Federal Court of Australia

Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257

ORDERS

THE COURT ORDERS THAT:

1.    The originating process dated 25 February 2021 is dismissed.

2.    The plaintiff pay the defendant’s costs of the proceedings.

3.    The hearing listed at 2.15 pm on Thursday, 18 March 2021 be vacated.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

FARRELL J:

Introduction

1    On 25 February 2021, Intelogent Pty Ltd (plaintiff) lodged an originating process, being an application for winding up on the ground of insolvency.

2    The plaintiff claimed that Onthego Group Pty Ltd (defendant) had failed to comply with a statutory demand dated 2 February 2021 which it said that it served on the defendant (together with an accompanying affidavit affirmed by Jesse Lee Baird, a co-director of the plaintiff) by prepaid express post sent to 10/15 Darling Street, Mitchell in the Australian Capital Territory and received by the defendant on Wednesday, 3 February 2021 at 12.39 pm. In Part C of the originating process, 10/15 Darling Street is referred to as the defendant’s registered office.

3    The statutory demand claimed that an aggregate amount of $24,886.05 was owing by the defendant to the plaintiff in relation to two invoices, being:

(a)    INV0068 dated 8 September 2020 in an amount of $14,080.46 due on 8 October 2020 for work undertaken between 1 and 31 August 2020; and

(b)    INV0070 dated 5 October 2020 in an amount of $10,805.59 due on 5 November 2020 for work undertaken between 1 and 30 September 2020.

4    On 8 March 2021, the defendant filed an interlocutory application seeking to vacate the first return date of the originating process on Friday, 26 March 2021. The defendant sought an urgent hearing of the originating process on the basis that, unless it was dismissed within 15 business days after the application for winding up was made, it would trigger the defendant’s obligation to pay $4,864,753.61 owing under a convertible notes deed poll to which the defendant was a party (on the assumption that all convertible noteholders elected to redeem their notes).

5    Following case management hearings on 9 and 10 March 2021 before me as Commercial and Corporations Duty Judge, orders were made, among other things, pursuant to s 467(3)(d) of the Corporations Act 2001 (Cth), for the hearing of a separate issue concerning whether the defendant failed to comply with the statutory demand. Orders were also made for a hearing of the originating process on Thursday, 18 March 2021.

6    I note that on 10 March 2021, GMWEB Pty Ltd filed a notice of appearance as a supporting creditor and its legal representative appeared at the case management hearing on 10 March 2021 and at the hearing of the separate issue on 15 March 2021.

7    Each of the plaintiff and defendant filed written submissions and was represented by counsel at the hearing on 15 March 2021.

8    At the hearing of the separate issue, the plaintiff conceded that the defendant paid it $24,886.05 on 1 March 2021 so that the issue was whether the statutory demand was served before 8 February 2021. If the statutory demand was found to have been served on the defendant on or after that date, the defendant will have complied with the statutory demand within the relevant 21 day period.

9    The plaintiff claimed that 10/15 Darling Street was the defendant’s “head office” as at 3 February 2021 and ss 28A(1)(b) and 29 of the Acts Interpretation Act 1901 (Cth) apply so that service on the defendant was deemed to have been effected at the time a letter would be delivered in the ordinary course of post, unless the contrary is proved. Mr Spencer, who was, as at 3 February 2021, one of two directors of the defendant and its managing director says that the statutory demand and its accompanying affidavit first came to his attention in the afternoon of 10 February 2021 when he found it with mail left for him on his desk at the defendant’s office on the upper mezzanine floor of 10/15 Darling Street.

Evidence

10    The following evidence was read:

(a)    For the plaintiff:

(i)    affidavits affirmed by Mr Baird on 25 February 2021 (save for [5] and [6]) and on 12 March 2021. The plaintiff was not legally represented when the affidavit affirmed on 25 February 2021 was executed by Mr Baird and it was not witnessed. Mr Baird gave evidence, which was not challenged, that [1]-[4] and [7]-[8] of that affidavit are true and correct.

(ii)    an affidavit of Sonia Baird affirmed on 12 March 2021 (save for [7] and [9]-[14]); and

(iii)    admitted subject to relevance, an 11 page document obtained from the Australia Post website concerning domestic delivery updates.

(b)    For the defendant:

(i)    affidavits affirmed by Mr Spencer on 8 March 2021, save for the second sentence of [8], [19] and annexure M, [26] and annexure O, and, for the purpose of this application, [29] and [37]; 12 March 2021 lodged at 12.28 pm; 12 March 2021 lodged at 4.57 pm; and 15 March 2021 limited to [18] and annexure F; and

(ii)    an affidavit of Christopher Morgan sworn on 12 March 2021.

11    These matters are conceded by the defendant:

(a)    At all relevant times, the defendant’s registered office according to records maintained by the Australian Securities and Investments Commission (ASIC) was Unit 4B, 69 Darling Street, Mitchell in the Australian Capital Territory. That property was vacated by the defendant by December 2020.

(b)    On 2 February 2021, Mr Baird put the statutory demand and accompanying affidavit in an express post envelope addressed to the defendant at 10/15 Darling Street and marked to the urgent attention of “Mick Spencer”. Mr Baird paid postage and posted the express post envelope, which had a tracking number attached to it.

(c)    The express post envelope was delivered at a roped off roller door entrance to the factory operated by OTG Labs Pty Ltd on the ground floor of 10/15 Darling Street at 12.39 pm on 3 February 2021.

12    It is Mr Baird’s evidence that he knew that Unit 4B, 69 Darling Street had been vacated by the end of December 2020. He claims that 10/15 Darling Street was the “head office” of the defendant as at February 2021. He relies on:

(a)    A posting on the “OTG Custom Apparel” Facebook page that, on 19 November 2020, contained two references to the defendant’s new address being advertised as 10/15 Darling Street.

(b)    A message posted by Mr Spencer on his public Instagram page “OTG Custom Apparel” on or about 5 December 2020:

mick_spencer – Unreal work @mad_murals for this design and spray, promoting #AussieMade and #WomenInSport in our craft new HQ showroom mural … can’t wait til the place is done. #2021 #newdigs @onthego_sports.

(c)    An email which Mr Spencer sent to Mr Baird on 8 December 2020 at 5.19 pm stating that: “We changed our address recently, and this changed the internet IP Address. Our new IP Address is: [redacted]”.

(d)    On 29 January 2021, Mr Baird visited the contact page at the website “onthegosports.com.au” to verify the new address, and it was shown as 10/15 Darling Street under the title “OTG HQ Canberra”.

(e)    The fact that he observed that there was no one at Unit 4B, 69 Darling Street when he visited on 2 February 2021 and all signage of the defendant had been removed.

13    It is Mr Spencer’s evidence that:

(a)    The defendant has a global ecommerce business that supplies custom apparel and currently employs 30 people.

(b)    During the COVID-19 pandemic, OTG Labs wound down its manufacturing premises in Wetherill Park in Sydney. In November/December 2020, the defendant wound down its trading premises at Unit 4B, 69 Darling Street. The business was busy and there was a lot of disruption while the business relocated.

(c)    Unit 4B, 69 Darling Street was vacated by 1 February 2021, however, staff would go back there on occasion to collect mail that was not redirected. A document advising ASIC that the defendant had changed its registered office was not filed due to a change of accountants at the same time as these changes in the business.

(d)    OTG Labs lease 10/15 Darling Street and operate it as a factory. The lease commencement date is stated to be 1 February 2021. The lease is not yet registered.

(e)    The defendant does not currently have a lease. The only place at which the defendant now has a physical presence is 10/15 Darling Street on the upper mezzanine floor. There, Mr Spencer has an office with a desk and finance, technology and digital staff members share an open plan office area. The upper mezzanine floor can only be accessed from the factory floor.

(f)    Mr Spencer is now the sole director and chief executive officer of the defendant. Because of the online nature of the defendant’s business, he sometimes works from his office on the upper mezzanine floor of 10/15 Darling Street, he works from home and he is frequently in other parts of Australia working with customers. His home is in Canberra.

(g)    Other executives are around Australia and the former director, Mr Morgan (who resigned on 21 February 2021) was based in Melbourne.

(h)    There is an executive assistant who works from home who assists all of the executives. Over 70% of the defendant’s employees work from home.

(i)    The defendant has a post office box. Because of the online nature of its business, the majority of its mail goes to that post office box and the majority of the mail is supplier statements that are not typically urgent. Mail is normally collected by the finance team every couple of days and “actioned” by that staff. If there is something for Mr Spencer, it is normally left on his desk. The defendant does not keep a mail log.

(j)    The majority of Australia Post’s deliveries to 10/15 Darling Street are parcels because the defendant is a global ecommerce business. Those parcels are usually delivered to the roller door entrance to the factory, where the Australia Post staff are met by factory floor staff who receive the parcels. If mail were delivered that way, Mr Spencer expects that it would be received by factory floor staff and passed to finance staff, who do not receive stock deliveries.

(k)    At 12.39 pm on 3 February 2021 he was at his home in Downer in the Australian Capital Territory meeting a garden bed delivery lady from a landscaping company.

(l)    He flew to Melbourne on 8 February 2021 and returned on 9 February 2021. The statutory demand came to his attention on 10 February 2021 when he found the express post envelope on his desk and he opened it. He does not recall having seen it before then. He cannot say when it was received.

(m)    He spoke with Mr Morgan on 11 February 2021 about receipt of the statutory demand. (That evidence is corroborated by Mr Morgan.)

(n)    The debts claimed in the statutory demand were the only debts alleged to be owed by the defendant to the plaintiff. The defendant disputed the debts. The defendant considered that it was entitled to itemised invoices from the plaintiff under the contractor agreement under which they operated. Even though the contractor agreement has expired, they continued to operate in accordance with its terms.

(o)    The defendant’s solicitor wrote to the plaintiff in relation to the dispute on 26 February 2021 demanding that the statutory demand be withdrawn on the basis that there was a genuine dispute. Having received no response, on 1 March 2021 he determined to pay the amount claimed in view of the fact that it was relatively small amount and he wanted to avoid the costs of litigating to have the statutory demand set aside.

Legislation

14    Sections 5C and 109X of the Corporations Act as in force during February 2021 provided as follows:

5C Application of the Acts Interpretation Act 1901

(1)    Until the date of commencement of section 4 of the Legislative Instruments (Transitional and Consequential Amendments) Act 2003 (the Legislative Instruments commencement day), the Acts Interpretation Act 1901 as in force on 1 November 2000 applies to this Act.

(2)    On and after the Legislative Instruments commencement day, the Acts Interpretation Act 1901 as in force on that day applies to this Act.

(3)    Amendments of the Acts Interpretation Act 1901 made after the Legislative Instruments commencement day do not apply to this Act

109X Service of documents

(1)    For the purposes of any law, a document may be served on a company by:

(a)    leaving it at, or posting it to, the company’s registered office; or

(b)    delivering a copy of the document personally to a director of the company who resides in Australia or in an external Territory; or

(c)    if a liquidator of the company has been appointed—leaving it at, or posting it to, the address of the liquidator’s office in the most recent notice of that address lodged with ASIC; or

(d)    if an administrator of the company has been appointed—leaving it at, or posting it to, the address of the administrator in the most recent notice of that address lodged with ASIC; or

(e)    if a restructuring practitioner for the company has been appointed—leaving it at, or posting it to, the address of the restructuring practitioner in the most recent notice of that address lodged with ASIC.

(2)    For the purposes of any law, a document may be served on a director or company secretary by leaving it at, or posting it to, the alternative address notified to ASIC under subsection 5H(2), 117(2), 205B(1) or (4) or 601BC(2). However, this only applies to service on the director or company secretary:

(a)    in their capacity as a director or company secretary; or

(b)    for the purposes of a proceeding in respect of conduct they engaged in as a director or company secretary.

(3)    Subsections (1) and (2) do not apply to a process, order or document that may be served under section 9 of the Service and Execution of Process Act 1992.

(6)    This section does not affect:

(a)    any other provision of this Act, or any provision of another law, that permits; or

(b)    the power of a court to authorise;

a document to be served in a different way.

(7)    This section applies to provisions of a law dealing with service whether it uses the expression “serve” or uses any other similar expression such as “give” or “send”.

15    The Legislative Instruments commencement day (as defined in s 5C of the Corporations Act) was 1 January 2005. Accordingly, ss 28A and 29 of the Acts Interpretation Act as in force on that date which apply to this application provided as follows:

28A Service of documents

(1)    For the purposes of any Act that requires or permits a document to be served on a person, whether the expression “serve”, “give” or “send” or any other expression is used, then, unless the contrary intention appears, the document may be served:

(a)    on a natural person:

    (i)    by delivering it to the person personally; or

(ii)    by leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document; or

(b)    on a body corporate–by leaving it at, or sending it by pre-paid post to, the head office, a registered office or a principal office of the body corporate.

(2)    Nothing in subsection (1):

(a)    affects the operation of any other law of the Commonwealth, or any law of a State or Territory, that authorizes the service of a document otherwise than as provided in that subsection; or

(b)    affects the power of a court to authorize service of a document otherwise than as provided in that subsection.

29 Meaning of service by post

(1)    Where an Act authorizes or requires any document to be served by post, whether the expression “serve” or the expression “give” or “send” or any other expression is used, then unless the contrary intention appears the service shall be deemed to be effected by properly addressing prepaying and posting the document as a letter, and unless the contrary is proved to have been effected at the time at which the letter would be delivered in the ordinary course of post.

(2)    This section does not affect the operation of section 160 of the Evidence Act 1995.

16    Section 160 of the Evidence Act 1995 (Cth) provides as follows:

160 Postal articles

(1)    It is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia or in an external Territory was received at that address on the seventh working day after having been posted.

 (2)    This section does not apply if:

(a)    the proceeding relates to a contract; and

(b)    all the parties to the proceeding are parties to the contract; and

(c)    subsection (1) is inconsistent with a term of the contract.

(3)    In this section:

working day means a day that is not:

  (a)    a Saturday or a Sunday; or

(b)    a public holiday or a bank holiday in the place to which the postal article was addressed.

Note: Section 182 gives this section a wider application in relation to postal articles sent by a Commonwealth agency.

Consideration

17    The plaintiff submitted that, on 2 February 2021, because Mr Baird (a co-director of the plaintiff) knew that:

(a)    The defendant had vacated Unit 4B, 69 Darling Street, which was, then and until 18 March 2021, its registered office (notwithstanding the requirements of s 146 of the Corporations Act), service on the defendant under s 109X(1)(a) of the Corporations Act would not have been possible; and

(b)    The defendant had changed its physical address to 10/15 Darling Street,

the statutory demand and accompanying affidavit were sent to 10/15 Darling Street by prepaid express post on that day.

18    The plaintiff submitted that the evidence discloses that 10/15 Darling Street is the defendant’s head office. Therefore the statutory demand and accompanying affidavit were properly served on the defendant on 3 February 2021 in accordance with s 28A of the Acts Interpretation Act. It is unnecessary to rely on the statutory presumption under s 29 of the Acts Interpretation Act because it is conceded that the express post envelope containing those documents was delivered to 10/15 Darling Street on 3 February 2021 at 12.39 pm. It was not necessary to identify the person who accepted the express paid envelope as leaving it at or sending it by prepaid post to the defendant’s head office, registered office or principal place of business was sufficient for the purposes of s 28A of the Acts Interpretation Act.

19    The plaintiff’s written submissions contend that communications with Australia Post demonstrate that the express post envelope was delivered to Mr Spencer (then and now a director of the defendant) on 3 February 2021 at 12.39 pm. However, the plaintiff is not entitled to rely on that evidence as it was not in admissible form and it was ultimately not read by the plaintiff. Evidence obtained from Australia Post by the defendant contradicted that evidence, and it was also inadmissible for the same reasons and was not read.

20    In my view, as at 3 February 2021, the functions conducted by the defendant’s finance and technology team out of the office on the upper mezzanine floor of 10/15 Darling Street and the fact that the chief executive officer and director had an office there which he used indicate that the office space occupied by the defendant on the upper mezzanine floor is its head office. Mr Baird has also identified instances where the defendant’s website identifies those premises as its “HQ”.

21    In Statutory Demands and Winding Up in Insolvency (2nd ed, LexisNexis Butterworths, 2012) at [3.43], its author, Farid Assaf SC states that opinion is divided as to whether s 28A of the Acts Interpretation Act applies to service on a company. Decisions of the judges of the Supreme Court of New South Wales suggest that s 28A is available as a means of establishing service of a statutory demand on a company: see Polstar Pty Ltd v Agnew [2007] NSWSC 114; (2007) 208 FLR 226 at [16] (Barrett J) (Polstar) and Woodgate v Garard Pty Ltd [2010] NSWSC 508; (2010) 239 FLR 339 (Woodgate) at [44] (Palmer J).

22    Mr Assaf SC notes that, in the Full Court decision in Rochester Communications Group Pty Ltd v Lader Pty Ltd [1997] FCA 189; (1997) 143 ALR 648 (Rochester) at 659, Beaumont J found that s 28A is not an available means of establishing service on a company. That case related to whether or not an application to set aside a statutory demand had been served on the creditor within the required timeframe when it was served at the office address of one of its directors, being an address used for service of documents in other litigation between the parties. At 659, Beaumont J said:

… I consider that s 220(1)-(6) of the Corporations Law is a clear contrary statutory provision. Section 109X is, I think, helpful in understanding s 220. The former allows service on a body corporate other than a company by leaving the document at, or sending it by post to, the head office, a registered office, or the principal office of the body corporate. Thus it permits several wider means of service upon a body corporate other than a company. The clear intention of s 109X and s 220(1)-(6) is that service upon a company must be in accordance with s 220(1)-(6) as expanded by the limited exceptions under subs (7). I consider that O 72, r 3 allows service in those ways specified on bodies corporate which are not companies under the meaning of the Corporations Law. Thus, for example, it clearly allows service by those wider methods upon a municipality [emphasis mine].

Master Bredmeyer went on to say [in Montarello v Berkman Capital (SC(WA), 18 June 1996, unreported)] (at 5):

…

I consider that s 76 of the Interpretation Act 1984 [WA] and s 28A of the Acts Interpretation Act 1901 (Cth) do not apply to justify the service effected in this case. Both of those sections allow for wider means of service upon a corporation but both state that those provisions only apply, in effect, where there is no contrary provision in an Act directing service in a particular way. As I have said above, s 220 of the Corporations Law is a contrary provision.

I agree, with respect, that s 28A of the Acts Interpretation Act does not apply to service on a company; and I further agree that, although having regard to the provision of s 220(7), s 220 of the Law is not, to that extent, a complete code. Nonetheless, the provisions of s 220(1)-(6) generally govern service on a company.

23    Section 28A of the Acts Interpretation Act was inserted into that Act by s 15 of the Acts Interpretation Amendment Act 1984 (Cth) (No 27 of 1984). In May 1996, when the issue for decision in Rochester arose, it was in the same form as currently.

24    Sections 109X and 109Y of the Corporations Law (Cth) under consideration in Rochester were situated in Div 8 of Part 1.2 headed “Miscellaneous interpretation rules” and provided as follows:

109X    Service of documents

(1)    For the purposes of any provision of this Law that requires or permits a document to be served on a person, whether the expression serve, give or send or any other expression is used, the document may be served:

(a)    on a natural person:

   (i)    by delivering it to the person personally; or

(ii)    by leaving it at, or by sending it by post to, the address of the place of residence or business of the person last known to the person serving the document; or

(b)    on a body corporate other than:

(i)    a company; or

(ii)    a recognised company; or

(iii)    a registered body;

by leaving it at, or sending it by post to, the head office, a registered office or a principal office of the body corporate.

(2)    Nothing in subsection (1):

(a)    affects the operation of any other provision of this Law or any other law of the Commonwealth or of this or another jurisdiction that authorises the service of a document otherwise than as provided in that subsection; or

(b)    affects the power of a court to authorise service of a document otherwise than as provided in that subsection.

(3)    Service on director or secretary

In addition to the methods of service referred to in subsection (1), a document may be served on, or delivered to, a director or secretary:

  (a)    in their capacity as a director or secretary; or

(b)    for the purposes of a proceeding in respect of conduct they engaged in as a director or secretary;

by leaving it at, or posting it to, the alternative address notified to the ASC under subsection 242(1), (2) or (8).

(4)    Subsection (3) applies whether the service or delivery is made for the purposes of a provision of this Law or for the purposes of another law.

109Y    Meaning of service by post

Where a provision of this Law authorises or requires any document to be served by post, whether the expression serve or the expression give or send or any other expression is used, then:

(a)    the service is taken to be effected by properly addressing and posting (under pre-paid post) the document as a letter to the last known address of the person to be served; and

(b)    unless the contrary is proved, the service is taken to have been effected at the time at which the letter would have been delivered in the ordinary course of post.

25    Section 220 was in Part 3.1 of the Corporations Law in May 1996, along with ss 217-219 which related to the registered office and name of a company. Section 220 provided as follows:

220    Service of documents on company

(1)    A document may be served on a company by leaving it at, or by sending it by post to, the registered office of the company.

(2)    For the purposes of subsection (1), the situation of the registered office of a company:

(a)    in a case to which neither paragraph (b) nor paragraph (c) applies - shall be deemed to be the place notice of the address of which has been lodged under subsection 218 (1);

(b)    if only one notice of a change in the situation of the registered office has been lodged under subsection 218 (3) - shall, on and from:

(i)    the day that is 7 days after the day on which the notice was lodged; or

(ii)    the day that is specified in the notice as the day from which the change is to take effect;

whichever is later, be deemed to be the place the address of which is specified in the relevant notice; or

(c)    if 2 or more notices of a change in the situation of the registered office have been lodged under subsection 218 (3) - shall, on and from:

(i)    the day that is 7 days after the day on which the later or latest of those notices was lodged; or

(ii)    the day that is specified in the later or latest of those notices as the day from which the change is to take effect;

whichever is later, be deemed to be the place the address of which is specified in the relevant notice;

and shall be so deemed to be that place irrespective of whether the address of a different place is shown as the address of the registered office of the company in a return or other document (not being a notice under subsection 218(3)) lodged after the notice referred to in paragraph (a) or (b), or the later or latest of the notices referred to in paragraph (c), was lodged.

(4)    Without limiting the operation of subsection (1), a document may be served on a company by delivering a copy of the document personally to each of 2 directors of the company who reside in Australia or an external Territory.

(4A)    Without limiting the operation of subsection (1), a document may be served on a proprietary company that has only one director by delivering a copy personally to that director.

(5)    Where a liquidator of a company has been appointed, a document may be served on the company by leaving it at, or by sending it by post to, the last address of the office of the liquidator notice of which has been lodged.

(6)    Where an official manager of a company has been appointed, a document may be served on the company by leaving it at, or by sending it by post to, the last address of the office of the official manager notice of which has been lodged.

(7)    Nothing in this section affects:

(a)    the power of the Court to authorise a document to be served on a company in a manner not provided for by this section; or

(b)    the operation of an Australian law authorising a document to be served on a company in a manner not provided for by this section.

26    It is notable that Beaumont J appears to have given no weight to s 220(7)(b). In Players Pty Ltd v Interior Projects Pty Ltd (1996) 133 FLR 265; (1996) 20 ACSR 189 (Players), Lander J rejected an argument based on ss 109X(2) and 220(7), as then enacted, that service on a creditor of an application under s 459G had to be in accordance with court rules which were saved under s 109X(2) and s 220(7). His Honour found that that would leave no work for the principal subsections of those provisions to do. He further found that those sections “contemplate that there be a form of service of summonses, orders and other legal processes throughout the Commonwealth so that a party resident in one State is able to know, without going to the local rules of another State, how that party ought to effect service”. That was a view with which Young J disagreed in Howship Holdings Pty Ltd v Leslie (1996) 41 NSWLR 542 at 544-545. Justice Young found that s 109X as then enacted was facultative not mandatory, noting that the words used in s 109X(1) were “may be served”.

27    By the Company Law Review Act 1998 (Cth) (Act No 61 of 1998), Part 3.1 was repealed and new provisions dealing with registered offices and places of business were moved to a new Part 2B.5. Section 109Y was not amended or repealed. Section s 109X was amended to read as follows:

109X Service of documents

(1)    For the purposes of any law, a document may be served on a company or recognised company by:

  (a)    leaving it at, or posting it to, the company’s registered office; or

(b)    delivering a copy of the document personally to a director of the company who resides in Australia or in an external Territory; or

(c)    if a liquidator of the company has been appointed—leaving it at, or posting it to, the address of the liquidator’s office in the most recent notice of that address lodged with the ASC; or

(d)    if an administrator of the company has been appointed—leaving it at, or posting it to, the address of the administrator in the most recent notice of that address lodged with the ASC.

(2)    For the purposes of any law, a document may be served on a director or company secretary (in addition to the methods of service set out in subsection (4)) by leaving it at, or posting it to, the alternative address notified to the ASC under subsection 242(1) or (3) or section 117 or 601BC. However, this only applies to service on the director or company secretary:

(a)    in their capacity as a director or company secretary; or

(b)    for the purposes of a proceeding in respect of conduct they engaged in as a director or company secretary.

(3)    Subsections (1) and (2) do not apply to a process, order or document that may be served under section 9 of the Service and Execution of Process Act 1992.

(4)    For the purposes of this Law, a document may be served on an individual by:

(a)    delivering it to the person personally; or

(b)    leaving it at, or posting it to, the residential or business address of the person last known to the person serving the document.

(5)    For the purposes of this Law, a document may be served on a body corporate other than a company, recognised company or registered body by leaving it at, or posting it to, the head office, a registered office or the principal place of business of the body corporate.

(6)    This section does not affect the operation of a law or the power of a court to authorise a document to be served in a different way.

(7)    This section applies to provisions of a law dealing with service whether it uses the expression “serve” or uses any other similar expression such as “give” or “send”.

28    The manner in which s 109X was amended by the Company Law Review Act maintained the clear distinction between “companies” and “bodies corporate” in the former enactments of ss 109X and 220 but also maintained (in s 109X(6)) the saving for other methods of service which existed in the former s 109X(2) and s 220(7).

29    The Explanatory Memorandum to the Company Law Review Bill 1997 at [8.36] explained the purpose of these amendments as being:

8.36    The rules about service of documents on companies have been moved to a redrafted section 109X (Bill Schedule 2 Item 55). As at present, it will be possible to serve documents (including legal process) on companies by posting them to the registered office. To simplify service on companies where there is a difficulty in sending documents to the company’s registered office, the Bill will allow service on a company by personal service on 1 director of the company rather than 2 (Bill Schedule 2 Item 55). The change is consistent with the degree of responsibility which individual directors have in relation to the affairs of their company.

30    It would appear that the amendments were designed to produce the same effect as the former ss 109X and 220, save that companies might now be served by service on one, rather than two, directors.

31    When the corporations power was referred to the Commonwealth by the States and Act No 50 of 2001 was enacted, s 109Y was not included and s 109X was enacted in relevantly the same form as that set out at [15] above, save that subsections (4) (service on an individual) and (5) (service on bodies corporate other than companies, recognised companies and a registered body) were not included.

32    The Explanatory Memorandum for the Corporations Bill 2001 (Cth) at [5.47]-[5.49] says the following (emphasis added):

Acts Interpretation Act 1901

5.47.    The scope of what is referred by a State Parliament is determined by that Parliament. As the scope of the matters referred is in part determined by reference to a particular text, Bill clause 5C provides that the text referred is to be interpreted in accordance with the Acts Interpretation Act 1901 of the Commonwealth as in force on 1 November 2000. This is intended to preclude any argument that the matters referred differ from State to State (as a result of differences in the local interpretation legislation) or that the scope of the reference may change as a result of amendments of the Acts Interpretation Act 1901. While the Bill applies the Acts Interpretation Act 1901 as at 1 November 2000, it is envisaged that changes to that Act could be applied to the interpretation of the legislation by an appropriate amendment of clause 5C in reliance on the amendment reference (see paragraph 4.10 above).

5.48.    The Bill does not address a number of matters that are currently addressed in both the Corporations Law and the Acts Interpretation Act 1901, on the basis that they will now be covered by the Acts Interpretation Act 1901. In particular, sections 109A to 109Z (inclusive, but excluding sections 109Q and 109X) and section 338 of the Corporations Law have not been included in the Bill. In addition, some definitions in section 9 that are no longer required have not been included in the Bill (for example, the definitions of ‘Account’, ‘calendar month’, ‘calendar year’, ‘Consolidated Revenue Fund’, ‘contravene’, ‘Department’, ‘document’, ‘estate’, ‘Executive Council’, ‘foreign companies law’, ‘foreign country’, ‘Gazette’, ‘Government Printer’, ‘individual’, ‘Jervis Bay Territory’, ‘justice of the peace’, ‘land’, ‘magistrate’, ‘month’, ‘office’, ‘originating provision’, ‘Parliament’, ‘Proclamation’, ‘record’, ‘statutory declaration’, ‘swear’ and ‘writing’).

5.49.    Bill clause 334(2) provides that the Acts Interpretation Act 1901, section 46A (as in force on 1 November 2001), applies to a standard made under clause 334(1) as if it were a disallowable instrument for the purposes of that section. The Acts Interpretation Act 1901 will therefore apply to accounting standards as though the standards were regulations made under an Act of the Commonwealth Parliament.

33    Counsel for the defendant submitted that this legislative history demonstrates that s 109X provides the only manner in which companies may be served with a statutory demand. He submitted that the amendments to the Corporations Law made under the Company Law Review Act drew a clear distinction between companies and other bodies corporate or registrable bodies, as did ss 109X and 220 so that Beaumont J’s reasoning in Rochester remains good law and binding authority in this Court. When Act 50 of 2001 was enacted, s 109X was enacted without subsections (4) dealing with service on individuals and (5) dealing with bodies corporate (other than companies), which were left to be dealt with under s 28A of the Acts Interpretation Act as envisaged in the Explanatory Memorandum. Section 109X was otherwise in the same form (with minor amendments not here relevant) and specifically preserved. Although counsel did not refer the Court to s 5C of the Corporations Act, it is to be inferred that his argument is that s 109X demonstrates a contrary intention of the kind referred to expressly in s 28A of the Acts Interpretation Act as in force on 1 November 2000.

34    The argument was rejected by Barrett J in Polstar at [14]-[16] where he said with reference to the intersection of s 109X and s 28A:

14    The co-existence of these provisions raises questions as to their interaction. A “company” registered as such under the Corporations Act is a “body corporate”: see s.119. Can it be said that s.109X, because it deals specifically with service on such a “company”, excludes the operation of s.28A in relation to service on that species of “body corporate” that such a company is?

15    I am of the opinion that s.109X does not impliedly exclude the operation of s.28A in such a case. Section 109X is not a code regarding service on a company. By providing for specific methods of service on a company, it is facultative, not mandatory. I refer, in that connection, to the decision of Young J (as he then was) in Howship Holdings Pty Ltd v Leslie (1996) 41 NSWLR 542. Section 109X is thus a provision of the same kind as the provision of Commonwealth taxation legislation considered by McDougall J in Deputy Commissioner of Taxation v Keck (2006) 63 ATR 310. That provision used the words “the Commissioner may give the person a notice under section 222AOE by …”. His Honour held that this provision was merely facultative and did not prevent the Commissioner giving a notice of the relevant kind in some manner other than that specified in the provision; also that s.28A of the Acts Interpretation Act made available to the Commissioner some such other manner of giving the notice. In Deputy Commissioner of Taxation v Nercessian [2006] ATC 4693, Santow JA (with whom Mason P and McColl JA agreed) expressed a “provisional view” corresponding with that taken by McDougall J.

16    The case before me warrants the same reasoning. Section 109X makes available (but does not make exclusive or mandatory) a particular mode of service by post upon the type of “body corporate” that is a “company” as defined by the Corporations Act. It does so, moreover, “[f]or the purposes of any law”, not just for the purposes of the Corporations Act. Section 28A, in the form made applicable to the interpretation of the Corporations Act by its own s.5C, makes available (but does not make exclusive or mandatory) a particular mode of service by post upon bodies corporate generally, including those of them that are “companies” as defined by the Corporations Act. It follows, in my view, that when a question of the sufficiency or effectiveness of service for the purposes of s.459G of the Corporations Act arises and that question relates to purported service by post on a “body corporate” that is a “company”, service must be held to be sufficient and effective if made in a way contemplated by either of the provisions.

35    I am persuaded by Barrett J’s reasoning. In light of s 5C of the Corporations Act I do not consider that the mere fact that s 109X remained in the same form (save for the extraction of subsections (4) and (5)) in the Corporations Act when other interpretive provisions in Div 8 of Part 1.2 were removed is a sufficient basis to overcome the apparent intention of the enactment of s 5C at a time when the Corporations Law regime was being removed from the States’ legislative ambit.

36    Further, there have now been decisions in this Court since 2001 which find that s 109X is intended to be facultative and permissive only, albeit without reference to Rochester or Players. In Australian Solar Electrics Pty Ltd v IPD Group Ltd [2012] FCA 786, Gordon J found as follows at [7]-[8]:

7    For present purposes, I agree with and adopt the following principles propounded by Palmer J in Woodgate v Garard Pty Ltd (2010) 78 ACSR 468 at [44] about the proper construction of s 109X and the so called effective informal service rule, namely:

1.    if a document required to be served on a company by the Act is served in accordance with any of the modes prescribed in s 109X(1) of the Act and s 28A of the Acts Interpretation Act 1901 (Cth) (the prescribed modes), the document is validly served;

2.    where service is effected by leaving the document at the company’s registered office in accordance with s 109X(1)(a), it makes no difference whether the document is left within or outside normal business hours or within or outside the hours at which that office is kept open, and the date of service is the date of leaving the document, not when it comes to someone’s attention;

3.    the prescribed modes are not exhaustive. Whether there has been good service depends upon whether the serving party can prove to the Court’s satisfaction that the document actually came to the attention of an officer of the company who was either expressly or implicitly authorised by the company to deal directly and responsively with the document, or documents of that nature (a responsible officer);

4.    there is no special exception to the “effective informal service rule” in the case of service by email or facsimile - the question remains whether that mode of service actually brought the document to the attention of a responsible officer;

5.    where a document, not served in a prescribed mode, comes to the actual attention of the sole director of a company it will be presumed, unless a strong case to the contrary is shown, that the director is the responsible officer and that service is good; and

6.    a party invoking the effective informal service rule bears the onus of proving the time at which the document came to the actual attention of a responsible officer of the company and, in view of the serious consequences which may result, the Court will not lightly draw inferences or make assumptions as to the time of service.

8    Consistent with those principles, the present application must fail. Section 109X is facultative. It is not proscriptive. Section 109X(6) makes that clear: see also Howship Holdings Pty Ltd v Leslie (No 2) (1996) 41 NSWLR 542 at 544-5. In the present proceedings, the demand was not served in a prescribed mode: see s 109X(1). The issue then is whether, consistent with the third principle (see [7] above) the Defendant “can prove to the [C]ourt’s satisfaction that the [demand] actually came to the attention of an officer of the company who was either expressly or implicitly authorised by the company to deal directly and responsively with the [demand], or documents of that nature”.

37    I note that in Woodgate at [44(i)] Palmer J cited Rochester as authority for the proposition that a document required to be served on a company by the Corporations Act, whether or not it initiates proceedings, is validly served if it is “served in accordance with any of the modes prescribed in s 109X and s 28A of the Acts Interpretation Act 1901 (Cth)”.

38    In Deputy Commissioner of Taxation v Starpicket Pty Ltd [2012] FCA 1196; (2012) 212 FCR 578, Greenwood J considered the interaction of s 109X and s 28A at [64]-[72] and found that s 109X was “permissive and facultative only”.

39    Whether or not s 109X of the Corporations Act or s 28A of the Acts Interpretation Act applies as a mode of service of a statutory demand on a company, it is necessary that service be effected at an “office” (unless personally served on a director). I accept the observation made by Barrett J in Polstar at [17]-[18]:

17    The Corporations Act provision contemplates posting to “the company’s registered office”. The Acts Interpretation Act provision also refers to “a registered office”, as well as “the head office” and “a principal office”. The common theme is “office”. Provisions of the Corporations Act imposing requirements with respect to a company’s “registered office” elucidate the meaning of “office” in the expression “registered office”. Those provisions make it clear that such an office may only be at a location capable of being “open to the public”: see s.145(1). It must also be a location at which it is possible to display prominently the company’s name (s.144(1)) and the words “Registered Office” (s.144(2)). Furthermore, it is contemplated that there will be “premises at the address of” the registered office (see s.143(1)) and that “premises” will be used “as the address of the company’s registered office” (s.143(2)(a)).

18    In short, the Corporations Act’s concept of “office”, in the references to “registered office”, is one centred on a physical location in the nature of premises (that is, a building or a room in or section of a building) to which persons may go and which can be identified by prominent display as a company’s registered office. I am of the opinion that the Acts Interpretation Act reflects a similar concept of “office” in its references to “registered office”, “head office” and “principal office”.

40    I generally accept Mr Spencer’s evidence and, in particular, the evidence that the office occupied by the defendant is on the upper mezzanine floor of 10/15 Darling Street and therefore that it does not occupy the whole of those premises.

41    In light of Mr Spence’s evidence and the defendant’s concessions referred to at [10] above:

(1)    Having regard to the consequences for a debtor company under the regime established by Part 5.4 of the Corporations Act on the basis of a company’s failure to comply with a statutory demand within the timeframe specified in s 459F, strict proof of service and the timing of service is required. The Court will not lightly draw inferences or make assumptions as to the timing of service.

(2)    The statutory demand and accompanying affidavit were not served on the defendant in accordance with s 109X(1)(a) or (1)(b) of the Corporations Act on 3 February 2021 since they were not served at its registered office as disclosed by ASIC’s records and they were not personally served on Mr Spencer having regard to the evidence that he was at home in the suburb of Downer at 12.39 pm on that day.

(3)    The fact that Mr Baird knew that the defendant did not occupy the premises at Unit 4B, 69 Darling Street has no bearing on the proper mode of service under s 109X. While it may be an abuse of process for a creditor to serve a statutory demand at a registered office at a time the creditor knows it is unoccupied, any potential abuse may be cured by separate email notification. In the context of a creditor which provides information technology services to a company which conducts its business online, it is remarkable that the expedient of sending an email to Mr Spender at the defendant’s email address after posting the statutory demand and accompanying affidavit to or leaving them at the registered office was not employed. That may reflect the fact that the plaintiff did not obtain legal advice before embarking on the procedure which was adopted.

(4)    As the express post envelope was not addressed to the defendant at the office on the upper mezzanine floor of 10/15 Darling Street where the head office conducted business, s 28A of the Acts Interpretation Act was not engaged. For the same reason, s 160 of the Evidence Act can have no operation.

(5)    There is no evidence of the whereabouts of the express post envelope from 12.39 on 3 February 2021 until the afternoon of 10 February 2021 when Mr Spencer found it in the defendant’s office on the upper mezzanine floor.

(6)    The express post envelope and its contents were informally served on the defendant when Mr Spencer found the envelope on his desk in an office occupied by the defendant on the upper mezzanine floor of 10/15 Darling Street on 10 February 2021: see Derma Pharmaceuticals Pty Ltd v HSBC Bank Australia Ltd [2005] SASC 48; (2005) 188 FLR 373 at [24] (Besanko J).

42    Having regard to these findings it is not necessary for me to determine whether or not the plaintiff was, in fact, a creditor when the winding up application was filed and served on the defendant.

Conclusion

43    The separate issue concerned whether the defendant failed to comply with the statutory demand within the timeframe required by s 459F of the Corporations Act. As the statutory demand and accompanying affidavit were served on the defendant on 10 February 2021 and the demand was satisfied in full on 1 March 2021, the statutory demand was satisfied within the timeframe required by s 459F and no presumption of insolvency arises under s 459C(2)(a) of the Corporations Act. As the originating process relied on a failure to pay within the required timeframe, the application should be dismissed with costs.

Associate:

Dated:    26 March 2021