Statutory Demand Defects: Common Mistakes That Invalidate the Demand

A statutory demand must comply strictly with the Corporations Act 2001 and the Corporations Regulations. Technical errors give you grounds to apply to set aside the demand under s459J — even if the debt is legitimate.

This article explains the most common statutory demand defects in Australia and how to identify them when you receive Form 509H.

What counts as a statutory demand defect?

A defect is any error, omission, or irregularity in the demand or supporting affidavit that fails to meet the requirements of the Corporations Act or Corporations Regulations.

Under s459J(1)(a), the Court may set aside a statutory demand if there is a defect and substantial injustice will be caused unless the demand is set aside. The defect does not need to be intentional — minor technical errors can be fatal if they cause confusion or prejudice.

Common defects in Form 509H

Form 509H is the prescribed form under Regulation 5.2. It must be completed accurately. The following errors are typical grounds for setting aside:

Incorrect company name

The demand must name the debtor company exactly as it appears on the ASIC register. Common errors include:

• Misspelling the company name
• Using a trading name instead of the registered legal name
• Omitting “Pty Ltd” or “Limited”
• Using an old name after the company has changed it

If the demand names the wrong entity, the Court will not allow the creditor to correct this after service.

Wrong ACN or ABN

The demand must include the correct Australian Company Number (ACN). Using the ABN instead, or listing the wrong ACN, is a defect.

Incorrect debt amount

The debt must be a liquidated sum — a specific, ascertained amount. Defects include:

• Listing an estimated or rounded figure
• Including future interest not yet accrued
• Combining multiple unrelated debts without itemisation
• Claiming an amount higher than what is actually owed

Failure to specify the debt

The demand must describe the debt with sufficient detail so the debtor can identify it. Simply stating “services rendered” or “outstanding invoices” is typically insufficient.

The creditor should include:

• Invoice numbers or contract references
• Dates the debt was incurred
• A clear description of what was supplied

Missing or incorrect creditor details

The demand must include the creditor’s full legal name and address. Errors include:

• Using a business name instead of the legal entity
• Listing an incorrect or outdated address
• Failing to name the creditor at all

Failure to include the prescribed notes

Form 509H requires specific notes at the end, including:

• The consequences of failing to comply
• The debtor’s right to apply to set aside the demand
• The time limit for making an application (21 days)

If these notes are missing, altered, or incomplete, the demand is defective.

Defects in the supporting affidavit

A statutory demand must be accompanied by an affidavit verifying the debt under s459E(3). The affidavit must comply with the rules of evidence and court procedure.

Affidavit not sworn or affirmed

The affidavit must be sworn before a Justice of the Peace, solicitor, or other authorised person. If it is not properly sworn, it is invalid.

Deponent lacks personal knowledge

The person making the affidavit must have direct knowledge of the debt. If the deponent is a director or employee who was not involved in the transaction, and they do not explain how they know the facts, the affidavit may be defective.

Affidavit does not verify the debt

The affidavit must state clearly that the debt is due and payable. It should confirm:

• The amount owed
• The basis of the debt (invoice, contract, loan, etc.)
• That the debt has not been paid

Exhibits not properly annexed

If the affidavit refers to invoices, contracts, or other documents, they must be formally annexed and marked. Loose attachments or documents mentioned but not included are defects.

Affidavit contains hearsay or opinion

The affidavit must contain facts, not speculation. Statements like “I believe the company owes us money” or “I was told by our accountant” are hearsay and weaken the affidavit.

Service defects

Defects in service can invalidate the demand even if the form and affidavit are correct.

Not served at the registered office

A statutory demand must be served at the company’s registered office as listed on the ASIC register. Service at a business address, PO box, or email address is not valid unless the company has consented to alternative service.

Served on the wrong person

The demand must be served on a director, secretary, or other authorised officer of the company. Leaving it with a receptionist, employee, or third party is not valid service.

No proof of service

The creditor must be able to prove the demand was served. If they cannot provide an affidavit of service or other evidence, the Court may find the demand was not validly served.

Substantial injustice test

Not every defect will result in the demand being set aside. Under s459J(2), the Court will not set aside a demand for a minor defect unless it causes substantial injustice.

Substantial injustice typically means the defect:

• Misleads the debtor about the amount owed or the creditor’s identity
• Prevents the debtor from understanding their rights
• Causes confusion about what debt is being claimed
• Prejudices the debtor’s ability to respond

A minor typographical error in the address that does not affect service is unlikely to cause substantial injustice. But an incorrect debt amount, wrong company name, or missing affidavit will.

What to do if you receive a defective statutory demand

If you believe the statutory demand served on your company contains defects, you must act within 21 days of service.

Review the demand carefully

Check the demand and affidavit against the requirements of the Corporations Act and Regulations. Look for:

• Errors in the company name, ACN, or address
• Incorrect or unclear debt amounts
• Missing or incomplete affidavit
• Service at the wrong address

Apply to set aside the demand

You must file an application in the Supreme Court (or Federal Court) under s459G within 21 days. The application must be supported by an affidavit setting out the grounds for setting aside, including any defects.

Serve the application on the creditor

The application and supporting affidavit must be served on the creditor before the hearing.

Attend the hearing

The Court will hear both sides and decide whether the demand should be set aside. If the Court finds a defect that causes substantial injustice, the demand will be set aside.

How Claim Done helps

Claim Done does not prepare applications to set aside a statutory demand. The application and a supporting affidavit must be filed with the Supreme Court or the Federal Court, and served on the creditor, within 21 days of service of the demand (Corporations Act 2001, s 459G). That time cannot be extended, so get legal advice straight away.

Final word

Creditors who fail to comply with the technical requirements give you grounds to set aside the demand, even if the debt is real. If you receive a defective demand, you have 21 days to act.

Ready to challenge a defective statutory demand? Get legal advice now, so your application is filed and served within the 21 days.

Frequently Asked Questions

What is the most common statutory demand defect?

The most common defect is an incorrect company name — using a trading name, misspelling the registered name, or omitting ‘Pty Ltd’. The demand must match the ASIC register exactly.

Can a statutory demand be set aside for a minor error?

Not always. Under s459J(2), the Court will only set aside a demand if the defect causes substantial injustice. Minor typographical errors that do not mislead the debtor are unlikely to succeed.

How long do I have to apply to set aside a defective statutory demand?

You have 21 days from the date of service to file an application in the Supreme Court or Federal Court under s459G. If you miss the deadline, the company is presumed insolvent.

What happens if the affidavit is not sworn?

If the supporting affidavit is not properly sworn before a Justice of the Peace or solicitor, it is invalid. This is a serious defect that will typically result in the demand being set aside.

Can I set aside a statutory demand if the debt is genuine?

Yes. Even if the debt is real, you can set aside the demand if it contains defects that cause substantial injustice. The defect must relate to the form, affidavit, or service — not just a dispute about the amount.