Hebbel Constructions Pty Ltd v Bitar Pty Ltd - [2022] NSWSC 1594

Supreme Court

New South Wales

Medium Neutral Citation: Hebbel Constructions Pty Ltd v Bitar Pty Ltd [2022] NSWSC 1594
Hearing dates: 7 November 2022
Decision date: 07 November 2022
Jurisdiction: Equity - Corporations List
Before: Hammerschlag CJ in Eq
Decision:
Statutory demand set aside

Catchwords:
CORPORATIONS – Corporations Act 2001 (Cth) – Part 5.4A, ss 459G(1), 459H(1), 459J(1) and (2) – statutory demand claims debts, being judgments of the Local Court and District Court based on cost assessment certificates – whether there is some “other reason” under s 459J(1)(b) why the demand should be set aside – where at the time the Local Court judgment was obtained, the operation of the relevant certificate was suspended under the provisions of the Legal Profession Act 2004 (NSW), a fact which was not disclosed to the Court – at the time of this application, both the judgment of the Local Court and the judgment of the District Court were stayed, in the case of the District Court on payment by the plaintiff of a significant part of the claim into Court – where the parties are in a long running dispute concerning the dissolution of a partnership between them, the accounting process has not yet run its course, and the claims of the defendant in the statutory demand are part of the accounting between them – where the plaintiff has offsetting claims and there are more than enough partnership assets, in the hands of the receiver of the partnership assets, to satisfy the balance of any legitimate claims the defendant may have in the accounting – HELD – reliance on the demand by the plaintiff is unconscionable, an abuse of process or will wreak a substantial injustice – demand should be set aside for some “other reason”

Legislation Cited:
Corporations Act 2001 (Cth)
Legal Profession Act 2004 (NSW)

Cases Cited:
Arcade Badge Embroidery Co Pty Ltd v Deputy Commissioner of Taxation [2005] ACTCA 3
CP York Holdings Pty Ltd v The Food Improvers Pty Ltd [2009] NSWSC 409
Hall Brothers Pty Ltd v Commissioner of Taxation (1996) 62 FCR 302
Hebbel Constructions Pty Ltd v Bitar Pty Ltd [2017] NSWSC 917
KW & KM Quinn Investments Pty Ltd and Deputy Commissioner of Taxation [2004] QCA 91

Category: Principal judgment
Parties: Hebbel Constructions Pty Limited - Plaintiff
Bitar Pty Limited - Defendant
Representation:
Counsel:
D. Klineberg - Plaintiff
M. McGirr - Defendant
Solicitors:
Speed and Stracey Lawyers - Plaintiff
The Legal Costs Consultants - Defendant

File Number(s): 2022/268089

Ex Tempore JUDGMENT

HIS HONOUR: The plaintiff (Hebbel) applies under s 459G(1) of the Corporations Act 2001 (Cth) (the Act) to set aside a statutory demand (the demand) served on it by the defendant (Bitar) on 16 August 2022 which claims a total of $564,373.19. The demand describes the debt as follows:

Description of the debt Amount of the debt
Judgment debt as entered in District Court of $518,203.64
NSW proceedings No 2022/230772 on
5 August 2022
Judgment…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Hebbel Constructions Pty Ltd v Bitar Pty Ltd

Details

AGLC: Hebbel Constructions Pty Ltd v Bitar Pty Ltd [2022] NSWSC 1594
Case: [2022] NSWSC 1594
Decision Date: 07 November 2022

CaseChat Overview and Summary

The matter before the court was a dispute between Hebbel Constructions Pty Ltd and Bitar Pty Ltd, involving statutory demand claims for debts. The debts in question arose from judgments of the Local Court and District Court based on cost assessment certificates. The central issue was whether there was some “other reason” under section 459J(1)(b) of the Corporations Act 2001 (Cth) why the demand should be set aside. This “other reason” consideration arises when a statutory demand is made in circumstances that render its reliance unconscionable, an abuse of process, or where it would wreak a substantial injustice.

The court had to determine if the fact that, at the time the Local Court judgment was obtained, the operation of the relevant certificate was suspended under the Legal Profession Act 2004 (NSW), a fact which was not disclosed to the Court, constituted such an “other reason.” Additionally, the court considered the ongoing nature of the dispute between the parties, the unsettled accounting process concerning the dissolution of their partnership, and the presence of offsetting claims and sufficient partnership assets to satisfy any legitimate claims. The court concluded that reliance on the demand by the plaintiff was unconscionable and an abuse of process or would wreak a substantial injustice.

In light of these considerations, the court ruled that the statutory demand should be set aside for some “other reason.” This decision highlights the importance of full disclosure in legal proceedings and the potential for a statutory demand to be set aside when it operates unfairly in the context of an ongoing dispute and unsettled accounting process.

The final orders of the court included setting aside the statutory demand for some “other reason” and potentially further directions for the parties to resolve the outstanding issues in their accounting and partnership dissolution.

Orders