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Recent decision confirming strict requirements for setting aside statutory demands

24 Nov 2009

On 19 November 2009, the Supreme Court in Western Australia examined the strict requirements of section 459G of the Corporations Act 2001. Accommodation West Pty Ltd v Innis [2009] WASC 337 looked at the requirements under the section and whether or not an error of the registry staff and a filing clerk were fatal to an application to set aside a statutory demand.

Section 459G governs applications made by companies to set aside statutory demands served on them. To comply with the section, the application and supporting affidavit must be filed and served upon the creditor within 21 days of service of the statutory demand.

There is a line of authority confirming that these requirements must be adhered to strictly and there is little, if any room for error.

In this case, the Applicant (Accommodation West) made application to set aside the statutory demand served on it. The application was filed the day before the last day for filing and service, as in on day 20 of 21. The registry allocated a date for the hearing, but failed to put a date and time for the hearing of the application. The service copies were given to the filing clerk - these did not contain a date or time for the application.

This was not picked up by the filing clerk who sent the application back to the Applicant’s solicitors for service. The Applicant’s solicitors served this copy on the solicitors for the Respondent on the same day.

The next day (being the last day for service and filing of the application, ie day 21), the registry informed the Applicant’s solicitors that the application was going to be heard on 20 October 2009. The Applicant’s solicitors told the Respondent’s solicitors on this date, which was in the hearing, acknowledged to still be within the 21 day time frame.

Notwithstanding this notice, the Court found that:

  1. the application served did not contain a return date or time;
  2. it was therefore not a properly made application for the purposes of section 459G; and
  3. the application as made was dismissed.

There was no concession for the fact that the Defendant’s solicitors were served with an (incomplete) Application and notified of the hearing date within the 21 day period.

Even though this was clearly a registry and filing clerk error, the effect of the error was to invalidate an application to set aside a statutory demand.

It serves as a useful warning to all involved of the complexities associated with the statutory demand process and that a slight error or oversight can cause substantial prejudice.