STATUTORY DEMANDS — PART 5.4 CORPORATIONS ACT 2001 (CTH)
STATUTORY DEMANDS: YOU MUST ACT BEFORE 21 DAYS!
The statutory minimum debt ($4,000) and a set-aside application under s 459G must be filed AND served within the 21 days, with no extensions.
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UNDERSTANDING STATUTORY DEMANDS
Your Guide
Jaswinder Says
A statutory demand is won or lost in the first days: verify the debt, service, supporting affidavit and available set-aside grounds immediately.
— Jaswinder (Jas) Sekhon · Director / Principal
How the STAT DEMAND Process Unfolds
FROM SERVICE TO WINDING-UP RISK
The procedure begins when a compliant statutory demand is served on the company at its registered office or by another valid method. The 21-day period runs strictly, and the company cannot rely on informal negotiations while allowing the filing deadline to expire.
A genuine dispute, offsetting claim or defect causing substantial injustice may support a set-aside application if raised properly and in time. Non-compliance creates a presumption of insolvency that a creditor may rely on in a later winding-up application. The stages below show the usual sequence, but urgent legal review is required as soon as the demand is received or before one is issued.
Demand prepared & served
Confirm the debt, statutory minimum, prescribed form, affidavit requirements and legally effective service.
Company must act
Within 21 days (strict) the company must pay, secure or compound the debt, or file and serve a section 459G set-aside application. The 21-day deadline cannot be extended.
Set-aside application
File evidence of a genuine dispute, offsetting claim or qualifying defect and complete service within the statutory period.
Presumption of insolvency
If the demand is not complied with, the creditor may rely on the statutory presumption in a winding-up application.
Winding-up application
Prepare originating process, affidavits, publication and service, and address solvency, debt and discretionary issues.
How we instruct, brief and work with Barristers (Counsel) - Our litigation strategy.
Court hearing & outcome
The court may dismiss, adjourn or make a winding-up order, with liquidator appointment and costs consequences.
How we instruct, brief and work with Barristers (Counsel) - Our litigation strategy.HOW MUCH DOES A DEMAND COST? YOUR LEGAL COSTS?
INDICATIVE CUMULATIVE COSTS AND TIME
The cost pathway depends on whether the demand prompts payment, is resolved by negotiation, proceeds to a set-aside application or leads to winding-up litigation. Because the 21-day deadline is strict, legal work is often compressed and urgent evidence may be required from directors, accountants and the creditor.
The charts are illustrative only and do not account for every solvency report, contested debt issue, substitution application or appeal. A creditor should assess the risk of a genuine dispute before issuing, and a company should act immediately rather than using the demand as a negotiation timetable.
| Initial Case Assessment | Conference, review of the key documents, advice on prospects and strategy, and a written estimate for the matter. The client decides whether to proceed. |
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| Pre-Action Resolution | Letter of demand or response, without prejudice negotiation, and any pre-action procedures that are compulsory in the jurisdiction. A large share of matters resolve here. |
| Commencement / Defence | Originating process, statement of claim or defence, initial affidavits, counsel settling the pleadings, and the first directions hearing. |
| Discovery & Evidence Management | Discovery, subpoenas, lay and expert evidence, interlocutory applications and further directions. Usually the largest single increment in the matter. |
| Mediation / Conciliation | Position paper, brief to counsel, attendance at mediation or a court-ordered conference, and a settlement deed if the matter resolves. The last realistic off-ramp before hearing. |
| Trial Preparation & Hearing | Hearing preparation, brief to counsel on hearing, written submissions, the hearing days themselves, and judgment. |
| Costs Recovery / Enforcement | Costs argument, costs schedules and assessment, and enforcement of the judgment where required. Only reached by matters that run to judgment. |
| Inclusions and exclusions | These figures are our professional fees only. They exclude GST. They exclude barristers’ (counsel) fees, which are charged separately. And they exclude disbursements such as court filing fees, expert reports, mediator’s fees, transcript, process server and search costs, which vary widely between matters and are charged at cost. |
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| Estimate, not a quote | These are indicative estimates for a matter of ordinary complexity. They are not quotes and they are not a costs disclosure. Before we start work we give every client a written costs disclosure and costs agreement under the Legal Profession Uniform Law (NSW), with an estimate specific to their matter. |
| How our estimates work | We scope each stage and estimate the hours it should take, and we work to that estimate. If something happens that will take the matter beyond it — an interlocutory application, a new party, a contested expert, disclosure that turns out to be far larger than expected — we tell you before the work is done, explain why, and give you a revised estimate. You will not receive an invoice that is the first you hear of it. |
| Cumulative, not per stage | Each figure is the total cost from the start of the matter to the end of that stage. A matter that resolves at Stage 2 costs the Stage 2 figure and nothing beyond it. Most matters resolve well before trial. |
| Barristers (counsel) | Most litigation involves a barrister. Counsel’s fees are charged separately and are not included in the figures above. We cannot give a single figure for them because they depend on the seniority the matter calls for and on which counsel is available when the work is needed — junior counsel, senior junior and senior counsel sit at very different rates. We identify the right counsel for your matter, obtain a fee estimate, and tell you what it will cost before we brief them. How We Use Barristers and Counsel |
| If you are unsuccessful you may pay the other side’s costs | In most civil litigation costs follow the event: an unsuccessful party is usually ordered to pay a portion of the successful party’s costs in addition to its own. Recovery on the ordinary basis is typically 60 to 70 per cent of the costs actually incurred, so even a successful party rarely recovers everything it has spent. You should budget for this before commencing proceedings. |
| Family law is different | In family law each party usually bears their own costs under s 117 of the Family Law Act 1975 (Cth), and costs orders are the exception rather than the rule. |
| What moves a matter to the top of the range | Urgent or interlocutory applications, multiple parties, cross claims, contested expert evidence, international elements, uncooperative disclosure, and appeals. We tell you as soon as we think your matter is heading above the range we gave you. |
Statutory demand costs should be compared with the debt, recoverability, solvency evidence, the prospects of a genuine dispute and the commercial consequences of a winding-up application. Excluding counsel costs.
Indicative planning ranges only. Figures exclude GST and disbursements unless stated and must be confirmed in a matter-specific written estimate.
Videos, Guides and Articles
INSIGHTS AND PRACTICAL GUIDANCE
Use these resources to understand the procedure, prepare more effectively and identify the questions that should be addressed before the next stage.
VIDEOS & GUIDES
Voluntary administration, liquidation and receivership
Who controls the company, what happens to claims and how creditor rights differ.
Voluntary administration, liquidation and receivership
Who controls the company, what happens to claims and how creditor rights differ.
ARTICLES
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1. What is the issue?
The issue is whether “addbacks” — assets wasted, spent, or hidden by one spouse — can
Court Intervention Held Necessary For General Dysphoria-Related Medical
Keywords: Family Law, Medical Procedures, Childhood gender
Full Court of Family Court Finds No Child Support Resulting Trust Favouring the
What is the Issue?
The case of Bass & Bass and Anor [2016] FamCAFC 64 (29 April 2016) was heard in
Treat every statutory demand as a 21-day emergency!
- Immediate demand and service review
- Set-aside evidence and filing strategy
- Creditor and winding-up representation
Key terms defined
GLOSSARY — STATUTORY DEMAND TERMS
Statutory demand a formal demand under s 459E requiring a company to pay, secure or compound a debt of $4,000 or more within 21 days
Genuine dispute a real, not spurious, dispute about the existence or amount of the debt
Offsetting claim a genuine counterclaim, set-off or cross-demand reducing the amount payable
Presumption of
insolvencythe presumption arising from non-compliance, available for 3 months (s 459C)
Setting aside (s 459G) the court application to set the demand aside, filed and served within 21 days
Winding-up
application the creditor’s application to have the company wound up in insolvency.
Frequently Asked Questions
COMMON QUESTIONS
A statutory demand is the fastest way a company can be pushed towards winding up. The 21-day deadline cannot be extended once it passes. If a demand has been served on your company, read question four first.
A creditor’s statutory demand is a formal written demand under section 459E of the Corporations Act 2001 (Cth) requiring a company to pay a debt within 21 days. It is not a court order and it is not an ordinary letter of demand. Ignoring it is serious: the company is then presumed insolvent and can be wound up.
The debt must exceed $4,000. This statutory minimum has applied since 1 July 2021, when it was permanently doubled from $2,000. If the debt is $4,000 or less or falls to that level once genuine offsetting claims are taken into account, the demand can be set aside.
21 days from the day the demand is served. Within that period the company must both file an application to set the demand aside and serve it, with a supporting affidavit, on the creditor. Filing alone is not enough, service inside the 21 days is essential.
No. The 21-day period under section 459G is strict and the court has no power to extend it once it has expired. This is the most common and most damaging mistake made with statutory demands. If a demand arrives, get advice the same week it is served.
A genuine dispute is a real, arguable disagreement about whether the debt is owed. The court does not decide who is right, only whether there is a plausible contention that needs investigating. The threshold is low, but the dispute must be genuine and supported by evidence, not merely asserted.
An offsetting claim is a genuine counterclaim, set-off or cross-demand the company has against the creditor. It does not have to arise out of the same transaction. If the offsetting claim brings the debt down to $4,000 or less, the demand can be set aside, or the amount varied.
Yes, but generally only where the defect would cause substantial injustice, for example a materially misstated amount, a wrongly identified creditor, or a missing or non-compliant affidavit. Minor errors that mislead nobody will not be enough. A court can also set a demand aside for “some other reason”.
They can, but they should not. Issuing a statutory demand where there is a genuine dispute is an abuse of the process. The likely outcome is that the demand is set aside with a costs order against the creditor, sometimes on the indemnity basis, and the debt still has to be sued for in the ordinary way.
The company is presumed to be insolvent. The creditor can then apply to wind the company up, and that application must generally be made within three months after the compliance period ends. At the winding-up hearing the company cannot raise the dispute about the debt without the court’s leave.
Solvency evidence can rebut the presumption of insolvency at a winding-up hearing, but it is expensive, needs detailed and current financial evidence, and does not cure a missed set-aside deadline. It is a fallback, not a plan. Responding properly within 21 days is far cheaper.
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