Mesh v Australian Steel [2001] NSWSC 1030

New South Wales Supreme Court

CITATION : Mesh v Australian Steel [2001] NSWSC 1030 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4056/01 HEARING DATE(S) : 12/11/01 JUDGMENT DATE : 11 December 2001

PARTIES : Mesh & Bar Pty Ltd v The Australian Steel Company (Operations) Pty Ltd JUDGMENT OF : Master Macready at 1

COUNSEL : Mr R. MacFarlane QC & Ian Pike for plaintiff Mr B.A. Coles QC for defendant SOLICITORS : Kanji & Co for plaintiff Clayton Utz for defendant CATCHWORDS : Corporations Law. Application to set aside demand under s 459G of the Corporations Act. Demand reduced due to offsetting claim. No matter of principle. DECISION : Paragraph 25

1 MASTER: This is an application to set aside a demand under s 459G of the Corporations Act. The plaintiff is a company which deals in mesh and reinforcing bar products. It purchases them from a steel supplier and makes them up for resale to builders and other contractors. For some time the plaintiff had purchased its steel from the defendant until a dispute arose between them. 2 The statutory demand claims an amount of $675,237.88 being for goods sold and delivered. 3 There is no dispute as to the amount of the debt and the only question which was raised on the present application is whether the plaintiff has an offsetting claim against the defendant. It puts forward as an offsetting claim a breach of contract by the defendant and suggests that there are damages of $736,000. This amount, of course, exceeds the amount in the statutory demand. 4 The defendant denies that there has been any breach of contract given the proper construction of the contract and in any event says that the damages, if there is found to be a triable issue on breach, would not amount to the sum claimed. It also submits that there should be conditions attached to any setting aside of the demand. 5 It is useful if I remind myself of some principles which apply. First it is clear that a claim for damages for breach of a contract will be a cross demand and thus be an offsetting claim. The level of satisfaction in respect of the establishment of the offsetting claim is expressed somewhat differently from whether there is a genuine dispute. In Collier Nominees Pty Ltd v Consolidated Constructions Pty Ltd Santow J 3 July 1998 his honour said the following:- The notion of "offsetting amount", in requiring genuineness, is to be understood not as requiring that the offsetting amount can be only established if in turn there is no genuine dispute about it. Rather, it is another related way in which the original claim the subject of the statutory demand becomes the subject of genuine dispute. Thus the offsetting amount ceases to be genuine only if it fails to rise to the level of a plausible contention requiring further investigation, or perhaps more aptly in the case of an offsetting claim — if it fails to establish a triable issue; see, for example, R E Morris Catering (Aust) Pty Ltd (supra), Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (supra) and Federico's Restaurant Pty Ltd v Warwick Entertainment Centre Pty Ltd (1995) 18 ACSR 702. Clearly an offsetting amount based merely on a vexatious or frivolous claim would not suffice, nor one based on mere assertion." 6 The reference to the claim not being one based upon mere assertion is picked up in a number of other cases. See for instance, Brankson v Colonial First State Property Ltd Master Sanderson unreported 24 May 2001 and Edge Technology Pty Ltd v Lite-On Technology Corporation (2000) 18 ACLC 576.