Damian Clothier KC And Jonathan Hohl appeared for the appellant, instructed by Corrs Chambers Westgarth.
The appellant appealed against a decision setting aside its statutory demand for unpaid fees under a 2024 deed between it and the respondent. At first instance, the primary judge found that there was a genuine dispute as to the existence of the debt, for the purpose of s 459H of the Corporations Act 2001 (Cth), because there was a plausible contention that a director of the respondent, appointed to the board as the nominee of the appellant’s parent company, had breached her fiduciary duty to the respondent. The potential breach was found to arise from her voting, at a meeting of the respondent’s board in 2023, for the respondent to enter into a suite of agreements to resolve a dispute with the appellant’s parent company. Certain of those agreements were later restated, assigned and novated, at the respondent’s request, by the 2024 deed. The primary judge also found that the parties’ omission to address the alleged breach of fiduciary duty in accordance with a contractual dispute resolution procedure in the 2024 deed meant that there was some ‘other reason’, within the meaning of s 459J of the Corporations Act 2001 (Cth), why the statutory demand should be set aside.
Brown JA, with Mullins P and Bradley JA agreeing, allowed the appeal and set aside the primary judge’s orders. Her Honour found that, whatever might have occurred at the 2023 board meeting, there was no arguable breach of fiduciary duty affecting the 2024 deed from which the appellant’s statutory demand arose. In any event, there was no possibility of rescinding the 2024 deed because there was no sufficient evidence that the appellant knew of any alleged breach of fiduciary duty. Regardless, the respondent had not attempted to rescind the 2024 deed at any time prior to the 21-day statutory period in s 459G of the Corporations Act 2001 (Cth). For any of those three reasons, there could be no genuine dispute. Since there was no genuine dispute, there was also nothing to be resolved under the contractual dispute resolution procedure — so, there was no ‘other reason’ to set aside the statutory demand.
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