Arris Investments Pty Ltd v Fahd [2013] NSWSC 1462 | Case summary

Judgment 1By Originating Process dated 2 July 2013, the Plaintiff, Vivo International Corporation Pty Limited ("Vivo") seeks orders under s 459H or alternatively s 459J of the Corporations Act 2001 (Cth) seeking to set aside a statutory demand dated 12 June 2013 ("Demand") served by the Defendant, E-Cycle Solutions Pty Limited ("E-Cycle"). 2The Demand claimed the amount of $235,334.25 being the amount of a debt described in the schedule and was supported by an affidavit of Ramanzan Gunes dated 12 June 2013 verifying that the amount was due and payable by Vivo. The schedule in turn described the debt as $235,334.25 "[p]ursuant to the annexed statement of account for services provided." The attached statement of account dated 31 May 2013 referred to twelve invoices issued between 31 July 2012 and 31 May 2013. Mr Gunes' supporting affidavit indicated that he was a director of E-Cycle; that he had inspected E-Cycle's business records in relation to Vivo and was able to state that the debt referred to in the Demand was now due and payable to E-Cycle by Vivo for services rendered and not paid for; and he provided the necessary confirmations that the debt claimed was due and payable and that there was no genuine dispute about the existence or amount of the debt. Whether a genuine dispute as to the debt is established 3Vivo contends that the Demand should be set aside under s 459H(1)(a) of the Corporations Act 2001 (Cth), which provides that a creditor's statutory demand may be set aside when the Court is satisfied that there is a genuine dispute about the existence or amount to which that demand relates. There was no substantial controversy as to the content of the test for a "genuine dispute" used in that section in this matter. That test has been variously formulated as requiring that the dispute is not "plainly vexatious or frivolous" or "may have some substance" or involves "a plausible contention requiring investigation" and is similar to that which would apply in an application for an interlocutory injunction or a summary judgment: Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290; (1993) 11 ACSR 362; Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787; Re UGL Process Solutions Pty Ltd [2012] NSWSC 1256 at [6]. 4Mr Shearer, who appears for Vivo, correctly points out that a genuine dispute as to the existence of the debt will be established if there is a plausible contention requiring investigation that the company is not indebted as alleged, and that determining whether there is a genuine dispute does not involve determining the merits of, or resolving, that dispute. He refers to McMurdo P's observation, in WEC Pty Ltd v Cypriot Community of Queensland Inc [2002] QCA 506 at [11], that the test requires "something beyond implausible assertion" in respect of the claim. He also refers to the observation of Barrett J in Roadships Logistics Ltd v Tree [2007] NSWSC 1084; (2007) 64 ACSR 671 at [24] that: "Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The Court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor on rational grounds that indicates an arguable case on the part of the company it must find that a genuine dispute exists even where any case, even apparently available to be advanced against the company seems stronger." 5Mr Mirzai, who appears for E-Cycle, in turn refers to the observations of the Full Court of the Federal Court in Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452 at 464; (1997) 24 ACSR 353 that a "genuine dispute" must be bona fide and truly exist in fact, and the grounds for that dispute must be real and not spurious, hypothetical, illusory or misconceived. 6The alleged debt arises from a claim by E-Cycle under an Agreement ("Agreement") to provide "end of life television recycling services" in respect of a statutory scheme for the recycling of televisions. Vivo contends that a genuine dispute exists as to whether E-Cycle has any right to payment under the terms of that Agreement, by reason of a dispute as to whether the televisions were being recycled as required or were being instead sent to landfill. Vivo relies on the affidavit of a former director, Mr Fabio Grassia, dated 2 July 2013 in support of its application to set aside the Demand. Mr Grassia's affidavit annexes a copy of the Agreement and identifies an issue as to whether Vivo, or another entity with a similar name, was party to the relevant agreement. That issue was not pressed in the application before me. Mr Grassia's affidavit also identifies an issue as to whether E-Cycle had in fact been providing recycling services in accordance with the Agreement or had instead been disposing of televisions in landfill. 7In my view, the issue as to whether E-Cycle was in fact providing the relevant recycling services gives rise to a genuine dispute as to the debt, having regard to the terms of the Agreement. Clause 4.1(a) of the Agreement provides that Vivo will pay the "Service Fees" (as defined) for "the Services" (as defined). The term "Services" is in turn defined as the "Collection Services" and the "Recycling Services" and the term "Service Fees" is defined as the "Collection and Recycling Fees". The term "Collection Services" means the provision of Collection Services in respect of Product (namely televisions and computers) in accordance with the PS Rules (as defined) and the term "Recycling Services" means the provision of recycling services in respect of Product in accordance with the PS Rules. The term "Collection Fees" means the fees for the "Collection Services" set out in Part 2 of Schedule 1, payable by Vivo to E-Cycle "for the provision of the Collection Services" and the term "Recycling Fees" means fees set out in Part 3 of Schedule 1 payable by Vivo to E-Cycle for the provision of the "Recycling Services". The term "PS Rules" means the "PS Act and the PS Regulations", which in turn refers to the Product Stewardship Act 2011 (Cth) ("PS Act") and the Product Stewardship (Television and Computers) Regulations 2011 (Cth) ("PS Regulations"). 8Clause 4.1(b) of the Agreement in turn requires Vivo to "pay for the Services in accordance with the schedule set out in Part 2 of Schedule 1". That schedule refers to the "Collection and Recycling fee" as being "$1.00 ex-GST per kilogram of Product collected and recycled. The Collection and Recycling Fee is fixed for one year and includes administration and marketing". The reference to "Product collected and recycled" in that schedule at least arguably contemplates that payment will be made by reference to the amount of product that is in fact collected and recycled. Clause 4.2 provides for Vivo to provide an order relating to the following Financial Year during each Financial Year of the Term, which must provide specified information upon which an Order for Services will be based. Clause 5.3 provides for a process of reconciliation with Reported Data (as defined) that is later to be provided by Vivo to E-Cycle. 9Mr Shearer, who appears for Vivo, points out that the PS Act has an object of reducing the impact that certain products have on the environment, by encouraging or requiring, inter alia, importers to take responsibility for those products, including taking action that relates to ensuring that products and waste from them are reused and recycled in an environmentally sound way (PS Act s 4(1)-(2)). Part 3 of the PS Act provides a scheme for "co-regulatory products stewardship", which requires a "liable party" in relation to a class of products (including Vivo) to be a member of an approved co-regulatory arrangement in relation to that class of products (PS Act s 18) and allows the "administrator" of a co-regulatory arrangement (relevantly, E-Cycle) to apply for the Minister to approve that arrangement in relation to a class of products. "Recycling targets" are in turn determined under the PS Regulations. The "administrator" of an approved co-regulatory arrangement is obliged to take all reasonable steps to ensure that the arrangement achieves the prescribed outcomes, including the recycling targets (PS Act s 23) and has obligations of record-keeping and reporting (PS Act s 24, PS Regulations Part 5). The concept of "recycling" is relevantly defined in the PS Regulations by reference to the initial processing of the relevant product for the purpose of recovering usable materials including disassembly or shredding of the product. 10The factual basis of the genuine dispute as to the obligation to make payment under the Agreement is set out in paragraphs 16-20 of Mr Grassia's initial affidavit, which indicates that he was made aware, in April 2013, that (or at least that it was alleged that) E-Cycle "had not been providing end of life television recycling services as it held out under the Agreement but rather had been dumping televisions in landfill". Mr Grassia's initial affidavit identifies the source for that information, being officers of other recyclers and officers of the Commonwealth Department of Sustainability and Environment, the government department responsible for the administration of the relevant scheme. Mr Grassia's evidence is that Vivo's solicitors informed E-Cycle's solicitors of the allegations on 27 May 2013. By letter dated 28 May 2013, E-Cycle's solicitors gave notice of default by non-payment under clause 12 of the Agreement and also invoked the dispute resolution procedure under clause 13 of that Agreement in respect of the allegation that E-Cycle was not properly disposing of the relevant televisions. 11In a further affidavit dated 26 August 2013, Mr Grassia provides further detail of a conversation with a director of another recycling provider and refers to a meeting with representatives of the Commonwealth Department of Sustainability and Environment on 13 June 2013 where, he claims, he was advised that the Department had met with E-Cycle in May 2013 and it had confirmed that televisions had been placed in landfill as Vivo alleged. There is some further support for that allegation in the fact that the party which is alleged to have placed the relevant televisions in landfill is also shown as E-Cycle's preferred recycler in documents produced on subpoena. 12E-Cycle in turn relies on affidavits of its General Manager, Mr Anthony Wheeler dated 22 July 2013 and 18 September 2013. Mr Wheeler sets out the history of dealings between Vivo and E-Cycle. He does not address the substance of the allegation in respect of whether televisions had been recycled, or placed in landfill, other than to note that he had instructed E-Cycle's solicitors to convey to Vivo's solicitors that the allegation "is denied". By a further affidavit dated 13 September 2013, Mr Wheeler refers to reports to the Department of Sustainability and Environment specifying the volume of material taken to landfill and gives an example of one report for the second quarter of the 2013 financial year showing that 205 tonnes of televisions were sent to landfill in the quarter and also identifying the weight exported and material sent for processing into usable material. The Court's role, in an application of this kind, is not to determine the merits of the claim, as distinct from whether it is genuinely arguable; and, in any event, it is difficult to draw any inference from that quarterly report, since the total of the weight exported, sent for processing and sent to landfill appears to fall significantly short of the total weight collected. Mr Wheeler provides no further explanation of the report or its significance. 13In his further affidavit, Mr Wheeler also states that: "To date, we have not had any issues or problems with the Department [of Sustainability and Environment] with regards to the quantity of material sent to landfill or any of our other obligations under the Regulations." This is not, in terms, a statement that E-Cycle is complying with its obligations, and there is plainly at least a potential inconsistency between Mr Grassia's evidence of what he was told by the Department in mid-June 2013 and Mr Wheeler's statement that there were no "issues or problems" with the Department. Again, it is not necessary or appropriate to reach any final determination as to that matter in an application of this kind. 14Vivo also relies on the fact that E-Cycle has not put on primary evidence as to its recycling practices and its treatment of televisions and submits that the Court may weigh the relevant evidence according to the proof which it was in E-Cycle's power to produce, in accordance with the principle in Blatch v Archer (1774) 1 Cowp 63; (1774) 98 ER 969, or may alternatively draw an inference from Mr Wheeler's failure to give evidence of that matter in accordance with the principle in Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418. I do not consider it necessary to address these submissions, since I consider that this question may be determined on the basis of the terms of the Agreement and the matters raised in Mr Grassia's affidavit evidence, without needing to draw any further inference from matters not addressed in Mr Wheeler's affidavit evidence. 15In response, Mr Mirzai submitted that it was not open to Vivo to rely on evidence relating to its claim that recycling services had not been provided in support of an application to set aside the Demand under s 459H of the Corporations Act where it also relied on that evidence to seek to set aside the Demand under s 459J of the Corporations Act. Mr Mirzai referred to NT Resorts Pty Ltd v Deputy Commissioner of Taxation (1998) 153 ALR 359 at 364, which he contended was authority that "[e]vidence in support of one ground cannot be used as evidence in support of another ground." It seems to me that Finkelstein J's observations in that case are not authority for that proposition, but for the narrower proposition that the existence of a genuine dispute that would support setting aside a creditor's statutory demand under s 459H(1)(a) of the Corporations Act is not, in itself, a separate basis for setting aside the demand for some other reason under s 459J(1)(b) of the Corporations Act. That proposition does not establish that the same evidence cannot be relevant to applications, brought, in the alternative, under both grounds. 16Mr Mirzai also submits that a genuine dispute under s 459H(1)(a) must relate to the debt claimed by E-Cycle and not to the conduct of E-Cycle's business generally. While I accept that proposition, it does not assist E-Cycle where, in the present case, its entitlement to payment under the terms of the Agreement at least arguably depends upon its having provided the relevant recycling services to Vivo. E-Cycle also contends that the evidence of Mr Grassia is not sufficient to establish that televisions were not being recycled by E-Cycle in accordance with the Agreement, where there is no evidence in support of that assertion outside the information which Mr Grassia says was provided to him; and E-Cycle is required to report to the Department of Sustainability and Environment and has done so, including (in the one report in evidence) as to weights sent to landfill. I accept that Vivo has not established that, in fact, E-Cycle had not provided the relevant services so as to be entitled to payment under the Agreement; however, the question before me is not whether it has established that matter in fact, but whether it has raised a genuine dispute as to that matter, and I consider that such a genuine dispute has been raised. 17E-Cycle also contends that "there is evidence before the Court that [E-Cycle] has acted in accordance with the Agreement". That submission referred to a conclusory statement, made in Mr Wheeler's affidavit, that E-Cycle had, to the best of his knowledge, always been in compliance with the PS Regulations "with regards to what material goes to landfill and in all other respects". I rejected that statement, on the basis of its form, so it is not in evidence. In any event, even if a statement of that kind had been in evidence, the Court is not required or permitted to determine the merits of the dispute, as distinct from the question whether a genuine dispute exists, in a matter of this kind. E-Cycle also contends that the dispute raised by Vivo is neither "genuine nor bona fide". It appears that the dispute was raised after a long period in which Vivo had not paid the invoices rendered by E-Cycle to it. However, the question for the Court is not whether Vivo is well-intentioned in raising a dispute as to the amount claimed against it, but whether that dispute is a genuine dispute in the relevant sense. 18In summary, there seems to me to be a genuinely arguable claim that the effect of the provisions set out in paragraphs 7-8 above is that the Vivo's obligation to pay the Service Fees, being the Collection Fees and the Recycling Fees (as defined), depended on E-Cycle's provision of the Collection Services and the Recycling Services (as defined) which in turn meant the provision of collection services and recycling services in accordance with the PS Rules. It would follow that there would be a genuinely arguable claim that Vivo was not obliged, under the terms of the Agreement, to pay the Collection Fees, the Recycling Fees or the Service Fees (as defined), if it was genuinely arguable that E-Cycle had not provided the Services in accordance with the PS Rules. It seems to me that Mr Grassia's evidence raises a genuinely arguable claim that E-Cycle did not do so, so as to impeach its entitlement to payment under the Agreement. I consider that a genuine dispute as to the amount claimed in the Demand is established on that basis. 19Mr Mirzai also draws attention to the fact that Mr Grassia's initial affidavit sought to "cover the field" in respect of available grounds to set aside the Demand. While there is force in that submission, that affidavit nonetheless identified specific areas of dispute, including the issue as to the provision of recycling services, the claim for $18,700 as an offsetting claim, and the breach of the dispute resolution clause in clause 13 of the Agreement, in a manner that is sufficient to raise those issues for the purposes of the principle in Graywinter Properties v Gas and Fuel Corp Superannuation Fund (1996) 70 FCR 452; (1996) 21 ACSR 581 at 587. That principle has effect that, before a ground of opposition may be relied upon to set aside a creditor's statutory demand, that ground must be identified expressly or by reasonably available inference in the affidavit supporting the application to set aside the demand filed within the 21 day period specified in the s 459G of the Corporations Act: Hopetoun Kembla Investments Pty Ltd v JPR Legal Pty Ltd [2011] NSWSC 1343; (2011) 87 ACSR 1 at [36]; Infratel Networks Pty Ltd v Gundry's Telco and Rigging Pty Ltd [2012] NSWCA 365; (2012) 92 ACSR 27 at [27]ff. Vivo's further construction point 20In submissions, Mr Shearer advanced a further argument that the amount invoiced by E-Cycle was calculated by applying a "percentage target" specified in the PS Regulations to the weight of product imported by Vivo and multiplied by the rate of $1.00 per kilogram specified in Schedule 2 Part 2 to the Agreement, rather than on the weight of televisions collected and recycled by E-Cycle. Mr Grassia's initial affidavit annexed a copy of the Agreement but did not otherwise refer to any suggestion that the amount of the recycling fee was not properly calculated by reference to the relevant formula, other than by reason of the fact that televisions had not in fact been recycled but sent to landfill. Although it is not necessary to the construction point, Vivo contends that that approach was taken notwithstanding that the third quarterly report referred to in Mr Wheeler's affidavit showed a significant shortfall against E-Cycle's recycling target. 21Mr Mirzai responds that this matter was not raised by Mr Grassia's original affidavit and is not open to E-Cycle under the principle in Graywinter above. It is not strictly necessary to determine the question whether Mr Grassia's affidavit sufficiently raised the construction issue noted above, since I have held above that a genuine dispute in respect of the Demand is established on other grounds. If it were necessary to do so, I would have been inclined to hold, consistent with the approach adopted by the Court of Appeal in NA Investment Holdings Pty Ltd v Perpetual Nominees Ltd [2010] NSWCA 210; (2010) 79 ACSR 544, that a dispute as to the application of that formula was sufficiently raised, for the purpose of the Graywinter principle, by annexing the copy of the Agreement to Mr Grassia's affidavit, where that dispute essentially raises a matter of construction to be determined within the four corners of the Agreement that had been put in evidence by that affidavit. I would also have held that the question of construction raised gives rise to a genuine dispute, in the sense of a serious question warranting further investigation as to whether the debt claimed is due and payable. Offsetting claim 22Vivo also contends that it has an offsetting claim in the amount of $18,700 for the purposes of s 459H(1)(b) of the Corporations Act. Mr Shearer formulates the relevant offsetting claim as follows: "An arrangement was entered into with E-Cycle [by the corresponding party who was a director of E-Cycle] for Vivo to supply televisions and the amount of the invoice to be off-set against amounts payable for recycling services. The relevant amount was $18,700." 23An "offsetting claim" for the purposes of s 459H(1)(b) of the Act is the amount of a claim or claims that a company has against the person who served the statutory demand by way of counter claim, set-off or cross demand, whether or not that amount arises out of the same transaction or circumstances as the debt to which the demand relates: s 459H(5). A company can establish an "offsetting claim" if there is a "serious question to be tried" or "an issue deserving of a hearing" as to whether the company has such a claim against the creditor and that claim is made in good faith and is arguable and not frivolous or vexatious: Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 47 FCR 451; 12 ACSR 341 at 356-7. The amount of an offsetting claim is the amount claimed by a party in good faith, so long as that claim as so quantified is not fictitious or merely colourable: Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No 2) (1994) 13 ACSR 787 at 790. If the Court is satisfied that the company has an offsetting claim, then the Court is required to calculate the "substantiated amount" of the demand by deducting any offsetting claim from the admitted amount of the debt: s 459H(2). 24Mr Grassia's initial affidavit refers to Vivo's withholding an amount of $18,700 in "alleged part payment of the alleged debt", although it might be noted that it had also not paid the balance of the alleged debt as to which no such claim was advanced. In his further affidavit, Mr Grassia provides further information as to an alleged arrangement with a director of E-Cycle for the purchase of televisions that is said to found the offsetting claim, and annexes a copy of email correspondence concerning that arrangement and of an invoice for the televisions. The attached email correspondence contemplates that the amounts payable for the supply of the televisions will be applied against the "oldest invoices for e-waste". The document described as an invoice appears to take the form of a purchase order by another entity, Romball Pty Limited, to Vivo, although that is not inconsistent with the asserted arrangement since Romball was the purchaser contemplated in the exchange of emails. E-Cycle relies in response on Mr Wheeler's first affidavit, which indicates that he is not aware of the receipt of an invoice or claim for the amount of $18,700 and neither confirms nor denies the claim in respect of that amount. Mr Wheeler's second affidavit does not further address the question of the alleged offsetting claim. 25E-Cycle contends that an assertion of a genuine dispute excludes the ability to argue an offsetting claim in relation to the same debt, also relying on NT Resorts Pty Ltd v Deputy Commissioner of Taxation for that proposition. I do not accept that submission, although I do accept that, once a genuine dispute is established, no question of an offsetting claim arises. That is the position in the present case. Had I not found that a genuine dispute was established, I would have found that an offsetting claim in the amount of $18,700 was established. Whether some other reason to set aside the Demand exists under s 459J(1)(b) of the Corporations Act 26Vivo also contends that, in the alternative, some other reason to set aside the Demand exists under s 459J of the Corporations Act by reason of non-compliance by E-Cycle with a dispute resolution procedure specified in the Agreement. Mr Grassia's initial affidavit refers to clause 13 of the Agreement which provides for a dispute notice to be given in respect of a dispute arising between the parties relating to or arising out of the provision of the "Services"; a specified period of negotiation, following which the dispute must be referred to a mediator, agreed between the parties or nominated at the request of a party by the President of the Law Institute of Victoria; and the party may take legal proceedings to resolve the dispute only after the mediation has failed within a specified period after referral. As I noted above, E-Cycle had invoked this procedure on 28 May 2013 in respect of the issue as to the manner of disposal of the televisions. Mr Grassia also refers to correspondence between the parties seeking to reach agreement as to a suitable mediator, or otherwise for the appointment of a mediator by the President of the Law Institute of Victoria, which was not brought to a conclusion. Mr Grassia contends that Vivo is ready, willing and able to attend mediation with E-Cycle as contemplated by the dispute resolution clause in the Agreement. 27Mr Wheeler's first affidavit indicates that that E-Cycle's solicitors have offered to meet with Vivo's solicitors with or without a mediator to resolve the matter, although that offer does not appear to be in strict compliance with the terms of the mediation provisions in the Agreement. By a further affidavit dated 13 September 2013, Mr Wheeler refers to continuing correspondence between E-Cycle's solicitors and Vivo's solicitors seeking to organise, without success, a meeting between the respective parties. 28Vivo contends that, notwithstanding the further correspondence between the parties, the obligation to refer the dispute to mediation under clause 13.2(a) of the Agreement was not complied with. Vivo contends that the reason for compliance with the dispute resolution mechanism is greater in this case, where the legislative regime for a co-regulatory arrangement under the PS Act and PS Regulations contemplates that a dispute resolution procedure is in place; this is a prerequisite to approval of such a co-regulatory arrangement; and the business plan submitted by E-Cycle to the Department of Environment in turn referred to the existence and structure of that dispute resolution procedure. 29Mr Shearer draws attention to National Telecoms Group Ltd v Bulldogs Rugby League Club [2003] NSWSC 654, where a statutory demand was issued by a creditor although the contract with the debtor contained a mediation clause. Gzell J there held that the question whether proceedings would have been stayed, if they had been commenced in the ordinary way, gave rise to a genuine dispute for the purposes of s 459H(1) of the Corporations Act as to the debt claimed. In Arris Investments Pty Ltd v Fahd [2010] NSWSC 309, Palmer J noted that such a clause would not necessarily preclude the service of a statutory demand, but nonetheless treated non-compliance with it as giving rise to "some other reason" to set aside a statutory demand under s 459J(1)(b) of the Act. 30In Re 2 Roslyn Street Pty Ltd - 2 Roslyn Street Pty Ltd v Leisure Inn Hospitality Management Pty Ltd [2011] NSWSC 512, Ward J considered a contention that a creditor's statutory demand should be set aside when it had been issued when the creditor was on notice of a genuine dispute or offsetting claim and in breach of a dispute resolution procedure in the relevant management agreement. Her Honour referred to Arris Investments Pty Ltd v Fahd above and to National Telecoms Group Ltd v Bulldogs Rugby League Club above and noted that a question of compliance with the dispute resolution procedure is unlikely to arise in isolation of a question whether there is a genuine dispute so that the statutory demand should be set aside; and doubted whether a failure to mediate a dispute as to the amounts owing or the present obligation to pay them would be sufficiently independent of the genuine dispute ground so as to fall within s 459J(1)(b) of the Act. As I understand her Honour's reasoning, it is that it is unlikely to be necessary to have regard to that ground, where the existence of a genuine dispute so as to enliven the obligation to mediate would already have provided a basis to set aside the Demand under s 459H(1) of the Act. There seems to me to be substantial force in that reasoning. 31Mr Mirzai responds that the object of the statutory demand process is to identify insolvency or potential insolvency, and to that extent it goes beyond the mere resolution of private rights between the parties. I accept that proposition, but it does not seem to me to exclude the possibility that, in an appropriate case, a failure to comply with a dispute resolution procedure may either give rise to a genuine dispute as to the debt or some other reason to set aside a statutory demand under s 459J(1)(b) of the Act. Mr Mirzai also draws attention, with some force, to the fact that Vivo itself has either not cooperated in, or at least has not itself progressed, the mediation contemplated by clause 13 of the Agreement. 32It does not seem to me that the service of the Demand gave rise to a direct breach of clause 13 of the Agreement, since it would not amount to the commencement of litigation: Reinsurance Australia Corp v Odyssey Re (Bermuda) Ltd [2000] NSWSC 1118; (2000) 36 ASCR 348; SMEC International Pty Ltd v CEMS Engineering Inc [2001] NSWSC 459; (2001) 38 ACSR 595 at [34]-[36]. However, the claimed debt seems to me to be connected with the question whether the relevant televisions have been sent to landfill and whether that is inconsistent with the E-Cycle's obligations under the Agreement; that is the question as to which E-Cycle itself invoked the dispute resolution procedure; and this seems to me to be sufficient to give rise to a genuine dispute as to the claim, for the purposes of s 459H(1) of the Corporations Act, or alternatively to some other reason to set aside the creditor's statutory demand for the purposes of s 459J(1)(b) of the Act. It is, however, also not strictly necessary for me to reach a finding as to that matter, given the findings that I have reached above that a genuine dispute is established on other grounds. Orders 33For these reasons, the statutory demand dated 12 June 2013 served by the Defendant, E-Cycle, should be set aside. In the ordinary course, costs should follow the event and the Defendant should pay the Plaintiff's costs of the application, as agreed or as assessed. 34I direct the parties to bring in agreed short minutes of order within 7 days to give effect to this judgment, and, if there is any disagreement as to the question of costs, short further submissions in respect of that question.

Arris Investments Pty Ltd v Fahd

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