How Demanding: The Standard for Supporting Affidavits when Setting Aside Statutory Demands – Insolvency 101

By Tim Elliott • In Bankruptcy Law, Dispute Resolution, Insolvency LawComments Off on How Demanding: The Standard for Supporting Affidavits when Setting Aside Statutory Demands – Insolvency 101

Solicitors beware – the recent case of Imagebuild Group Pty Ltd v Fokust Pty Ltd [2017] VSCA 131 has reiterated the standards that are expected for a supporting affidavit that accompanies an application to set aside a statutory declaration.

On 30 January 2017, Fokust Pty Ltd obtained a judgment against Imagebuild Group to the amount of approximately $540,500. On 10 February 2017, Fokust served a statutory demand under s 459E of the Corporations Act 2001 (Cth).

Exactly 21 days later, Imagebuild filed an originating process seeking an order to set aside the statutory demand under s 459G of the Corporations Act. Accompanying this originating process was an affidavit from the practice manager of the law firm acting on Imagebuild’s behalf. This affidavit explained the delay in filing the supporting affidavit of Imagebuild’s director and stated that it would be filed within three days.

The judge at first instance held that the affidavit filed was not a supporting affidavit within the meaning of s 459G of the Corporations Act and, as no supporting affidavit had therefore been filed within the 21 day time limit, dismissed this application on that basis.

Imagebuild sought leave to appeal this dismissal.

The Supreme Court of Victoria held that the affidavit was not an affidavit supporting the application to set aside the statutory demand. Instead, Whelan JA held that it was an affidavit explaining delay in swearing, filing and service of what was supposed to be the supporting affidavit.

The Court went on to firmly state that a supporting affidavit must be filed and served within the specified 21 day time period. They also relied on the High Court decision in Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corp Ltd (2008) 232 CLR 314, which holds that there is no power to extend time after specified 21 day period. Based on this decision, the Court found that allowing Imagebuild’s appeal would be tantamount to extending the statutory 21 day time period, contrary to High Court’s decision.

The appeal was dismissed.

This case serves as a reminder and warning to practitioners of the standards and pitfalls when setting aside a statutory demand.

If you have questions or issues regarding a statutory demand, Bell Legal Group Partner Tim Elliott has a wealth of experience in all aspects of corporate and personal insolvency law, corporate reconstructions, voluntary administrations, receiverships, liquidations and securities disputes. Contact Tim Elliott today on (07) 5597 3366 or telliott@belllegal.com.au

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