Grounded Construction Group Pty Ltd v KW Civil & Construction Pty Ltd - [2025] WASC 307

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   GROUNDED CONSTRUCTION GROUP PTY LTD -v- KW CIVIL & CONSTRUCTION PTY LTD [2025] WASC 307
CORAM:   LUNDBERG J
HEARD:   16 JULY 2025
DELIVERED          :   6 AUGUST 2025
FILE NO/S:   COR 150 of 2024
BETWEEN:   GROUNDED CONSTRUCTION GROUP PTY LTD
Plaintiff
AND
KW CIVIL & CONSTRUCTION PTY LTD
Defendant

Catchwords:

Corporations - Statutory demand - Application to set aside a statutory demand under s 459G of the Corporations Act 2001 (Cth) - Civil works subcontract for an accommodation village - Demand based upon adjudication determination made under the Building Industry (Security of Payments) Act 2021 (WA) - Separate proceedings earlier brought in the Supreme Court of Western Australia by the defendant claiming amounts under the subcontract which overlap with statutory demand

Corporations - Whether statutory demand should be set aside or varied by reason of offsetting claims pursuant to s 459H(1)(b) of the Corporations Act 2001 (Cth) - Whether offsetting claims are 'true' or 'genuine' claims - Consideration of Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2012] WASCA 91 - As these claims were rejected by the adjudicator and do not form part of the final adjudication, they are 'true' offsetting claims - Whether claims also 'genuine' - Turns on own facts

Corporations - Whether statutory demand should be set aside for some other reason, namely as an abuse of process, pursuant to s 459J(1)(b) of the Corporations Act 2001 (Cth) - Abuse alleged to be based on parallel proceedings with inconsistent purposes and on knowledge of solvency of the plaintiff - Turn on own facts

Legislation:

Building and Construction Industry (Security of Payment) Act 2021 (WA) s 3, s 17, s 18, s 22, s 26, s 27, s 54, s 55
Construction Contracts (Former Provisions) Act 2004 (WA)
Construction Contracts Act 2004 (WA) s 45
Corporations Act 2001 (Cth) s 459G, s 459H, s 459J

Result:

Plaintiff's application to set aside the statutory demand granted

Category: B

Representation:

Counsel:

Plaintiff	:	M R Collins
Defendant	:	C S Gough

Solicitors:

Plaintiff	:	Thomson Geer - Perth
Defendant	:	Bedivere Legal Services Pty Ltd

Case(s) referred to in decision(s):

Aldoga Aluminium Pty Ltd v De Silva Starr Pty Ltd [2005] NSWSC 284
Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2007) 53 ACSR 300
BBB Constructions Pty Ltd v Frankipile Australia Pty Ltd [2008] NSWSC 982
CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31
Cape Range Electrical Contractors Pty Ltd v Austral Construction Pty Ltd [2012] WASC 304
CBS Commercial Canberra Pty Ltd v Axis Commercial (ACT) Pty Ltd in the matter of CBS Commercial Canberra Pty Ltd [2022] FAC 544
Creata (Aust) Pty Ltd v Faull [2017] NSWCA 300
Createc Pty Ltd v Design Signs Pty Ltd [2009] WASCA 85
Dask Entertainment Melbourne Pty Ltd v Aussie Outfits Pty Ltd [2023] VSC 660
Demir Pty Ltd v Graf Plumbing Pty Ltd [2004] NSWSC 553
Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41; (2008) 237 CLR 473
Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2012] WASCA 91
Downer Utilities Australia Pty Ltd v Alinta Energy Transmission (Chichester) Pty Ltd [No 2] [2023] WASC 1
Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560
Energy Equity Corporation Ltd v Sinedie Pty Ltd [2001] WASCA 419; (2001) 166 FLR 179
Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1997) 25 ACSR 675
Grandview Ausbuilder Pty Ltd v Budget Demolition Pty Ltd [2019] NSWCA 60
Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund [1996] FCA 822; (1996) 70 FCR 452
Greenaways Australia Pty Ltd v CBC Management Pty Ltd [2004] NSWSC 1186
Grocon Constructors (Qld) Pty Ltd v Dexus Funds Management Ltd as trustee for the Dexus 480Q Trust (No 2) [2019] FCA 1117
Hoare Bros Pty Ltd v Deputy Commissioner of Taxation (1996) 62 FCR 302
H'Var Steel Services Pty Ltd v TDC Concrete Pty Ltd [2017] WASCA 63
In the matter of Douglas Aerospace Pty Ltd [2015] NSWSC 167
J Group Constructions Pty Ltd [2015] NSWSC 1607; (2015) 303 FLR 139
Kellogg Brown & Root Pty Ltd v Doric Contractors Pty Ltd [2014] WASC 206
Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330
Meehan v Glazier Holdings Pty Ltd [2005] NSWCA 24; (2005) 53 ACSR 229
Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290
MNWA Pty Ltd v Deputy Commissioner of Taxation [2016] FCAFC 154
Nepean Conveyors Pty Ltd v Linkforce Industrial Services Pty Ltd [2024] WASC 71
ORH Contracting Pty Ltd v CGS Solutions Pty Ltd [2009] WASC 273
Re Modern Wholesale Jewellery Pty Ltd [2017] NSWSC 236
Re Vortex Communications Australia Pty Ltd [2020] VSC 796
Re Zarzar Pty Ltd [2017] NSWSC 93
Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA & Pharmagel SpA (1994) 15 ACSR 347
Sceam Constructions Pty Ltd v Clyne [2021] VSCA 270
Sovereign Building Company Pty Ltd v Sheehan Group Pty Ltd [2025] WASC 11
Tatlers.com.au Pty Limited v Davis [2006] NSWSC 1055
TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd [2008] VSCA 70

Table of Contents

A. Introduction

B. The issues arising on the Application

C. Procedural history of the Application

(1) Affidavit material

(2) Hearing on 19 December 2024

(3) Court's ruling dated 4 May 2025

(4) Hearing on 16 July 2025

D. Legislative framework - Corporations Act

(1) Relevant provisions

(2) Relevant principles

E. Legislative framework - the SOP Act

F. Factual background

(1) The Subcontract - an overview

(2) Relevant terms of the Subcontract

(3) Payment claim made in December 2023

(4) Termination of the Subcontract and liquidated damages

(5) Payment claim made in May 2024

(6) Civil proceedings commenced in the Supreme Court by the defendant

(7) Adjudication proceedings commenced by the defendant

(8) Statutory Demand issued by the defendant

G. Extent of the overlap between the processes

(1) The December 2023 Claim and the Recovery Proceeding

(2) The Determination and the Statutory Demand

(3) The December 2023 Claim and the May 2024 Claim

(4) The Statutory Demand (and the Determination) and the Recovery Proceeding (and the December 2023 Claim)

H. Disposition of issue 1 - sufficiency of the plaintiff's affidavit material

(1) The parties' contentions

(2) Analysis

I. Disposition of issue 2 - the plaintiff's offsetting claims

(1) The plaintiff's contentions

(2) The defendant's contentions

(3) Analysis - whether the claims are 'true' offsetting claims

(4) Analysis of the liquidated damages claim

(5) Analysis of the damage to property claim

(6) Analysis of the backcharge to operator claim

(7) Relevance of the cash retention amount

J. Disposition of issue 3 - whether there is an abuse of process

(1) The parties' contentions

(2) Further principles

(3) Analysis

K. Objections to the evidence pursuant to s 55(4) of the SOP Act

L. Conclusion and orders

ATTACHMENT A The defendant's Statutory Demand

ATTACHMENT B List of affidavits

ATTACHMENT C The Court's Evidentiary Rulings dated 4 May 2025

LUNDBERG J:

A. Introduction

These reasons concern the plaintiff's originating summons dated 1 October 2024 (Application),[1] filed pursuant to s 459G(1) of the Corporations Act 2001 (Cth) (CA) and within the statutory period. The Application seeks orders to set aside the creditor's statutory demand issued by the defendant on 10 September 2024 (the Statutory Demand).[2]
[1] Folio 1.
[2] The full terms of the Statutory Demand are extracted in Attachment A to these reasons. The adjudication determination was attached to the Statutory Demand.
The Statutory Demand is based upon a debt obtained by the defendant in the form of a determination following adjudication proceedings under the Building and Construction Industry (Security of Payment) Act 2021 (WA) (SOP Act).[3] The defendant obtained a certified copy of the determination pursuant to s 54(2) SOP Act, which is 'taken to be a monetary judgment of a court of competent jurisdiction' under that provision.
[3] First Brown Affidavit [5] and Attachment SB-02 (Folio 2).
The total amount demanded in the Statutory Demand was a little over $1 million. This is undoubtedly a sum which is commercially significant to both parties. The quantum of the claim may in part explain, as will become apparent, why the Application was fiercely contested by the parties. Some 13 affidavits were filed by the parties, together with numerous sets of submissions. The proceedings required two substantive hearings, on 19 December 2024 and then on 16 July 2025, the first in order to address numerous objections to the affidavit material. The parties' respective arguments effectively descended into the detail of the competing claims, being those which underpin the Statutory Demand, the related claims made by the defendant, and the plaintiff's offsetting claims.
The factual setting is rendered more complex by the existence of parallel processes instituted by the defendant in respect of overlapping matters, being civil proceedings for debt recovery in this Court, an adjudication proceeding under the SOP Act, and then the service of the Statutory Demand.
Ordinarily, a court dealing with an application to set aside a statutory demand under div 3 pt 5.4, in reliance on the grounds in s 459H(1) CA, is not expected to 'embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute'.[4] It is typically not necessary for the court to engage in an in-depth examination of the issues, or to resolve contested legal issues, other than perhaps straightforward issues.[5]
[4] Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290, 295 (Hayne J); Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2012] WASCA 91 [90] (Pullin JA, Newnes and Murphy JJA agreeing) (Diploma Construction).
[5] Creata (Aust) Pty Ltd v Faull [2017] NSWCA 300 [36] - [37] (Barrett AJA, with whom Gleeson and White JJA agreed) (Creata v Faull).
In some respects then, there has been a divergence between the statutory objectives and the conduct of these proceedings,[6] although I recognise the Application also raised an allegation that the service of the Statutory Demand was an abuse of process. That allegation has required additional materials to be filed and occupied a portion of the parties' submissions. Nonetheless, it must be remembered that proceedings such as this, which involve no pleadings, no discovery, and no cross-examination of deponents, are typically ill-suited to resolve factual controversies and contested contractual construction arguments.
[6] Adopting the language employed by the Full Federal Court in Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1997) 25 ACSR 675, 696.
The conclusions I have reached in this matter as to the competing claims agitated by the parties must be seen in the foregoing light. These reasons do not embody conclusions as to the ultimate validity of those competing claims for payment under the Subcontract.
For the reasons which follow, I accept the plaintiff's contention that the Statutory Demand should be set aside for 'some other reason' under s 459J(1)(b) CA, namely that it was an abuse of process to issue such a demand whilst there were, and are, pending and overlapping civil proceedings on foot between the parties, which were also initiated by the defendant.
I should observe that, in presenting the abuse argument, the plaintiff made it clear, and I accept, that this contention involved no personal attack on the integrity of the defendant's solicitors.[7]
[7] ts 154.
Further, and in any event, I consider the plaintiff has demonstrated that it has genuine offsetting claims pursuant to s 459H(1)(b) CA, and the Statutory Demand should accordingly be varied to reflect the value of these claims.

B. The issues arising on the Application

In order to outline the primary issues arising on this Application, it is necessary to briefly introduce the parties and the subject matter of the dispute.
The plaintiff, Grounded Construction Group Pty Ltd, is a construction company which undertakes design and construction work for mining and civil projects, including in remote locations.
One of its projects has been the Rocklea Palms Village Expansion Project in Paraburdoo, in the Pilbara region of the State (Rocklea Project). The principal on that Project is Hamersley Iron Pty Ltd, which I will refer to in these reasons as Rio Tinto for convenience.
On 1 June 2023, the plaintiff entered into a subcontract with the defendant in respect of the Rocklea Project, to perform various civil works including earthwork services (Subcontract).[8] The defendant subcontractor, KW Civil and Construction Pty Ltd, is a civil construction company.
[8] Described as 'Subcontract Agreement, Subcontract No. 30265 for Rocklea Palms Village Expansion Project (civil works to new modular buildings, civil & external works for the Rocklea Palms Village Expansion Project)'.
The defendant relevantly issued two payment claims to the plaintiff under the Subcontract. The first payment claim was made on 22 December 2023. On that date, the defendant sent a payment claim to the plaintiff in the sum of $920,129.35 (including GST). I will refer to this as the December 2023 Claim. The second payment claim was made on 31 May 2024. On that date, the defendant sent a progress claim for all works performed up to that date in the sum of $1,585,203.10 (including GST). I will refer to this as the May 2024 Claim.
The non-payment of these two payment claims has led to the institution, by the defendant, of two legal processes. The first process was a civil action commenced against the plaintiff in this Court on 7 June 2024, seeking recovery of precisely the same amount claimed in the December 2023 Claim under the Subcontract. I will refer to this proceeding, being CIV 1669 of 2024, as the Recovery Proceeding.
The second process was the adjudication proceeding initiated against the plaintiff on 19 July 2024 pursuant to the SOP Act. I will refer to this as the Adjudication Proceeding. The foundation of that proceeding was the amount claimed in the May 2024 Claim. The Adjudication Proceeding led to an adjudication determination being made by the appointed adjudicator on 30 August 2024 (Determination).[9]
[9] First Brown Affidavit [6] and Attachment SB-02 (being annexed to the Statutory Demand).
Within the Determination, the appointed adjudicator awarded the defendant a lesser sum than the amount claimed in the May 2024 Claim, being the amount of $1,031,136 inclusive of GST.
On 10 September 2024, the defendant served the Statutory Demand on the plaintiff. There are factual issues raised on the Application as to the degree of overlap between the amount claimed in the Recovery Proceeding and the amount which is claimed in the Statutory Demand, to which I will return.
In the present proceedings, the plaintiff advances various arguments under s 459H(1)(b) CA and s 459J(1)(b) CA, to the effect that the Statutory Demand constitutes an abuse of process, and that the plaintiff has offsetting claims that ought be offset against the amount claimed.[10] In its minute of proposed orders dated 15 July 2025, the plaintiff seeks orders to either set aside the Statutory Demand, or to have it varied by reducing the amount of the demand to $418,454.26. The defendant resists these arguments and presses for orders that the Application be dismissed.
[10] First Brown Affidavit [7].
Having regard to the submissions filed by the parties and those advanced by counsel at the hearing on 16 July 2025, and in the context of the factual matters detailed below in these reasons, the following primary issues arise for determination on this Application (noting also that a number of evidentiary objections were raised by the parties, which have been the subject of the Court's rulings):
1.First, whether the affidavit evidence initially filed by the plaintiff was sufficient to meet the minimum statutory requirements of s 459G CA, to properly raise the offsetting claims and abuse of process argument which are described below.
2.Second, whether the plaintiff has sufficiently demonstrated, to the requisite standard, that it has 'true' and 'genuine' offsetting claims for the purposes of s 459H(1)(b) CA.[11] The plaintiff relies on three offsetting claims, none of which it says were offset against the amount awarded to the defendant by the Determination.[12] The plaintiff submits that these claims may legitimately be erected in response to the Statutory Demand. The offsetting claims are for:
[11] See Issue C in the Outline of Issues for Determination dated 15 July 2025 filed by the plaintiff.
[12] Plaintiff's submissions dated 10 June 2025 [44].
(a)liquidated damages under the Subcontract;
(b)damage to property under the Subcontract and associated loss; and
(c)backcharges for providing an operator to perform the defendant's works.
There is also a sub-issue as to the relevance of any amount held by the plaintiff as security in the form of cash retention under the Subcontract, which I will need to address.
3.Third, in the alternative, whether the plaintiff has sufficiently demonstrated, to the requisite standard, that the Statutory Demand constitutes an abuse of process for the purposes of s 459J(1)(b) CA.[13] The plaintiff's contention that the Statutory Demand constitutes an abuse of process is based on two matters:[14]
(a)it is asserted that there is an overlap between the amount the defendant claimed in the Adjudication Proceeding (and by extension, the Statutory Demand) and the amount the defendant claimed in the parallel Recovery Proceeding initiated in this Court; and
(b)it is asserted that the defendant has maintained the Statutory Demand in circumstances in which it knew, or ought to have known, that the plaintiff was solvent.
[13] See Issue A in the Outline of Issues for Determination dated 15 July 2025 filed by the plaintiff.
[14] Plaintiff's submissions dated 10 June 2025 [70].
The plaintiff initially presented the abuse of process argument as an alternative contention to the offsetting claims argument, but elevated this point in the batting order contained in the issues list prepared for the hearing on 16 July 2025.
The plaintiff also sought to rely on s 459J(1)(b) CA in combination with its arguments based on offsetting claims under s 459H(1)(b) CA. That is, the 'some other reason' to set aside the Statutory Demand pursuant to s 459J(1)(b) CA is also said to consist of both the existence of the parallel processes (being the Recovery Proceeding and the service of the Statutory Demand) and the existence of some offsetting claims under s 459H(1)(b) CA.[15]
[15] See Issue B in the Outline of Issues for Determination dated 15 July 2025 filed by the plaintiff.
There is a question whether the combined reliance on these statutory grounds under the rubric of s 459J(1)(b) CA is permissible, noting that one ground is mandatory (if established) and the other ground is fundamentally discretionary. For my part, the conflation of these bases would appear to be inconsistent with the structure of the statutory regime, as well as with the language of s 459J(1)(b) CA which refers to 'some other reason'. Given the conclusions I have reached in these reasons, however, it is an issue that does not require a final determination.

C. Procedural history of the Application

I will now briefly trace the procedural history of the matter and identify the materials adduced by the parties.

(1) Affidavit material

The parties to this proceeding filed 13 affidavits which have, in varying ways, descended into the factual detail of their dispute. There were no applications to cross-examine any of the deponents. The table in Attachment B to these reasons identifies the affidavits which were filed.
The Application itself was initially supported by an affidavit sworn by Mr Brown, who is the Group Commercial Manager for the plaintiff, and to which I will refer as the First Brown Affidavit. The defendant took objection to whether this affidavit was sufficient for the purposes of s 459G(3) CA, which argument I will address in due course.[16]
[16] Mr Brown swore a further affidavit, on 29 November 2024, which I will refer to as the Second Brown Affidavit.
The Application was first heard by Master Russell on 22 October 2024 and programming directions were made to facilitate a special appointment on 10 December 2024.[17] The matter was then transferred to my CMC list.
[17] Folio 7.
As a result of the volume of objections to the affidavit material, the parties sought the listing of a directions hearing in the matter, which was held on 21 November 2024. I made directions thereafter to program the matter to a hearing on 19 December 2024 for the purpose of determining the objections to the evidence.[18]

(2) Hearing on 19 December 2024

[18] Folio 13.

On 18 December 2024, an interlocutory process was filed by the defendant pursuant to O 26 r 1 and O 26 r 2 of the Rules of the Supreme Court 1971 (WA) (RSC). The interlocutory process sought orders for further documents to be produced by the plaintiff.
In terms of submissions, I received an aide memoire from the plaintiff on 21 November 2024,[19] an outline of submissions from the plaintiff on 10 December 2024,[20] an outline of submissions from the defendant on 16 December 2024,[21] and an outline of submissions from the plaintiff on 19 December 2024,[22] the latter being received on the morning of the hearing.
[19] Folio 12.
[20] Folio 18.
[21] Folio 22.
[22] Folio 25.
The hearing on 19 December 2024 ran for a half day. I noted at the outset of the hearing that there were a lot of 'moving parts' in the application, more than 'one might ordinarily have on a statutory demand to set-aside application'.[23] Following exchanges with both counsel, during which I expressed some concern at the volume of material being relied upon for the purposes of this type of application, which as I have already noted ought never become a mini-trial of the underlying issues, the matter was stood down for further conferral to occur.
[23] ts 2.
Following that conferral, argument proceeded in relation to several of the issues raised by the parties.
At the conclusion, I made orders to dismiss the defendant's interlocutory process, to allow the plaintiff an opportunity to re-assess whether it conceded the defendant's objection to parts of the First Brown Affidavit having regard to the implied undertaking submission made by the defendant,[24] to permit the defendant a further opportunity to confirm whether its submission that the proceedings were final in nature would be pressed,[25] and to permit the defendant to file responsive submissions.
[24] The defendant had objected to par 19 and attachment SB-13 of the First Brown Affidavit.
[25] Being the proposition at par 18 of the defendant's submissions dated 16 December 2024.
I otherwise indicated I would determine the outstanding objections on the papers.

(3) Court's ruling dated 4 May 2025

On 5 May 2025, the Court communicated to the parties its determination in relation to the remaining objections. Those rulings, which are dated 4 May 2025, are set out in Attachment A to these reasons, and supporting reasons are incorporated into those reasons and the body of these reasons to the extent necessary. See, in particular, heading K below.

(4) Hearing on 16 July 2025

For the purposes of the substantive hearing on 16 July 2025, I received further submissions from the parties and a further affidavit from Mr Williams sworn 23 June 2025.[26] The further submissions consisted of an outline of submissions from the plaintiff dated 10 June 2025,[27] an outline of submissions from the defendant dated 24 June 2025,[28] and a responsive outline from the plaintiff dated 9 July 2025.[29]
[26] Folio 37.
[27] Folio 36.
[28] Folio 38.
[29] Folio 39.
I also invited the parties to provide a list of issues, which I received from each of the parties on 15 July 2025.

D. Legislative framework - Corporations Act

(1) Relevant provisions

It is convenient at this point to set out the relevant provisions within div 3 pt 5.4 of the CA which provide the statutory basis for the plaintiff's Application. The primary provisions which are the focus of the Application are s 459G, s 459H and s 459J CA. I will set out these provisions and then briefly identify the applicable orthodox principles.
Section 459G of the Corporations Act provides as follows:
s 459G Company may apply

(1)A company may apply to the Court for an order setting aside a statutory demand served on the company.
(2)An application may only be made within the statutory period after the demand is so served.
(3)An application is made in accordance with this section only if, within that period:
(a)an affidavit supporting the application is filed with the Court; and
(b)a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.

Section 459H CA provides that if the Court is satisfied there is a 'genuine dispute' about the existence or amount of a debt to which a statutory demand relates and/or that a company has an 'offsetting claim' then it 'must calculate the substantiated amount of the demand in accordance with the formula: Admitted total - Offsetting total'.
Section 459H CA provides in terms as follows, noting that the 'statutory minimum' referred to therein is presently $4,000:[30]
[30] Corporations Regulations 2001 (Cth), reg 5.4.01AAA(1)(b).
s 459H Determination of application where there is a dispute or offsetting claim
(1)This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:
(a)that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;
(b)that the company has an offsetting claim.
(2)The Court must calculate the substantiated amount of the demand in accordance with the formula:
Admitted total - Offsetting total
where:
"admitted total" means:
(a)the admitted amount of the debt; or
(b)the total of the respective admitted amounts of the debts;

as the case requires, to which the demand relates.

"offsetting total" means:
(a)if the Court is satisfied that the company has only one offsetting claim--the amount of that claim; or
(b)if the Court is satisfied that the company has 2 or more offsetting claims--the total of the amounts of those claims; or

(c)otherwise--a nil amount.

(3)If the substantiated amount is less than the statutory minimum, the Court must, by order, set aside the demand.
(4)If the substantiated amount is at least as great as the statutory minimum, the Court may make an order:
(a)varying the demand as specified in the order; and
(b)declaring the demand to have had effect, as so varied, as from when the demand was served on the company.

(5)In this section:
"admitted amount", in relation to a debt, means:
(a)if the Court is satisfied that there is a genuine dispute between the company and the respondent about the existence of the debt--a nil amount; or
(b)if the Court is satisfied that there is a genuine dispute between the company and the respondent about the amount of the debt -- so much of that amount as the Court is satisfied is not the subject of such a dispute; or
(c)otherwise--the amount of the debt.

"offsetting claim" means a genuine claim that the company has against the respondent by way of counterclaim, set-off or cross-demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates).
"respondent" means the person who served the demand on the company.
(6)This section has effect subject to section 459J.

Section 459J(1)(b) CA is also relied upon by the plaintiff, in support of its abuse argument. The section provides:
s 459JSetting aside demand on other grounds
(1)On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:
(a)because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or
(b)there is some other reason why the demand should be set aside.
(2)Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect.

(2) Relevant principles

The proper approach to be adopted by the Court when assessing whether there is a 'genuine dispute' for the purposes of s 459G(1)(a) CA, or for assessing the existence of an 'offsetting claim' for the purposes of s 459G(1)(b) CA is well-established. In neither case is it the Court's function to undertake an extended inquiry or attempt to weigh the merits of the dispute. Put simply, it is not part of the Court's function on applications brought pursuant to div 3 pt 5.4 to resolve the dispute between the parties.
The following principles are well supported on the authorities:
1.The text of s 459H CA, insofar as an 'offsetting claim' is concerned, is intended to require something more than the mere 'raising' of a dispute and the mere 'making' of a claim by a party. The definition of 'admitted amount' in s 459H(5) CA, and the terms of s 459H(1)(a) CA, both refer to the 'existence' of a 'genuine dispute'. Further, the definition of 'offsetting claim' in s 459H(5) refers to the 'existence' of a 'genuine claim'. The provisions assume that the dispute and offsetting claim have an objective existence, the genuineness of which is capable of being assessed.[31]
2.The word 'genuine' has been included in the legislation to sound a note of warning that the propounding of spurious disputes and claims is to be expected, but must be excluded from the Court's consideration.[32]
3.In determining whether it is satisfied that the company has a genuine offsetting claim, the Court considers both the sufficiency of the evidence relied on to support the existence of an offsetting claim, and the sufficiency of the evidence in relation to the amount of the claim.[33]
4.A company seeking to set aside or reduce a statutory demand on the basis of an offsetting claim does not need to set out evidence supporting the claim in meticulous detail. The evidence need only be sufficient for the Court to make a reasonable assessment or estimate of the amount of the offsetting claim. It is sufficient that there be, on the evidence, a plausible and coherent basis for quantifying the genuinely asserted claim, or showing that the claim, despite elements of uncertainty, can be seen to be, in any event, greater than the debt demanded. The narrower the margin between the alleged debt and the plaintiff's estimate or initial quantification, the greater will be the need for particularity in assessing the amount of the offsetting claim.[34]
5.In conducting the above exercise, the Court must keep in mind that the task which it is performing is the determination of the amount of a genuine claim, which must exist in fact, rather than resolving the claim or attempting to predict its outcome.[35]
[31] Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA & Pharmagel SpA (1994) 15 ACSR 347, 353 (Lindgren J) (Rohalo Pharmaceutical); H'Var Steel Services Pty Ltd v TDC Concrete Pty Ltd [2017] WASCA 63 (Newnes JA, Murphy JA and Beech J) (H'Var Steel Services); and CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31 [35] (Buss P and Vaughan JA) (CA & Associates).
[32] Rohalo Pharmaceutical (353); H'Var Steel Services [35].
[33] H'Var Steel Services [36].
[34] H'Var Steel Services [37]; and TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd [2008] VSCA 70 [71] (TR Administration).
[35] H'Var Steel Services [38].
Ultimately, it will suffice if there is a 'plausible contention' requiring 'further investigation', which may be equated to the criterion of whether there is a 'serious question to be tried'.[36] The threshold is relatively low.[37]
[36] CA & Associates [35(2)]; Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330 (Kyrou, Ferguson and Kaye JJA).
[37] Grandview Ausbuilder Pty Ltd v Budget Demolition Pty Ltd [2019] NSWCA 60 [61] and [66] (Bell P) (Grandview Ausbuilder).
There is a body of authorities which address the operation of s 459H(1)(b) CA (in respect of offsetting claims) in the context of adjudications under the SOP Act and its analogous regimes throughout Australia. I will address these authorities when considering the arguments developed by the parties in relation to issue 2 below.
Turning to s 459J CA, it is apparent that the broad language in the provision, namely 'there is some other reason why the demand should be set aside' which is found in s 459J(1)(b) CA, provides the Court with a wide discretion whether a party should be denied the use of the statutory procedure. The onus is on the applicant to demonstrate that the court should exercise its discretion to set aside the statutory demand.[38] The discretion may be exercised even without showing that a substantial injustice would otherwise be caused.[39]
[38] MNWA Pty Ltd v Deputy Commissioner of Taxation [2016] FCAFC 154 [177] (Farrell and Davies JJ) (MNWA).
[39] Hoare Bros Pty Ltd v Deputy Commissioner of Taxation (1996) 62 FCR 302, 317 - 318 (Black CJ, Einfeld and Sackville JJ).
The reference to 'some other reason' is a reference to a reason not otherwise indicated by the legislation as a ground to set aside a statutory demand, such as the grounds provided for in s 459H CA.[40] The provision exists to maintain the integrity of the process under pt 5.4 and is to be used to counter an attempt at subversion of the statutory scheme, although importantly it is not to be exercised by reference to subjective notions of fairness.[41]
[40] Kellogg Brown & Root Pty Ltd v Doric Contractors Pty Ltd [2014] WASC 206 [40] (Kellogg).
[41] Meehan v Glazier Holdings Pty Ltd [2005] NSWCA 24; (2005) 53 ACSR 229.
It has been held that a statutory demand will be set aside for 'some other reason' under s 459J(1)(b) CA where the conduct of the creditor in issuing the statutory demand is 'unconscionable, an abuse of process, or gives rise to substantial injustice',[42] and 'conduct falling within this category includes using the statutory demand process by a creditor as a debt collection device'.[43]
[42] Grocon Constructors (Qld) Pty Ltd v Dexus Funds Management Ltd as trustee for the Dexus 480Q Trust (No 2) [2019] FCA 1117 [14] - [15] (Moshinsky J) (Grocon).
[43] Grocon [14] (Moshinsky J).
Indeed, it has been accepted for some time that the Court retains a residual discretion to restrain reliance on the statutory demand procedure where there is an abuse of process.[44]
[44] Createc Pty Ltd v Design Signs Pty Ltd [2009] WASCA 85 [49] (Martin CJ, with whom Owen and Miller JJA agreed) (Createc).
The provision has been successfully deployed by applicants in circumstances in which a party resorts to instituting parallel processes in respect of the relevant debts.[45] Specifically, where a party resorts to use of the statutory demand procedure whilst also pressing debt recovery proceedings. I will address this issue further below when dealing with issue 3.
[45] Re Zarzar Pty Ltd [2017] NSWSC 93 (Re Zarzar); In the matter of Modern Wholesale Jewellery Pty Ltd [2017] NSWSC 236 (Modern Wholesale Jewellery).

E. Legislative framework - the SOP Act

The SOP Act first came into effect in Western Australia on 25 June 2021, with various provisions taking effect over the period through until 1 February 2024, repealing the Construction Contracts (Former Provisions) Act 2004 (WA), which itself replaced the Construction Contracts Act 2004 (WA). The SOP Act effected a range of changes to the pre-existing legislation regime, including the introduction of a statutory right to payment in addition to the contractual rights to payment.
The broad purpose of the prior legislative regime, as with the SOP Act, insofar as it relates to payment disputes, is as follows:[46]
[T]o ensure that, in construction contracts, progress claims are paid on time and that principals obliged to pay do not act as their own judge and jury and hold up payment on their own assertion that they have a defence warranting refusal to pay. It is a 'pay now, argue later' system.
[46] Diploma Construction [55] (Pullin JA, Newnes and Murphy JJA agreeing). See, more recently, Seaward J in Nepean Conveyors Pty Ltd v Linkforce Industrial Services Pty Ltd [2024] WASC 71 [25] - [28] and [37] - [39].
Within the SOP Act, s 3(1) sets out the object of the legislation. The stated object is to 'provide an effective and fair process for securing payments to persons who undertake to carry out construction work, or to supply related goods and services, in the building and construction industry'. That object is achieved primarily by 'giving those persons a statutory entitlement to progress payments' and 'establishing an expedited procedure for making claims for progress payments, for responding to those claims and for the adjudication of disputed claims', among other matters.[47]
[47] SOP Act, s 3(2).
Part 2 of the SOP Act deals with the right to progress payments under construction contracts. Pursuant to s 17(1), a person who, under a construction contract, has undertaken to carry out construction work, or to supply related goods and services, is entitled to receive payment under this section, referred to as a 'progress payment'.
Pursuant to s 17(2), a 'progress payment' includes the final payment for construction work carried out, or for related goods and services supplied, under a construction contract, a single or one-off payment for construction work carried out, or for related goods and services supplied, under a construction contract, and a milestone payment under a construction contract, being a payment that is based on an event or date.
Pursuant to s 17(3), a progress payment to which a person is entitled under s 17 does not include payment for any expenses, loss or damages incurred because of a breach of a construction contract.
The amount of a 'progress payment' is the amount calculated in accordance with the contract, as set out in s 18. The construction work carried out under a construction contract must be valued in accordance with the contract, or where the contract does not so provide, having regard to the contract price, any rates or prices in the contract, any agreed variations, and the estimated costs of rectifying defective work.[48]
[48] SOP Act, s 19(1).
The date for payment of a progress payment issued by a subcontractor is 25 business days after the 'payment claim' is made for the 'progress payment'. The making of a 'payment claim', and the procedure for obtaining 'progress payments' generally, is addressed in pt 3 of the SOP Act. Section 22(1) provides:
(1)A person who is or claims to be entitled to a progress payment may give a claim for the progress payment (a payment claim) to the person who, under the relevant construction contract, is or may be liable to make the progress payment.
A respondent may respond to a 'payment claim' by giving a 'payment schedule' to the claimant within the time period specified.[49] A failure to give a 'payment schedule' has consequences. Section 26 provides:
The respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates if the respondent does not respond to the claim by giving a payment schedule to the claimant within the time allowed for the response.
[49] SOP Act, s 25(1).

The steps that may thereafter be taken by the party which has issued the 'payment claim', are set out in s 27. The full terms of that section are set out below:
27.Consequences of not paying claimed or scheduled amount
(1)In this section -
claimed or scheduled amount owed, in relation to a payment claim, means -
(a)if the respondent did not respond to the payment claim by giving a payment schedule to the claimant within the time allowed for the response - the claimed amount under the payment claim; or
(b)if the respondent did respond to the payment claim by giving a payment schedule to the claimant within the time allowed for the response and the payment schedule indicates the scheduled amount that the respondent proposes to pay to the claimant - that scheduled amount.
(2)If a claimant makes a payment claim for a progress payment and the respondent does not pay the claimed or scheduled amount owed to the claimant in full on or before the due date for the progress payment, the claimant may do either but not both of the following -
(a)recover from the respondent the unpaid portion of the claimed or scheduled amount owed as a debt due to the claimant in a court of competent jurisdiction;
(b)make an adjudication application in relation to the payment claim.
Notes for this subsection:
1.Division 7 provides that in addition to taking debt recovery action or making an adjudication application, the claimant may suspend work or supply under the construction contract.
2.If no payment is proposed in a payment schedule, the claimant cannot commence proceedings in a court under this section, but may make an adjudication application.
(3)If the claimant commences proceedings under this section in a court of competent jurisdiction to recover from the respondent the unpaid portion of the claimed or scheduled amount owed -
(a)judgment in favour of the claimant is not to be given unless the court is satisfied that the relevant circumstances exist; and
(b)the respondent is not, in those proceedings, entitled -
(i)to bring any cross-claim against the claimant; or
(ii)to raise any defence in relation to matters arising under the construction contract.
(4)The relevant circumstances for the purposes of subsection (3)(a) are as follows -
(a)the respondent -
(i)did not respond to the payment claim by giving a payment schedule to the claimant within the time allowed for the response; or
(ii)did respond to the payment claim by giving a payment schedule to the claimant within the time allowed for the response, and the payment schedule indicates the scheduled amount that the respondent proposes to pay to the claimant;
(b)the respondent has not paid the claimed or scheduled amount owed to the claimant in full on or before the due date for the progress payment;
(c)if the payment of the claimed or scheduled amount owed is dependent on the substitution of performance security under Division 6 - the requisite compliant performance bond has been duly executed by an authorised issuing institution as referred to in that Division.
Div 2 pt 3 of the SOP Act concerns the adjudication process. The adjudication process is to be conducted in a speedy manner, consistent with the objects of the legislation. At the conclusion of the process, the adjudicator may make a determination that the respondent must pay an amount to the claimant, typically within 5 business days.[50] If the respondent fails to make the payment in full, the claimant may request the Building Commissioner appointed under the legislation to provide a certified copy of the determination 'to enable enforcement of the adjudicated amount as a monetary judgment of a court of competent jurisdiction'.[51]
[50] SOP Act, s 52(1).
[51] SOP Act, s 53(1).
Further, by operation of s 54(2) of the SOP Act, a certified copy of a determination issued under s 53 is 'taken to be a monetary judgment of a court of competent jurisdiction'.[52]
[52] The term 'monetary judgment' is defined by reference to the Civil Judgments Enforcement Act 2004 (WA), namely a 'judgment or an order of a court that requires or has the effect of requiring a person to pay money, whether or not the judgment or order contains any other requirements'.
Accordingly, where a determination is made by an adjudicator under div 2 pt 3 of the SOP Act requiring a payment to be made by a respondent, where the amount is not paid in full, and where the claimant obtains a certified copy of the determination pursuant to s 53, the amount therein stated is a debt presently due and payable by the respondent. That is consistent with the position under the predecessor legislation.[53]
[53] Diploma Construction [55] (Pullin JA, Newnes and Murphy JJA agreeing).
Finally, to complete the review of the relevant provisions of the SOP Act, it is necessary to make reference to s 55, which is headed 'Effect of this Part on civil proceedings'. The following aspects of the regime should be noted for present purposes, which serve to reinforce the interim nature of proceedings and outcomes under the SOP Act:
(a)Pursuant to s 55(1), nothing in pt 3, which includes a determination made by an adjudicator under s 38 and a monetary judgement arising from a certified copy of a determination under s 54, 'affects any right' that a party to a construction contract may have under the contract or may have apart from the legislation in respect of anything done or omitted to be done under the contract.
(b)Pursuant to s 55(2), nothing done under or for the purposes of pt 3 affects any civil proceedings arising under a construction contract, whether under pt 3 or otherwise, except as provided by s 55(3).
(c)Section 55(3) provides that, in any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal must, in any order or award it makes in those proceedings, allow for any amount paid or repaid to a party to the contract under or for the purposes of pt 3, and may make any orders it considers appropriate for the restitution of any amount so paid or repaid, and any other orders it considers appropriate, having regard to its decision in those proceedings.

F. Factual background

(1) The Subcontract - an overview

I have already mentioned the existence of the Subcontract between the plaintiff and the defendant concerning the Rocklea Project.[54] The instrument is a detailed document, incorporating a series of contract particulars and six attachments.
[54] First Brown Affidavit [8] and Attachment SB-03 (being a copy of the Subcontract).
The 'Subcontract Price' was $1,127,178.10, as appears in item 6 of the contract particulars.
Due to a mistake by the parties (which I understand is not contentious), the Subcontract referred to the incorrect scope of work. The parties subsequently agreed that the scope of works set out in the Request for Quotation issued by the plaintiff to the defendant dated 5 April 2023, would form part of the Subcontract and would govern the scope of works the defendant would complete under the Subcontract.[55]
[55] First Brown Affidavit [9] and Attachments SB-04 and SB-05; Plaintiff's submissions dated 10 June 2025 [3].
The Request for Quotation included a site plan for the Rocklea Project, which is extracted below, and which shows the work areas the subject of the Subcontract enclosed in red boxes. The diagram shows the various accommodation buildings, laundries and associated facilities, the car parks, and the recreation and transit complex, all of which are the subject of the Subcontract.[56] The work to be undertaken by the defendant included civil works to new modular buildings and civil and external works for the Project.
[56] First Brown Affidavit, Attachment SB-04.
The term of the Subcontract was relatively brief, around 5 months. The stated 'Commencement Date' in the Subcontract was 7 June 2023 and the stated 'Works Completion Date' was 19 November 2023, with a 'Project Completion Date' of 30 January 2024.[57]

(2) Relevant terms of the Subcontract

[57] See item 7 of the contract particulars.

The parties' submissions referred to a range of clauses in the Subcontract, which I will briefly describe below, before outlining the factual chronology.
The Subcontract included a clause addressing the performance by the subcontractor, delay and the defendant's liability for liquidated damages, the full terms of which are as follows:
2.Performance by Subcontractor
2.1.Performance
The Subcontractor must perform the Works in a safe, timely, and environmentally responsible manner in accordance with:
(a)Good Industry Practice;
(b)any Direction of the Company;
(c)all legislation, licences, permits, codes and standards relevant to the performance of the Works;
(d)the Company and/or Principal's policies and procedures where these have been provided to the Subcontractor in writing; and
(e)this Subcontract.
2.2.Completion
The Subcontractor shall Complete the Works in accordance with the construction programme provided by the Company and shall Complete the Works by the relevant Milestone dates and Works Completion Date unless an extended timeframe has been granted to the Subcontractor in writing by the Company Representative.
2.3.Delay
(a) If the Subcontractor becomes aware the that the Completion of the Works will be delayed, the Subcontractor shall notify the Company in writing within 2 Business Days of the cause of the delay detailing the cause of the delay and proposed mitigation.
(b) The Subcontractor shall only be entitled to an extension of time to the Milestone dates and/or Works Completion Date where the delay is an Excusable Delay.
(c) Where the delay so notified by the Subcontractor at clause 2.3(a) is an Excusable Delay then the Company must amends [sic] the Milestone Dates (if any) and the Works Completion Date to accommodate the Excusable Delay.
(d) Where the delay is an Excusable delay arising from paragraph (a), (b), or (c) of the definition of Excusable Delay at clause 1.1 then the Subcontractor shall be entitled to recover its reasonable costs arising from such delay together with a reasonable sum in respect of overheads.
2.4.Liquidated Damages
(a) In addition to other remedies in this Subcontract, if the Subcontractor fails to Complete the Works on or before the Works Completion Date and such failure is not caused by an Excusable Delay, then the Subcontractor shall pay to the Company upon demand by the Company the sum specified in Item 10 of the Subcontract Particulars for each and every day or part thereof during which the Works remain incomplete after the Works Completion Date.
(b) The parties agree that the sums identified in Item 10 of the Subcontract Particulars are genuine and reasonable pre-estimate of the loss to the Company due to the delay in Completion of the Works.
Within the contract particulars, item 10 identifies the liquidated damages as being $5,317 per day, to a maximum amount of 10% of the 'Subcontract Price', for the 'failure to Complete the Works by the Works Completion Date, which then results in the Company failing to achieve Completion by the Project Completion Date'.
The term 'Excusable Delay', which is employed within cl 2.3 and cl 2.4 as extracted above, is defined in cl 1.1 of the Subcontract, as follows:
Excusable Delay means a delay caused by:
(a)the Company and/or the Principal which is not attributable to any act, omission, negligence or default of the Subcontractor;
(b)a variation to the Works where additional time is required to Complete the variation Works;
(c)suspension of the Works by the Company unless the suspension is caused by the Subcontractor;
(d)inclement or adverse weather; including dry back period. [sic]
(e)a delay caused by Force Majeure.
The Subcontract includes various clauses governing the making and payment of payment claims. In particular:
(a)Pursuant to cl 6.1(e) of the Subcontract, the parties agreed that the plaintiff was not under any obligation to pay for a variation that the plaintiff had not authorised prior to the defendant commencing the works relating to the claimed variation.[58]
(b)Pursuant to cl 7.1 of the Subcontract (and item 8 of the contract particulars), the defendant agreed to submit invoices to the plaintiff each month on the due date (the last business day of the month) in relation to actual progress completed by reference to prices, fees or other amounts specified in the Subcontract.
(c)Pursuant to cl 7.2 of the Subcontract (and item 8 of the contract particulars), the plaintiff agreed to pay the defendant the invoiced value within 25 business days from the date on which the defendant's claim was submitted.
(d)Pursuant to cl 7.5 of the Subcontract, if the plaintiff disputed any amount shown on the defendant's invoice, it agreed to notify the defendant within 21 days of receipt of the invoice and would pay any amounts not in dispute in accordance with cl 7.2 of the Subcontract, provided that the payment by the plaintiff of any amount the subject of a disputed invoice was not considered acceptance of the amount in dispute or of the plaintiff's liability to make that payment.
[58] Allied to this, pursuant to cl 7.1(e) of the Subcontract (and item 3 of the contract particulars), the defendant agreed that it would not submit an invoice for a variation unless it had been approved by the Company Representative.
The Subcontract includes a security regime. Pursuant to cl 9.1 of the Subcontract, and item 9 of the contract particulars, security for performance of the 'Works' was to be provided by way of cash retention, in the total value of 10% of the contract sum. There are infelicities in the drafting of item 9, but in general terms it appears that 50% of the security was to be released upon the 'Completion' of the 'Works', with the balance held until the conclusion of the 'Defects Liability Period'.
The plaintiff also refers in its submissions to cl 16(a) of the Subcontract, which is an indemnity provision. By that provision, the defendant agreed to be liable for and indemnify the plaintiff against certain liability, loss, claim or proceeding. The indemnity was 'in respect of' loss, destruction or damage to any property, real or personal, arising out of or in the course of the defendant's execution of the works, or the execution of the works or any portion thereof by the defendant's employees, agents or subcontractors. The proviso to the clause is that the defendant's liability is to be reduced proportionately to the extent an act or omission of the plaintiff contributed to the loss, damage, death or injury.

(3) Payment claim made in December 2023

Pursuant to the Subcontract, the defendant relevantly issued two payment claims to the plaintiff, both said to be made under the SOP Act.
The first payment claim was made on 22 December 2023, being the December 2023 Claim. On that date, the defendant sent a payment claim to the plaintiff in the sum of $920,129.35 (including GST).
The following table is extracted from the December 2023 Claim, showing the defendant's overall calculation of that claim.[59]
[59] First Brown Affidavit, Attachment SB-07.
The amounts included as the 'Subcontractor Works', the 'Variations', and 'the 'Deductions', as well as the amount 'Previously Paid', are supported by detailed schedules attached to the December 2023 Claim.

(4) Termination of the Subcontract and liquidated damages

The defendant failed to complete the 'Works' by the 'Works Completion Date', and the plaintiff failed to achieve completion under its contract with Rio Tinto.
Mr Brown deposes that, on 29 February 2024, some 102 days after the 'Works Completion Date' had expired, the plaintiff terminated the Subcontract for convenience pursuant to cl 17 of the Subcontract.[60] Clause 17 permitted the plaintiff, in its absolute discretion, to terminate the Subcontract by giving notice to the defendant of its intention to do so.
[60] First Brown Affidavit [10] and Attachment SB-06 (the letter from the plaintiff to the defendant sent on 29 February 2024); Second Brown Affidavit [27] - [30].
Mr Brown deposes that the defendant was therefore liable to pay liquidated damages to the plaintiff in the sum of $542,334, subject of course to the 10% cap.[61]
[61] Second Brown Affidavit [27] - [30].
Given the determination made by the adjudicator, to which I will refer below, which set an adjusted Subcontract Price of $2,258,237.17, Mr Brown deposes that the liquidated damages liability, with the cap of 10%, was $225,823.71.[62]

(5) Payment claim made in May 2024

[62] Second Brown Affidavit [27] - [30].

The second payment claim was made on 31 May 2024, being the May 2024 Claim. On that date, the defendant sent a progress claim for all works performed up to that date in the sum of $1,585,203.10 (including GST).
The following table is extracted from the May 2024 Claim, showing the defendant's overall calculation of that claim.[63]

[63] First Brown Affidavit, Attachment SB-08.

On 21 June 2024, a payment schedule was sent by the plaintiff in response to the above payment claim.[64] That response asserted that the defendant was not entitled to any payment in relation to the claim, and also asserted that the plaintiff had claims for damage to property and a liquidated damages claim. The response did not expressly mention a backcharges claim.
[64] First Brown Affidavit, Attachment SB-15.
The plaintiff's response, which was authored by Mr Brown, opened with something of a sweeping criticism of the payment claim, employing some serious epithets as well as a high level metric analysis of the progress under the Subcontract, in the following terms:[65]
It is readily apparent that the Claim is fundamentally flawed and disingenuous. The original Subcontract Price was $1,127,178.10 with an anticipated duration of 6 months for work onsite. The Subcontractor has claimed only 57% progress of this. At the same time, the Subcontractor alleges in the Claim that it is entitled to an aggregate sum of $2,865,825.41 for works performed over 9 months (including a period where the Subcontractor wrongfully suspended works). So despite only performing 57% of its original scope, the Subcontractor is alleging that it performed nearly triple the amount of work in a duration that has only increased by 50%. This is clearly false as is addressed in detail herein.

(6) Civil proceedings commenced in the Supreme Court by the defendant

[65] First Brown Affidavit, Attachment SB-15, page 361.

As is evident from the contemporaneous correspondence passing between the parties, the commercial relationship between the plaintiff and the defendant became strained as a result of disputes concerning the Rocklea Project. The disputes resulted in the legal processes being set in motion.
The first legal process was the civil action commenced in this Court on 7 June 2024 by the defendant against the plaintiff, seeking recovery of sums under the Subcontract. I have referred to this above as the Recovery Proceeding.
A statement of claim was filed and served in the Recovery Proceeding on 29 July 2024. It is evident that the amount claimed by the defendant in the Recovery Proceeding was precisely the amount which was the subject of the December 2023 Claim issued by the defendant, being the sum of $920,129.35.
On 29 July 2024, the defendant filed a chamber summons in the Recovery Proceeding in which it sought summary judgment against the plaintiff in the above sum.
On 22 October 2024, this Court made orders staying the defendant's application for summary judgment and the Recovery Proceeding itself, pending the Court's determination of the Application to set aside the Statutory Demand.

(7) Adjudication proceedings commenced by the defendant

The second legal process was the adjudication proceeding initiated by the defendant on 19 July 2024, against the plaintiff, pursuant to the SOP Act. I have referred to this above as the Adjudication Proceeding.
The foundation of the proceeding was the May 2024 Claim. The Adjudication Proceeding ultimately led to a Determination being made on 30 August 2024.[66] Within the Determination, the adjudicator awarded the defendant the sum of $1,031,136 (inclusive of GST), comprised of:
(a)$916,856.04, being the adjudicated amount;
(b)$7,261.77, being interest on the adjudicated amount; and
(c)$107,019.00, being 90% of the adjudicator's fees and expenses.
[66] First Brown Affidavit [6] and Attachment SB-02 (being annexed to the Statutory Demand).
In determining that the adjudicated amount was $916,856.04, the adjudicator determined that the total value of work the defendant performed under the Subcontract was equal to $2,258,237.17 (excluding GST).[67] In effect, then, the adjudicator determined that this amount was the adjusted Subcontract Price.
[67] Determination [777] - [778].
I should observe that the Determination itself is comprehensive. It runs to 796 paragraphs over 164 pages. The Determination addresses over 70 variation claims, as well as the set-offs claimed by the plaintiff. The adjudicator rejected the three set-off claims, for liquidated damages, for damage to property, and for backcharges for an operator.[68] In brief:
(a)the adjudicator concluded that the plaintiff had failed to substantiate the liquidated damages claim, and found the plaintiff ought to have extended the 'Works Completion Date' for 'Excusable Delays' to a date beyond the date of termination;
(b)the adjudicator concluded that the plaintiff had failed to establish the claim for damage to property or the quantum; and
(c)the adjudicator primarily concluded that, as the claim for backcharges had not been included in the payment schedule, he was precluded from considering it.

(8) Statutory Demand issued by the defendant

[68] First Brown Affidavit, Attachment SB-2, [777] and see also [744] - [775].

On 10 September 2024, in the wake of the Determination, the Statutory Demand was issued by the defendant.[69] By its terms, the Statutory Demand states that monies are owing by the defendant to the plaintiff pursuant to the 'Certified Adjudication Determination dated 2 August 2024'.[70] As the Statutory Demand correctly states, that determination is 'taken to be a monetary judgment of a court of competent jurisdiction', pursuant to the terms of s 54(2) SOP Act.
[69] First Brown Affidavit [5] and Attachment SB-02 (Folio 2).
[70] The reference to the date is incorrect but no issue was taken in this regard. The Determination was issued on 30 August 2024.

G. Extent of the overlap between the processes

Before I address the primary issues in the Application, I should deal with some factual questions as to the extent of the overlap between the various processes on foot. I refer here to the December 2023 Claim, the May 2024 Claim, the Recovery Proceeding, the Determination, and the Statutory Demand. The parties were not in agreement as to the extent of the overlap across all of these processes, save for the first two matters addressed below.

(1) The December 2023 Claim and the Recovery Proceeding

It is common ground that the amount claimed in the December 2023 Claim is precisely the same amount, and for the same subject matter, as claimed in the Recovery Proceeding, being $920,129.35 (including GST).
The statement of claim in the Recovery Proceeding expressly pleads a claim based on 'Payment Claim 9', which is particularised as the payment claim claiming a progress payment of $920,129.35 (including GST), issued on 22 December 2023.[71]
[71] First Brown Affidavit, Attachment SB-11 (statement of claim [12] - [17]).
The statement of claim alleges that the defendant is entitled to recover that amount from the plaintiff as a debt due to it, in a court of competent jurisdiction, pursuant to s 27(2) SOP Act.[72] The prayer for relief seeks judgment in that sum.
[72] First Brown Affidavit, Attachment SB-11 (statement of claim [23]).
It is evident, then, that the defendant elected to pursue recovery of the December 2023 Claim, as permitted by s 27(2)(a) SOP Act, through recovery proceedings in a court of competent jurisdiction. That approach is permissible where the paying party has failed to give a payment schedule in response, within the time allowed, as is alleged in this case.[73] I refer to s 27(4)(a)(i) SOP Act which sets out the 'relevant circumstances' which must exist before judgment can be given in respect of recovery proceedings brought under s 27(2)(a) SOP Act.
[73] First Brown Affidavit, Attachment SB-11 (statement of claim [18]).
The alternative pathway for a party which has issued a payment claim is to pursue an adjudication, as is made apparent by s 27(2)(b) SOP Act.

(2) The Determination and the Statutory Demand

It is also common ground that the amount which is the subject of the Determination is precisely the same amount claimed in the Statutory Demand. The terms of the Statutory Demand make this clear.

(3) The December 2023 Claim and the May 2024 Claim

The parties were not in agreement as to the extent of the overlap between these claims, although both accept there is some overlap.
The plaintiff submits that the May 2024 Claim included claims for all the works and purported variation works that the defendant claimed in its December 2023 Claim, with the value of some items adjusted, together with claims for additional works and additional purported variation works that the defendant did not claim in its December 2023 Claim.[74] As I understood the plaintiff's submission, the May 2024 Claim includes the entirety of the subject matter of the December 2023 Claim, albeit with some different values.
[74] Plaintiff's submissions dated 10 June 2025 [8]; and see ts 73.
The defendant submits, based on the evidence of Mr Male, that an amount of $468,484.16 which was claimed in the December 2023 Claim was not claimed in the May 2024 Claim.[75] Mr Male accepts there is duplication between these two claims, however, which he calculates is at least $376,775.96.[76]
[75] Defendant's submissions dated 24 June 2025 [49]; Affidavit of Nicholas Male [18] - [20] and Attachment NMM-1.
[76] Defendant's submissions dated 24 June 2025 [50]; Affidavit of Nicholas Male [21].
As submitted by the defendant, the payment claim issued by the defendant in May 2024 'rolls up' claims from previously unpaid payment claims, which in this case includes part of what was claimed in the December 2023 Claim.[77]
[77] Defendant's submissions dated 24 June 2025 [65].
It appears to me, from the foregoing, that the May 2024 Claim covers all of the subject matter of the claims included in the December 2023 Claim, but with a different quantum attached to some of those claims, which accounts for the calculation made by Mr Male.

(4) The Statutory Demand (and the Determination) and the Recovery Proceeding (and the December 2023 Claim)

The evidence was somewhat unclear as to the extent of the overlap between the amount claimed in the Statutory Demand (being the amount awarded by the Determination) and the amount claimed in the Recovery Proceeding (being the amount of the December 2023 Claim).
The suggestion by the plaintiff that the defendant was claiming duplicated amounts in the Recovery Proceeding in this Court was described by the defendant in its written submissions as 'pejorative hyperbole'. That is something of a strong description and one that is in conflict with the plaintiff's assessment of the factual position. More importantly, it is hard to reconcile that description with the concession on the part of the defendant that there is an overlap. That concession appears in its submissions and was made by counsel.[78]
[78] Defendant's submissions dated 24 June 2025 [64] - [65]; and see ts 125.
I consider there is an overlap of some substance. Based on the plaintiff's assessment, the adjudicated amount claimed in the Statutory Demand, being $916,856.04, includes a substantial amount which is also the subject of the Recovery Proceeding.[79] The overlap amount, according to the plaintiff, is $404,796.77 (including GST).
[79] First Brown Affidavit [20] and [22]; ts 81.
Notwithstanding this calculation, and although the defendant accepted in its submissions there is an overlap between the claims in the Statutory Demand and the Recovery Proceeding, the precise amount was ultimately not clear to me on a review of all the materials. In the foregoing circumstances, it is sufficient to conclude there is an overlap of substance between the subject matter and amounts claimed in the Recovery Proceeding and the subject matter and amounts claimed by the plaintiff in the Statutory Demand.
The position adopted by the defendant in response, given the overlap, was to emphasise that it had sought and obtained a stay on the Recovery Proceeding, and to indicate that, if the Recovery Proceeding continues, it would amend the claims therein so as to reduce the amount claimed by any amount which is duplicated in the Statutory Demand.
The defendant's expressly stated position is thus that it will not prosecute in the Recovery Proceeding in this Court a claim to the extent that it overlaps with any amounts claimed in the Statutory Demand
Against the above review of the factual background, I turn to the primary issues in the Application.

H. Disposition of issue 1 - sufficiency of the plaintiff's affidavit material

(1) The parties' contentions

The defendant raised a criticism as to the sufficiency of the First Brown Affidavit, submitting that the affidavit was inadequate for the purposes of s 459G(3)(a) CA. The defendant maintained that the affidavit did not set out the legal and evidentiary basis for the plaintiff's claim that the Statutory Demand ought be set aside.
The principal thrust of the criticism was that the affidavit did little more than attach documents, and provided only sparse substantive support for the abuse of process allegation. The defendant submitted that it should have been plainly obvious that the affidavit was 'wholly inadequate to have established the matters that [the plaintiff] alleges, and which are said to constitute grounds to set aside a statutory demand based on a judgment debt'.[80]
[80] Defendant's submissions 16 December 2024 [6].
The defendant noted that, although the First Brown Affidavit was filed within the statutory time period, the plaintiff had then filed further affidavits in order to buttress its position, particularly in light of the objections to the First Brown Affidavit taken by the defendant. The defendant submitted that the plaintiff had 'never made any genuine attempt to file material within time that would support this application'.[81]
[81] Defendant's submissions 16 December 2024 [13].
I recognise that these challenges to the adequacy of the First Brown Affidavit were initially deployed in the context of the arguments as to the admissibility of the affidavit material. Nonetheless, the challenge was maintained by the defendant and requires a determination.
The defendant's contentions in effect rely on the decision of Sundberg J in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund,[82] a decision which I have recently had cause to examine.[83] I refer also to the decision of the Full Court in this State in Energy Equity Corporation Ltd v Sinedie Pty Ltd[84] which endorsed Graywinter.
[82] Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund [1996] FCA 822; (1996) 70 FCR 452 (Graywinter). See, in the Full Court in this State, Energy Equity Corporation Ltd v Sinedie Pty Ltd [2001] WASCA 419; (2001) 166 FLR 179 [29] (Wallwork J, with Steytler J (as his Honour then was) and Olsson AUJ agreeing), which endorsed Graywinter.
[83] Sovereign Building Company Pty Ltd v Sheehan Group Pty Ltd [2025] WASC 11.
[84] Energy Equity Corporation Ltd v Sinedie Pty Ltd [2001] WASCA 419; (2001) 166 FLR 179 [29] (Wallwork J, with Steytler J (as his Honour then was) and Olsson AUJ agreeing).
In Graywinter, the Court held that if an affidavit filed with the application to set aside the statutory demand does not satisfy the minimum requirements of s 459G(3) CA, the Court will not have jurisdiction to set aside the demand.
The minimum requirements as described by Sundberg J, and later explained by the Victorian Court of Appeal in Sceam Constructions Pty Ltd v Clyne,[85] are:
(a) the affidavit 'must, as a minimum, contain a statement of the material facts on which the applicant intends to rely to show a genuine dispute';[86]
(b)the affidavit 'may read like a pleading' and need not detail, in admissible form, all the evidence that supports the contention of a genuine dispute;[87] and
(c)neither a mere assertion that there is a genuine dispute nor a bare claim that the debt is disputed is sufficient.[88]
[85] Sceam Constructions Pty Ltd v Clyne [2021] VSCA 270 [12] (Ferguson CJ, Sifris and Walker JJA) (Sceam Constructions).
[86] Graywinter (459).
[87] Graywinter (459).
[88] Graywinter (459).
The accompanying affidavit required to be filed by s 459G(2) CA is used to 'fairly alert the claimant to the nature of the case the company will seek to make in seeking to have the statutory demand set aside'.[89]
[89] Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560 [7] (Barrett J) (Elm Financial).
Further, 'the content of the affidavit must convey, even if it be by necessary inference, a clear delineation of the area of controversy, so that it is identifiable with one or more of the grounds in ss 459H and 459J'.[90] The inferences which can reasonably be drawn include inferences from the documents attached to the affidavit.
[90] Elm Financial [7].
Finally, it should be noted that 'this process of delineation may not be extended after the statutory period, although it is open to the applicant to supplement the supporting affidavit by way of additional evidence relevant to the area of controversy within the period'.[91]

(2) Analysis

[91] Sceam Constructions [15], citing Barrett J in Elm Financial.

The first point to observe is that several of the paragraphs of the First Brown Affidavit were ruled as being inadmissible, or were the subject of objections which were conceded by the plaintiff. These matters are addressed in the Court's rulings dated 4 May 2025.[92]
[92] Relevantly, this extended to [41], [43], [44] and [46] of the First Brown Affidavit.
The inadmissibility of some of this material is not, however, fatal to the sufficiency of the First Brown Affidavit in terms of s 459G(3) CA, having regard to the principles accepted in Graywinter and Sceam Constructions. Further, to the extent certain objections were conceded by the plaintiff, that was done on the express basis that the plaintiff intended to adduce further evidence.
At a broad level, it is to be noted that Mr Brown is the Group Commercial Manager for the plaintiff and was so employed during the relevant period, even though he was not employed in that position at the time the Subcontract was executed. It is reasonably apparent from this position and role, and from his involvement in several of the items of correspondence passing between the parties, that he would have direct knowledge of significant matters arising under this particular Subcontract.
The First Brown Affidavit contains 49 paragraphs, attaches some 26 documents, and is 511 pages in length. The affidavit attaches, among other documents, the Subcontract, the December 2023 Claim, the May 2024 Claim, the writ and statement of claim filed in the Recovery Proceeding,[93] the Determination made by the adjudicator, materials filed within the Adjudication Proceeding including statutory declarations, the Statutory Demand, and various items of correspondence which passed between the parties.
[93] As well as a supporting affidavit filed in the Recovery Proceeding, sworn by a representative of the defendant, to which the defendant took objection and which the plaintiff ultimately conceded. See the Court's rulings in this regard.
The affidavit is thus not a slim document, and cannot be described as a 'holding affidavit' or a 'placeholder affidavit' which contains mere assertions, designed to put on the bare minimum within the statutory period. As explained below, while there are weaknesses in the affidavit, it is a fulsome document on any view.
Overall, and as further explained below, I am not persuaded by the defendant's criticism as to the asserted inadequacy of the plaintiff's affidavit material. In my view, the First Brown Affidavit, in its express terms and by reasonably available inference, sufficiently demonstrates the grounds of challenge to the Statutory Demand.

The offsetting claims

As to the offsetting claims themselves, upon which the plaintiff relies in order to set aside the Statutory Demand, the First Brown Affidavit sufficiently identifies the species of those claims. I refer to [24] to [49] of the First Brown Affidavit, which describes the three types of claims and attaches supporting documents. Mr Brown deposes that the adjudicator did not offset any of the amounts claimed against the amount awarded to the defendant in the Determination.
Further, it is a relevant feature of this matter that the offsetting claims relied upon by Mr Brown in the First Brown Affidavit had all been the subject of the Adjudication Proceeding, and so had previously been articulated in some fashion by the plaintiff. That is, the defendant was already on notice from the Adjudication Proceeding of the broad nature of the offsetting claims, and the criticisms of the First Brown Affidavit must be seen in this light.
Within the affidavit, Mr Brown deposes that the plaintiff has a claim for liquidated damages in the sum of $225,823.71, representing the maximum claim at the cap of 10% when regard is had to the adjusted Subcontract Price in the Determination.[94] The claim is articulated by reference to the provisions of the Subcontract which give the plaintiff a contractual entitlement to liquidated damages, and by reference to the 'Works Completion Date' and the asserted failure by the defendant to complete the works by that date.
[94] Second Brown Affidavit [27] - [30].
Mr Brown also deposes to the damage to property, at [42] to [46] of the First Brown Affidavit, which he asserts gives rise to a claim under cl 16(a) of the Subcontract, which is the indemnity provision. The factual basis for the claim relies on hearsay evidence, obtained from representatives of a subcontractor and the plaintiff's own construction managers, and might be described as relatively weak in an evidentiary sense. Indeed, the plaintiff ultimately conceded the objection to [43], [44] and [46] of the First Brown Affidavit, subject to its ability to lead additional evidence in support of these matters. There is also additional material included in the Determination which explains the nature of this claim.[95] Mr Brown then provides a quantification of the claim, based on the rectification costs, time lost during the rectification work, and the plaintiff's upstream liability to Rio Tinto for liquidated damages, portions of which were objected to and those objections were conceded on the basis identified above and in the Court's rulings.
[95] First Brown Affidavit, Attachment SB-02, page 169 to 170.
Finally, Mr Brown deposes to the backcharge claim, at [47] to [49] of the First Brown Affidavit. This claim is cross-referenced to the plaintiff's response in the Adjudication Proceeding and there is additional material included in the Determination which explains the nature of this claim.[96] The essence of the claim is exposed. Mr Brown deposes that the plaintiff incurred costs for another subcontractor to provide an operator to perform work which ought to have been undertaken by the defendant under the Subcontract prior to its termination. This was done, Mr Brown deposes, because the defendant had insufficient resources onsite. The value of the claim is quantified by Mr Brown at $95,711 excluding GST.
[96] First Brown Affidavit, Attachment SB-02, page 170.

(3) Analysis

[161] Re Vortex [64] - [66] (Efthim AsJ).

The first limb to the plaintiff's argument based on s459J(1)(b) CA focuses on the existence of parallel processes. There is considerable substance to the plaintiff's contention in this regard, in my view. The circumstances make clear that:
1.The defendant commenced proceedings for recovery of a debt in this Court on 7 June 2024, being the Recovery Proceeding. That proceeding claimed the entire amount which is the subject of the December 2023 Claim, being $920.129.35.
2.I have concluded that there is a substantial overlap in both subject matter and quantum (which is far from being a mere error or trifling amount) between the claim in the Recovery Proceeding and the amount which was the subject of the Determination issued by the adjudicator on 30 August 2024.
3.The defendant then served the Statutory Demand on the plaintiff on 10 September 2024. The defendant has maintained the demand since then and has resisted the application to set it aside in this Court.
The defendant points to a potential antidote to the inconsistency in its position which emerges from the above circumstances. The defendant says that, upon the Statutory Demand being served, it sought an order to the effect that the Recovery Proceeding be stayed and obtained such an order from the Master. The defendant says it has now given an unequivocal indication to both the plaintiff and this Court that it will not prosecute claims in the Recovery Proceeding, and would amend the claims therein, to the extent they overlap with amounts claimed in the Statutory Demand.[162]
[162] As further explained by counsel for the defendant at ts 125 - 127.
The defendant's response to the inconsistency in position, and the overlap in the claims, is commendable to an extent and reflects a desire to avoid any suggestion of duplication in claims. But the difficulty facing the defendant is not resolved by these steps and by its unequivocal indication in this regard, in my view.
It remains the case that there are two proceedings on foot which have differing objectives. The abuse of process emerges from this fact. The defendant's indication that it will not pursue the overlap does not avoid that conclusion. The proceeding on foot, which I have described as the Recovery Proceeding, is designed to extract payment from the plaintiff of the sum claimed. The other process, being the Statutory Demand, which was the catalyst for the plaintiff's application to set aside under s 459H and s 459J CA, is designed to obtain an event of insolvency.
The defendant ought not to have served the Statutory Demand on the plaintiff while the Recovery Proceeding, which was seeking relief in respect of overlapping amounts, was on foot. As matters presently stand, the Recovery Proceeding continues to incorporate a claim for overlapping amounts.
Thus, whether I examine the abuse of process at the time the Statutory Demand was served, or at the later point in time at which the defendant confirmed it would not pursue any overlap,[163] it remains the case there is an inconsistency between the two processes. This gives rise to an abuse of process by reason of the oppression placed on the plaintiff. This conclusion is consistent, on my analysis, with the reasoning and conclusions in Re Modern Wholesale Jewellery, Re Zarzar, and Re Vortex, with which I respectfully agree.
[163] As to which, I note the approach of Barrett J in Tatlers.com.au Pty Limited v Davis [2006] NSWSC 1055 is to focus upon the circumstances prevailing at the time of the court's assessment of the abuse, rather than on some historical snapshot.
I should also emphasise in this regard my concern at the effect of this duplication on the parties' costs, legal and otherwise, and the impact on the use of the resources of this Court, by reason of the use of parallel processes. The service and subsequent pursuit of the Statutory Demand has inevitably led to the parties incurring additional legal costs, and drawn further on the resources of this Court which are undoubtedly scarce, and must be remembered are intended to be available for use by all members of the community.
I will now address the 'knowledge of solvency' issue, although given the above conclusion, which is sufficient to engage s 459J(1)(b) CA, it is not strictly necessary to do so.
The evidence on this issue includes discussions between representatives of the parties which took place at a without prejudice meeting, which I ruled were admissible.
At two meetings held in August 2024, Mr Male deposes that he was informed by representatives of the plaintiff as to solvency issues which would arise within the plaintiff depending on the quantum of the adjudicator's determination. Mr Male is a director of Bedivere Group Pty Ltd which is a supplier of commercial services to the defendant.
At the first meeting, Mr Male deposes he was informed that if the determination exceeded $470,000 then the plaintiff 'would not be capable of making the payment, would become insolvent, and would cease to exist in about a week'.[164] The statement was made by the plaintiff's chief financial officer and Mr Male says was affirmed by Mr Brown, the Group Commercial Manager for the plaintiff.
[164] Affidavit of Mr Male sworn 12 November 2024 [23].
There was then a second meeting in August. Mr Male deposes that the plaintiff's chief financial officer maintained at that meeting that the plaintiff 'would not be able to pay the forthcoming Determination and added that the Grounded group of companies was seeking funding on a broader and more general basis, and was currently subject to a cross guarantee between group companies'.[165]
[165] Affidavit of Mr Male sworn 12 November 2024 [25].
The plaintiff, for its part, accepts that between around 1 August 2024 and 6 September 2024, it held concerns regarding its financial position and cash flow, and it communicated those concerns to representatives of the defendant.[166]
[166] Plaintiff's submissions dated 10 June 2025 [86(a)].
Mr Male deposes that, after the Determination was issued by the adjudicator on 30 August 2024, he discussed the issue with a director of the defendant and was instructed to prepare a statutory demand. The demand in question was then served on the plaintiff, on 10 September 2024.
Thereafter, Mr Male became aware that the plaintiff had lodged its financial statements with ASIC.[167] This occurred on or around 30 October 2024. The financial statements in question relate to the financial year which ended on 30 June 2024, and disclose a rosier picture of financial health of the plaintiff than Mr Male had been led to believe from his discussions in August. Indeed, the financial statements reveal the net income of the plaintiff as being in excess of $7m, with total equity of over $11m, and financial assets exceeding liabilities.[168] The financial statements include a declaration from the directors as to solvency as well.[169]
[167] Affidavit of Mr Male sworn 12 November 2024 [27] - [28].
[168] Plaintiff's submissions dated 10 June 2024 [88].
[169] Affidavit of Mr Male sworn 12 November 2024, Attachment NMM-2, page 18.
The point developed by counsel for the plaintiff is that, having become seized with knowledge that the plaintiff's solvency issues were no longer as stark as earlier communicated, the defendant ought to have withdrawn the Statutory Demand.
I do not accept that this alone provides a basis to conclude there has been some improper conduct or abuse of process on the part of the defendant.
The fact remains that the plaintiff's personnel made representations to the defendant, which one can assume were intended to be relied upon, that it had solvency concerns. It now frankly acknowledges that it did in fact have solvency concerns during this period. The defendant acted upon that knowledge, not unsurprisingly, to issue a statutory demand. It does not appear the plaintiff's representatives have recanted the earlier statements or provided any subsequent assurances to the defendant to assuage its concerns in this regard, although I recognise the latest financial statements present a healthy financial state of affairs. But that is not enough to characterise the defendant's decision to maintain the Statutory Demand thereafter as being improper in some way.
In any event, although the financial statements were signed in mid-October 2024 and include a neutral note as to the events occurred after the end of the reporting period,[170] the accounts fundamentally relate to an anterior period, ending on 30 June 2024.
[170] Affidavit of Mr Male sworn 12 November 2024, Attachment NMM-2, page 47.
In these circumstances, I am not prepared to make a finding of an improper purpose on the part of the defendant, as was sought by the plaintiff. I therefore reject the second limb of the plaintiff's argument under s 459J(1)(b) CA.

K. Objections to the evidence pursuant to s 55(4) of the SOP Act

It is necessary to briefly amplify the rulings set out in Attachment C to these reasons, which were provided to the parties on 5 May 2025. Specifically, several objections were taken by the defendant to the plaintiff's affidavits in reliance on s 55(4) of the SOP Act, as outlined in those rulings.
Section 55(4) of the SOP Act provides:
(4) Evidence of anything lawfully said or done in the course of an adjudication or adjudication review under this Part is not admissible before a court, arbitrator or other person or body, unless the parties to the adjudication or adjudication review consent to the admission of the evidence.
The material which was the subject of objection included the application filed in the adjudication, the adjudication response, submissions filed during the adjudication, and statutory declarations filed in the adjudication. This material was sought to be adduced by the plaintiff in support of the offsetting claims it raised under s 459H(1)(b) CA. The plaintiff did not object to the Determination itself being adduced in evidence, particularly as the Determination formed part of the Statutory Demand.
I upheld these objections. I did so having regard to the broad terms of s 55(4) and the thorough analysis of Pritchard J in Cape Range Electrical Contractors Pty Ltd v Austral Construction Pty Ltd[171] in respect of the equivalent provision in the predecessor legislation, with which I respectfully agree.
[171] Cape Range Electrical Contractors Pty Ltd v Austral Construction Pty Ltd [2012] WASC 304 (Pritchard J) (Cape Range Electrical).
The Court in Cape Range Electrical was dealing with dual proceedings to challenge the validity of an adjudicator's determination under the Construction Contracts 2004 (WA) based on an asserted jurisdictional error, and for enforcement of the adjudication. Coincidentally, as it happens, the factual circumstances in that case concerned subcontract work on an accommodation village at a Rio Tinto project in the Pilbara.
An issue arose in Cape Range Electrical as to whether the affidavit evidence relied upon by the contractor (having been the respondent in the adjudication proceedings) was admissible in either the enforcement proceedings or the invalidity proceedings.[172] The evidence included the adjudication response which had been filed by the contractor during the course of the adjudication. Her Honour concluded that the evidence was not precluded from admission by reason of s 45(3) of the Construction Contracts 2004 (WA), in either the enforcement or invalidity proceedings. Pritchard J characterised the prohibition in the provision as directed to the use of such material 'in proceedings before any other body which is dealing with the merits of the contractual dispute between the two parties to the construction contract'.[173] The proceedings before her Honour did not meet that description.
[172] Cape Range Electrical [14] (Pritchard J).
[173] Cape Range Electrical [44] (Pritchard J).
By way of explanation of this conclusion, her Honour identified two contextual considerations in the legislation which together supported the limitation on the scope of the prohibition.
The first contextual consideration was the essential nature of the adjudication scheme which allowed the parties to seek resolution of their substantive contractual dispute in other fora, whether in litigation or through arbitral proceedings. Her Honour explained that:[174]
If that right is to be effectively preserved, then what goes on in proceedings before the adjudicator should not be able to be admitted in those other proceedings other than to the extent that the sum awarded in an adjudication should be taken into account in determining any amount of an award, judgment or order which might be made in resolving the parties' contractual dispute. That is the work that is done by s 45(3) and s 45(4).
[174] Cape Range Electrical [42] (Pritchard J).
Pritchard J further explained that s 45(3) has the 'additional effect of facilitating the expeditious resolution of the adjudication because the parties to the adjudication can make frank submissions to an adjudicator without being concerned that those submissions would prejudice their position in any substantive proceedings about their contractual dispute before an arbitrator, court or other body'.[175]
[175] Cape Range Electrical [42] (Pritchard J).
The second contextual consideration identified by her Honour is found in the language used in the opening words of s 45(3), which mirrors the language in s 45(1):[176]
That is, s 45(3) refers in a shorthand fashion to the proceedings referred to in s 45(1) of the CC Act. It is only in those proceedings (that is, in proceedings before an arbitrator or a court or other body to resolve the substantive dispute between parties to a construction contract) that anything said or done before an adjudicator will be inadmissible.
[176] Cape Range Electrical [43] (Pritchard J).
Pritchard J's analysis was challenged in a matter before Archer J, namely Downer Utilities Australia Pty Ltd v Alinta Energy Transmission (Chichester) Pty Ltd [No 2].[177] Archer J rejected that challenge and concluded that, not only was Pritchard J not plainly wrong, her reasoning was correct.
[177] Downer Utilities Australia Pty Ltd v Alinta Energy Transmission (Chichester) Pty Ltd [No 2] [2023] WASC 1 [120] - [146].
The terms of s 55 of the SOP Act are not identical to the language which was employed within s 45 of the Construction Contracts Act 2004 (WA). The force of the contextual considerations identified by her Honour remain, however, and, if anything, the language of s 55(4) is broader. The provision extends to anything lawfully said or done 'in the course of an adjudication or adjudication review', with the only exception to the prohibition being the consent of the parties.
Accepting the limitation identified by Pritchard J applies to s 55(4) of the SOP Act, which I do, there is a question whether the proceeding before this Court, involving an application to set aside a statutory demand on the basis of offsetting claims, is a proceeding dealing with 'the merits' of the contractual dispute.
As I have reiterated already, proceedings to set aside a statutory demand are not designed to embark upon an extended inquiry into factual matters, nor weigh the final merits of the dispute. The analysis required by the Court is whether the dispute or claim is 'genuine', which requires an assessment as to whether the claim is 'plainly vexatious or frivolous' or 'involves a plausible contention requiring investigation'. Those are not ultimate assessments of the merits of the dispute.
Nonetheless, such assessments require some degree of analysis of the force or strength of an asserted claim. The threshold is low but a court must engage to an extent with the asserted basis of the dispute or claim and its apparent strength. That may be contrasted with enforcement or invalidity style proceedings, such as those which were before Pritchard J in Cape Range Electrical.
Accordingly, the well-accepted limitation on the nature of proceedings under s 459G CA to set aside a statutory demand does not avail the plaintiff in this case, and does not exclude the prohibitive effect of s 55(4) of the SOP Act on the evidence which may be adduced. Material adduced in an adjudication which descends into the merits of the claims agitated by an applicant will ordinarily be captured by s 55(4) of the SOP Act, and thus be precluded from being admitted in a court in proceedings to set aside a statutory demand, to the extent the material is relied upon in support of, or to challenge, the genuineness of disputes or claims.
This conclusion is consistent with the evident policy of the SOP Act, including the speedy nature of adjudication processes thereunder, and the interim status of determinations which result therefrom. The operation of s 55(4) greatly reduces the scope for parties to simply adduce voluminous material prepared during an adjudication in support or, or in opposition, to applications to set aside statutory demands.
This conclusion will not operate to the prejudice of either party, in terms of their ability to adduce evidence in proceedings under s 459H(1) CA. The parties remain able to adduce affidavit evidence in such proceedings where that evidence has been specifically prepared for the purposes of the proceedings, in order to address the genuineness of a dispute or claim. Contemporaneous documents and 'business records' may also be adduced to the extent necessary. Subject to the limitation earlier identified, s 55(4) operates to preclude reliance on material such as adjudication submissions, the adjudication response, and statutory declarations lodged in the adjudication process.

L. Conclusion and orders

For the foregoing reasons, I consider the plaintiff's Application should be granted and the Statutory Demand should be set aside pursuant to s 459J(1)(b) CA, on the basis of the existence of the parallel proceedings.
Had I not reached that view, I would, in any event, have ordered that the Statutory Demand be varied to reflect the offsetting claims raised by the plaintiff for liquidated damages in the amount of $225,823.72 and for backcharges in the amount of $87,010 (both amounts being exclusive of GST).
I will hear from counsel as to the formal orders which should be made and as to the costs of the proceeding.

ATTACHMENT A
The defendant's Statutory Demand

ATTACHMENT B
List of affidavits

No.	Deponent	Date	Folio
1	Shane Edward Brown Group Commercial Manager for the plaintiff	1 Oct 2024	2
2	Michael Adam Hurst Site Supervisor for the defendant	12 Nov 2024	8
3	Konrad Kanaly Williams Director of the defendant	12 Nov 2024	9
4	Neville James Duncanson Site Supervisor for the defendant	12 Nov 2024	10
5	Nicholas Mansel Male Director of Bedivere Group Pty Ltd (a supplier to the defendant)	12 Nov 2024	11
6	Julian Wilmont-Barr Chief Financial Officer for the plaintiff	28 Nov 2024	14
7	Edin Sabanovic Senior Electrical Supervisor of PME Industries Pty Ltd (engaged by the plaintiff)	28 Nov 2024	15
8	Shane Edward Brown Group Commercial Manager for the plaintiff	29 Nov 2024	17
9	Edin Sabanovic Senior Electrical Supervisor of PME Industries Pty Ltd (engaged by the plaintiff)	13 Dec 2024	19
10	Jeffrey Paul Burke Director of the defendant	13 Dec 2024	20
11	Katherine Jane Male Law Clerk, Solicitors for the defendant	13 Dec 2024	21
12	Jeffrey Paul Burke Director of the defendant[178]	18 Dec 2024	24
13	Konrad Kanaly Williams Director of the defendant	23 June 2024	37

[178] The second affidavit filed from Mr Burke was sworn as a declaration rather than an affidavit, but no issue was taken in this regard: ts 29.

ATTACHMENT C
The Court's Evidentiary Rulings dated 4 May 2025

Scope of these rulings

The rulings contained in this attachment concern the objections served by the defendant to the affidavit of Shane Edward Brown sworn on 1 October 2024, the affidavit of Shane Edward Brown sworn on 29 November 2024, and the affidavit of Edin Sabanovich sworn on 28 November 2024, and the objections served by the plaintiff to the affidavit of Konrad Kranly Williams sworn 12 November 2024, and the affidavit of Nicholas Mansel Male sworn 12 November 2024.
The Court notes there were broad objections as to the relevance of the affidavits of Mr Burke sworn 13 December 2024 and Ms Katherine Jane Male sworn 13 December 2024. Those objections will be held over until the final hearing, to the extent necessary.
The objections concern admissibility issues only. Matters of weight and cogency will fall to be considered as part of the determination of the substantive application itself.
The Court's reasons for making these rulings will be provided as part of the final reasons in respect of the plaintiff's substantive application.

Whether application is interlocutory or final

The defendant initially advanced a contention that an application pursuant to s 459G(1) CA was final in nature, but that was not ultimately pressed: defendant's further submissions dated 10 January 2025 [1].
I will proceed, without deciding, on the basis that the proceeding is interlocutory, consistent with the approach of Sanderson M in ORH Contracting Pty Ltd v CGS Solutions Pty Ltd[179] and the Victorian Court of Appeal in Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd.[180] Hearsay evidence is therefore admissible, subject to the evidentiary requirements in O 37 r 6(3A) RSC.
[179] ORH Contracting Pty Ltd v CGS Solutions Pty Ltd [2009] WASC 273 [20] (Sanderson M).
[180] Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2007) 53 ACSR 300.

Affidavits of Mr Brown

As to the affidavit of Mr Brown sworn 1 October 2024, the objections are identified below, with the Court's ruling indicated.
(a)Objection to [9] - This objection has been resolved by the parties and no ruling from the Court is required.
(b)Primary objection to [15], [16], [25], [26] - [35], [40], [44] and Attachments SB-10, SB-16 to SB-25, and SB 26 - This material was objected to having regard to s 55(4) of the SOP Act. The Court rules that the material identified in these paragraphs, and in the attachments, is precluded from being admitted by reason of s 55(4) to the extent these paragraphs and attachments purport to lead evidence in support of the plaintiff's offsetting claims under s 459H(1)(b) CA. Those matters go to the merits of the dispute between the parties: see Cape Range Electrical Contractors Pty Ltd v Austral Construction Pty Ltd [2012] WASC 304 [44] (Pritchard J). See generally PS [17] - [27] and DS [56] - [59]. See also the objection addressed at [7(e)] below.
(c)Additional objection to [15], [16], [25] and Attachment SB-10 - This material was also the subject of an objection on the grounds of relevance and hearsay. The Court rules the material is relevant and notes the plaintiff's position that the evidence is not led for its testimonial effect.
(d)Objection to [19] and Attachment SB-13 - This objection was conceded by the plaintiff by email from the plaintiff's solicitors to the Court dated 20 December 2024, pursuant to orders 3 and 4 of the orders made by the Court on 19 December 2024.
(e)Objection to [41], [43], [44], [46] and Attachment SB-26 - These objections are noted as having been conceded on the basis that the plaintiff could adduce further affidavit evidence. No court ruling required.
(f)Additional objections to [26] - [35], [39], [40], [47], [48] (including annexures of Adjudication Response referred to) and Attachments SB-16 to SB-25 - This material was also the subject of objections on various grounds including hearsay, vague, conclusion, no basis for belief, and no direct knowledge. None of those objections are upheld.
(g)Objection to [49] - The defendant objected to this paragraph on the basis it was scandalous as well as vague and potentially misleading. The plaintiff has clarified the basis on which the evidence is sought to be admitted. The material is not objectionable. The objection is not upheld.
(h)At item 15 of the objections schedule, there was a general objection raised by the defendant to the affidavit of Mr Brown. The terms of the objection demonstrate it is not a valid objection but rather goes to considerations of weight, and to the extent there is overlap with objections referred to above, it is unnecessary to address them again.
As to the affidavit of Mr Brown sworn 29 November 2024, the objections are identified below, with the Court's ruling indicated.
(a)Objection to [14] and [17] - [19] - This material was objected to having regard to s 55(4) of the SOP Act. The Court rules that the material identified in these paragraphs, and in the attachments, is precluded from being admitted by reason of s 55(4) to the extent these paragraphs and attachments purport to lead evidence in support of the plaintiff's offsetting claims under s 459H(1)(b) CA.
(b)Objection to [15] - This material is objectionable by reason of s 55(4) of the SOP Act to the extent the paragraph and the attachment purport to lead evidence in support of the plaintiff's offsetting claims under s 459H(1)(b) CA.
(c)Objection to [16] - This material would be admissible provided reliance on the statutory declaration of another person, Mr Sabanovich, is not for its testimonial effect. However, the material is objectionable by reason of s 55(4) of the SOP Act to the extent the paragraph and the attachment purport to lead evidence in support of the plaintiff's offsetting claims under s 459H(1)(b) CA.
(d)Objection to [23] - [26], [27] - [28] and [46] - [58]- Not valid objections.
(e)Objection to [31] - References to or explanations of the written contract in paras (a) and (b) are inadmissible and will be struck out. The contract should speak for itself. However, [31(c)] is a statement of fact and admissible.
(f)Objection to [33] - Hearsay evidence is admissible in accordance with O 37 r 6(3A) RSC.

Affidavit of Mr Sabanovich

As to the affidavit of Mr Sabanovich, the objections are identified below, with the Court's ruling indicated.
(a)Objection to [14] (second sentence) - Statement is a conclusion or opinion, and inadmissible.
(b)Objection to [15] - Statement is a broad conclusion or opinion, and inadmissible.
(c)Objection to [16] - Opening words of paragraph are a conclusion or opinion and inadmissible. The word "I believe that the damage to the services and pits in J Block was caused by" will be ruled as inadmissible, but balance of sentence can stand.
(d)Objection to [17] - Evidence is relevant and admissible.
(e)Objection to [18] - Evidence is relevant and admissible.
(f)Objection to [19] - First sentence is a conclusion or opinion and inadmissible. First sentence will be ruled as inadmissible. The word "only" in second last sentence will also be ruled as inadmissible being a conclusion or opinion, with balance of that sentence remaining.
(g)Objection to [23] - Evidence is relevant and admissible.
(h)Objection to [24] and [25] - Evidence in [24] and [25] is inadmissible to the extent it contains a conclusion or opinion that the conduct was undertaken by the defendant. Accordingly, in [24], the words "by KW" are inadmissible and the whole of [25] is inadmissible.

Affidavit of Mr Williams

As to the affidavit of Mr Williams, there was only one objection served by the plaintiff, concerning [19] - [20] of the affidavit. That objection was not pressed (see PS [47]) and so no ruling from the Court is required.

Affidavit of Mr Male

As to the affidavit of Mr Male, the plaintiff raised objections to [23] - [26] and to [27], [28] and Attachment NMM-2. The objections are identified below, with the Court's ruling indicated.
(a)The objection to [23] - [26] is based on the contention that these portions of the affidavit purport to lead evidence of events that occurred at without prejudice meetings on 13 August 2024 and 23 August 2024. The defendant seeks to lead this evidence given the abuse of process contention raised by the plaintiff, although the abuse argument is narrow and confined: Brown affidavit at [22] and plaintiff's aide-memoire [38(g)].
(b)The Court finds that the meetings were arranged and conducted on a without prejudice basis, having regard to the matters deposed to by Mr Brown in his affidavit sworn 29 November 2024 at [63] - [65]. This was not disputed by the defendant (DS [43]).
(c)However, the Court rules that [23] - [26] contain relevant and admissible evidence because the paragraphs purport to lead evidence of factual matters rather than evidence of a privileged nature. Alternatively, the exception contained in s 131(2)(g) of the Evidence Act 1995 (Cth) is engaged, given the abuse of process argument asserted by the plaintiff. Alternatively, the privilege has been waived through the filing of the affidavit of Mr Wilmot-Barr which was sworn on 28 November 2024, and the making of orders pursuant to O 67B r 5 RSC (see PS Reply [18] - [23]) does not alter this position.
(d)The objection to [27], [28] and Attachment NMM-2 is that the material therein is irrelevant. Those paragraphs adduce evidence as to the plaintiff's financial statements and reports dated 30 October 2024. This material was relied upon by the defendant in conjunction with the material at [23] - [26]. As those earlier paragraphs are admissible, the material at [27], [28] and Attachment NMM-2 remains relevant. Accordingly, the Court will rule that [27], [28] and Attachment NMM-2 are admissible.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IR
Associate to the Hon Justice Lundberg
6 AUGUST 2025