Statutory Demand – A Genuine Dispute

Statutory Demand – A Genuine Dispute

Recently we acted for a client who sought to set aside a statutory demand with which they were served. In that matter, there appeared to be a genuine dispute as to the debt claimed (outstanding rental under a commercial lease) in the statutory demand. We recommended and were instructed to write to the solicitors for the alleged creditor to make an early strategic offer that the parties agree to the statutory demand being set aside, the disputed payments be reconciled and the parties bear their own costs. This offer was refused, and the alleged creditor adopted and maintained a very persistent and belligerent attitude.

 

However, in the face of repeated offers and affidavit material clearly showing the disputed amounts were raised well before the issuance of the statutory demand the alleged creditor then withdrew the statutory demand at the 11th hour before the hearing. The offers made were then exhibited as part of an affidavit and relied upon to secure an order for indemnity costs against the alleged creditor.

 

In the end, the indemnity costs were ordered and his own costs well exceeded the disputed amount, a very unsatisfactory result and costly error of judgement by the alleged creditor.

 

In an unrelated and more recent judgement, in Australia and New Zealand Banking Group Limited v Thomson (Thomson), the Supreme Court of Queensland, provided another reminder that when issuing and then prosecuting a statutory demand, an alleged creditor must be ready to prove it has a genuine debt.

 

In Thomson, the Australia and New Zealand Banking Group Limited (ANZ) applied to the Court to have a statutory demand set aside pursuant to sections 459G and 459H of the Corporations Act 2001 on the basis of a genuine dispute about the existence or amount of the debt claimed.

 

The statutory demand in question was issued by the respondent Ms Thomson for $2,832,378. She issued it on the basis there was an alleged agreement between her and ANZ for the settlement of a longstanding dispute between the parties.

 

ANZ argued there was a “genuine dispute” in respect of the alleged debt. Her Honour Williams J highlighted the onus of establishing a genuine dispute was on the applicant (ANZ) where she quoted her Honour Bowskill J (as her Honour then was) in SGR Pastoral Pty Ltd v Christensen:

 

“The threshold is not high or demanding; a genuine dispute means there must be a plausible contention requiring investigation; and it is only if the applicant’s contentions are so devoid of substance that no further investigation is warranted that the applicant will fail.”

 

ANZ pointed to various contemporaneous correspondence, which referred to the need for formal documents including any offers. In respect of the correspondence, ANZ argued there was no concluded settlement that would give rise to the alleged debt.

 

The applicant argued:

“there is no evidence of any agreement being evidenced in a deed or arrangement”.

In respect of the correspondence, Williams J concluded it showed:

“Here the contemporaneous correspondence shows there were ongoing negotiations between the applicant and the respondent. It shows counteroffers being made.”

Her Honour Williams J found:

“In the circumstances, there is a clear and genuine dispute between the parties as to whether there is a debt that is due and payable as claimed in the statutory demand.

Accordingly, I am satisfied that there exists a genuine dispute regarding the existence of the debt asserted in the statutory demand and the statutory demand should be set aside.”

If you have been issued a statutory demand or are struggling to recover a debt and would like advice on the most appropriate strategy in doing so, please call us to discuss reviewing your circumstances.

 

1. Australia and New Zealand Banking Group Limited v Thomson [2022] QSC 18.
2. SGR Pastoral Pty Ltd v Christensen (2019) 2 QR 334 at [290].
3. Australia and New Zealand Banking Group Limited v Thomson [2022] QSC 18 at [290].
4. Ibid at [338].

 

The blog published by Rostron Carlyle Rojas Lawyers is intended as general information only and is not legal advice on any subject matter. By viewing the blog posts, the reader understands there is no solicitor-client relationship between the reader and the author. The blog should not be used as a substitute for legal advice from a legal practitioner, and readers are urged to consult RCR on any legal queries concerning a specific situation.

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