Background
Foodeology Pty Ltd served Lets Build NSW Pty Ltd with a statutory demand for $777,125. The demand described a $350,000 loan advance made in January 2024 and claimed weekly interest at 1.25% from then until May 2026, less weekly payments Lets Build had made to Foodeology.
Lets Build accepted that Foodeology paid it $350,000 and that it made the weekly payments to Foodeology. But it contended that its loan arrangement was with Lam Concepts Pty Ltd, whose representative had arranged the funding and directed the payments to Foodeology. Lets Build said it had no agreement or dealings with Foodeology. Foodeology relied on the payment records, an unexecuted proposed facility agreement naming it as lender, and communications with Lam Concepts.
The Court’s Holding
Black J set aside Foodeology’s statutory demand under s 459H(1)(a) of the Corporations Act 2001 (Cth), finding a genuine dispute about whether Foodeology, rather than Lam Concepts, was the party entitled to recover the asserted debt from Lets Build.
There was no executed loan agreement between Foodeology and Lets Build, and no clear contemporaneous communication in which Lets Build acknowledged a legal relationship with Foodeology. Although the evidence could ultimately support Foodeology’s case, Lets Build’s account was not implausible or spurious. A statutory-demand application was not the forum to decide the merits or make a general credit assessment of Lets Build’s director.
Key Takeaways
- A genuine dispute can arise over the identity of the contracting lender, even where the demand issuer advanced funds and received interest payments.
- The threshold is whether there is plausible evidence of a real dispute, not whether the applicant will ultimately win at trial.
- An unexecuted proposed loan agreement and indirect dealings may be insufficient to establish an undisputed debt for statutory-demand purposes.
Why It Matters
Statutory demands are available only for debts that are not genuinely disputed. Where funding arrangements involve intermediaries, undocumented arrangements, or payments made at another party’s direction, creditors should ensure that the borrower has clearly documented and acknowledged the creditor relationship.
The decision leaves Foodeology free to pursue the underlying claim in substantive proceedings, where the parties’ contractual rights can be determined on the evidence.