By Drazen Kozaric, Special Counsel on 24/06/2022 – [SOURCE]
Even though, the threshold to set aside a statutory demand is relatively low, a recent decision in In Alpine Valley Flour Mills Pty Ltd v Grainlink (NSW) Pty Ltd [2020] VSC 85, shows that this is not as straight forward as it may seem. In this instance, the applicant was unsuccessful because the Court held that the offsetting claim by Alpine Valley, namely that Grainlink had supplied it with a contaminated product, was not genuine.
Amongst other things, the Court concluded the following:
- There was no notification of the offsetting claim until after it was served with the statutory demand.
- The company had made many promises to pay the debt prior to being served with the demand.
- The company had stated that the reason for non-payment was cash-flow problems.
- There was no evidence that the alleged contaminated product had anything to do with Grainlink.
Therefore, although the bar to set aside a statutory demand is not high, the applicant still must show that there is a genuine dispute or an offsetting claim. Further, any hard evidence in support of any such claim will be very important.
