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Statutory Demands Against Companies that Owe You Money – A 21 Day Turbo-charged Debt Collection Procedure!


If a company owes you money and you want to give them a no-nonsense kick in the behind to get your account paid, a statutory demand could do the trick! However, you must have all your ducks in a row to take advantage of this powerful collection device. Commercial Litigation Associate Georgia Taylor discusses the risks and benefits of a statutory demand and why it is best left to the experts.

Are you owed money by a company?

For business owners throughout Australia, debtors are a constant and mounting problem. Despite best endeavours to improve cash-flow and check the credit ratings of customers, many industries must rely on extending credit after they have supplied their goods or services. Any industry that supplies  standard credit terms of 14 to 30 days find themselves in unwinnable situations with monies for services or supplies being owed past the due date. Paying someone to collect money you are owed is not appealing to any creditor, however, if the monies owed are for an amount that is commercially worth it, issuing a statutory demand has its benefits. The Corporations Act 2001 (Cth) (the Act) in response has provided creditors with a streamlined debt collection procedure in order to reduce the costs of litigation and provide a formal demand with dire consequences for the debtor should the appropriate action not be taken. Please note this remedy is only available against proprietary limited or public companies and should not be confused with business names where the proprietor is a person or a partnership.

What is a statutory demand?

A statutory demand is a formal debt collection procedure under S459E of the Act. This section allows for debts in excess of the statutory minimum of $2,200.00 to be issued against a debtor company (whether it is a singular or combined debt). The issuing of the statutory demand can occur anytime after a debt is owed and merely needs to be posted to the registered office of the debtor company.

There are certain minimum requirements for you to issue a statutory demand against a company:

  • The debt must be due and payable;
  • The debt must exceed the statutory minimum of $2,200.00
  • There must be no dispute as to the amount of the debt;
  • There must be no offsetting claim.

The statutory demand itself must be issued in a certain format and concisely set out the details of the debt owing by the company. There is also an affidavit by the Director or solicitor acting for the creditor as to the debt owing and that there is no dispute. The affidavit is an important part of the equation – you state on oath that the debt is due and payable and that there is no dispute concerning the amount owing.

Advantages of issuing a statutory demand as opposed to suing through the Courts

Court proceedings can be drawn out, expensive and stressful for any party involved. When a creditor has not paid their debts, spending additional cash flow and time in our already exhausted civil court system is less than appealing. The Statutory Demand procedure allows you to collect your debts or have them disputed within 21 days of serving the necessary documentation. This quick process is relatively easy to access and apply, without the need to initiate court proceedings.

The company has 21 days to either file an application to the court to set aside the demand or pay the debt. This pressure to either spend the money to file a court application setting it aside or pay the debt makes the procedure very popular with clients who are owed money.

If the company does not respond to the demand, you are required to file court proceedings to wind up the company, but many debtor companies do not take this risk and deal with the matter promptly. While taking proceedings to wind up a company are not cheap, it is certainly an effective way to bring the matter to a head. Like all things, it depends on how much money you are owed and the financial position of the company as to whether this procedure is worth it or not.

It is certainly a more cost effective and much quicker way to bring about a result in debt collection proceedings than suing through the courts in the usual fashion.

Make sure your statutory demand is spot on!

Statutory Demands are construed strictly by the courts because of the dire consequences of a company not complying with the notice (i.e., the company can be wound up and a liquidator appointed). It is therefore imperative that you engage lawyers who are experienced in this area of law and that the demand is thoroughly investigated and prepared properly. If there are any errors or parts of the debt that may be in dispute or are not yet properly payable, the demand can be set aside and costs awarded against you.

If you would like more information or want to obtain the best possible chance of a successful outcome in your dispute , please contact our Commercial Litigation Department Manager, Amanda Heather on direct line 07 5506 8245, email or free call 1800 621 071.

We have an experienced dedicated Commercial Litigation team that practice exclusively in these areas.

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Georgia Taylor - Senior Associate - Commercial Litigation, Racing & Equine Law

Georgia Taylor

Senior Associate
Commercial Litigation, Racing & Equine Law

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The contents of this article are considered accurate as at the date of publication. The information contained in this article does not constitute legal advice and is of a general nature only. Readers should seek legal advice about their specific circumstances. 

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