Tooma v Eaton

Tooma was the creditor and Eaton was the debtor. Tooma had issued a statutory demand under section 459G of the Corporations Act 2001 (Cth). Eaton applied to the Federal Court to set aside the statutory demand on the basis that there was no genuine dispute and that section 14 of the Building and Construction Industry Security of Payment Act 1999 (BCISP Act) meant that Tooma had no cause of action. The court was required to determine whether section 14 of the BCISP Act precluded Tooma from having a genuine dispute about the debt claimed in the statutory demand. The court held that section 14 of the BCISP Act did not affect the matter and that the statutory demand should be set aside. The court found that the dispute was genuine because the parties had a bona fide difference of opinion about the existence or extent of the debt claimed in the statutory demand. The court also found that section 14 of the BCISP Act did not preclude Tooma from having a genuine dispute because it did not prevent Tooma from taking legal action to recover the debt. The court held that the statutory demand should be set aside because the dispute was genuine and the creditor had no reasonable prospects of succeeding in recovering the debt. The court ordered that the statutory demand be set aside and that Tooma pay Eaton’s costs of the application.