In the matter of Dalski Pty Ltd [2025] NSWSC 99

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Dalski Pty Ltd [2025] NSWSC 99 Hearing dates: On the papers, last submissions 10 February 2025 Date of orders: 25 February 2025 Decision date: 25 February 2025 Jurisdiction: Equity - Corporations List Before: Black J Decision: The Defendant, Zen Haus Group Pty Ltd, pay the costs of these proceedings, including the costs of the costs applications, as agreed or as assessed. Catchwords: COSTS — Party/Party — General rule that costs follow the event — Where application to set aside statutory demand did not proceed – Where no determination of proceedings on the merits. Legislation Cited: - Civil Procedure Act 2005 (NSW) s 98(4) Cases Cited: - Ayrton Investments Pty Ltd v Andrlik (2000) 34 ACSR 643; [2000] ACTSC 55 - Felkro Nominees Pty Ltd v Austissue Pty Ltd (1993) 11 ACSR 607 - One.Tel v Deputy Commissioner of Taxation (2001) 101 FCR 548 - Re Bell Potter Securities Ltd [2023] NSWSC 1528 - Re Kaloriziko Pty Ltd [2021] NSWSC 1276 - Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 Category: Costs Parties: Dalski Pty Ltd (Plaintiff) Zen Haus Group Pty Ltd (Defendant) Representation: Counsel:

Solicitors: CCS Legal Pty Ltd (Plaintiff) MLH Lawyers (Defendant) File Number(s): 2024/270688

Judgment

Background and affidavit evidence 1. This is an application for costs in respect of an application to set aside a creditor's statutory demand which was not determined on its merits. 2. By way of background, on 3 July 2024, the Defendant, Zen Haus Group Pty Ltd ("Zen Haus") issued a creditor's statutory demand ("Demand") to the Plaintiff, Dalski Pty Ltd ("Dalski"). On 12 July 2024, Dalski's solicitors wrote to Zen Haus requesting that the Demand be withdrawn and referring to a letter which set out the matters on which Dalski relied to contend that Zen Haus's product was not compliant with the National Construction Code ("Code") and to advance a claim of misleading and deceptive conduct against Zen Haus in that respect. 3. By Originating Process filed on 23 July 2024, Dalski filed its application to set aside the Demand. That application was supported by an affidavit of Mr Szkudlarek dated 23 July 2024, to the effect that Dalski and Zen Haus had agreed to work together to deliver a tender for the supply and construction of prefabricated homes to the disabled housing market, with Zen Haus as the supplier and Dalski as the builder under any head contract. Mr Szkudlarek there referred to the entry into individual supply agreements for modular housing at several sites and asserted that Zen Haus had made representations as to compliance with applicable building standards. Mr Szkudlarek also contended that he became aware during the design process in early 2024, that modular housing products supplied by Zen Haus did not comply with the Code or applicable residential building work legislation. Mr Szkudlarek referred to correspondence with Zen Haus concerning that question and referred to work done by Dalski to seek to address issues of non-compliance at a first construction site at Mackay. Mr Szkudlarek then referred to Dalski's termination of agreements with Zen Haus, other than for the project at Mackay. He also referred to the amount paid by Dalski to Zen Haus in respect of several proposed projects, although his affidavit is unclear as to any reconciliation between the total sum that he says was paid to Zen Haus and another amount which he claims was paid with "nothing in return". The latter amount exceeds the amount claimed in the Demand, referable to supply of materials by Zen Haus for the Mackay project. Mr Szkudlarek in turns refers to an offsetting claim against Zen Haus in a much larger amount, relating to certain costs allegedly incurred by Dalski. 4. On 24 October 2024, Dalski commenced proceedings against Zen Haus pleading the misleading and deceptive conduct on which Dalski relies to establish an offsetting claim in respect of the Demand. By letter sent by Zen Haus's solicitors on 31 October 2024, Zen Hause then withdrew the Demand. 5. On 18 November 2024, I made orders noting that Zen Haus had withdrawn the Demand and that the only remaining issue was as to costs and made orders for service of affidavits and submissions as to costs. I ultimately determined that the question as to costs should be determined on the papers, without the need for an oral hearing. 6. By an affidavit dated 6 December 2024, Mr Howard, the solicitor acting for Dalski in the proceedings, referred to earlier correspondence sent on behalf of Dalski to Zen Haus, to which I have referred above. Mr Howard noted that the application to set aside the Demand was filed when Dalski received no response to the request that the Demand be withdrawn. Mr Howard there refers to an exhibit to Mr Szkudlarek's affidavit, containing documents on which Dalski would have relied to support its misleading and deceptive conduct claim including earlier email correspondence between Dalski and Zen Haus as to compliance issues. Mr Howard also referred to subsequent correspondence between the parties' legal representatives and to the commencement of the substantive proceedings brought by Dalski against Zen Haus. 7. Zen Haus in turn relied on an affidavit dated 13 December 2024 of its director, Mr Lienemann, which referred to earlier correspondence as to non-compliance with the Code; asserted that he believed that Dalski's claims were baseless, and denied non-compliance with that Code. Mr Lienemann takes issue with other aspects of Mr Szkudlarek's affidavit, and refers to further correspondence, but it is not necessary to address those matters in detail where his evidence, at its highest, emphasises that there existed a genuine dispute as to the matters raised by Dalski by way of offsetting claim in response to the Demand.