Onthego: a timely reminder about service of statutory demands

Posted on April 19, 2021

The recent decision of Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257 has provided useful discussion about service of statutory demands, and the importance of calculating time for compliance.

The factual circumstances in this case are not uncommon. Relevantly:

1. The creditor, in this case Intelogent Pty Ltd (Intelogent), had knowledge that the debtor, Onthego Group Pty Ltd (OTG), had vacated its registered office in or about December 2020.
2. The statutory demand (Demand) was dated 2 February 2021.
3. The Demand was not served on the registered office, but rather, an address understood to be the “head office” of OTG, being 10/15 Darling Street, Mitchell (Mitchell Address). It was received by OTG on 3 February 2021.
4. There was a dispute between Intelogent and OTG about when the Demand was served. Intelogent relied upon the date of delivery of the Demand at the Mitchell Address, while OTG relied upon the date which the Demand came to the attention of the director, namely the afternoon of 10 February 2021.
5. Intelogent issued wind up proceedings on 25 February 2021.
6. OTG had paid the Demand in full on 1 March 2021.

If the Court accepted Intelogent’s evidence regarding the date of service, there had been non-compliance, and a presumption of insolvency had arisen. If the Court accepted OTG’s evidence, there had been compliance, and there was no proper basis to bring the proceedings.

In determining the outcome of the matter, the Court considered the interaction between section 109X of the Corporations Act 2001 (Cth) (CA) and section 28A of the Acts Interpretation Act 1901 (Cth) (AIA).

The Court ultimately dismissed the application to wind up OTG, and made the following findings in relation to service of the Demand:

1. Section 109X of the CA was intended to be “facultative” and “permissive”, and was not mandatory for the service of documents under the CA.[1]
2. Section 28A of the AIA can be relied upon for service for any piece of Commonwealth legislation, including the CA.[2]
   
3. Irrespective of whether section 109X of the CA or 28A of the AIA applied, service must be effected at an “office”.[3]
   
4. The “office” of OTG was on the upper mezzanine floor of the Mitchell Address, not the Mitchell Address alone. As the envelope containing the Demand was only addressed and delivered to the Mitchell Address, section 28A of the AIA was not engaged.[4]
   
5. As such, the envelope containing the Demand was informally served on OTG when it came to the director’s attention on 10 February 2021.[5] As such, the Demand was complied with when payment in full was made on 1 March 2021.[6]
   

Key takeaways

The Court’s decision is a timely reminder to carefully consider the appropriate address for service, the method of service and finally, calculating time for compliance.

If you are receiving a statutory demand, it is crucial that you pay attention to the date of receipt, so as to ensure that you deal with the statutory demand within the 21-day timeframe. Conversely, if you are the party issuing the demand, be clear about when time will expire so that you do not file wind up proceedings prematurely.

Lynch Meyer Lawyers’ Insolvency and Restructuring Team are experienced in both issuing, responding and opposing statutory demands and applications to wind up a company. If you require assistance with any insolvency matter, please contact Lynch Meyer Lawyers’ Insolvency and Restructuring Team.

[1] Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257 at [36] and [39].

[2] Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257 at [35].

[3] Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257 at [39].

[4] Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257 at [41].

[5] Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257 at [41].

[6] Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257 at [43].

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