ORH Contracting Pty Ltd v CGS Solutions Pty Ltd

The plaintiffs, ORH Contracting Pty Ltd, sought to set aside a statutory demand issued by the defendant, CGS Solutions Pty Ltd, under the Corporations Act. The dispute between the parties was over a debt claimed by CGS, which ORH denied. The matter was heard in the Federal Circuit Court, presided over by Justice Bromberg. The primary legal issue before the court was whether an affidavit in support of the application to set aside the statutory demand could contain hearsay evidence. Additionally, the court had to consider whether a dispute raised by the plaintiff, which was not mentioned prior to the issuance of the demand, could affect the application's outcome. The court found that the affidavit could include hearsay evidence and that the unmentioned dispute did not necessarily undermine the application's validity. It was held that the plaintiff's application to set aside the demand should succeed, leading to the demand being set aside.

Justice Bromberg emphasised that the statutory demand process is designed to be a swift and inexpensive means of recovering debts, but it is not intended to be a punitive measure. The court noted that the presence of hearsay evidence in the affidavit did not automatically disqualify the application. Instead, the court focused on whether the evidence was reliable and whether it sufficiently addressed the defendant's claim. Regarding the unmentioned dispute, the court held that while it was preferable for all relevant disputes to be disclosed before the demand is issued, the absence of such disclosure did not automatically invalidate the application. The court concluded that the plaintiff had demonstrated a genuine dispute over the debt, warranting the setting aside of the demand. Consequently, the demand was set aside, and the plaintiff's application was successful.