TGIF 24 January 2025 - Court upholds service at an unattended office

The Federal Court of Australia has recently delivered judgment in the case of Deputy Commissioner of Taxation v ACN 152 259 839 Pty Ltd [2024] FCA 1489. The Court held that in some circumstances, a statutory demand can be validly served on a perceived temporarily empty company office.

On 20 May 2024, an ATO officer purported to serve ACN 152 259 839 Pty Ltd (the Company) with a statutory demand and an accompanying affidavit by leaving the documents at the Company’s registered office.

When the ATO officer arrived at the Company’s registered address, they found that the doors were locked, lights were off and no one was in attendance. A sign on the door read ‘IF THIS OFFICE IS UNATTENDED PLEASE CALL [phone number specified]’. The ATO officer serving the documents did not call the number, and he slid the statutory demand and accompanying affidavit under the door of the office, thereby placing the documents on the premises. The office had been permanently unattended since 2018. The ATO officer didn’t take any further steps to satisfy themselves that the documents would come to the attention of the Company.

The Company subsequently failed to pay the amount demanded or any amount to the Deputy Commissioner of Taxation’s (DCT) reasonable satisfaction within 21 days after the demand was served.

The DCT commenced proceedings against the Company on 27 June 2024 and sought orders that:

• the Company be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth);
  
  
• a liquidator be appointed; and
  
  
• the DCT’s litigation costs be paid out of the assets of the Company.

These orders were then granted by a Registrar on 24 October 2024. The Company sought a review of this decision in the Federal Court.

Key takeaways

• Companies bear the risk of maintaining unattended registered offices or must otherwise clearly communicate alternative contact methods.
  
  
• Serving officers are not required to investigate beyond the registered office if they have no knowledge that it is permanently unattended.
  
  
• Internal knowledge within a large organisation is not automatically attributed to the serving officer.

The issue

The Company did not dispute that service was effective but instead argued that there had been a want of fair notice.

Arguments

The Company argued that the address at which the statutory demand was left was permanently unattended. It also argued that the ATO officer had the address for the Company’s lawyer and could have sent the statutory demand to them by email.

Further, the Company submitted that because the ATO’s internal records noted that the Company’s registered address was unreliable for service, this imputed knowledge to the serving agent and thus created a want of fair notice.

Service requirements

Moshinsky J set out the applicable law, stating that where a creditor serves a statutory demand by a prescribed mode and:

• knows, at the time of service or before the statutory service period expires, the demand had not actually come to the attention of the company;
  
  
• knows that the company would dispute the demand if made aware of it;
  
  
• refrains from bringing the demand to the actual notice of a responsible officer of the company within the statutory service period; and
  
  
• relies on good service of the demand and the presumption of insolvency arising under the Corporations Act,

the Court may, in its discretion and in the interests of justice, set aside the statutory demand, not for want of good service, but for want of fair notice.

Decision

Moshinsky J held that the signage outside the office, and in particular the word ‘If’, suggested that the office was only temporarily unattended. Clearer wording was needed to suggest that premises are permanently unattended.

Second, the Court did not agree that knowledge held by the ATO as an organisation should necessarily be attributed to all ATO employees and agents. The Court held that the ATO officer serving the documents was the relevant employee or agent. Accordingly, it was their frame of mind that was relevant and needed to be assessed. The Court held that the ATO officer was not aware of the information stored internally by the ATO, and in the circumstances it was not incumbent on the ATO officer attending to service, acting reasonably, to check.

The Court concluded that there was no want of fair notice and affirmed the winding up order.

Comment

This case provides an important caution to companies operating with unattended or dormant registered offices and parties seeking to effect service of documents.

Companies should turn their mind to whether their registered office arrangements are fit for purpose, particularly where the office is not regularly attended or if the company does not operate from the address. Where alternative arrangements are in place, these should be clearly and effectively communicated. Companies that fail to do so risk valid service being made at an unattended office, even if documents are not actually received.

Those serving documents should note that while technical compliance with service requirements may be sufficient, they should consider whether they have actual knowledge of any facts that would give rise to a want of fair notice.