Statutory Demand Lawyers Queensland: Your Step-by-Step Guide to Issuing a Statutory Demand
A statutory demand is one of the most powerful debt recovery tools available to creditors in Australia. If a company owes you money and has failed to pay, issuing a statutory demand under section 459E of the Corporations Act 2001 (Cth) can force the issue — quickly and decisively.
As experienced statutory demand lawyers in Queensland, Boss Lawyers regularly assists creditors in drafting, serving, and enforcing statutory demands. This guide explains exactly how the process works.
What Is a Statutory Demand?
A statutory demand is a formal written notice served on a company by a creditor, requiring the company to pay a debt within 21 days. It is governed by section 459E of the Corporations Act 2001 (Cth).
If the company fails to comply with the demand (and does not successfully apply to set it aside), a presumption of insolvency arises under section 459C(2)(a). This presumption can then be used to support an application to wind up the company in insolvency.
This makes the statutory demand far more than a simple demand for payment — it is a gateway to winding up proceedings.
When Can You Issue a Statutory Demand?
You can issue a statutory demand when:
- The debtor is a company (not an individual — for individuals, the equivalent is a bankruptcy notice)
- The debt is due and payable
- The debt is at least $4,000 (the current statutory minimum under regulation 5.4.01 of the Corporations Regulations 2001)
- The debt is not genuinely disputed
Critical warning: Do not use a statutory demand to pursue a debt that is genuinely disputed. If the company applies to set aside the demand on the basis of a genuine dispute and succeeds, you may be ordered to pay the company’s legal costs.
Step-by-Step: How to Issue a Statutory Demand
Step 1: Confirm the Debt
Before preparing the demand, verify that:
- The debt is due and payable (all contractual preconditions have been met)
- The amount exceeds $4,000
- There is no genuine dispute about the existence or amount of the debt
- The debtor entity is a registered company (check the ASIC register)
Step 2: Prepare the Statutory Demand
The demand must be in the prescribed form (Form 509H) and must:
- Specify the debt and the amount owed
- Require the company to pay the debt or secure or compound the debt to the creditor’s reasonable satisfaction within 21 days
- Be accompanied by an affidavit verifying the debt (unless the debt arises from a judgment or order of a court)
The affidavit must be sworn or affirmed by a person with direct knowledge of the debt — not simply a solicitor acting on instructions. The affidavit must verify that the debt is due and payable and that the deponent believes there is no genuine dispute about the debt.
Step 3: Serve the Demand
The statutory demand must be served on the company at its registered office. Service can be effected by:
- Leaving it at the company’s registered office
- Posting it to the company’s registered office
The registered office address can be found on the ASIC company register. It is critical to serve at the correct address — service at a trading address (rather than the registered office) may be challenged.
Step 4: Wait 21 Days
Once served, the company has 21 days to:
- Pay the debt in full
- Secure or compound the debt to your reasonable satisfaction (for example, by entering into a payment arrangement)
- Apply to court to set aside the demand under section 459G — the application must be filed and served within the 21-day period (there is no extension of time available)
Step 5: Apply to Wind Up the Company (If Unpaid)
If the company fails to comply with the demand and does not successfully apply to set it aside, you may file an application to wind up the company in insolvency with the Federal Court of Australia or the Supreme Court of Queensland. The presumption of insolvency arising from non-compliance with the statutory demand shifts the burden to the company to prove it is solvent.
Common Mistakes When Issuing Statutory Demands
Statutory demands are technical documents, and errors can be fatal. Common mistakes include:
- Overstating the debt — claiming more than is owed can provide grounds to set aside the demand
- Defective affidavit — an affidavit that does not properly verify the debt, or is sworn by the wrong person, can undermine the demand
- Wrong entity — serving the demand on the wrong company (particularly in corporate groups) is a fatal error
- Disputed debt — issuing a demand for a genuinely disputed debt invites a set-aside application
- Wrong address — serving at a trading address rather than the registered office
Why Use a Statutory Demand Instead of Standard Court Proceedings?
A statutory demand offers several advantages over commencing a standard debt recovery claim:
- Speed — the 21-day response period is much shorter than a standard litigation timeline
- Cost — the initial cost of preparing and serving a statutory demand is significantly less than commencing court proceedings
- Leverage — the threat of winding up is a serious consequence that motivates payment
- Presumption of insolvency — non-compliance creates an evidentiary advantage in subsequent winding up proceedings
Need Help Issuing a Statutory Demand?
At Boss Lawyers, our statutory demand lawyers in Queensland can prepare and serve a statutory demand on your behalf, and guide you through each step of the process — from initial assessment through to winding up proceedings if required.
We also assist companies that have received a statutory demand and need to respond within the strict 21-day deadline. Our debt recovery and commercial litigation teams work together to deliver practical outcomes.
Contact Boss Lawyers on 1300 267 711 to discuss your matter.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
