Legal Project Management Plan & Checklist
Purpose of this Guide: Welcome to the practitioner roadmap for responding to a statutory demand from the debtor company perspective in Australia. Designed explicitly for defence lawyers and corporate directors, this guide covers options under the Corporations Act 2001 (Cth). Additional forms are accessible via the Australia Government Portal.
Jurisdiction: This guide applies to actions in Australia, under the Federal Court or Supreme Court registries. Verify current guidelines on the official Federal Register of Legislation.
The Process at a Glance: Debtor companies must act within strictly non-extendable timeframes (21 days). The workflow begins with calculating deadlines, identifying defects or genuine disputes (s459H), communicating with the creditor, and ultimately choosing between filing a set-aside application or transitioning to Voluntary Administration. Practitioners should check the official and for regular procedure updates.
This legal matter plan provides a structured workflow for COMMERCIAL_LAW cases, outlining the standard RESTRUCTURING process. Utilize these tracking templates to manage your legal cases efficiently.
Perform conflict checks, establish the strict 21-day deadline, and gather documents.
Verify all prerequisite documentation has been obtained, cross-reference against the statutory requirements for this matter type, and confirm compliance with practice direction protocols.
Prepare the relevant forms and supporting materials required under the applicable legislation, ensuring all mandatory fields are completed and all attachments are properly certified.
s 459G Corporations Act 2001 (Cth) - the application to set aside must be made within 21 days after the demand is served. The court has NO power to extend this deadline under any circumstances.
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 - the High Court confirmed the 21-day period is an absolute jurisdictional prerequisite. The court cannot extend time even if the applicant has a strong case on the merits.
The 21 days runs from service, not from the date the demand was drafted or dated.
Draft and dispatch formal correspondence addressing the procedural requirements at this stage, including any required notices, requests for information, or proposals for resolution.
Evaluate statutory defences including genuine dispute, offsetting claims, and formal defects.
Coordinate the collection and review of all financial documentation required for disclosure, including statements, valuations, and supporting schedules as mandated by the rules.
Advise the board on legal options and potential personal liability (insolvent trading).
Assess the strategic considerations for interim applications, prepare supporting evidence, and draft the necessary documentation for urgent or time-sensitive relief sought.
s 459H Corporations Act 2001 (Cth) - the court must set aside or vary the demand if satisfied there is:
The 'genuine dispute' threshold is low - merely a 'plausible contention requiring investigation': Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785. The court must not conduct a mini-trial.
The 'substantiated amount' is calculated as: Demand Amount - Disputed Amount - Offsetting Claim. If the substantiated amount is below $4,000, the demand is set aside entirely.
Conduct a thorough review of all filed materials to ensure compliance with court requirements, verify service obligations have been met, and prepare for the next procedural milestone.
s 459E(3) Corporations Act 2001 (Cth) - non-judgment debts must be accompanied by a verifying affidavit. Absence of this affidavit is a defect.
s 459J(1)(a) - the court may set aside a demand if there is a defect in the demand and 'substantial injustice will be caused unless the demand is set aside'. The test for substantial injustice considers whether the defect misled the debtor.
s 459J(1)(b) - the court may also set aside for 'some other reason' - this is a broad residual power.
Porterhouse Holdings Pty Ltd v Deka Australia Pty Ltd [2020] NSWSC 1771 - even technical defects in the demand form can ground a set-aside if they cause confusion about the amount or nature of the debt.
Verify all prerequisite documentation has been obtained, cross-reference against the statutory requirements for this matter type, and confirm compliance with practice direction protocols.
s 588G Corporations Act 2001 (Cth) - directors who allow a company to incur debts while insolvent (or while there are reasonable grounds to suspect insolvency) face personal liability for those debts. This includes civil penalty orders and compensation orders.
s 588GA - Safe Harbour defence: directors are protected from insolvent trading liability if, after the director starts to suspect insolvency, they begin developing one or more courses of action that are reasonably likely to lead to a better outcome for the company than winding up.
Safe Harbour requires the company to be up-to-date on employee entitlements and tax reporting obligations.
Prepare the relevant forms and supporting materials required under the applicable legislation, ensuring all mandatory fields are completed and all attachments are properly certified.
s 95A Corporations Act 2001 (Cth) - defines insolvency as the inability to pay debts as and when they become due and payable (the 'cash flow' or 'commercial' insolvency test).
This is distinct from 'balance sheet insolvency' (liabilities exceeding assets). A company can be balance-sheet insolvent but still commercially solvent if it can meet debts as they fall due.