Statutory Demand Lawyers

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, our statutory demand lawyers 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.

Our statutory demand lawyers 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 creditor can issue a statutory demand to recover an outstanding debt. The demand must include details of the debt’s amount, 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, our statutory demand lawyers have extensive experience in dealing with all aspects of issuing a statutory demand. Our statutory demand lawyers 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.

Our statutory demand lawyers 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.

Statutory Demand lawyers in Queensland and throughout Australia

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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 Team

Wayne Davis - Lawyer - Stonegate Legal

Legal Practice Director / Principal Solicitor

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.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

 

Education & Certifications

LLB – Bachelor of Laws

Personal Quote

Don’t believe everything you think.

Areas of Interest

Laylah Toovey - Stonegate Legal

Law Graduate / Paralegal

Laylah Toovey

Laylah completed her Bachelor of Laws with Honours at the University of the Sunshine Coast and is currently undertaking her graduate diploma of legal practice at the College of Law. I have worked with Stonegate Legal since 2021, and within this time, she acquired a broad range of knowledge and experience across a diverse range of matters.

Laylah’s approach is centered on understanding your unique circumstances, protecting your interests, and advocating for the best possible outcome. Whether you’re facing commercial disputes, debt disputes, contract issues, or other contentious matters, Laylah and the team are here to guide you every step of the way.

 

Education & Certifications

Bachelor of Laws

Personal Quote

I am dedicated to supporting our senior team members, and achieving positive results for our clients

Areas of Interest

Stacey Harvey - Stonegate Legal

Senior Paralegal

Stacey Harvey

Stacey has been a part of the team at Stonegate Legal since 2022 but has worked in the industry for over 20 years, having extensive knowledge of the legal processes in Australia and specializing in debt recovery claims, default judgments, enforcement action, and bankruptcy.

Stacey spent a large portion of her career as a senior paralegal responsible for the performance and management of a team of paralegals and an administration department for many years.  During the first 18 years, she worked for one of Brisbane’s largest debt collection companies, where she managed large portfolios of debt for councils, schools, government departments, and insurance companies, along with debt purchased from various banks, utilities, and other credit providers.

Education & Certifications

Justice of the Peace, Certificate III in Office Business Administration

Personal Quote

Stay positive, work hard, make it happen.

Areas of Interest

Statutory Demand FAQ with Answers

What is a statutory demand in Australia?

A statutory demand is a formal request by a creditor requiring a company to pay an outstanding debt over $4,000 within 21 days. It’s issued under the Corporations Act 2001 (Cth) and, if ignored, may lead to a presumption of insolvency and legal action to wind up the company.

Who can issue a statutory demand?

A statutory demand can be issued by any creditor owed more than $4,000 by a company. The debt must be due and payable, and the demand must comply with strict legal formatting and service requirements outlined in the Corporations Act 2001 (Cth).

How long does a company have to respond to a statutory demand?

A company has 21 days from the date of service to either pay the debt, reach an agreement, or apply to set the demand aside in court. Failing to act within this period may result in the company being presumed insolvent.

What is an offsetting claim?

An offsetting claim is a genuine counterclaim or set-off the debtor company has against the creditor, even if unrelated to the original debt. If it reduces the amount owed below the statutory minimum, it can be grounds to set aside the demand.

What form is used to issue a statutory demand?

Statutory demand Form 509H must be used when issuing a demand. It must contain specific information, including the debt amount, creditor details, and an affidavit if the debt is not a judgment debt. Incorrect use can render the demand invalid.

Can a creditor issue a statutory demand for a personal debt?

No, statutory demands are strictly for debts owed by companies, not individuals. Creditors seeking payment from individuals must use other legal avenues such as court proceedings or bankruptcy notices.

Can a company defend against a statutory demand?

A company can defend against a statutory demand by filing an application to set it aside within 21 days, supported by an affidavit. Valid defences include genuine disputes, offsetting claims, or procedural errors.

What happens after a statutory demand is served?

Once served, the company has 21 days to comply. Options include paying the debt, negotiating, or filing to set aside the demand. If no action is taken, insolvency is presumed, enabling a winding-up application by the creditor.

Does a statutory demand affect credit ratings?

A statutory demand does not automatically affect credit ratings. However, if ignored and legal proceedings commence, including winding-up applications, it can significantly damage the company’s creditworthiness and reputation.

Why engage a lawyer for a statutory demand?

Statutory demands involve strict legal requirements and short deadlines. Errors or delays can result in severe consequences. Engaging an experienced lawyer ensures correct procedure, advice on setting aside demands, and representation in court if necessary.

What happens if a statutory demand is ignored?

If a company ignores a statutory demand, the creditor can apply to the court to wind up the company. The company is presumed insolvent, and a liquidator may be appointed to take control of the business and distribute its assets.

Can a statutory demand be set aside?

Yes, a company can apply to set aside a statutory demand if there's a genuine dispute about the debt, a valid offsetting claim, or a formal defect causing substantial injustice. The application must be filed within 21 days of service.

What is a ‘genuine dispute’ in a statutory demand case?

A genuine dispute exists if there is a real, not spurious, disagreement about the existence or amount of the debt. It must be supported by evidence in an affidavit and is grounds to apply to set aside the demand under section 459H.

How must a statutory demand be served?

Under section 109X of the Corporations Act 2001, a statutory demand must be served by post, personal delivery to the registered office, or handed to a director in Australia. Proper service must be evidenced by an affidavit of service.

What is the statutory minimum for a statutory demand?

As of current legislation, the minimum debt for issuing a statutory demand is $4,000. The amount must be due and payable, and if reduced by dispute or offsetting claim below this threshold, the demand can be invalidated.

Can a statutory demand be withdrawn?

Yes, a creditor can withdraw a statutory demand voluntarily before expiry of the 21-day response period. This is usually done by written notice and may form part of negotiated settlements between creditor and debtor.

What if a statutory demand contains an error?

A statutory demand with formal defects may be set aside if it causes substantial injustice. Courts consider errors in the form, amount, or supporting documents serious enough to invalidate the demand under section 459J.

Is an affidavit always required with a statutory demand?

An affidavit is required if the debt is not a judgment debt. It must state that the debt is due and payable and must comply with all legal requirements. Omission or inaccuracy can render the demand defective.

What legal consequences follow a statutory demand?

If not complied with, a statutory demand leads to a presumption of insolvency. This allows the creditor to apply for the company's winding up, potentially resulting in liquidation and the appointment of a liquidator.

Can multiple debts be included in one statutory demand?

Yes, a statutory demand may include more than one debt, provided the total exceeds $4,000 and all debts are due and payable. Each debt must be detailed clearly, and supported by appropriate documentation or an affidavit.

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