TGIF 16 April 2021 – You have been served – but was it the right address?

This week’s TGIF considers the service requirements for a statutory demand where it is served at a location other than the company’s registered address.

Key takeaways 

• Where possible, a company should be served at the address listed with the Australian Securities and Investments Commission as its ‘registered office’.
  
  
• Where service is effected via post to an address other than the registered office, documents should be sent to a physical office, with the address specified with exact precision.
  
  
• Where possible, separate email notification should be sent to the company alerting them that documents have been sent to their address. 

What happened?

In a recent case before the Federal Court, a creditor’s application to wind up Onthego Group Pty Ltd (Onthego) was dismissed on the basis that Onthego had validly complied with a statutory demand issued by Intelogent Pty Ltd (Intelogent) within 21 days of service (Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257).

The creditor, Intelogent, claimed the statutory demand was received by Onthego on 3 February 2021 and the outstanding amount that gave rise to the statutory demand was paid on 1 March 2021.

Onthego claimed the statutory demand was not received until 10 February 2021, when its director returned from interstate and opened the company mail. Accordingly, Onthego claimed that its payment on 1 March 2020 was made within the time for complying with the statutory demand.  

The controversy arose because the demand was sent to Onthego’s operations factory, having recently vacated the premises which was listed as their ‘registered office’ with the Australian Securities and Investments Commission (ASIC). Intelogent was aware from communications with Onthego that they had vacated their registered office, and were instead operating out of the mezzanine floor at the operations factory location.

What is the relationship between service under the Corporations Act and the Acts Interpretation Act?

Under section 109X of the Corporations Act 2001 (Cth), a document may be served on a company through the post by posting it to the company’s registered office, as recorded with ASIC. Under section 28A of the Acts Interpretation Act 1901 (Cth), unless a contrary intention appears, a document may be served on a body corporate by sending it by pre-paid post to the head office, a registered office or a principal office of the business.

Justice Farrell held that section 109X of the Corporations Act is not proscriptive but is facilitative, and consistent with previous authorities on the matter, service in accordance with section 28A of the Acts Interpretation Act would constitute valid service.  

However, her Honour noted that whether the mode of service in section 109X of the Corporations Act or in section 28A of the Acts Interpretation Act - is employed, the language clearly requires service at an ‘office’ – unless personally served on a director.

Where service is effected other than in accordance with these provisions, service will be informal and deemed to have occurred when the article comes to the actual attention of a responsible officer of the company.

What did the Court find?

Justice Farrell held that as the document was not served at the company’s registered address, section 109X of the Corporations Act was not engaged.

Her Honour noted that the office of Onthego was on the mezzanine floor of the factory, and did not occupy the whole of the premises of the location. As the envelope was not specifically addressed to ‘the mezzanine floor’ from which Onthego was conducting its business, section 28A of the Acts Interpretation Act was also not engaged.

Due to the implications that a statutory demand may have on a debtor company, strict proof of service is required. With this in mind, a court will not lightly draw inferences or make assumptions as to the timing of service.  

Her Honour held that the demand was informally served on Onthego when its director opened the envelope containing the demand on 10 February 2021, and accordingly, by paying the demand on 1 March 2021, Onthego had complied with the demand within time.

As a consequence, Intelogent’s application to wind-up Onthego was dismissed with costs.

Interestingly, her Honour also noted that despite Intelogent being aware that Onthego had vacated its registered office, this fact had no bearing on the proper mode of service under section 109X of the Corporations Act. Her Honour held that a separate email notification alerting a recipient that they had documents sent to their registered address would cure any potential abuse of process of serving a document at a location known to have already been vacated.

Comment

The decision of the Federal Court in this case demonstrates that the requirements for effecting proper service of statutory demands are often nuanced in particular circumstances, and may have significant consequences for a party that is unable to satisfy a court that service has occurred.  

Tellingly, the court noted that the creditor’s failure to obtain legal advice before attempting to effect service may have been one contributing factor to the ultimate failure of its winding up application.