Australian Steel Manufacturing Pty Ltd v Selection Steel Trading Pty Ltd [2025] FCA 407

1. The nature of the arrangements with Atradius were not explained by Mr Gregory. The evidence suggests that Selection Steel's offer of credit to Australian Steel was to be dependent on the credit being insured by Atradius.
2. On 1 March 2022, Mr Gregory sent the following email to Mr Egan, which had the subject line "APT - Laurus new orders and cash flow - amended" and was copied to Mr Kocsis and Mr Brandi:

John

Trust you are well.

Rang but missed you.

As agreed we have placed new order on BSL for 970T which now brings total to 2513T - thanks for support.

We were due payment of $679k yesterday that has not yet arrived??? Please confirm this payment asap.

To operate within the agreed limit of $1m - please see our attached spreadsheet cashflow with assumed draw down and payments.

• Ÿ A - Based on 90 day terms the steel will take over 12 months - which is not acceptable to both of us.
• Ÿ B - Or to deliver over 5 months (500t pcm) the attached payment will be needed within 30 days.

Also the new order (as previous) will be subject to the Selection Steel T&Cs.

Please confirm - happy to catch up any time.

1. The email suggests that Selection Steel had offered Australian Steel credit of $1 million, although it is not clear from the email whether terms were still being negotiated. The email stated that the Selection T&Cs would apply to the Australian Steel orders being discussed.
2. Mr Gregory deposed that:

Between 4 March 2022 to 9 March 2022 SST corresponded with Mr Folino, Mr Egan and Mr Brandi of APT in relation to finalising ASM's credit limit and coverage with Atradius to facilitate the provision of goods and services ...

1. On 4 March 2022, Mr Kocsis sent the following email to Mr Folino, copied to Mr Egan, with the subject line "Financials to ATradius".

Hi David.

I chased up ATradius regarding getting your limit in place.

They advised they still haven't received financial information.

Sorry John but I though [sic] you confirmed that the info had been sent.

Would you mind following up or advising who you sent the info to so I can redirect our brokers.

Regards,

1. On 9 March 2022 at approximately 2.24 pm, Mr Kocsis sent an email to Mr Egan and Mr Folino, copied to Mr Brandi, which read:

Hi John.

Atradius have advised that no information has been received at this stage.

We have scheduled processing of your stock very soon so this may be delayed if we cannot get the info to them for assessment soon.

Regards,

1. A short time later, at approximately 2.30 pm, Mr Brandi sent the following reply:

Gents, in my court.

I'm popular at the moment - a few meetings to go & then I'll close out today.

Cheers

1. Mr Gregory deposed (again in a conclusory form) that:

On or around 15 March 2022, Atradius approved a $1million credit limit and SST began releasing the orders for ASM pursuant to the agreement and in accordance with SST's terms and conditions.

1. Apart from the statement concerning the Selection T&Cs, Mr Gregory's evidence in the preceding paragraph was confirmed by an email from Mr Kocsis to Messrs Egan, Folino, Brandi and Gregory on 15 March 2022 stating:

Confirming that the $1m limit has now been approved and allocated to the new account.

Processing of the current order is continuing.

1. A short time later, Mr Egan replied asking whether Selection Steel would be issuing new invoices, and Mr Kocsis replied stating that he would provide invoices to the account.

1. The claimed debt in the amount of $1,116,010.32 which is the subject of the statutory demand concerns the price payable for the supply of steel products by Selection Steel to Australian Steel in partial fulfilment of four separate orders for steel placed by Australian Steel and accepted by Selection Steel, and associated slitting services. Each of the four orders was placed by way of email from Ms Pirotta, the purchasing officer for APT, addressed to Ms O'Beirne, the National Inventory Controller of Selection Steel. Each email from Ms Pirotta attached a purchase order detailing the specifications of the order and, relevantly, also attached the APT T&Cs.
2. The first of the relevant purchase orders was numbered 23662 and dated 20 April 2022. It was sent by email to Ms O'Beirne on 26 April 2022 together with the APT T&Cs. The order was for delivery in "W22-W26" which I infer is in the period of weeks 22 to 26 of the calendar year 2022 (broadly, the month of June 2022). Not having received a response, Ms Pirotta sent a follow up email to Ms O'Beirne on 29 April 2022 at 10.26 am with the subject line "hr order 23662".

Amy

Please could you advise if Selection have accepted the above order number 23662 and it has been placed on Bluescope

Thanks

1. A short time later at 10.33 am, Ms O'Beirne replied as follows:

Hi Marina,

Rod was still working through the timing of the order, but it has been placed and accepted by BSL for June delivery.

Regards,

1. The second of the relevant purchase orders was numbered 23831 and dated 26 May 2022. It was sent by email to Ms O'Beirne on 30 May 2022 together with the APT T&C's. The order was for delivery in "W27-W30" which I infer is in the period of weeks 27 to 30 of the calendar year 2022 (broadly, the month of July 2022).
2. The third of the relevant purchase orders was numbered 26777 and dated 24 May 2023. It was sent by email to Ms O'Beirne on 25 May 2023 together with the APT T&C's. The order was for delivery in "Weeks 31-35" which I infer is in the period of weeks 31 to 35 of the calendar year 2023 (broadly, the month of August 2023).
3. The fourth of the relevant purchase orders was numbered 26795 and dated 2 June 2023. It was sent by email to Ms O'Beirne on 2 June 2023 together with the APT T&C's. The order was for delivery in "Weeks 31-35" which I infer is in the period of weeks 31 to 35 of the calendar year 2023 (broadly, the month of August 2023).
4. There was no response from Selection Steel suggesting that the orders would not be accepted on the basis of the APT T&Cs, or otherwise asserting that the orders were subject to different terms and conditions (and specifically the Selection T&Cs).
5. Selection Steel subsequently began supplying the products the subject of the purchase orders. It is not in dispute between the parties that this supply occurred in instalments and that Selection Steel did not deliver the full amounts specified in purchase orders 23831, 26777 and 26795. In respect of those purchase orders, Ms Spiteri deposed that:

(a) purchase order 23831 was for a total of 1,003 tonnes of steel (to be delivered during weeks 27 to 30 of 2022), but Selection Steel failed to deliver 211.64 tonnes of the steel that had been ordered;

(b) purchase order 26777 was for a total of 500 tonnes of steel (to be delivered during weeks 31 to 35 of 2023), but Selection Steel failed to deliver 228.105 tonnes of the steel that had been ordered;

(c) purchase order 26795 was for a total of 614 tonnes of steel to be delivered during weeks 31 to 35 of 2023, but Selection Steel failed to deliver 310.74 tonnes of the steel that had been ordered.

1. Between 11 September 2023 and 5 October 2023, Selection Steel issued 18 invoices, each of which related to quantities of steel that had been delivered by Selection in partial fulfilment of the purchase orders detailed above (in other words, by way of instalments). Each of the invoices referenced the purchase order under which delivery had been made, stated the delivery date and identified the quantities delivered and the purchase price. Each invoice included the following notations:

TERMS: 90 DAYS

TERMS AND CONDITIONS

(a) Until full payment has been made for the goods and full payment of any other sums whatsover [sic] which are or may become outstanding from the buyer to Selection Steel Trading Pty Ltd ('the company') the property in the goods shall not pass to the buyer.

(b) Until payment in full is made, the buyer is to store the goods separately from its own goods.

(c) All goods (after delivery) are at the buyers risk and must be paid for notwithstanding the destruction thereof or any damage however caused.

(d) The buyer shall deliver to the seller or otherwise deal with the goods as directed by the seller upon request until property in the goods has passed to the buyer.

1. As at 31 March 2024, the amounts owing under the 18 invoices remained outstanding, being the amount claimed under the statutory demand.
2. There is no dispute between the parties that the invoices reflected the prices applicable to steel coil delivered to Australian Steel. As is explained further below, the dispute concerns the question whether the amounts stated in the invoices were due and payable by Australian Steel.

Subsequent negotiations between the parties concerning payment

1. Between 28 March 2024 and 29 April 2024, Mr Brandi endeavoured to negotiate payment arrangements and the provision of security to Selection Steel on behalf of APT in respect of the invoiced amounts. It is unnecessary to set out those communications between the parties in detail. It is sufficient to record that, in an email chain between Mr Brandi and Mr Gregory (copying Mr Egan):

(a) on 2 April 2024, Mr Brandi stated that he was "working through a payment plan ...over the next 3 months" and provided a list of real property assets which might be used to secure the invoiced amounts;

(b) on 18 April 2024, Mr Brandi stated that APT was selling down assets and seeking a refinancing and that it was imperative for the supply of steel coil to APT to continue, and proposed payment of the "debt" in 12 weekly instalments;

(c) on 19 April 2024, Mr Gregory stated that Selection Steel would accept the weekly payment plan in respect of the outstanding amount owing, but would only supply more steel coil on a cash against invoice basis until the debt was cleared;

(d) later on 19 April 2024, Mr Brandi stated:

Yes lets move forward with the deed.

We also need to work out a solution conjunctly with the Coil. I may not have articulated that well in my email and John may be clearer 'speaking steel language better than I' but what I meant was a quasi-consignment arrangement whereby we record that this is your coil, housed at APT, slit. And against backorders we (same day) roll & invoice out to a customer, upload into debtors & draw down cash - and pay you for this exact coil usage daily COD.

We would keep a detailed inventory list until its all done, and separate clear area under roof at APT to house your coil.

This way you get your $ ASAP and we make clients waiting happy & we can take the margin against debtors to further enhance the payment arrangement below.

1. No agreement to pay the invoiced amounts was reached between Selection Steel and Australian Steel. The statutory demand was issued on 5 June 2024. It was accompanied by an affidavit of debt sworn on the same date by Mr Gregory. The Schedule to the statutory demand describes the alleged debt as "Money due and owing by the company to the creditor for goods and services provided pursuant to a credit agreement dated 15 February 2022 as particularised in the statement attached". There was no challenge to the form of the statutory demand (although in her affidavit of 27 June 2024, Ms Spiteri deposed that a statement was not attached to the statutory demand that was received by Australian Steel).
2. Australian Steel filed an originating process seeking orders to set aside the statutory demand on 27 June 2024. The originating process was subsequently amended on 15 July 2024. In her affidavit dated 27 June 2024, Ms Spiteri deposed that Australian Steel:

(a) denies that it is indebted to Selection Steel for the debt alleged in the statutory demand;

(b) denies that any moneys are presently due and payable by it to Selection Steel; and

(c) has offsetting claims against Selection Steel that exceed the alleged debt.

1. Ms Spiteri's affidavit deposed to the process by which Australian Steel placed orders for steel coil with Selection Steel on the basis of the APT T&Cs. Ms Spiteri claimed that Selection Steel breached the APT T&Cs because:

(a) it delivered the steel coil in progressive tranches; and

(b) as at the date of the affidavit, failed to deliver the full quantities required under the purchase orders.

(a) by reason of the above breaches, Australian Steel has suffered substantial loss and damage that will exceed the value of the alleged debt;

(b) Australian Steel has claims against Selection Steel for liquidated damages that exceed the value of the alleged debt; and

(c) pursuant to cl 6.1 of the APT T&Cs, Australian Steel is entitled to suspend any payment obligation that it has to Selection Steel until Selection Steel remedies the above breaches.

1. Australian Steel submitted that the statutory demand should be set aside for either of the following reasons.
2. Australian Steel's primary argument is that, pursuant to s 459H(1)(a) of the Act, there is a genuine dispute between the parties as to whether the debt to which the statutory demand relates is payable. Australian Steel submitted that that dispute arises from the 'battle of the forms' - the disagreement between the parties as to whether it is the APT T&Cs or the Selection T&Cs which govern the relevant transactions. Australian Steel argues that it is the APT T&Cs which are applicable and that:

(a) Selection Steel's incomplete delivery, and delivery by way of instalments, is a breach of cl 3.1 of the APT T&Cs; and

(b) under cl 6.1 of the APT T&Cs, Australian Steel is entitled to suspend payment of the amounts the subject of the statutory demand until Selection Steel supplies the whole of the steel.

1. Australian Steel submitted that there is uncertainty as to the resolution of that question, which will in part depend on which of the 'last shot', 'higher status' or 'synthesis' approach is ultimately applied to resolve the question. Each approach is arguable in the circumstances, but Australian Steel submitted that the 'last shot' and 'synthesis' approaches will more likely lead to a finding that the APT T&Cs are applicable. Australian Steel submitted that it is not appropriate for such questions to be determined on an application to set aside a statutory demand.
2. Australian Steel further submitted that, in accordance with s 459H(1)(b) of the Act, it has an offsetting claim against Selection Steel as it is entitled to liquidated damages that will exceed the value of the alleged debt. Australian Steel's claim to liquidated damages proceeds on the basis that the APT T&Cs are applicable. Under cl 4.2 of the APT T&Cs, Australian Steel has a claim for liquidated damages in respect of each of the incompletely performed purchase order contracts at $2,000 per day, until such time as Selection Steel supplies the whole of the steel under the purchase orders. Australian Steel did not put on evidence regarding the precise quantification of the liquidated damages, but submitted that it was not required to do so for the purposes of the present application. Australian Steel submitted that all that was required for the present application is that the offsetting claim be stated and the basis for it articulated. In that regard, the evidence shows that:

(a) purchase order 23831 was for delivery in July 2022, but delivery was incomplete; and

(b) purchase orders 26777 and 26795 were for delivery in August 2023, but delivery on each was incomplete.

1. If liquidated damages were payable under the APT T&Cs for each of the above purchase orders in the amount of $2,000 per day as submitted by Australian Steel, it can be readily concluded that the amount of the liquidated damages would exceed the amount of the debt claimed as at the date of the statutory demand on 5 June 2024.

1. Selection Steel submitted that there is no genuine dispute as to the existence or quantum of the debt, as it is clear that the Selection T&Cs were applicable to the relevant transactions.
2. Selection Steel submitted that the 'battle of the forms' argument on which Australian Steel now seeks to rely was not raised as a basis for setting aside the statutory demand in the affidavits filed in support of the application to set aside the statutory demand, and that it is not open for Australian Steel to rely on such an argument now. Selection Steel also referred to the evidence of the negotiations that occurred between the parties prior to the statutory demand being issued. Selection Steel argued that the emails sent by Mr Brandi between 28 March and 29 April 2024 were clearly directed to the time frame in which the debt could be paid down, any security that Australian Steel could give to Selection Steel in respect of the payment of the debt, and the arrangements for future supply of steel by Selection Steel. Selection Steel submitted that the emails contain an express acknowledgment of the debt as owing, contain no assertion that the amounts were not payable, nor any assertion that Australian Steel had suspended payment pursuant to contractual rights. Selection Steel submitted that the fact that these arguments, upon which Australian Steel now seeks to rely, were not raised contemporaneously, speaks to a lack of genuineness in Australian Steel's asserted belief that the debt is not payable.
3. In response to Australian Steel's argument concerning an offsetting claim, Selection Steel submitted that Australian Steel has no genuine offsetting claim against Selection Steel, and nor has Australian Steel made any attempt to quantify such a claim for the purposes of s 459H(2), in circumstances where it is required to do so.

1. As stated earlier, on an application to set aside a statutory demand, it is neither necessary nor appropriate for the Court to engage in an in-depth examination of the merits of the alleged dispute. The Court is required to determine whether the dispute is genuine, in the sense that it truly exists in fact and that the grounds for alleging the existence of a dispute are real and not spurious, hypothetical, illusory or misconceived: Spencer Constructions Pty Ltd v G&M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452 at 464. The Court does not engage in a balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the applicant to set aside the demand, it must find that a genuine dispute exists: Panel Tech Industries (Australia) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896 at [18].
2. In my view, Australian Steel's contentions that:

(a) there is a genuine dispute between the parties as to whether the debt to which the statutory demand relates is payable, within the meaning of s 459H(1)(a) of the Act; and

(b) it has an offsetting claim, within the meaning of s 459H(1)(b) of the Act,

1. The determination of applicable terms and conditions, where there is a 'battle of the forms', is notoriously difficult and requires a complete examination of all communications between the parties. The documentary record outlined earlier in these reasons indicates that each of the parties have an arguable case that their terms and conditions applied. At least three questions arise for resolution. The first is the status of the "last email" sent by Mr Egan to Mr Kocsis at 1.48 pm on 28 October 2021 which stated that the APT T&Cs were to apply to Australian Steel's purchases from Selection Steel. It is not possible to determine on this application whether that email was received by Selection Steel. The second question concerns Australian Steel's application for credit from Selection Steel and the incorporation of the Selection T&Cs into that document. As noted earlier, the application was not itself a contract, and a question arises whether and to what extent the application became a contract between the parties and overrode the "last email". The third question concerns the purchase orders placed by Australian Steel which attached the APT T&Cs. Selection Steel accepted the purchase orders and did not object to the APT T&Cs. The significance of each of those events, and the ultimate determination of the terms and conditions governing the trading relationship between Australian Steel and Selection Steel, involve complex questions of fact and law. It is not appropriate to attempt to resolve the dispute as to the applicable terms and conditions in an application of this kind.
2. As submitted by Australian Steel, if the APT T&Cs applied to the steel coil purchases made by Australian Steel, it is reasonably arguable that Selection Steel's incomplete delivery, and delivery by way of instalments, is a breach of cl 3.1(a) of those terms and conditions. It is also reasonably arguable that, under cl 6.1 of the APT T&Cs, Australian Steel is entitled to suspend payment of the amounts the subject of Selection Steel's invoices until Selection Steel supplies the whole of the steel ordered by Australian Steel. It is also reasonably arguable that, under cl 4.1 of the APT T&Cs, Selection Steel is liable to pay liquidated damages to APT for late delivery of the steel coil ordered by Australian Steel in the amount of $2,000 per day for each of the three purchase orders where supply was not fulfilled. As at the date of the statutory demand (5 June 2024), the amount of liquidated damages would exceed the amount of the debt claimed. Again, it is not appropriate that those contractual questions be determined on an application of this kind.
3. It can be accepted that the conduct of Australian Steel prior to the issue of the statutory demand calls into the question the genuineness of the dispute. As was submitted by Selection Steel, the email correspondence between 28 March 2024 and 29 April 2024 does not contain any statement by Australian Steel that it disputed the amount of the debt claimed by Selection Steel, nor that Australian Steel had suspended payment of the invoices pursuant to its contractual rights under the APT T&Cs. However, Australian Steel's conduct in that period cannot be regarded as determinative of the contractual issues in dispute between the parties. A party will not necessarily forfeit their contractual rights because they do not assert them at the earliest opportunity. It may be arguable that, by its conduct, Australian Steel is estopped from asserting, or has waived, its contractual rights. But any such contentions, if pressed by Selection Steel, cannot be determined on this application.
4. I do not accept Selection Steel's submission that Australian Steel failed to raise its contractual arguments in the affidavits filed in support of the application to set aside the statutory demand. Ms Spiteri's affidavit of 27 June 2024 explicitly relies on the APT T&Cs in support of Australian Steel's stated position denying that it is indebted to Selection Steel, denying that any moneys are presently due and payable, and asserting that it has an offsetting claim against Selection Steel that exceeds the alleged debt. It is apparent that, at the time Ms Spiteri made her affidavit, Australian Steel alleged that it was the APT T&Cs that governed the relevant transactions.
5. I am therefore satisfied that Australian Steel has discharged the onus of establishing that there is a genuine dispute as to the existence of the debt the subject of the statutory demand, and that Australian Steel has an offsetting claim in an amount that exceeds the amount of the claimed debt. The dispute and offsetting claim raised by Australian Steel are real, plausible and supported by evidence rather than mere assertion. It follows that, pursuant to s 459H(3), the Court must set aside the statutory demand.

1. In conclusion, an order should be made setting aside Selection Steel's statutory demand dated 5 June 2024. It follows that the extension of time granted by order 1 of the orders made on 23 September 2024 ceases to have any effect.
2. Section 459N of the Act provides that where, on an application under s 459G, the Court sets aside a statutory demand, it may order the person who served the demand to pay the company's costs in relation to the application. Subject to one matter, I consider that it is just that Selection Steel pay Australian Steel's costs of the application to set aside the statutory demand. The matter concerns the late filing of evidence by Australian Steel, addressed earlier in these reasons. The late filing of evidence caused Selection Steel to prepare a lengthy responsive affidavit of Mr Gregory, most of which was rendered unnecessary (and ultimately not read) because I ruled that it would be prejudicial to allow Australian Steel to rely on significant parts of its late-filed affidavits. Having regard to the amount of evidence that was rendered unnecessary, and the legal work that was therefore wasted, I consider it appropriate to reduce the costs payable to Australian Steel by 30%. Accordingly, I will order that Selection Steel pay 70% of Australian Steel's costs.

I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan.