Corporate Law

GoConnect Ltd v Sino Strategic International Ltd (In Liq) [2016] VSCA 315

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Facts

  • By way of statutory demand, Sino Strategic International Ltd (“Sino“) demanded that GoConnect Ltd (“GoConnect“) pay the sum of $1,589,316.24 as a debt owed to Sino.
  • The debt comprised a loan of $962,668.77 plus interest of $626,647.47.
  • GoConnect failed to pay the debt.  It brought an application to set aside the statutory demand. Sino opposed the application. An applicant must file its application to set aside and supporting evidence within 21 days from service of the statutory demand.
  • GoConnect’s application to set the statutory demand aside was accompanied by a supporting affidavit.  The affidavit stated that the loan facility agreement pursuant to which the moneys were advanced contained a provision that reserved a discretion for GoConnect to choose when to pay. The loan was, therefore, not payable on demand.
  • GoConnect also attempted to file further supplementary affidavit material after the 21-day time limit expired. This supplementary material sought to raise a new ground of estoppel.
  • The Associate Justice refused to admit the supplementary affidavits into evidence and dismissed the application to set aside the statutory demand.
  • GoConnect appealed to the Victorian Supreme Court of Appeal.

Issues

  • Should GoConnect have been permitted to file the supplementary affidavit material?

Held

  • The Victorian Supreme Court of Appeal upheld the Supreme Court’s judgment.
  • Affidavits filed outside the 21-day period which raise a new ground to set aside a statutory demand (as opposed to an affidavit which expands on grounds in an earlier affidavit) cannot be relied upon to set aside a statutory demand.
  • The supporting affidavit explicitly confined the basis of the genuine dispute to the terms of the loan facility agreement, not oral terms and estoppel.

Quotes

“In Malec, the Court set out what an applicant must establish pursuant to s 459H of the Corporations Act. The Court said that, on an application to set aside a statutory demand, the applicant is required only to establish a genuine dispute or offsetting claim. 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. 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. The criterion of a ‘genuine’ dispute requires that the dispute be bona fide and truly exist in fact. The grounds for alleging the existence of a dispute must be real and not spurious, hypothetical, illusory or misconceived. They must have sufficient factual particularity to exclude the merely fanciful or futile. A court is not required to accept uncritically statements that are improbable or inconsistent with contemporary documents. Generally speaking, the court should not embark on an inquiry as to the credit of witnesses. Finally, the determination of the ‘ultimate question’ of the existence of the debt at a substantive hearing should not be compromised.”

Full Text

The full text is available here: https://jade.io/j/?a=outline&id=508827


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