When a creditor issues a creditor’s statutory demand in reliance upon a judgment debt, the creditor must ensure that the judgment debt is accurately particularised in the demand and that the judgment debt is due and payable.

In the recent decision of Verimark Pty Ltd v Passiontree Velvet Pty Ltd [2019] NSWSC 455 (26 April 2019), the creditor obtained two cost orders following success in two interlocutory applications in the Local Court of NSW.

The creditor then issued a statutory demand in respect of the orders.

The Civil Procedure Rules in NSW state that cost orders do not become due and payable until the conclusion of the main proceeding (unless otherwise ordered by the court).

Because the main proceeding had not been determined, the Debtor relied on the court rules and applied to set aside the creditor’s statutory demand on the basis that the judgment debt was not due and payable. The Debtor was successful in establishing that the debt was not due and payable and set aside the creditor’s statutory demand. Whether a debt is due and payable should be the first question that a creditor asks prior to issuing a creditor’s statutory demand. The decision in Verimark is reflective of this position.