In the recent decision of In2Ply Pty Ltd v Amerind Pty Ltd (in liq) (recs and mgrs apptd)  VSC 603 the Victorian Supreme Court set aside a creditor’s statutory demand because the Court held that there was a valid offsetting claim despite the fact that it was not available as a cross-claim.
Amerind had receivers and managers appointed. Amerind issued a creditor’s statutory demand on In2Ply, with the affidavit in support sworn by one of the receivers. Amerind had previously entered into a debtor finance agreement with its bank and the relevant debt had been assigned to the bank.
In2Ply applied to have the creditor’s statutory demand set aside on the basis that it had an offsetting claim. Amerind argued that In2Ply did not have an offsetting claim because of 1) the change in creditor from Amerind to the bank and 2) the offsetting claim was not in the same right or capacity as the debt.
Regarding the first submission the Court held that the debt was due and payable to the bank, not Amerind as stated in the creditor’s statutory demand because the debt had been assigned to the bank.
In analysing the second submission the Court accepted the offsetting claim as a reason for setting aside the creditor’s statutory demand. First the Court rejected Amerind’s argument regarding mutuality, holding that mutuality did not limit cross-demands. Second the Court held that ‘cross-demand’ was broadly defined and not restricted to counterclaims that could be brought as court actions.
Take Home Message
When issuing creditor’s statutory demands, creditors should be careful to:
Please contact the Dispute Resolution, Insolvency and Reconstruction team at Chamberlains Law Firm if you are considering issuing a creditor’s statutory demand. We can advise on whether it is an appropriate option and we offer an affordable fixed fee for preparing and issuing your creditor’s statutory demand.