Statutory Demands in Perth

Vogt Legal provides clear and practical legal advice for both creditors seeking to issue a statutory demand and companies responding to one. Statutory demands are a powerful legal mechanism under the Corporations Act 2001 (Cth) and must be used carefully to avoid serious legal and financial consequences.

Understanding Statutory Demands

A statutory demand is a formal notice issued by a creditor to a company requiring payment of a debt that is $4,000 or greater. It must:

• Be in the prescribed form under section 459E of the Corporations Act 2001 (Cth);
• Set out the amount owed;
• Be signed by the creditor or their lawyer; and
• Be supported by an affidavit verifying the debt, unless the debt arises from a court judgment.

Once served, the company has 21 days to either:

1. Pay the debt in full; or
2. Apply to the Supreme Court of Western Australia to have the demand set aside.

If the company does not comply within 21 days, it is presumed to be insolvent, allowing the creditor to apply to have the company wound up in liquidation.

When to Use a Statutory Demand

While a statutory demand can be an effective tool for debt recovery, it should only be used where there is no genuine dispute about the debt. Improperly issuing a demand can expose a creditor to legal risk and costs if the company successfully applies to set it aside.

A statutory demand may be appropriate when:

• The debtor is a company (not an individual);
• The debt is due and payable and exceeds $4,000;
• There is no genuine dispute about the existence or amount of the debt; and
• You have reason to believe the debtor company may be insolvent or unwilling to pay.

Where a statutory demand is not appropriate, other recovery methods such as a Letter of Demand or Deed of Acknowledgment of Debt may be more suitable.

Responding to a Statutory Demand

If your company has been served with a statutory demand, you must act immediately. The 21-day deadline is strict — missing it can have severe consequences.

Your options include:

• Paying the debt: Where the debt is undisputed and funds are available.
• Negotiating a settlement: In some cases, creditors may agree to payment terms or partial settlements.
• Applying to set aside the demand: If you believe the debt is genuinely disputed, or you have an offsetting claim, an application can be made to the Supreme Court of Western Australia under section 459G of the Corporations Act 2001 (Cth).

Applications to set aside must be filed and served within 21 days of service.

Why Legal Advice is Essential

Both issuing and responding to statutory demands require strict compliance with statutory requirements. An error in the form, service, or timing of the demand can render it invalid or expose a creditor to costs. Likewise, a company that ignores or delays responding risks being presumed insolvent and facing winding up proceedings.

Our experienced lawyers assist with:

• Drafting and issuing statutory demands in compliance with the Corporations Act 2001 (Cth);
• Advising on whether a statutory demand is appropriate in your circumstances;
• Responding to and applying to set aside statutory demands; and
• Representing clients in Supreme Court proceedings relating to winding up applications.

Need Help with a Statutory Demand?

If you are considering issuing a statutory demand, or your company has received one, seek advice immediately. Our team at Vogt Legal provides timely and practical guidance to protect your interests and ensure compliance with the law.