Service of statutory demands – have the goal posts shifted?
Posted on August 05, 2021
Statutory demands, when used correctly, are an important tool to recover outstanding debts. Over the years, when it came to service, strict compliance with section 109X of the Corporations Act 2001 (Cth) was essential. More recently, the Court has confirmed service by more “informal” means will suffice.
Traditionally, service would have entailed either:
- leaving the document at, or posting it to, the registered office (as set out on a current ASIC search) of the debtor company; or
- delivering the document personally to the debtor company’s director (who resides in Australia or an external territory).
The statutory demand is then deemed served:
- in the case of postal service:
- pursuant to section 160 of theEvidence Act 1995 (Cth), which sets out that a document sent by post will be presumed served (unless there is sufficient evidence to the contrary) on the 7th working day after it was posted; or
- pursuant to the provisions of the relevant state legislation, for example, in South Australia, section 33 of theActs Interpretation Act 1915 (SA).[1]
- in the case of personal service, on the date it is delivered.
An important “carve out” in section 109X is that this section does not affect any other law that permits, or the power of a court to authorise, a document to be served in a different way. To that end, changing working environments, including working remotely, the slowness of post and the increased use of email, has resulted in litigation related to “informal service” of statutory demands, as follows:
- “Informal service” is an acceptable service method, subject to certain conditions.
- To establish informal service, you must be able to “prove to the Court’s satisfaction that the document in fact came to the attention of an officer of the company who is either expressly or implicitly authorised by the company to deal directly and responsively with the document.”[2]
- Evidence of receipt may include confirmation by email, telephone communication, and so on.
- Proving the authorised status of a person (other than a director of the debtor company) will be subject to heavy scrutiny by a Court.
- The provision of a “courtesy” copy of a statutory demand, after service has been effected, does not “reset” the date of service.
We expect there is yet to be further litigation about service of statutory demands and while the Court has confirmed that “informal service” is permissible, we suggest you still proceed with caution!
Our team at Lynch Meyer is experienced and available to assist with any queries you might have about recovering outstanding debt and in particular, processes and service. Please call Alice Carter on 8236 7626 or Georgia Gray on 8236 7602 to further discuss.
[1] You need to consider which legislation applies depending on jurisdiction.
[2] Kookaburra Educational Resources Pty Limited v MacGear Limited Partnership trading as MacGear Australia [2021] FCA 797 at [57].
