In the matter of Fujian Xingxing Restaurant Pty Limited

The case involves Fujian Xingxing Restaurant Pty Limited, the defendant, against the plaintiff, who issued a statutory demand seeking payment of an alleged debt. The dispute was heard in the Federal Circuit Court of Australia. The central issue was whether the statutory demand could be set aside due to an offsetting claim. The offsetting claim arose from a dispute over a licence agreement and potential accessorial liability under the Australian Consumer Law. The defendant argued that the statutory demand should be set aside as there was a plausible contention regarding the construction of the licence agreement and the accessorial liability, which were the subject of concurrent Federal Court proceedings.

The court examined whether the defendant's offsetting claim was sufficient to set aside the statutory demand. The plaintiff contended that the defendant's claim was speculative and lacked merit, while the defendant argued that the contentions were plausible and based on the pleadings in the other proceedings. The court held that there was a plausible contention in respect of both the offsetting claim and the liability under the Australian Consumer Law. Given the concurrent proceedings and the potential for the offsetting claim to result in a set-off, the court determined that the statutory demand should be set aside.

The reasoning was based on the need to ensure fairness in the statutory demand process and the potential for the offsetting claim to be successful. The court found that the defendant's contentions were plausible and could lead to a set-off of the debt claimed. Therefore, the statutory demand was set aside pending the outcome of the other proceedings. The court emphasised the importance of considering the merits of the offsetting claim and the potential for a set-off in determining whether to set aside a statutory demand.

The final orders of the court included setting aside the statutory demand and directing the parties to continue with the concurrent proceedings to resolve the underlying disputes. The court's decision underscored the importance of assessing the plausibility of offsetting claims in statutory demand proceedings and ensuring that the process is fair and just.