It is not uncommon for a creditor (assignor) to transfer
their right to receive payment of a debt (assignment) to a third
party (assignee). The assignee will then seek payment from the
The assignee of the debt can issue to the debtor company a
statutory demand for the payment of the debt if the debt exceeds
the statutory minimum, which is currently $2,500.
For the assignee issuing the statutory demand, there will be
threshold issues as to whether notice of the assignment has been
given to the debtor and whether appropriate details of the
assignment are contained in the statutory demand.
Assignee has the same rights and obligations as the
The assignee of the debt takes the assignment subject to the
rights and obligations of the assignor.
This was demonstrated in the recent decision of Mascarene
Pty Ltd v Slater  VSC 395 relating to a building
In Mascarene a judgment debt was assigned and the
assignee issued a statutory demand.
The Court held that the assignee was not prevented from seeking
payment of interest as it had the same rights as the assignor, as
if the assignment had not taken place.
However, the assignee also took the assignment subject to the
obligations that would have applied to the assignor in respect of
In seeking to set aside the statutory demand the debtor company
claimed it had an offsetting claim against the assignor for
reinstatement costs relating to building works.
Although the assignee was not a party to the building contract
and not personally liable for the reinstatement costs, the debtor
company was successful in claiming the setoff and reducing the
amount of the statutory demand by the amount of the reinstatement
It is clear that an offsetting claim cannot be sidestepped by
assigning the debt.
The assignee of a debt receives the benefit of the debt subject
to the rights of the assignor but also subject to the
assignor's obligations in respect of the debt.
A statutory demand can be issued in respect of an assigned debt
however the assignment does not prevent the debtor company from
disputing the existence or amount of the alleged debt or seeking to
raise an offsetting claim.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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