Re Duke Ventures Wellington Street Pty Ltd [2025] VSC 75

The recent decision in Re Duke Ventures Wellington Street Pty Ltd v Cobolt Constructions Pty Ltd [2025] VSC 75 provides some guidance on the availability of offsetting claims under s 459H of the Corporations Act 2001 (Cth) (Corporations Act) in the context of payment disputes adjudicated under the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOPA).

This case reaffirms that offsetting claims rejected or only partially considered in a SOPA adjudication remain available as offsetting claims to set aside a statutory demand.

 

Background

Duke Ventures Wellington Street Pty Ltd (Duke) engaged Cobolt Constructions Pty Ltd (Cobolt), to construct a 10-storey apartment building. A contractual dispute arose from defects and incomplete works allegedly performed by Cobalt, leading to competing claims.

Cobolt served a payment claim pursuant to the SOPA and the adjudicator made a determination in Cobolt’s favour for the payment of $158,422.34. Cobolt subsequently obtained judgment based on the adjudication and served a statutory demand on Duke.

Duke applied to set aside the statutory demand on the basis of offsetting claims, arguing that it had legitimate claims for defective and incomplete works under section s 459H of the Corporations Act. Cobolt opposed the application, asserting that the adjudicator’s determination under SOPA precluded Duke from relying on these offsetting claims in excess of the judgement debt, and that Duke could only rely on offsetting claims that arise from ‘transactions separate from the one giving rise to the debt’.

Key Issues

The Court assessed whether offsetting claims raised by Duke in the SOPA adjudication can be relied upon to set aside a statutory demand under s 459H of the Corporations Act.

Court Findings

The Court, applying Re Douglas Aerospace [2015] NSWSC 167, ultimately affirmed that offsetting claims dealt with by the adjudicator under SOPA do not lose their character as claims capable of setting aside a statutory demand under s 459H of the Corporations Act, except to the extent that allowance has been made for them in the adjudication.

The Court at [26] distinguished between different categories of claims that may be relied upon:

Having regard to the relevant authorities, I consider that the following principles apply in relation to the availability of a genuine dispute or offsetting claim under 459H in the context of a SOPA adjudication. Where a debt arises by reason of an adjudication under the SOPA:

(a) a debtor may not rely on a ‘genuine dispute’ in relation to that debt;

(b) a debtor may not rely on an offsetting claim to the extent allowance has been made for that claim in the adjudication;

(c) a debtor may rely on an offsetting claim to the extent the claim was raised before the adjudicator but was rejected;

(d) a debtor may rely on an offsetting claim that was not raised before the adjudicator;

(e) a debtor may rely on an offsetting claim that arises from transactions separate to the one giving rise to the debt.

The Court considered that Duke’s genuine offsetting claims exceeded the amount demanded by Cobalt, and the statutory demand was set aside.

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Implications

The Court's ruling provides clarity on the intersection of the SOPA and the Corporations Act, reinforcing that the SOPA regime does not displace a company’s right to challenge a statutory demand if there are offsetting claims despite the outcome of an adjudication determination.