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[2026] NSWSC 249
Supreme Court of NSW
2026-03-17
Brereton 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: Reosteel Pty Ltd v AonAri PT10 Pty Ltd; Reosteel Holdings Pty Ltd v AonAri PT10 Pty Ltd [2026] NSWSC 249
Hearing dates: 17 March 2026
Date of orders: 17 March 2026
Decision date: 17 March 2026
Jurisdiction: Equity - Corporations List
Before: Brereton J
Decision: The statutory demands are set aside
Catchwords: CORPORATIONS – applications to set aside creditor’s statutory demands under ss 459G, 459H and 459J of the Corporations Act 2001 (Cth) – where statutory demands have been stayed by consent of the parties pending determination of challenge to arbitral award – whether pressing statutory demand constitutes enforcement inconsistent with stay – whether statutory demand should be set aside under s 459J(1)(b) – offsetting claim – substantiated amount – whether the hearing should be adjourned – no adjournment – statutory demand set aside under s 459H(3)
Legislation Cited: Corporations Act 2001 (Cth)
Justices Act 1902 (NSW) (repealed)
Cases Cited: Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344
In the matter of Wyse Accounting Pty Ltd; In the matter of Wyse & Young International Pty Ltd; In the matter of Wyse & Young International Pty Ltd; In the matter of Wyse Accounting Pty Ltd [2016] NSWSC 1772
Scope Data Systems Pty Ltd v BDO Nelson Park Hill [2003] NSWSC 137
Texts Cited: N.A.
Category: Principal judgment
Parties: Reosteel Pty Ltd (first plaintiff)
Reosteel Holdings Pty Ltd (second plaintiff)
AonAri PT10 Pty Ltd (defendant)
Representation: Counsel:
F G Di Lizia (plaintiffs)
S A Wells (defendant)
Solicitors:
Madison Marcus (plaintiffs)
Lazarus Legal (defendant)
File Number(s): 2025/330414; 2025/330421
Publication restriction: N.A.
These proceedings concern two statutory demands which have been issued based on a judgment debt that was entered by this Court on 6 August 2025. The judgment is against both plaintiffs in the amount of $733,721.25.
The judgment debt arose from the registration of an arbitral award made on 16 July 2025.
In separate applications, each of Reosteel Holdings Pty Ltd and Reosteel Pty Ltd seek to set aside the statutory demand issued respectively to each company. The application to set aside the statutory demands are made on two main grounds.
The first is the judgment debt has been stayed, with the consequence that the statutory demands should be set aside pursuant to s 459J(1)(b) of the Corporations Act 2001 (Cth). That section relevantly provides:
(1) On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:…
(b) there is some other reason why the demand should be set aside.
(1) This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:
(a) that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;
(b) that the company has an offsetting claim.
(2) The Court must calculate the substantiated amount of the demand in accordance with the formula:
where:
"admitted total" means:
(a) the admitted amount of the debt; or
(b) the total of the respective admitted amounts of the debts;
as the case requires, to which the demand relates.
"offsetting total" means:
(a) if the Court is satisfied that the company has only one offsetting claim--the amount of that claim; or
(b) if the Court is satisfied that the company has 2 or more offsetting claims--the total of the amounts of those claims; or
(c) otherwise--a nil amount.
(3) If the substantiated amount is less than the statutory minimum, the Court must, by order, set aside the demand.
(4) If the substantiated amount is at least as great as the statutory minimum, the Court may make an order:
(a) varying the demand as specified in the order; and
(b) declaring the demand to have had effect, as so varied, as from when the demand was served on the company.
(5) In this section:
"admitted amount", in relation to a debt, means:
(a) if the Court is satisfied that there is a genuine dispute between the company and the respondent about the existence of the debt--a nil amount; or
(b) if the Court is satisfied that there is a genuine dispute between the company and the respondent about the amount of the debt--so much of that amount as the Court is satisfied is not the subject of such a dispute; or
(c) otherwise--the amount of the debt.
"offsetting claim" means a genuine claim that the company has against the respondent by way of counterclaim, set - off or cross - demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates).
"respondent" means the person who served the demand on the company.
(6) This section has effect subject to section 459J.
The plaintiffs commenced proceedings to challenge the arbitral award in this Court on 10 October 2025. Those proceedings are fixed for hearing next Monday, 26 March 2026.
On 26 November 2025, Williams J made the following order (by consent):
The judgment entered on 6 August, 2025, in proceedings 2025/291191 be stayed pending the determination of proceedings 2025/390719, and any appeal therefrom.
The first proceedings to which reference is made in that order is the proceedings giving rise to the judgment debt. The second proceedings are those challenging the award.
If, in the present case, a stay of execution of the Local Court orders is in force by operation of s107 of the Justices Act, reliance upon the statutory demand to produce a statutory presumption of insolvency as a basis for seeking a winding up order will entail for the plaintiff consequences of a serious and adverse kind. The defendant, as a judgment creditor to whom the remedy of execution upon the judgment is expressly denied pending determination of the appeal to this court, will nevertheless be permitted to rely on the judgment as a basis for bringing to bear the pressure for payment and threat of serious and adverse consequences inherent in a statutory demand and a winding up petition, notwithstanding the legislative policy that precludes direct resort to execution. That legislative policy would thereby be circumvented.
If Parliament sees fit to provide that, where a certain type of appeal is initiated in respect of a judgment debt, the judgment creditor is not to be allowed to exercise ordinary judgment creditor remedies by proceeding to execute the judgment, it would, in my view, be inconsistent with the position Parliament has striven to create if the judgment creditor could nevertheless proceed with impunity to initiate winding up proceedings on the basis of the mere existence (even though technically not subject to "genuine dispute") of that judgment debt. Such a course would, in my view, be oppressive in the sense referred to by Austin J in Moutere and by Mullins J in Softex. The circumstances would therefore warrant an order under s459J(1)(b) setting aside the statutory demand, even though the initiation of action towards winding up was not technically within the black letter operation of s107 of the Justices Act (cf Australian Cherry Exports Ltd v Commonwealth Bank of Australia (1996) 39 NSWLR 337).
The stay in the present case made by the Court on 26 November 2025 does not arise by operation of s 107 of the Justices Act 1902 (NSW) (repealed), and so the position in the present case is not on all fours with the decision in Scope Data. Nevertheless, in my view it would be inconsistent with the orders of this Court to stay a judgment to permit the defendant to press statutory demands that demand payment of that debt, with the threat of winding up proceedings in the event the demands go unfulfilled. As a matter of substance, by pressing the statutory demands, the defendant is seeking to enforce the judgment debt. It cannot do that so long as the judgment debt has been stayed.
The defendant submitted that the best outcome for the plaintiffs in the proceedings challenging the award is that the indebtedness of the plaintiffs will be several rather than joint and several, and that the liabilities under the arbitral award will be as follows:
(a) Reosteel Holdings - $291,988.98 (outgoings of $217,439.98, plus costs)
(b) Reosteel - $561,281.24 (outgoings of $441,732.24, plus costs)
The plaintiffs foreshadowed an application to amend the commercial arbitration list statement to challenge the arbitral award on wider grounds. They tendered a proposed form of amended commercial arbitration statement. If an amendment is permitted and the plaintiffs are successful in those proceedings, the result would be that the award would be set aside in its entirety. At this stage, whether the amendment will be permitted is unknown.
The defendant submitted that they would consent to an order varying the amounts of the statutory demands to the amounts that I have identified above at [10]. I am not satisfied that I have power to make orders of that kind.
The defendant directed my attention to s 459H(4), which confers some power to vary a statutory demand. The power to vary arises where there is a "substantiated amount" calculated in accordance with s 459H(2). I do not accept that this section gives power to vary statutory demands in the manner contemplated by the defendant. The section, relevantly, gives power to vary statutory demands where there is an offsetting claim, or claims, that total an amount less than the admitted amount of the debt. That is not what is proposed by the defendant in this case. The plaintiffs admit there is a judgment debt. No question of a genuine dispute arises, nor for the purpose of this argument is there any relevant offsetting claim. The judgment debt is the debt that is the subject of the statutory demands. The plaintiffs are challenging that debt and, if they are successful, it may be that there will be new judgment debts in smaller amounts. These will be new and different debts.
Given that the judgment debt against each plaintiff is currently stayed, in my view that is a sufficient basis to set aside each statutory demand.
Accordingly, there must be evidence that satisfies the court that there is "a serious question to be tried", or "an issue deserving of a hearing", or a "plausible contention requiring investigation" of the existence of either a dispute as to the debt or an offsetting claim. It is apparent, therefore, that evidence sufficient to satisfy this test, given the time period in which the affidavit must be filed, cannot and need not conclusively prove the claim or otherwise be incontrovertible or substantially non-contestable.
The offsetting claim advanced by the plaintiffs is a claim made in proceedings commenced in this Court in 2023 against the defendant. By a second further amended statement of claim, the plaintiffs sued the defendant for breach of contract. The plaintiffs have served their evidence in those proceedings and the defendants are in the process of preparing their evidence.
There is no reason to suppose that those proceedings are made without a proper basis. They are not a contrivance designed to defeat a statutory demand. That cannot be the case because the statutory demands were issued after those proceedings were commenced.
The defendant submits that there is an insufficient basis for the Court to be satisfied that the amount of the offsetting claim exceeds the amounts in the statutory demands. It noted that the plaintiffs did not seek to read, on this application, the evidence that they have served in the other proceedings.
I am satisfied that there is in evidence a sufficient basis to conclude that the amount of the offsetting claim exceeds the amount of the statutory demands. There is hearsay evidence of a forensic accountant's report that potentially puts the claim as one exceeding $100 million. That report was not in evidence and I cannot comment on its admissibility, but it is some basis to conclude that the amount of the offsetting claim exceeds the amount of the statutory demands. There is other evidence that part of the claim for damages in the other proceedings consists of certain relocation costs and those costs, by themselves, comfortably exceeded the amounts of the statutory demands.
Accordingly, I am satisfied that there is an offsetting claim that exceeds the admitted amount of the debt, being the judgment debt. That means the substantiated amount of the demand is less than zero and the statutory demands must be set aside under s 459H(3).
The defendants submitted that the disposal of these proceedings should be adjourned until the day following the hearing of the appeal against the arbitral award.
The defendants relied upon the decision In the matter of Wyse Accounting Pty Ltd; In the matter of Wyse & Young International Pty Ltd; In the matter of Wyse & Young International Pty Ltd; In the matter of Wyse Accounting Pty Ltd [2016] NSWSC 1772. In that case, an application to set aside a statutory demand was adjourned for a few days, at a time when an application for an instalment order was made on the day of the hearing of the application to set aside the statutory demand, but no instalment order had been made. That is different to this case.
In this case the judgment debt has been stayed since November 2025. It has been stayed for a period that is conceivably some months away, because it extends to the time when any appeal from the first instance proceedings is determined.
The matter before me has been ready for some time. I do not consider that an adjournment was appropriate. An adjournment may have had some relevance to the question of whether the stay was a foundation for setting aside the statutory demands. There was no reason to adjourn consideration of the alleged offsetting claim. It was convenient to consider the applications on their merits today.
I make the following orders:
The statutory demands dated 8 August 2025, issued by the defendant to each plaintiff, are set aside.
The defendant is to pay the plaintiffs’ costs.
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(1996) 39 NSWLR 337