The above issues have been considered in two 2019 decisions of the Supreme Court of Victoria.
At the next return of the matter, the Company’s counsel produced a bank cheque and sought to tender it as payment of the entire amount of the judgment debt. Payment was refused by the Owners Corporation. However, the Court ordered that the bank cheque be paid into Court pending the resolution of the proceeding. In addition, the defendant made payments to the Owners Corporation in respect of interest on the judgment debt.
One of the questions for the Court was whether in all the circumstances the Owners Corporation should be prevented from being substituted as plaintiff, in the exercise of the Court's discretion.
The Court observed as follows at : "The object of a tender is not to end all controversy between the parties but to “throw the risk of further controversy upon the other party”. So long as a defendant is able to show that he or she was willing to unconditionally pay the entirety of an amount falling due, then tender will be effective". Other relevant principles referred to by the Court included that:
The plaintiff declined to accept payment because of a concern that the defendant was insolvent. The defendant sought and was given leave to pay the relevant funds into Court. It then did so. The Company opposed the winding up application on various grounds including that it had sought to pay the debt.
In these circumstances the Court held that the tender was unconditional (whilst the solicitor's reference to the payment being the subject of separate proceedings for damages was "inelegantly worded", the Court accepted that it "simply evinced an attempt to reserve the defendant’s rights"). Further, the potential for the payment to constitute a voidable transaction was not a sufficient basis to refuse the tender. The Court held at :
"I am satisfied that the defendant has demonstrated valid tender in respect of the amount of the statutory demand. That amount has been paid into Court and the defendant remains willing to discharge the debt. These are matters which strongly weigh in favour of the Court exercising its discretion to refuse to make a winding up order".The Court ultimately declined to make a winding up order against the defendant notwithstanding that it had tried, but failed to displace the statutory presumption of insolvency.
The company should attempt in the first instance to unconditionally tender the debt to the creditor which issued the demand.
If the creditor refuses to accept the tender, and subsequently applies to have the company wound up in insolvency, the company should seek leave to pay the relevant funds into Court then (assuming leave is granted) do so. It should also thereafter manifest a continued readiness and willingness to pay the same to the creditor, together with interest.
A valid tender and payment into Court will be a matter relevant to the exercise of the Court's discretion to substitute the applicant for a company to be wound up, and to make a winding up order.
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