Service of Statutory Demand by email

By Drazen Kozaric, Special Counsel – [SOURCE]

In Bioaction Pty Ltd v Ogborne, in the matter of Bioaction Pty Ltd [2022] FCA 436 provisions of sections 105A and 105B of the Corporations Act (“the Act”)regarding service of applications to set aside a statutory demand were considered for the first time by the courts.

Facts

On 3 February 2022, Bioaction filed an application seeking an order to set aside a statutory demand served by the respondent on 13 January 2022. The application was served via an email. The statutory demand did not give any email address for service.

Between 1 December 2021 and 3 February 2022, legal representatives of the parties engaged in email communication in relation to the demand. The respondent’s legal representative used the firm’s letterhead (as attachments) containing their email address during this communication. Both parties agreed that the last day of the statutory period to file and serve the application was 3 February 2022.

On 3 February 2022, the respondent’s solicitor turned off her computer and left her office just before 3pm. At 4:48pm the applicant’s solicitor served a sealed copy of the application(in PDF format) by email on the respondent’s solicitor. The next day the respondent’s solicitor confirmed the receipt of the documents and email at 4:48pm on 3 February 2022, but advised the applicant’s solicitor that:

1. she had no instructions to accept the service of the Court documents by email; and
2. the applicant had failed to make a valid application under s459G of the Act, because it had failed to serve the application within the (21 day) statutory period.

Amongst other things the respondent argued that:

• the documents were served late because the respondent’s solicitor’s computer was off at the time the email was sent, therefore the delivery was only effected when she turned on her computer the next day;
• the meaning of “service” in the context of s 459G extend beyond mere delivery and contemplate a result that enables the document to be read and dealt with; and
• the documents were not converted into a legible form at the address nominated in the statutory demand until 4 February 2022when the PDF reader was used to convert the document into a legible version on a screen or printed as a hard copyinto a legible copy of the document.

Decision

The court stated that sections 459G and 9 do not define what constitutes service. In that regard, it referred to Howship Holdings Pty Ltd v Leslie [1996] NSWSC 314; 41 NSWLR 542 where the court, amongst other things,said that:

“Section 459G itself does not deal with what is service. The ordinary meaning of “service” is personal service, and personal service merely means that the document in question must come to the notice of the person for whom it is intended. The means by which that person obtains the document are usually immaterial…”

It further said that:

1. Other means of service may be adopted if those other means result in the documents arriving at the nominated address within the statutory period;
2. What is critical is the result which is achieved by the plaintiff’s efforts, not the manner by which that result has been achieved;
3. While  section 459G application is an originating process of the Court involving  formal rules of service,  personal service is not required;
4. As the statutory demand must nominate a place at which the application may be served on the creditor, the service requirement of the section is met when the documents are served to that address; and
5. Section 600G allows that a document be given by means of an electronic communication if it is reasonable to expect the document would be readily accessible so as to be usable for subsequent reference and the recipient has a nominated electronic address.

The court was satisfied that it was reasonable for theapplicant to believe that the email address it used to serve the document was used by the respondent’s solicitor for communications. This was supported by the fact that the respondent’s solicitor had used this email to communicate with the applicant’s solicitor prior to the service of the documents.

The Court also cited Bowskill J in SGR Pastoral:

“[37] In the case of service by email, in my view, what must be shown is that the electronic copy of the application and supporting affidavit was received, in a complete and legible form, at the address for service, within the prescribed time. That is, that the email was sent to an email address that belongs to the nominated agent for service …; that the email attaching the documents to be served actually arrived at the email address; and that the email and attached documents were capable of being opened and read (even if they were not opened and read until later).”

Consequently, the application was deemed to have been served within the statutory period.

Note:It was held in C & E Pty Ltd v Corrigan [2006] QCA 047 that the 4pm deadline under rule 103 of the UCPR did not apply to time for services under s459G(3). Therefore, service of a statutory demand between 4 and 5pm is fine. Autumn Solar Installations Pty Ltd v Solar Magic Australia Pty Ltd [2010] NSWSC 463 is an authority that an application to set aside a statutory demand can be served until midnight on the 21^st day.

Key takeaway

In relation to s459G, a consent of the recipient is not necessary to effect the service via electronic communication, if it was reasonable for the applicant to believe that the email address used to serve documents was used by the recipient for communications. This applies even if the address for service of the recipient does not include the email address. To prove the service the sender needs to show thatthe email:

1. was sent to an email address that belongs to the nominated agent for service;
2. attaching the documents to be served arrived at the email address; and
3. and attached documents were capable of being opened and read;

within the time specified for service.