Setting Aside a Statutory Demand

Set Aside a Statutory Demand: Act Within 21 Days

If your company has been served with a creditor's statutory demand, you have 21 days from service to either pay, or apply to the court to set aside the demand. The application must be filed, with a supporting affidavit, and both served on the creditor within those 21 days. The court cannot extend that deadline, and missing it means the court will presume your company is insolvent.

Reviewed by Sam Saadat, Principal Lawyer, Invictus Legal. Last reviewed: 7 October 2026

Served with a statutory demand? Call 02 8553 0500 now, or 0410 600 230 for urgent matters. Invictus Legal is a Sydney commercial litigation firm specialising in insolvency disputes. We act quickly to set aside a statutory demand, protect your company from a winding up application and resolve the underlying debt dispute.

What is a creditor's statutory demand?

A statutory demand is a formal written demand under the Corporations Act 2001 (Cth) s 459E requiring a company to pay a debt within 21 days.

A creditor can serve one for a debt (or debts) that is due and payable and at least the statutory minimum. Unless the debt is a judgment debt, the demand must be accompanied by an affidavit verifying that the debt is due and payable. The demand must be in writing, in the prescribed form and signed by or for the creditor.

What is the minimum amount for a statutory demand?

The statutory minimum is currently $4,000.

Section 9 of the Act sets the statutory minimum at $2,000 unless a greater amount is prescribed, and reg 5.4.01AAA of the Corporations Regulations 2001 (Cth) prescribes $4,000. A demand for a debt below that amount is open to challenge.

How long do I have to set aside a statutory demand?

You have 21 days after the demand is served, and this time limit cannot be extended.

Section 459G requires that, within that period, the company both files the application with a supporting affidavit and serves a copy of the application and the affidavit on the person who served the demand. In David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 the High Court held that the court has no power to extend this time. If you file on day 22, or file in time but serve late, the right to apply to set aside the demand is lost. Count the days from the date of service and call us immediately.

What are the grounds to set aside a statutory demand?

The main grounds are a genuine dispute about the debt, an offsetting claim, a defect causing substantial injustice, or some other reason.

• Genuine dispute (s 459H): there is a genuine dispute about the existence or amount of the debt. Your affidavit must show the dispute; the court does not resolve the merits, only whether the dispute is genuine (Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681).

• Offsetting claim (s 459H): the company has a genuine counterclaim, set-off or cross-demand against the creditor. If the undisputed amount, after deducting offsetting claims, is below the statutory minimum, the court must set the demand aside. Otherwise the court may vary the demand to the reduced amount.

• Defect causing substantial injustice (s 459J(1)(a)): a defect in the demand will cause substantial injustice unless it is set aside. A defect alone is not enough (s 459J(2)).

• Some other reason (s 459J(1)(b)): the court may set the demand aside if it is satisfied there is some other reason why it should be set aside.

Everything you rely on must be in the affidavit filed within the 21 days, so the affidavit needs to be prepared carefully and quickly.

What happens if my company does not comply with a statutory demand?

The company is taken to have failed to comply, and the creditor can apply to wind it up relying on a presumption of insolvency.

Under s 459F, if the demand is not paid or set aside within the compliance period, the company is taken to have failed to comply. On a winding up application made within three months, s 459C(2)(a) requires the court to presume the company is insolvent unless the contrary is proved. Under s 459S the company generally cannot oppose the winding up on a ground it relied on, or could have relied on, to set aside the demand, without the court's leave. That is why acting within 21 days matters so much. Directors also face personal risk once a company is insolvent. See our page on directors' duties claims.

Which court hears an application to set aside a statutory demand?

In Sydney, applications are usually filed in the Corporations List of the Equity Division of the Supreme Court of NSW, or in the Federal Court of Australia.

Both are courts with jurisdiction under the Corporations Act 2001 (Cth) (s 58AA and s 1337B). Invictus Legal appears in the Supreme Court and in courts across Sydney and NSW.

What should I do right now?

1. Write down the date and method of service of the demand.

2. Gather the demand, the creditor's affidavit, invoices, contracts and correspondence about the debt.

3. Identify any dispute about the debt and any claim the company has against the creditor.

4. Contact us so we can prepare the originating process and affidavit, file them and serve them within time.

If you are a creditor considering a demand, see our debt recovery page.

What does it cost?

Cost depends on the strength and complexity of the dispute, how much evidence must go into the affidavit, and whether the creditor contests the application. Many applications resolve once the creditor sees the evidence. Fees for commercial matters are determined by the scope of work involved, and we issue a costs agreement before we commence any work, so you have full transparency from the start.

Frequently asked questions

How long do I have to set aside a statutory demand?

21 days after the demand is served. Within that period the application and supporting affidavit must be filed and copies of both served on the creditor (Corporations Act 2001 (Cth) s 459G). The High Court has held the court cannot extend this time.

What is the minimum debt for a statutory demand?

$4,000. Section 9 of the Corporations Act sets a default of $2,000, but reg 5.4.01AAA of the Corporations Regulations 2001 prescribes $4,000. A demand for a smaller debt is open to challenge.

What counts as a genuine dispute?

A genuine dispute exists where there is a real, not fanciful, dispute about whether the debt is owed or about its amount. The court does not decide who is right on an application to set aside; it decides whether the dispute is genuine based on the company's affidavit.

What happens if I ignore a statutory demand?

The company is taken to have failed to comply, and the creditor can apply to wind it up. If the application is made within three months, the court must presume the company is insolvent unless the contrary is proved (s 459C(2)(a)). The company also generally cannot later rely on grounds it could have used to set aside the demand (s 459S).

Can a statutory demand be set aside because it has a mistake in it?

Only if the defect will cause substantial injustice unless the demand is set aside (s 459J(1)(a)). The court must not set aside a demand merely because of a defect (s 459J(2)). The court can also set aside a demand for 'some other reason' (s 459J(1)(b)).

Don't let the 21 days run out

The deadline to set aside a statutory demand is strict and cannot be extended. Call Invictus Legal on 02 8553 0500, or 0410 600 230 for urgent matters, or book online today.

This page is general information only and is not legal advice. Contact Invictus Legal to discuss your situation.