A recent decision handed down in the Supreme Court of New South Wales has shed light on new reasons for why a Court may set aside a creditor’s statutory demand that is served upon a company.
Section 459G of the Corporations Act 2001 (Cth) (Act) provides that a company may apply to the Court for an order to set aside a statutory demand that it is served with. Section 459J of the Act further provides that in order to make such an order, the Court must be satisfied that there is a defect in the demand which will cause substantial injustice unless it is set aside OR there is “some other reason” why the demand should be set aside.
In the matter of Nanevski Developments Pty Limited (No 2)  NSWSC 1217, the ground raised by the company to set aside the statutory demand was that the affidavit verifying the statutory demand (which is required pursuant to section 459E of the Act) was sworn two days before the statutory demand was issued. Since this affidavit must be in compliance with the relevant rules, it was a contentious issue whether the deponent of the affidavit needed to swear or affirm that the debt described in the statutory demand is due and payable on the day that the affidavit is sworn or affirmed, in order to properly support and verify the statutory demand.
Justice Rees relied on the principles set out in Wollongong Coal Limited v Gujarat NRE India Pty Limited (2015) 104 ACSR 425 (Wollongong Coal), which confirmed that an affidavit that predates a demand does not or cannot verify that demand, and it is not necessary to point out any substantial injustice in such cases.
In the end, the Court made an order to set aside the statutory demand that was served on the company on the basis that there was “some other reason” for why such an order should be entered against the creditor. This settles that an affidavit verifying a statutory demand must be sworn or affirmed by the deponent during the same time or after the demand was dated. The Court highlighted from Wollongong Coal that while this is “a highly technical point”, it is “nevertheless a good point”.