Form over substance when setting aside statutory demands

When applying to set aside a statutory demand, don’t just rely upon the work of the court registry!

Today’s case, although arbitrary and kind of unfair, is a stark reminder of how courts apply form over substance when you are trying to save your company from being wound-up by the court.

Company A was issued a statutory demand and engaged their lawyer to apply to set it aside. Company A had 21 days to make this application, otherwise it could fall victim to a winding-up application in court.

The lawyer applied to the Supreme Court of South Australia to set aside the statutory demand, and relied upon the Form 2 precedent that is published by the Court. This Form 2 is required under the court rules and must be followed to the ‘t’.

Form 2 comes in 4 parts, but only Part B and Part C are relevant to us today.

Part B and Part C are reproduced as follows:

Part B

Part C

When the lawyer filed the application with the court registry, the lawyer did not realise that the registry had not filled out all of Part B.

Instead, the Registry had affixed the application return date within Part C.

The South Australian Supreme Court ruled against Company A, because:

  • Part B had not been completed properly within 21 days; and
  • it should not be for the creditor to guess what date they would have to go to court.

The application to set aside the statutory demand was therefore dismissed! I feel for the creditor and the lawyer involved, but the moral of the story is don’t just trust the registry.

#statutorydemands #SVVoidables #legalrules

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