On 23 March 2012, the Federal Court of Australia in Superior International Pty Ltd ACN 126 853 558 v Ahearn Fox Patent and Trade Mark Attorneys [2012] FCA 282 (23 March 2012) held that an Applicant seeking orders to set aside a Statutory Demand issued by the defendant must file a genuine steps statement before initiating proceedings. The requirement of a genuine dispute about the existence of the debt claimed in a Statutory Demand is provided for in s459H(1)(a) of the Corporations Act 2001. Reeves J referred to section 3 of the Civil Dispute Resolution Act 2011 which provides that the object of that Act is to ensure that ‘people take genuine steps to resolve disputes before certain civil proceedings are instituted.’
In addition, section 6(1) Civil Dispute Resolution Act 2011 provides that ‘an applicant who institutes civil proceedings in an eligible court must file a genuine steps statement at the time of filing the application’. As such Reeves J provided that the onus is on the applicant to take genuine steps to resolve the dispute before initiating proceedings and thereafter file a genuine steps statement with the Court. In these proceedings neither party filed a genuine steps statement and the court held that this should be a consideration when submissions as to costs are to be heard. Reeves J adjourned the matter in relation and costs and ordered that the both parties’ legal representation be joined as parties for the costs determination. Reeves J further advised the parties to seek independent legal advice on the question of costs in the proceedings.
Should you have any queries in relation to how this effects your current practices, please contact the Directors of our Insolvency and Corporate Restructuring Team:
Jeffrey Brown 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette 9806 7459 or stephenm@matthewsfolbigg.com.au
