In the matter of AAP Investments (Aust) Pty Ltd

AAP Investments (Aust) Pty Ltd, a creditor, issued a statutory demand to another party under section 459D of the Corporations Act 2001 (Cth) in relation to a debt. The debt originated from a default judgment that was subsequently set aside. The debtor contested the statutory demand, arguing it should be set aside under section 459J(1)(b) of the Corporations Act. The case was heard in the Federal Circuit Court of Australia.

The primary legal issue before the court was whether the statutory demand should be set aside. The court had to consider if the judgment debt, which arose from a default judgment and was later set aside, constituted a valid debt upon which a statutory demand could be based. This involved an interpretation of section 459J(1)(b) of the Corporations Act, which allows for the setting aside of a statutory demand if the debt is not a valid debt.

The court examined the statutory provisions and found that a judgment debt, even if set aside, could still constitute a valid debt for the purposes of a statutory demand. The court held that the judgment debt remained valid until it was formally set aside by a court, and as such, the statutory demand was not invalid solely because the underlying judgment was set aside. The debtor’s application to set aside the statutory demand was dismissed.

The court ordered that the statutory demand remained in effect, and the debtor was liable to pay the costs of the proceeding. This decision reinforced the principle that a judgment debt retains its validity until formally set aside, impacting the enforceability of statutory demands in such circumstances.