Lessons from a $1 Million Statutory Demand Fight

By Damon Laffin, Director | Odyssey Legal | Queensland | Statutory Demands

Key Takeaways

• M Resources Trading Pty Ltd v Australian Pacific Coal Ltd (Receivers Appointed) [2026] QCA 150 (18 August 2026) upheld a $1.07 million statutory demand, reversing a decision that had set it aside.
• APC argued the debt arose from an agreement tainted by a nominee director's undeclared conflict of interest in 2023.
• The Court of Appeal found no arguable connection between that 2023 conflict and the 2024 deed that actually generated the debt.
• By the time of the 2024 deed, the nominee director had become APC's own independent CEO, and the company that had nominated her no longer had any right to appoint directors at all.
• Two further, entirely independent reasons also defeated the challenge: there was no evidence the creditor knew of the alleged conflict, and APC never attempted to rescind the agreement until after the 21-day statutory window had already closed.
• The dispute-resolution clause in the underlying contract couldn't rescue the challenge either, with no genuine dispute, there was nothing left for that clause to resolve.

What Happened

M Resources Trading Pty Ltd (MRT) and Australian Pacific Coal Ltd (APC) were parties to a joint venture over the Dartbrook coal mine. In 2022, MRT's parent company, M Resources Pty Ltd, held a contractual right to nominate a director to APC's board, and nominated Ms Saridas, an experienced company executive with no other ties to M Resources, to that role.

In 2023, a dispute broke out between the joint venture parties. It was resolved through a revised term sheet, under which M Resources gave up its right to nominate a director to APC altogether. As part of resolving that dispute, APC's board, including Ms Saridas, voted to approve APC granting M Resources a 10% economic interest in the venture and entering a services agreement with MRT, a Technical Services Advisory Agreement (Original TSAA), paying MRT a retainer regardless of whether services were rendered. Two directors voted against; Ms Saridas voted in favour, telling the board she believed APC would otherwise become insolvent.

Over the following months, Ms Saridas rose through APC's own ranks, becoming Executive Director, then Interim CEO, then CEO, appointments made by APC itself, not by M Resources. In late 2023, APC secured a US$60 million financing facility from Vitol, a global energy and commodities company. Vitol's financier conditions required a restructure of the payment obligations under the original TSAA. In February 2024, at APC's own request, a deed (2024 Deed) restated the TSAA, shifting the obligation to pay MRT's retainer from a subsidiary onto APC directly.

In July 2025, MRT issued a letter of demand and then a statutory demand for $1,074,006.85 owed under the restated TSAA. APC applied to set the demand aside, arguing the whole arrangement was tainted because Ms Saridas had never declared a conflict of interest back in 2023. The primary judge agreed, and set the demand aside. MRT appealed, and won.

Why the Conflict Argument Didn't Reach the Actual Debt

The Court of Appeal's central finding was that the primary judge had treated the 2024 Deed as simply “a continuation” of the arrangement Ms Saridas had voted on in 2023. That, the Court held, was the key error.

The debt MRT was actually chasing arose under the new TSAA, given effect by the 2024 Deed, not the original 2023 arrangement. And the circumstances surrounding the 2024 Deed were materially different. By that point, M Resources no longer had any right to nominate directors to APC at all. Ms Saridas was not, and had never been, an employee of M Resources or paid by it. She held no ongoing position with M Resources. She had become APC's own CEO, in a role APC itself had appointed her to. The 2024 Deed itself was entered into at APC's request, to satisfy a condition its own financier had imposed, not at Ms Saridas's initiative or for any benefit connected to M Resources.

On the law of nominee director conflicts, the Court confirmed that being nominated by a related company doesn't, by itself, create a conflict of interest. Following the Full Federal Court's approach in Hylepin Pty Ltd v Doshay Pty Ltd, a nominee director only breaches the conflict rule where there is a real, substantial possibility that a competing loyalty actually influenced their conduct, not merely because of how they came to be appointed. With no evidence Ms Saridas retained any loyalty to, or connection with, M Resources by 2024, and no evidence linking her to the decision to enter the 2024 Deed at all, there was no arguable breach of duty capable of tainting the debt actually being claimed.

Two Further, Independent Reasons the Challenge Failed

Even if the fiduciary duty argument had connected to the right debt, the Court found two further, entirely separate reasons the challenge couldn't succeed.

No evidence the creditor knew of the alleged conflict

A contract affected by an undisclosed conflict of interest is voidable, not automatically void, and rescinding it requires the other party to have known about the breach. There was no evidence MRT knew anything about the internal dynamics of APC's 2023 board meeting, or had any reason to suspect a conflict. Without that knowledge, no agreement, not the original TSAA, the new TSAA, or the 2024 Deed, could be rescinded at all.

APC never attempted to rescind within the statutory window

This point proved decisive on its own. A company has 21 days from service of a statutory demand to apply to set it aside, under section 459G of the Corporations Act. APC's first affidavit, filed within that window, raised the conflict allegation but never asserted that APC had terminated, or intended to terminate, the agreement. A notice purporting to terminate the TSAA only appeared in a second affidavit, filed after the 21-day period had already expired. The Court held that until an agreement is actually rescinded, it remains fully effective, meaning the debt under it remains genuinely undisputed. Asserting that an agreement is voidable, without ever foreshadowing an intention to actually terminate it, isn't enough to raise a genuine dispute, particularly once that assertion arrives too late to matter.

Why the Dispute Resolution Clause Argument Also Failed

APC separately argued that MRT should have followed the contract's own dispute resolution clause before issuing the demand, and the primary judge accepted this as a further, independent reason to set the demand aside. The Court of Appeal rejected this too, on two bases: procedurally, the argument wasn't properly raised within the 21-day window either, and substantively, a dispute resolution clause can only provide a reason to set aside a demand if a genuine dispute actually exists to be resolved. Since the Court had already found no genuine dispute, there was nothing left for the clause to operate on.

Practical Takeaways

• A conflict-of-interest argument needs to connect to the specific transaction giving rise to the debt, not merely to an earlier, related arrangement. Corporate relationships change, and courts will look closely at whether the alleged conflict still existed at the relevant time.
• If you intend to rely on rescinding a voidable agreement to resist a statutory demand, say so, clearly, within the 21-day window. A late-arriving termination notice will not help.
• Rescission also requires evidence the other party knew of the alleged breach. A bare assertion of conflict, without more, will not establish this.
• A dispute resolution clause is not a fallback argument. It only assists where a genuine dispute already exists independently of it.
• Nominee directors and the companies that appoint them should keep clear records of when nomination rights end, and ensure board minutes don't leave ambiguous conflict-of-interest notations that can be misread later.

How Odyssey Legal Can Help

Odyssey Legal acts for Queensland businesses on both sides of statutory demand disputes, and regularly advises joint venture partners, shareholders, and nominee directors on governance and conflict-of-interest issues. If you're a creditor facing a stale or poorly connected dispute, or a company weighing up whether a genuine ground exists to challenge a demand, timing and precision both matter enormously.

Contact Odyssey Legal:

• Phone: 07 5370 8759
• Email: info@odysseylegal.com.au
• Location: Servicing all of Queensland
• Book Your Free Initial Consultation: We offer a free initial consultation to assess your situation and provide clear advice on the best path forward.

Frequently Asked Questions

Does a nominee director automatically have a conflict of interest?

No. Being nominated by a related company doesn't, by itself, create a conflict. There needs to be evidence of a real, substantial possibility that a competing loyalty actually influenced the director's conduct at the relevant time.

Can an old conflict of interest taint a later, related agreement?

Only if there's an arguable connection between the two. Where the corporate relationships have changed materially, for example, the nominating right has ended, or the director has become independent of the nominating company, that connection can break down entirely, as it did here.

What do I need to show to rescind a contract affected by a breach of fiduciary duty?

The agreement is voidable, not void, so it needs to actually be rescinded. That requires evidence the other party knew of the breach, and a genuine intention to rescind must be raised within the relevant statutory window if you're relying on it to resist a statutory demand.

Can a dispute resolution clause be used to defeat a statutory demand on its own?

No. A dispute resolution clause can only provide a basis to set aside a demand where a genuine dispute already exists. It cannot create one.