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CASE STUDY #1
In the Matter of Jana Pty Ltd [2022] NSWSC 112
Facts
On or around 19 January 2022, Jana Pty Ltd (Landowner), Allspec Constructions and Project Management (ACMP) (Subcontractor) and other five parties, entered into a deed (Deed).
In the Deed, Clause 2.1 provided that
“the Head Contractor acknowledged and agreed upon the execution of the Deed ……. the sum of $481,865.51(‘Guarantee Debt’) is a debt owing to [ACPM] ……. And the ‘Head Contractor’ and the ‘Guarantors’ agreed not to dispute the ‘Guarantee Debt”
On 4 May 2021, ACPM issued a letter of demand to Jana among other parties to the Deed for an amount of $481,865.51.
On 13 September 2021, ACPM issued a Statutory Demand against Jana Pty Ltd for the amount of $481,865.5. The Schedule describes the debt as follow:
“The Debtor Company, Jana Pty Ltd as Guarantor, Guaranteed payment of the Acknowledgement of Debt of $481,865.51 and the terms and conditions set out in the Deed dated 19 January 2021 as annexed and marked ‘A’”
On 1 October 2021, Jana Pty Ltd applied to set aside the Statutory Demand and contended that there was a ‘genuine dispute’ about the existence of the debt to which the demand related.
Jana Pty Ltd submits that there is a genuine dispute about whether it was a “Guarantor” under the Deed, properly constructed. Further, Jana submits that the Debt was owed by the Head Contractor and another party to the ACPM and Jana was the landowner.
ACPM contends that properly construed, the guarantee extends to the obligation of Jana as guarantor to repay on demand the Guarantee Debt $481,865.51.
Issues
- Whether there is a genuine dispute about the debt
- Whether there is a genuine dispute about the correct construction of the deed
Decision
The Court finds that there is a genuine dispute in relation to the whole of the alleged debt. The Court rejects ACPM’s submission and held that Jana’s application raises bona fide issues of law concerning the proper construction of the very poorly drafted Deed.
The Statutory Demand was set aside and ACPM was ordered to pay Jana’s costs.
Key Takeaways
- A Deed of Guarantee needs to be clear and unambiguous in specifying which party is, or which parties are, providing the guarantee.
- Seek legal advice to ensure that a settlement agreement is enforceable.
CASE STUDY #2
Re Amville Constructions Pty Ltd [2022] VSC 65
Facts
On or about 18 February 2020, Amville Constructions Pty Ltd (Amville)(Builder) and Ms Li (Owner) entered into a building contract.
Between 14 May 2021 and 20 May 2021, Mr Skinder (Bricklayer) had been engaged to perform bricklaying work at the site.
Level Playing Field Lawyers acted for the Bricklayer in this case. Despite repeated communications and demands by Mr Skinder, Amville did not pay the bricklaying invoice in the sum of $11,176 including GST.
On 15 September 2021, Mr Skinder issued the statutory demand for the amount in the sum of $11,176.
On 6 October 2021, Amville commenced the application to set aside the statutory demand.
Amville contends that there is a genuine dispute about the responsibility for the Debt and there is an offsetting claim. Amville argued that Ms Li, the owner, would be responsible for the bricklaying payments and also the bricklaying works were incomplete and defective.
Mr. Skinder submits that the Agreement was made with Amville and he barely knew the Owner. Ms Li also denies the Agreement with Mr. Skinder and further submits that she paid other traders as a favor to Amville to move the project forward.
Issues
- Whether there is a genuine dispute about identify of contracting party or whether another party responsible for payment.
- Whether there is a genuine dispute with payment for alleged defective and incomplete works
- Whether there is an offsetting claim
Decision
The Court held that the statutory demand will be varied by substituting the sum of $8,096 for the sum of $11,176 and the bricklayer is entitled to payment for $8,096.00.
Key Takeaways
- Statutory demands are useful for undisputed debts, especially older debts where the Security of Payment legislation cannot be used.
- There are serious considerations for the Debtor Company and the Creditor Company and legal advice should be sought before issuing statutory demands or if you have been issued with a statutory demand.
What we can do for you
When facing litigation, an experienced legal team is essential. A statutory demand is one of the options worth considering. Our team has successfully helped many of our clients with issuing statutory demands and the winding up process.
Recovering debts can be a frustrating process. Using our industry experience and specialist legal knowledge, we can help you review your claim that you fully understand your rights and obligations and help you can get the best business opportunity.
For all your enquiries regarding statutory demands and other aspects of debt recovery, get in touch with us on (03) 9041 4674.
