MOMTAN PTY LTD -v- FOSTER [2025] WASC 135 (24 April 2025)

(a) Chetna Raju Batavia, the sole director of Momtan, sworn 29 November 2024 (Batavia Affidavit); and

(b) Dominique Pascal Hermann Engelter (a director of the Applicants' lawyers) sworn 20 March 2025 (Engelter Affidavit).

1. Counsel for Ms Foster read two affidavits in COR 189 of 2024 in opposition to the Application:

(a) Ms Foster's affidavit sworn 6 January 2025 (Foster Affidavit); and

(b) Christoper Hannay, her solicitor (sworn 10 January 2025) (Hannay Affidavit).

1. The Statutory Demand was served on Four Little Girls on 13 November 2024. It commenced an application to set aside the Statutory Demand on 29 November 2024 (COR 191 of 2024). Counsel read two affidavits in support:

(a) Kevin Ronald Sorgiovanni, the sole director of Four Little Girls, sworn 29 November 2024 (Sorgiovanni COR 191 Affidavit); and

(b) Mr Engelter, sworn 20 March 2025 (in the same terms as the Engelter Affidavit).

1. Counsel for Ms Foster read two affidavits in COR 191 of 2024 in opposition, which are identical to those filed in COR 189 of 2024:

(a) Ms Foster's affidavit sworn 6 January 2025; and

(b) Mr Hannay's affidavit sworn 10 January 2025.

1. The Statutory Demand was served on Harvey River on 13 November 2024. It commenced an application to set aside the Statutory Demand on 29 November 2024 (COR 192 of 2024). Counsel read two affidavits in support of the application:

(a) Mr Sorgiovanni, the sole director of Harvey River, sworn 29 November 2024 (Sorgiovanni COR 192 Affidavit); and

(b) Mr Engelter, sworn 20 March 2025 (in the same terms as the Engelter Affidavit).

1. Counsel for Ms Foster read two affidavits in opposition in COR 192 of 2024, again identical to those filed in COR 189 of 2024:

(a) Ms Foster's affidavit sworn 6 January 2025; and

(b) Mr Hannay's affidavit sworn 10 January 2025.

1. Both counsel agreed for the Applications to be heard and determined together, and for evidence in one to stand as evidence in the other.

1. The background to the Applications is complex. From all the evidence before the Court the following picture emerges. In setting out the background, I have drawn a distinction between what is an objective fact and what I regard as a contention of one or more of the parties.
2. It is instructive to begin with identifying some people who feature in the narrative. The first is Peter Foster. Mr Foster is the brother of Ms (Jill) Foster. He is described by each Ms Batavia and Mr Sorgiovanni in their affidavits as being a 'notorious conman'.[4] Ms Foster's daughter is Arabella Foster, whom for ease of identification I will refer to as 'Arabella'.
3. Each of the Applicants invested in a scheme known as 'Sports Trading Club' (STC Scheme). Momtan invested $100,000. Ms Batavia invested $50,000. Her husband Raju Batavia, invested $50,000.[5] Four Little Girls invested $100,000 in the STC Scheme. Harvey River Estate invested $250,000 in STC. Extended family members of Mr Sorgiovanni invested a further $400,000 in STC.[6]
4. The Applicants contend that the STC Scheme is a fraud.
5. The Applicants and others commenced proceedings in the Supreme Court of New South Wales in relation to the STC Scheme. The plaintiff was Ian Henry Mackinnon who was representative of 153 plaintiff group members (including the Applicants). The defendants to this action were:

(a) the partnership of Anne Patricia Larter, Alan Jones, Miraleste Pty Ltd trading as USG Partner and Leigh Johnson, trading as 'STC Sports Trading Club' (STC Partnership);

(b) Anne Patricia Larter;

(c) Alan Jones;

(d) Miraleste Pty Ltd trading as USG Partner;

(e) Leigh Johnson;

(f) Sports Trading Club Limited (a company incorporated in Hong Kong);

(g) Bella Development Limited (a company incorporated in Hong Kong);

(h) East Ocean Capital Limited (a company incorporated in Hong Kong);

(i) Arabella Racing Pty Ltd;

(j) Banksia Holdings Ltd (Banksia);

(k) Arabella; and

(l) Mr Foster.

1. The final decision is reported as Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as 'STC Sports Trading Club' (No 7) [2019] NSWSC 103 (Mackinnon). The decision was delivered on 18 February 2019. The trial judge, Justice Stevenson, ultimately concluded that 'STC was a fraudulent scheme and that, in substance, each of the representations in the Proposal [pursuant to which Mr Mackinnon invested] was false'.[7] In relation to Mr Foster, his Honour concluded:[8]

There is no direct evidence of who composed the Proposal. But it must have been Mr Foster or someone acting at his direction. He must have been instrumental in its composition and circulation.

Mr Foster must have known that, in substance, there was no truth to the representations made in the Proposal. The representations were fabricated by Mr Foster to attract investment to STC.

The representations set out above were made in the Proposal.

I am satisfied that Mr Foster, by causing the Proposal be published to prospective investors, made those representations.

1. Ms Batavia and Mr Sorgiovanni each depose that although they were successful in obtaining judgment in the NSW proceedings, including against Arabella and Banksia, due to the costs of proceedings and the way funds were dispersed around the world, they have not actually recovered any of their money or interest on that money.[9]
2. The Applicants contend that a significant amount of the funds invested in the STC ended up in bank accounts in the Cayman Islands. Each of the Applicants was one of 132 applicants (Cayman Applicants) in proceedings commenced in the Grand Court of the Cayman Islands (Cayman Action).[10] The Cayman Applicants were represented by Harneys, a law firm in the Grand Caymans.
3. A decision of the Grand Court of the Cayman Islands in the Cayman Action is annexed to the affidavits of each of Ms Batavia and Mr Sorgiovanni. It is a decision of Her Honour Justice Mangatal dated 9 June 2016 (Cayman Decision). Counsel for Ms Foster accepted that the Cayman Decision accurately sets out the history of proceedings in the Grand Court of the Cayman Islands.
4. The respondents in the Cayman Action were Mr Foster, Arabella, Banksia and the STC Partnership (Cayman Respondents).
5. On 2 November 2015 the Grand Court of the Cayman Islands granted an ex parte interim injunction. It restrained the Cayman Respondents from removing from the Cayman Islands or in any way disposing of or dealing with any of the assets specified in the schedule to the order which were then in the Cayman Islands to the value of US $8,195,775.29 (Interim Injunction).
6. It is apparent from the Cayman Decision that the Cayman Applicants contend that the proceeds of the STC Scheme were moved from a bank in Australia to banks in Hong Kong to banks in the Cayman Islands.
7. The decision of Justice Mangatal dealt with two applications. The first was by the Cayman Applicants to extend the Interim Injunction until further order. Her Honour granted this application, relevantly 'upon the same undertakings previously given'.[11] The second was by Banksia to have access to some of the funds restrained for the purpose of paying legal fees. Her Honour declined that application.
8. In October 2021, Ms Foster applied to be joined as a party to the Cayman Action. This was to seek orders that a certain bank account in the name of Arabella was always hers, having been lawfully assigned to her before the commencement of the Cayman Action. There followed some settlement negotiations between Ms Foster's lawyers and Harneys. Ms Foster's application was heard on 2 December 2021. Prior to the hearing, Harneys advised Ms Foster's lawyers that they did not have instructions to attend the hearing on 2 December 2021, and did not do so. At the hearing on 2 December 2021, the court made the orders sought by Ms Foster including an order for the costs of the application to vary the injunction. Harneys did not take any steps on behalf of the Cayman Applicants in relation to the assessment of the costs. The costs were fixed using a process referred to as a 'default costs certificate' on 30 March 2022 in the amount of USD $32,956.63 (Cayman Costs Judgment).
9. In May 2023, Ms Foster brought a summons in the Cayman Action for an assessment of damages which she claimed pursuant to the undertaking as to damages given by the Cayman Applicants to support the injunction. Ms Foster's application was heard on 5 March 2024. Prior to this, on 27 February 2024 Harneys had been removed from the record as the lawyers for the Cayman Applicants. On 14 March 2024, the court assessed damages in favour of Ms Foster and awarded her judgment in terms of the assessment in the amount of USD $227,710.78 together with interest and costs of USD $81,515.86, totalling USD $309,226.64, being what I have defined in [1] as the Cayman Damages Judgment.
10. Mr Hannay deposes that he has been in contact with Ms Foster's lawyer in the Cayman Islands, Mr John Harris. Mr Hannay deposes that he has been informed by Mr Harris and verily believes:

(a) although Harneys has been removed as the attorney of record for the Cayman Applicants, the firm had continued to correspond and the court has ordered substituted service could be effected on the Cayman Applicants through that firm;

(b) as at 6 January 2025, no steps have been taken by Harneys nor any of their clients since 'final orders were granted on 29 May 2024' (which appears from Ms Foster's affidavits to be an order for substituted service);

(c) it is extremely unlikely that the court would entertain any application to seek orders setting aside either the Cayman Damages Judgment or the Cayman Costs Judgment; and

(d) the time limits for any appeal to the Cayman Islands Court of Appeal has long passed and, in terms of applications out of time, 'the prospects of expunging the judgments of the Grand Court of the Cayman Islands ... [are] almost impossible'.

1. In relation to the Cayman Action, Ms Batavia deposes:[12]

I dispute various of the allegations Jill Foster made in the Cayman Islands in her applications to be joined to the proceedings, discharge the injunction, and claim loss and damage, including Jill Foster's assertations:

(a) she was beneficially entitled to the funds due to a valid assignment of those funds by Arabella Foster to her;

(b) Arabella Foster's trustees in bankruptcy accepted the (purported) assignment was valid and did not challenge Jill Foster's right to the funds;

(c) Jill Foster lost her rental accommodation because she failed to pay rent as a result of the bank account being frozen.

Unfortunately, the 'plaintiff group's' lawyers in the Cayman Islands were unfunded and thus would not represent the plaintiffs in actively opposing Jill Foster's applications. As mere members of a group, and not the lead plaintiff in any of the proceedings, we did not at the time have sufficient information or personal advice and representation in the Cayman Islands.

1. Mr Sorgiovanni's evidence is in near identical terms.[13]

1. As mentioned, the Cayman Damages Judgment was registered by QSC under the FJA, being what I have defined in [1] as the QSC Order. The QSC Order is annexed to each Statutory Demand. The substantive terms of the QSC Order are:

(a) The judgment of the Grand Court of the Cayman Islands dated 14 March 2024 whereby it was ordered that the abovenamed Defendants pay USD$227,710.78 together with interest, and costs of USD$81,515.86 to Jill Louise Foster be registered under Part 2 of the Foreign Judgements Act 1991 (Cth); and

(b) The amount payable by the judgment debtor to the judgement creditor is USD$309,226.64 inclusive of interest and costs; and

(c) The reasonable costs of and incidental to registration, including the costs of obtaining a certified copy of the judgment to be assessed are payable by the judgement debtor to the judgment creditor; and

(d) The judgment debtor may, within 45 days of service, apply to have registration set aside.

1. Subject to some exceptions which are not relevant, by FJA s 6(7):

(a) a registered judgment has, for the purposes of enforcement, the same force and effect; and

(b) proceedings may be taken on a registered judgment; and

(c) the amount for which a judgment is registered carries interest; and

(d) the registering court has the same control over the enforcement of a registered judgment;

as if the judgment had been originally given in the court in which it is registered and entered on the date of registration.

It follows that the QSC Order is a debt which may be the subject of a Statutory Demand.

1. Mr Hannay deposes that since registration of the Cayman Damages Judgment, there has been no application with respect to setting aside the QSC Order.[14]

Do any of the Applicants have an offsetting claim against Ms Foster? Principles

1. By CA s 459H(1)(b) the court may set aside a statutory demand where the company has an 'offsetting claim'. The phrase '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)'.[15]
2. The onus is on the company who receives the statutory demand to establish that it has an 'offsetting claim'.[16]
3. The principles by which the court determines whether to set aside a statutory demand on the basis of an offsetting claim were set out by the Court of Appeal in Complete Hire and Sales Pty Ltd v Terra Firma Constructions Pty Ltd [No 2][17] and summarised in WA Glass Pty Ltd v Auto Control Systems Pty Ltd [No 2] in the following terms:[18]
   1. An offsetting claim is not confined to debts which are due and payable.
   2. A claim for an unliquidated sum may be an offsetting claim.
   3. To be used as an offsetting total, the counterclaim, set‑off or cross‑demand must be for an amount capable of being quantified in money terms.
   4. It is necessary for the person applying to set aside a statutory demand to take steps to quantify the counterclaim, set‑off or cross claim.
   5. In a claim for unliquidated damages for economic loss the court will not be able to determine whether the amount claimed is claimed in good faith unless the company adduces some evidence to show the basis upon which the loss is said to arise and how that loss is calculated.
   6. An affidavit in support will be insufficient if it does not contain material from which a court can make an estimate of the amount of an offsetting claim.
   7. A company seeking to set aside or reduce a statutory demand on the basis of an offsetting claim does not need to set out evidence supporting the claim in meticulous detail. It is enough that the company provides evidence of a plausible and coherent basis for quantifying the claim or showing that it exceeds the amount of the debt demanded. Precise quantification is unnecessary.
   8. The court must keep in mind that the task which it is performing is the determination of the amount of a genuine dispute or claim, which must exist in fact, rather than resolving the dispute or offsetting claim or attempting to predict its outcome.
   9. The court may assign a nominal value where damage is an element of the claim and there is no evidence of damage.
   10. The court may also assign a nominal value to the offsetting total if it cannot estimate the amount of the offsetting claim.
4. In JJMMR Pty Ltd v LG International Corp McPherson JA made the following observations which are instructive for present purposes:[19]

Anyone can make a claim to a right of set-off against a creditor. What the definition in s 459H(5) requires, however, is that it be 'genuine'. The same word in s 459H(1) has already elicited so many synonyms and shades of meaning that it will not help to add more. Its antithesis is to be seen in the word 'artificial'. The claim to set off against the debt demanded must not have been manufactured or got up simply for the purpose of defeating the demand made against the company. It must have an existence that is objectively demonstrable independently of the exigencies of the demand that evoked it.

1. The claim which the Applicants and others proposed to commence against Ms Foster is set out in the same terms in the affidavits of Ms Batavia and Mr Sorgiovanni. [20] Ms Batavia deposes:

Momtan, my husband and I intend to soon commence (fresh) proceedings against Jill Foster directly, in relation to the STC scam. We have engaged solicitors to prepare these proceedings.

We intend to commence proceedings as part of a group including other victims (plaintiffs in the NSW and Cayman Island proceedings), who have told me (and I believe):

(a) these other victims have engaged them to commence proceedings against Jill Foster on the same basis; and

(b) the combined claim of this group (including us) against Jill Foster exceeds $1 million.

The foreshadowed proceedings against Jill Foster, which will be developed further in those proceedings once they are commenced, relates to my belief Jill Foster was knowingly involved in the STC fraudulent scheme, assisting Peter and Arabella Foster in the dispersal and Dissipation of victim's funds.

My belief ... above is based on, among other things:

(a) The Cayman Islands bank account in Arabella's name, being opened by or with the direct assistance of Peter Foster using dishonest means. I have seen account opening documents which appear (on their face) to have been created by Peter Foster and which;

(b) Jill Foster being joined as a signatory to Arabella's account, at a time when the STC scam was 'falling apart' (complaints by victims, media reporting occurring, and court proceedings starting);

(c) Jill Foster withdrawing substantial funds from Arabella's Cayman Islands bank account, within a short period of time once a freezing order had been obtained in Hong Kong and when an injunction in the Cayman Islands was imminent, to pay Peter Foster's legal fees in Australia (as well as other purposes);

(d) Jill Foster's history (together with Arabella) of being involved in Peter Foster's schemes including by control of bank accounts through which scheme-funds were passed. I refer for example to:

1. ACCC v SensaSlim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484 at [93] and [102];

2. ACCC v SensaSlim Australia Pty Ltd (in liq) (No 5) [2014] FCA 340 at [127], [130], [495], and [515];

3. ACCC v Chaste Corporation Pty Ltd (No 3) [2013] FCA 984;

4. Johnson v Mackinnon [2021] NSWCA 152 at [13]; and

5. media reporting of Jill Foster's arrest in Fiji in 2006 relating to an alleged bank fraud involving Peter Foster (and dissipation of funds amongst the Foster family). Annexed hereto and marked with the letter 'CRB-4' is a copy of three media articles relating to this.

(e) There being no 'legitimate' source of her funds and that Jill Foster knew, or ought to have known, this.

The assertions in [the preceding] paragraph ... will be developed further in the court proceedings against Jill Foster that I have foreshadowed above.

1. Ms Foster responds to the affidavits in the following terms:[21]

I have read the Affidavits of Mr Sorgiovanni sworn in the Harvey river and Four Little Girls proceedings, and that of Mr Batavia in the Momtan proceeding. To the extent that I can do so, considering the paucity of direct evidence about what I am supposed to have done, I deny that I have in any way participated in any so-called fraudulent activity vis-à-vis the Applicants or at all.

I am offended by these allegations and have never been the subject of any litigation by any of the 132 Defendants to the Cayman Islands litigation, nor have I been the subject of, or a defendant in, proceedings relating to the matters the subject of the so-called 'STC scam'.

What is more, I have never even been called as a witness in any sort of those proceedings.

My claim for damages and costs in the Cayman Islands arose from the simple fact that my funds and a bank account which belonged to me were wrongfully made the subject of the freezing orders in that jurisdiction.

I have expended large sums of money and suffered damages arising from wrongful impounding of my monies, and I want those found to be responsible to pay that to which the Courts have said that I am entitled.

1. The 2025 Action was commenced by a claim filed in the QSC on 20 March 2025, after each of the Batavia Affidavit and the Sorgiovanni Affidavit were filed. The initiating process is annexed to the Engelter Affidavit. It is a detailed 25‑page pleading.
2. Paragraphs 5 to 60 set out in some detail facts relating to Mr Foster's prior involvement in a number of scams and criminal conduct. This series of facts comes to a head in par 61 which reads:

In the premises pleaded at paragraphs 5 to 60 above, by 2012, Peter Foster was notorious to the public as:

(a) a confidence trickster;

(b) a fraudster;

(c) a man who had a lengthy history of obtaining money from members of the public by dishonest means.

1. Paragraphs 62 to 64 contains assertions about Ms Foster's knowledge leading to the conclusion in par 65:

As the matters pleaded at paragraph 61 above were notorious to the public, in the premises pleaded at paragraph 64, by 2012 the Defendant knew that Mr Peter Foster was notorious to the public as:

(a) a confidence trickster;

(b) a fraudster;

(c) a man who had a lengthy history of obtaining money from members of the public by dishonest means,

in that she either had actual knowledge of those matters, or alternatively the Defendant had knowledge of circumstances which would indicate the facts to an honest and reasonable person.

Particulars

The circumstances which at a minimum must by their significance or the Defendant's direct involvement have been known to the Defendant and would indicate the facts to an honest and reasonable person were 11, 13, 18, 19, 21, 22, 23, 24‑29, 33, 35‑38, 39, 40, 41, 44, 48, 49, 50, 53, 54, 58 and 60 above.

1. Paragraphs 66 to 92 refer to the STC Scheme, being the subject of the decision in Mackinnon.
2. Paragraph 91 contains a plea that the plaintiffs in the 2025 Action, including the Applicants, paid funds into a bank account in the name of 'The Sports Trading Club Partnership' with Westpac (Westpac Account) which is alleged to have been directly or indirectly controlled by Mr Foster. Relevantly for present purposes:

(a) Harvey River Estate paid $250,000 on or about 19 August 2014;

(b) Four Little Girls paid $100,000 on or about 28 August 2014; and

(c) Momtan paid $100,000 in two tranches in December 2013.

1. Paragraphs 93 to 122 plead facts showing the movement of money from the Westpac Account through accounts in Honk Kong to accounts in the Cayman Islands. Ms Foster is said to be a signatory to one of these accounts. The entirety of the funds in the Westpac Account have been paid away. None of the funds have been used in the manner proposed in the STC Scheme.
2. Paragraphs 123 and 124 plead facts to the effect that Mr Foster 'enjoys sudden wealth which is not explicable by any honest means'. Paragraphs 125 to 129 then plead facts to the effect that Ms Foster knew of Mr Foster's activities in generating wealth not explicable by honest means. Paragraphs 131 to 149 plead other facts going to Ms Foster's involvement with Mr Foster.
3. Paragraph 150 contains the central allegation against Mr Foster:

Each of the amounts pleaded at paragraph 91 above which the Plaintiffs contributed to the STC scheme were fraudulently stolen by or at the direction of Mr Peter Foster in that:

(a) representations were made as to the use to which any invested funds would be put, as pleaded at 72, 74, 81, 86 and 89 above (and in the First to Third Plaintiffs, paragraph 79 above);

(b) at the time the money was received by the STC Scheme or otherwise came under the control of Mr Peter Foster, it can be inferred from the circumstances pleaded at paragraph 93 to 120 above that Mr Peter Foster did not intend to deal with the investment moneys consistently with the representations;

(c) the conduct of Mr Peter Foster pleaded at paragraphs 66 to 90 above:

(i) was predatory;

(ii) transgressed the ordinary standards of honest behaviour;

(iii) was both dishonest and fraudulent in design;

(d) in the premises, the moneys invested into the STC Scheme were held on trust from the moment they were paid into the Westpac Account, either by Peter Foster or by whichever entity controlled the Westpac Account into which the investment moneys were paid;

(e) in the premises, Mr Peter Foster assumed a fiduciary duty to each of the Plaintiffs requiring him to:

(i) exercise his position as trustee of the Plaintiffs' funds in good faith and in the best interests of the Plaintiffs and for a proper purpose; and

(ii) not to cause detriment to the Plaintiffs or make a benefit or gain by reason of his position.

1. This is followed by a plea in par 151 as to Ms Foster's knowledge:

It is to be inferred from the combination of the following:

(a) the Defendant's historical association with Mr Peter Foster's ventures as pleaded at paragraphs 11, 27, 33, 35, 38, 53 and 54 above;

(b) Mr Peter Foster's notoriety as pleaded at paragraphs 61 above;

(c) the Defendant's knowledge of that notoriety as pleaded at paragraph 65 above;

(d) the obvious wealth which Mr Foster enjoyed upon the commencement of the STC Scheme which could not be explained by honest means as pleaded at paragraphs 123 and 124 above;

(e) the Defendant's familiarity with Mr Peter Foster's day-to-day activities as pleaded at paragraphs 125 to 127 above;

(f) that the Defendant was present at the house she shared with Mr Peter Foster during the conduct of elements of the STC Scheme as pleaded at paragraphs 67(k), 131 and 133 above;

(g) the Defendant's participation in at least aspects of the distribution of funds derived from the STC Scheme as pleaded at paragraphs 135 to 147 above;

(h) the Defendant at the present time serving as director and being a shareholder of the two companies pleaded at paragraphs 148 and 149 above,

that at the time of each of the payments pleaded at paragraph 91 above and since that time to the present day, the Defendant:

(i) had actual knowledge, whether by positively expressly kowing or by wilfully and recklessly making such enquiries as an honest and reasonable person would make, that Mr Peter Foster was generating or had generated income by the means of yet another fraudulent scheme and of the essential characteristics of the STC Scheme pleaded above; or

(j) alternatively had knowledge of circumstances that would indicate the facts to an honest or reasonable person that the STC Scheme was a fraudulent investment scheme.

1. There are two broad causes of action asserted against Ms Foster. The first, in pars 154 to 157 is that Ms Foster:

(a) knowingly assisted Mr Foster in conducting the STC Scheme in which each of the plaintiffs invested; and

(b) in the alternative, was knowingly involved in Mr Foster's fraudulent breach of trust.

In either case, Ms Foster is said, in par 157, to be liable to compensate the plaintiffs for the dissipation of the funds which they invested in the amount of their respective investments plus interest.

1. The second broad cause of action, in pars 158 to 163, is that Ms Foster has knowingly received the proceeds of Mr Foster's fraud in circumstances giving rise to a proprietary interest in any assets received in breach of trust. These funds included the funds the subject of the Interim Injunction which were paid out to Ms Foster when that injunction was lifted.
2. The primary remedy sought is equitable compensation.
3. I add that, given the timing of the Engelter Affidavit, Ms Foster has not had an opportunity to respond. I proceed on the basis that any response of Ms Foster would be in the same terms as what I have quoted at [42].

1. As to whether the 2025 Action is 'genuine', the Applicants submit that:

(a) it has been particularised in detail; and

(b) it has been settled by senior counsel 'with the responsibility encapsulated in the professional conduct rules to not bring an unmeritorious claim'.

1. Counsel drew the court's attention to the decisions in Black v S Freedman & Co,[22] Blue Mirror Pty Ltd v Tan & Tan Australia Pty Ltd (in liq)[23] and Grimaldi v Chameleon Mining NL [No 2][24] as providing support for the legal basis on which the 2025 Action has been structured.
2. In relation to quantification, the equitable compensation claimed is based on the loss of the money 'invested' in the STC Scheme, being:

(a) $100,000 by Momtan;

(b) $250,000 by Harvey River Estate; and

(c) $100,000 by Four Little Girls.

To this is added interest, which if it ran from the time of investment in 2013 or 2014 would be significant, even at the statutory pre‑judgment interest rate of 4%.[25]

1. Counsel adds that there are multiple plaintiffs in the 2025 Action and the total claim against Ms Foster greatly surpasses the amount for which she has judgment. Others may seek to join the proceedings, further increasing the size of the claim, once they become public knowledge.

1. Counsel for Ms Foster places some emphasis in submissions that each Statutory Demand seeks to enforce a judgment of a court, being the QSC Order. These submissions would be relevant had the Applicants sought to set aside each Statutory Demand on the basis that there was a genuine dispute about the existence of the debt. They are not relevant to the issue of whether there is an offsetting claim.
2. Counsel essentially raises three issues as to why the 2025 Action does not constitute an offsetting claim for the purposes of CA s 459H.
3. The first is that neither Ms Batavia nor Mr Sorgiovanni swear to the truth or accuracy of the facts pleaded in the 2025 Action. However, there is only a limited amount of evidence which Ms Batavia and Mr Sorgiovanni can give about the details of the 2025 Action. They each confirm the amount of money invested. They each set out in broad detail the substance of the claim against Ms Foster at [41]. Beyond that, the facts pleaded appear to be outside their personal knowledge. The detailed allegations in the 2025 Action, up to the point of Ms Foster's involvement, mirror the findings in Mackinnon and the Cayman Decision.
4. The second is that the pleading in 2025 Action is so deficient that 'it will be an act of mercy to terminate its existence', quoting from the decision of Dunn J in the Queensland case of Madden v Kirkegard Ellwood and Partners.[26] The 'asserted fraud case' is said to be 'so obscure that there is a real reasons to suspect that they cannot plead a viable cause of action'. The submissions foreshadow a significant challenge to these pleadings on the relevant rules of court in Queensland, which appear to be more or less the same as those in this jurisdiction. Counsel also foreshadows a challenge to the 2025 Action on the basis of the concept of 'limitation by analogy' given that the 'so‑called frauds' are alleged to have occurred in 2009 and were litigated in 2015 (though it appears to me that the payments relied on occurred in 2013 and 2014). I am told from the bar table that the relevant Queensland limitation legislation does not apply to the 2025 Action. Hence, there will need to be reliance on the equitable principles which apply by analogy to statutory limitations.[27] However, I reiterate what I have set out at [39], that the task which this court is to perform is to determine the amount of a genuine dispute or claim, which must exist in fact, rather than resolving the dispute or offsetting claim, or attempting to predict its outcome.
5. The third is that, in any event, the amounts of damages claimed in the 2025 Action are not sufficiently particularised for the purposes of either the relevant rules of procedure or CA s 459H.

1. I am readily satisfied that the 2025 Action is 'genuine'.[28] In no way can it be said that it is artificial or that it was manufactured or got up simply for the purpose of defeating the Statutory Demands. It is the next logical chapter in the litigation after Mackinnon and the Cayman Decision. It clearly has 'an existence that is objectively demonstrable independently of the exigencies of the demand that evoked it'.[29]
2. I am also satisfied that the 2025 Action is a 'counterclaim, set‑off or cross-demand' against Ms Foster.[30]
3. As set out at [39], the fact that the claim is for an unliquidated sum does not prevent it from being an 'offsetting claim'. However, it must be one which is capable of being quantified in money, and one for which there is material from which the court can make an estimate of the amount of the offsetting claim.
4. The level of detail required for there to be an 'offsetting claim' sufficient to warrant setting aside a statutory demand was recently considered by WA Glass [No 2]. In that case, between December 2019 and 6 November 2020 WA Glass Pty Ltd (WAG) engaged Auto Control Systems Pty Ltd (ACS) to perform electrical works at WAG's Bassendean glass recycling plant. Some of the work was performed pursuant to written quotes prepared by ACS and accepted by WAG. Other work was performed pursuant to ad hoc requests by WAG. WAG had refused to pay invoices totalling $248,391.81 for work done pursuant to written quotes. ACS issued a statutory demand for this amount. WAG sought to set is aside, among other bases, on the ground that it had an offsetting claim against ACS. At first instance, the Master declined to set aside the statutory demand, a decision upheld on appeal.
5. The offsetting claim relied on by WAG was for damages and costs associated with delay on the part of ACS in delivering the electrical work which it was contracted to do. On the material before the Master (and thus on appeal), there was no quantification of the alleged loss or damage. There was an estimate in a second affidavit filed by a Mr Harkins, the director of WAG.[31] The Court of Appeal held that the evidence adduced by WAG was insufficient having regard to points 5 and 6 of the principles which I have quoted at [39]. It is instructive for present purpose to quote the analysis of the Court of Appeal:[32]

We accept that Mr Harkins' second affidavit purports to provide a quantification of WAG's delay claim. The affidavit quantifies the claim in monetary amounts. Those monetary amounts are broken down into various identified heads of loss due to alleged delay. However, the affidavit evidence does not state how the amounts put forward by Mr Harkins are calculated. The affidavit does no more than state bald rounded figures without exposing the basis on which Mr Harkins arrived at the figures - or whether there was in fact any methodology by which Mr Harkins arrived at the figures he asserted. Nor does the affidavit provide material enabling the court to make an estimate of the amount of the offsetting claim. The absence of any explanation as to how the loss is calculated, and the basis on which the loss is said to arise, means that the court cannot meaningfully evaluate the asserted estimates.

The master was correct, for the reasons that he gave, to state that the quantification provided in Mr Harkins' second affidavit did not contain sufficient detail to allow any assessment to be made of the alleged delay claim ... The affidavit material did not provide any basis to enable the court to assess the veracity of the amounts. As the master said, pithily and correctly, '[t]here is simply a lack of a factual basis upon which the figure of $174,000 rests'... The material relied on was manifestly insufficient for the court to conclude that the nominated amount of the offsetting claim was claimed by WAG in good faith.

1. The present case is very different. The claim said to be the 'offsetting claim' has been commenced. The amount sought by each Applicant is readily quantified, being the amount of their initial investment together with interest. Assuming pre‑judgment interest is awarded at the rate of 4%, the claims in broad terms become:

(a) Momtan - $140,000 ($100,000 + $4,000 per year for 10 years);

(b) Harvey River Estate - $250,000 ($250,000 + $10,000 per year for 10 years); and

(c) Four Little Girls - $140,000 ($100,000 + $4,000 per year for 10 years).

1. There is however a nuance. In each case the amount of the offsetting claim is less than the amount which each Applicant is jointly and severally liable to Ms Foster pursuant to the QSC Order. A strict application of the formulas in CA s 459H would result in the court varying each Statutory Demand to limit it to the difference between $478,689.26 and the amounts in [70]. This raises the issue of whether there is 'some other reason' why each Statutory Demand should be set aside.

Is there some other reason to set aside the Statutory Demand? Principles

1. The court by CA s 459J(1)(b) has the power to set aside a statutory demand if it is satisfied that 'there is some other reason why the demand should be set aside'. Unlike the power in CA s 459H relating to genuine disputes and offsetting claims, the power is discretionary connoted by the use of the word 'may' in CA s 459J(1).[33] The onus is on the company to move the court to exercise its discretion to set aside the statutory demand.[34]
2. The discretionary power in s 459J(1)(b) is wide.[35] It is to be employed 'for the purpose of meeting the demands of justice'.[36] As Young CJ in Eq observed in Meehan v Glazier Holdings Pty Ltd it 'is not possible to set out fully the cases that might fall within s 459J(1)(b) nor if it were possible would it be wise to do so'.[37]
3. The discretionary power exists to 'maintain the integrity of the process provided under Part 5.4 of the Corporations Act and is to be used to counter an attempted subversion of the statutory scheme, but not by reference to subjective notions of fairness'.[38] It should not be activated 'unless the decision to do so is supported by some sound or positive ground or good reason which is relevant to the purposes for which the power exists'.[39] In the words of Lundberg J in Rectangle:[40]

So understood, an application to set aside a statutory demand in reliance on s 459J(1)(b) of the Act requires that the whole of the circumstances of the matter be considered, in order to determine whether the court can be satisfied there is some other basis (beyond those in s 459H(1) and s 459J(1)(a) of the Act) which justifies an order being made that precludes the use of the statutory procedure. The relative positions of both sides must be examined, not merely the party which is the subject of the demand, having regard to the objectives of pt 5.4 of the Act.

1. In relation to the objectives of CA pt 5.4, in Meehan Santow JA observed:[41]

The legislative intent of Pt 5.4 was explained succinctly in Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] VicRp 61; (1993) 11 ACLC 1062, 11 ACSR 362 at 366. Its essence is to be found in the proposition that a winding‑up application is not to be used for the improper purpose of compelling a solvent company to pay a disputed debt. That proposition is certainly not to be construed as precluding statutory demands being used where there are ongoing disputes between the parties. That is especially so when those disputes do not relate to the debt the subject of the statutory demand nor to any offsetting claim between the parties but rather depend upon the interposition of a third party, as here, in asserting a claim for account.

1. In CA & Associates Pty Ltd v Fini Group Pty Ltd Mitchell JA made similar comments:[42]

The issue of a statutory demand is not a means by which the ordinary curial procedures for debt recovery are to be avoided. The purpose of the statutory demand procedure is not to allow claimants to use the spectre of a winding up application to apply additional pressure on a corporation to satisfy their claims. Rather, the purpose of the statutory demand procedure is to facilitate a winding up application where there is no apparent reason, other than insolvency, for the corporation's refusal to pay a demanded amount. That is why, in dealing with an application to set aside a statutory demand, the court must keep in mind that the task which it is performing is the determination of the amount of a genuine dispute or claim, which must exist in fact, rather than resolving the dispute or offsetting claim, or attempting to predict its outcome.

1. The power 'extends to conduct that may be described as unconscionable, an abuse of process, or which gives rise to substantial injustice'.[43]
2. The discretion may be exercised even without showing that a substantial injustice would otherwise be caused.[44]

1. Counsel for the Applicants refers to three further matters in relation to this ground.
2. The first is that the submission is made (with details I do not need to refer to) that Ms Foster has previously been involved in Mr Foster's money laundering and has a history of benefitting from or being involved in Mr Foster's dishonest schemes.
3. The second is that although the court is not here expected to consider the merits of the 2025 Action, the nature of that claim is such that if ultimately proven at trial, there would be a risk of any funds being paid to Ms Foster now, not being able to be recovered.
4. The third is that each Statutory Demand was not issued for the proper purpose of establishing the insolvency of each Applicant. Rather, they were issued for the improper purpose of placing commercial pressure on each Applicant to pay the debt. This is in the context that Ms Foster knew that there was a wider dispute between her and the Applicants, and knew that each Applicant was solvent. In this regard, counsel refers to the fact that the Statutory Demands were issued to the Applicants following correspondence from their lawyer to her lawyer in July 2024 threatening further action.[45]

1. Counsel for Ms Foster is critical of the delay and inaction by the Applicants. There is merit in this submission. The Applicants had an opportunity to apply to set aside the registration of the Cayman Costs Judgment and the Cayman Damages Judgment in the QSC, but did not do so. The Applicants had an opportunity to oppose the application by Ms Foster in the Grand Court of the Cayman Islands. Having obtained the Interim Injunction and given an undertaking as to damages, it was incumbent on the Cayman Applicants, including the Applicants, to take action to claim the amount restrained. The Applicants have had the benefit of the decision in MacKinnon since February 2019. At that time, the Applicants had the benefit of the Interim Injunction restraining over USD $8 million. There is no evidence before me to the effect that the Applicants have taken any steps to enforce the judgment in MacKinnon against the assets the subject of the Interim Injunction. At the time of judgment (prior to Ms Foster's application), the funds restrained were in excess of USD $8 million. Ms Foster's position is that the explanation given as to why no action has been taken is insufficient to amount to 'some other reason' why the Statutory Demands should be set aside.

1. In my view the nuance I have identified at [71] can be dealt with by using the power in CA s 459J(1)(b) to look at the offsetting claims by each Applicant together. The debt underlying the QSC Order stems from a collective action by the Applicants and others against Mr Foster and others. However, the liability of each Applicant is joint and several. The 2025 Action is a collective action. Viewed together, the offsetting claims of the Applicants exceed the amount of the debt the subject of each Statutory Demand. It would be an injustice for each Applicant to have to pay some of the debt the subject of the Statutory Demand when, if the 2025 Action is successful, they would, together, have a claim which entirely offsets the amount of the QSC Order. The demands of justice, in my view, require the Statutory Demands to be wholly set aside. This constitutes a sound reason is relevant to the purposes for which the power exists to set aside each Statutory Demand.
2. In terms of other issues going to the discretion of the court, the matters raised by counsel for Ms Foster going to the failure of the Applicants to either oppose the Cayman Damages Judgment or seek to have its registration in the QSC set aside have considerable merit. On the other hand, so does the submission by counsel for the Applicants that each Statutory Demand was issued for the improper purpose of placing commercial pressure on each Applicant to pay the debt in the face of their threatened action against Ms Foster.
3. Further, in my view, the appropriate forum for the issue of whether the QSC Order can be enforced against each Applicant, given the commencement of the 2025 Action, is an application for a stay of the QSC Order in the QSC. This issue should not be determined by the back door approach of the issue of a statutory demand.
4. In the final analysis, no discretionary factor is of sufficient weight to mean that the outcome in [84] is not that which justice demands.
5. Each Statutory Demand should be wholly set aside pursuant to CA s 45J(1)(b).
6. I will hear from the parties as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Corporations Act 2001 (Cth) (CA) s 459H(1)(a).

[2] CA s 459H(1)(b),

[3] CA s 459J(1)(b).

[4] Batavia Affidavit, par 9; Sorgiovanni Affidavit (COR 191), par 9; Sorgiovanni Affidavit (COR 192), par 9.

[6] Sorgiovanni Affidavit (COR 191), par 16; Sorgiovanni Affidavit (COR 192), par 16.

[9] Batavia Affidavit, par 17; Sorgiovanni Affidavit (COR 191), par 17; Sorgiovanni Affidavit (COR 192), par 17.

[10] Batavia Affidavit, pars 7, 10; Sorgiovanni Affidavit (COR 191), pars 7, 10; Sorgiovanni Affidavit (COR 192), pars 7, 10.

[12] Batavia Affidavit, pars 24 and 25.

[13] Sorgiovanni Affidavit (COR 191), pars 24 and 25; Sorgiovanni Affidavit (COR 192), pars 24 and 25.

[15] CA s 459H(5).

[16] Kiewit Australia Pty Ltd v New Energy Corp Pty Ltd [2018] WASCA 180 [50] (judgment of the court).

[17] Complete Hire and Sales Pty Ltd v Terra Firma Constructions Pty Ltd [No 2] [2018] WASCA 111 [15] ‑ [19] (reasons of the court).

[18] WA Glass Pty Ltd v Auto Control Systems Pty Ltd [No 2] [2023] WASCA 85 [105] (judgment of the court) (WA Glass [No 2]).

[19] JJMMR Pty Ltd v LG International Corp [2003] QCA 519 [18] (McPherson JA); Diploma Construction (WA) Pty Ltd v Consummo Painting Pty Ltd [2017] WASC 31 [37] (Strk AM); Apex Gold Pty Ltd v Atlas Copco Australia Pty Ltd [2011] WASC 49 [30] (Pritchard J).

[20] Batavia Affidavit, pars 19 - 23; Sorgiovanni Affidavit (COR 191), pars 19 - 23; Sorgiovanni Affidavit (COR 192), pars 19 - 23.

[22] Black v S Freedman & Co [1910] HCA 58; (1910) 12 CLR 105.

[23] Blue Mirror Pty Ltd v Tan & Tan Australia Pty Ltd (in liq) [2024] NSWCA 253 [2], [30] (Leeming JA, with whom Ward P and Mitchelmore JA agreed).

[24] Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296 [270] (Finn, Stone and Perram JJ).

[25] Civil Proceedings Act 2011 (Qld) s 58, s 59(3); Practice Direction Number 7 of 2013 - Supreme Court of Queensland.

[26] Madden v Kirkegard Ellwood and Partners [1975] Qd R 363, 366 (Dunn J).

[27] Knox v Gye (1872) LR5HL 656, 674 - 675 (Lord Westbury LC).

[32] WA Glass [No 2] [107], [108].

[33] Rectangular Pty Ltd v Mae Cardaci atf The Marco Cardaci Testamentary Trust [2023] WASC 13 [42] (Lundberg J) (Rectangle).

[34] Total Beverage Australia Pty Ltd v Corporate Link Australia Pty Ltd [2013] SASC 45 [30] (Sulan J); MNWA Pty Ltd v Deputy Commissioner of Taxation [2016] FCAFC 154 [177] (Farrell and Davies JJ).

[35] Rectangle [42]; Midas Management Pty Ltd v Equator Communications Pty Ltd [2007] NSWSC 759 [17] (Hammerschlag J)

[36] Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91 [83] (Pullin JA, with whom Newnes and Murphy JJA agreed); Professional Services of Australia Pty Ltd v Lean [2018] WASC 28 [50] (Smith AJ) (Professional Services).

[37] Meehan v Glazier Holdings Pty Ltd [2005] NSWCA 24; (2005) 53 ACSR 229 [60] (Young CJ in Eq) (Meehan). See also Hoare Bros Pty Ltd v Deputy Commissioner of Taxation (1996) 62 FCR 302, 317 ‑ 318; (1996) 135 ALR 677, 691 ‑ 692 (Black CJ, Einfeld and Sackville JJ) (Hoare).

[38] Re Mio Amico Pty Ltd [2013] NSWSC 1292 [8] (Black J); Rectangle [42]; Meehan [61] (Young CJ in Eq).

[39] Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd [1996] NSWSC 199; (1996) 20 ACSR 746, 757 (Bryson J); Meehan [59] (Young CJ in Eq).

[40] Rectangle [43], citing Meehan [52] (Santow JA, with whom Tobias JA agreed).

[41] Meehan [47] (Santow JA, with whom Tobias JA agreed).

[42] CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31 [89] (CA & Associates) (Mitchell JA) (reference ommitted).

[43] Professional Services [49]; Re Haidi Holdings Pty Ltd [2023] VSC 739 [18] (Hetyey AsJ); Hoare (691).