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Commercial Litigation & Insolvency News Alert: A statutory demand in not deffective despite the absence of a "no genuine dispute" statement

News Alert 08 April 2014

There has been a very interesting case recently. Kisimul Holdings Pty Ltd (‘Kisimul’) sought to set aside two statutory demands served on it by the defendant, Clear Position Pty Ltd (‘Clear Position’).

Although the case turned on the specific facts, the judgment is significant because it is contrary to a long line of authorities. It is understood the judgment is to be appealed.

Each of the statutory demands was accompanied by an affidavit sworn by a director of Clear Position, which is required to comply with the Supreme Court (Corporation) Rules 1999. Those Rules have a mandatory requirement that the affidavit must contain a statement: “I believe that there is no genuine dispute about the existence of the debt”.

There was no such statement in the affidavits sworn by the director of Clear Position.

Going back at least to the 1994 case of B & M Quality Constructions Pty Limited v Buyrite Steel Supplies Pty Limited, the Courts have consistently held that statutory demands, in the absence of a “no genuine dispute” statement, should be set aside.

In the B & M Quality decision McLelland CJ reasoned that:

“The express requirement in the rule that the person making the affidavit depose to his or her belief that there is no genuine dispute is a significant mechanism for filtering out cases where there is in fact such a dispute, so as to prevent cases from reaching the Court on an application as the present with a consequent waste of time and resources.”

However, the Court in Kisimul declined to set aside the statutory demands despite the non-compliance with the Rules. The Court considered the manner in which Kisimul sought to propound the existence of a “genuine dispute” was both unsatisfactory and unpersuasive. The Court also found the absence of the statement that there was no genuine dispute could not have caused any confusion or injustice to Kisimul.

Kirsten Farmer, Partner

News Alert 08 April 2014
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