• Lionel Wirth

Can a statutory demand be served on an incorporated association?


The statutory demand process is a familiar one to those who practise in insolvency and debt-collection. Section 459E of the Corporations Act 2001 (Cth) provides, inter alia, as follows:

(1) A person may serve on a company a demand relating to:

(a) a single debt that the company owes to the person, that is due and payable and whose amount is at least the statutory minimum; or

(b) 2 or more debts that the company owes to the person, that are due and payable and whose amounts total at least the statutory minimum.

(2) The demand:

(a) if it relates to a single debt--must specify the debt and its amount; and

(b) if it relates to 2 or more debts--must specify the total of the amounts of the debts; and

(c) must require the company to pay the amount of the debt, or the total of the amounts of the debts, or to secure or compound for that amount or total to the creditor's reasonable satisfaction, within 21 days after the demand is served on the company; and

(d) must be in writing; and

(e) must be in the prescribed form (if any); and

(f) must be signed by or on behalf of the creditor.

(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.

The relevant form is Form 509H found in Schedule 2 of the Corporations Regulations 2001 (Cth): regulation 1.0.03 and Schedule 1, Item 51H. The affidavit is to be in accordance with Form 7 of the Supreme Court (Corporations) Rules 2013 (Vic): rule 5.2.

Can a demand under section 459E of the Corporations Act be served on an incorporated association registered under the Associations Incorporation Reform Act 2012 (Vic)?

Section 459E(1) provides that a person may serve a demand “on a company”. Section 9 of the Corporations Act defines company to be one registered under the Corporations Act.

Simple?

No.

The national system of corporations legislation, when devised at the beginning of this century, was attended by a number of constitutional complications, and so there is a plethora of supporting legislation at the State level. One of those statutes is the Corporations (Ancillary Provisions) Act 2001 (Vic). Part 3 of that Act has the effect that a statute can declare that provisions of the Corporations Act (and related legislation) apply in relation to a matter as a law of the State.

Basically, if the Victorian Parliament wants to be efficient and avoid reproducing legislation that exists in the Commonwealth’s corporations legislation, it can just point to the relevant Commonwealth provisions and say “they apply as a law of this State”. (Compare that process with the application of the Australian Consumer Law – found in Schedule 2 of the Competition and Consumer Act 2010 (Cth) – as a law of the State: Australian Consumer Law and Fair Trading Act 2012 (Vic), section 8.)

Such declaratory provisions exist in the Associations Incorporation Reform Act 2012 (Vic): generally, Part 11. Section 150 specifically applies, with sensible modifications, Part 5.4 of the Corporations Act. Section 459E is in Part 5.4.

So, as a law of Victoria, section 459E(1) reads:

A person may serve on an incorporated association a demand …

And so on.

Section 459P similarly applies, so that an incorporated association can be wound up for failing to comply with a statutory demand. Section 459G (applications to set aside statutory demands) applies, too. When drafting a statutory demand, it would presumably be sensible to substitute the word "company" for "incorporated association".

#statutorydemand #insolvency #incorporatedassociation

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lionel@vicbar.com.au

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© Lionel Wirth

Whilst every effort is made to ensure that the content of this blog is accurate, it should not be taken as legal advice. Liability limited by a scheme approved under Professional Standards Legislation