Served with a statutory demand?

The clock

A statutory demand under s 459E of the Corporations Act 2001 (Cth) requires the company to pay, secure or compound the debt within 21 days of service. To challenge it, an application to set it aside must be filed and served within those 21 days: s 459G.

The period cannot be extended

This is not a limitation period that a court can enlarge for good reason. The High Court held in David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 that the 21-day requirement in s 459G is not amenable to extension. A day late is fatal, no matter how strong the underlying dispute.

Grounds to set aside

• Section 459H: a genuine dispute about the existence or amount of the debt, or an offsetting claim. The company must show a plausible contention requiring investigation, not that it will win.
• Section 459J(1)(a): a defect in the demand causing substantial injustice.
• Section 459J(1)(b): some other reason.

What the first 24 hours generally involve

1. The date and method of service are established first. Service on the registered office by post is effective, and demands are routinely found weeks later in unopened mail at an old address. Check that your registered office with ASIC is current.
2. Decide first whether the debt is genuinely disputed, because that determines which step you take.
3. If it is, a s 459G application with a supporting affidavit must be both filed and served within the 21 days.
4. If it is not, payment or written terms before day 21 are the remaining options.