In the matter of Douglas Aerospace Pty Ltd [2015] NSWSC 167

In the matter of Douglas Aerospace Pty Ltd [2015] NSWSC 167

A creditor's statutory demand based on a judgment arising from an adjudication certificate under the Building and Construction Industry Security of Payment Act 1999 (NSW) may not be set aside on the basis of a 'genuine dispute' pertaining to the correctness of the adjudication or underlying contractual liability. However, a genuine, quantified offsetting claim (here, for damages related to defective or incomplete works) may be raised. In this case, the Court found an offsetting claim in the amount of $107,040, resulting in variation of the demand to $122,280, but no 'genuine dispute' for the purposes of s 459H(1)(a).

Parties
Plaintiff: Douglas Aerospace Pty Ltd; Defendant: Indistri Engineering Albury Pty Ltd
Jurisdiction
Australia
Judgment Date
09 March 2015
Procedural Posture
Application to Set Aside or Vary Statutory Demand / Judgment on Application
Outcome
Order that the statutory demand be varied to $122,280, effective from the date of original service.
Legal Topics
Statutory Demands, Offsetting Claims, Judgment Debts, Security of Payment, Enforcement of Adjudication Certificates
Corporations Law Building and Construction Law Statutory Demands Offsetting Claims Judgment Debts Security of Payment Enforcement of Adjudication Certificates

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Parties

Douglas Aerospace Pty Ltd

Plaintiff

Indistri Engineering Albury Pty Ltd

Defendant

Procedural Posture

Application to Set Aside or Vary Statutory Demand / Judgment on Application

Legal Issues

  1. 1 Whether a judgment debt founded on a filed adjudication certificate under the Building and Construction Industry Security of Payment Act 1999 (NSW) can be the subject of a 'genuine dispute' or 'offsetting claim' for the purposes of s 459H of the Corporations Act 2001 (Cth)
  2. 2 Whether the pendency of a claim that an adjudication is incorrect can form an offsetting claim
  3. 3 How alleged claims for defective or incomplete works and alleged overpayments interact with substantiation of the demand

Ratio Decidendi

A creditor's statutory demand based on a judgment arising from an adjudication certificate under the Building and Construction Industry Security of Payment Act 1999 (NSW) may not be set aside on the basis of a 'genuine dispute' pertaining to the correctness of the adjudication or underlying contractual liability. However, a genuine, quantified offsetting claim (here, for damages related to defective or incomplete works) may be raised. In this case, the Court found an offsetting claim in the amount of $107,040, resulting in variation of the demand to $122,280, but no 'genuine dispute' for the purposes of s 459H(1)(a).

Court Disposition

Order that the statutory demand be varied to $122,280, effective from the date of original service.

Orders

  • Pursuant to s 459H(4) of the Corporations Act 2001 (Cth), the creditor's statutory demand dated 27 June 2014 served by the defendant on the plaintiff is varied so that the amount of the demand is $122,280 and the demand has effect as so varied from when it was served on the plaintiff.