By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group
A letter can be posted today and yet be received by the recipient on any number of days thereafter due to various issues that impact on the process between sender and recipient. The Government has attempted to regulate a standard time frame for receipt by various statutory measures to assist to work out the delivery time … but has it?
The need in legal circles to be precise about the date of receipt of a letter became instantly necessary when the High Court of Australia in David Grant and Co Pty Ltd v Westpac Banking Corporation [1995] 184 CLR 265 held unanimously that the time limit of 21 days after service set for the setting aside of a Creditor’s Statutory Demand (“Demand”) was 21 days, a number not to be fudged by any external factors.
A number of parties resort to service of a Demand by post to the registered office of the debtor company. This is an accepted method of service pursuant to section 109X of the Corporations Act 2001 (“the Corporations Act”). The difficulty arises when attempting to determine when the 21 day period for a response to the Demand expires as allowed for under section 459G of the Corporations Act.
Wescat
This was the issue for determination recently by the Western Australian Supreme Court in Advanced Mining & Civil Pty Ltd v Wescat Plant Hire Pty Ltd [2016] WASC 413. The plaintiff debtor (“AMC”) filed an application to set aside the Demand served upon it claiming that there was a genuine dispute over the amount purportedly due to the creditor (“Wescat”) along with an offsetting claim. Wescat opposed the application on the basis that the application was not filed and served within the allocated 21 day period.
The question the Court had to determine was: “When was the Demand delivered to AMC?”
The parties accepted that the letter serving the Demand was properly addressed to AMC’s registered office and agreed on the date it was posted. Wescat relied in part upon the Acts Interpretation Act 1901 (Cth) where at section 29(1) it states:
“Where an Act 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 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.”
To complicate matters, the accountants’ office used by AMC for its registered office had a mail redirection from its street address to a post box. The Demand was delivered by Australia Post to the post box in accordance with the redirection.
The question was therefore: “What is the “ordinary course of post” and can the contrary be proved?”
Ordinary Course of Post
In looking at those questions, the Court noted at [17] and at [18] of its judgment:
“17 It is Wescat’s position, consistent with the authorities, that the ‘ordinary course of post’ is not concerned with particular idiosyncrasies or special arrangements relating to a particular addressee so as to fix a time at which service was effected that is different from the time at which service would have been effected under the general practice operating in the area.
18 It is Wescat’s position that ‘the ordinary course of post’ is instead concerned with the general delivery practices of the postal service as determined by the postal service, for which practices the Australian Postal Corporation (Performance Standards) Regulations 1998 (Cth) (Regulations) determine when mail shall, as a general rule, be delivered”.
Evidence led by Wescat stated the Australia Post Regulations provide that a non-priority letter must be delivered at an address within the State within three business days from the date of posting. The Australia Post Annual Report for 2015 stated that 94.8% of letters were delivered early or on time. Whilst the Demand was not posted in 2015, Wescat argued that this figure should be accepted by the Court as the Australia Post Annual Report from previous years showed similar results and so 2016 results would also be similar.
The Court was satisfied that unless the contrary was proved, service of the Demand confirmed leaving AMC one day late in the filing and service of its application.
AMC relied upon the Evidence Act 1995 (Cth) and specific evidence of the practice of the accounting firm hosting its registered office, together with the practice of Australia Post at the location of the relevant post box. A director of the accounting firm stated that a junior staff member collected the post from the box on Mondays, Tuesdays and Wednesdays between 10am and 2pm. A solicitor employed by AMC contacted Australia Post who confirmed that all postal articles were delivered to the post box by 9am each day.
Whilst strictly speaking such evidence from the accountant and the solicitor was hearsay (because it described what the witness had been told by other people), the Court allowed the evidence favouring the decision of the Court when determining an application to set aside a Demand in ORH Contracting Pty Ltd v CGS Solutions Pty Ltd [2009] WASC 273 which stated at [20] “… that the application is interlocutory in nature and that hearsay evidence is admissible”.
In reviewing the evidence before it, the Court noted the days of collection of the mail by the accounting firm and that the mail was delivered to each post box by 9am. The Court declared that the Demand must have been received by (or, more properly, delivered to) the registered office of AMC after Monday (the 21st day). This finding meant that the 21 day time period for filing and service of an application allowed for under section 459G of the Corporations Act (to set aside the statutory demand) had not expired when AMC’s application was filed.
Informal Service?
In a final twist in the matter, Wescat argued that an informal service of the Demand was sufficient to satisfy the requirements of service of the Demand upon AMC. If accepted by the Court, the application to set aside the Demand by AMC would still have been filed out of time.
Two days after posting the Demand, Wescat’s solicitor sent an email containing the Demand to the Accounts Manager at AMC. The Accounts Manager responded to the email stating
“We have received the documents and I will pass them onto the director”.
Notwithstanding the email and the reply, the Court held that notwithstanding this assertion as to what would happen to the Demand, this did not prove the Director had received it (at [62]):
“I find that Wescat has not proved to my satisfaction that by emailing the Demand to Karene Day on 20 May 2016, the Demand actually came to the attention of an officer of Advanced Mining …”.
Therefore, the Court held that the application to set aside the Demand was filed within time and further as there was a genuine dispute as to the debt claimed, the Demand was set aside.
The need for an assurance of the date of service is a primary reason why many creditors elect to serve the Demand personally upon the registered office of a debtor company. This form of service attempts to eliminate the dispute over when the Demand was delivered, although when considering the matter of Prime City Investments Pty Limited v Paul Jones & Associates Pty Limited & Anor [2013] NSWSC 2, one can never be certain … but that is for another day.
Read the judgment here https://jade.io/article/509749
If you would like more information or advice in relation to insolvency, restructuring or debt recovery law, contact Darrin Mitchell on 02 9806 7428 or darrinm@matthewsfolbigg.com.au or a Principal of the Matthews Folbigg Insolvency, Restructuring & Debt Recovery Group:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au
