August 2022 Legal Update

The recent Supreme Court of Victoria handed down judgment on 4 August 2022 in:
Re J Build Developments Pty Ltd
J Build Developments Pty Ltd successfully disputed a statutory demand for payment of debt.

What is a statutory demand?

This is a formal demand for payment of a debt, if ignored, can lead to a winding up application against the company.

When should a statutory demand be used?

For undisputed debts.

Other methods of debt recover for disputed debts?

Application under the Security of Payment legislation (SOP Act);
Court/VCAT

What did the Subcontractor try to argue?

That it had served a ‘payment claim’ in accordance with the SOP Act and no ‘payment schedule’ was served.

It argued that J Build could not argue that there was a genuine dispute about the subject of the statutory demand in this proceeding.

What did the judge find?

That there was a genuine dispute in relation to

• Whether the invoice was issued before the reference date;
• The identification of the applicable reference date

Key takeaways:

The appropriate forum to recover debts based on a payment claim under the SOP Act is:

• Summary judgment under the SOP Act (if no payment schedule issued); or
• Adjudication Application

Talk to us before you issue a payment claim that is likely to be disputed!

If you have been issued with a statutory demand, contact us as soon as possible as it must be disputed within 21 days! By disputed, we mean an application to set aside the statutory demand must be issued within 21 days!