ABC Constructions No 1 Pty Ltd v Bonelli Constructions Pty Ltd

In the case of ABC Constructions No 1 Pty Ltd v Bonelli Constructions Pty Ltd, the applicant sought to set aside a statutory demand for payment pursuant to section 459H of the Corporations Act 2001 (Cth). The demand related to outstanding progress payment claims under a building contract for the development of Jacaranda Gardens at Morayfield. The respondent disputed the existence and amount of the debt, arguing that there were discrepancies between progress payment claims, delay charges were not applicable, the contract had not been validly terminated, and certain breaches did not occur. The court was required to determine whether there was a genuine dispute about the existence or amount of the debt.

The court found that there was a genuine dispute regarding the existence and amount of the debt. The applicant had issued a Principal’s Notice to Show Cause to the respondent, alleging breaches of the contract. The respondent responded by claiming the termination was invalid, and the statutory demand was served the same day. The applicant also contended that the respondent failed to submit documentary evidence supporting its progress claim and that there were differences between separate progress claims issued by the respondent. The court held that the dispute regarding the entitlement to delay costs was genuine, and the former director's approval of the payment did not affect the genuineness of the dispute.

The court concluded that the applicant had established a genuine dispute about the existence or amount of the debt, rendering it unnecessary to determine whether the applicant had a genuine offsetting claim. The statutory demand was set aside. The applicant sought indemnity costs for the application, arguing that the respondent's failure to accept an offer to resolve the matter was unreasonable. However, the court found that the respondent's conduct did not justify an award of indemnity costs, and ordered the respondent to pay the applicant's costs on the standard basis.

The court ordered that the respondent's statutory demand dated 21 January 2016 be set aside, and that the respondent pay the applicant's costs of the application, to be assessed on the standard basis.