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[2023] QSC 73
In this case, Ryan J considered the consequences of the affidavit accompanying a statutory demand pre-dating the statutory demand it was intended to verify. Although the respondent led evidence that the statutory demand was mis-dated and was signed on the same day as the affidavit, because the applicant was not informed of this within the 21-day period for compliance with the demand, Ryan J still set aside the statutory demand.
Ryan J
14 April 2023
The respondent was the authorised representative of the applicant, which in turn was the responsible entity for a number of managed investment schemes. [4]. Pursuant to the arrangement between the parties, the applicant was required to pay certain fees to the respondent. [4]–[6]. The respondent alleges that the applicant did not pay all the fees required and posted a statutory demand to the applicant, which was delivered to its post box on 22 December 2022. [13]. The statutory demand was dated 21 December 2022, but the accompanying affidavit and cover letter were both dated 20 December 2022. [13]–[14]. The statutory demand further stated that attached to it was an affidavit “dated 21 December 2022”. [14].
The applicant did not become aware of the statutory demand until 9 January 2023, when the mail from its post box (to which the statutory demand had been sent) was collected. [13]. The following day, the discrepancies in the date of the statutory demand and the supporting affidavit were brought to the respondent’s solicitors’ attention. [18]. The respondent’s solicitors rejected that the statutory demand was defective, following which the applicant commenced proceedings to set aside the statutory demand. [20]–[21]. In defending this application, the respondent subsequently adduced evidence that the demand was misdated, and should have been dated 20 December 2022. [26].
In considering the application to set aside the statutory demand, Ryan J commenced by reviewing the relevant authorities and summarising the key principles which they establish: [78]
a)when resolving disputes about statutory demands, the courts will look to the commercial justice of the matter, rather than technical difficulties. In doing this, they should consider the operation and objectives of the Corporations Act 2001 (Cth) (“CA”). If it is necessary to “preserve the undistorted operation” of Part 5.4 CA and promote the objectives it is intended to serve, the Court must set aside a statutory demand;
b)defects “in a demand” should be distinguished from those “in relation to a demand”. Where there is a defect in a demand, the demand may only be set aside “if substantial injustice will be caused by the defect were the demand not to be set aside”. Conversely, where the defect is “in relation to a demand” (or any other defect), the demand may only be set aside if the Court is satisfied there is some reason why it should be set aside;
c)the mere presence of a defect is not enough for a statutory demand to be set aside. Rather, there must be an “other reason” why the discretion to do so should be granted;
d)defects in affidavits accompanying statutory demands are caught by s 459J(2) CA – that is, the Court must not set aside a statutory demand merely because of such a defect. Rather, the Court will require “some other reason” why the demand should be set aside;
e)defects in the supporting affidavits are more significant than those in the demands themselves, because of the requirements of verification and the responsibilities in relation to it which fall on the officer who deposes the affidavit;
f)entities should act in a responsible way when they support a statutory demand by affidavit;
g)the “dominant consideration is the need to ensure the purity of the manner in which creditors follow statutory procedures which are preliminary to litigation and for which verification is required by law”;
h)given the benefit of the presumption of insolvency which a creditor obtains if the statutory demand is not complied with, creditors should ensure that their statutory demands are “expressed in clear, correct and unambiguous terms”;
i)in exercising the discretion to set aside a statutory demand, Court should only act if there are reasons of “appropriate seriousness” for setting the statutory demand aside;
j)affidavits accompanying statutory demands should be deposed to contemporaneously with the statutory demand they accompany. They must speak as at the date of the demand. Where an affidavit pre-dates the demand, it “is no mere defect”. Rather, the “affidavit is, in form and substance, ineffective to verify the demand. Section 459J cannot save it”. Further, in such cases, the Courts will usually find that there was “some other reason”, being that the affidavit cannot verify the debt as required by the CA. [104]. It is not necessary that a substantial injustice be shown; and
k)it is possible for parties to depose an updating affidavit, which may cure a problem or defect in the statutory demand or accompanying affidavit. However, this should be served within the 21-day period for compliance with the demand.
After considering these principles, and the parties’ submissions, Ryan J observed that this case was “unusual” because the respondent sought to rely on a defect in the statutory demand to resist its statutory demand being set aside because of a defect in the accompanying affidavit. [99]. However, her Honour found that there was no way that the applicant could have known, on the face of the documents, that the dates stated on the statutory demand were incorrect. [100].
In circumstances where the applicant raised this discrepancy with the respondent’s solicitors soon after becoming aware of the demand, but the respondent asserted that there was no defect, Ryan J found that “the applicant is entitled to take the documents at face value and the creditor is to bear the consequences.” [108]. In reaching this conclusion, her Honour noted that the statutory demand might have been “saved” had the mis-dating of the demand been brought to the respondent’s attention within the 21-day period for compliance with the demand, but the respondent did not do so. [107].
Ultimately, Ryan J concluded that “this is a case in which the deficiency in procedure is such that the Court should not allow the respondent to be successful”, and set aside the statutory demand. [114]–[115].
M Paterson