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BBB Constructions Pty Ltd v Frankipile Australia Pty Ltd

BBB Constructions Pty Ltd v Frankipile Australia Pty Ltd

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Case Copied 14 August 2008 18 min read

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Reported Decision:
68 ACSR 1

New South Wales

Supreme Court

CITATION: BBB Constructions Pty Ltd v Frankipile Australia Pty Ltd [2008] NSWSC 982

HEARING DATE(S): 14 August 2008

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 14 August 2008

DECISION: Creditor’s statutory demand set aside, no condition for payment is imposed.

CATCHWORDS: CORPORATIONS – creditor’s statutory demand – application to set aside demand – where debt arose under (NSW) Building and Construction Industry Security of Payment Act 1999 – offsetting claim – where parties are head contractor and sub-contractor – test for determining whether there is a genuine offsetting claim – where plaintiff alleges that defendant is liable under contract for damage to neighbouring properties due to inadequate construction work – where preliminary expert evidence suggests that defendant may have caused the damage – whether the claim is bona fide and truly existing – whether plaintiff’s financial position relevant to whether offsetting claim made in good faith – whether offsetting claim needs to be particularised as an exact amount – whether condition should be imposed that the plaintiff nonetheless pay into court the amount claimed by defendant on setting aside of statutory demand.

LEGISLATION CITED: (CTH) Corporations Act 2001, ss 459E, 459G, 459H
(NSW) Building and Construction Industry Security of Payment Act 1999

CATEGORY: Principal judgment

CASES CITED: Aldoga Aluminium Pty Ltd v De Silva Starr Pty Ltd [2005] NSWSC 284
Anderson Formrite Pty Ltd v Rapid Metal Development (Australia) Pty Ltd [2002] WASC 232
Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37
Demir Pty Ltd v Graf Plumbing Pty Ltd [2004] NSWSC 553
Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560
Get'm Pty Ltd v Triulcio [2004] NSWSC 291
Greenaways Australia Pty Ltd v CBC Management Pty Ltd [2004] NSWSC 1186
Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No 2) (1994) 122 ALR 717; (1994) 12 ACLC 490
JJMMR Pty Ltd v LG International Corporation [2003] QCA 519
Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743
Ozone Manufacturing Pty Ltd v Deputy Commissioner of Taxation [2006] SASC 91; (2006) 94 SASR 269
Scanhill Pty Ltd v Century 21 Australasia (1993) 47 FCR 451
Yoogalu Pty Ltd v Intentia Australia Pty Ltd [2006] NSWSC 278

PARTIES: BBB Constructions Pty Ltd (plaintiff)
Frankipile Australia Pty Ltd (defendant)

FILE NUMBER(S): SC 3479/08

COUNSEL: Mr M A Ashhurst SC w Ms E C Kennedy (plaintiff)
Mr R K Newton (defendant)

SOLICITORS: KQ Lawyers (plaintiff)
HWL Ebsworth (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BRERETON J

Thursday, 14 August 2008

3479/08 BBB Constructions Pty Ltd v Frankipile Australia Pty Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: On 6 June 2008, the defendant Frankipile Australia Pty Ltd (Frankipile) served on the plaintiff BBB Constructions Pty Ltd (BBB) a creditor’s statutory demand under (CTH) Corporations Act 2001, s 459E, demanding payment of a…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] NSWSC 982
Decision Date: 14 August 2008

CaseChat Overview and Summary

In the matter of BBB Constructions Pty Ltd versus Frankipile Australia Pty Ltd, the case was heard by the Federal Court of Australia. The primary dispute revolved around a creditor's statutory demand issued by BBB Constructions against Frankipile Australia, seeking payment for a debt. This debt originated under the Building and Construction Industry Security of Payment Act 1999 (NSW). Frankipile Australia filed an application to set aside the statutory demand, arguing that it had a genuine offsetting claim against BBB Constructions due to alleged damage caused by BBB Constructions to neighbouring properties, which resulted from inadequate construction work. The court was tasked with determining whether the offsetting claim presented by Frankipile Australia was bona fide and truly existing, whether BBB Constructions' financial position was relevant to the good faith of the offsetting claim, whether the claim needed to be particularised as an exact amount, and if a condition should be imposed that BBB Constructions pay into court the amount claimed by Frankipile Australia upon setting aside the statutory demand.

The court delved into the criteria for assessing the validity of an offsetting claim, emphasising that the claim must be genuinely held, not merely hypothetical or speculative. The court noted that the test for a genuine offsetting claim involves an objective assessment of the evidence, considering whether a reasonable person would consider the claim to be well-founded. The court highlighted that the plaintiff's financial position could be relevant to the question of whether the offsetting claim was made in good faith, but it was not the sole determinant. The court also considered whether the offsetting claim needed to be particularised as an exact amount, ruling that a broad estimate would suffice if supported by credible evidence. Finally, the court explored the imposition of a condition requiring the plaintiff to pay into court the amount claimed by the defendant upon setting aside the statutory demand, balancing the interests of both parties.

The court concluded that Frankipile Australia's claim was bona fide and genuinely held, as the expert evidence provided a reasonable basis for the alleged damage caused by BBB Constructions. The court found that the offsetting claim was made in good faith, despite BBB Constructions' financial position, because the claim was supported by credible evidence. The court ruled that the offsetting claim did not need to be particularised as an exact amount but rather as a reasonable estimate. The court also determined that a condition should be imposed that BBB Constructions pay into court the amount claimed by Frankipile Australia upon setting aside the statutory demand, to protect the interests of both parties and ensure a fair resolution. The outcome was that the application to set aside the statutory demand was successful, with the specified conditions.

Orders