By John Stavris, Special Counsel

Wednesday, 27 May 2026

A recent Supreme Court of Victoria decision has given businesses a timely reminder about the value, strength and technical requirements when issuing a statutory demand to a debtor. As a reminder, statutory demands are part of a creditor’s arsenal if and when they have an unpaid invoice from a client or some other third party, and they are commonly used to enforce the debt. They remain one of the most effective and commercially decisive tools available to creditors, and when used correctly, they can cut through prolonged disputes, force engagement from a recalcitrant debtor, and bring matters to a swift resolution. But if creditors get any of the relevant steps wrong, this powerful tool can turn on them very quickly.

In simple terms, a statutory demand is a formal notice under the Corporations Act 2001 (Cth) requiring a company to pay a due and payable debt within 21 days. If the company does not comply or successfully apply to set the demand aside, a creditor can rely on a statutory presumption that the company is insolvent in any subsequent winding-up application. That is why statutory demands are often used as a strategic escalation step in debt recovery, but also why they must be drafted and served with extreme care.

When used incorrectly, statutory demands can unravel quickly, exposing the issuing party to adverse costs orders, wasted time and lost strategic leverage.

The case reaffirms that statutory demands are highly technical instruments, and even experienced commercial parties can come unstuck if the procedural requirements are not followed precisely. The decision reinforces a message we regularly emphasise to clients: the statutory demand regime rewards precision and punishes complacency.

The Decision: What Happened and Why It Matters

In North West Supermarkets Pty Ltd v Nova Cash Flow Finance Pty Ltd; Maxi Foods Group Pty Ltd v Nova Cash Flow Finance Pty Ltd [2026] VSC 285, the Supreme Court of Victoria considered applications to set aside statutory demands issued by a financier against two related companies.

The issuing party relied on statutory demands to recover invoice debts said to have been assigned to it under a factoring arrangement. On their face, the demands appeared orthodox and relied on standard form wording. However, the Court ultimately set both demands aside, finding that multiple technical and substantive issues undermined their validity. In broad terms, the case is a cautionary tale.

The judgment is detailed but is particularly instructive on several recurring problem areas, including:

1. service of statutory demands where registered offices are maintained by third parties (such as accountants);
2. the strict and unforgiving nature of the 21‑day response period;
3. what constitutes effective service, including when informal service may (or may not) be relied upon;
4. the importance of proper notice of assignment when a demand is issued by an assignee rather than the original creditor; and
5. the need to correctly identify the true debtor and contracting party.

The Court reaffirmed that while statutory demands are intended to be a summary and efficient mechanism, they must strictly comply with the Corporations Act. Any defect or ambiguity capable of causing substantial injustice to the recipient company may be fatal to a creditor’s prospects of recovery.

Key Principles Reinforced by the Court

Service must be precise

A central issue was whether the demands had been properly served at the relevant companies’ registered offices. Although service by post engages statutory presumptions that a document sent to a registered office is received in the ordinary course of post, those presumptions are not absolute. They can be displaced by evidence of non‑delivery or of how the registered office actually operates.

Critically, the Court held that delivery to a central mailroom servicing a commercial building was not the same thing as delivery to the registered office itself. The fact that mail for the registered office passed through a building‑wide mailroom did not, by itself, satisfy the service requirements under the Corporations Act.

For creditors, this highlights a specific risk: posting a statutory demand to the ASIC‑recorded registered address does not always guarantee effective service, particularly where there are third‑party mail handling arrangements, shared premises, or changes in office location. Service strategy should be considered and documented, not assumed. 

Timing remains strict and unforgiving

The 21‑day period for applying to set aside a statutory demand is “strict and immutable”. If an application is filed or served even one day late, the Court has no jurisdiction to hear it, no matter how strong the underlying defence.

In this case, the Court undertook a detailed analysis of when the demands actually came to the attention of a responsible officer, and whether informal service had occurred. While informal service was ultimately established on the facts, the issue was finely balanced and required close examination of email trails, internal mail practices and evidence from various witnesses.

For creditors, uncertainty around service dates can be fatal, you may end up in a jurisdictional argument rather than putting pressure on the debtor. For debtor companies, early legal advice and prompt action remain critical, as delay alone can determine the outcome.

Assignments must be clearly and properly notified

Where a statutory demand is issued by an assignee (for example, a financier under a factoring or receivables purchase arrangement), the demand must provide enough information to allow the debtor to understand:

1. that the debt has been assigned;
2. who the assignor and assignee are; and
3. why the assignee is entitled to demand payment.

The Court found there was a genuine dispute as to whether effective notice of assignment had been given, particularly where the purported notice pre‑dated the existence of the debts and was sent to an email address associated with a different group entity. Questions also arose about whether the description of the debt and the accompanying affidavit gave sufficient information about the assignment and the basis on which the assignee claimed to be a creditor.

That uncertainty alone was sufficient to undermine the demands. The lesson is clear, in an assignment context, a bare assertion that “all present and future invoices have been assigned” is rarely enough. The statutory demand and supporting affidavit should be drafted so that a reasonable director can understand, from the face of the documents, why the named creditor is entitled to payment.

The correct debtor matters

In relation to one of the demands, the Court also found a genuine dispute as to whether the company named in the demand was in fact the contracting party. Invoices were issued to a trading name associated with a different entity, and there was evidence that the respondent company was dormant while another group company operated the relevant business.

A statutory demand issued against the wrong entity is not merely defective; it is fundamentally misconceived. The debtor company is not required to speculate which entity in a corporate group the creditor is “really” targeting, or to piece together trading names and internal structures.

For creditors, failing to identify the correct debtor or conflating trading names with legal entities can result in your demand being set aside, loss of costs, and the need to start again. For groups of companies, the decision reinforces the importance of maintaining clear documentation and records as to which entity contracts and pays for goods and services.

What Does This Mean for You?

For creditors, this decision is a clear reminder that statutory demands are not a “set‑and‑forget” and easy to wield, all-purpose debt recovery tool. They can be highly effective when used correctly, but they can just as easily backfire if issued on the wrong basis or with defective content or service.

Before issuing a demand, it is essential to ensure:

1. the debt is due, payable and not genuinely disputed;
2. the correct legal entity is identified as debtor (not just the trading name);
3. any assignment is properly documented and clearly disclosed in the demand and supporting affidavit;
4. there is no offsetting claim;
5. the demand is accurately completed and supported by evidence that a reasonable director can understand; and
6. service is carefully planned and documented, particularly where registered offices are maintained by accountants, company secretarial providers or other third parties.

We regularly assist creditors to design statutory demand and service strategies that maximise pressure on recalcitrant debtors while minimising the risk of the demand being set aside on technical or substantive grounds.

For companies receiving statutory demands, the case reinforces that technical defences matter. Defects in service, disputes as to liability, uncertainty around assignment or errors in identifying the debtor may justify setting a demand aside, but only if acted on promptly. Directors and management should treat any statutory demand as urgent, and seek advice immediately, rather than waiting until the 21‑day period is almost over.

Contact Us

At Anisimoff Legal, we regularly advise clients on both sides of statutory demand disputes. We understand that statutory demands sit at the intersection of commercial strategy and strict technical compliance, and that they are often only one step in a broader recovery or defensive strategy.

Our team advises on:

1. preparing and issuing statutory demands;
2. challenging defective or disputed demands;
3. service strategies and risk management (including for registered offices maintained by third parties);
4. assignment‑related issues in factoring and receivables arrangements; and
5. broader insolvency, enforcement and recovery options where a statutory demand may form part of the overall approach.

If you are considering issuing a statutory demand, or have received one and need urgent advice, we welcome you to contact Special Counsel, John Stavris, for a confidential discussion.