Which case won?

casea
The case for the debtor company
  • We always believed that we had been served with the statutory demand on 29 June and we maintain that belief.
  • We had various communications with the creditor after receiving the demand in which we referred to this 29 June date. That date was never disputed or corrected by the creditor, so we were justified in proceeding on that basis.
  • It would be unconscionable for the creditor to now depart from that basis.
  • That is, even if we are mistaken and the date of service was in fact 27 June, the creditor did nothing to dispel our mistaken belief and should be estopped (that is, prohibited) from now claiming the earlier date for service.
  • Otherwise, we will have lost the opportunity to file our application on time as a result of the conduct of the creditor, which would not be fair.
  • There is no injustice or prejudice suffered by the creditor if it is estopped from claiming the earlier service date.
  • The court should find that our application to set aside the statutory demand is valid.
caseb
The case for the creditor
  • The process server’s affidavit of service was provided to the debtor company. That affidavit clearly states that the demand was served on 27 June 2017.
  • We never referred to the date of service being anything other than 27 June 2017 in our communications with the debtor company and we had no duty to correct any error that it made.
  • The legislation is clear; an application to set aside a statutory demand “may only be made within 21 days”.
  • This is a statutory time limit that cannot be altered by agreement or estoppel, irrespective of any unconscionable conduct on our part (which we deny).
  • The debtor company’s application was filed outside of the 21-day period and so it must be invalid, and the court has no jurisdiction to now consider it.

So, which case won?

Cast your judgment below to find out
Case A Case B

Case B won. You were right!

How people voted
a31%
b69%

Expert commentary on the court's decision

Jatinder SinghConsultant Lawyer
“There is a great deal of importance in companies ensuring they keep accurate records of when documents have been received. It is also important to act promptly upon being served with a statutory demand.”
Supreme Court decision appealed

The matter first came before the Supreme Court of NSW in the case Boss Engineering (NSW) Pty Limited [2017] NSWSC 1334. The court found as a matter of fact that the statutory demand had been served on 27 June 2019 and therefore that the application to set aside had not been made on time. However, the court found that due to its conduct the creditor was estopped from relying on this in seeking to dispute the validity of the application. The creditor appealed this decision.

Court of Appeal finds in favour of the creditor

In the case Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd [2018] NSWCA 270, the NSW Court of Appeal overturned the Supreme Court’s earlier decision.

The Court of Appeal held that the creditor, the Chief Commissioner of State Revenue, could not be estopped from relying on the time limits stipulated by the Corporations Act in challenging the validity of the application made by the debtor, Boss Constructions (NSW) Pty Ltd.

Boss Constructions out of time to apply to set aside statutory demand

In both cases, the court focused on the application of section 459G(2) of the Corporations Act. Section 459G(2) stipulates that an application to set aside a statutory demand may only be made “within 21 days after the demand is so served”.

The primary judge determined that the date of service of the statutory demand was 27 June 2017. However, the creditor was estopped from asserting that the debtor’s application was made out of time. Accordingly, the judge upheld the debtor’s application to set aside the statutory demand.

However, the Court of Appeal found that the Corporations Act does not intend for estoppel to apply to vary time limits. The strict time periods stipulated in section 459G(2) cannot be varied as a result of agreement between the parties or estoppel.

Court has no jurisdiction to hear application to set aside statutory demand

The primary judge in his reasoning indicated that the debtor company had faced a loss of opportunity to set aside the demand. Therefore, the doctrine of estoppel was applied to prevent the Chief Commissioner of State Revenue from asserting that the application filed on 20 July 2017 was out of time.

The primary judge stated that should the creditor be estopped, it would not be burdensome or significantly unjust on the creditor.

However, the Court of Appeal stated that the time limits set out in section 459G(2) of the Corporations Act define the jurisdiction of the court to hear an application made under that section.

The effect of estoppel would be to prevent the creditor from relying on the time limits in section 459G(2) and to apply jurisdiction on a court to hear an application, which the court would have never heard ordinarily.

Consequently, the Boss Constructions’ application to set aside State Revenue’s statutory demand was dismissed.

Debtor companies must keep accurate records and act promptly

There is a great deal of importance in companies ensuring they keep accurate records of when documents have been received. It is also important to act promptly upon being served with a statutory demand.

As held by the Court of Appeal, the 21-day period is a strict time period within which a debtor company wishing to set aside a statutory demand must file and serve a copy of the application made under section 459G of the Corporations Act. That time period cannot be varied.

Have your say

Other cases

Fill out this form and one of our local law professionals will be in contact

By submitting this form you agree to the terms of our Privacy policy