What is a statutory demand in Australia?
A statutory demand is a formal demand for payment of a debt served on a company under section 459E of the Corporations Act 2001 (Cth). The company has 21 days to pay, compound the debt, or apply to the court to set aside the demand. If none of those happen, the company is presumed insolvent under section 459C and a winding-up application can be filed. Statutory demands are a creditor's most powerful insolvency tool but must be used carefully — using them on disputed debts is an abuse of process.
Requirements for a valid demand
Under section 459E of the Corporations Act 2001 (Cth), a statutory demand must: be in writing and in Form 509H; specify a debt of at least $4,000 (the current statutory minimum) that is due and payable; be signed by or on behalf of the creditor; specify the place for payment; be supported by an affidavit verifying the debt unless based on a judgment. Service must be on the company's registered office.
The company's response options
Within 21 days of service the company can: pay the debt; reach a compromise with the creditor; or apply to the court to set aside the demand under section 459G. A section 459G application must be supported by an affidavit and filed and served within 21 days. After 21 days the court has no jurisdiction to set aside — Graywinter v Aeromech (1996) 70 FCR 452.
Grounds to set aside
Under section 459H, a demand can be set aside where there is a genuine dispute about the debt, or an offsetting claim reduces the substantial debt below $4,000. Under section 459J, a demand can also be set aside for a defect causing substantial injustice or for some other reason. The genuine dispute threshold is low — even a plausible argument is usually enough.
How I draft statutory demands
I draft Form 509H statutory demands and supporting affidavits in Corporations Act 2001 (Cth) compliant format, including accurate debt descriptions. I also draft section 459G set-aside applications when acting for the company. For commercial lawyers this is a high-volume routine workflow.
Common issues
- Service on the registered office is strict — service on a branch is ineffective
- The 21-day period runs from service, not from sending — make sure the affidavit of service is accurate
- Using a statutory demand as a debt collection tactic on a disputed debt is an abuse of process
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