How to Issue a Statutory Demand in Australia

A corporate customer owes you money. Invoices have gone unpaid, follow-ups have been ignored, and a standard letter of demand has not produced payment. The next escalation — the most powerful one available against an Australian company — is a statutory demand under the Corporations Act 2001 (Cth). Used correctly, it produces payment in days. Used incorrectly, it can be set aside with costs awarded against you.

The legal framework

Section 459E of the Corporations Act 2001 allows a creditor to issue a statutory demand on a company for a debt of $4,000 or more (the threshold raised from $2,000 in 2021). The demand must be in the prescribed Form 509H, must be verified by affidavit (unless the debt is the subject of a court judgment), and must be served on the company at its registered office in accordance with section 109X. The company then has 21 days to either pay the debt, secure or compound it to the creditor’s reasonable satisfaction, or apply to the court to have the demand set aside.

When to use it — and when not to

A statutory demand is the right tool when the debt is undisputed and the debtor is a company. It is the wrong tool when there is a genuine dispute about the debt, when the debtor is an individual or partnership (not a company), when the debt is below $4,000, or when the debt is contingent or unliquidated. Misusing the statutory-demand process is a recognised abuse of process and can result in indemnity costs against you under section 459J.

Common pitfalls that get demands set aside

• Genuine dispute. If the debtor can show even a plausible dispute about the debt, the demand will be set aside under section 459H.
• Offsetting claim. A counter-claim that reduces the debt below $4,000 will defeat the demand.
• Defective affidavit. The supporting affidavit must verify the debt — a sloppy affidavit (wrong deponent, missing details, inconsistent with invoices) is a common ground for set aside.
• Service error. Service must be at the company’s registered ASIC address; sending it to a trading address can invalidate the demand.
• Wrong amount. Overstating the debt — even by a small amount — risks the demand being set aside.

What the document does

A statutory demand is the prescribed Form 509H, accompanied by a supporting affidavit, served at the company’s registered office. It triggers the 21-day clock, the presumption of insolvency on non-compliance, and the right to apply for winding up. It is a court-grade instrument, not a letter — and it is taken extremely seriously by company directors and their lawyers.

What Claim Done delivers

For a flat fee, Claim Done drafts a compliant Form 509H statutory demand with the supporting affidavit framed correctly under section 459E. The wizard captures the debt particulars, ASIC company details, and registered office for service. About ten minutes.

What happens after

Once served, the company has 21 days to pay or apply to set aside. A meaningful percentage of demands result in full payment before the deadline because directors understand the consequences. If the company does nothing, you can apply to wind it up under section 459P. If the company applies to set aside the demand, the matter goes to court — which is why proper drafting matters so much.