Creditor's Statutory Demand (Form 509H — Australia)
A statutory demand is one of the most powerful debt-recovery tools available against an insolvent Australian company. Under <em>Corporations Act 2001</em> (Cth) s. 459E, a creditor owed at least AUD 4,000 can serve a Form 509H demand requiring the debtor company to pay within 21 days; failure creates a legal presumption of insolvency that supports an immediate winding-up application under s. 459P. Our free template is current to the 1 July 2021 threshold increase and the strict 21-day set-aside deadline confirmed in <em>David Grant & Co Pty Ltd v Westpac Banking Corporation</em> (1995) 184 CLR 265.
| TO (DEBTOR COMPANY) | Harbour Digital Pty Ltd (ACN 634 891 257) |
| FROM (CREDITOR) | Mitchell and Carter Suppliers Pty Ltd (ACN 789 654 321) |
| AMOUNT DEMANDED | AUD 47,890.50 |
| DEMAND DATE | 15 May 2026 |
| STATUTORY BASIS | Corporations Act 2001 (Cth) s. 459E |
| COMPLIANCE PERIOD | 21 days from service |
The Company is hereby given NOTICE that pursuant to Corporations Act 2001 (Cth) section 459E, the Creditor named below demands payment of the debt particularised in Schedule A below. The Company must, within twenty-one (21) days after service of this demand, either pay the amount demanded or secure or compound for the amount to the reasonable satisfaction of the Creditor.
Failure to comply with this demand will give rise to a presumption that the Company is insolvent pursuant to Corporations Act 2001 (Cth) s. 459C(2), which may form the basis of an application to wind up the Company in insolvency under s. 459P.
Schedule A — Particulars of Debt:
Amount: AUD 47,890.50
Description of Debt: Unpaid invoices for software development consulting services provided by the Creditor to the Debtor between 1 February 2026 and 30 April 2026, comprising tax invoices INV-2026-0042 (AUD 18,450.00), INV-2026-0058 (AUD 14,890.50), and INV-2026-0073 (AUD 14,550.00), all due and payable on 30 days net terms and now overdue.
Date Due and Payable: 30 April 2026.
Reference: INV-2026-0042, INV-2026-0058, INV-2026-0073.
The above debt is currently due and payable by the Company to the Creditor. The amount demanded is at least the statutory minimum of AUD 4,000 required for service of a statutory demand under Corporations Regulations 2001 reg. 5.4.01AAA (in force since 1 July 2021).
The Company MUST, within twenty-one (21) days after service of this demand:
(a) Pay to the Creditor the total amount demanded in cleared funds; OR
(b) Secure the amount demanded or compound for it to the reasonable satisfaction of the Creditor; OR
(c) Apply to the Court to set aside this demand under Corporations Act 2001 (Cth) s. 459G. Such an application must be made within twenty-one (21) days after service AND a copy must be served on the Creditor at the address for service set out below.
Grounds on which the Court may set aside this demand are limited and are set out in Corporations Act 2001 ss. 459H and 459J:
(i) Genuine dispute (s. 459H(1)(a)) — there is a genuine dispute about the existence or amount of the debt;
(ii) Offsetting claim (s. 459H(1)(b)) — the Company has an offsetting claim against the Creditor;
(iii) Defect causing substantial injustice (s. 459J(1)(a)) — there is a defect in the demand that would cause substantial injustice unless the demand is set aside;
(iv) Some other reason (s. 459J(1)(b)) — the Court considers it just to set aside the demand for some other reason.
The Creditor's address for the service of any application under Corporations Act 2001 (Cth) s. 459G is:
C/- Patterson and Co Solicitors, Level 12, 50 Bridge Street, Sydney NSW 2000
Email: accounts@mitchellcarter.com.au
Phone: +61 2 9876 5432
This is the address at which the Company must serve any application to set aside this demand and any other communications relating to this demand.
If the Company fails to comply with this demand within the 21-day period set out above (or such longer time as the Court may order), the Company is taken to have failed to comply and the Creditor may rely on that failure to commence an application to the Federal Court of Australia or the Supreme Court of New South Wales to wind up the Company in insolvency.
Under Corporations Act 2001 (Cth) s. 459C(2), the Court must presume that the Company is insolvent. That presumption operates throughout any winding-up proceedings under Chapter 5 of the Corporations Act. The Company may rebut the presumption only by adducing evidence that it is, in fact, solvent (s. 459C(3)).
The Creditor may apply to wind up the Company under Corporations Act 2001 (Cth) s. 459P within three (3) months of the end of the 21-day compliance period — failure to apply within that time deprives the Creditor of the right to rely on this demand as the basis for winding up.
Pursuant to Corporations Act 2001 (Cth) s. 459E(3), the Creditor relies on the affidavit of Sarah J. Mitchell, dated 14 May 2026, sworn or affirmed in their capacity as a director of the Creditor with knowledge of the debt.
The affidavit verifies that the debt or aggregate amount specified in this demand is due and payable by the Company and provides such information about the debt as is sufficient to identify the source of the debt and the date on which it became payable. A copy of the affidavit is annexed to this demand and is served with it as required by s. 459E(3) of the Corporations Act.
The Court may, on an application to set aside the demand, examine the sufficiency of the affidavit (Citystate Holdings Pty Ltd v BandM Investments Pty Ltd (1998) 16 ACLC 1,127). The affidavit therefore states the facts giving rise to the debt with reasonable particularity, including identification of the underlying contract, agreement, or judgment.
Set-aside risk — strict 21-day deadline: The Company is warned that any application to set aside this demand under Corporations Act 2001 (Cth) s. 459G must be filed in the Court AND served on the Creditor within 21 days of service of this demand. The 21-day period is strict — extension is not available (David Grant and Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265). Failure to file and serve within the 21-day period destroys the right to apply to set aside the demand, regardless of the merits of the dispute.
ASIC publication and reputational risk: The Company is reminded that the existence of a statutory demand, any application to set aside, and any subsequent winding-up application become matters of public record. Listing on ASIC databases, the publication of a winding-up application in the Insolvency Notices register, and reporting in industry credit-watch services can have significant reputational and commercial consequences — including triggering defaults under finance, lease, or supply contracts containing change-of-status or solvency clauses. The Company should consider these consequences when deciding how to respond to this demand.
Winding-up application within 3 months: If the Company does not comply with this demand, the Creditor reserves the right to apply to wind up the Company in insolvency under Corporations Act 2001 (Cth) s. 459P within the 3-month period following the end of the 21-day compliance period. The presumption of insolvency under s. 459C(2) operates throughout any such proceeding and can only be rebutted by the Company adducing proper evidence of solvency.
This demand is signed by Rebecca L. Patterson of Patterson and Co Solicitors, solicitor for the Creditor, pursuant to written instructions from the Creditor.
Dated: 15 May 2026.
Service: Served on the Company by personal service on 15 May 2026 in accordance with Corporations Act 2001 (Cth) s. 109X.
What Is a Statutory Demand?
A statutory demand is a formal demand for payment of a debt made on a registered Australian company under <strong>Part 5.4 of the Corporations Act 2001</strong> (Cth). The demand is served using <strong>Form 509H</strong> prescribed by paragraph 459E(2)(e) of the Act. Once served, the debtor company has just <strong>21 days</strong> to either pay the demanded amount, secure or compound for it, or apply to the Federal Court (or relevant State Supreme Court) to set the demand aside under s. 459G. If the company does none of these things, the law presumes the company is insolvent under s. 459C(2) — and the creditor can apply to wind it up under s. 459P.
Statutory demands are <strong>not</strong> general-purpose debt-recovery tools. They are only available against <em>Corporations Act companies</em> — proprietary, public, or large proprietary companies — and not against sole traders, partnerships, individuals (use Bankruptcy Act procedures), unincorporated associations, or trusts. The threshold debt is at least <strong>AUD 4,000</strong> (raised from AUD 2,000 on <strong>1 July 2021</strong> under amendments to the <em>Corporations Regulations 2001</em> reg. 5.4.01AAA) and the debt must be due and payable at the date of the demand. Statutory demands cannot be used for debts that are genuinely disputed — attempting to do so will result in the demand being set aside under s. 459H(1)(a) and may expose the creditor to costs.
In practice, statutory demands are used as a <strong>solvency test</strong> rather than purely a recovery mechanism. Sophisticated creditors use them when they suspect a debtor company is unable to pay its debts — the 21-day clock and the presumption of insolvency create strong commercial pressure for genuinely insolvent companies to either pay, compromise, or face winding up. Many companies pay within hours of receiving a demand to avoid the reputational and regulatory consequences (ASIC notifications, defaults triggered under finance, lease, and supply contracts containing change-of-status clauses). Misuse of statutory demands — for genuinely disputed debts, or to apply illegitimate pressure — has been heavily criticised by the courts and may attract indemnity costs orders.
What's Covered in This Template
Our Australian statutory demand template implements every element required by Form 509H and the Corporations Act.
Creditor Details
Creditor name, ACN (if a company), address, and contact details for service of any s. 459G application.
Debtor Company
Debtor company name, mandatory ACN, and registered office address — must match the current ASIC register.
Debt Particulars
Amount in AUD (at least AUD 4,000), description of the debt source, invoice references, and date the debt became due and payable.
Aggregate Amount Validation
Auto-totalled amount from multiple debts (where elected) with statutory minimum check against the AUD 4,000 threshold.
21-Day Compliance Requirement
The mandatory 21-day window for payment, securing the debt, compounding, or applying to set aside under s. 459G.
Set-Aside Grounds (ss. 459H, 459J)
Express statement of the four grounds: genuine dispute, offsetting claim, defect causing substantial injustice, and some other reason.
Address for Service
The Creditor's address for service of any application — typically the Creditor's solicitor for prompt action on a set-aside application.
Consequences of Non-Compliance
s. 459C(2) presumption of insolvency + s. 459P winding-up application within 3 months of compliance period.
Service Method
Pre-paid post to registered office (s. 109X — most common) or personal service or email — selectable.
Signing Capacity
Creditor personally, Director of the Creditor company, or Solicitor for the Creditor — drives the right signature block.
Expert: Multiple Debts Schedule
Bundle several debts in one demand — each line is parsed and tabulated, aggregate auto-totalled.
Expert: Supporting Affidavit
Reference to s. 459E(3) affidavit verifying the debt, with deponent capacity (director / officer / solicitor) — mandatory unless debt is a judgment debt.
How to Create a Statutory Demand
Follow these steps to draft a Form 509H demand that meets every Corporations Act requirement.
- 1
Verify the Debtor Is a Corporations Act Company
Search the ASIC register at asic.gov.au or abr.business.gov.au to confirm the debtor is registered under the Corporations Act 2001 (Pty Ltd, Ltd, or Limited). Statutory demands cannot be used against sole traders, partnerships, individuals, or unincorporated associations. Also verify the current registered office — service is made to that address under s. 109X.
- 2
Confirm the Debt Is Due, Payable, and ≥ AUD 4,000
The debt must be: (a) at least AUD 4,000 in aggregate (since 1 July 2021); (b) due and payable at the date of the demand (not contingent or future); (c) not genuinely disputed. If any of these is not satisfied, the demand may be set aside under s. 459H or s. 459J and you may bear the costs. Get tax invoices, contracts, or judgment documentation in order before drafting.
- 3
Describe the Debt with Particularity
Use the description field to identify the underlying source: the contract, agreement, or judgment giving rise to the debt; relevant dates; tax invoice numbers; and how the amount is calculated. Vague descriptions ("amount owing") can be set aside as defective causing substantial injustice under s. 459J(1)(a). Best practice: include the source contract or judgment reference, payment terms, and an itemised breakdown.
- 4
Optional but Recommended: Add a Supporting Affidavit
Section 459E(3) of the Corporations Act requires an affidavit verifying the debt unless the debt is a judgment debt of a Court. The affidavit must be by a person with personal knowledge of the debt (typically a director, officer, or solicitor of the Creditor) and must identify the source of the debt and the date it became payable. Use the Expert section to reference the affidavit in the demand. The affidavit itself is a separate document annexed to the demand.
- 5
Serve on the Registered Office
Best practice is service by pre-paid post to the company's registered office under <em>Corporations Act 2001</em> s. 109X — this is the safest method and the date of service is presumed to be 7 business days after posting (s. 29 of the Acts Interpretation Act 1901 (Cth) deems it 4 business days, but s. 109X gives 7). Personal service on a director is also valid. Email service is risky unless the company's constitution or the directors have specifically authorised it. After service, the 21-day clock starts.
Legal Considerations
Statutory demands are powerful but high-risk — using them incorrectly can expose the creditor to indemnity costs and an unwanted set-aside.
This template is for informational purposes only and does not constitute legal advice. Statutory demands are complex documents with strict legal consequences. Misuse — for a debt that is genuinely disputed, for an amount below the AUD 4,000 threshold, with defective service, or with a defective affidavit — can result in the demand being set aside and the Creditor being ordered to pay the Debtor's costs on an indemnity basis. <strong>Always seek legal advice from an Australian commercial lawyer before serving a statutory demand.</strong>
Reviewed for Australian insolvency law
Strict 21-Day Set-Aside Deadline (David Grant v Westpac)
The High Court in <em>David Grant & Co Pty Ltd v Westpac Banking Corporation</em> (1995) 184 CLR 265 confirmed that the 21-day period under s. 459G for an application to set aside is <strong>strict</strong> and cannot be extended — even where the debtor has a strong case on the merits, even where the failure to file in time was caused by misconduct of the creditor, and even where the merits would otherwise be unanswerable. The application must be both <strong>filed in court</strong> AND <strong>served on the creditor</strong> within 21 days of service. Failure on either limb destroys the right to set aside, and the presumption of insolvency operates automatically. The strict approach has been re-confirmed in numerous Federal Court and Supreme Court decisions since 1995.
Genuine Dispute Test (s. 459H(1)(a))
The most common ground for setting aside a statutory demand is the existence of a <strong>genuine dispute</strong> about the existence or amount of the debt under s. 459H(1)(a). The threshold is low — the debtor must show that there is a <em>plausible contention</em> requiring investigation. The dispute does not need to be likely to succeed; it just needs to be plausibly arguable. The Court will not resolve the dispute on the application to set aside, but will instead determine whether there is a genuine dispute — leaving the substantive resolution to be litigated in ordinary debt-recovery proceedings. Misuse of statutory demands for genuinely disputed debts has been heavily criticised (<em>Mibor Investments Pty Ltd v Commonwealth Bank of Australia</em> [1993] 2 VR 524) and may attract indemnity costs.
Offsetting Claim (s. 459H(1)(b))
A statutory demand may also be set aside if the debtor has a genuine <strong>offsetting claim</strong> against the creditor that reduces the net amount owed below the AUD 4,000 threshold or extinguishes it entirely. The offsetting claim need not be liquidated and need not arise from the same transaction — it can be any cross-claim that the debtor might genuinely assert (including damages for breach of contract, professional negligence, or other torts). The court will offset the creditor's claim against the debtor's offsetting claim and set aside the demand if the net amount is below AUD 4,000.
Defect Causing Substantial Injustice (s. 459J)
Defective demands can be set aside under s. 459J(1)(a) where the defect causes <strong>substantial injustice</strong> to the debtor, or under s. 459J(1)(b) for any other reason the court considers just. Common defects include: wrong ACN; wrong debtor name; misstatement of the amount; missing or defective affidavit; vague description of the debt; demand for an amount below AUD 4,000; service at the wrong address. The threshold of "substantial injustice" is moderate — a defect that significantly misleads the debtor or impedes their ability to respond will usually qualify. To minimise the risk of set-aside, the demand should be drafted with the same precision as a court pleading.
Frequently Asked Questions
Serve Your Statutory Demand Today
Identify the Creditor and Debtor company, particularise the debt (≥ AUD 4,000), choose service method, and produce a Form 509H demand ready for service under Corporations Act 2001 s. 459E. Add the Expert affidavit reference for non-judgment debts.
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