Michelle Herbert and Paul Staunton v Jo Schmid

Michelle Herbert and Paul Staunton (the applicants) sought to set aside a statutory demand issued by Jo Schmid (the respondent). The applicants argued that they had a genuine dispute about the existence of the debt claimed in the statutory demand, and that there were offsetting claims against the respondent. The matter was heard in the Supreme Court of Victoria.

The primary legal issue before the court was whether the applicants had established a sufficient basis to set aside the statutory demand. This required the court to determine if there was a "genuine dispute" about the existence of the debt, or if there were "offsetting claims" that would reduce the debt to less than the statutory threshold. The court also considered the nature of the evidence required to demonstrate such a dispute or offsetting claim.

Justice Nicholas Smith found that the applicants had failed to demonstrate a genuine dispute about the existence of the debt. The court noted that the applicants' claims of offsetting amounts were vague and unsubstantiated, lacking the necessary particularity to be considered genuine. The principles applied centred on the requirements for setting aside a statutory demand under the Corporations Act 2001 (Cth), which necessitates a substantial and arguable case, not merely a bare assertion of a dispute or offsetting claim.

The application to set aside the statutory demand was dismissed.