O'NEILL v Dwyer

In *O'Neill v Dwyer*, heard before Lloyd-Jones J in the Supreme Court of New South Wales, the applicant sought to set aside a statutory demand issued by the respondent. The dispute arose from an alleged debt owed by the applicant to the respondent, which the applicant claimed was not a liquidated debt and therefore not a proper basis for a statutory demand. The applicant sought to rely on a cross-claim as a defence to the statutory demand, arguing that it raised a substantial dispute as to the existence of the debt.

The primary legal issue before the Court was whether the applicant had established a sufficient dispute to justify setting aside the statutory demand. This required the Court to consider the nature of the applicant's cross-claim and whether it demonstrated a genuine and substantial dispute concerning the liquidated nature of the debt claimed by the respondent. The Court also had to determine the appropriate test to apply when assessing whether a cross-claim constitutes a sufficient dispute for the purposes of setting aside a statutory demand.

Lloyd-Jones J applied the principles established in *Sons of Gwalia Ltd v Glencore Australia Pty Ltd* and *Hale v. J.A.B. Pty Ltd*, which require a party seeking to set aside a statutory demand based on a cross-claim to show that the cross-claim is genuine and substantial, and that there is a real prospect of success. His Honour found that the applicant's cross-claim, which alleged that the respondent had engaged in misleading and deceptive conduct and breached contractual obligations, raised a substantial dispute as to the existence and quantum of the debt. The Court was satisfied that the cross-claim was not a mere sham or vexatious, and that it had a real prospect of success, thereby demonstrating a sufficient dispute to warrant setting aside the statutory demand.

The Court ordered that the statutory demand be set aside.