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Traps for the unwary: failure to verify post-judgment interest will lead to statutory demand being set aside

The Supreme Court of New South Wales has held, consistent with existing authority, that a failure by a creditor to verify a non-judgment debt the subject of a statutory demand will lead to the statutory demand being set aside.

In In the matter of Colour Metal Pty Ltd [2021] NSWSC 1012, Leeming JA (sitting at first instance) held that two creditors had failed to verify a weekend’s worth of post-judgment interest that accrued under s 101 of the Supreme Court of Victoria Act 1986 (Vic).  The consequence of that failure was that their statutory demands were to be set-aside pursuant to s 459J(1)(b) of the Corporations Act 2001 (Cth) (“there is some other reason why the demand should be set aside”).

This case forms part of a now clear line of authority.  A verifying affidavit is required to support any debt in a statutory demand that is not a judgment debt.  The fact that post-judgment interest arises as a consequence of the judgment does not make it part of the judgment debt.  Post-judgment interest must be verified in the manner required by s 459E.

The creditors had failed to withdraw their demands despite having the relevant (and unequivocal) authorities drawn to their attention by the applicant’s solicitors.  The Court awarded indemnity costs against them for that failure.

Karen Petch appeared for the successful applicant, instructed by HFW Australia.

 

 

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