Re Roberts Construction Group Pty Ltd [2024] VSC 679

Chris Hey  |  Michael Lo  |  Millie Lewis

Key takeouts

• Statutory demands must accurately describe the nature of the debt claimed. 
  
  
• Where a statutory demand is based on a debt arising under the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act), the statutory demand cannot be set aside pursuant to ss 459G and 459H of the Corporations Act 2001 (Cth) (Corporations Act) on the basis of there being a genuine dispute. The grounds for setting aside a statutory demand in these circumstances are limited to offsetting claims.
  
  
• A failure to identify the nature of the debt as a statutory debt in an unambiguous way may mean the recipient of the statutory demand is not in a position to consider whether there is a genuine dispute to have the statutory demand set aside pursuant to the Corporations Act.

Facts

A builder engaged a subcontractor to undertake joinery works for a residential development. 

The subcontractor issued a payment claim in the amount of $32,500 under the SOP Act upon the approval of the shop drawings. In response, the builder issued a payment schedule approving the subcontractor’s payment claim in full, but failed to make payment of the scheduled amount. Subsequently, the builder terminated the subcontract and issued a second payment schedule, scheduling an amount of $8,000 in response to the payment claim.

The subcontractor served a statutory demand on the builder, describing the debt as:

‘A debt that arose in consideration of shop drawings the creditor completed for the debtor company pursuant to a construction contract dated 2 October 2023, and subsequently issued payment claim and tax invoice INV-0210 in the amount of $35,750.00′. 

The subcontractor’s statutory demand did not refer to the original payment schedule, a ‘scheduled amount’ or the SOP Act. The builder applied to set aside the statutory demand pursuant to ss 459G and 459H of the Corporations Act.

The key issue before the court was whether the subcontractor’s statutory demand sufficiently identified the nature of the debt, and if not, whether the builder was entitled to have the statutory demand set aside on the basis that there was a genuine dispute as to the existence of the amount of the debt.

Decision

The court held that the subcontractor’s statutory demand failed to accurately describe the nature of the debt as a statutory debt under the SOP Act. Accordingly, in seeking to have the statutory demand set aside, the builder was entitled to assert that there was a genuine dispute and was not limited to offsetting claims.

It was insufficient for the statutory demand to refer to the unpaid invoice and payment claim issued under the subcontract. The statutory demand failed to make reference to the relevant payment schedule or the SOP Act.  

The court accepted there was at least a plausible contention the subcontractor was not entitled to the full amount of the statutory demand. The issue of the second payment schedule was an acknowledgement by the builder that $8,000 was owing to the subcontractor for the work undertaken in respect of the shop drawings. Therefore, the court made an order reducing the statutory demand from $32,500 to $8,000.