How to Draft a Statutory Demand – Form 509H

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Draft a Statutory Demand - Form 509HDo you need to know how to draft a statutory demand – Form 509H?

A statutory demand is a demand for payment pursuant to section 459E of the Corporations Act 2001 (Cth) (“the Corporations Act”).

If you are a creditor of a debtor company, and the company is unable to pay its debts when they become due and payable, then you can serve the company with a creditor’s statutory demand for payment, provided that the debt (or debts) are equal to or more than the statutory minimum of $4,000.00.

If the debtor company does not do one or more of the following, then they are presumed to be insolvent, and a creditor can take steps to wind in up in insolvency:

  1. Pay the amount of the debt; or
  2. Secure or compound for the debt; or
  3. Request that the issuer withdraw the demand; or
  4. Apply to the Federal Court to set the demand aside.

This article will explain how to draft a statutory demand – Form 509H.

If a debtor company applies to set the demand aside, and is successful because of a defect in the demand, then you may be ordered to pay the debtor company’s legal costs for the application.

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PLEASE NOTE – This article is for general information only.  It is not legal advice.  We always recommend that you seek qualified legal advice from a lawyer.

Creditor’s Statutory Demand for Payment of Debt

The form of the statutory demand is Form 509H which is found at Schedule 2 of the Corporations Regulations 2001 (Cth).  I have also extracted it and annexed Form 509H to the bottom of this article.  Please scroll to the end.

We will attempt to guide you through the process of drafting the demand and how to draft a statutory demand – Form 509H.

Name, ACN, and Address

If you intend to draft a statutory demand – form 509H, firstly you need to correctly Identify the debtor company.

1 Name, ACN, and Address in the Statutory Demand

When thinking about how to draft a statutory demand – Form 509H, the name and the ACN (Australian Company Number) of the debtor company must be correct, and must be able to correctly identify the debtor company.

The name and the ACN can be found by conducting a search of the database of the Australian Securities and Investments Commission (“ASIC”) website.

The address of the registered office of the company must also be correctly identified.  A company’s registered office may not be its principal place of business.  It may also be an accountant’s office, for example.  There is a section of the current extract which identifies the registered office.

Tip – You are going to have to obtain a current extract for the debtor company from ASIC in order to correctly serve the demand, so we suggest doing this now, and simply the copy (ctrl + c) and paste (ctrl + v) this information directly from the current extract, into the statutory demand.  This eliminates any possibility of user error.

Section 9 of the Corporations Act defines one of the ways a defect in the demand can exist to be a misdescription of a person or entity.  It is vital that you get this part correct, the Courts have said that “it is not asking too much” that a creditor correctly identify the debtor.

Your Name, Address and the Debt

Next, when learning how to draft a statutory demand – Form 509H, you must correctly identify your own name, address, and the amount of the debt.

2 Your Name, Address and the Debt in the stat demand

A creditor in this section must clearly identify the entity to which the debt is owed.

If the debt is owed to a person, then correctly identify the person.  If the debt is owed to a company, then correctly identify the details of the Company.

This may sound like being over-cautious but the demand should clearly identify the correct entity of the creditor.

For example, if the debt relates to an unpaid invoice for “The Company 1 Pty Ltd ACN 123 456 789” then it important that this company is identified as the creditor, not the director personally, or a subsidiary company, or other entity.

The Amount of the Debt

When you draft a statutory demand – form 509H, you must then clearly identify the amount of the debt.

3 The Amount of the Debt in the demand

Where you see an asterisk in the Form 509H then you are to keep one and delete the other.  The statutory demand form actually says “* Omit if inapplicable”.

The debt amount can relate to one debt, or a number of debts.

If your demand relates to one debt, keep the first and delete the second.  If your debt relates to a number of debts, then delete the first and keep the second.

The amount that you insert here, bust be identical to the amount that you put into the schedule.

Please refer to the section below regarding the Schedule.

Section 9 of the Corporations Act defines other ways a defect in the demand can exist to be a misstatement of an amount or total; and a misdescription of a debt or other matter.  It is vital that you also get this part correct, failure to correctly identify the creditor or the correct amount of the debt may allow the demand to be set aside, and you may have to pay costs for the application.

We offer professional advice and assistance in all things related to statutory demands

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Issuing Statutory Demands Setting Aside Statutory Demands

Amount is Due and Payable by the Company

Once that you have correctly identified the parties, and the amount of the debt, the demand must clearly state that the debt is due and payable by the debtor company.

The Amount of the Debt draft a statutory demand - form 509H

If you are serving the statutory demand with an affidavit in support, then delete the first option and keep the second option.

The deponent is the person who has sworn or affirmed the affidavit.  This is usually the director of the creditor (if the creditor is a company) or the creditor (if a natural person).

The date of the affidavit and the date of the statutory demand must be the same.

You must state that the total amount of the debt or debts is due and payable by the debtor company.

What you Require the Debtor to do

The next section of the statutory demand let’s the debtor company know what they are required to do to comply with the statutory demand.

4 Amount is Due and Payable by the Company in the statutory demand

If you chose one (1) debt in paragraph 1, then choose one (1) debt here.  Is you chose a number of debts in paragraph 1, then choose a number of debts here too.

Then, leave the rest.  The debtor is required to pay the debt, secure or compound for the debt to the creditor’s reasonable satisfaction.  Section 3, 3(a), and 3(b) must be left in the statutory demand.

Paragraphs 4 and 5 of the Demand

Paragraphs 4 and 5 of the statutory demand are to be left exactly as they are.

5 if the debtor does not comply the wind the company up

Paragraph 4 lets the debtor company know that if they do not comply with paragraph 3, then the creditor can apply to wind the company up.

Paragraph 5 lets the debtor company know they can apply to set the demand aside (if they have grounds). It also lets the company know that a sealed copy of the application and affidavit in support must be served on the creditor within 21 days of being served with the statutory demand.

The Warning Box

Next is the warning box, warning the debtor company of the consequences of failing to respond to the statutory demand.

6 the warning box draft a statutory demand - form 509H

The warning box must be left in.

Although the Courts have ruled that omission of the warning box is a defect which does not cause substantial injustice, it should simply be left in.

Address for Service of Application

Next is the address for service for copies of an application to set aside the demand and the supporting affidavits.

7 Address for Service of Application in the same state as the debtor company

The address for service of the creditor must be in the same State as the registered office of the debtor company.  So, for example if the registered office of the debtor is in VIC from a debt which arose in QLD, the address for service must be in VIC.

Although the Courts have ruled that an address for service in another State is a defect which may not cause substantial injustice, you should attempt to get an address for service in the state where the debtor company has their registered office.

Tip – You can engage a solicitor in that state to act as your “Town Agent” if you do not live in that state.  This law firm will charge a reasonable fee to accept service of the documents and provide them to you.  Google “town agent” and the State you need to have an address for service.

We offer professional advice and assistance in all things related to statutory demands

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Issuing Statutory Demands Setting Aside Statutory Demands

Debt Schedule

This is arguably the most important section of the statutory demand.

8 schedule to the stat demand must describe the debt

This section must clearly and accurately identify the debt, and the amount of the debt.

Judgment Debt

If the debt is a judgment debt, then clearly identify the judgment debt.  Add the name of the Court, the date of the order, the Court proceeding number, and anything else that you need to correctly identify the judgment debt.  Annex a copy of the judgment or money order to the statutory demand.

If the debt is a decision in the Queensland Civil and Administrative Tribunal (“QCAT”) registered in the Magistrates Court, then clearly identify the particulars of the QCAT decision to which the enforceable money order relates, along with the particulars of the registered Form 1.

Non-Judgment Debt

If the debt is not a judgment debt, you must clearly and precisely particularise the debt so that the debtor company can sufficiently identify the debt.

For example, if the debt relates to an unpaid invoice, then clearly and precisely articulate the details of the invoice.  Invoice number, date, amount, and particulars of the goods and/or services to which the invoice relates.  For example, the Description of the debt could be something like:

The non-payment of invoice number WGH664589 dated 21 October 20XX in the amount of $36,406.84 for work conducted between the dates of 27 June 20XX and 4 July 20XX at the property located at 15 Queen Street, Noosa, Qld 4573.

If you have a number of unpaid invoices, then particularise each one as above.

Then add the total amount of the unpaid invoice (or invoices) under the Amount of the debt.

Then add the total amount of the debts under Total Amount.

Annex the invoices to the affidavit in support of the statutory demand.

Tip – Put the debt schedule into a table.  Two columns, one headed Description of the debt and the other headed Amount of the debt.  Add another row for each debt.  Total in the bottom corner.  This makes the demand clear and easy to understand.

Section 9 of the Corporations Act defines other ways a defect in the demand can exist to be a misstatement of an amount or total; and a misdescription of a debt or other matter.  It is vital that you also get this part correct, failure to correctly identify the debt or the amount of the debt may allow the demand to be set aside, and you may have to pay costs for the application.

Date, Signature and Capacity

Finally, you need to date, and sign the statutory demand.

9 Date, Signature and Capacity of the person signing the stat demand

The date of the statutory demand must be the same date as the date of swearing or affirming the affidavit in support.

The statutory demand must be signed on behalf of the creditor.  If the creditor is a natural person, then the person named in the demand.  If the creditor is a company then signed by a person with capacity to sign on behalf of the company (best case – the director of the company, but can be secretary or an executive officer such as a CFO).

The statutory demand can also be signed by the solicitor acting on behalf of the company.

If signed on behalf of a partnership, or on behalf of a corporation, then you must include the name of the partnership or the corporation.

The person signing must also print their name, and put their capacity.

The capacity may be “creditor” or “director of the creditor” or “solicitor for the creditor” for example.

The Notes

Lastly, are the notes included in the statutory demand.

10 the notes must be included draft a statutory demand - form 509H

The notes must be left in.

Although the Courts have ruled that omission of the notes are a defect that does not cause substantial injustice, you should just keep then included in the demand.

How to Draft a Statutory Demand

Hopefully, this article helped to with how to draft a statutory demand.

We strongly recommend getting a statutory demand solicitor to draft the demand for you.

If a debtor company applies to set the demand aside, and is successful because of a defect in the demand, then you may be ordered to pay the debtor company’s legal costs for the application.

DEDICATED FOCUS – COMMERCIALLY MINDED – PROVEN RESULTS

GET A FREE FEE ESTIMATE TODAY

OR CALL: 1300 545 133 FOR A PHONE CONSULTATION

Please see below for the Form 509H

Form 509H – Statutory Demand

 

Form 509H

(paragraph 459E(2)(e))

Corporations Act 2001

CREDITOR’S STATUTORY DEMAND FOR PAYMENT OF DEBT

 

To (name and A.C.N. or A.R.B.N. of debtor company) of (address of the company’s registered office)

1.   The company owes (name) of (address) ( “the creditor”)

* the amount of $(insert amount), being the amount of the debt described in the Schedule.

* the amount of $(insert total amount), being the total of the amounts of the debts described in the Schedule.

* 2.  The amount is due and payable by the company.

* 2.  Attached is the affidavit of (insert name of deponent of the affidavit), dated (insert date of affidavit), verifying that the amount is due and payable by the company

3.   The creditor requires the company, within 21 days after service on the company of this demand:

(a)  to pay to the creditor the * amount of the debt/ * total of the amounts of the debts; or

(b)  to secure or compound for the * amount of the debt/ * total of the amounts of the debts, to the creditor’s reasonable satisfaction.

4.   The creditor may rely on a failure to comply with this demand within the period for compliance set out in subsection 459F(2) as grounds for an application to a court having jurisdiction under the Corporations Act 2001 for the winding up of the company.

5.   Section 459G of the Corporations Act 2001 provides that a company served with a demand may apply to a court having jurisdiction under the Corporations Act 2001 for an order setting the demand aside. An application must be made within 21 days after the demand is served and, within the same period:

(a)  an affidavit supporting the application must be filed with the court; and

(b)  a copy of the application and a copy of the affidavit must be served on the person who served the demand.

6.   The address of the creditor for service of copies of any application and affidavit is (insert the address for service of the documents in the State or Territory in which the demand is served on the company, being, if solicitors are acting for the creditor, the address of the solicitors).

SCHEDULE

 

Description of the debt                                              Amount of the debt

 

(indicate if it is a judgment debt, giving the name of the court and the date of the order)

* Total Amount

 

Dated:

signed:

Print name:                                         capacity:

 

Corporation or partnership name (if applicable):

NOTES:

1.   The form must be signed by the creditor or the creditor’s solicitor. It may be signed on behalf of a partnership by a partner, and on behalf of a corporation by a director or by the secretary or an executive officer of the corporation.

2.   The amount of the debt or, if there is more than one debt, the total of the amounts of the debts, must exceed the statutory minimum of $4,000.

3.   Unless the debt, or each of the debts, is a judgment debt, the demand must be accompanied by an affidavit that:

(a)  verifies that the debt, or the total of the amounts of the debts, is due and payable by the company; and

(b)  complies with the rules.

4.   A person may make a demand relating to a debt that is owed to the person as assignee.

5.   This form was amended in 2006 as part of amendments of the Corporations Regulations 2001 . For the period of 12 months after the commencement of those amendments a person may comply with paragraph 459E(2)(e) of the Corporations Act 2001 in relation to a statutory demand for payment of debt by using:

(a)  the version of this form that was in force immediately before the commencement of the amendments; or

(b)  this version of the form.

* Omit if inapplicable

If a debtor company applies to set the demand aside, and is successful because of a defect in the demand, then you may be ordered to pay the debtor company’s legal costs for the application.

DEDICATED FOCUS – COMMERCIALLY MINDED – PROVEN RESULTS

GET A FREE FEE ESTIMATE TODAY

OR CALL: 1300 545 133 FOR A PHONE CONSULTATION

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