NT Court of Appeal orders statutory demand to be set aside over lack of verifying affidavit

The dispute arose from a sale of a mineral lease

NT Court of Appeal orders statutory demand to be set aside over lack of verifying affidavit

The NT Court of Appeal has ordered that a statutory demand for an alleged “judgment debt” to be set aside because it was not accompanied by a verifying affidavit.

In Jones v Endeavour Investments (NT) Pty Ltd [2023] NTCA 2, Selwyn Jones sued Endeavour Investments Pty Ltd over the sale of a mineral lease. The parties agreed to a settlement after a compulsory conference process before the Northern Territory Civil and Administrative Tribunal (NTCAT). 

The tribunal issued a consent order, compelling the respondent Endeavour Investments to pay Jones the settlement sum of $38,000. The parties drafted a deed of release but never agreed on the terms, and the deed was not executed. As a result, the respondent has not paid $38,000, and Jones has not transferred the mineral lease.

Jones applied to the local court seeking registration of the NTCAT order. The NTCAT Act permits a creditor with a claim under a “monetary order” of the tribunal to file the order in court and pursue enforcement proceedings.

The local court accordingly issued a notice of registration order. However, the order did not include the relevant portions of the NTCAT order. Nonetheless, Jones served the respondent a statutory demand in accordance with the Corporations Act. The demand stated that the respondent owed Jones $38,000, which was then due and payable and was described as a “judgment debt” arising from an NTCAT order registered with the local court. An affidavit did not accompany the demand.

Setting aside a statutory demand

Under the Corporations Act, a company could apply to the court for an order to set aside a statutory demand. Endeavour Investments applied to have Jones’ statutory demand set aside. The Supreme Court ordered the demand to be set aside on the ground that the local court order did not constitute a “judgment debt” within the meaning of the law. The court further ruled that, on a balance of probabilities, there was a genuine dispute between the parties about whether the debt described in the statutory demand was due and payable and “existed” at the service date.

The Corporation Act requires that a statutory demand be accompanied by a verifying affidavit when the debt relied on is a “judgment debt.” In this case, no affidavit was served. On appeal, the court affirmed the Supreme Court’s ruling that registering the order with the local court did not constitute a “judgment debt.” Consequently, the demand must have been accompanied by a verifying affidavit.

The Supreme Court further observed that the local court order could not stand alone because the payment terms were not included in the order. The court pointed out that it was difficult to ascertain whether the debt was due and payable without reference to the payment scheme in the order. The court emphasized that a verifying affidavit was necessary.

The appeal court affirmed the Supreme Court’s decision, finding that the local court order could not stand alone as a judgment debt because of the uncertainty surrounding whether the payment was due and, if so, when. The appeal court concluded that in the absence of an affidavit, as required by the Corporations Act, the statutory demand must be set aside.

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