Have you received a Statutory Demand and not sure what to do? We stress the need for absolute precision within an absolutely finite time in applying to set aside a Statutory Demand.
A Statutory Demand is a statement, in a particular form, that a company owes a sum of money and that there is no genuine dispute about it – if the Statutory Demand is not set aside, the failure to comply with the Demand is admissible as proof that the company is insolvent, and it can be put into liquidation – all this without filing a Claim and getting a judgment against the company.
The Statutory Demand regime under the Corporations Act is strict and inflexible. There is no jurisdiction for the Court to consider an application to set aside a statutory demand unless the application and affidavit have been properly filed and served on the person serving the demand within 21 days of service of the demand. On this point see also my articles: “How to Deal With a Statutory Demand” and “Statutory Demand – The 21 Day Guillotine”
In a recent case (Monsere Pty Ltd v RDM Nominees Pty Ltd, 24 July 2019), the company had been served (on 19 March 2019) with a Statutory Demand that it wished to challenge. Its solicitor filed at the Court the application to set aside the Demand and served it the same day, 5 April 2019 – well within the 21 days. So far, so good.
Unfortunately, the Court staff made an error when stamping and endorsing the application to set aside the Demand. The Rules require the application to set aside to state when the matter will be heard by the court. Here, the Registry staffer wrote in the date and time for hearing the application, but not in the correct part of the application, but in another, redundant part of the application.
Therefore, a person reading the application to set aside could not be certain without further inquiry as to when it would be heard.
It can be argued that a reasonable person would infer the date for hearing was the date written in the wrong part of the application. And the company’s solicitor did tell the solicitors who had issued the Statutory Demand the time and date. But this was only done on 18 April – after the 21 days were up.
The SA Supreme Court concluded that the strict requirements of the Corporations Act had not been met, and so the application to set aside a Statutory Demand was dismissed. This rather harsh (but surely correct) result is the effect of the strict rules that apply in these cases. Even though the fatal error was made by the Court staff, the company (or its solicitor) had a duty to ensure the application was correct in all respects.
We cannot over-emphasise the “Need for Speed”, and deadly accuracy, when applying to set aside a Statutory Demand.
For further information please contact Peter on 8362 6400 or email Peter Jakobsen. Join our mailing list to receive updates and advice on current issues.