A major Perth builder was served with a creditor’s statutory demand by one of its sub-contractors after experiencing delays and cost overruns on a $40 million commercial building project.
The builder was served with a creditor’s statutory demand in relation to a $260,000 debt which the sub-contractor claimed it was owed for work done on the project. Whilst the builder acknowledged a portion of the debt was due and payable, it disputed the balance of the debt on the basis that the sub-contractor had caused delays in the construction of the building which resulted in the builder being penalised under its construction contract with the client. Given that the sub-contractor was primarily responsible for the delays, the builder believed it was entitled to set-off the penalty against the amount claimed by the sub-contractor.
The builder paid the undisputed portion of the debt within the required time period. We then made an application to the Court to have the statutory demand set aside on the basis that the builder had an offsetting claim against the sub-contractor arising out of the delays. The application was successful and the statutory demand was set aside with the sub-contractor ordered to pay the builder’s legal costs. After further negotiations, with our help and expert legal advice the builder was able to settle the dispute with the sub-contractor without ongoing and costly litigation proceedings.