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Fixing a faulty statutory demand: Not as oppressive as it sounds – June 2000

In brief: Can you set aside two statutory demands just because the first one issued was faulty? The Supreme Court of Western Australia recently considered an application to do just that in a case involving statutory demands made under the winding-up provisions of the Corporations Law (sections 459E - 459L)1.

The case arose because, on 14 December 1999, lawyers for the creditor served on the debtor a statutory demand that had not been signed. After realising this, the same lawyers issued a second signed statutory demand. The debtor applied successfully to set aside the first demand and argued that the second one should also be set aside on the basis that two statutory demands served at the same time was oppressive and an abuse of process.

The debtor relied on authority that the statutory procedure required one demand for one debt even if that debt was made up of a number of amounts that were to be paid separately. The issue of multiple demands was held to be prima facie oppressive.

The court found that issuing the second demand had caused little confusion or prejudice to the debtor. It was a bona fide issue, the debt of its subject was not contested and the debtor had been awarded costs for the application to set aside the first demand. There was no basis for setting aside the second demand and to do so would achieve no real purpose.

The case demonstrates that in law, even the most minor of mistakes can be expensive.

Footnote
  1. Indaba Pty Limited v Home Building Society Limited, Supreme Court of Western Australia per Master Sanderson, 23 February 2000, unreported

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