A statutory demand is a claim for a debt made by a person or company (creditor) against another company (debtor) for an amount over the statutory minimum as set out in the Corporations Act. 

A Statutory Demand must comply with certain statutory requirements detailed in the Corporations Act being:-

  • a liquidated debt.
  • in writing
  • In the prescribed form
  • Signed on behalf of the creditor

If the debt is not a judgement debt it must be verified by the Creditor by the swearing of an affidavit confirming that:-

  • There is a debt, i.e. the debt is presently due and owing to the Creditor by the Debtor,
  • the total amount of the debt which is due and payable as at the date of the statutory demand.
  • There is no dispute as to the debt.

If your Company receives a Statutory Demand – act now and do not delay.

Section 459F of the Corporations Act details that for the recipient of a Statutory Demand there is a strict 21 day time period to make arrangements to

  • pay the debt;
  • negotiate the payment and get agreement in writing with the issuer of the statutory demand irrevocably withdrawing the statutory demand in writing.
  • file an application in a court of relevant jurisdiction to set aside the Statutory Demand.

If your company receives a Statutory Demand you must deal with it immediately as failure to do so may cause your Company to be wound up as being insolvent.

The Courts have no power to extend the 21 day period for compliance.

If you are filing an application to set aside a Statutory Demand then in addition to the application, affidavits in support of your application will have to be prepared and filed at the same time as the application to set aside the statutory demand.

Courts can set aside the statutory demand if they are satisfied that:-

  • There is a genuine dispute
  • There is an offsetting claim by the debtor against the Creditor
  • The statutory demand does not comply with procedure set out in the Corporations Act.
  • There would be substantial injustice to the Debtor
  • There is some other reason why the statutory demand should be set aside.

As to whether a dispute is a ‘genuine dispute’ the court only has to conclude that there is a dispute and that it is a genuine dispute. The Court does not have to embark on an extended inquiry in order to determine whether there is a dispute between the parties and certainly will not attempt to weigh the merits of that dispute.

Costs can be awarded against the issuer of the Statutory demand

If a statutory demand is set aside by the court, the court may order the issuer of the statutory demand pay the debtor company’s legal costs in relation to the application.

Need Help?

If you require any further information or assistance in relation to a statutory demand, please contact our team of lawyers at The Quinn Group on (02) 9223 9166 or submit an online enquiry form today.