Creditor’s Statutory Demands have become a useful, cheap and effective way of ensuring companies which owe money pay attention to the debts they owe.

While the process is quick and cheap, it can often be highly technical.  As such, what may seem to be a straight forward process continues to take up a considerable amount of court time which no doubt results in significant legal fees being incurred by the parties involved.

The recent decision of J.J. Armstrong Pty Ltd vs Hamptee Pty Ltd [2017] VSC 427 handed down by the Supreme Court of Victoria serves as a typical example.

In that case, the Court was called upon to determine whether a Creditor’s Statutory Demand served by the assignee of a debt suffered from a defect such that it should be set aside. Prior to the service of the demand, the debtor had not received notice of the assignment of the debt and neither the demand itself nor the affidavit in support of it made reference to the assignment.

The Court held that in light of the circumstances the demand should be set aside. The Court referred to earlier authority dealing with cases where either the demand or the affidavit in support clearly identified to the debtor the fact that the debt had been assigned. The Court distinguished those cases from the present circumstances and said that given the serious nature of a Creditor’s Statutory Demand it was not appropriate for a debtor to have to make its own enquiries in relation to the possible valid (or invalid) assignment of a debt.

The case is another in a long line of examples of the care that needs to be taken with the deceptively simple Creditor’s Statutory Demand process.

For more information, please contact ERA Legal.