Central City Pty Ltd v Montevento Holdings Pty Ltd

[2011] WASCA 5

Western Australia Court of Appeal

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For Australian Law.

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Interrogate

Catchwords

1. Corporations
2. › Statutory demand
3. › Application to set aside
4. › Genuine dispute
5. › Whether debt presently due and payable
6. › Threshold test
7. › Plausible contention requiring investigation
8. › Corporations Act 2001 (Cth), ss 459C, 459G, 459H(1)(a), 459J(1)
1. Contract
2. › Implied terms
3. › Informal contracts
4. › Loan agreement
5. › Whether term as to time for repayment could be inferred or implied
6. › Whether BP Refinery criteria apply rigidly to informal contracts
7. › Whether loan repayable on demand or upon realisation of project
1. Contract
2. › Formation
3. › Inference from conduct
4. › Whether contract for loan could be inferred from acts and conduct of parties
5. › Family company arrangements
6. › Shareholder loans for development project
1. Practice and Procedure
2. › Costs
3. › Indemnity costs
4. › Whether indemnity costs appropriate where applicant succeeded on principal issue

Quick Take

Where a loan between related parties has no express term as to time for repayment, the circumstances of the loan — including the informal family nature of the arrangements, the lender's shareholding in the borrower, and the structure of shareholder funding for a development project — may give rise to a plausible contention that the loan contains an inferred or implied term that it is not repayable on demand but only upon realisation of the project or from cash flow. Such a contention is sufficient to establish a genuine dispute for the purposes of setting aside a statutory demand under s 459H(1)(a) of the Corporations Act 2001 (Cth).