statutory demand
📖 O que é statutory demand? Significado e conceito
A statutory demand is a significant legal tool used in Australia, primarily under the Corporations Act, when a company owes money to a creditor. It serves as a formal notice requiring the company to pay a specified debt, such as for maintenance, cleaning, or services rendered, within a set timeframe. If the company fails to pay the demanded amount or apply to set aside the demand within that period, it can lead to a presumption that the company is insolvent, which may then be used as grounds to apply for the company to be wound up.
Companies that receive a statutory demand have a limited time, often 21 days, to respond. During this period, the company can either pay the debt, reach an agreement with the creditor, or apply to the court to have the demand set aside. An application to set aside a statutory demand might be made if there is a genuine dispute about whether the debt is owed, or if there are other defects with the demand itself, such as issues with the accompanying affidavit or the amount claimed.
For instance, a company might argue that the agreement for services was for a different fixed amount than what is claimed, or that the services provided were incomplete or not as agreed. The court will consider whether there is a 'genuine dispute' regarding the liability. If the court finds a genuine dispute, the statutory demand may be set aside. However, if the application to set aside the demand is dismissed, perhaps due to ineffective service of the application itself or if an offsetting claim is not properly quantified, the company remains liable for the debt and faces the consequences of not complying with the demand.
📋 Requisitos
- The demand must claim a specific sum, such as for services rendered or maintenance.
- The application to set aside the demand must be filed within a specified period, often 21 days.
- There must be a 'genuine dispute' regarding the liability for the debt for the demand to be set aside.
- The application to set aside the demand must be effectively served on all relevant parties.
📝 Procedimento
- A creditor issues a statutory demand to a company for a claimed debt.
- The company receives the demand, which specifies the amount owed and the basis for the claim (e.g., an invoice for services).
- The company has a limited time (e.g., 21 days) to either pay the debt or apply to the court to set aside the demand.
- If the company applies to set aside the demand, they must demonstrate a genuine dispute about the debt or identify defects in the demand or its supporting documents.
- The court hears the application, considering arguments such as a genuine dispute over the amount or scope of services, or issues with the affidavit supporting the demand.
- The court makes a decision, either setting aside the demand (e.g., due to a genuine dispute) or dismissing the application (e.g., due to ineffective service or unquantified offsetting claims).
💡 Exemplos
- A cleaning company issues a statutory demand to a client for $69,091.52 for maintenance and cleaning services, as outlined in their subcontract.
- A web design firm sends a statutory demand for $11,715 for services rendered, but the client applies to set it aside, claiming the agreement was for a fixed $8,000 and a complete website redesign, not just the services invoiced.
- A company receives a demand for payment but their application to set it aside is dismissed because they failed to properly serve the application documents on the creditor within the required 21-day period.
- A company tries to set aside a statutory demand by claiming an offsetting amount is owed to them, but the court rejects this because the offsetting claim was not clearly quantified.
📚 Base legal
- Corporations Act 2001 (Cth)
- Service and Execution of Process Act 1992 (Cth)
❓ Perguntas frequentes
What happens if I receive a statutory demand?
If your company receives a statutory demand, you have a limited time, typically 21 days, to either pay the debt, negotiate with the creditor, or apply to the court to have the demand set aside. Failing to act can lead to serious consequences for your company.
Can I challenge a statutory demand if I don't think I owe the money?
Yes, you can apply to the court to set aside a statutory demand if there is a 'genuine dispute' about whether your company owes the debt, or if there are other defects with the demand itself, such as issues with the supporting affidavit.
What does 'genuine dispute' mean in this context?
A 'genuine dispute' means there is a real and not just a spurious or frivolous disagreement about the existence or amount of the debt. For example, if you believe the services were not provided as agreed or the price was different, that could constitute a genuine dispute.
What if my application to set aside the demand is not properly served?
If your application to set aside a statutory demand is not effectively served on the creditor within the specified timeframe, the court may dismiss your application, even if you have valid grounds for a dispute. Proper service, including interstate service, is crucial.
What is the role of an affidavit in a statutory demand case?
An affidavit is a sworn statement of facts that often accompanies a statutory demand or an application to set one aside. Defects in this affidavit, such as insufficient detail or errors, can sometimes be grounds for challenging the demand.
What if I have an offsetting claim against the creditor?
If you believe the creditor owes your company money, this can sometimes be used as an 'offsetting claim' against the statutory demand. However, the court may not accept it if the offsetting claim is not clearly quantified or properly presented.
Should I get legal help if I receive a statutory demand?
Given the strict time limits and legal complexities involved, it is highly recommended to seek advice from a qualified solicitor experienced in corporations law if your company receives a statutory demand.