In Austech Institute for Further Education Pty Ltd v Britt [2010] NSWSC 56, the plaintiff (Austech) applied to set aside a statutory demand in respect of a debit of A$260,901 on the basis that the affidavit verifying the statutory demand was defective.

The affidavit was sworn by the solicitor for the defendant creditor who deposed that:

"Based on my perusal and knowledge of the Lease and the notices sent to the Debtor Company from the creditor's managing agent ... I am aware of the circumstances giving rise to, and the state of, the indebtedness of the Debtor Company to the Creditor.
...
I believe that there is no genuine dispute about the existence or amount of any of the debts".

Austech submitted that the evidence of the solicitor as to the existence of the debt and regarding the absence of a genuine dispute was hearsay. It relied on a number of authorities including Faji (Australia) Constructions Pty Limited v AC Professional Accounting Pty Ltd [2009] NSWSC. In that case, the supporting affidavit was also sworn by the creditor's solicitor who deposed that:

"I have knowledge of the facts stated in the attached statutory demand.
I believe that the amount of ... being the debt due specified in the accompanying demand, is due and payable by the debtor to the creditor.
I believe these matters to be true.
I believe there is no genuine dispute about the existence or amount of the debt ...".

In Faji, Barrett J held that "having regard to that content, it is clear that the deponent solicitor does not identify the source of the knowledge which he considers enables him to make the statements he makes". His Honour set aside the statutory demand.

In Austech, Palmer J held that the solicitor had stated the source of his knowledge of how the alleged debt arose and how it was quantified. However, the solicitor did not state the source of his belief that the debt was not genuinely disputed and in that regard the affidavit was "glaringly deficient". Palmer J set aside the statutory demand.

Palmer J commented that "this case affords a salutary reminder that, as a general rule, statutory demands ought not to be supported by an affidavit from the creditor's solicitor". His Honour said that it will usually be difficult for a creditor's solicitor to inform himself or herself adequately of "the matters in relation to the debt" required to be verified under Rule 5.2. Palmer J said that "it is highly desirable, as a general rule, that the creditor himself or herself, or a properly qualified officer of a corporate creditor, should make the affidavit under s 459E(3), rather than the creditor's solicitor".

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