In the matter of DJ&A Pty Ltd

In proceedings 2026/14730, DJ&A Pty Ltd (“DJ&A”) applied to set aside a creditor’s statutory demand for payment dated 22 December 2025 issued by Beijing Youshare Food Co Ltd (“BYF”). In proceedings 2026/14737, DJ&A similarly applied to set aside a creditor’s statutory demand dated 22 December 2025 issued by Qingdao Youshare Food Co Ltd (“QYF”). In a third set of proceedings, 2026/14741, DJ&A applied to set aside a creditor’s statutory demand dated 22 December 2025 issued by Beijing Yangsen Food Technology Co Pty Ltd (“BYFT”). On 9 March 2026, I ordered, by consent in each of the proceedings, that the statutory demands be set aside and, at the parties’ request, made orders for the determination of costs to be dealt with in Chambers.

In each of the proceedings, DJ&A seeks an order that the Defendant pay its costs of the proceedings, to be fixed in a lump sum amount. In proceedings 2026/14730, DJ&A seeks to rely on three affidavits which were not read in the substantive proceedings and an exhibit which has not been tendered in them, where they have not gone to hearing. DJ&A’s solicitors refer to the applicable principles, by reference to my decisions in Re Kaloriziko Pty Ltd [2021] NSWSC 1276 at [2]ff (“Kaloriziko”) and Re Ziwei Pty Ltd [2025] NSWSC 621 at [2]ff (“Ziwei”). DJ&A rightly recognises the relevance of the question whether BYF’s decision to issue the relevant statutory demand was unreasonable and contends that BYF knew or should reasonably have known that there was room for a genuine dispute as to whether DJ&A owed it that amount that was the subject of the demand.

DJ&A there submits that the demand identifies purchase orders as being the basis for BYF’s claim against it and points to DJ&A’s evidence that it was not a party to the relevant purchase orders, although it accepts that it had historically had dealings with BYF and other companies within the Youshare group (“Youshare Companies”). It refers to earlier correspondence in which it had disputed debts claimed by the Youshare Companies and submits that the Court could not be satisfied that email correspondence on which the Youshare Companies relied gave rise to an understanding on the Defendants’ part that that dispute had been resolved. DJ&A submits that it had also identified other defects in the demand to which BYF had not responded. It submits that BYF should have, but did not, withdraw the demand after being placed on notice of the dispute, prior to the commencement of these proceedings. DJ&A made substantially identical submissions in the proceeding 2026/14737 relating to QYF and in proceeding 2026/14741 relating to BYFT as it made in the proceeding relating to BYF, and claimed the same amount of costs on a gross sum basis in respect of each of the proceedings.

By its submissions, BYF responds by reference to the principles arising from Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622;[1997] HCA 6, and refers to my summary of those principles in Re Captcha Property No 3 Pty Ltd [2026] NSWSC 60 as follows:

BYF in turn refers to the chronology of events, arising from evidence which was also not read in the substantive proceedings where they did not go to hearing and advances submissions as to the alleged deficiencies in the demands and the question of who the purchaser was under relevant purchase orders, and also addresses the detail of an alleged offsetting claim which has also not been determined on its merits where the matter did not go to hearing.

Mr Chen, who appears for BYF, submits that the Court should not be satisfied that BYF’s refusal to withdraw the demand was unreasonable; or, if the Court was to make any costs order, it should be made for costs only up to 11 February 2026, when the demand was withdrawn, and that a lump sum costs order should not be made where the evidence does not show the period in which costs were incurred. Mr Chen makes substantially the same submissions in proceedings 2026/14737 relating to QYF, although he there addresses the question of offsetting claims in less detail than in submissions made in respect of BYF, and advances the same submissions in conclusion. Mr Chen also makes substantially the same submissions in proceedings 2026/14741 on behalf of BYFT, again making detailed submissions as to an offsetting claim which has not been the subject of any determination on the merits, and advances the same submissions in conclusion in that matter.

The submissions made by DJ&A assume but do not establish that the dispute which it raises in respect of each of the Youshare Companies’ claims was a genuine dispute in the relevant sense. That question cannot be determined without a determination on the merits, which will here not take place where the proceedings will not go to hearing. In these circumstances, and contrary to the position in Kaloriziko and Ziwei, I am not satisfied that it was unreasonable for the Youshare Companies to issue the statutory demands or that a basis for an order for costs is established in these three matters. It is therefore not necessary to address DJ&A’s application for an order that its costs be quantified on a lump sum basis. I should add that, in any event, I would likely have declined to undertake a quantification on that basis, where complex questions would have arisen as to DJ&A’s entitlement to recover the same amount of costs in each of the three proceedings, given the overlap of issues in those proceedings.

I therefore make no order as to costs in the three proceedings.