Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd

Grandview Ausbuilder Pty Ltd (Grandview) sought to set aside a statutory demand issued by Budget Demolitions Pty Ltd (Budget) under section 459G of the *Corporations Act 2001* (Cth). The dispute arose from Budget's claim for payment under the *Building and Construction Industry Security of Payment Act 1999* (Cth), which Grandview had not paid, leading to Budget issuing the statutory demand. Grandview argued that it had an offsetting claim against Budget, which, if genuine, would be a ground to set aside the demand. The appeal concerned the application of principles relating to offsetting claims in the context of setting aside statutory demands, particularly where the claim arose after the application was filed.

The central legal issues before the Court of Appeal of New South Wales were whether Grandview possessed a "genuine offsetting claim" within the meaning of section 459H of the *Corporations Act 2001* (Cth) that would justify setting aside Budget's statutory demand. This involved considering whether an offsetting claim that arose after the filing of the application to set aside the demand could be considered, and if so, whether it was sufficiently genuine. The court also had to determine the effect of Grandview's purported termination of the contract with Budget and whether that termination precluded Grandview from relying on an election to affirm the contract.

The Court of Appeal affirmed the principles established in *Graywinter Pty Ltd v GIBB Australia Pty Ltd*, holding that an offsetting claim that arises after the filing of an application to set aside a statutory demand can be considered, provided it was foreshadowed in the affidavit supporting the application and is genuinely arguable. The court found that Grandview's alleged offsetting claim, which related to alleged defects in Budget's demolition work, was not sufficiently substantiated to be considered genuine. The court also determined that Grandview's purported termination of the contract was ineffective and did not preclude it from relying on an election to affirm the contract.

Leave to appeal was granted, but the appeal was ultimately dismissed with costs. The court ordered that the $340,000 paid into court by Grandview be paid out to Budget.