By Hayley Hitch, a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.
Service of a document is a difficult issue at times to be 100% certain that service has been properly effected. Unless a document is personally served on a relevant individual (being the individual relevant to be served or a current appropriate officer of a company), issues may develop from posting a document to a registered office, leaving a document at a property, or otherwise.
The issue of whether a document was correctly served by post in accordance with s 109X of the Corporations Act 2001 (Cth) was raised in the case of Brown v Bluestone Property Services Pty Ltd (“Bluestone”). In this matter, the Plaintiff allegedly served a Creditor’s Statutory Demand upon the Defendant by posting the document to the registered office of the Defendant.
The parties agreed that the address in question was correct. Therefore, the issue was not where the item was sent, but if it was sent at all.
The Defendant claimed that they did not receive the Creditor’s Statutory Demand and only found out about it after being served with the winding up application filed by the Plaintiff. The Defendant thereby filed an Interlocutory Application to dismiss the proceedings based on the claim that the Creditor’s Statutory Demand was never served upon the Defendant company.
In order to decipher whether the Demand was effectively served by post, the following criteria was required to be proved:
- That the relevant document was placed inside an envelope;
- That the envelope had the correct address written/typed on its face;
- That a postage stamp or franking of the required amount was affixed to the envelope; and
- That the envelope was physically deposited into the post (either post box or post office).
The above criteria was also confirmed in the case of In the Matter of Smith & Young Pty Ltd (“Smith”) whereby the Defendant was allegedly served also with a Creditor’s Statutory Demand by post.
Another issue was raised in both the Bluestone case and the Smith case – whether a firm’s usual office practice can be used as evidence to meet the criteria of service by post. In the Bluestone case, evidence was provided that the Creditor’s Statutory Demand was placed in an outgoing tray for daily mail and then the “usual practice” of the firm permitted for sending out the item in the post. Proof of the exact steps taken in respect of the “usual practice” was not made evident. It was deemed that the service of the Demand was not proved in the proceedings due to the lack of evidence showing proof of the postage item being placed in the post.
It can be seen that it is important that there be “evidence of the office practice regarding outgoing mail” and “evidence that the practice was in fact followed on the day in question and that the particular letter was in fact dealt with in accordance with the practice” ([at 14] of Smith) is provided in an affidavit of service where service has been effected by post.
It is important to note that if service is not effected in accordance with the relevant legislation, there is a potential for damage to be caused to your case, including the possibility of a costs order for such circumstances as causing delay or unnecessary attendance at Court. The Bluestone case exhibited just this whereby a costs order was made against the Plaintiffs and they were asked to file a Notice of Discontinuance in respect of the winding up proceedings commenced by the Plaintiffs due to the ineffective service of the Creditor’s Statutory Demand, the subject of the winding up proceedings.
If you are unsure if you have met the requirements required for service, please contact our office to discuss.
Read the article/judgment here
If you would like more information or advice in relation to insolvency, restructuring or debt recovery law, contact Hayley Hitch at hayleyh@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
