Court Of Appeal Examines What Constitutes A Supporting Affidavit In An Application To Set Aside A Statutory Demand

/, Litigation/Court Of Appeal Examines What Constitutes A Supporting Affidavit In An Application To Set Aside A Statutory Demand

In the recent case of Imagebuild Group Pty Ltd v Fokust Pty Ltd [2017] VSCA 131, the  Court of Appeal considered whether a ‘supporting affidavit’ had been sworn, served and filed within the time limit prescribed by section 459G of the Corporations Act 2001 (Cth) (“Act”).

On 10 February 2017, Fokust Pty Ltd sent Imagebuild Group Pty Ltd (Imagebuild) a statutory demand in relation to a judgment debt.  Upon receipt of the demand Imagebuild had 21 days to pay the debt or apply to court to have the statutory demand set aside.   Pursuant to section 449G of the Act any application would need to be supported by an affidavit, served within the 21 day period, setting out why the statutory demand should be set aside.

On 3 March 2017, Imagebuild commenced proceedings in the Supreme Court seeking an order that the statutory demand be set aside.  Accompanying the originating process was an affidavit sworn by the practice manager of Imagebuild’s solicitor (the Affidavit).  The Affidavit exhibited an unsworn affidavit by Imagebuild’s director setting out the grounds upon which the statutory demand should be set aside.   The Affidavit also explained that the director of Imagebuild was not in a position to swear the affidavit until 6 March 2017, being 3 days after the expiry of the 21 day period.

At issue was whether the Affidavit constituted a supporting affidavit for the purposes of s459G of the Act.

The Supreme Court found that although the Affidavit explained why a supporting affidavit had not been sworn, filed and served within the twenty one day period, it was of itself not a supporting affidavit for the purposes of the Act.  The Supreme Court accordingly declined to set aside the statutory demand.

Imagebuild appealed to the Court of Appeal.

Decision on appeal

It was accepted by the parties that an affidavit cannot be a supporting affidavit under section 459G if its effect is to state that a supporting affidavit will be sworn in the future. Counsel of Imagebuild argued that the Affidavit went further than this and sufficiently raised the matters to be relied upon in making the application to set aside the statutory demand (primarily because the director’s proposed affidavit was exhibited to the Affidavit).

Despite the above submissions, the Court of Appeal echoed the Supreme Court’s reasoning and held that the Affidavit was not a ‘supporting affidavit’ pursuant to section 459G.  Whelan JA noted that “An affidavit filed and served within the specified time which asserts that a supporting affidavit will be sworn, or may be sworn, but not within time, and which explains the delay, is not itself a supporting affidavit.” Whelan JA added that the Affidavit could have constituted a supporting affidavit if it had actually verified the contents of the as yet unsworn affidavit of the Director of Imagebuild.

The case serves as a reminder of the importance of responding to statutory demands in a timely manner and complying strictly with the requirements of the Act.

For more information or to discuss any of the above, please Nicholas McCarthy of our office on (03) 9614 7707.

Authors
2018-08-30T12:47:48+00:00June 22nd, 2017|Categories: Insolvency, Litigation|Tags: |