In the matter of SBC Construction Pty Ltd

HIS HONOUR: On 1 May 2018 the plaintiff, SBC Construction Pty Ltd (“SBC”), was served with a statutory demand made by the defendant, Quick Smart Plumbing Services Pty Ltd (“Quick Smart”). The statutory demand stated that SBC owed Quick Smart “the amount being the amount of the debt described in the Schedule”. The amount claimed in the Schedule was $125,890.49. This was described as follows:

The demand was not accompanied by an affidavit. This was because it was purportedly for a judgment debt, being a judgment of the District Court. Section 459E(3) of the Corporations Act 2001 (Cth) provides:

Section 459J provides:

SBC is a builder. Quick Smart was its plumbing subcontractor on a number of residential building projects. The debt the subject of the statutory demand arose from five adjudication determinations under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Security of Payment Act”).

Sections 24 and 25 of the Security of Payment Act provide:

Section 32 provides:

Section 34 is not presently relevant.

On 2 March 2018 Quick Smart made five applications to an adjudicator for adjudication under the Security of Payment Act in respect of work done for SBC on five sites. The adjudicator determined that in respect of each site, Quick Smart was entitled to a progress payment (although not in all cases in the amounts claimed) and was entitled to interest from the due date of payment at the rate prescribed under s 101 of the Civil Procedure Act 2005 (NSW) (“the Civil Procedure Act”). [1]

Five adjudication certificates were issued. They specified the adjudicated amount as determined by the adjudicator, the amount of interest due and payable on the adjudicated amount, and total fees for the adjudication paid by the claimant (Quick Smart) on behalf of SBC. The certificates then specified the adjudicated amount after the addition of interest and the respondent’s unpaid share of the adjudicator’s fee. The adjudicated amounts in respect of the five project sites the subject of the certificates were as follows:

It will be observed that the same adjudicated amount was determined in respect of application numbers 2018 ADJT 105 and 2018 ADJT 110.

The total of the five adjudicated amounts set out in the adjudication certificates is $125,706.49.

On or about 18 April 2018 Quick Smart filed in the District Court a form entitled “Registration of certificate of judgment or order” with the accompanying adjudication certificates. The form stated that the original amount of “Judgment/Order” was $125,706.49 and included a sum of $184 as “Registration/filing fee”. The total amount stated to be the amount to be enforced as at the date of registration/filing was $125,890.49. This was the amount claimed in the statutory demand.

On 19 April 2018 the District Court sent to Quick Smart a letter described as “Notice of orders made” stating that:

On the same day, the District Court advised Quick Smart that:

On 19 April 2018, the District Court issued an amended form of judgment increasing the “claim amount” to $114,949.49 and the total of the judgment to $115,133.49. The reason for this change is not apparent. Quick Smart’s director, Mr Hababa, deposed that he assumed that it was a clerical error.

On 1 May 2018, when the statutory demand was served on SBC, the statutory demand was accompanied by a copy of a “Judgment/Order” sealed by the District Court on 1 May 2018 referring to a judgment made on 19 April 2018 and entered on 20 April 2018 in the sum of $115,133.49.

On 24 May 2018 Ms Amanda Condoluci, the sister of Mr Hababa, telephoned the District Court and spoke to a registrar and pointed out that the District Court was in error in having stated that there was a duplication in the two adjudication certificates for the same amount of $11,952.65 and that in fact, those adjudication certificates related to different sites. On or about 24 May 2018 the District Court corrected the judgment and issued a new form headed “Judgment/Order” stating that judgment had been made or given on 19 April 2018 and entered on 24 May 2018 in favour of Quick Smart against SBC in the amount of $125,890.49.

The originating process and supporting affidavit seeking to set aside the statutory demand was filed on 21 May 2018.

SBC submits that the statutory demand should be set aside on two grounds. The first ground is that the statutory demand was not accompanied by an affidavit and when the statutory demand was served and when the originating process was filed, there was no judgment against SBC for the amount claimed in the statutory demand. On the reasoning of Siopis J in Anderson Formrite Pty Ltd v CASC Hire Pty Ltd (2005) 147 FCR 379; [2005] FCA 1424 (“Anderson Formrite”), Ward J (as her Honour then was) in Fitness First Australia Pty Ltd v Dubow [2011] NSWSC 531; (2011) 84 ACSR 296 (“Fitness First”), and Black J in In the matter of GTH Equipment Pty Ltd [2017] NSWSC 1617, (“GTH Equipment”) this is prima facie a strong ground for setting aside the statutory demand. Their Honours held that where a creditor serves a statutory demand without a supporting affidavit for an amount that is either less than the judgment debt (because there was part payment) or more than the judgment debt (because the demand claimed a filing fee that was not part of the judgment debt when the demand was served or claimed post-judgment interest) the debt the subject of the demand was not a judgment debt within the meaning of s 459E(3) and therefore had to be accompanied by an affidavit. In each case, the demand was set aside under s 459J(1)(b). The principal issue raised under the first ground relates to the effect of the subsequent, but retrospective, correction of the judgment.

The second ground was that SBC had offsetting claims against Quick Smart. In the affidavit supporting the originating process an operations manager of SBC, Mr Salameh, claimed that Quick Smart was not entitled to any moneys as claimed and that SBC had an offsetting claim in respect of the works performed. He annexed a copy of a statement of claim filed by SBC in the Local Court in which SBC claimed damages from Quick Smart of $26,761, being the difference between its assessment of the value of work done by Quick Smart on the five projects (totalling $151,180) and the amount paid by SBC (totalling $128,837) and its claim for rectifying defective work of $49,104.

In a later affidavit Mr Salameh also claimed that SBC was entitled to liquidated damages. However, that was not a ground for an offsetting claim raised in the supporting affidavit and is not an available ground for asserting an offsetting claim on the principle in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 that the supporting affidavit for the setting aside of a statutory demand must identify, either expressly or by reasonable inference, the grounds for setting aside the demand.

SBC did not contend that the judgment entered in the District Court did not give rise to a “judgment debt” within the meaning of s 459E(3). Accordingly, it is unnecessary to address that question. There are many cases where statutory demands have been issued and upheld for judgment debts based on a filed certificate: either an adjudication certificate under the Security of Payment Act or its interstate equivalents, or a certificate issued by a costs assessor or a Review Panel for legal costs. In the latter class of case it has been held that although on the filing of the certificate it is to be taken as a judgment of the court in which it is final and is enforceable as such, the entry of judgment is a ministerial act and does not make it a judgment of the court (Frumar v The Owners - Strata Plan 36957 [2010] NSWCA 172 at [8], [38], [42] (“Frumar”); Zepinic v Chateau Constructions (Australia) Ltd (No. 2) [2013] NSWCA 227 at [76]-[77]). The question whether a certificate of indebtedness issued not by a court but by a person acting quasi-judicially, that can be enforced as a judgment by being filed in a court’s registry, is a judgment debt within the meaning of s 459E(3) does not arise, because it was not argued.

Many decisions have emphasised the importance of compliance with s 459E(3).

In Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262 (“Kisimul Holdings”) the supporting affidavit failed to comply with the requirement that the demand be accompanied by an affidavit that complied with the rules. Rule 5.2 of the Supreme Court (Corporations) Rules 1999 (NSW) required that the affidavit be in accordance with Form 7 and state the matters mentioned in that Form. Those matters included a statement by the deponent that he or she believe that there was no genuine dispute about the existence or amount of the debt. The supporting affidavit omitted that statement.

The primary judge in Kisimul Holdings referred to numerous cases where statutory demands had been set aside because the supporting affidavit did not include that statement, but declined to find that that was a sufficient reason to set aside the demand under s 459J(1)(b). That was for two reasons. The first was that the primary judge found on the evidence that there was no genuine dispute about the amounts claimed. The company had asserted an offsetting claim that was abandoned.

The second reason was that the primary judge found that the absence of the statement could not have made any difference to the company’s response to the service of the statutory demand (at [16]).

On appeal, the statutory demand was set aside. The Court of Appeal did not overturn the primary judge’s factual findings that informed his conclusion that there was not a sufficient reason to set aside the demand, notwithstanding non-compliance with the requirements of s 459E(3). Rather, the Court held that because the supporting affidavit omitted the statement as to the absence of genuine dispute the demand should be set aside to preserve the integrity of the statutory scheme for raising a presumption of insolvency on failure to comply with a statutory demand.

Barrett JA, with whose reasons Beazley P and Gleeson JA agreed, said:

Earlier decisions to the same effect included B & M Quality Constructions Pty Ltd v Buyrite Steel Supplies Ltd (1994) 15 ACSR 433 at 435-6 (McLelland CJ in Eq) and Wildtown Holdings Pty Ltd v Rural Traders Co Ltd (2002) 172 FLR 35; [2002] WASCA 196 at 39-40 (Full Court of the Supreme Court of Western Australia).

In Anderson Formrite Siopis J referred to these latter decisions and observed that they should inform the construction to be given to the words “judgment debt” in s 459E(3) (at [61]). His Honour continued:

In Anderson Formrite the defendant had obtained default judgment against the plaintiff in the District Court of Western Australia in the sum of $195,554.13. The plaintiff agreed to pay the judgment debt by instalments. Two instalments were paid but the next instalment was not paid when due. After extensive negotiations the defendant served a statutory demand claiming the sum of $95,554.13 described as the balance of the judgment of the District Court of Western Australia after the company had paid the creditor two sums of $50,000 (at [31]). No affidavit accompanied the statutory demand.

The plaintiff relied both upon the fact that the statutory demand was not in the same amount as the judgment and asserted that there was a genuine dispute as to whether the parties had reached an agreement to compromise the debt. Siopis J set aside the judgment on the first ground, although he would also have found that there was a genuine dispute as to whether such an agreement for compromise had been reached (at [65]).

In Fitness First the statutory demand described the debt as being two amounts that were subject of a certificate of a cost assessor’s determination of costs and a sum of $78, being the cost of registration of the certificates in the Local Court (at [51]). Ward J held that whether a debt was a judgment debt was to be assessed by whether a judgment had been obtained in relation to the debt and not whether the debt had been quantified in the judgment (at [90]). Her Honour held that even if the costs certificates had not been filed with the Local Court at the date of the statutory demand, the amounts payable under the costs certificates could be described as judgment debts, although they could not be enforced as such until formal entry of the judgment as a result of the filing of the costs certificates (at [91]). Nonetheless, the filing fee of $78, described as costs of registration of the certificates, was not, at the date of the statutory demand, a judgment debt (at [92]). Her Honour applied Anderson Formrite in holding that the defendant needed to verify the demand as it contained an amount claimed which was not a judgment debt (at [96]). The absence of the affidavit was a sufficient reason under s 459J(1)(b) to set aside the demand (at [104]).

In GTH Equipment Black J set aside a statutory demand claiming moneys payable pursuant to a judgment entered against the plaintiff in favour of the defendant in the District Court of New South Wales:

In fact, the judgment entered in the District Court was for a sum of $143,000 “together with interest under the contract from 3 February 2015”.

The judgment was given on 18 May 2017. The interest claimed in the statutory demand included interest at a contractual rate of 15 per cent per annum, both up to the date of judgment and up to the date of the statutory demand.

The demand was not verified by affidavit. After service of the demand, the plaintiff paid the judgment sum of $143,000 (at [5] and [14]). The defendant accepted that the demand should be varied to reflect payment of that sum (at [13]).

There was a genuine dispute as to whether the defendant was entitled to post-judgment interest at the rate of 15 per cent per annum as claimed in the statutory demand or only to post-judgment interest at the rates under s 101 of the Civil Procedure Act (at [17]-[21]). But Black J did not vary the demand because of that dispute. Rather, the demand was set aside under s 459J(1)(b) because the claim for interest in the demand was for an amount that was not a “judgment debt” and the demand had not been verified by affidavit (at [29]-[31]). After referring to relevant authorities his Honour said (at [31]):

In the present case, when the statutory demand and supporting affidavit were served on SBC, Quick Smart did not have a judgment debt in the amount claimed in the statutory demand. On the filing of the five adjudication certificates, it was taken to have five judgments for the debts the subject of each adjudication certificate (Security of Payment Act, s 25(1)). The total of those debts was less than the amount claimed in the statutory demand because they did not include the filing fee of $184. On the principles explained in the authorities referred to above, and in particular, the decision of Ward J in Fitness First, because the debts stated in the adjudication certificates are taken to be judgment debts by reason of s 25 of the Security of Payment Act, but were not for the amount claimed in the statutory demand (by reason of including a debt for the filing fee), there was non-compliance with s 459E(3) by reason of the absence of verification.

The form of judgment issued by the District Court on 24 May 2018 purportedly stated that the judgment was given on 19 April 2018 included the filing fee of $184 as part of the judgment amount. The form of judgment was in accordance with Form 43 said to be made under Uniform Civil Procedure Rules, r 36.11. UCPR r 36.11 relevantly provides:

Section 133(1) and (2) of the Civil Procedure Act 2005 provides:

Neither party made a submission as to whether the filing fee could properly be included in the judgment entered pursuant to r 36.11. Section 25 of the Security of Payment Act provides that the adjudication certificate, when filed, is enforceable as a judgment debt. There may be some statutory provision that enables the filing fee on the adjudication certificate to be included in the judgment, or it might be an implication of s 25(1) that the fee on filing can also be included in the judgment as part of the judgment debt. As no submissions were made on this question I express no view on it. I assume, without deciding, that the form of the certificate of judgment that includes the filing fee has statutory authority.

The form of the judgment issued on 24 May 2018 was not expressed to be made under the slip rule (UCPR, r 36.17). That rule provides:

A “judgment” is defined in s 3 of the Civil Procedure Act as including any order for the payment of money. Even if r 36.17 did not apply (because the “judgment” was not a judgment of the court but a ministerial act to allow enforcement of the adjudication certificates as if they were a judgment of the court), the earlier “judgment” could be corrected in the District Court’s inherent jurisdiction (Frumar).

A correction of orders under the slip rule operates from the date of the original order (Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 (“Elyard Corporation”)).

Elyard Corporation concerned s 459R of the Corporations Law (now s 459R of the Corporations Act), which provided in substance that an application for winding up is to be determined within six months after the application is made and unless the court makes an order extending that period, the application is dismissed if it is not determined within that time. The dismissal operates by force of statute. In Elyard Corporation a first order for extension was made by a registrar. When the matter came again before the registrar no further extension was sought and none was included in orders made by the registrar appointing a further directions hearing (at 388). The Full Court of the Federal Court held that the slip rule under the then order 35, r 7(2)(e) of the Federal Court Rules which permitted variation of a judgment or order that did not reflect the intention of the court was applicable. The rule extended to the intention which the court would have had but for the failure that caused the accidental slip or omission (at 391). The Full Court upheld the decision of the primary judge (Sheppard J) that, relying on the slip rule, the order of the registrar could be corrected retrospectively to provide a further extension of time.

In the present case, the judgment/order issued on 24 May 2018 and entered on that date was described as having been “made or given” on 19 April 2018. Clearly the District Court intended to correct its earlier order with retrospective effect. The fact that the entry of the “judgment/order” on each date was a ministerial act, and not a judicial act, does not mean that the principles applicable to the correction of judgments that are truly judgments are inapplicable. Rule 36.17 envisages that the rule can apply to the correction of a mistake in a certificate, which must include a certificate filed as a judgment. Although the present error was not a mistake in a certificate, the fact that the rule extends to the corrections of mistakes in a certificate indicates that there is no reason the rule should not extend to the correction of a judgment entered on the filing of a certificate.

SBC submitted that its rights were affected by the correction of the “judgment/order” and no such correction should have been made without its having been given an opportunity to be heard before the correcting order was made. That may well be right. But SBC made no application to the District Court to set aside the “judgment/order” entered on 24 May 2018. That judgment stands.

The question then is whether there is reason under s 459J(1)(b) to set aside the statutory demand because it was not verified when the debt claimed was not a judgment debt at the time of service of the demand, but is retrospectively to be taken as having been such a judgment debt. The originating process to set aside the demand and the supporting affidavit of Mr Salameh were filed on 21 May 2018. I infer that it was the result of the service of those documents that Ms Condoluci of Quick Smart spoke to a registrar of the District Court and procured the correcting judgment.

SBC did not suffer prejudice as a result of the District Court’s error, nor by the failure of Quick Smart to provide a supporting affidavit verifying the debt claimed in the statutory demand at a time it did not have a judgment debt for the amount claimed. Kisimul Holdings demonstrates that the absence of prejudice is immaterial if there is a sufficiently serious contravention of the statutory scheme for creating a presumption of insolvency. However, it is not every failure to comply with the requirements of the prescribed form of affidavit that will provide a sufficient reason to set aside a statutory demand under s 459J(1)(b).

Although the correction of the District Court judgment has retrospective effect, that does not mean that one should ignore the fact that when the statutory demand and supporting affidavit were served it failed to comply with the requirements of s 459E(3) in a way which would have entitled SBC to have the statutory demand set aside. Giving the judgment retrospective effect is the converse of, but analogous to, declaring something done to be a nullity. As Gageler J said in New South Wales v Kable (2013) 252 CLR 118; [2013] HCA 26 at [52]:

Notwithstanding the subsequent retrospective correction of the judgment, Quick Smart failed in a material way to comply with the requirements of Pt 5.4 Div 2 of the Corporations Act relating to the creation of a presumption of insolvency on non-satisfaction of a statutory demand that would require the statutory demand to be set aside. The fact that it procured (without notice to SBC) a retrospective correction of the judgment on which its statutory demand was based does not vitiate the need to enforce the integrity of the statutory scheme in Pt 5.4 Div 2 as expounded in the authorities referred to earlier in these reasons. The present issue is not concluded by the decision of the Full Court of the Federal Court in Elyard Corporation. Accepting that the correction of the judgment has a retrospective effect does not mean that the actual facts, including, but not limited to, the retrospective effect of the correction of the judgment, should be ignored.

For these reasons in my view the statutory demand should be set aside under s 459J(1)(b). However, it is well settled that such an order may be made on terms, including on terms that the amount of the judgment debt be paid into court.

To decide whether such a condition on an order setting aside the statutory demand should be imposed, it is appropriate to consider SBC’s contended offsetting claims and, indeed, the merits of its dispute that it is not liable to Quick Smart for the amounts the subject of the adjudication determinations.

SBC’s statement of claim filed in the Local Court asserts that Quick Smart has breached its subcontracts in respect of the five projects in various respects. Its statement of claim identified the total amounts invoiced by Quick Smart in respect of the five projects, SBC’s assessment of the value of the work done for which Quick Smart was entitled to payment, the amounts paid by SBC, and in the case of three projects a claim for the cost of defective work. In relation to a property in Wesley Street, Telopea, SBC assessed the value of the work done in the sum of $8,470 and conceded that it had paid only $5,000. In the case of a property in Farnell Street, West Ryde, it asserted that the value of the work done was $39,930. It conceded it had paid only $19,950, but said that it had incurred costs in rectifying defective work of $16,654. In the case of a property on Carlingford Road, Epping, SBC contended that the value of the work done was $19,950. It said it had overpaid this amount by $1,750 and had incurred costs in rectifying defective work in an amount of $11,550. It claims that Quick Smart is liable to it in respect of this project in the sum of $12,850. In relation to a property on Ross Street, Forest Lodge, SBC alleged that the value of the work done was $75,900, that the total amount paid was $82,637 and that it is entitled to $20,900 for the recovery of the costs of defective work. It claims that Quick Smart owes it in respect of that project a sum of $27,637. In the case of a property on Yurunga Street, Telopea, SBC says that the value of the work done was $6,930. It admits that it has not paid for that amount. It claims damages for $26,761. The statement of claim pleads that the total amount invoiced by Quick Smart in respect of the five projects was $243,698. SBC says that the value of the work done on those projects was $151,180 of which it paid $128,837, but has a claim for the cost of rectifying defective work of $49,104.

If this claim is accepted after a trial in the Local Court, the result will not only be that SBC is entitled to judgment for the amount claimed of $26,761 plus interest. The operation of s 32 of the Security of Payment Act would mean that Quick Smart could no longer seek to enforce its judgment in the District Court. SBC would be entitled after the conclusion of the proceedings referred to in s 32 to a permanent stay of that judgment (Frumar at [54]-[63]). Nothing would then be owed under the judgment (Frumar per Handley JA at [62]). If, instead, SBC paid the amount of the judgment prior to succeeding in the claims it asserts in the Local Court then it would have a restitutionary claim against Quick Smart for the amount of the judgment, and be entitled to damages in respect of the balance of $26,761.

The question is not whether SBC has an offsetting claim under s 459H, but whether, having regard to the claims it propounds in the Local Court, there is a sufficient reason not to make it a condition of setting aside the statutory demand that the amount demanded be paid into court.

Extensive evidence was led as to the genuineness of SBC’s claims in the Local Court. Mr Salameh of SBC gave evidence supported by third party assessments of defective and incomplete works, the value of the works completed and the cost of remedying defects. It is unnecessary to go into the detail. By way of illustration, Mr Salameh said that Quick Smart had issued invoices for work done at a site in Ross Street, Forest Lodge totalling $145,780 and exhibited those invoices. He exhibited a report of ATP Group (AUS) Pty Ltd which had been engaged as a subcontractor to replace Quick Smart. Its manager reported:

The report was accompanied by photographs of the allegedly defective and incomplete works. Mr Salameh deposed that it had paid Quick Smart $82,637 in respect of the work performed by it and had been invoiced or quoted $27,400 by ATM Group for repair of defective work and had been quoted $56,100 as the cost to complete the works that were the subject of Quick Smart’s scope of works. This evidence establishes there is a genuine claim that at the trial of the claim in the Local Court it may be held that SBC is entitled to recover $27,637 (being the difference between what it contends is the value of the work done, less the amount paid, plus the cost of repairing defective work). The adjudicator’s certificate establishes an interim but provisional debt owed by SBC to Quick Smart of $63,143.

Similar evidence was provided with respect to the other sites.

I am satisfied that the claims made by SBC are genuine. The construction of ss 459H and 459J(1)(b), including whether a condition should be imposed under s 459M that the amount the subject of the demand should be paid into court, should be informed by the purpose of the statutory demand procedure. That purpose was aptly described by Barrett J (as his Honour then was) in Bakota Holdings Pty Ltd v Bank of Western Australia Pty Ltd [2011] NSWSC 1277 (“Bakota”). His Honour said (at [25]):

Because I have concluded that the statutory demand is liable to be set aside under s 459J(1)(b) and not under s 459H and that the issue is whether it should be a condition of setting aside the demand that the amount of the demand be paid into court, it is not necessary and would not be appropriate to address the issues raised in the judgments of the Court of Appeal of Western Australia in Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91, particularly at [73]-[79] and the judgment of Brereton J (as his Honour then was) in In the matter of Douglas Aerospace Pty Ltd [2015] NSWSC 167 at [90]-[91] (“Douglas Aerospace”) as to the operation of s 459H in relation to offsetting claims against debts arising under the Security of Payment Act.

In Douglas Aerospace Brereton J said (at [92]):

It is reasonably well settled that where there has been a judicial determination that results in a judgment debt that has not been stayed, but which is subject to an appeal that appears to be reasonably arguable, the court may, under s 459J(1)(b), set aside the statutory demand based on that judgment debt, but on condition that the amount of the judgment debt be paid into court. The money paid into court is not security for the judgment debt that will give the judgment creditor priority over other unsecured creditors (Quarter Enterprises Pty Ltd v Allardyce Lumber Co Ltd [2011] NSWSC 1031 at [10]). The reason for imposing such a condition is to put the judgment debtor to proof of the genuineness of his dispute.

The same principle would not necessarily apply if the judgment debt sought to be enforced is a default judgment rather than a judgment given after a contested hearing on the merits.

There are significant differences between judgment debts arising after a contested hearing before a judge which is subject to appeal and debts that are taken to be judgment debts by force of statute, but which are in truth ministerial acts and not true judgment debts. One significant difference is that in accordance with s 32 of the Security of Payment Act the judgment debt arising from the adjudication certificate is provisional. A second significant difference is that in most cases it is inimical to the purpose of the Security of Payment Act for the judgment debtor to be able to obtain a stay of execution of the judgment (Grosvenor Constructions (NSW) Pty Limited (in administration) v Musico [2004] NSWSC 344 at [31]; Veolia Water Solutions & Technologies (Australia) Pty Ltd v Kruger Engineering Australia Pty Ltd (No 3) [2007] NSWSC 459 at [72]-[75]; Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liquidation) [2019] NSWCA 11 at [254]). In the case of a true judgment debt that is subject to appeal, the fact that the judgment debtor has not sought, or, if sought, has not obtained, a stay of execution of the judgment, is highly material to whether a condition should be imposed under s 459J(1)(b).

Having regard to these differences and the purpose of the statutory demand procedure described by Barrett J in Bakota, I do not consider that it should be a condition of setting aside the statutory demand that the amount demanded should be paid into court. Quick Smart is entitled to pursue its remedies as a judgment creditor.

It follows that the statutory demand should be set aside and Quick Smart should pay SBC’s costs of the application. The originating process sought an order also for the payment of interest on costs. No evidence was adduced to support this order and no submissions were made in support of it.

Accordingly, for these reasons I order that: