Statutory Demand
At Stonegate Legal, we understand that dealing with a statutory demand can be overwhelming for individuals and businesses. We provide legal assistance and advice to clients facing statutory demands, whether it’s issuing or setting aside a demand.
What is Statutory Demand?
Issuing & Setting Aside A Statutory Demand
Dealing With Statutory Demand
A statutory demand is a legal document that requires a debtor to pay an outstanding debt within 21 days. The document can be served either by post or personally by the creditor, and must include details of the amount of debt, who it is owed to and how it can be paid. If the debtor does not comply with the demand, then the creditor may take legal action against them in court.
At Stonegate Legal, we understand that dealing with a statutory demand can be daunting for those on the receiving end. We provide our clients with detailed advice on their options when facing a statutory demand, including issuing or setting aside a demand.
We have extensive experience in dealing with all aspects of statutory demands, from issuing them to representing clients in court proceedings if necessary. Our experienced solicitors will provide you with support throughout the process and ensure that your rights are protected at all times.
Issuing a Statutory Demand
A statutory demand can be issued by a creditor in order to recover an outstanding debt. The demand must include details of the amount of debt, who it is owed to and how it can be paid. The debtor must pay the debt within 21 days or the creditor may take legal action against them in court.
At Stonegate Legal, we have extensive experience in dealing with all aspects of issuing a statutory demand. We will provide our clients with detailed advice on their options and ensure that their rights are protected throughout the process.
Setting Aside a Statutory Demand
If a debtor wishes to dispute a statutory demand, they may apply to set it aside in court. This means that the demand will no longer be legally enforceable and the creditor will not be able to take legal action against them until further notice.
We understand that dealing with a statutory demand can be overwhelming for individuals and businesses alike. We provide our clients with detailed advice on their options when facing a statutory demand, including setting aside a demand if necessary. Our experienced solicitors will provide you with support throughout the process and ensure that your rights are protected at all times.
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At Stonegate Legal, we understand that dealing with a statutory demand can be a difficult process. Whether it is issuing or setting aside a demand, you can count on us to be there for you.
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Issuing a Demand
Under Section 9 of the Corporations Act 2001 (Cth), a company must pay $4,000 if it owes a debt of more than $2,000. To demand payment for debts greater than $4,000, a specific form (509h) must be used with accurate information to avoid challenges by the debtor in court. Liquidation is not easily ordered by courts, so attention to detail is essential in the process.
When creating a statutory demand, section 459E subsection (3) requires that an affidavit be included unless the debt is a judgment debt. The affidavit must confirm that the company owes the debt or debts and comply with the rules. It is crucial to ensure that the affidavit is drafted accurately and follows the regulations. If not, the demand may be invalidated.
After fulfilling all the requirements, the next step is to serve the demand. As per section 109X of the Corporations Act 2001 (Cth), a document can be served on a company in various ways. These include leaving it at the registered office or posting it to the company's registered office. Alternatively, a copy can be delivered personally to a director of the company residing in Australia or an external Territory. It is crucial to ensure that the demand is served correctly and documented in an affidavit of service to avoid any legal consequences. The company's registered office address can be found in the Australian Securities and Investments Commission (ASIC) company extract. To ensure effective debt recovery, it is recommended to follow both options mentioned in section 1.
Setting Aside a Demand
If the statutory demand has formal defects in its form, it can be invalidated by a court order. The prescribed form for such demands is outlined in schedule 2 of the Corporations Regulations 2001 (Cth) as statutory demand form 509h. The Corporations Act 2001 (Cth) outlines in section 459J(1)(a) that a demand can be set aside if there is a defect in the demand that will cause substantial injustice if not addressed. This issue of substantial injustice is the threshold for determining whether or not the demand should be set aside. Many cases in Australia and Queensland have discussed the process of setting aside a statutory demand based on formal defects in the demand.
According to Section 459H(1)(a) of the Corporations Act 2001 (Cth), it is possible to set aside a statutory demand without a judgment if there is a genuine dispute about the existence or amount of a debt. However, you must provide affidavit evidence to support your claim that there is indeed a dispute about the debt's existence or amount. Once the affidavit is submitted, you must follow the rules for setting aside the demand. More information on this can be found below.
In accordance with Section 459H(1)(b) of the Corporations Act 2001 (Cth), a statutory demand can be put on hold if there is an offsetting claim. An offsetting claim is a legitimate counterclaim, set-off or cross-demand that the company has against the person or company issuing the demand, even if it is not related to the same transaction or circumstances as the debt in question. If the offsetting claim reduces the total amount of the demand to below the statutory minimum, it can be used to set aside the demand.
If a company receives a statutory demand, it has the option to request the Court to nullify it. However, this application must be made within 21 days of the demand being served. To make a valid application, the company must file an affidavit supporting the application and serve copies of the application and affidavit on the person who served the demand within the 21-day period. Failure to meet this deadline will result in a presumption of insolvency for three months and the creditor may apply to wind up the company during this period. This presumption shifts the burden of proof, similar to the presumption of innocence in criminal law.
Our Team
Meet Our Statutory Demand Lawyers
Director
Wayne Davis
Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team. Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia. Wayne is a debt recovery, litigation, and insolvency professional who is experienced in:
Expertise
Debt Disputes
Commercial Litigation
Civil Litigation
Insolvency
Building Disputes
Defamation
Tax Debts
Solicitor
Damon Laffin
Damon Laffin is a solicitor and forms part of the litigation team.
Damon is admitted to the Supreme Court of Queensland and the High Court of Australia. Damon is also presently undertaking to Master of Applied Law (majoring in Litigation) through the College of Law, which is due to be completed in or around February 2023.
Expertise
Debt Disputes
Commercial Litigation
Civil Litigation
Building Disputes
Legal Assistant
Laylah Toovey
Laylah joined the Stonegate Legal team in 2021 as our receptionist and legal assistant. Laylah has worked her way up to paralegal and works in the debt recovery team.
She is currently in her final year of studying a Bachelor of Laws at the University of the Sunshine Coast and has found a keen interest in litigation, contract law and tort law.
Expertise
Debt Disputes
Commercial Litigation
Civil Litigation
Frequently Asked Questions
If a debtor ignores a statutory demand, the creditor may take legal action and apply to the court for an order of liquidation or winding up. If this happens, the court will decide if it is appropriate to liquidate or wind up the company.
At Stonegate Legal, we understand that dealing with a statutory demand can be overwhelming and we are here to provide our clients with detailed advice on their options and ensure that their rights are protected throughout the process.
A statutory demand is a demand made by a creditor to a debtor, while a court order is an order made by the court. A statutory demand can be set aside if there are reasonable grounds for doing so, however, the court will not interfere with a court order unless there are exceptional circumstances.
In addition, if the debtor does not comply with a statutory demand, the creditor will not be able to take legal action against them until further notice.
Yes. A statutory demand can be issued for personal debts, such as overdue rent or loan payments, however, the debt must be over $2,000 and must be due and payable. Statutory demands can also be issued for company debts that are overdue. At Stonegate Legal, we can provide our clients with detailed advice on all aspects of dealing with a statutory demand. We will ensure that your rights are protected every step of the way.
A debtor has 21 days to pay the debt after receiving a statutory demand. If the debt is not paid within this time frame, the creditor may take legal action against the debtor and apply to the court for an order of liquidation or winding up. If a court order is granted, it will be much more difficult for the debtor to challenge it in court. Therefore, it is important that the debtor takes steps to settle any debts as soon as possible after receiving a statutory demand.
