The Hobson Apartments suffer from water tightness issues. Unusually for a unit development, the top floor apartment on level 12 owned by the appellant Manchester Securities, owned the exterior of its unit including the roof of the building rather than the Body Corporate. Severe water damage was identified in October 2009. Following a series of High Court decisions and one Court of Appeal decision, Manchester Securities was required to contribute certain amounts to the Body Corporate for repair costs.
The Body Corporate served two statutory demands on Manchester. The first statutory demand related to levies, and also included the amounts formally ordered by the High Court to be paid as a consequence of the amended scheme. The High Court refused to set aside one of the demands. Manchester appealed arguing a right to set-off, and the existence of a bona fide dispute The Court of Appeal confirmed that "statutory demands can legitimately be used to recover a debt even where liquidation is not in prospect". It determined that Manchester's application to set aside the statutory demand for at least one aspect of the demand was an attempt to re-litigate matters already decided by the High Court in earlier proceedings and held that despite an arguable set-off, the presence of arbitration clauses and a bona fide dispute, the High Court's decision not to set aside the statutory demand should stand. The Court of Appeal endorsed the respondent's view that in the circumstances of this case, it was appropriate to "pay now, argue later."
See the Court of Appeal decision here.