Article by Philip Woods, Ian Briggs, Richard Crawford and Peter Wood,
Is a judgement debt obtained in respect of a decision of an adjudicator sufficient to issue a statutory demand as a precursor to winding up proceedings?
Several recent New South Wales court decisions have set aside or varied statutory demands for judgement debts obtained under the NSW Security of Payment Act, generally on the basis of some set-off or other genuine dispute, even if it has not been raised in the adjudication proceedings.
Potentially, these decisions would frustrate the primary objective of the security of payments acts by allowing a party to avoid complying with an adjudication decision.
However, a decision handed down last week by the Queensland Supreme Court in Peekhrst Pty Ltd v Glenzeil Pty Ltd  QSC 159 suggests that Queensland courts may be more willing to allow parties to make statutory demands in respect of judgement debts obtained under the security of payment acts.
In Peekhrst, the Queensland Supreme Court held that, notwithstanding any set-off argument or other genuine dispute, it was appropriate to use the statutory demand process to enforce a judgement debt obtained under the Queensland Security of Payment Act. This was because any argument in relation to set-off or other genuine disputes could (and should) have been raised in earlier proceedings. In Peekhrst, the principal had not exercised its rights under the Queensland Security of Payment Act to apply to set aside the judgement, nor had it, prior to these proceedings, applied for judicial review of the adjudicator's decision.
The court's willingness to allow parties to make statutory demands in respect of judgement debts obtained under the security of payment regimes is important because, unfortunately, the bleak reality is that there will always be some debtors that simply refuse to pay. It might be the case that a security of payment decision, coupled with a statutory demand (and the associated threat of winding the company up) will be enough to encourage payment, which is what the security of payment regimes are designed to achieve.
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When determining if a DOCA is to be terminated, public interest can, and often will, outweigh any benefit to creditors.
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