Setting aside a statutory demand
Division 3 of Part 5.4 of the Corporations Act 2001 (Cth) provides four (4) grounds for defending against a statutory demand by way of court application under section 459G of the Act.
The most frequently exercised defence to a statutory demand is to argue that there is a genuine dispute about the amount that is owing pursuant to section 459H of the Act. Alternatively, section 459H allows a statutory demand to be set aside on the grounds that the debtor has an ‘offsetting’ claim (i.e. where the creditor owes the debtor an amount greater than the amount owed per the statutory demand).
Establishing that a genuine dispute exists is a low threshold, meaning that creditors should not issue a statutory demand unless they are confident that both parties accept that the amount remains outstanding. In the event a creditor issues you with a statutory demand that they know to be genuinely disputed, our expert Gold Coast insolvency lawyers can assist you to seek indemnity costs against them.
Failing the ability to exercise one of the defences under section 459H, it is possible to argue that there is a defect in the statutory demand itself which nullifies the creditor’s claim under section 459J. A ‘defect’ occurs when the statutory demand lacks a necessary or essential element for it to be considered incomplete.