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[2026] NSWSC 1214
Supreme Court of NSW
2026-10-02
Nixon J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: In the matter of Binah Constructions Pty Ltd [2026] NSWSC 1214
Hearing dates: 25 September 2026
Date of orders: 2 October 2026
Decision date: 02 October 2026
Jurisdiction: Equity - Corporations List
Before: Nixon J
Decision: 1. Order, pursuant to section 459H of the Corporations Act 2001 (Cth), that the statutory demand dated 13 June 2026 served by the Defendant on the Plaintiff be set aside.
2. The Defendant pay the Plaintiff’s costs of the proceeding, as agreed or assessed.
Catchwords: CORPORATIONS – statutory demand – where statutory demand served on Plaintiff claiming judgment debt arising from adjudication determination – where Plaintiff raised a number of offsetting claims – whether offsetting claims amount to an impermissible challenge to the adjudication determination
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW) s 32
Corporations Act 2001 (Cth) ss 459G, 459H
Cases Cited: Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (2019) 99 NSWLR 397; [2019] NSWCA 60
In the matter of Citadel Financial Corporation Pty Ltd [2019] NSWSC 65
In the matter of Douglas Aerospace Pty Ltd (2015) 294 FLR 186; [2015] NSWSC 167
In the matter of J Group Constructions Pty Ltd (2015) 303 FLR 139; [2015] NSWSC 1067
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4
Category: Principal judgment
Parties: Sunnice Pty Ltd (Plaintiff)
Binah Constructions Pty Ltd (Defendant)
Representation: Counsel:
D R Sibtain SC and D S Allen (Plaintiff)
L Shipway and E Miers (Defendant)
Solicitors:
McCullough Roberston Lawyers (Plaintiff)
Vincent Young (Defendant)
File Number(s): 2026/274702
Publication restriction: Nil
By Originating Process filed 3 July 2026, the Plaintiff, Sunnice Pty Ltd, brings an application for orders, pursuant to s 459H of the Corporations Act 2001 (Cth), setting aside or, alternatively, varying a statutory demand served by the Defendant, Binah Constructions Pty Ltd, and dated 13 June 2026 (Statutory Demand).
The Statutory Demand claimed an amount of $3,561,185.79, being the amount specified in an adjudication certificate (Adjudicated Amount) issued on 29 May 2026 under s 24 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA). Binah subsequently filed the adjudication certificate as a judgment for a debt in this Court pursuant to s 25(1) of the SOPA (Judgment).
Sunnice did not contend that there was a genuine dispute about the Adjudicated Amount, but rather raised a number of offsetting claims.
Sunnice’s primary position was that the Statutory Demand should be set aside pursuant to s 459H of the Corporations Act by reason that Sunnice had offsetting claims which exceeded the amount claimed in the Statutory Demand, namely:
a claim for liquidated damages in the amount of $7,569,500, said to arise pursuant to the terms of the Contract between Sunnice and Binah dated 25 November 2022; and
claims for restitution in the amounts of:
(a) $4,200,089.12, relating to payments made by Sunnice to Binah pursuant to earlier SOPA adjudications (in October 2023, December 2024 and January 2025); and (b) $1,000,000, relating to a payment made by Sunnice to Binah pursuant to a payment certificate issued in January 2026.
Sunnice accepted that it could not advance the restitution claims, or a liquidated damages claim in the amount specified above, if the Deed of Variation executed by Sunnice and Binah and dated 30 October 2025 was enforceable. That is because, in short, the Deed of Variation recognised Binah’s entitlement to the amounts which are the subject of Sunnice’s restitution claim, and varied the provisions in the Contract relating to liquidated damages (in a manner which is inconsistent with Sunnice’s primary position).
However, Sunnice contended that the Deed of Variation was discharged, or is unenforceable, by reason of the failure to satisfy an express condition precedent.
Binah accepted that there was a genuine basis for Sunnice’s contention that the Deed of Variation was unenforceable, but submitted that Sunnice was unable to advance the offsetting claims that comprise its primary position, because this would amount to an impermissible challenge to the adjudication determination (relying on the decision of Brereton J in In the matter of Douglas Aerospace Pty Ltd (2015) 294 FLR 186; [2015] NSWSC 167).
Sunnice advanced its alternative position only in the event that the Court accepted Binah’s submission in respect of Sunnice’s primary position.
Sunnice’s alternative position was that, even if the Deed of Variation was enforceable, Sunnice nonetheless had an offsetting claim for damages in respect of delay, consisting of:
a claim for liquidated damages in an amount of $1,430,000 pursuant to the Contract as varied by the Deed of Variation; and
a claim for damages in the amount of $1,785,439.23 for breach of the warranty implied by s 18B(1)(d) of the Home Building Act 1989 (NSW) (HBA) that the work would be done within the time stipulated in the Contract.
If Sunnice’s alternative position was accepted, the result would be that the Statutory Demand would be varied, by reducing the amount claimed, rather than set aside.
Binah did not dispute that, if the Deed of Variation was enforceable, Sunnice had a genuine offsetting claim for liquidated damages.
However, Binah did dispute that Sunnice had a genuine claim for breach of the HBA warranty. In particular, Binah submitted that the liquidated damages provisions of the Contract, as varied by the Deed of Variation, provided an exclusive remedy for delay. Further, Binah contended that the breach of warranty claim was not sufficiently disclosed in the affidavit filed in support of the s 459G application.
On 25 November 2022, Sunnice and Binah entered into the Contract, which related to the design and construction of 354 residential apartments in Rouse Hill, New South Wales (the Project).
The Contract divided the Project into “separable portions” lettered from A to E, with individual dates for the practical completion of each separable portion.
In respect of each separable portion, the Contract contained provisions for Binah to pay liquidated damages in the event that it failed to complete the works comprising that portion by the specified date for practical completion.
There was a series of disputes about payment under the Contract. Binah obtained adjudication determinations under the SOPA in its favour in October 2023, December 2024 and January 2025, which Sunnice paid.
On 30 October 2025, Sunnice and Binah entered into the Deed of Variation. The recitals to the Deed of Variation included the following statements:
“B. The Parties are in dispute (Dispute) relating to various matters under the Contract and in respect of the Project including:
a. [Binah’s] entitlement to various EOTs [Extensions of Time] and adjustments to the contract sum arising from and in connection with various alleged variations and claims under the Contract;
b. [Sunnice’s] entitlement to liquidated damages under the Contract; and
c. whether various work constitutes a Defect and liability relating to such alleged Defects.
C. Without admissions of any kind, the Parties have agreed to settle the Dispute on the terms set out in this Deed including to vary the Contract on the terms set out in this Deed.”
Clause 5 of the Deed of Variation sets out amendments to:
the dates for practical completion for each separable portion that were specified in the Contract; and
the liquidated damages provisions set out in the Contract, including the rates for liquidated damages and the dates from which they applied.
Clause 6 of the Deed of Variation was headed “Revised Contract Sum” and relevantly provided as follows:
“6.1. The contract sum set out in Clause 2.3 of the Formal Instrument of Agreement is at the date of this Deed revised to $148,293,058.34 plus GST (Revised Contract Sum) calculated as follows:
| SN | Item | VALUE excl GST | | 1 | Revised Contract Sum as per September 25 PC 35 | $141,317,120.77 | | 2 | Amount paid through Adjudication under the SOP Legislation | $2,775,937.57 | | 3 | Settlement Sum | $4,200,000.00 | | | TOTAL | $148,293,058.34 |
6.2. The Revised Contract Sum includes:
(a) all variations, all payment claims and all delay damages under clause 34 of the Contract that have been or could have been claimed by the Contractor under the Contract at law up to and including the date of this Deed.
(b) all claims or liquidated damages, claims for damages and or consequential losses, Defects and other Claims that have been made or could have been made by [Sunnice] under the Contract or at law up to and including the date of this Deed. …”
As set out above, cl 6.1 of the Deed of Variation added two new elements to the Revised Contract Sum, being an “Amount paid through Adjudication under the SOP legislation” of around $2.78m and a “Settlement Sum” of $4.2m.
The amount paid as a result of previous SOPA determinations (see paragraph [16] above) was the subject of cl 7.2 of the Deed of Variation, which provided as follows:
“[Sunnice] agrees that [Binah] is to retain any amounts paid to [Binah] pursuant to adjudication determinations made pursuant to the SOP Legislation up to and including the date of this Deed.”
“7.1. [Sunnice] must pay to [Binah] the Settlement Sum in the following instalments:
(a) $500,000 plus GST within 30 days after the issue of an occupation certificate for separable portion A;
(b) $500,000 plus GST within 30 days after the issue of an occupation certificate for separable portion C; and
(c) $3,200,000 plus GST within 30 days after the issue of an occupation certificate for separable portion D.”
“3.1. The Parties agree that this Deed is subject to and conditional upon the Parties obtaining written consent from the Secured Party to this Deed in accordance with the Builder’s Side Deed within 2 days of the date of this Deed.
3.2. Each Party will take all reasonable steps to obtain the consent referred to in clause 3.1.”
The “Secured Party” was Indigo Delta Development III Limited.
Clause 3.1 required Indigo’s consent to be obtained within two days of the date of the Deed of Variation. Indigo’s consent was not obtained until 4 November 2025.
| Other Items: | Amount Claimed by Contractor this Month | | Settlement Sum as per Clause 7.1(a) of the Deed of Variation, Settlement and Release dated 30 October 2025 - Separable Portion A - Occupation Certificate | $500,000.00 | | Settlement Sum as per Clause 7.1(a) of the Deed of Variation, Settlement and Release dated 30 October 2025 - Separable Portion C - Occupation Certificate | $500,000.00 |
Having regard to the terms of cl 7.1(a)-(b) set out in paragraph [20] above, the reference in the second entry in this table to “Clause 7.1(a)” is plainly an error, with the correct reference being to “Clause 7.1(b)”.
Accordingly, the Superintendent certified that these two sums of $500,000 each were payable pursuant to cll 7.1(a) and 7.1(b) of the Deed of Variation.
Payment was subsequently made by Sunnice in accordance with this payment certificate.
On 1 May 2026, Binah issued an Adjudication Application under the SOPA, claiming a total amount of $3,623,000 excluding GST. The sum claimed by Binah comprised:
an amount of $3.2m, which was described as “Payment made in accordance with clause 7.1(c) of Deed of Variation payable by [Sunnice] to Binah within 14 days after the issue of Occupational Certificate for separable portion D”; and
three other claims totalling $423,000 relating to certain footpath and asphalt works and temporary works.
On 11 May 2026, Sunnice issued its Adjudication Response.
Sunnice did not advance any contention to the effect that the Deed of Variation was unenforceable.
Instead, Sunnice contended Binah’s claim for the amount of $3.2m pursuant to cl 7.1(c) of the Deed of Variation was not a claim for an amount owing pursuant to the construction contract (namely, the Contract). Sunnice’s position was summarised as follows in the “Executive Summary” of the Adjudication Response:
“[Binah’s] fourth claim is for a portion of a settlement sum payable under the Deed [of Variation] however, contrary to the lengthy submissions of [Binah], its right to payment is found only in a separate settlement Deed and not the construction contract (i.e. the Contract) relied on to utilise the mechanisms under the Act. That is, contrary to its position that the entirety of the Deed should be read together with the Contract, this would adopt an inappropriate amalgamation of 2 instruments which is an outcome which the parties did not intend, and the Act does not accommodate.”
On 19 May 2026, the Adjudicator issued his Adjudication Determination.
The Adjudicator determined that an amount of $3,520,000 was payable by Sunnice to Binah, being the amount of $3.2m payable under cl 7.1 of the Deed of Variation, plus GST.
As noted above, the issue in dispute between Binah and Sunnice on the Adjudication Application was whether Binah’s claim for the payment of the amount of $3.2m pursuant to cl 7.1(c) of Deed of Variation was a claim pursuant to the construction contract. The Adjudicator summarised the parties’ respective positions on this issue as follows:
“[Binah] submits that the purpose of the Deed [of Variation] was to settle the dispute, concerning [extensions of time], adjustments to the Contract Sum on account of variations, [Sunnice’s] entitlement to liquidated damages and the allegation of defective work. [Binah] says that on 30 October 2025, the parties executed the Deed, by which the Contract was varied. [Binah’s] position is that there is only one Contract in place, being the original Contract, which has been amended by the Deed, and that the original Contract and the Deed operate, as a single ongoing contract.
…
At [6.1-17.1] of the Adjudication Response, [Sunnice] rejects [Binah’s] position that the original Contract, as amended by the Deed, is the only Contract in place. [Sunnice] agrees that the Deed, ‘in part, operates as an amending instrument and, to that extent, the Contract and those parts of the Deed should be read together. That is, the Contract should be read as incorporating the variations expressly identified in the Deed’, but [Sunnice] disputes that the entirety of the Deed should be read together with the Contract, particularly the rights concerning payment of the Settlement Sum …”
“According to the decision in EnerMech, it is for the Adjudicator to determine, if an amount is payable under a construction contract. In the present case, [Binah’s] entitlement to payment for the Settlement Sum, pursuant to Clause 7.1 of the Deed, is, in my opinion, subject to whether Clause 7.1 of the Deed was incorporated into the Contract. I am satisfied that it is a matter in my jurisdiction, which I am entitled to determine.”
“Putting myself in the position of an ordinary person, my interpretation of the provisions of the Deed leads me to conclude that its intent was to vary the Contract by the provisions of the Deed and to maintain the original Contract, amended by the Deed, as the only Contract in place. I am therefore not persuaded to accept [Sunnice’s] position that the Deed is a separate contract from the original Contract and was only amended by Clause 5 of the Deed.
In summary, I am satisfied that the Contract was varied by the Deed and that it should be read, as the Contract, varied by the Deed.”
“Firstly, I have previously expressed the view that the Contract was varied by the Deed and that it should be read, as the Contract, varied by the Deed.
Secondly, I reject the Superintendent’s assertion that the claimed sum is not attributable to work, performed by [Binah]. The Superintendent’s assertion is, in my opinion, contrary to the provision of Clause 6.2(a) of the Deed, where the Revised Construct Sum accounts for disputed work, including variations, payment claims, delay and other damages, and defects, the value of which the parties assessed and agreed, as at 30 October 2025. I am satisfied that [Binah’s] entitlement to payment arise under Clause 7.1(c) of the Deed.
I am satisfied that the Occupation Certificate for Separable Portion D was issued on 25 March 2026 and that pursuant to Clause 7.1(a) of the Deed, the Settlement Sum of $3,200,000.00 was payable within 14 days of issuance of the Occupation Certificate, being 8 April 2026. As no payment was made on or after 8 April 2026, I am satisfied that [Binah] was entitled to include the sum of $3,200,000.00 in the Payment Claim.
I agree with [Binah] that the right to claim under the Act is not limited to construction work only and extends to any other right to claim under the construction contract, including the Settlement Sum, which forms part of the Revised Contract Sum in the Deed.
For the above reasons, I am satisfied that [Binah] is entitled to payment of the Settlement Sum of $3,200,000.00.”
On 19 May 2026 (being the same day as the Adjudication Determination was issued), Binah commenced proceedings in the Technology and Construction List of this Court seeking the return of bank guarantees held by Sunnice.
On 10 June 2026, Sunnice filed its List Response.
In its List Response, Sunnice disputes Binah’s contention that Sunnice is not entitled to have recourse to the bank guarantees and that the bank guarantees must be returned to Binah. In particular, Sunnice pleads that:
the Deed of Variation was subject to the condition precedent in cl 3.1 requiring that Indigo’s consent be obtained within two days of the date of the Deed of Variation;
this condition precedent was not satisfied, with the result that the Deed of Variation was discharged and/or is unenforceable; and
Sunnice has various claims against Binah including, relevantly:
(a) a claim for liquidated damages in the amount of $7,569,500; and (b) claims for restitution in a total amount of $5,200,089.12 (plus GST);
(these being the claims that Sunnice advances as its primary position on the present application).
On 29 May 2026, the Adjudication Certificate was issued in the amount of $3,561,185.79, comprising the amount determined to be owing by the Adjudicator pursuant to the Deed of Variation ($3,520,000 incl GST) plus interest ($32,403.29) plus the adjudication fees payable by Sunnice ($8,782.50).
On the same day, Binah applied to register the Adjudication Certificate as a judgment of this Court.
On 3 June 2026, the Judgment was entered in the amount of $3,567,037.63, comprising the amount specified in the Adjudication Certificate plus interest and filing fees.
On 13 June 2026, the Statutory Demand was issued, claiming the amount specified in the Adjudication Certificate.
The Statutory Demand was served on 15 June 2026. Sunnice’s application to set aside the Statutory Demand was commenced on 3 July 2026, and therefore within the 21-day period prescribed in s 459G of the Corporations Act.
An offsetting claim, for the purposes of s 459H(1)(b) of the Corporations Act, is the amount of a claim or claims that a company has against the person who served a creditor’s statutory demand by way of counter-claim, set-off or cross-demand, whether or not the amount arises out of the same transaction or transactions as the debt to which the demand relates: s 459H(5).
In Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (2019) 99 NSWLR 397; [2019] NSWCA 60 at [65]-[66], Bell P (as his Honour then was) referred to the “relatively low threshold that is necessary to be satisfied to establish an offsetting claim for the purposes of s 459H(1)(b)”. His Honour quoted with approval the following observations of White JA in In the matter of Citadel Financial Corporation Pty Ltd [2019] NSWSC 65 at [30] (citations omitted):
“In judging the sufficiency of the evidence to give rise to an offsetting claim, the question is not whether the evidence is sufficient to establish the offsetting claim or its amount, but whether it is sufficient to establish that the offsetting claim is genuine and its genuine level … It is sufficient if there be a plausible contention requiring investigation ... The offsetting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion and not be merely fanciful or futile …”
Although it is not open to a party in Sunnice’s position to raise a “genuine dispute” in relation to a judgment debt obtained under the SOPA, such a party may advance an offsetting claim: Grandview at [5]-[6], referring to Douglas Aerospace at [93] (Brereton J) and In the matter of J Group Constructions Pty Ltd (2015) 303 FLR 139; [2015] NSWSC 1067 (Robb J).
In Douglas Aerospace at [91], Brereton J observed that “the judgment that arises upon filing an adjudication certificate determines that the judgment debt is indisputably due and payable, and remains so unless and until it is set aside”. His Honour explained that this “accords with the legislative policy that adjudicated debts should be paid notwithstanding the pendency of any curial dispute as to whether they reflect the true legal rights of the parties, and that if it is ultimately found that they do not reflect those rights, can later be recovered by way of restitution”.
Brereton J stated (at [91]) that, unlike a “genuine dispute”, an “offsetting claim” does not involve a challenge to the judgment debt. Accordingly, an offsetting claim may be relied upon to set aside a statutory demand founded on an adjudication certificate (at [93]).
His Honour identified the “critical question” in that case as “whether the existence or pendency of an arguable claim that the adjudication does not reflect the true legal rights of the parties amounts to an offsetting claim, where there is no cross-demand for damages and where there has been no payment and thus no complete claim for restitution” (at [97]). His Honour addressed this issue as follows (at [98], [100]):
“In my view, a curial proceeding in which a party to a construction contract seeks, by way of enforcing its contractual rights, a declaration that an adjudicated amount is not truly due and payable is in a position closely analogous to one who applies to set aside a judgment, or to appeal from a judgment – essentially, the contention is that the adjudication, and thus the judgment founded on it, is wrong. Despite the width of the concept of ‘offsetting claim’, it has never been thought to extend to an appeal from, or application to set aside, a judgment. In the absence of payment of an amount of which restitution might be claimed, there is nothing to be set off against the judgment debt, but only a contention that the adjudication is in error. A contention that a debt does not exist is not a ‘counterclaim, set-off or cross-demand’. Such a contention denies the debt, whereas a counterclaim, set-off or cross-demand admits it, but asserts that there is a countervailing liability. That the curial proceedings might produce a different result is no different from an appeal. The general principle that an appeal or application to set aside a judgment does not found a genuine dispute, or (at least without more) provide some other reason to set aside a demand, supports the conclusion that a claim that an adjudication does not reflect the true contractual rights of the parties does not amount to an offsetting claim.
…
In my opinion, therefore, the existence or pendency of an arguable claim that an adjudication does not reflect the true legal rights of the parties – involving no cross-claim for damages, and where there has been no payment and thus no complete claim for restitution – cannot be an offsetting claim for the purposes of s 459H(1)(b). …”
“In my opinion, the answer to this question is that the offsetting claims remain available for the purposes of the present application, and that they are ‘true’ offsetting claims, being for damages for breach of contract: see Douglas Aerospace at [93]. Sections 23 and 25 of the Security of Payment Act may have the effect that the adjudication amount cannot reasonably be disputed by J Group, but the statutory provisions do not clothe the adjudicator’s reasoning with any finality that must be accepted by the court.”
Robb J said (at [169]) that the “most significant feature” of the case was that J Group had a genuine offsetting claim, which it was “seriously prosecuting” in District Court proceedings. His Honour held (at [171]) that the “apparent determination by the adjudicator that J Group is not entitled to succeed on its offsetting claims does not in any way bind this court on an application to set aside the statutory demand”.
In circumstances where there is an offsetting claim, it is necessary to determine the amount of that offsetting claim. The “admitted total” (being the amount claimed in a statutory demand which is not the subject of a genuine dispute) less this “offsetting total” will be the “substantiated amount” of the Statutory Demand: s 459H(2).
If the substantiated amount is less than the statutory minimum of $4,000, the Court must set aside the Statutory Demand: s 459H(3). Otherwise, the Court may make an order varying the Statutory Demand such that the amount claimed is the substantiated amount, and declaring the demand to have had effect, as so varied, as from when the demand was served on the company: s 459H(4).
As noted above, Binah did not dispute that there is a genuine basis for the offsetting claims which Sunnice advanced as its primary position.
However, Binah did dispute that Sunnice is able to raise these claims as offsetting claims on an application to set aside the Statutory Demand by reason that these claims amount to “a challenge to” the Adjudication Determination (Douglas Aerospace at [91]).
In particular, Binah submitted that:
the Adjudicator determined that Sunnice was obliged to pay the amount of $3.2m (plus GST) to Binah pursuant to cl 7.1(c) of the Deed of Variation;
it was therefore an “essential plank” in the Adjudicator’s determination that the Deed of Variation was enforceable;
each of the offsetting claims comprising Sunnice’s primary position necessarily depends on the proposition that the Deed of Variation is unenforceable; and
accordingly, each of those claims depends on an assertion that the Adjudication Determination “does not reflect the true contractual rights of the parties” and, consistently with Douglas Aerospace at [98], Sunnice is unable to advance any such claim as an offsetting claim in response to the Statutory Demand.
I reject this submission for the following reasons.
First, Sunnice does not “challenge” the Adjudication Determination, in that:
the Adjudication Determination was that Sunnice is required to pay Binah the amount of $3.2m plus GST; and
Sunnice does not dispute that it is required to pay Binah this amount.
It follows that Sunnice accepts that “the judgment debt is indisputably due and payable, and remains so unless and until it is set aside”, notwithstanding any “dispute as to whether [the adjudicated debt] reflect[s] the true legal rights of the parties” (Douglas Aerospace at [90]).
Secondly, it is not the case that (as Binah submits) “in reaching his determination pursuant to s 22 of the SOPA, the adjudicator dealt with and decided [Sunnice’s] primary claim” (emphasis in original). Sunnice did not advance in its Adjudication Response, and the Adjudicator did not address in the Adjudication Determination, either Sunnice’s claim for liquidated damages or its claims for restitution which comprise its primary position on this application.
Thirdly, it is not the case that each of the offsetting claims comprising Sunnice’s primary position necessarily depends on Sunnice establishing that the Deed of Variation is unenforceable. For example, such a proposition is not an element of Sunnice’s claim for restitution in respect of the amounts paid pursuant to earlier adjudication determinations. It is true that Binah’s likely response to this restitution claim is that Sunnice is precluded from advancing this claim by reason of cl 7.2 of the Deed of Variation (see paragraph [20] above). Any such response would require Binah to establish that the Deed of Variation came into effect and is enforceable.
Fourthly, the Adjudicator did not make any determination that the Deed of Variation was enforceable. That is because, as outlined above, there was no issue raised by Sunnice that it was unenforceable. Instead, Sunnice contended that a claim for the amount of $3.2m pursuant to cl 7.1(c) of the Deed of Variation was not a claim pursuant to the construction contract. The Adjudicator determined this issue adversely to Sunnice. In doing so, the Adjudicator did not refer to, let alone determine, any issue as to whether the condition precedent for the Deed of Variation was satisfied, or any issue as to what were the consequences of non-satisfaction, or any issue as to whether Sunnice had waived any such non-satisfaction or had otherwise affirmed the Deed of Variation.
Fifthly, even if the Adjudicator had determined any such issue in the process of determining that Sunnice was liable to pay the sum of $3.2m pursuant to cl 7.1 of the Deed of Variation, his determination of that issue would not be binding on the parties.
Section 32 of the SOPA provides as follows:
(1) Subject to section 34, nothing in this Part affects any right that a party to a construction contract—
(a) may have under the contract, or
(b) may have under Part 2 in respect of the contract, or
(c) may have apart from this Act in respect of anything done or omitted to be done under the contract.
(2) Nothing done under or for the purposes of this Part affects any civil proceedings arising under a construction contract, whether under this Part or otherwise, except as provided by subsection (3).
(3) In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal—
(a) must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order or award it makes in those proceedings, and
(b) may make such orders as it considers appropriate for the restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings.
“To speak of an adjudicator’s determination as being final obscures the fact that a party is not left without recourse where an adjudicator errs within jurisdiction in determining the amount of a progress payment. A determination does not of itself give rise to any issue estoppel for the purposes of civil proceedings arising under a construction contract. As ss 3(4) and 32 make plain, the ability of a party to enforce contractual rights, including where an adjudicator has erred in determining the amount of a progress payment, is undiminished.”
Accordingly, even if the Adjudicator had made an express determination that the Deed of Variation was enforceable despite non-satisfaction of the condition precedent, his determination of that issue would not give rise to any issue estoppel (see also J Group at [168], [171]). The same conclusion must follow if, as Binah asserts, it was an (unstated) “essential plank” in the Adjudicator’s reasoning that the Deed of Variation was enforceable.
Finally, I do not accept Binah’s submission that Douglas Aerospace stands for the proposition that “a claim that rests on a submission that an adjudicator made an error of fact or law in reaching a determination will not constitute a ‘true’ offsetting claim”.
Brereton J did not, in that case, state any principle to this effect, or to the effect that a company seeking to set aside a statutory demand based on an adjudication application is unable to advance any claim which involves a proposition that the adjudication “does not reflect the true rights of the parties”.
Instead, his Honour stated a narrower proposition (at [100], emphasis added), namely that:
“the existence or pendency of an arguable claim that an adjudication does not reflect the true legal rights of the parties – involving no cross-claim for damages, and where there has been no payment and thus no complete claim for restitution – cannot be an offsetting claim for the purposes of s 459H(1)(b)”.
That statement of principle has no application in the present case because the offsetting claims advanced by Sunnice do involve both:
a cross-claim for liquidated damages; and
a “complete claim for restitution” (in the sense of a claim for “the recovery by way of restitution of amounts already allegedly overpaid”: Douglas Aerospace at [93]).
For those reasons, I have determined that Sunnice is entitled to advance, in response to the Statutory Demand, those offsetting claims which comprise its primary position.
Binah has conceded that each of those offsetting claims is “genuine”.
It follows that Sunnice has genuine offsetting claims in an amount greater than the amount of the Statutory Demand.
It also follows, pursuant to s 459H(3) of the Corporations Act, that the Court must set aside the Statutory Demand.
For the reasons given above, Sunnice has established that it is entitled to an order pursuant to s 459H of the Corporations Act setting aside the Statutory Demand. Costs will follow the event.
Accordingly, I make the following orders:
Order, pursuant to section 459H of the Corporations Act 2001 (Cth), that the statutory demand dated 13 June 2026 served by the Defendant on the Plaintiff be set aside.
The Defendant pay the Plaintiff’s costs of the proceeding, as agreed or assessed.
**********
(2019) 99 NSWLR 397
(2015) 294 FLR 186
(2015) 303 FLR 139
(2018) 264 CLR 1