Australian Steel Manufacturing Pty Ltd v Selection Steel Trading Pty Ltd

This Federal Court case arose from an ordinary trading relationship that became legally complicated once a large debt was pursued through the statutory demand process. Australian Steel Manufacturing Pty Ltd operated the Australian Pipe & Tube business. Selection Steel Trading Pty Ltd supplied steel coil and also provided slitting services. After Australian Steel acquired the APT business, the parties needed new contractual arrangements for future supply.

Selection Steel later served a creditor's statutory demand claiming Australian Steel owed $1,116,010.32 for goods and services said to have been supplied under a credit agreement dated 15 February 2022. Australian Steel applied to set the demand aside. The case then moved through two stages. A Judicial Registrar first dismissed the application. Australian Steel then sought review, and O'Bryan J heard the matter afresh and ultimately set the demand aside.

The commercial significance of the case lies in what caused the debt dispute. This was not simply a complaint that invoices had not been paid. The available reasons show a deeper argument about contract formation, competing standard terms, and whether Australian Steel had a genuine dispute about the debt and or a genuine offsetting claim. In practical terms, it is a battle of the forms case inside a statutory demand case.

The available reasons trace the parties' communications in some detail. On 1 October 2021, a consultant for Australian Steel emailed Selection Steel about APT's future requirements and referred to adopting terms used in the past, including 90 days end of month from delivery. That email also referred to a strategic long term partnership.

On 26 October 2021, Australian Steel's purchasing officer sent Selection Steel a purchase order for four variants and quantities of hot rolled steel, with a total purchase price of $816,205.70 including GST. Attached to that email were APT's terms and conditions of trade. Those terms were drafted strongly in APT's favour. They said APT's conditions applied to each contract, excluded supplier terms unless APT agreed otherwise in writing, and would prevail over inconsistent supplier terms. They also dealt with delivery timing, liquidated damages for delay, payment timing, set-off, suspension of payment for breach and indemnity rights.

On 28 October 2021, Selection Steel's general manager finance responded by email saying APT's supplier terms were relevant to dealings with BlueScope and did not apply to Selection Steel. He asked for confirmation that Selection Steel Trading's terms and conditions would apply for future trading and supersede APT's terms. Australian Steel's CEO then replied that Selection Steel's terms and conditions would be used.

The complication is that there was then an alleged further email sent six minutes later. According to Australian Steel, that later email clarified that Selection Steel's terms applied specifically to slitting invoices, while coil supply would be subject to APT's terms. Australian Steel relied on evidence from an IT consultant and a consultant who said the email existed and was received. Selection Steel relied on evidence that searches of its server and archives did not show the email in the relevant histories. O'Bryan J said the evidence was not conclusive and the court was not in a position to resolve whether that email was sent and received on the application.

The reasons also record that on 15 February 2022 Australian Steel executed Selection Steel's application for commercial credit and a declaration accepting Selection Steel's terms and conditions of sale. That document was obviously important to Selection Steel's case, because suppliers often rely on signed credit applications as the clearest evidence that their terms govern ongoing supply on account. But the existence of that signed document did not automatically end the matter. The earlier communications and the disputed email trail still mattered to the court's assessment of whether there was a genuine dispute or offsetting claim for s 459H purposes.

To understand the decision, it helps to understand what a statutory demand application is and is not. A statutory demand under s 459E is a formal insolvency mechanism. It is not designed to be a substitute for a full trial of a substantial commercial dispute. If the company served with the demand applies under s 459G and shows the court that there is a genuine dispute about the existence or amount of the debt, or that it has a genuine offsetting claim, s 459H can require the demand to be set aside or varied depending on the substantiated amount.

The judgment sets out the text of s 459H and the established principles. The court's task is not to decide the ultimate merits of the debt claim. Instead, the company resisting the demand needs to show a plausible contention requiring investigation. The dispute or offsetting claim must be real and not spurious, hypothetical, illusory or misconceived. The court can reject assertions that are inherently improbable or unsupported by evidence, but it should not conduct a mini trial. If even one issue has enough substance to be arguable, that can be enough to establish a genuine dispute.

That point is important for business owners. A creditor does not need to lose the underlying debt case for the statutory demand to fail. Equally, a debtor does not need to prove the entire defence at this stage. The question is narrower: is there a genuine dispute or a genuine offsetting claim that should be investigated in ordinary proceedings rather than through insolvency pressure?

In this case, Australian Steel's originating application referred to both ss 459H and 459J, but at the review hearing it relied only on s 459H. The catchwords and orders confirm that the court considered whether there was a genuine dispute about the existence or amount of the debt and whether there was an offsetting claim within the meaning of s 459H, and that the application was allowed.

The orders are clear. O'Bryan J set aside orders 1, 3 and 4 made by Judicial Registrar Schmidt on 16 September 2024. The court then ordered, pursuant to s 459H of the Corporations Act 2001 (Cth), that Selection Steel's statutory demand dated 5 June 2024 be set aside. Selection Steel was also ordered to pay 70% of Australian Steel's costs of the proceeding.

The reasons also make clear that the review was by way of hearing de novo. That means the court did not simply ask whether the registrar had made an error. The matter was considered afresh on the evidence and the law at the time of the review. That procedural point matters because parties sometimes assume a review is limited or appellate in character. Here, the court approached the application anew.

From the available reasons, the court accepted that the demand should not stand under s 459H. The catchwords refer expressly to both a genuine dispute about the existence or amount of the debt and an offsetting claim. The reasons up to the available point also show that the contractual framework was central, including the battle of the forms issue and the disputed email evidence. What should be said carefully, though, is that the visible text does not contain the whole of the court's final reasoning. So while the result is certain, the precise path by which the court concluded that s 459H was satisfied should be checked against the full judgment before drawing fine-grained conclusions about every factual finding.

Businesses should read this case as a warning about fragmented contracting practices. In many supply relationships, there is no single negotiated supply agreement. Instead, the legal record is built from onboarding emails, quotes, purchase orders, attached terms, credit applications, invoices and later conduct. That can work while the relationship is healthy. It becomes a problem when a large debt is pursued and each side points to a different document as the contract.

If you are a supplier, this case shows the limits of relying on a statutory demand where the customer can point to a real contractual controversy. Before serving a demand, review the whole contract formation trail. Ask whether the customer ever sent purchase order terms, whether anyone in your business accepted or failed to object to them, whether there were later emails qualifying the position, and whether there are any arguable cross-claims. If there is a genuine dispute, ordinary debt proceedings may be the safer path.

If you are a customer or buyer, the case shows that your own terms may still matter even if you later signed a supplier's credit application, depending on the full course of dealings. But do not overread that point. A signed credit application can be powerful evidence against you. The lesson is to be deliberate. If your business intends different terms to apply to different parts of the relationship, say so clearly and keep records that prove the communication was sent and received.

The case also highlights the importance of evidence quality. One of the key factual issues was whether a later email was actually sent and received. The court said the evidence was inconclusive and could not resolve that question on the application. For businesses, that is a reminder that server records, mailbox records, document retention and disciplined communications are not just IT issues. They can shape the outcome of a major debt dispute.

The key dates visible from the reasons are these. Selection Steel served the statutory demand on 5 June 2024. Australian Steel filed its application to set aside the demand on 27 June 2024. The Judicial Registrar heard that application on 22 August 2024 and dismissed it on 16 September 2024, while also extending time to comply with the demand until 23 September 2024. Australian Steel then filed its review application on 20 September 2024. On 23 September 2024, the court made timetabling orders and extended the period for compliance with the demand until 7 days after the court determined the review. The review was heard on 17 December 2024, and judgment was delivered on 29 April 2025.

The reasons also record an issue about late evidence filed by Australian Steel for the review hearing. O'Bryan J described the explanation for non-compliance with timetabling orders as unsatisfactory, although some limited parts of the late material were allowed to be read because Selection Steel accepted that doing so would not cause prejudice. That part of the judgment is a reminder that even in urgent insolvency-related proceedings, procedural discipline matters.

Because the reasons available here are incomplete, the safest public reading is that the result and the broad legal basis are clear, but the full judgment should be checked for the complete factual findings and the court's detailed reasoning on how the genuine dispute and any offsetting claim were analysed.

This page is based on the Federal Court judgment in Australian Steel Manufacturing Pty Ltd v Selection Steel Trading Pty Ltd [2025] FCA 407, decided by O'Bryan J on 29 April 2025. The visible reasons identify the matter as a review of a registrar's decision concerning an application to set aside a statutory demand and record that the application was allowed under s 459H.

Some of the published reasons available here are cut off before the end of the judgment. That means the orders and the broad structure of the reasoning are clear, but some factual detail and the court's full analysis are not fully visible in this version. Readers wanting to rely closely on the case should review the complete judgment.