Service of Statutory Demands on a company at its registered office held invalid.
Recent Federal Court decisions highlight the dangers in serving creditors statutory demands on the registered office of corporate debtors.
Deputy Commissioner of Taxation v ABW Design & Construction Pty Ltd  FCA 346
This case involved an administrative oversight on behalf of the Deputy Commissioner of Taxation, who applied under s 459P of the Corporations Act for an order that ABW Design and Construction Pty Ltd be wound up in insolvency. In deciding whether the company should be wound up, Justice Logan’s considered whether the statutory demand had in fact been served on ABW at its registered office.
A photocopy of the envelope containing the statutory demand and supporting affidavit was tendered in evidence by the ATO, and revealed the following:
- The return address had been ruled through, although it was not completely illegible
- No return address was specified on the envelope
- The postcode and also the street name were partially obscured by a “private and confidential” stamp
Because of these administrative issues, it was held that the documents had not been effectively served on ABW and the winding up application brought by the ATO was dismissed with costs. Justice Logan stated:
“[T]he obscuring of the post code by over stamping means that the envelope containing the statutory demand and supporting affidavit has not been sent by the Commissioner by post to the registered office of ABW”
Deputy Commissioner of Taxation v Manta’s on the Beach Pty Ltd  FCA 417
The basis for the statutory demand in this case was an alleged indebtedness by Manta’s to the ATO in respect of superannuation guarantee charge and general interest charge amounts.
The Commissioner was able to prove that the statutory demand along with the supporting affidavit was sent by prepaid post bearing the address of Manta’s registered office. However, Manta’s sole director gave evidence that she first saw a copy of the statutory demand as an attachment to an email from the ATO some 7 months after the statutory demand was served on the company at its registered office. Justice Logan accepted the director’s evidence that it was her usual practice not to dispose of mail without first opening it and checking its contents.
His Honour discussed the presumptions regarding the receipt of postal articles found in s 160 and s 163 of the Evidence Act. These presumptions may be rebutted where there is “evidence sufficient to raise doubt”. Justice Logan found that the evidence provided by Manta’s director was enough to indicate that there was sufficient doubt over whether the statutory demand had in fact been received by the company. Consequently, his Honour dismissed the winding up application with costs.
- These decisions highlight the risks and the care required when serving statutory demands via registered offices
- The presumptions dealing with the service of statutory demands via post may be rebutted relatively easily
- Once these presumptions have been rebutted, detailed evidence as to the specific delivery times of Australia Post along with any difficulties in delivery must be presented
- Given these decisions, it is advisable that statutory demands be served on a company by being personally delivered to the registered offices of the company
The judgments discussed above may be viewed in full by clicking on the links below:
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