Mesh v Australian Steel

Mesh, a shareholder in Australian Steel, applied to the Court to set aside a demand made under section 459G of the Corporations Act. The demand, originally for $400,000, was made by Australian Steel against Mesh in relation to alleged breaches of directors' duties. Mesh contested the demand on the basis that it should be reduced to $200,000 due to an offsetting claim he had against Australian Steel. The matter was heard in the Federal Circuit Court of Australia.

The court had to determine whether the demand could be reduced in light of Mesh's offsetting claim and whether the demand could be set aside under the relevant statutory provision. The court considered the statutory language of section 459G and previous case law which established that a demand could be set aside if the court was satisfied that setting it aside would not be contrary to the interests of justice. The court also considered whether the offsetting claim constituted a matter of principle that would prevent the setting aside of the demand.

In delivering judgment, the court found that Mesh's offsetting claim did not constitute a matter of principle. The court noted that the offsetting claim was not related to the subject matter of the demand, which was concerned with Mesh's alleged breaches of directors' duties. The court also found that setting aside the demand would not be contrary to the interests of justice as Mesh had not provided any evidence to suggest that the demand was excessive or oppressive. Accordingly, the court ordered that the demand be reduced to $200,000 to reflect the offsetting claim.