Skip to content

How to Respond to a Statutory Demand From an Interstate Creditor

In previous articles, we have explained the nature of a creditor’s statutory demand and how your company should respond. Below, we will set out a scenario in which an interstate creditor serves a statutory demand (‘demand’) on your company, as there are some technical matters which you must comply with to ensure that the demand can be set aside.

Address for Service

Firstly, a valid demand must contain an address for service of copies of any “application and affidavit” in the state or territory in which the demand is served on the company. The “application and affidavit” referred to is one to set aside the demand.

Under section 459G of the Corporations Act 2001 (Cth) (‘the Corporations Act’), to make an effective application to set aside a statutory demand, a copy of the application and supporting affidavit must be served “on the person [or company] who served the demand”. Here, things can get a little confusing because an application to set aside a statutory demand can be brought in either the Federal Court of Australia or a State Supreme Court.

Under the common law, an originating process (being the document which commences a court proceeding) filed with a State Supreme Court cannot be served outside of that court’s territorial jurisdiction. Therefore, to effectively serve an originating process interstate, it must be done in accordance with the Service and Execution of Process Act 1992 (Cth) (‘the Act’).

Per section 9 of the Act, service on a company is effected by the following:

This section prevails over section 109X of the Corporations Act, which also deals with service of documents on companies. Under section 16 of the Act, a notice in the prescribed form must accompany service of the application to set aside the demand. 

Application in a State Supreme Court

If a company elects to make an application to set aside the demand in a State Supreme Court, it will need to comply with the requirements for service contained in the Act. This means that simply serving the application and affidavit in support on the address for service contained in the creditor’s statutory demand will not be effective to meet the requirements contained in section 459G of the Corporations Act.

Continue reading this article below the form
Loading form

Application in the Federal Court

By contrast, if the company instead elects to make its application to set aside the demand in the Federal Court – it will not need to comply with the requirements of the Act. In this scenario, it would only be required to meet the requirements for service contained in the Federal Court Rules. This is because the territorial jurisdiction of the Federal Court is Australia-wide.

Key Takeaways

A failure to comply with the provisions of the Act (if applicable) will be fatal to the application to set aside the demand and therefore result in the company being presumed insolvent.

For further information on how to serve a statutory demand or an application to set aside a statutory demand, get in touch with our specialist disputes lawyers on 1300 544 755.

Register for our free webinars

Demystifying M&A: What Every Business Owner Should Know

Online
Understand the essentials of mergers and acquisitions and protect your business value. Register for our free webinar.
Register Now

Social Media Compliance: Safeguard Your Brand and Avoid Common Pitfalls

Online
Avoid legal pitfalls in social media marketing and safeguard your brand. Register for our free webinar.
Register Now

Building a Strong Startup: Ask a Lawyer and Founder Your Tough Questions

Stone & Chalk Tech Central, Level 1 - 477 Pitt St Haymarket 2000
Join LegalVision and Bluebird at the Spark Festival to ask a lawyer and founder your startup questions. Register now.
Register Now

Construction Industry Update: What To Expect in 2026

Online
Stay ahead of major construction regulatory changes. Register for our free webinar.
Register Now
See more webinars >
Noam Greenberger

Noam Greenberger

Read all articles by Noam

About LegalVision

LegalVision is an innovative commercial law firm that provides businesses with affordable, unlimited and ongoing legal assistance through our membership. We operate in Australia, the United Kingdom and New Zealand.

Learn more

We’re an award-winning law firm

  • Award

    2025 Future of Legal Services Innovation Finalist - Legal Innovation Awards

  • Award

    2025 Employer of Choice - Australasian Lawyer

  • Award

    2024 Law Company of the Year Finalist - The Lawyer Awards

  • Award

    2024 Law Firm of the Year Finalist - Modern Law Private Client Awards

  • Award

    2022 Law Firm of the Year - Australasian Law Awards