In Newstart Homes Australia Pty Ltd v Kodiak Concrete Pty Ltd, the applicant, Newstart Homes, sought to wind up the respondent, Kodiak Concrete, on the grounds of insolvency following alleged defective work performed by Kodiak under a subcontract. The work was not rectified as required, leading Newstart to serve a statutory demand, which Kodiak disputed but did not formally challenge. In the proceedings, Newstart argued for insolvency based on Kodiak's failure to comply with the statutory demand, while Kodiak contended that the application constituted an abuse of process and presented evidence of solvency.
The court found that Newstart’s statutory demand was not based on a liquidated debt, concluding that the amount claimed was not a liquidated sum due. Thus, using the demand to claim insolvency was deemed an abuse of process. Kodiak successfully demonstrated solvency through financial reports and assets, including the director’s loan, and the court was satisfied with Kodiak’s ability to pay its debts as they fall due. Consequently, the court dismissed the winding-up application.