Reosteel Pty Ltd v AonAri PT10 Pty Ltd; Reosteel Holdings Pty Ltd v AonAri PT10 Pty Ltd

1. [1]

   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.

2. [2]

   The judgment debt arose from the registration of an arbitral award made on 16 July 2025.

3. [3]

   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.

4. [4]

   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:

5. [5]

   The second is that there is an offsetting claim, which engages s 459H(1)(b) of the Corporations Act. Section 459H provides:

The stay

1. [6]

   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.

2. [7]

   On 26 November 2025, Williams J made the following order (by consent):

3. [8]

   In Scope Data Systems Pty Ltd v BDO Nelson Park Hill [2003] NSWSC 137, Barrett J made the following observations at [25]-[26]:

4. [9]

   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present case made by the Court on 26 November 2025 does not arise by operation of s 107 of the Justices Act 1902 (NSW) (repealed), and so the position in the present case is not on all fours with the decision in Scope Data.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.

5. [10]

   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:

6. [11]

   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.

7. [12]

   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.

8. [13]

   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.

9. [14]

   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.

Offsetting claims

1. [15]

   The plaintiffs separately contended that the statutory demands should be set aside pursuant to s 459H because there is an offsetting claim that comfortably exceed the judgment debt (see, in particular, s 459H(3)). Section 459H(5) defines the term “offsetting claim”. The sufficiency of evidence to satisfy the court that there is an offsetting claim was discussed by the Court of Appeal in Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344. At [36] the Court observed:

2. [16]

   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.

3. [17]

   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.

4. [18]

   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.

5. [19]

   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.

6. [20]

   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).

Adjournment

1. [21]

   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.

2. [22]

   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.

3. [23]

   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.

4. [24]

   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.

5. [25]

   I make the following orders:

   1. (1)

      The statutory demands dated 8 August 2025, issued by the defendant to each plaintiff, are set aside.

   2. (2)

      The defendant is to pay the plaintiffs’ costs.