Background
Sunnice Pty Ltd engaged Binah Constructions Pty Ltd to design and construct 354 residential apartments in Rouse Hill, New South Wales. After payment disputes and several adjudications under the Building and Construction Industry Security of Payment Act 1999 (NSW), the parties executed an October 2025 deed varying their contract and providing for a settlement sum. The deed was conditional upon a secured party’s written consent being obtained within two days, but that consent was obtained later.
In May 2026, an adjudicator determined that Sunnice owed Binah $3.52 million inclusive of GST, comprising a $3.2 million settlement instalment plus GST. Binah registered the resulting adjudication certificate as a judgment and served a statutory demand for $3,561,185.79. Sunnice did not dispute that the adjudicated judgment debt was due and payable, but sought to set aside the demand under s 459H of the Corporations Act 2001 (Cth), relying principally on liquidated-damages and restitution claims exceeding the demanded amount.
Those claims depended substantially on Sunnice’s contention that the deed was discharged or unenforceable because its condition precedent was not satisfied. Binah accepted that the claims had a genuine basis but argued that Sunnice could not rely on them because doing so would impermissibly challenge the adjudication determination.
The Court’s Holding
Nixon J rejected Binah’s argument. Sunnice was not disputing the adjudicated debt; it accepted that the debt remained due and payable. Its liquidated-damages and restitution claims instead asserted countervailing liabilities and therefore could qualify as offsetting claims under s 459H.
The adjudicator had decided whether the settlement instalment arose under the construction contract, but Sunnice had not put—and the adjudicator had not decided—the enforceability of the deed’s condition precedent or Sunnice’s present liquidated-damages and restitution claims. Even if the adjudicator had addressed the deed’s enforceability, that determination would not create an issue estoppel in later civil proceedings. The Court distinguished Douglas Aerospace because Sunnice asserted both a damages cross-claim and complete restitution claims for amounts already paid.
Because Binah conceded that the offsetting claims were genuine and their amount exceeded the statutory demand, the substantiated amount fell below the statutory minimum. Section 459H(3) therefore required the demand to be set aside. Binah was ordered to pay Sunnice’s costs, and the Court did not need to determine Sunnice’s alternative offsetting claims.
Key Takeaways
- A company may rely on genuine offsetting claims against a statutory demand founded on a security-of-payment judgment while accepting that the judgment debt remains due and payable.
- A damages cross-claim or completed restitution claim is distinct from merely alleging that an adjudication reached the wrong result.
- An adjudicator’s reasoning does not create issue estoppel in later civil proceedings concerning the parties’ underlying contractual rights.
Why It Matters
The decision clarifies the boundary between an impermissible attack on an adjudicated judgment debt and a permissible offsetting claim under the Corporations Act. Construction companies facing statutory demands may invoke independently genuine damages or restitution claims without first denying the enforceability of the adjudicated debt.
It also reinforces the interim character of security-of-payment adjudications: they support prompt payment, but do not finally determine the parties’ contractual rights or prevent those rights from being litigated elsewhere.