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Re J Group Constructions Pty Ltd

Re J Group Constructions Pty Ltd

Case [2015] NSWSC 1607 30 October 2015

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of J Group Constructions Pty Ltd [2015] NSWSC 1607
Hearing dates: 17 August and 14 September 2015
Date of orders: 30 October 2015
Decision date: 30 October 2015
Jurisdiction: Equity - Corporations List
Before: Robb J
Decision:
(1) Pursuant to s 459H(4) of the Corporations Act 2001 (Cth), the creditor’s statutory demand dated 21 July 2015 served by the defendant on the plaintiff be varied so that the amount of the demand is $8542.90 and the demand has effect as so varied from when it was served on the plaintiff.

Catchwords: CORPORATIONS – debts – creditor’s statutory demand – application to set aside – where demand based on judgment arising upon filing of adjudication certificate under the Building and Construction Industry Security of Payments Act 1999 (NSW) (the Act) – whether amenable to genuine dispute – whether amenable to offsetting claim – in present circumstances, no genuine dispute as to existence of the debt as demand arises from an adjudication certificate pursuant to the Act but there may be a countervailing liability – adjudicator rejected plaintiff’s offsetting claim – adjudicator’s rejection does not bind this court – relatively low threshold – statutory demand varied by amount of the plaintiff’s offsetting claim
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Cases Cited: Bakota Holdings Pty Ltd v Bank of Western Australia Ltd [2011] NSWSC 1277
Demir Pty Ltd v Graf Plumbing Pty Ltd [2004] NSWSC 553
Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41; (2008) 237 CLR 473
Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91
Drum Cafe Australia Pty Ltd v Lieberman [2010] NSWSC 642
Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560
Ettamogah Pub (Rouse Hill) Pty Ltd v Consolidated Constructions Pty Ltd (In Liq) [2006] NSWSC 1450
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
ICM Agriculture Pty Ltd v Young [2009] FCA 109
In the matter of Douglas Aerospace Pty Ltd [2015] NSWSC 167
Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWCA 279
Plus 55 Village Management Pty Ltd v Parisi Homes Pty Ltd [2005] NSWSC 559
Prime City Investments Pty Ltd v Paul Jones & Associates Pty Ltd [2013] NSWSC 2
W & P Reedy Pty Ltd v Macadams Baking Systems (Pty) Ltd [2007] NSWCA 146
Category: Principal judgment
Parties: J Group Constructions Pty Ltd (plaintiff)
PGA Rendering Group Pty Ltd (defendant)
Representation:
Counsel: T Bland (plaintiff)
J Williams (defendant)
Solicitors: Andrew M Pasternacki (in house counsel)
Carmody Lawyers (defendant)

File Number(s): 2015/223168
Publication restriction: None

Judgment

Introduction

On 30 July 2015, the plaintiff, J Group Constructions Pty Ltd (J Group), filed an originating process by which it sought orders that a creditor’s statutory demand dated 21 July 2015 served upon it by the defendant, PGA Rendering Group…

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 Re J Group Constructions Pty Ltd

Details

AGLC: Re J Group Constructions Pty Ltd [2015] NSWSC 1607
Case: [2015] NSWSC 1607
Decision Date: 30 October 2015

CaseChat Overview and Summary

The matter involved a creditor’s statutory demand against J Group Constructions Pty Ltd, which was subsequently challenged by the defendant. The dispute was heard in the Federal Circuit Court of Australia, where the central issue was the validity and enforceability of the statutory demand in light of a potential offsetting claim. The creditor had issued the demand based on a judgment that arose from an adjudication certificate issued under the Building and Construction Industry Security of Payments Act 1999 (NSW). The defendant argued that the demand should be set aside as there was a genuine dispute over the existence of the debt, and it was also claimed that the defendant had a right to offset the debt with a countervailing liability.

The court had to determine whether the statutory demand was valid and whether there was a genuine dispute regarding the existence of the debt. It was held that while the debt was not in genuine dispute as it arose from an adjudication certificate, the court could consider the offsetting claim. The adjudicator had rejected the defendant’s offsetting claim, but the court found that the adjudicator's decision did not bind it. The court had to assess the merits of the offsetting claim at the stage of setting aside a statutory demand, applying a relatively low threshold. The court found that there was a potential for the defendant to offset the debt with a countervailing liability.

In conclusion, the court varied the statutory demand by the amount of the defendant’s offsetting claim. The defendant was granted leave to set aside the statutory demand to the extent of the offsetting claim, allowing the matter to proceed to trial to determine the validity and amount of the offsetting claim. This outcome reflects the court's recognition of the importance of allowing genuine disputes and offsetting claims to be considered in the context of statutory demands arising from adjudication certificates.

Orders