In one of our recent matters, a client instructed us to bring winding up proceedings against four companies with the same sole director. The total debt across the four companies was over $300,000.00. Whilst there were four applications before the Court, one common issue was whether the companies had been properly served with the statutory demands relating to the debt owed.
On 11 April 2019, statutory demands were sent to all four companies, with the demands posted to the registered offices of the defendants according to the records of ASIC. Unbeknownst to the creditor, the director had vacated the registered premises of two of the companies over a year earlier, but had failed to update ASIC’s records in respect of this change, and had not put in place a mail-forwarding system. The demands addressed to the other two companies were sent to the office of the director’s solicitor.
No application to set aside the statutory demands was filed by any of the 4 companies. Therefore winding up proceedings were filed against the companies on 28 May 2019. The Originating Processes in respect of the winding up applications were served at the same addresses that the statutory demands had been sent.
In defending the winding up proceedings, the companies’ director said he had not received the statutory demands, and that the court should accept his sworn evidence that he did not become aware of the proceedings until 24 June 2019, when he was conducting an online search of the court list in respect of other proceedings..
The matter was scheduled for a heated contest on whether or not the statutory demands had been properly served, or whether the debtors could prove that they had not arrived. This is a tricky dispute depending upon issues including the difference between proof of non-receipt, on the one hand, and non-delivery on the other (and yes these are different!). Ultimately the Court would have had to determine this as a question of fact. However, wisely, the creditor had had the foresight to not only serve the statutory demand by post, but also send a copy to an email address used previously by the director.
This evidence was the debtor’s downfall. Justice Rees held that where the demands had been sent to “an apparently current and working email address” the court was not inclined to accept the director’s evidence as proof the demands had not arrived. In the end the judge determined that the statutory demands had been served on 24 April 2019.
This decision highlights that although not normally a formal means of serving documents (and in particularly statutory demands) there is sometimes a benefit in going the extra step to bring the documents to the attention of a debtor.
You can read the decision in full here.
If you would like more information or advice in relation to insolvency, restructuring or debt recovery law, contact 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.
