In the matter of Malvern Developments (Vic) Pty Ltd [2021] NSWSC 888

In the matter of Malvern Developments (Vic) Pty Ltd [2021] NSWSC 888

The statutory demand was set aside because Devakon accepted, and the evidence established, that Malvern had a genuinely arguable offsetting claim for liquidated damages exceeding the amount demanded. The Court declined to require payment into Court because, if Devakon's submission about Malvern's limited assets was correct, the condition would effectively require third-party funding to avoid a presumption of insolvency and would advance Devakon's position beyond contested litigation rather than merely reflect the Security of Payment regime. Costs followed the event because the offsetting claim existed before the separate Commercial and Construction List proceedings, even though those...

Jurisdiction
Australia
Judgment Date
14 July 2021
Procedural Posture
Application to Set Aside Creditor's Statutory Demand / Originating Process; Principal Judgment
Outcome
Creditor's statutory demand set aside. Defendant to pay Plaintiff's costs of the application.
Legal Topics
["creditor's Statutory Demand" 'offsetting Claim' 'payment Into Court Condition' 'building and Construction Industry Security of Payment Act Adjudication Debt' 'verifying Affidavit' 'costs Following the Event']
['corporations' 'insolvency' 'building and Construction' 'costs'] ["creditor's Statutory Demand" 'offsetting Claim' 'payment Into Court Condition' 'building and Construction Industry Security of Payment Act Adjudication Debt' 'verifying Affidavit' 'costs Following the Event']

Case Brief

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Procedural Posture

Application to Set Aside Creditor's Statutory Demand / Originating Process; Principal Judgment

Legal Issues

  1. 1 ["Whether Malvern had an offsetting claim under s 459H(1)(b) of the Corporations Act 2001 (Cth) exceeding the amount of the creditor's statutory demand." 'Whether, despite the offsetting claim, the statutory demand should be set aside only on a condition under s 459M of the Corporations Act 2001 (Cth) that Malvern pay the amount claimed into Court.' 'Whether the statutory demand was liable to be set aside under s 459J(1)(b) because it was not supported by a verifying affidavit where the demand relied on a judgment debt reduced by a credit for a garnishee recovery.' 'Whether costs should follow the event or be limited because Malvern commenced separate Commercial and Construction List proceedings after the statutory demand proceedings began.']

Ratio Decidendi

The statutory demand was set aside because Devakon accepted, and the evidence established, that Malvern had a genuinely arguable offsetting claim for liquidated damages exceeding the amount demanded. The Court declined to require payment into Court because, if Devakon's submission about Malvern's limited assets was correct, the condition would effectively require third-party funding to avoid a presumption of insolvency and would advance Devakon's position beyond contested litigation rather than merely reflect the Security of Payment regime. Costs followed the event because the offsetting claim existed before the separate Commercial and Construction List proceedings, even though those...

Court Disposition

Creditor's statutory demand set aside. Defendant to pay Plaintiff's costs of the application.

Orders

  • ["The creditor's statutory demand issued by Devakon Pty Ltd to Malvern Developments (Vic) Pty Ltd dated 11 March 2021 be set aside." "The Defendant pay the Plaintiff's costs of the application, as agreed or as assessed." 'Malvern was given reserved opportunity to bring an application for indemnity costs, if so...