As discussed in the previous article, there are various grounds which a debtor company can rely upon in order to seek to set aside a statutory demand issued upon it.
Offsetting Claim
Pursuant to section 459H(1)(b) of the Corporations Act 2001 (Cth) (Act), if the debtor company has an offsetting claim, being a ‘genuine claim’ that it has against the creditor by way of a counterclaim, set-off or a cross-demand, then it can seek to have the statutory demand set aside. Such an offsetting claim must arise between the exact same entities and must be in relation to a debt, damages or other monetary disputes (see No 96 Factory Bargains Pty Ltd v Kershel Pty Ltd [2003] NSWSC 146 in this regard), however it does not have to be related to the debt which forms the basis of the statutory demand. In the case of In the matter of BMG Poseidon Corp Pty Ltd (No 2) [2009] FCA 404, it was held that whilst an offsetting claim may include an unliquidated claim, the claim must be capable of being quantified as an amount of money. Here, the offsetting claim must be bona fide and truly exist in fact and must be brought in good faith, meaning that the debtor company should have prospects of success in bringing such a real claim and it cannot be spurious, hypothetical, illusory or misconceived: see Re Macro Constructions Pty Ltd [1994] 2 Qd R 31 in this regard.
It is important to note that the Court will set aside the statutory demand where after deducting the value of the offsetting claim, the balance of the sum claimed by the creditor under the statutory demand falls below the current statutory threshold of $4,000. On the other hand, where this sum continues to remain above $4,000, the Court can simply make an order to vary the amount of the debt under the statutory demand that will remain outstanding and due and payable by the debtor company.
Other Reasons
The Court may set aside a statutory demand if a defect in that statutory demand was significant enough to cause substantial injustice to the debtor company unless it is set aside. Such defects can include irregularities such as a missing signature on the statutory demand and/or the supporting affidavit, errors with sufficiently involving the entities involved or the amounts claimable, mistakes with service and so on. In such instances, this may also form grounds for the application to wind up the debtor company to be dismissed with costs against the creditor.
This article was prepared with the assistance of Neil Bookseller.
For reliable legal guidance in Litigation and Dispute Resolution, contact us now.
If you wish to recover money owed to you from a debtor company or you have received a statutory demand from a creditor, please contact Stipe Vuleta of our Litigation & Strategic Advisory Team on 02 6188 3600.