A statutory demand is a useful tool for creditors in recovering debts. However, there are strict standards that need to be complied with particularly in relation to service of the statutory demand. A failure to comply with these standards may render a statutory demand invalid and lead to it being set aside by a court.
In this article, we will provide an overview of the service requirements for statutory demands with a focus on service by post.
How can service of a statutory demand be effected?
Section 109X of the Corporations Act 2001 (the Act) provides that a document may be served on a company by:
- leaving it at, or posting it to, the company’s registered office; or
- delivering a copy of the document personally to a director of the company who resides in Australia or in an external Territory; or
- if a liquidator, administrator or restructuring practitioner has been appointed in respect of the company—leaving it at, or posting it to, the address provided for the liquidator, administrator or restructuring practitioner in the most recent notice of that address lodged with ASIC.
All Australian companies must provide ASIC with the address of their registered office, and the Act requires that a company lodge notice of a change of address of its registered office with ASIC within 28 days of the change.[1]
If a statutory demand is served by post to a company’s registered address, it is presumed to have been received at that address on the seventh working day after being posted.[2]
The risks of service by post
Once a statutory demand has been served on a debtor company, it has 21 days to either comply with the demand or apply to the Court under section 459G of the Act for an order that the statutory demand be set aside.
A debtor company may argue that it did not receive the statutory demand on the day that it was served, or alternatively, that it never received it. Therefore, it is crucial that the statutory demand and envelope enclosing the demand precisely reflect the address of the debtor company’s registered office as shown on an ASIC company search.
Minor differences in the address used for effecting service of a statutory demand by post can lead to a finding that that manner of service was invalid. For example:
- where an envelope enclosing a statutory demand was addressed to the correct street address for a company’s registered office in North Sydney, but the postcode shown on the envelope was for the Sydney central business district (In the matter of VO Group Australia Pty Ltd [2023] NSWSC 852).
- a creditor company was aware from communications with a debtor company that the debtor company had vacated their registered office and were operating from the ‘upper mezzanine floor’ of a head office in Mitchell. That is, the debtor company did not occupy the whole of the head office premises. However, the envelope enclosing the statutory demand was not addressed to the ‘upper mezzanine floor’ of the head office (Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257).
What next?
If you are a creditor seeking to recover a debt, or debtor who has been served with a statutory demand, you should seek advice from a debt recovery or insolvency expert as soon as possible.
At Hunt & Hunt, we have a specialist debt recovery and insolvency team who can assist you with anything debt recovery related, including advising and acting for you throughout the process of issuing or responding to a statutory demand.
Our considerable experience across all jurisdictions within Australia can provide you with the comfort to know you are being looked after by the best during this stressful time.
If you require advice on your specific circumstances, please don’t hesitate to get in touch.
Article by Matt Gauci, Partner, Jessica Egger, Senior Associate and Stephanie Luong, Lawyer
[1] Corporations Act 2001 (Cth), sections 142 and 601CT as applicable
[2] Evidence Act 1995 (Cth), section 160
