Hebbel Constructions Pty Ltd v Bitar Pty Ltd

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.