Background
Devmcoz Development Pty Ltd engaged Phoenix Fitouts and Construction Pty Ltd to construct a commercial development in Queensland. After Phoenix made a final payment claim, an adjudicator awarded it $958,483.37, plus interest and fees, under Queensland’s security-of-payment legislation. The adjudication certificate was registered as a judgment of the Supreme Court of Queensland.
Devmcoz later sued Phoenix in Queensland for damages arising from allegedly defective and incomplete work. Phoenix served a statutory demand for $1,254,769.73, comprising the adjudicated amount, adjudication fees, and interest calculated at $500 per day. Devmcoz applied under the Corporations Act 2001 (Cth) to set aside or vary the demand, alleging a defect in the demand, a genuine dispute about post-judgment interest, and offsetting claims exceeding the demanded sum.
The Court’s Holding
Nixon J rejected the contention that the demand was defective. Its schedule and supporting affidavit identified the components of the claimed debt and explained the interest calculation with sufficient precision. The Court nevertheless found a genuine dispute about whether registration of the adjudication certificate displaced the adjudicator’s $500-per-day rate in favor of the statutory Queensland post-judgment interest rate. Using Phoenix’s undisputed alternative calculation, the admitted total was $1,135,589.55.
The Court also held that Devmcoz had genuine offsetting claims exceeding that admitted total. The parties’ competing interpretations of the contract’s defects-liability clause were fairly arguable and were unsuitable for final resolution in a statutory-demand proceeding. Even excluding several claims challenged separately by Phoenix, Devmcoz’s remaining claims plus interest exceeded the admitted total. Section 459H therefore required the demand to be set aside. The Court declined to condition relief on payment of the adjudicated amount into the Queensland court, noting that Devmcoz had already commenced proceedings there and Phoenix had consented to dismissal of its earlier application seeking such payment.
Key Takeaways
- A statutory demand may adequately specify a debt even when part of the sum claimed as a judgment debt includes separately calculated post-judgment interest.
- A plausible statutory-interpretation dispute about the applicable post-judgment interest rate can satisfy the low threshold for a genuine dispute under section 459H.
- Where competing contractual interpretations are fairly arguable, the Court ordinarily will not resolve them summarily; genuine construction-defect claims may operate as offsetting claims against an adjudicated amount.
Why It Matters
A security-of-payment adjudication registered as a judgment does not necessarily permit the creditor to use a statutory demand when the debtor has substantial, genuine cross-claims. Although the adjudicated principal was not itself disputed, the Court assessed the genuinely contested interest and offsetting claims under the statutory-demand framework.
The decision also underscores that payment into court is discretionary, not automatic, when a demand based on an adjudication judgment is set aside. Existing proceedings pursuing the offsetting claims—and the creditor’s earlier procedural choices in those proceedings—may weigh strongly against imposing such a condition.