Can the administrative error of incorrectly dating a statutory demand, its supporting affidavit and cover letter be seen as a sufficient basis for the court to set aside the statutory demand? The recent case of Income2Wealth Pty Ltd v ACN 114 733 569 Limited [2023] QCA 215 examines this issue in further detail.
Case Analysis: Income2Wealth Pty Ltd v ACN 114 733 569 Limited [2023] QCA 215
Facts
In this case ACN 114 733 569 (“the Company”) and Income2Wealth Pty Ltd (“Income2Wealth”) disagreed on the date of service of a statutory demand. The statutory demand was served on the Company by Income2Wealth in December 2022. The statutory demand was dated 21 December 2022, but the supporting affidavit and cover letter were dated 20 December 2022.
On 10 January 2023, the Company notified the appellant of its position that there was a genuine dispute concerning the differing dates on the documents served and asked for the demand be withdrawn. Income2Wealth refused to withdraw the demand and maintained that there were no defects on the documents with respect to the dates. In response, the Company filed and served a set-aside application within the 21-day period asserted by Income2Wealth.
Lower Court Decision
Following Income2Wealth’s refusal to withdraw the demand, the Company sought an order from the Court to set it aside. The Company formed an argument that the demand should be set-aside on the basis that it was misdated. The primary judge found that there was ‘some other reason’ to set aside the statutory demand within section 459J(1)(b) of the Corporations Act 2001 (Cth) (“the Act”). This was on the bases that the supporting affidavit appeared to predate the statutory demand and that Income2Wealth had the opportunity to inform the Company of the true position regarding the date within the 21-day period but failed to do so.
Income2Wealth then appealed the decision.
Court of Appeal Decision
Income2Wealth argued that the decision ought to have been based on the evidence proved at the hearing, which included the evidence about the date issue. This would have enlivened section 459J(1)(a) of the Act instead of section 459J(1)(b) of the Act. As a result, this would have required the Company to establish the substantial injustice element.
Upon review of authorities, the Court found that section 459J(1)(a) of the Act was not applicable because the issue did not give rise to a defect ‘in the demand’. The defect instead was ‘in relation to’ the statutory demand. This means it was not necessary to show substantial injustice as required by section 459J(1)(a) of the Act.
Instead, the Court said the date issue undermined the verifying affidavit, which created ‘some other reason’ under section 459J(1)(b) of the Act to set aside the demand.
Accordingly, the appeal was dismissed.
Takeaway
This case demonstrates the importance of complying with the technical legal requirements before serving documents, as even simple administrative errors can lead to the setting aside of a statutory demand, which can be costly.
How we can help
At Chamberlains Law Firm we can help you to sufficiently understand, and comply with, the legal requirements of serving and dating documents. If you have any questions regarding a statutory demand that you have been served, or are serving on a company, please contact Mr Stipe Vuleta or Ms Sayward McKeown of our office.
*This article was prepared with the assistance of Annabel Randall.
If you have any questions or concerns please contact our Insolvency & Restructuring Associate Director Sayward McKeown on 02 6188 3600