A new decision has clarified creditors’ rights where part of a debt is disputed.

As is common knowledge, if a debt claimed in a statutory demand is disputed the Court may set aside the statutory demand. The threshold for establishing that the debt is disputed is very low.

Questions have arisen about how a creditor may proceed if part only of a debt is disputed. A recent decision of the Western Australia Court of Appeal has considered this issue.

In Commonwealth Bank of Australia v Garuda Aviation Pty Limited [2013] WACSA 61 the Court held that that the bank was entitled to issue a statutory demand provided the amount was over the statutory minimum ($2,000) and the debt was described in clear terms in the demand and supporting affidavit.

The decision offers you useful guidance on creditors’ rights and should be welcomed by the commercial community.

For more information please contact ERA Legal.