Drama Unit Pty Ltd v Fearndale Holdings Pty Ltd (Administrator Appointed)

Drama Unit Pty Ltd (the applicant) sought leave to appeal from a decision of the Supreme Court of New South Wales, which had dismissed its application to set aside a statutory demand issued by Fearndale Holdings Pty Ltd (the respondent). The core of the dispute concerned the validity of the applicant's application to set aside the statutory demand, particularly in relation to whether it was supported by an affidavit demonstrating an offsetting demand. The matter came before the Court of Appeal of the Supreme Court of New South Wales, constituted by Macfarlan, Gleeson and Payne JJA.

The Court of Appeal was required to determine whether the applicant's application to set aside the statutory demand was a valid application under section 459G of the *Corporations Act 2001* (Cth). This involved considering whether the affidavit filed in support of the application met the requirements of the Act, specifically in relation to demonstrating an offsetting demand. A further issue was whether the primary judge had erred in finding that the affidavit did not satisfy this description, and whether any such error would lead to injustice. The Court also considered the consequence of the statutory period for compliance with the demand having expired without an extension being sought or obtained.

The Court of Appeal reasoned that the applicant's application to set aside the statutory demand was fundamentally flawed because the period for compliance had expired, and no extension had been sought or granted. Consequently, there was no utility in attempting to have the statutory demand set aside. Furthermore, the Court found that even if the primary judge had made a factual error in assessing the affidavit, no injustice had been demonstrated. The Court applied the principles that an application to set aside a statutory demand must be made within the prescribed time limits, and that an applicant must demonstrate a genuine offsetting claim to succeed.

The Court of Appeal ordered that the summons seeking leave to appeal be dismissed, and that the applicant pay the respondent's costs in the Court.