Re Dask Entertainment Melbourne Pty Ltd [2023] VSC 660

Nikki Miller | Michael Lo | Morsaal Aimaq

Key takeout

A claim that has been considered by an adjudicator under the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act) and forms the basis of the adjudicator’s decision will not be considered as an offsetting claim under 459H(1)(b) of the Corporations Act 2001 (Cth) to set aside a statutory demand.

Facts

Dask Entertainment Melbourne Pty Ltd (plaintiff) engaged Aussie Fitouts Pty Ltd (defendant) to carry out fit out works for a project in Queensland (Brisbane project) and another project in Melbourne (Melbourne project).

For the Brisbane project the defendant was paid on a cost-plus 15% margin basis.  The parties were in dispute as to whether the Melbourne project was on the same cost-plus 15% margin basis as the Brisbane project.

On 3 March 2023 the defendant issued a payment claim under the SOP Act.  The plaintiff did not serve a payment schedule in response to the payment claim.  On or about 30 March 2023 the defendant suspended works under the Melbourne project under s 16 of the SOP Act.

The defendant submitted an adjudication application and on 23 May 2023 an adjudication certificate was issued in the defendant’s favour. On 3 July 2023 the County Court issued an order for judgment debt against the plaintiff in the sum of $1,290,453.24 and the defendant issued a statutory demand under the Corporations Act claiming that amount.

The plaintiff sought to set aside the defendant’s statutory demand under section 459H(1)(b) of the Corporations Act on the basis that it had an offsetting claim for damages for breach of contract and alleged defective works.

Section 459H(1)(b) of the Corporations Act provides a statutory demand may be set aside if there is a genuine dispute about the existence or amount of a debt to which the demand relates or there is an offsetting claim. 

Decision  

The court held that the plaintiff did not have an offsetting claim for the purposes of section 459H(1)(b) of the Corporations Act.

The adjudication determination was a final decision that is binding on the parties until it is decided otherwise, and a court cannot simply ignore the adjudication in circumstances where the offsetting claim arises out of the same transaction that the adjudicator had before them and determined.

A claim for alleged defects cannot constitute an offsetting claim in circumstances where the costs to rectify the alleged defective works had not been quantified and there was no independent expert opinion as to whether there are defective works or not.