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Creditor’s statutory demand issued pending negotiations is upheld

By Andrew Behman, an Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

In a recent matter which we acted for the Defendant (In the matter of Precise Training Pty Ltd [2018] NSWSC 1383), we successfully defended an application to set aside a creditor’s statutory demand issued by the Chief Commissioner of State Revenue (“the Commissioner“) against Precise Training Pty Ltd, the Plaintiff.

Facts

The Commissioner issued a number of assessments for payroll tax to Precise Training in 2015 as a member of a larger tax group. Precise Training disputed the assessments and lodged an objection on 10 December 2015. The Commissioner disallowed the objection and proceeded to enter into negotiations for payment of the assessments.

Precise Training lodged a second objection on 18 July 2016 and requested that the Commissioner undertake not to commence recovery proceedings while the second objection was being decided and the parties were in negotiations.

On 10 November 2016, the Commissioner responded to the request for an undertaking advising that “recovery proceedings have been on hold” while the objection is being decided and the parties are in discussions to settle the disputed assessments.

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In a Daze about Days – counting the time limit for filing an Application to set aside a Creditor’s Statutory Demand

By Jeffrey Brown, a Principal of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

The Supreme Court has today handed down a Judgment that reinforces an established principle about the meaning of the term “within 21 days” in Section 459G(2) of the Corporations Act.

If a company is served with a Creditor’s Statutory Demand, it must, if it wishes to resist the Demand, file an Application with a Court within 21 days. This timeframe cannot be extended, even if both parties agree to do so.

But do you count the day that the company was served with the Demand as day 1 of that 21 day period?

That question was of central importance in Verimark Pty Ltd -v- Passiontree VelvetPty Ltd [2019] NSW SC 455 (26 April 2019). If the day of service is to be counted as Day 1 then, the parties agreed, Verimark was out of time to file its Application.

Her Honour Ward CJ in Eq. reviewed the caselaw thoroughly and concluded that the 21 day period begins the day after the Demand is served, and therefore Verimark’s Application was within time. This decision accords with a strong line of case law authority supporting that view.
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