statutory demands
📖 O que é statutory demands? Significado e conceito
A statutory demand is a crucial legal document used in Australia, primarily under the Corporations Act, when a company owes money to a creditor. If a company fails to pay a debt specified in a statutory demand within 21 days, it is presumed to be insolvent, which can lead to an application for the company to be wound up (liquidated). This presumption of insolvency is a serious consequence, as seen in cases where winding-up orders are made based on unpaid statutory demands.
Companies that receive a statutory demand have a limited window, usually 21 days from the date of service, to 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 is made under section 459G of the Corporations Act. Such applications can be dismissed if not served effectively or if the claims made within them are not properly quantified, such as an offsetting claim.
The process of serving a statutory demand and any subsequent application to set it aside must follow specific rules, including those for interstate service under the Service and Execution of Process Act (SEPA). Defects in the accompanying affidavit or an abuse of process can also be grounds for a court to consider when deciding whether to set aside a demand. The court will consider relevant factors, including whether there is an ongoing appeal against the judgment that forms the basis of the demand.
📋 Requisitos
- The demand must specify the address for service.
- Service of the demand must be effective, potentially including informal service if no interstate issues arise.
- An application to set aside the demand must be made under section 459G of the Corporations Act.
- Any offsetting claim in an application to set aside the demand must be quantified.
📝 Procedimento
- A creditor issues a statutory demand to a company for an outstanding debt.
- The statutory demand is served on the company, specifying an address for service.
- The company has 21 days from effective service to respond to the demand.
- If the company wishes to challenge the demand, it must file an application to set it aside under section 459G of the Corporations Act.
- The application to set aside the demand, and any supporting affidavits, must be served on the creditor, adhering to rules for interstate service if applicable.
- The court considers the application, including any defects in affidavits or unquantified offsetting claims.
💡 Exemplos
- A cleaning company issues a statutory demand for $69,091.52 to a subcontractor for unpaid maintenance and cleaning services.
- A creditor serves a statutory demand on a company, and the company's application to set it aside is dismissed because the service of the application was outside the 21-day period.
- A court orders the winding up of a company because it failed to pay a statutory demand, even though the company had an ongoing appeal against the judgment that led to the demand.
- An application to set aside a statutory demand is rejected by the court because the company's claim to offset the debt was not properly quantified in the affidavit.
📚 Base legal
- Corporations Act 2001 (Cth)
- Judiciary Act 1903 (Cth)
- Trade Practices Act 1974 (Cth)
❓ Perguntas frequentes
What happens if a company receives a statutory demand?
If a company receives a statutory demand, it typically has 21 days to either pay the claimed debt, negotiate with the creditor, or apply to the court to have the demand set aside. Failure to act within this period can lead to a presumption of insolvency and potential winding-up proceedings.
Can a statutory demand be challenged?
Yes, a company can apply to the court under section 459G of the Corporations Act to have a statutory demand set aside. Grounds for challenging can include defects in the demand or affidavit, or if there is a genuine dispute about the debt.
What is 'effective service' in relation to a statutory demand?
Effective service means the demand or related court documents have been delivered to the company in a legally recognised way, often at a specified address. For interstate matters, the Service and Execution of Process Act (SEPA) provides specific rules for service.
What if the company has an 'offsetting claim'?
If a company believes the creditor owes them money, creating an 'offsetting claim', this can be a reason to challenge a statutory demand. However, the court requires that such an offsetting claim must be properly quantified in the application to set aside the demand.
What is the role of the Corporations Act in statutory demands?
The Corporations Act 2001 (Cth) is the primary legislation governing statutory demands in Australia, particularly sections like 459G, which outlines the process for applying to set aside a demand, and 459E, which deals with the demand itself.
Can an ongoing appeal affect a statutory demand?
While an ongoing appeal against the judgment that forms the basis of a statutory demand is a relevant consideration, it does not automatically prevent a winding-up order based on the unpaid demand. The court will assess whether to adjourn the winding-up application until the appeal is determined.