL to start and/or promote Soteria Wealth Pty Ltd t/as Sonata Wealth, and/or by using the AFSL to explore opportunities in financial services and/or to receive or direct significant remuneration from financial services clients”.  In support of that claim, Bevan attached to his affidavit a copy of a document which said, inter alia, that Gina Benny and Sonata Wealth were Authorised Representatives of Akela Ventures.  There was no objection to the document, although there was some suggestion in oral submissions that it was a draft only.  
  4. [68]
    JT made another complaint about Bevan’s conduct.  JT asserted that, “in the later stage of 2023”, Bevan sought to sell his interest in Wealth Management via a share sale agreement.  JT asserted that he held the following concerns about Mr Bevan and his ASIC ban and his conduct at that time (my emphasis):

[14] … The way [Wealth Management] was conducted, and the proposed sale terms caused me concern, given the nature of Mr Bevan’s ASIC banning.  From my observations of Mr Bevan’s conduct at the premises, I suspected (at least) that he was intermeddling in the day-to-day operation of Wealth Management’s financial services business.  I also became aware, at that time, that Mr Bevan was the true 100% owner of all of the shares in Trade Winds Wealth Management Pty Ltd, which meant that that company had previously been carrying on business in our premises in contravention of the ASIC Ban and the Corporate Authorised Representative Agreement that Capital Markets had previously entered into with Wealth Management.  These issues caused my father and I significant concern.

  1. [69]
    It was then, JT said, that he caused to be issued to Wealth Management two breach notices.  According to JT, it was shortly thereafter that “Mr Bevan and his entities” abandoned the property – leaving $46,030.00 (sic) outstanding and unpaid.   

Submissions

  1. [70]
    It is important to consider the way in which the applicant framed its written submissions – relying on what it said were the existence of grounds to vitiate the Agreement.  In the precis of its argument, the applicant wrote:
  1. Varandra Holdings Pty Ltd applies to set aside Mr Bevan’s statutory demand for the payment of $140,000.  It does so on the basis that it has grounds to vitiate the contract giving rise to that liability.  It asserts that misrepresentations were made expressly and by silence that were causative of its entry into the contract and that if the true facts were known, it would never have agreed to purchase the shares it took under that contract.
  2. It is common ground that the representations occurred during conversations in the first half of 2021.  The evidence on this application shows that the nature of the representations is hotly contested.  Such a contest is not amenable to summary disposition and, so, is properly resolved in the ordinary way.
  1. [71]
    By way of further elaboration in writing, the applicant submitted that –
    1. Bevan was not precluded from talking about the ASIC investigation before he entered into the Agreement – because he was banned on 27 May 2021;
    2. His silence about the investigation constituted an actionable misrepresentation;
    3. JT’s statement that VH would not have entered into the Agreement had it known that JT had been banned was “utterly plausible” because “stepping into the shoes” of someone who had been banned by ASIC was “replete with risk”;
    4. Bevan’s evidence is that JT knew these things: “Therein lies the genuine dispute”;
    5. “The genuine dispute is in respect of asserted misrepresentations sworn to by Varandra Holdings.  Mr Bevan’s attempt to characterise Jonathon’s evidence as an admission (in addition to being unfair) matter[s] not.  It overlooks that the relief available if the representations are proved includes having the contract set aside or declared void ab initio, alternatively, having the enforcement of the document constrained in some respects, or an award of damages or compensation that is equal to the liability asserted.”  In this regard, the applicant referred me to legislative prohibitions on misleading and deceptive conduct;
    6. The misrepresentation was something for VH to raise by way of counterclaim if Bevan decided to sue to recover the $140,000.  It was not something which could be decided summarily;
    7. “The court would simply find that a genuine dispute has been established and dismiss the application knowing that summary judgment against Varandra Holdings is not called for and that Mr Bevan retains the right to sue”.
  2. [72]
    Bevan’s position, as set out in his written submissions, emphasised VH’s knowledge of his banning – which on its own admission it acquired one month after the Agreement was made – and its willingness to retain the benefit of the Agreement regardless.  Thus, he asserted, it was ingenuine for VH to raise the dispute.
  3. [73]
    In writing, Bevan argued that there was no genuine dispute – there was only JT’s “say so” and he admitted that the money was owed.  As his submissions developed, it became clear that, by his references to “say so”, he was challenging VH’s bona fides and in fact raising something akin to recent invention.
  4. [74]
    Bevan referred me to the following well known propositions of law from Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 and from Scanhill Pty Ltd v Century 21 Australasia Pty Ltd [1993] FCA 618; (1993) 120 ALR 173:
    1. to establish a genuine dispute, the dispute must be bona fide and truly exist in fact; 
    2. the grounds for alleging a genuine dispute must be real and not spurious, hypothetical, illusory, or misconceived;

and

  1. the court must be satisfied that there is a serious question to be tried.
  1. [75]
    As I understood Bevan’s arguments, the challenge to VH’s bona fides was based on JT’s admission that he knew one month into the Agreement that Bevan had been banned, and yet he (on behalf of VH) –
    1. took no steps to, for example, avoid the Agreement;
    2. took no steps to distance himself from Bevan;
    3. did not complain about the misrepresentation until VH was served with the statutory demand;
    4. did not raise the misrepresentation as a reason for VH’s not paying the money owed under the Agreement. 

Further, he admitted the debt as recently as November 2023 and did not raise any dispute about its existence until the statutory demand was served. 

  1. [76]
    Bevan submitted – in effect – that VH’s assertion that it would not have entered into the Agreement had it known about Bevan’s banning was unsupported by the evidence it presented.  The evidence was consistent with VH having no qualms at all about Bevan’s banning and inconsistent with what it was now saying about its attitude to the contract.  In that context, Bevan referred me to John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ASCR 250, in which Young J said, “Something more than mere assertion is required because if that were not so then anyone could merely say it did not owe a debt”.

Applicable principles

  1. [77]
    The general principles applicable to the current application are well known.  They have been stated and gathered in numerous authorities. 
  2. [78]
    An applicant bears the onus of establishing the existence of a genuine dispute on the balance of probabilities: Building Solutions & Waterproofing Pty Ltd v Robin H Wright Pty Ltd [2017] QSC 110 at [16] and its footnote.
  3. [79]
    Many authorities provide formulations for the determination of whether an applicant has established a “genuine dispute”.  But I note the caution in Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 that, while the various formulations in relation to the expression “genuine dispute” may be helpful in determining whether there is a genuine dispute in a particular case, a formulation ought not to become a substitute for the words of the statute. 
  4. [80]
    In J S W Parts Pty Ltd v Dacaro Pty Ltd, VG 3164 of 1997, Finkelstein J observed that there was no authoritative statement dealing with the meaning of the expression “genuine dispute” or that which must be established to show that such a dispute exists in section 459G of the Corporations Act 2001, but his Honour concluded that something more than the mere assertion of a dispute was required (my emphasis):

The difficulty, if there is one, lies with the meaning of the word “genuine”.  It appears to be used in its ordinary meaning but as the Oxford English Dictionary shows the word has a number of meanings.  Perhaps the meanings which are most apposite are “not spurious”, “real”, and “true: see also Greenwood Manor Pty Ltd v Woodlock (1994) 48 FCR 229 at 234 per Northrop J.  Thus, something more than a mere assertion of a dispute by the party resisting the statutory demand is required to satisfy s 459G.  To demonstrate that a dispute is genuine will, in the ordinary case, require evidence to show that the dispute is based on reasonable or substantial grounds.  This conclusion appears to accord with the view of Lockhart J in Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 where (at p 39) his Honour said:

“The notion of a ‘genuine dispute’ … suggests to me that the court must be satisfied that there is a dispute that is not plainly vexatious or frivolous.  It must be satisfied that there is a claim that may have some substance.  On the other hand the court must be careful, because if all an applicant has to do is to assert both a claim and some basis for it, without more, it would mean that in almost every case that the court would set aside statutory demands where application is made to that effect.  Plainly that is not what the legislature intended by introducing this new regime.”

  1. [81]
    Santow J observed in Polaroid Australia Pty Ltd v Minicomp Pty Ltd (1998) 16 ACLC 529 at 533 that “the cases have provided various formulations of the test for genuineness with the suggestion of subtle gradations of stringency.  They have ranged from a test closely allied with that for an interlocutory injunction, namely, whether there is a serious question to be tried, to the least stringent test, namely, that applicable to a party seeking to resist an application for summary judgment”.  After referring to that observation, the Court of Appeal of Western Australia (Martin CJ with whom Owen and Miller JJA agreed) in Createc Pty Ltd v Designs Signs Pty Ltd (2009) 71 ACSR 602, said:

[44] The verbal formulation of the test to be applied which appears to enjoy the greatest judicial support is that of McLelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, where he described the expression “genuine dispute” as connoting “a plausible contention requiring investigation” and equated it to the criterion of “serious question to be tried” which arises on an application for an interlocutory injunction …

[45] It is equally well established that the applicant for an order setting aside a statutory demand must establish that the dispute is bona fide and truly exists in fact, and that the grounds alleging the existence of the dispute are real and not spurious, hypothetical, illusory or misconceived: see Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 at 464 … and Turner Corp [(WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294] at [27].

[46] It is also well established that the only function of the court is to determine whether there is a genuine dispute – the court is not expected to undertake an extended inquiry nor attempt to weigh the merits of the dispute: see Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290 at 295 … The written and oral arguments advanced on behalf of Createc in support of its appeal ignored this basic proposition.  The thrust of that argument was directed to establishing a number of legal propositions which were said to lead to the conclusion that the debt was due and owing.  The approach taken by Createc was not directed to the question of whether there was a dispute, but invited the court to resolve that dispute in its favour.  Many authorities establish that such an approach is fundamentally misconceived.

  1. [82]
    In Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330 (in the context of a broader statement of applicable principles at [47] – [50]), the Court of Appeal of Victoria (Kyrou, Ferguson and Kaye JJA) explained that, while the test of genuine dispute is not demanding, the court must be persuaded that the asserted dispute is real and more than mere bluster (citations omitted, my emphasis):

The terms of s 459H of the Corporations Act and the authorities make clear that, on an application to set aside a statutory demand, the applicant is required only to establish a genuine dispute or offsetting claim.  The applicant is required to evidence the assertions relevant to the alleged dispute or offsetting claim only to the extent necessary for that primary task.  It is not necessary for the applicant to advance a fully evidenced claim.  Therefore, the task faced by an applicant is by no means at all a difficult or demanding one.

In determining such an application, it is not necessary or appropriate for a court to engage in an in-depth examination or determination of the merits of the alleged dispute.  This is because an application alleging a genuine dispute or offsetting claim is akin to one for an interlocutory injunction and requires the applicant to establish that there is a “plausible contention requiring investigation” of the existence of either a dispute as to the debt or an offsetting claim.  It is therefore not helpful to perceive that one party is more likely than the other to succeed or that the eventual state of the account between the parties is more likely to be one result than another.  Further, the determination of the “ultimate question” of the existence of the debt at a substantive hearing should not be compromised.

The court is required to determine whether the dispute or offsetting claim is “genuine”.  It has been said that the criterion of a “genuine” dispute requires that the dispute be bona fide and truly exist in fact and that the grounds for alleging the existence of a dispute be real and not spurious, hypothetical, illusory or misconceived.  It has also been observed that the dispute or offsetting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster, or assertion.  It must also have sufficient factual particularity to exclude the merely fanciful or futile.  A rigorous curial approach is essential to the effective operation of the statutory scheme.

The court is not required to accept uncritically every statement in an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be, as it may not have sufficient prima facie plausibility to merit further investigation as to its truth.  The court is also not required to accept uncritically a patently feeble legal argument or an assertion of facts unsupported by evidence, although this should not be read as suggesting that the applicant must formally or comprehensively evidence the basis of its dispute or offsetting claim.  Except in such extreme cases, the court should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on by the applicant to set aside a statutory demand.

…

  1. [83]
    An applicant is required to establish a “plausible contention requiring investigation” of the existence of a genuine dispute or claim to succeed; and an application would only fail if the contended for dispute was “so devoid of substance that no further investigation is warranted”.  “The resolution of an application should generally not involve the deciding of disputed questions of fact but might require determination of short points of law: Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (2017) 118 ACSR 592 at [47].
  2. [84]
    Although the threshold for establishing a genuine dispute is low, that does not mean that a court will not critically examine the evidence to determine whether the asserted dispute is real and not plainly vexatious or frivolous (see for example Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 12 ACSR 341 at 357).

Recent invention

  1. [85]
    Creata (Aust) Pty Ltd v Faull [2017] NSWCA 300 dealt specifically with the question of “‘[g]enuine’ dispute or recent invention”.  In Creata, the primary judge dismissed an application to set aside a statutory demand.  The debt was said to arise pursuant to a deed.  The debtor argued that the creditor had breached certain clauses of the deed and was therefore not entitled to payment under it.  The primary judge concluded that the construction of the clauses contended for by the debtor (which saw the creditor in breach) was not seriously arguable; and that a genuine dispute had therefore not been established. 
  2. [86]
    On appeal, the Court of Appeal (Barrett AJA with whom Gleeson and White JJA agreed) held that the primary judge ought not to have decided the question of construction of the clauses upon which the dispute turned.  The Court said at [37] that the existence of competing but plausible submissions on the question of construction should have led to a finding that there was a dispute on that question and therefore a dispute as to the existence of the debt the subject of the statutory demand.  The Court also held at [46] that the primary judge was wrong to reject evidence that established a serious question to be tried about whether there had in fact been a breach of the relevant clause of the deed, on at least one of the cogently available constructions of that clause. 
  3. [87]
    Then the Court turned to the question of recent invention.  Barrett AJA said at [47], under the heading “‘Genuine’ dispute or recent invention” (my emphasis):

I have addressed to this point the aspect of the “genuine dispute” concept that concentrates on a showing of serious question to be tried or plausible contention requiring further investigation.  Another aspect, no less important, requires that the serious question or plausible contention not be something merely created or constructed in response to the pressure represented by the service of the statutory demand [Footnote 12: The issue was framed in that way in Ligon 158 Pty Ltd v Huber (2016) 117 ACSR 495; [2016] NSWCA 330 at [10] and [13]].  If the dispute is of that quality and is accordingly not advanced in good faith, it is not “genuine”.     

  1. [88]
    The creditor argued that it should be inferred from the evidence that the dispute raised by the debtor was merely created or constructed in response to the pressure represented by the service of the statutory demand.  After analysing the evidence, Barrett AJA was not satisfied that a charge of recent invention could properly be levelled at the debtor.  Leave to appeal was granted; the appeal was allowed; and the statutory demand was set aside.
  2. [89]
    In Ligon, the primary judge dismissed an application to set aside a statutory demand having found that the plaintiff debtor had not established a genuine dispute about the existence of the debt to which the demand related.  The primary judge found that the characterisation of the amount demanded as a non-refundable contribution to legal expenses, and not a loan, was a recent invention which deprived the dispute of its genuine quality.  An appeal against that decision was allowed.  The Court of Appeal (Barrett AJA, with whom McColl and Meagher JJA agreed) recorded the criteria “by which it is to be judged whether a dispute asserted by a company served with a statutory demand is … a “genuine dispute” as follows (citations and footnotes omitted, my emphasis):

“Genuine dispute” – task of the Court

[8] The primary judge summarised a statement of relevant principles found in the judgment of Black J in Re Wollongong Coal Ltd (2015) 110 ACSR 134 at [9] – [22]).  Black J identified the following matters by reference to the decided cases:

  1.  A dispute is “genuine” if it is not “plainly vexatious or frivolous” or “may have some substance” or “involves a plausible contention requiring investigation”.  A genuine dispute requires that it be bona fide and, to that effect, be premised on sufficiently particularised grounds that are “real and not spurious, hypothetical, illusory or misconceived” and which demonstrate the dispute’s “objective existence “and “prima facie plausibility”.
  1.  The test is governed by principles analogous to those which underpin an application for an interlocutory injunction or summary judgment.  The court must, however, guard against setting the threshold too low for that is liable to defeat the legislative purpose of the section.
  1.  The task faced by a company challenging a statutory demand on the genuine dispute ground is by no means at all a difficult or demanding one.  Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow and the demand will be set aside.  A finding to the contrary could only be arrived at if the contentions advanced are so devoid of substance that no further investigation is warranted.
  1.  The function of the court is merely to determine the existence of a genuine dispute.  While this neither requires nor invites it to weight or assess the merits of the dispute, the court will not exceed its legitimate function by having regard to evidence which bears upon whether the asserted dispute is genuine.   
  1. [90]
    Barrett AJA then re-stated the following points about the forensic approach to be adopted in section 459G proceedings from Britten-Norman Pty Ltd v Analysis and Technology Australia Pty Ltd (2013) 85 NSWLR 601 at [30] – [31] and [39] – [55] (my emphasis):
  1.  While there must be evidence showing a serious question to be tried or an issue deserving of a hearing, that evidence cannot and need not conclusively prove the claim or otherwise be incontrovertible or substantially non-contestable.
  1.  The short time allowed by s 459G(2) for the preparation of the affidavit supporting the claim for an order setting aside the demand militates against the presentation of the fullest and best evidence in some cases.
  1.  In determining whether there is evidence of a genuine dispute regarding the debt, the court is generally not concerned to engage in an enquiry as to the credit of the deponent of the supporting affidavit.  At the same time, it is not required to accept uncritically every statement in the affidavit that is inconsistent with undisputed contemporary documents, is inherently improbable, does not have sufficient prima facie plausibility to merit further investigation or is an assertion of facts unsupported by evidence.
  1.  Inconsistent contemporaneous documents are not necessarily sufficient to defeat the company’s challenge even though they might pose difficulties for the ultimate proof of the case that it would advance if the dispute were litigated. 
  1. [91]
    At [10], Barrett AJA said that the court had to decide “whether the grounds of dispute delineated by the affidavit [were] grounds which, when viewed in the whole of the circumstances emerging from the evidence, indicate[d] a plausible defence propounded in good faith and not one merely constructed in response to the pressure represented by the statutory demand” (my emphasis). 
  2. [92]
    The primary judge in Ligon had rejected as implausible and not warranting of further investigation Ligon’s contention that Ms Huber’s payment to it of $410,000 was not a loan, but a non-refundable contribution towards legal expenses.  The primary judge found that contention incredibly implausible – but observed that that would not suffice to deprive the dispute of the epithet of “genuine”.  From the primary judge’s point of view, added to its implausibility were: (a) the fact that it was originally recorded as a loan in Ligon’s books and only “corrected” after the dispute over repayment arose; and (b) evidence which the primary judge found to be inconsistent with the debtor’s characterisation of the payment. 
  3. [93]
    The appeal was by way of re-hearing.  Barrett AJA’s assessment of the evidence did not cause his Honour to conclude that the contention that the money was non-refundable was so devoid of plausibility that no further investigation was required.  Although it was less likely that it would ultimately be concluded that the money was non-refundable, it was not for the court to weight the merits of the competing contentions.  The contention was not so lacking in substance as to warrant its dismissal without further investigation.  The appeal was allowed, and the statutory demand was set aside.   

Application of principles

  1. [94]
    In deciding this application, I have taken the care required of a court discussed in (for example) Chadwick Industries and Ligon and guarded against setting the “genuine dispute” threshold too low, so as not to defeat the purpose of the legislation.  I have – against the background of the authorities – evaluated the “realness” or “prima facie plausibility” of the applicant’s dispute about the debt including by not uncritically accepting JT’s assertions and by examining the evidence.
  2. [95]
    I proceeded on the basis that I did not need to (nor was it my place to) resolve the factual question whether Bevan misrepresented anything to JT about ASIC’s investigation into his licence before the Agreement was signed. 
  3. [96]
    I simply proceeded on JT’s admission that he knew that Bevan was banned one month after the Agreement was signed in assessing whether the dispute about the existence of the debt now raised by VH was genuine.
  4. [97]
    Although JT admitted that he knew “the truth” about a month after the Agreement was signed (and the shares were transferred, and a new director was installed), nothing in his (or TT’s or VH’s) conduct thereafter is consistent with any intention on VH’s part to claim that it was not therefore obliged to pay $140,000 to Bevan. 
  5. [98]
    JT did not assert that VH made a decision not to pay Bevan because of any misrepresentation.  Indeed, nothing in the applicant’s material explained why VH did not make payment for the shares as it was required to do under the Agreement.  Until this application, it raised no dispute about the debt. 
  6. [99]
    When I asked the applicant’s counsel about the steps his client took to have the Agreement set aside for misrepresentation, he said –

Well, he doesn’t need to because of the facts of this case, which is that the $140,000 hasn’t been paid.  So, the contract, as it presently stands, isn’t one that affects his interests.  So if, for example, he had paid the money and later found out what he did find out, then that’s a scenario on which he might have then, as plaintiff, taken steps to do something about that.  But in circumstances where … the company hasn’t paid the money, the occasion does not arise for him to rely upon the representations, unless it arises defensively, when Mr Bevan says, “You owe me the $140,000, and here’s why.”  It really comes by way of counterclaim …

  1. [100]
    Apart from the fact that this submission by the applicant’s counsel was not grounded in evidence (there was no evidence about why JT took no action once he acquired knowledge of the truth) – the evidence from the applicant was inconsistent with it:
    1. JT did not challenge Bevan’s evidence that he had asked for payment of the $140,000 from VH several times – meaning that “the occasion” had arisen for him to rely upon the alleged misrepresentation “defensively” many times, and VH had not done so.
    2. Of greater significance: VH acknowledged its debt to Bevan as recently as November 2023 in the calculation of the moneys said to be owing by Bevan (or entities associated with him) to JT or TT (or entities associated with them).    
  2. [101]
    Freeburn J observed in McDonald Earthmoving Equipment Pty Ltd v HM Hire Pty Ltd [2023] QSC 148 at [29], that Malec “supports the proposition that the court must seriously question the genuineness of an alleged dispute where there has been an acknowledgment of the debt after the invoices the subject of the statutory demand were received”.  I note that the admissions in Malec were not determinative of the outcome in that case and, with respect, I might not have drawn such support from Malec.  But more to the point, in McDonald Earthmoving, there was evidence from the creditor of the debtor’s promises to pay the debt, the subject of the statutory demand, on several occasions before the demand was served.  His Honour said that if the evidence went no further, then “the conclusion could easily be drawn that any defence of the respondent's claim could be regarded as thin and shadowy and lacking any genuine dispute” ([22]).  However, his Honour was of the view that the evidence showed that the “real” or “more probative” dispute was not limited to disputing the amount claimed – but rather, prosecuting an offset for negligent work by the respondent ([30]). 
  3. [102]
    In that case, the statutory demand was in relation to payment for the refurbishment of the applicant debtor’s truck.  The applicant’s first affidavit: (a) stated that the applicant was shocked at the amount of the invoice; (b) contended that three specified amounts should be deducted from the creditor’s claim (offsets); and (c) provided evidence about the circumstances in which the offsets were said to arise.  In his first and second affidavits, the applicant also contended that the refurbishment had not been properly done, and he detailed the amounts he spent in remediating the allegedly defective work. 
  4. [103]
    His Honour held that the applicant’s sworn evidence about the need for repairs arising out of negligent work done by the creditor could not be lightly dismissed.  While his Honour considered the applicant’s claim to be “not a promising one” and one that faced “hurdles”, it “warranted further investigation at the least” and the respondent’s statutory demand was set aside ([30] – [35]). 
  5. [104]
    By way of contrast, in the case before me, there is little more than a bare assertion that the applicant disputed the debt on the basis of a misrepresentation, upon which it relied, and without which it would not have entered into the Agreement – which was contradicted by the applicant’s conduct and its admission. 
  6. [105]
    In the present case, the applicant’s counsel submitted that the fact that the applicant admitted the debt in November 2023 did not “undermine” its right to rely on the representation to vitiate the contract or raise a genuine dispute.  But he did not explain to me why that would be so.  He submitted, in effect, that the dispute was raised “when push came to shove” – which was, in my view, mighty close to a submission that the dispute was created only in response to the pressure represented by the service of the statutory demand. 
  7. [106]
    The applicant’s counsel also submitted that I would not construe the letter of 7 or 8 November 2023 as containing an admission that the debt was owed.  Instead, I would view it as “posturing”.  But I struggled to see how admitting the debt enhanced VH’s position or amounted to bravado. 
  8. [107]
    In my view, the applicant cannot escape its own evidence or admission. 
  9. [108]
    Assuming everything said by JT to be true – he was aware of Bevan’s misrepresentation in July of 2021.  He did nothing in the years thereafter to set aside the Agreement or distance himself (or VH) from Bevan.  He provided no evidence to explain why VH made no payments in pursuance of the Agreement; or why it declined the offer to sell the shares for $200,000.  Nor could the applicant persuade me that the letter of 7 or 8 November 2023 was anything other than an admission that the debt was due and payable. 
  10. [109]
    In my view, the evidence amounted to a “mere assertion” of a dispute (cf J S W Parts v Dacaro) – and the assertion of the dispute about the existence of the debt was contradicted by VH’s conduct and contemporaneous documents (cf Malec and Britten-Norman).  The applicant’s own case was, in effect, that it kept the prospect of raising a dispute about the debt, based on misrepresentation, “up its sleeve” (my phrase) – to be resorted to only if necessary.  I found that the applicant lacked bona fides in raising it now.  On its own case, it relied upon the existence of the debt it owed under the Agreement as recently as November 2023 to offset the amount it claimed from Bevan for rent and outgoings.  And it was only in response to the pressure of being confronted with the statutory demand that it decided to raise a dispute about its existence.  In my view, that amounts to a “constructed” – not a genuine – dispute.    
  11. [110]
    The application is dismissed. 

Footnotes

[1]  Section 19 of the ASIC Act states:

Notice requiring appearance for examination

  1. (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.
  1. (2)
    ASIC may, by written notice in the prescribed form given to the person, require the person:
  1. (a)
    to give to ASIC all reasonable assistance in connection with the investigation; and
  1. (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).

  1. (3)
    A notice given under subsection (2) must:
  1. (a)
    state the general nature of the matter referred to in subsection (1); and
  1. (b)
    set out the effect of subsection 23(1) and section 68.

[2]  Clause 3 of the Agreement, “Payment by Seller”, deals with the consequences of the cancellation of the “AFS Licence” on or before the Third Payment Date, if the cancellation resulted or arose out of “a Specified Circumstance”.

The Dictionary defines the AFS Licence as the licence granted to Trade Winds Capital Markets.

Paragraph 3 of the Agreement states:

  1. (a)
    If the AFS Licence is cancelled on or before the Third Payment Date, and the Cancellation results or arises out of a Specified Circumstance, then the Seller must pay to the Buyer the following amounts, as applicable … [essentially, the purchase price].
  1. (b)
    Notwithstanding the requirement for the Seller to pay one or more amounts to the Buyer … the Buyer will retain title to, property in and risk in relation to the Shares.

The Dictionary defines “cancellation” as follows –

The cancellation of the AFS Licence by ASIC pursuant to sections 915B or 915C of the Corporations Act 2001, other than the cancellation of the AFS Licence following the lodgement of an application or request for ASIC to do so by the Company.

By clause 4.6(b) of the Agreement –

The Buyer acknowledges the Seller or the Company may do any of the following … prior to Completion, and by entering into this Agreement, provides its consent to any such thing:

  1. (i)
    Entering into or terminating any agreement, deed, arrangement, or other thing that is binding on the Company (including after Completion), or alter any term of any such thing, including in relation to the arrangements between the Company and any Current AR.
  1. (ii)
    …
  1. (iii)
    …
  1. (iv)
    …
  1. (v)
    …

A “Current AR” was defined in Schedule 1 as “A person that was authorised by the Company to provide financial services on its behalf pursuant to section 916A or 916B of the Corporations Act 2001 prior to Completion, including the following …”

“The Following” was a list of individuals and companies.  Bevan was not on the list.  Trade Wind Wealth Management Pty Ltd (Wealth Management) was.  Bevan held shares in Wealth Management.

“Special Circumstances”, for the purposes of clause 3, included (a) the cancellation of the AFS Licence, as a direct result of an act or omission of a “Current AR”; or (b) as a direct result of an act or omission by the Company or the Seller that occurred prior to Completion.

[3] CORPORATIONS ACT 2001 – SECT 459G

Company may apply

  1. (1)
    A company may apply to the Court for an order setting aside a statutory demand served on the company.
  1. (2)
    An application may only be made within the statutory period after the demand is so served.
  1. (3)
    An application is made in accordance with this section only if, within that period:
  1. (a)
    an affidavit supporting the application is filed with the Court; and
  1. (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 459H

Determination of application where there is a dispute or offsetting claim

  1. (1)
    This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:
  1. (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;
  1. (b)
    that the company has an offsetting claim.
  1. (2)
    The Court must calculate the substantiated amount of the demand in accordance with the formula … [Formula omitted]
  1. (3)
    If the substantiated amount is less than the statutory minimum, the Court must, by order, set aside the demand.
  1. (4)
    If the substantiated amount is at least as great as the statutory minimum, the Court may make an order:
  1. (a)
    varying the demand as specified in the order; and
  1. (b)
    declaring the demand to have had effect, as so varied, as from when the demand was served on the company.
  1. (5)
    In this section:

“admitted amount”, in relation to a debt, means:

  1. (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
  1. (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
  1. (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.

  1. (6)
    This section has effect subject to section 459J.

[4] On 12 July 2024, Robert White, an auditor, advised JT and others by email that “the price of $140,000 was considerably more than what the AFSL acquired was worth” and offered to assist in determining its reasonable value.

Close

Editorial Notes

  • Published Case Name:

    Varandra Holdings Pty Ltd v Bevan

  • Shortened Case Name:

    Varandra Holdings Pty Ltd v Bevan

  • MNC:

    [2024] QSC 203

  • Court:

    QSC

  • Judge(s):

    Ryan J

  • Date:

    05 Sep 2024

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (2017) 118 ACSR 592
2 citations
Jump To
Cite 1 - (2017) 118 ACSR 592
Cite 2 - (2017) 118 ACSR 592
Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd (2013) 85 NSWLR 601
2 citations
Jump To
Cite 1 - (2013) 85 NSWLR 601
Cite 2 - (2013) 85 NSWLR 601
Building Solutions and Waterproofing Pty Ltd v Robin H Wright Pty Ltd [2017] QSC 110
2 citations
Jump To
Cite 1 - [2017] QSC 110
Cite 2 - [2017] QSC 110
Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37
2 citations
Jump To
Cite 1 - (1994) 13 ACSR 37
Cite 2 - (1994) 13 ACSR 37
Creata (Aust) Pty Ltd v Faull [2017] NSWCA 300
2 citations
Jump To
Cite 1 - [2017] NSWCA 300
Cite 2 - [2017] NSWCA 300
Createc Pty Ltd v Design Signs Pty Ltd (2009) 71 ACSR 602
2 citations
Jump To
Cite 1 - (2009) 71 ACSR 602
Cite 2 - (2009) 71 ACSR 602
Eyota Ply Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
3 citations
Jump To
Cite 1 - (1994) 12 ACSR 785
Cite 2 - (1994) 12 ACSR 785
Cite 3 - (1994) 12 ACSR 785
Greenwood Manor Pty Ltd v Woodlock (1994) 48 FCR 229
1 citation
Jump To
Cite 1 - (1994) 48 FCR 229
Ligon 158 Pty Ltd v Huber (2016) 117 ACSR 495
2 citations
Jump To
Cite 1 - (2016) 117 ACSR 495
Cite 2 - (2016) 117 ACSR 495
Ligon 158 Pty Ltd v Huber [2016] NSWCA 330
1 citation
Jump To
Cite 1 - [2016] NSWCA 330
Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330
2 citations
Jump To
Cite 1 - [2015] VSCA 330
Cite 2 - [2015] VSCA 330
McDonald Earthmoving Equipment Pty Ltd v HM Hire Pty Ltd [2023] QSC 148
2 citations
Jump To
Cite 1 - [2023] QSC 148
Cite 2 - [2023] QSC 148
Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290
1 citation
Jump To
Cite 1 - [1994] 2 VR 290
Polaroid Australia Pty Ltd v Minicomp Pty Ltd (1998) 16 ACLC 529
2 citations
Jump To
Cite 1 - (1998) 16 ACLC 529
Cite 2 - (1998) 16 ACLC 529
Re Wollongong Coal Ltd (2015) 110 ACSR 134
1 citation
Jump To
Cite 1 - (2015) 110 ACSR 134
Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 12 ACSR 341
1 citation
Jump To
Cite 1 - (1993) 12 ACSR 341
Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 120 ALR 173
2 citations
Jump To
Cite 1 - (1993) 120 ALR 173
Cite 2 - (1993) 120 ALR 173
Scanhill Pty Ltd v Century 21 Australasia Pty Ltd [1993] FCA 618
2 citations
Jump To
Cite 1 - [1993] FCA 618
Cite 2 - [1993] FCA 618
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452
3 citations
Jump To
Cite 1 - (1997) 76 FCR 452
Cite 2 - (1997) 76 FCR 452
Cite 3 - (1997) 76 FCR 452
Turner Corp (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294
1 citation
Jump To
Cite 1 - [1999] WASCA 294

Cases Citing

Case NameFull CitationFrequency
Varandra Holdings Pty Ltd v Bevan (No 2) [2024] QSC 231 2 citations
1

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