ERA Legal

On 23 February 2011, Justice Ball in the Supreme Court of New South Wales in the matter of Abadeen Group Pty Ltd v Bluestone Group Pty Ltd agreed with the submissions of ERA Legal that there was no basis to set aside a Statutory Demand on the various grounds argued by the applicant debtor.

ERA Legal successfully argued that each of the purported assignments relied on to set aside the Statutory Demand were defective and there was insufficient evidence to support the factual allegations claimed by the debtor. The Supreme Court agreed and confirmed earlier authorities that the evidence needs to be sufficient to satisfy the court that a claim has proper factual basis and there must be some evidence which supports the factual allegations. The debtor failed this test, leaving the way open for ERA Legal's client to file a winding up application to enforce a judgment debt in the sum of $600,000.

The decision is a timely reminder of the importance of ensuring that there is evidence to prove the allegations that a Statutory Demand should be set aside. Failure can be fatal for a company as it creates a presumption of insolvency. Simply making assertions of offsetting claim or genuine dispute will not be sufficient.