Besides for the failure to effect valid service of documents, one of the other most common mistakes that is made when issuing statutory demands is the failure to provide a current accompanying affidavit.
This is the second article in our four-part Focus on Statutory Demands article series, following from our first article on how to effect effective service of documents.
In this article, we will provide an overview of the requirements for a valid affidavit and focus on the strict requirements necessitating the provision of current accompanying affidavit with the statutory demand.
What are the requirements for a valid affidavit?
The affidavit accompanying a statutory demand must, under rule 5.2 of the Federal Court (Corporations) Rules 2000, be:
- in accordance with Form 7;
- be made by the creditor, or a person with the authority of the creditor; and
- not state a proceeding number, or refer to a Court proceeding, in any heading or title to the affidavit.
The purpose of the accompanying affidavit in support of the statutory demand is to:
- clarify the amount that is due and payable by the company debtor;
- state the source of the deponent’s knowledge of the debts, and
- note the deponent’s belief that there is no genuine dispute about the existence or debt amount.
As a defective affidavit may result in the demand being set aside, it is crucial that the affidavit be executed correctly and in compliance with the strict requirements. One of these requirements is that the affidavit be sworn or affirmed contemporaneously.
Ensuring an affidavit is current
Although section 459E of the Act does not explicitly require the affidavit be executed on the date on which the demand is signed, the fact that the purpose of the accompanying affidavit is to verify that the amount described in the demand is due and payable means that the affidavit must be sworn or affirmed ‘contemporaneously with or after the date of demand’.[1]
There is abundant authority in case law that the statutory demand will be set aside if the affidavit is executed before the date of the statutory demand, even if there is no defect with the statutory demand itself.[2] This is a mandatory and important statutory safeguard. The affidavit must be sworn or affirmed on the same day as the statutory demand, or else it will not satisfy the requirements of subsection 459E(3) of the Act.
What next?
If you are a creditor seeking to recover a debt, or debtor who has been served with a statutory demand, you should seek advice from a debt recovery or insolvency expert as soon as possible.
At Hunt & Hunt, we have a specialist debt recovery and insolvency team who can assist you with anything debt recovery related, including advising and acting for you throughout the process of issuing or responding to a statutory demand.
Our considerable experience across all jurisdictions within Australia can provide you with the comfort to know you are being looked after by the best during this stressful time.
If you require advice on your specific circumstances, please don’t hesitate to get in touch.
[1]In the matter of Unity Resources Group Australia Pty Ltd [2015] NSWSC 11174 per Brereton J at [5]; In the matter of Naneski Developments Pty Ltd (No 2) [2019] NSWSC 1217 per Rees J at [5].
[2] The ‘plethora’ of cases in support of this proposition (described as such by Randall AsJ in Stellar Projects (Vic) Pty Ltd v Cambridge Plumbing Pty Ltd (2017) 324 FLR 279; [2017] VSC 532 at [24]) was recently summarised by Wigney J in Wollongong Coal Limited v Gujarat NRE India Pty Limited (2015) 104 ACSR 425; [2015] FCA 221 at [83]-[84].
