Re Essential Media and Entertainment Pty Ltd

Essential Media and Entertainment Pty Ltd was the subject of a statutory demand issued by a creditor, which the company sought to set aside. The dispute centred on the validity of the statutory demand and the company's ability to demonstrate a genuine dispute regarding the debt claimed. The case was heard in the Federal Circuit and Family Court of Australia.

The primary legal issues before the court were whether the affidavit accompanying the statutory demand complied with the statutory requirements and whether the company could demonstrate a genuine dispute concerning the debt. The court examined the authority of the director who swore the affidavit and whether the company could ratify an unauthorised demand. Furthermore, the court considered whether there was a genuine dispute about the amount of the debt due.

The court found that the affidavit did not comply with the statutory requirements as it was not sworn by a director or a secretary with authority, nor did it contain a resolution of the board authorising the demand. The court emphasised that the statute overrides common law and that retrospective authority cannot be conferred by ratification. However, the court determined that the director had de facto authority to issue the demand, thereby satisfying the statutory requirements. Regarding the genuine dispute, the court concluded that there was a genuine dispute because the loan was arranged by a common director, and neither party had authorised the receipt or advance of the loan. Consequently, the court set aside the statutory demand.

The court ordered that the statutory demand be set aside and that the creditor pay the company’s costs of the application.