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[2026] NSWCA 57
respondent. Leave was granted to B & B Legal to file and serve the amended response and, to the extent necessary, to adduce the deed of re-assignment. The Court refused to extend time for Mr Smits to file the...
The Court of Appeal allowed B & B Legal to update its response and rely on a deed, but it did not allow Mr Smits to proceed with his proposed appeal. The summons was late, the delay was not adequately explained, and the proposed grounds did not show the kind of significant error needed for leave. The Court also stressed that the primary judge had only needed to decide whether a genuine dispute existed, not finally decide who owed the deposit. Mr Smits was ordered to pay B & B Legal’s costs.
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B & B Legal was the stakeholder for a $130,000 deposit under a contract for the sale of land dated 21 February 2018. The vendors were Sandra and David Edmonds, and the purchaser was Bayfoyle Pty Ltd. Mr Smits asserted that B & B Legal had misappropriated the deposit and that rights to recover it had been assigned to him. The statutory demand he issued on 11 December 2024 claimed $218,756.16, the difference from the original deposit being attributed to interest ([2], [24]–[25]).
B & B Legal applied under s 459G of the Corporations Act 2001 (Cth) to set the demand aside. The primary judge, Brereton J, did so. The reasons summarised by the Court of Appeal identify two independent bases: the supporting affidavit accompanying Mr Smits’ demand did not contain the statement required by r 5.2 of the Supreme Court (Corporations) Rules 1999 (NSW), and there was a genuine dispute about the alleged debt. The latter included B & B Legal’s position that the deposit had been paid out on settlement with the vendors’ consent, and the possible effect of an October 2018 deed of settlement and release ([28]–[30]).
Mr Smits sought leave to appeal. His six proposed grounds challenged the validity and service of B & B Legal’s application, the genuine-dispute findings, the primary judge’s reliance on the missing statement in his supporting affidavit, and the costs order ([38]). B & B Legal separately sought leave to amend its response and, if needed, to rely on a deed of re-assignment dated 22 September 2025 ([31]–[35]).
The Court granted B & B Legal’s procedural motion. It refused to extend time for Mr Smits’ summons, dismissed the summons and ordered him to pay B & B Legal’s costs of both applications ([64]).
The Court applied a demanding gateway for leave to appeal. It said leave generally requires an issue of principle, a question of public importance or a reasonably clear injustice going beyond something merely arguable ([37]). It also cited Mohareb v Local Court of New South Wales for the proposition that reasons on a leave application may be concise, provided they explain the core reasons for refusing leave ([42]).
Timing was an independent difficulty. Under the dates identified by the Court, the principal judgment was delivered on 6 June 2025 and the costs judgment on 24 June 2025. The respective three-month deadlines under UCPR r 51.6 were 6 September and 24 September 2025. The summons was filed on 4 October 2025, so an extension was needed ([40]–[41]). The Court accepted that Mr Smits had provided no explanation for the delay other than “inadvertence” in oral submissions. It was not persuaded that the merits were sufficiently arguable to justify extending time ([41]).
On the first two grounds, the Court considered the distinction between requirements imposed by s 459G and procedural requirements in court rules. David Grant & Co Pty Ltd v Westpac Banking Corporation was cited for the strict, jurisdictional character of s 459G’s time and service requirements ([43]–[44]). But the asserted defect was different: the originating process served in Queensland did not include the statement required by UCPR r 10.3(3) ([47]–[48]). Drawing on Financial Solutions Australasia Pty Ltd v Predella Pty Ltd, the Court reasoned that procedural rules may facilitate the operation of s 459G but do not, without more, add to or alter its statutory jurisdictional requirements ([49]–[51]). It found no arguable error in the primary judge’s conclusion that the omission was not fatal. It also found no error beyond the merely arguable in the primary judge’s alternative findings about physical and electronic service ([52]).
The genuine-dispute grounds failed because, in the Court’s view, they treated the primary judge’s findings as though the judge had finally determined whether the debt existed. That was not the task. The judge considered whether B & B Legal’s contentions about authorised payment and the settlement and release deed raised a genuine dispute. The Court said the primary judge was not required to finally determine whether the deposit had been paid out with authority or whether the deed barred the claim ([53]–[54]). It also noted the relatively undemanding threshold described in the primary judgment, quoting Ligon 158 Pty Ltd v Huber: a contention would fail only if so devoid of substance that no further investigation was warranted ([54]).
The fifth ground attacked the primary judge’s reliance on the absence of a no-genuine-dispute statement in Mr Smits’ supporting affidavit. The primary judge had relied on Kisimul Holdings Pty Ltd v Clear Position Pty Ltd, which discusses the assurance such a statement gives a company receiving a statutory demand ([55]–[57]). Mr Smits asserted that Kisimul was wrongly decided but did not explain why or identify compelling reasons to depart from it. The Court therefore found no error beyond the merely arguable ([58]–[59]).
The costs ground also failed. The Court said costs are generally discretionary and cited authorities concerning the need to establish an error of the kind described in House v R. It rejected the characterisation that B & B Legal had only mixed success: it had obtained the substantive relief it sought ([61]–[62]).
Finally, B & B Legal’s motion was allowed because the Court found no demonstrable prejudice from the proposed amendments. The motion had been filed 11 weeks before the leave hearing, and the Court considered it desirable for relevant disputed issues to be heard and determined ([36]).
The judgment does not purport to establish a new test for statutory demands or leave to appeal. It applies the established leave threshold stated in Cheng v Motor Yacht Sales Australia Pty Ltd: the applicant must identify an issue of principle, a question of public importance or a reasonably clear injustice beyond a merely arguable point ([37]). It also applies the statutory time and service requirements in s 459G, as explained in David Grant, and distinguishes those requirements from procedural rules governing the form of originating process ([43]–[52]).
For statutory-demand disputes, the decision reinforces the distinction between identifying a genuine dispute and deciding the underlying debt finally. The primary judge’s findings about payment authorisation and the settlement deed were relevant to whether further investigation was warranted. The Court of Appeal did not decide whether the deposit was ultimately owed, whether it was properly paid out, or what final effect the settlement deed had ([53]–[54]).
The Court also applied Kisimul in addressing the demand creditor’s supporting affidavit. It did not reconsider the correctness of Kisimul because Mr Smits’ submission did not explain the alleged error or give reasons to depart from that authority ([56]–[59]). Accordingly, the judgment’s contribution on that point is an application of the existing authority in a leave application, not a new ruling on the substantive rule.
After this decision, as far as the supplied judgment shows, the primary orders setting aside the statutory demand remained undisturbed. The judgment does not resolve the parties’ underlying dispute about the deposit. It records that the demand had been set aside, refuses leave to appeal and makes procedural and costs orders ([2], [64]).
At [37], the Court said that leave generally requires “an issue of principle, a question of public importance or a reasonably clear injustice going beyond something that is merely arguable.” In plain English, showing that a proposed appeal raises a debatable point is not ordinarily enough. The applicant must identify a more substantial reason for the appeal court to consider the matter.
At [44], the Court quoted David Grant’s explanation that s 459G’s timing provisions attach a “limitation or condition upon the authority of the court to set aside the demand.” That passage concerns the statutory requirements themselves, including the time for making and serving the application. The Court distinguished those requirements from the separate procedural omission concerning r 10.3(3) ([47]–[51]).
At [51], the Court said there was “nothing here to suggest” that an originating process had to comply with r 10.3 for it to be a valid s 459G application. It also noted that r 10.3(4) expressly allows the Court to grant leave to proceed otherwise than under sub-rule (3). The conclusion was confined to the issue argued in this case: the alleged omission did not demonstrate an error in the primary judge’s approach.
At [54], the Court clarified that the primary judge “did not and was not required finally to determine” whether the deposit had been paid out with authority or whether the settlement deed defeated the claim. The question at that stage was narrower: whether those matters gave rise to a genuine dispute about the debt. This explains why the appeal could not succeed simply by disputing the ultimate factual or contractual case.
At [63], the Court added that the demand appeared stale and that Mr Smits was not an alleged creditor when he filed his summons. It also identified uncertainty about the relevance of the January 2026 deed, including the differing parties referred to in its schedule. The Court introduced these observations “for completeness” and described them as further considerations against granting leave.
The decision is most directly relevant where a party seeks leave to appeal from an order setting aside a statutory demand and needs an extension because the leave application was filed outside the period identified by UCPR r 51.6. In this case, the Court considered both the unexplained delay and whether the proposed grounds were sufficiently arguable to justify an extension ([40]–[42]).
It is also relevant where an applicant says a defect in originating process, beyond the express statutory timing and service requirements, deprived the court of authority under s 459G. The judgment distinguishes the statutory requirements from procedural rules and treats the particular r 10.3(3) omission as insufficient to show that the application was invalid ([47]–[52]). The decision does not say that every procedural defect is immaterial; it addresses the rule and argument before the Court.
A further relevant pattern is an appeal that treats a primary judge’s finding of a genuine dispute as if it were a final decision about the debt. The Court emphasised that the statutory-demand inquiry was limited to whether the creditor’s position raised a genuine dispute, not whether the debt was conclusively proved or defeated ([53]–[54]).
The decision also addresses attempts to challenge costs orders without identifying an error in the exercise of discretion, and motions to amend appeal materials where the other party has not demonstrated prejudice ([31]–[36], [60]–[62]). Its application to other cases depends on their procedural rules, evidence and factual circumstances.
The supplied judgment contains no decisions made after 30 April 2026 and therefore provides no information about how later courts treated Smits v B & B Legal. It would not be possible, on this material, to say that a later court followed, distinguished, applied or criticised this decision.
The judgment itself relies on earlier authorities, including Cheng, David Grant, Predella, Ligon, Kisimul, Mendonca and John Anthony Arena. Those authorities are identified in the reasons as sources for the leave threshold, s 459G requirements, genuine-dispute threshold and review of discretionary costs decisions ([37], [43]–[56], [61]). That reliance describes the legal framework the Court applied; it is not evidence of later treatment of Smits.
For research purposes, any account of subsequent treatment would require access to later judgments or other legal sources not included in the supplied material. No such treatment is asserted here.
The Court of Appeal did not finally decide whether the $130,000 deposit was owed to Mr Smits, whether B & B Legal was authorised to pay it out, or whether the October 2018 deed of settlement and release affected the alleged debt. Those questions were not resolved because the Court considered that the primary judge was deciding only whether there was a genuine dispute ([29], [53]–[54]).
The judgment also does not determine the full legal consequences of non-compliance with UCPR r 10.3(3) in other procedural settings. Its conclusion was that no error had been shown in treating this omission as non-fatal to the s 459G application, particularly given r 10.3(4) ([47]–[52]).
Nor did the Court reconsider Kisimul’s reasoning in detail. Mr Smits’ challenge did not explain why that authority was wrong or why there were compelling reasons to depart from it ([58]–[59]). The Court therefore left that argument undeveloped in this decision.
Lastly, the Court’s observations about the stale demand, the alleged reassignment and the January 2026 deed were additional considerations, not a detailed determination of the rights arising under those instruments ([63]). The judgment records uncertainty about how the deeds related to one another but does not resolve that issue.
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Smits v B & B Legal Pty Ltd t/as Borthwick & Butler [2026] NSWCA 57
Hearing dates: 20, 28 April 2026
Date of orders: 30 April 2026
Decision date: 30 April 2026
Before: Adamson JA; Griffiths AJA
Decision: 1. Under s 64 of the Civil Procedure Act 2005 (NSW), grant leave to the respondent to file and serve an amended response under r 51.13 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) in the form annexed to the affidavit of Mr Malcolm John Cameron affirmed on 30 January 2026 (Cameron Affidavit).
2. To the extent that leave is required, grant leave to the respondent under r 51.51 of the UCPR to adduce in evidence the deed of re-assignment which is Annexure C to the Cameron Affidavit.
3. Refuse to extend time to file the summons seeking leave to appeal.
4. Dismiss the summons seeking leave to appeal.
5. The applicant is to pay the respondent’s costs of the summons and the notice of motion filed on 30 January 2026.
Catchwords: CIVIL PROCEDURE — Court of Appeal — application for leave to appeal — whether to grant leave to file amended response and rely on deed of re-assignment — whether more than merely arguable error in primary judge’s decision to set aside statutory demand
Legislation Cited: Civil Procedure Act 2005 (NSW) s 64
Corporations Act 2001 (Cth) ss 459G, 459J
Supreme Court Act 1970 (NSW) s 101
Supreme Court (Corporations) Rules 1999 (NSW) r 5.2
Uniform Civil Procedure Rules 2005 (NSW) rr 10.3, 51.6, 51.8, 51.13, 51.51
Cases Cited: Cheng v Motor Yacht Sales Australia Pty Ltd (2022) 108 NSWLR 342; [2022] NSWCA 118
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265; [1995] HCA 43
Financial Solutions Australasia Pty Ltd v Predella Pty Ltd (2002) 26 WAR 306; [2002] WASCA 51
In the matter of B & B Legal Pty Ltd t/as Borthwick and Butler Solicitors [2025] NSWSC 587
In the matter of B & B Legal Pty Ltd t/as Borthwick and Butler Solicitors [2025] NSWSC 656
John Anthony Arena Pty Ltd v Franpina Developments Pty Ltd [2022] NSWCA 139
Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262
Ligon 158 Pty Ltd v Huber (2016) 117 ACSR 495; [2016] NSWCA 330
Mendonca v Tonna [2025] NSWCA 82
Mohareb v Local Court of New South Wales [2024] NSWCA 235
Re MHC Pathology Pty Ltd (2020) 356 FLR 222; [2020] VSC 789
Category: Principal judgment
Parties: Leonardus Gerardus Smits (applicant)
B & B Legal Pty Ltd t/as Borthwick & Butler (respondent)
Representation: Counsel:
L G Smits (solicitor) (applicant)
R May (respondent)
Solicitors:
Murray Laws (applicant)
Sparke Helmore Lawyers (respondent)
File Number(s): 2025/00339884
Publication restriction: Nil
THE COURT: By summons filed on 17 November 2025, the applicant seeks leave to appeal from the judgment and orders in In the matter of B & B Legal Pty Ltd t/as Borthwick and Butler Solicitors [2025] NSWSC 587 (PJ) and In the matter of B & B Legal Pty Ltd t/as Borthwick and Butler Solicitors [2025] NSWSC 656.
The proceedings below involved an application by the respondent (B & B Legal) to set aside a statutory demand dated 11 December 2024 that was issued by the applicant (Mr Smits). The statutory demand related to an amount of $218,756.16, being a debt allegedly owed to Mr Smits as a legal assignee. The primary judge, Brereton J, set aside the statutory demand and ordered that Mr Smits pay the costs of B & B Legal on the ordinary basis.
Mr Smits requires leave to appeal under s 101(2)(p) of the Supreme Court Act 1970 (NSW) because the judgment and orders below relate to an application made under s 459G of the Corporations Act 2001 (Cth).
Also before the Court is a notice of motion filed on 30 January 2026 by B & B Legal. B & B Legal seeks leave to file and serve an amended response under r 51.13 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and also seeks leave (to the extent necessary) to rely upon a deed of re-assignment dated 22 September 2025 in relation to the question of leave to appeal.
For the reasons that follow, the orders sought in the respondent’s notice of motion should be made and leave to appeal should be refused, with costs.
It is appropriate to say something about some procedural matters. As noted above, the summons seeking leave to appeal was filed on 17 November 2025. The respondent filed its notice of motion on 30 January 2026, together with the supporting affidavit of Mr M J Cameron.
On 2 February 2026, the summons seeking leave to appeal was listed for hearing on 20 April 2026, with an estimated hearing time of one hour.
Various other case management orders relating to the hearing of both the summons and the respondent’s motion were made by the Registrar on 2 February 2026, 4 March 2026 and 16 March 2026, including listing the respondent’s motion for hearing also on 20 April 2026.
Both parties filed detailed written submissions, including an undated statement of argument from the applicant and submissions dated 15 December 2025 (respondent), 30 January 2026 (one set from each party), 16 February 2026 (respondent) and 13 March 2026 (applicant). The White Folder comprised two lever arch folders totalling in excess of 700 pages.
On 16 April 2026, the respondent’s solicitor wrote to the Registrar with the applicant’s consent. The email related to the applicant’s application for the hearing on 20 April 2026 to be vacated on the basis of the applicant’s ill health. The respondent consented to the foreshadowed application and indicated that the parties agreed that the leave only hearing on 20 April 2026 should be vacated and the proceedings listed for directions on 6 May 2026.
The respondent attached to its email dated 16 April 2026 three medical documents which it had received from the applicant concerning the adjournment application. The first is a one page report dated 25 March 2026 signed by Dr Christopher Raffel and addressed to the applicant’s general practitioner, Dr Rao Hameed from the Carrara Medical Practice. The report refers to cardiological procedures conducted on the applicant at Pindara Private Hospital on 16 March 2023, which involved the insertion of stents on that day. The report continued with Dr Raffel, a cardiological surgeon, informing Dr Hameed that he would “leave ongoing follow up locally”.
The second report is dated 15 April 2026 and is a brief medical certificate issued by Dr Hameed. Dr Hameed certified that the applicant (whose date of birth is given as xx April 2052 [sic]) “is currently undergoing investigation for complex medical issues” and that, due to his medical condition, the applicant was not fit to either travel interstate or “[e]ngage in stressful activities” for the period from 15 April 2024 to 24 April 2026 inclusive.
The third document is a brief medical certificate signed by Professor Rohan Jayasinghe. It is dated 15 April 2026 and certifies that the applicant is receiving medical treatment for the period 16 April 2026 to 23 April 2026 inclusive. It states that the applicant will be unfit for travel or to be involved in any work involving stress during this period (noting that those dates differ from those in the medical certificate of Dr Hameed). It adds that the applicant was scheduled to have an angiogram at Pindara Hospital on 16 April.
On 24 December 2024, B & B Legal commenced proceedings in the Corporations List in the Equity Division of the Supreme Court seeking to set aside the statutory demand.
The $218,756.16 debt which is the subject of the statutory demand was said to arise from the payment of a $130,000 deposit to B & B Legal’s trust account. The difference between the two amounts is claimed to be attributable to interest.
The $130,000 deposit was paid to B & B Legal as stakeholder under a contract for the sale of land dated 21 February 2018 between Ms Sandra Edmonds and Mr David Edmonds (vendors) and Bayfoyle Pty Ltd (purchaser). Mr Smits contended that B & B Legal had misappropriated the deposit and consequently owed the vendors that amount. By virtue of a deed which purported to assign the rights of the vendors under the contract for sale to Mr Smits, Mr Smits alleged that he was entitled to the deposit plus interest, which added to $218,756.16.
In the proceedings below, Mr Smits contended that the application to set aside the statutory demand should be dismissed (PJ at [5]) because:
the originating application and supporting affidavit were not served within the statutory period (21 days) after service of the statutory demand, as required by s 459G(2) of the Corporations Act; and
the originating process was fatally flawed due to the absence of the endorsement or statement required under UCPR r 10.3(3).
The primary judge rejected both contentions. His Honour explained at some length why Mr Smits was served both physically and electronically within the statutory period: PJ at [13]-[16], [17]-[23]. The primary judge also found that the omission of the required statement under UCPR r 10.3(3) did not mean that B & B Legal failed to make an application in accordance with s 459G of the Corporations Act: PJ at [24]-[31].
The primary judge then turned to the question whether the statutory demand should be set aside on the basis that “there is some other reason why the demand should be set aside”: Corporations Act s 459J(1)(b). His Honour found that the affidavit accompanying the statutory demand sworn by Mr Smits did not comply with r 5.2 of the Supreme Court (Corporations) Rules 1999 (NSW) because it did not contain a statement as to the belief of Mr Smits that there was no genuine dispute about the existence or amount of the debt. On this basis, the primary judge set aside the statutory demand: PJ at [33]-[41].
Further, the primary judge found that there was a genuine dispute regarding the alleged debt in light of:
B & B Legal’s denial that it was liable for the deposit on the grounds that the deposit was duly paid out on settlement in accordance with an express consent (PJ at [45]); and
It is convenient to first address B & B Legal’s notice of motion.
As already noted, B & B Legal seeks leave to file and serve an amended response under UCPR r 51.13 and also seeks leave (to the extent necessary) to rely upon a deed of re-assignment dated 22 September 2025 in relation to the question of leave to appeal.
The amended response contains a new section summarising B & B Legal’s arguments in response to each of the draft grounds of appeal, so as to comply with UCPR r 51.13(2)(b)(i). The amended response also raises, as an additional reason why leave should not be granted, the fact that Mr Smits no longer had any disputed debt owing to him by B & B Legal at the time he filed the summons seeking leave to appeal. B & B Legal seeks leave (if necessary) to rely on a deed of re-assignment to make good this argument. Further, the amended response annexes a draft notice of contention pursuant to UCPR r 51.13(4).
B & B Legal contends that leave should be granted to file and serve its amended response in circumstances where the amendments were timely, would not prejudice Mr Smits, and the reason for the amendments is that counsel was only briefed shortly before the deadline for the filing of the response (with the consequence that the response did not address all of the matters that B & B Legal wished to raise).
Mr Smits opposes leave being granted and urges the Court to reject B & B Legal’s attempt to rely on the deed of re-assignment. Mr Smits contends that the amended response is an “attempt to re-frame the case” after the filing deadline and would “introduce a novel contention, new arguments and fresh materials which fundamentally alter the conduct and issues on appeal”. He also submits that to “introduce a notice of contention at this late stage is procedurally improper and unfairly prejudicial”. He further argues that B & B Legal should not be permitted to rely upon the deed of re-assignment as it did not exist at the time of the trial and “appeal proceedings are not an opportunity for parties to introduce newly created instrument [sic], evidence and rights, which are designed to change materially the legal landscape after judgment”.
Mr Smits’ submissions are not accepted. No demonstrable prejudice would be occasioned to Mr Smits by the grant of leave sought in the notice of motion, in circumstances where it was filed by B & B Legal 11 weeks prior to the hearing of the application for leave to appeal. It is desirable in the interests of justice to have all relevant issues in dispute heard and determined by the Court.
Turning to whether leave to appeal should be granted, it is well-established that the grant of such leave generally requires the identification of an issue of principle, a question of public importance or a reasonably clear injustice going beyond something that is merely arguable: see eg Cheng v Motor Yacht Sales Australia Pty Ltd (2022) 108 NSWLR 342; [2022] NSWCA 118 at [15] per Bell CJ, Ward P and Basten AJA agreeing.
In a draft notice of appeal annexed to Mr Smits’ affidavit sworn on 4 October 2025 (which was incorrectly filed in Supreme Court proceeding 2025/00381643), six grounds of appeals are identified. Those grounds may be summarised as follows:
The primary judge erred in proceeding on the basis that there was a valid application under s 459G of the Corporations Act so as to enliven the Court’s jurisdiction to set aside the statutory demand.
The primary judge erred in finding that the application under s 459G of the Corporations Act had been validly served so as to enliven the Court’s jurisdiction to set aside the statutory demand.
The primary judge erred in finding that there was a genuine dispute as to the amount or existence of the debt claimed in the statutory demand.
The primary judge erred in finding that the deed of settlement and release provided the basis for a genuine dispute about the debt.
The primary judge erred in finding that the statutory demand should be set aside under s 459J(1)(b) of the Corporations Act due to the absence of a “no genuine dispute” clause in the supporting affidavit.
The primary judge erred in awarding costs to the plaintiff in view of its proportional success.
B & B Legal submits that leave to appeal should not be granted because the application for leave to appeal has been brought out of time, hence an extension of time is required and no explanation has been provided by Mr Smits for the delay. B & B Legal also submits that the statutory demand is now stale, no issue of principle or question of general public importance or injustice is raised by the appeal, and Mr Smits has no real interest in prosecuting the appeal because he has reassigned the debt which is the subject of the statutory demand.
The primary judge delivered the principal judgment on 6 June 2025 and the costs judgment on 24 June 2025. These were relevantly the “material dates” for the purposes of filing a summons for leave to appeal or a notice of intention to appeal. Mr Smits filed a notice of intention to appeal against the costs judgment on 2 July 2025. This was within the 28 day period in UCPR r 51.8. He filed an amended notice of intention to appeal against the principal judgment on 13 July 2025. Even if the amended notice of intention to appeal was regarded as having been filed within time, any summons for leave to appeal was still required to be filed within 3 months of the relevant material date, which is 6 September 2025 for the principal judgment and 24 September 2025 for the costs judgment: UCPR r 51.6.
[I]n general, the Court need not give extensive reasons for dismissing an application for leave to appeal. They should be sufficient to articulate for the benefit of the parties and, if special leave is sought, the High Court, the core reasons why the Court was not persuaded to exercise its discretion to grant leave to appeal. They can be short. To require extensive reasons — eg addressing in detail all arguments made or grounds raised by an applicant — would be to defeat the very purpose of having a leave gateway …
(1) A company may apply to the Court for an order setting aside a statutory demand served on the company.
(2) An application may only be made within the statutory period after the demand is so served.
(3) An application is made in accordance with this section only if, within that period:
(a) an affidavit supporting the application is filed with the Court; and
(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.
In providing that an application to the court for an order setting aside a statutory demand 'may only' be made within the twenty-one day period there specified and that an application is made in accordance with s 459G only if, within those twenty-one days, a supporting affidavit is filed and a copy thereof and of the applications are served, sub-ss (2) and (3) of s 459G attach a limitation or condition upon the authority of the court to set aside the demand ... Here, the phrase '[a]n application may only be made within 21 days' should be read as a whole. The force of the term 'may only' is to define the jurisdiction of the court by imposing a requirement as to time as an essential condition of the new right conferred by s 459G. An integer or element of the right created by s 459G is its exercise by application made within the time specified.
It was necessary, therefore, for the Master to have had jurisdiction to set aside the statutory demand, that an application and an affidavit "supporting the application" be filed with the court, and copies of the application and the supporting affidavit be served, as required by s 459G(3)(b), within the 21 days stipulated by s 459G(2).
Where an application under s 459G has not been filed and served within the statutory period, the Court has no jurisdiction to consider the application and it will be dismissed as incompetent. The time period is ‘strict and immutable’. Further, the statutory period cannot be extended, or service validated after its expiration.
(3) An originating process for service in Australia, but outside New South Wales, must bear a statement either that the plaintiff intends to proceed under the Service and Execution of Process Act 1992 of the Commonwealth or that the plaintiff intends to proceed under the Uniform Civil Procedure Rules 2005.
The originating process here was served in Queensland and it did not include a statement as specified in r 10.3(3).
An analogous argument was made in Predella. Financial Solutions contended that the affidavit in support of Predella’s application to set aside a statutory demand failed to meet essential requirements of the then-applicable Supreme Court rules, such that it was not valid or effective as an affidavit supporting the application: at [39]-[40]. However, Parker J (Scott and Anderson JJ agreeing) reasoned at [41] that:
It is necessary to draw a distinction between the jurisdictional requirement of s 459G(3) and compliance with the procedural rules of this Court. The rules relevantly seek to facilitate the operation inter alia of s 459G(3), but they can never expand or modify its jurisdictional requirement. In this case either the affidavit satisfies the statutory requirement of s 459G(3)(a) or it does not. That is determined on the proper construction of s 459G.
[The relevant Supreme Court rule] is in aid of the Corporations Law. There is nothing in that law which would suggest a legislative intention that requirements such as those in [the rule] would be essential to the validity of an application. To the extent that [the rule] may require, in a particular case, something additional to or different from s 459G(3)(a) to be included in the supporting affidavit, it is not apparent why that additional or different requirement should be essential to the validity of the application.
Similarly, there is nothing here to suggest that an originating process must comply with UCPR r 10.3 in order for it to constitute a valid application under s 459G of the Corporations Act. All the more so where express provision is made in r 10.3(4) for the Court to grant leave for the plaintiff to proceed otherwise than in accordance with the requirements in sub-rule (3). Mr Smits has not explained why the contrary position should be taken. No arguable error has been demonstrated in the primary judge’s finding that non-compliance with r 10.3 was not fatal.
Mr Smits further submits that the primary judge’s findings as to the effective service of the originating process were in error such that the Court below lacked jurisdiction to determine the application to set aside the statutory demand. However, no error which rises beyond the merely arguable, much less one which gives rise to a reasonably clear injustice, has been demonstrated in respect of the primary judge’s analysis regarding physical or electronic service, which were alternative bases supporting his Honour’s finding as to the satisfaction of the requirement in s 459G(3)(b) of the Corporations Act. Nor has Mr Smits identified any issue of principle or question of public importance arising from the primary judge’s findings and analysis on the subject of service.
Grounds 3-4 challenge the primary judge’s finding that there was a genuine dispute about the sum or existence of the debt claimed in the statutory demand. Mr Smits submits that “the plaintiff simply made up a dispute which did not exist in fact” and that the primary judge’s finding of a genuine dispute about the debt:
proceeded “upon the erroneous basis that the … deposit … was appropriated by [B & B Legal] as authorised by the vendors on 5 February 2019 in or towards reduction of the mortgage debt of $1,215,000 … when in fact there was no such appropriation” (see PJ at [45]); and/or
was in error because “any such appropriation was not subject to a release under clause 3(e) of the [deed of settlement and release], when [B & B Legal] was not a releasee under the deed, appropriation of the deposit provided no foundation for any disputed debt under the deed and the release was not enlivened” (see PJ at [46]).
These submissions appear to proceed on a misapprehension of the primary judge’s reasons. The primary judge did not and was not required finally to determine whether the deposit was paid out of B & B Legal’s trust account with authority conferred by the vendor’s solicitor such that there was no debt. Nor did his Honour finally determine whether the debt claim was barred by the deed of settlement and release. The primary judge’s findings on both these issues were confined to determining whether they gave rise to a genuine dispute about the existence of the debt. His Honour found that they did, noting that the genuine dispute threshold is “by no means at all a difficult or demanding one” and that “[a] finding to the contrary could only be arrived at if the contentions advanced are so devoid of substance that no further investigation is warranted”: PJ at [43], quoting from Ligon 158 Pty Ltd v Huber (2016) 117 ACSR 495; [2016] NSWCA 330 at [8] (Barrett AJA, McColl and Meagher JJA agreeing). No error which goes beyond something which is merely arguable has been demonstrated in the primary judge’s reasons in this respect.
Ground 5 contends that the primary judge erred by setting aside the statutory demand on the basis that there was an “omission of a denial of existence of a genuine dispute from the supporting affidavit sworn by [Mr Smits] on 11 December 2024” accompanying the statutory demand (see PJ at [33]-[41]).
The primary judge referred to Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262, where the question before the Court was “whether a statutory demand should be set aside because the affidavit that accompanied it did not contain a statement” as to the deponent’s belief that there was “no genuine dispute about the existence or amount of the debt”: at [1]. The primary judge quoted from the judgment of Barrett JA (Beazley P and Gleeson JA agreeing) at [33]-[34], where his Honour observed that:
A creditor seeking the benefit of a statutory presumption of insolvency through service of a statutory demand has a responsibility to ensure that, so far as it is aware, the debt relied on is owing, due, payable and undisputed — or, more accurately, a responsibility not to rely on the debt unless it genuinely believes it to be of that kind. And the company served with the demand has a right, secured to it by s 459E(3)(b) and the provision of the rules requiring adherence to Form 7, to be assured that the demanding creditor recognises that responsibility and has conscientiously formed a belief that the responsibility has been discharged.
The statement by the deponent of the s 459E(3) affidavit of belief of absence of genuine dispute therefore provides a significant measure of assurance that the objectives of Pt 5.4 are being observed by the creditor. Absence of the statement means that that measure of assurance is lacking and puts the recipient company into a position of uncertainty from which the legislation intends that it should be protected.
Barrett JA consequently concluded that the primary judge erred when he treated the absence of the “no genuine dispute” clause from the affidavit “as somehow offset or compensated for by particular factual matters”: Kisimul at [35]. The Court set aside the statutory demand: at [37], [39].
Mr Smits submits that there is an issue as to “whether Kisimul was decided correctly, particularly in relation to s 459J, [insofar as] it upheld the principle that omission of the denial of genuine dispute from the supporting affidavit was substantive, incurable, and rendered the alleged demand invalid”. No further explanation was given as to why the reasoning in Kisimul was said to be erroneous or why there are compelling reasons to depart from that decision.
No error which rises beyond the merely arguable is disclosed by ground 5.
Ground 6 contends that the primary judge erred in awarding costs to B & B Legal because it had only enjoyed “mixed success”: “it only succeeded on two dubious issues … and lost seven substantive grounds raised”.
"[T]he issue of awarding costs is an invariable one in litigation, and it is trial judges who are generally best placed to weigh up the interests involved in such awards”: Mendonca v Tonna [2025] NSWCA 82 at [6] (Kirk JA and Price AJA). Because an award of costs is generally discretionary, “[a]ny challenge to such a costs order must … seek to establish an error of the kind described in House v R (1936) 55 CLR 499 at 505; [1936] HCA 40”: John Anthony Arena Pty Ltd v Franpina Developments Pty Ltd [2022] NSWCA 139 at [17] (Kirk JA, Macfarlan JA agreeing).
No such error has been identified much less demonstrated here. Mr Smits’ characterisation of the outcome of the proceedings below must be rejected: B & B Legal was wholly successful in obtaining the substantive relief that it sought and it was appropriate for costs to follow the event.
For completeness, there also appears to be force in B & B Legal’s submissions that the statutory demand is now stale and Mr Smits was not an alleged creditor of the respondent at the time when the summons seeking leave to appeal was filed. The deed dated 9 January 2026 does not alter this fact given that it postdates the filing of the summons seeking leave to appeal. In any event, it is difficult to understand the relevance of the deed having regard to the identification of relevant parties in item 11, which differ from the parties to the deed of re-assignment dated 22 September 2025. These considerations further militate against the Court exercising its discretion to grant leave to appeal.
For these reasons, the Court makes the following orders:
Under s 64 of the Civil Procedure Act 2005 (NSW), grant leave to the respondent to file and serve an amended response under r 51.13 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) in the form annexed to the affidavit of Mr Malcolm John Cameron affirmed on 30 January 2026 (Cameron Affidavit).
To the extent that leave is required, grant leave to the respondent under r 51.51 of the UCPR to adduce in evidence the deed of re-assignment which is Annexure C to the Cameron Affidavit.
Refuse to extend time to file the summons seeking leave to appeal.
Dismiss the summons seeking leave to appeal.
The applicant is to pay the respondent’s costs of the summons and the notice of motion filed on 30 January 2026.
**********
Smits
B & B Legal Pty Ltd t/as Borthwick & Butler
[2002] WASCA 51
[1936] HCA 40
(2022) 108 NSWLR 342
(1995) 184 CLR 265
(2002) 26 WAR 306
(2020) 356 FLR 222
(1936) 55 CLR 499
Leave was granted to B & B Legal to file and serve the amended response and, to the extent necessary, to adduce the deed of re-assignment. The Court refused to extend time for Mr Smits to file the summons for leave to appeal, dismissed the summons and ordered him to pay B & B Legal’s costs of the summons and notice of motion ([64]).
Following receipt of this correspondence, the Registrar emailed the parties on Thursday 16 April 2026 asking whether the parties consented to the summons and notice of motion being determined on the papers.
On Friday 17 April 2026, the respondent emailed the Registrar indicating that the applicant did not consent to the matter being determined on the papers but that the respondent did.
Shortly thereafter, the Registrar emailed the parties stating that the matter remained listed on 20 April 2026.
On the morning of Monday 20 April 2026, the applicant emailed the Registrar, copying in the respondent’s legal representatives. He referred to the medical certificates of Dr Hameed and Professor Jayasinghe outlined above and added further claims concerning his medical conditions. He said that he was not fit to contest the leave application and added that the hearing should have been vacated on 16 April 2026.
In his email, the applicant also pointed to several other factors in his life which he submitted were causing him “on-going emotional distress" and risked “further damage to [his] recovery”.
When the matter was called for hearing at 10:16am on 20 April 2026, Mr R J May of counsel appeared for the respondent. There was no appearance by the applicant.
After explaining the long history of the matter and after referring to the correspondence outlined above, the Court invited Mr May to indicate whether he wished to supplement by oral submissions the various written submissions filed by the respondent in relation to the application for leave to appeal and the notice of motion. The Court proposed that a copy of the transcript be sent to Mr Smits as soon as it was available and that the hearing of the two matters would be adjourned to 9am on Tuesday 28 April 2026. Mr Smits could appear at that time either in person, by a legal representative or via AVL. The Court also indicated that any further application for an adjournment of the hearing by the applicant needed to be supported by affidavit evidence from a medical practitioner.
Mr May raised no objection to this proposed course. Mr May had also indicated earlier that the respondent did not wish to supplement its written submissions, emphasising that it had been content for the matter to be heard on the papers.
When the hearing resumed on Tuesday 28 April 2026, Mr Smits appeared via AVL. He tendered a deed of acknowledgment and replication of assignment dated 9 January 2026 between Mr and Mrs Edmonds and himself. Recital B stated that the purpose of the deed is to “confirm and acknowledge the intention of the parties that the Assignee is the holder of the Deposit Debt described in Schedule A, despite any other transaction, instrument, action, step or proceeding”. There are 11 items in the schedule, including item 11 which refers to “Any document filed or referred to in Supreme Court of NSW Winding Up Proceedings No. 2025/00184474” on or after 15 May 2025. Presumably, this was intended to include the deed of re-assignment dated 22 September 2025 but it should also be noted that the parties to that deed are not the same as the parties identified in the deed of acknowledgement and replication of assignment dated 9 January 2026 with reference to item 11.
the existence of a deed of settlement and release dated October 2018 which contained various releases and supposedly made provision for how the deposit would be applied on settlement, including that there would be no amounts to be paid to the vendor having regard to their indebtedness (PJ at [46]).
These circumstances, in the primary judge’s view, each provided a sufficient basis to set aside the statutory demand.
The summons for leave to appeal was not filed until 4 October 2025, which was more than three months after the relevant dates for the principal judgment (6 June 2025) and the costs order (24 June 2025). Accordingly, Mr Smits required an extension of time. As Mr May submitted, Mr Smits provided no explanation for the delay in filing the summons for leave (other than “inadvertence”, which Mr Smits volunteered in oral submissions in reply) or any reason, beyond the asserted merits of the summons for leave to appeal, why time ought be extended. We accept this submission. For reasons which we will develop, we are not persuaded that the merits of the summons are sufficiently arguable so as to justify an extension of time.
The absence of any issue of principle, question of public importance or reasonably clear injustice going beyond something which is merely arguable raised by the draft grounds of appeal is sufficient to dispose of this application for leave to appeal. As Kirk and McHugh JJA noted in Mohareb v Local Court of New South Wales [2024] NSWCA 235 at [34]: