Astows Constructions P/L v Sundown Pastoral Company P/L

[1994] FCA 232

232     99

JUDGMENT No. ..... ,..., .... ,.,. ......

IN THE FEDERAL COURT OF AUSTRALIA )

N W SOUTH WALES. D?CSTBICT RBGISTRY ) No. NG 3421 of 1993

GENERAL DIVISION 1

Between:  ASTOWS CONSTRUCTIONS PTY LTD

Applicant

And:  $ONDOWN PASTORAT. COMPANY PTY
LIMITED

Respondent

REASONS FOR JUXMENT

..

SYDNEY 3 MARCH 1994

This is an application by Astows Constructions Pty Limited for an order under section 459G(1) of the Corporations Law (the Law) that a statutory demand served on it by Sundown Pastoral Company Pty Limited on Friday 10 December 1993 be set aside. The structure of the legislation suggests that the application will normally be granted when the Court is satisfied that there is a genuine dispute between the companies about the amount or existence of the debt to which the demand relates or that the debtor company has an offsetting claim which equals or exceeds the amount that may be owing.

aside, Astows moved the Local Court at Newcastle to set aside the	judgment. In those proceedings the Astows made available to the
Local Court a notice of grounds of defence and-a notice of cross; claim. They in substance assert that under a contract between Astows as contractor and Sundown as builder for the construction of a building at the Walgett College of TAFE, there were aspects of the works performed which were inadequately or improperly carried out and required rectification, repair and replacement at the expense of Astows. There is evidence available to me, as it presumably was to the Local Court, of expenditure by Astows for the rectification work. The Local Court decided to set aside the default judgment and made orders for the filing of the grounds of defence and the cross-claim. I am not informed as to when the hearing of this dispute will take place.
There are unsatisfactory features about this case altogether.
On the part of Astows there is to say the least a degree of
generality and a lack of particularity about the assertions which makes the prospects of defeating Sundown's claim in the Local Court somewhat problematic. There is also evidence that Astows Constructions has made or is shortly to make an application for
Mr Thompson, gave evidence that the company is no longer deregistratlon as a company. Certainly its managing director,
functioning in business. That must make the Local Court proceedings somewhat more than theoretical, if only because the judgment would be unlikely to be enforceable if it was obtained again.
However, it is not this Court's function in an application of thls kind to go into the claimed debt and determine what its chances of success are. -The question for me is whether the debt is doubtful or genuinely disputed, and if so, whether the demand
should be set aside in the exercise of the Court's discretion. There were in substance two matters argued in support of the discretion being exercised in favour of Astows. One is the fact that the Local Court has set aside the judgment and the other is the unanswered evidence of faults in Sundown's work. Together with the fact that it was Astows which moved to set aside the judgment in the Local Court, this is said to be sufficient to establish that there is a genuine dispute and that Astows has an offsetting claim as defined in section 459H(1) of the Law.
The evidence of Astows is that they paid Sundown for the vast majority of the contract concerned in the sum of something over $30,000 and that the amount in dispute of around $9000 is merely a balance which was withheld and has not been paid because of the defects referred to. This shows certain bona fides on the part of Astows in relation to the contract. In view of the legal costs associated with taking proceedings in the Local Court and
doing so for some reason other than the reasons which it gives in this Court, it seems unlikely to me that the company would be
in the affidavit evidence and the documentary annexures produced to the Court.
On the balance of probabilities I think that there is a genuine dispute between these companies, that Astows does have an offsetting claim and that accord~nglythe statutory demand should
be -set aside. I therefore make an order in accordance with
paragraph 1 of the application filed in the matter.
RECORDED NOT TRANSCRIBED
It seems to me that this is a case where costs should follow the event. I order that the respondent pay the applicant's costs.

The demand here is for a debt of some $9000 odd being the amount obtained in a default judgment of the Local Court at Newcastle in June 1993 together with interest accrued since that time. After the issue of the demand and the application to set it

I certify that this and the

preceding pages are a true copy of the

Reasons for Judgme

Justice Einfeld

Associate

Uated: A