You invoiced a client months ago. They have not paid. The amount is over $10,000. You have sent reminders, made phone calls, maybe even sent a formal letter of demand. Nothing.
Now you need to escalate. You have two main options: serve a statutory demand under the Corporations Act, or file proceedings in the district court. Both are serious. Both cost money. But they work very differently, and choosing the wrong one can waste weeks and thousands of dollars.
What is a statutory demand?
A statutory demand is a formal notice served under the Corporations Act. It is only available when the debtor is a registered company (Pty Ltd or Ltd).
The demand gives the company 21 days to pay the debt in full, apply to set aside the demand, or face a presumption of insolvency. If they do nothing, you can apply to wind up the company.
Key features:
- Minimum debt: $4,000
- Debtor must be a registered company
- 21-day deadline
- Prescribed form with supporting affidavit
- No court filing required to serve it
- Creates immediate pressure
The statutory demand is not a court application. You prepare it, swear the affidavit, and serve it. If the company ignores it, you then file a wind-up application in the Federal Court or Supreme Court.
What are district court proceedings?
District court proceedings are a formal lawsuit filed in your state’s intermediate court. In NSW it is the District Court. In Victoria it is the County Court. In Queensland, South Australia, and Western Australia it is also called the District Court.
You file a statement of claim, pay a filing fee, serve the defendant, and follow the court’s procedural rules. If you win, you get a judgment. If the defendant does not pay the judgment, you enforce it through garnishee orders, writs of execution, or bankruptcy proceedings.
Key features:
- Available against companies or individuals
- No minimum debt (district courts typically hear claims between $10,000 and $750,000)
- Formal pleadings and evidence required
- Court filing fees apply
- Defendant has 28 days to file a defence
- May take 6-18 months to reach judgment if defended
- Judgment is enforceable Australia-wide
District court is the traditional litigation path. It is slower, more formal, and more expensive than a statutory demand, but it results in a court judgment that can be enforced in multiple ways.
Cost comparison
Statutory demand:
- Preparation: $197 (ClaimDone prepares the form and affidavit template)
- Service: $150-$300 (process server)
- Wind-up application (if needed): $2,000-$5,000 in legal fees, plus court filing fee
Total upfront cost: around $350-$500
If the company pays within 21 days, you are done. If they do not, you decide whether to file the wind-up application or walk away.
District court proceedings:
- Filing fee: $700-$2,000 depending on claim value and state
- Service: $150-$300
- Legal costs (if you use a lawyer): $3,000-$10,000+ for a defended matter
- Enforcement costs (if you win but they do not pay): $500-$2,000+
Total upfront cost: $850-$2,300 minimum, potentially $10,000+ if defended
If you represent yourself, you save on legal fees but still pay filing and service costs. If the defendant defends the claim, you may spend months in court and still need to enforce the judgment.
Speed comparison
Statutory demand:
- Preparation: 1-2 days
- Service: immediate
- Deadline: 21 days
- Wind-up application (if needed): 3-6 months to hearing
Total timeline if they ignore it: 4-7 months to wind-up hearing
Most companies pay before the 21 days expire. The threat of insolvency and director liability is immediate and serious.
District court proceedings:
- Filing and service: 1-2 weeks
- Defence deadline: 28 days
- Interlocutory steps: 3-6 months
- Trial or default judgment: 6-18 months
Total timeline if defended: 12-24 months
If the defendant does not file a defence, you can apply for default judgment within 6-8 weeks. But if they defend, expect a long procedural fight.
Pressure and leverage
Statutory demand:
A statutory demand threatens the company’s existence. Directors take it seriously because:
- The company is presumed insolvent if they do not respond
- Insolvent trading can carry personal liability for directors
- The company can be wound up and liquidated
- ASIC records the wind-up application publicly
Even if the debt is disputed, the company must apply to set aside the demand within 21 days or lose the right to defend. This forces immediate action.
District court proceedings:
Court proceedings are serious, but they are also routine. Companies get sued regularly. The defendant has 28 days to file a defence, and if they do, the matter enters the court system and slows down.
There is no presumption of insolvency. There is no director liability. There is no public wind-up threat. It is litigation.
If the company is genuinely insolvent and has no assets, a court judgment may be worthless. You win, but you cannot collect.
When to use a statutory demand
Use a statutory demand when:
- The debtor is a registered company (not a sole trader or partnership)
- The debt is undisputed and liquidated (a fixed sum, not estimated damages)
- The debt is at least $4,000
- You want immediate pressure and fast resolution
- You are prepared to follow through with a wind-up application if they ignore it
- The company is solvent and has assets worth protecting
Best for:
- Unpaid invoices for goods or services already delivered
- Trade debts between businesses
- Loan repayments owed by a company
- Situations where the company is avoiding payment but is not genuinely disputing the debt
Not suitable for:
- Disputed debts (the company will apply to set aside and you will end up in court anyway)
- Debts under $4,000
- Debts owed by individuals or unregistered businesses
- Situations where the company is genuinely insolvent with no assets
When to go to district court
Use district court proceedings when:
- The debtor is an individual, sole trader, partnership, or trust (not a company)
- The debt is disputed and you need a formal determination
- You want a judgment you can enforce through multiple methods
- The debtor has assets but is not a company (so statutory demand is unavailable)
- The amount is too high for a tribunal (typically over $10,000 in most states)
- You need a judgment for enforcement in another state or country
Best for:
- Breach of contract claims requiring evidence and argument
- Claims against individuals or non-corporate entities
- Situations where the debtor denies liability and you need a court ruling
- High-value debts where enforcement options matter
Not suitable for:
- Simple unpaid invoices where a statutory demand would work faster
- Debtors with no assets or income (judgment-proof)
- Small debts under $10,000 (use a tribunal instead)
Combining both strategies
You can start with a statutory demand and switch to court proceedings if it does not work.
Example:
- Serve a statutory demand on the company
- Company applies to set aside the demand, claiming the debt is disputed
- Court sets aside the demand
- You file district court proceedings to prove the debt
This is common. The statutory demand flushes out any genuine dispute. If the company does nothing, you win fast. If they fight, you escalate to court with full knowledge of their defence.
You cannot do it the other way around. Once you file court proceedings, you cannot later serve a statutory demand for the same debt.
Enforcement after judgment
If you win in district court, you get a judgment. The judgment does not pay itself. You must enforce it.
Enforcement options:
- Garnishee order (intercept payments owed to the debtor)
- Writ of execution (sheriff seizes and sells assets)
- Examination summons (debtor discloses assets under oath)
- Bankruptcy notice (if debtor is an individual)
- Creditor’s statutory demand (if debtor is a company)
If you serve a statutory demand and the company ignores it, you apply to wind up the company. The court appoints a liquidator who investigates the company’s affairs, recovers assets, and distributes them to creditors.
Both paths require follow-up action. Neither is automatic.
How ClaimDone helps
ClaimDone prepares your statutory demand in 60 minutes for a flat fee of $197. You complete a 5-minute intake form, upload your invoice and any supporting evidence, and our Proprietary AI Engine drafts the prescribed form and supporting affidavit citing the Corporations Act.
You receive:
- Completed statutory demand form
- Supporting affidavit template ready for swearing
- Service instructions
- Guidance on next steps if the company does not pay
ClaimDone does not give legal advice. For complex disputes, high-value claims, or situations requiring court representation, consult a qualified Australian lawyer. But for straightforward unpaid invoices owed by a registered company, a statutory demand is the fastest, cheapest way to force payment.
Final decision framework
Choose a statutory demand if:
- Debtor is a registered company
- Debt is undisputed and over $4,000
- You want fast pressure (21 days)
- You are prepared to follow through with wind-up if ignored
Choose district court if:
- Debtor is an individual or non-corporate entity
- Debt is genuinely disputed
- You need a formal judgment for enforcement
- Statutory demand is unavailable or inappropriate
For unpaid invoices over $10,000 owed by a company, the statutory demand is almost always the smarter first move. It is faster, cheaper, and creates immediate existential pressure. Court proceedings are the backup plan if the demand fails or the debt is disputed.
Start your statutory demand now
If a registered company owes you $4,000 or more and has ignored your reminders, a statutory demand gives them 21 days to pay or face wind-up proceedings. ClaimDone prepares the form and supporting affidavit in 60 minutes for $197 — no subscription, no hourly fees, done fast.
Start your statutory demand now and get paid.
Frequently Asked Questions
Can I serve a statutory demand for an unpaid invoice under $10,000?
Yes, as long as the debt is at least $4,000. The $10,000 threshold mentioned in this article is relevant for district court jurisdiction, not statutory demands. Statutory demands require a minimum debt of $4,000 under the Corporations Act.
What happens if the company disputes the debt after I serve a statutory demand?
The company has 21 days to apply to court to set aside the demand. If the court finds there is a genuine dispute, the demand will be set aside and you will need to prove the debt through normal court proceedings. If the dispute is not genuine, the court will dismiss the application and the demand stands.
Can I serve a statutory demand on a sole trader or partnership?
No. Statutory demands under the Corporations Act only apply to registered companies (Pty Ltd or Ltd). For sole traders, partnerships, or individuals, you must use a letter of demand followed by court proceedings or a bankruptcy notice if the debt is over $10,000.
How much does it cost to wind up a company if they ignore the statutory demand?
Filing a wind-up application in the Federal Court or Supreme Court typically costs around $1,700-$2,000 in filing fees, plus $2,000-$5,000 in legal costs if you use a lawyer. Most companies pay before you reach this stage because the threat of liquidation is serious.
Is a district court judgment enforceable in other states?
Yes. District court judgments are enforceable Australia-wide under federal legislation. You can register the judgment in another state’s court and enforce it through garnishee orders, writs, or examination summons in that jurisdiction.
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