Subcontractor Not Paid: Can You Issue a Statutory Demand?

You finished the job. You sent the invoice. The head contractor has gone silent. Weeks turn into months, and you are still waiting for payment.

If the head contractor is a registered company and owes you $4,000 or more, a statutory demand might be the fastest way to force payment. If they are a sole trader or partnership, you will need a different approach.

What Is a Statutory Demand?

A statutory demand is a formal notice requiring a company to pay a debt within 21 days. It only works against registered companies — Pty Ltd or Ltd entities listed on the ASIC register.

The demand uses Form 509H and must be accompanied by a supporting affidavit verifying the debt. If the company does not pay or apply to set aside the demand within 21 days, it is presumed insolvent. You can then apply to wind up the company.

Key requirements:

• Minimum debt of $4,000
• Debtor must be a registered company (not a sole trader, partnership, or trust)
• Debt must be a specific amount, not estimated damages
• Debt must not be genuinely disputed

For construction subbies, this means checking whether the head contractor is trading as a company or under a personal ABN.

When a Subcontractor Can Use a Statutory Demand

You can issue a statutory demand if:

The head contractor is a registered company. Check the ASIC register or do an ABN lookup. If the entity type shows “Australian Private Company” or similar, you can proceed.

The debt is at least $4,000. This is the statutory minimum. If you are owed less, you will need to use a different debt recovery method.

The amount is certain. Progress payments, retention amounts, or final invoices all qualify as long as the sum is clear. Do not use a stat demand for disputed variations or unliquidated damages.

There is no genuine dispute. If the head contractor has raised a legitimate dispute about the quality of work, defects, or contract compliance, the demand can be set aside. Make sure the debt is clear-cut before proceeding.

You have evidence. The supporting affidavit must verify the debt. Attach invoices, contracts, payment schedules, correspondence, and proof of completed work.

What Happens After You Serve a Statutory Demand

Once served, the company has 21 days to either:

1. Pay the debt in full — most companies pay within this window to avoid insolvency proceedings
2. Apply to set aside the demand — they must file an application in court and show a genuine dispute or defect in the demand
3. Do nothing — after 21 days, the company is presumed insolvent and you can apply to wind it up

A statutory demand is not a bluff. Directors know that failing to respond can result in the company being wound up, which is why payment rates are high.

If the company applies to set aside, you may need to defend the application. This involves court filings and potentially legal representation. Most subbies settle at this stage rather than proceed to a contested hearing.

What If the Head Contractor Is Not a Company?

If the head contractor is a sole trader, partnership, or trust, you cannot issue a statutory demand. The relevant legislation only applies to registered companies.

Your alternatives:

Letter of demand. A formal demand letter citing the contract, applicable legislation, and a clear deadline for payment. ClaimDone generates and sends these automatically for $79.

Tribunal application. In most states, you can file a claim in the small business or civil tribunal for debts up to $25,000 (some states allow up to $100,000). The process is designed for self-representation.

Security of Payment claim. If your contract is a construction contract under the relevant state or territory legislation, you can lodge a payment claim and adjudication application. This typically resolves within 10-20 business days.

Court proceedings. For larger debts or where tribunal jurisdiction does not apply, you can file in the Magistrates, District, or Supreme Court depending on the amount.

Security of Payment vs Statutory Demand

Many subbies confuse these two tools. They serve different purposes.

Security of Payment legislation allows you to recover progress payments quickly through adjudication. It applies to construction contracts and does not require the debtor to be a company.

Statutory demands apply only to company debtors and are not limited to construction work. They are a debt recovery tool, not a payment dispute mechanism.

If the head contractor is a company and you have already obtained an adjudication determination in your favour, that determination is a debt. You can then use a statutory demand to enforce it.

Common Mistakes Subbies Make

Issuing a demand for a disputed amount. If the head contractor has raised a legitimate dispute about defects, variations, or contract compliance, the demand will likely be set aside. Make sure the debt is clear and undisputed.

Not checking the debtor’s legal structure. Serving a statutory demand on a sole trader has no legal effect. Always verify the entity type on the ASIC register.

Serving it incorrectly. The demand must be served personally or by registered post to the company’s registered office. Service on a site manager or email alone is typically not sufficient.

Waiting too long. If the debt is old and the company has changed hands or restructured, enforcement becomes harder. Act while the debt is fresh.

Not preparing the affidavit properly. The supporting affidavit must verify the debt and attach all relevant evidence. A poorly drafted affidavit gives the company grounds to apply to set aside the demand.

How ClaimDone Helps Subcontractors Recover Unpaid Debts

ClaimDone prepares statutory demands for subcontractors owed $4,000 or more by a registered company. You complete a 5-minute intake form, upload your invoices and evidence, and our Proprietary AI Engine generates Form 509H and the supporting affidavit template — ready to swear and serve.

What you get:

• Completed Form 509H citing the debt
• Supporting affidavit template verifying the debt, ready for signing before a JP or solicitor
• Service instructions explaining how to serve the demand correctly
• Flat fee of $197 — no hourly billing, no subscriptions

If the head contractor is not a company, ClaimDone can send a formal letter of demand for $79, or file a tribunal application for smaller debts within the tribunal’s jurisdiction.

Recover What You Are Owed

If a head contractor company owes you $4,000 or more and refuses to pay, a statutory demand is the fastest way to force action. ClaimDone prepares your Form 509H and affidavit in under 60 minutes — upload your evidence, answer a few questions, and we handle the rest. Start your statutory demand now for $197.

Frequently Asked Questions

Can I issue a statutory demand if the head contractor is a sole trader?

No. Statutory demands only apply to registered companies. If the head contractor is a sole trader or partnership, you will need to use a letter of demand, tribunal application, or court proceedings instead.

What is the minimum debt amount for a statutory demand?

The minimum debt is $4,000. If you are owed less than this, you cannot use a statutory demand and should consider a letter of demand or tribunal claim.

What happens if the head contractor disputes the debt after receiving the statutory demand?

If the company can show a genuine dispute about the debt, they can apply to the court to set aside the demand within 21 days. If successful, the demand is cancelled and you will need to resolve the dispute through other means such as adjudication or court proceedings.

Can I use a statutory demand to enforce a Security of Payment adjudication determination?

Yes. If you have obtained an adjudication determination in your favour, that determination is a debt. If the head contractor is a company and the debt is at least $4,000, you can issue a statutory demand to enforce it.

How long does the head contractor have to respond to a statutory demand?

The company has 21 days from the date of service to either pay the debt in full or apply to the court to set aside the demand. If they do neither, the company is presumed insolvent and you can apply to wind it up.