This week's TGIF considers a recent decision of the NSW Supreme Court, in which the Court had to determine whether an application to set aside a statutory demand, served interstate electronically, was served within the 21-day statutory period.
Key Takeaways
- While the decision relates to an application served prior to
the repeal of section 600G of the Corporations Act 2001 (Cth)
(Corporations Act), it is a reminder that electronic service of
processes and applications pursuant to Chapter 5 of the
Corporations Act is no longer valid service. Documents served on a
company pursuant to the Corporations Act should continue to be
served in compliance with 109X and 601CX of the Corporations Act,
either in person or by registered post to the company's
registered office. Service on a company's solicitor is not
effective.
- Additionally, the decision is also a reminder that documents
served interstate under the Corporations Act must comply with the
mandatory requirements of the Service and Execution of Process Act
1992 (Cth) (SEP Act), which expressly excludes the application of
sections 109X and 601CX of the Corporations Act to a process,
service or document served under the SEP Act.
- Take care and act early when effecting service. Doing so ensures service is technically effective and allows time to rectify any mistakes that render the service ineffectual.
In the matter of Riverina Solar Pty Ltd [2024] NSWSC 480, the NSW Supreme Court considered the statutory interpretation of section 600G of the Corporations Act (a section that had allowed for the electronic service of documents under Chapter 5 of the Corporations Act and was repealed in September 2023) and its interaction with the service requirements of the SEP Act governing interstate service of documents.
Background
The facts of the case were as follows:
- On 25 May 2023, the defendant, Tellhow International
Engineering & Contracting Co., Ltd (being a foreign company
registered under the Corporations Act with a registered office in
Sydney), served a statutory demand on the plaintiff, Riverina Solar
Pty Ltd.
- The 21-day period within which Riverina was entitled to apply
to a court to set aside the statutory demand under section 459G of
the Corporations Act expired at midnight on 15 June 2023.
- The statutory demand was served under cover letter from the
Tellhow's solicitors specifying phone numbers and email
addresses. The application specified the Tellhow's
solicitors' Sydney address as the address for service.
- On 15 June 2023, Riverina filed an application to set aside the
statutory demand, together with a supporting affidavit, in the
Supreme Court of Queensland.
- Between 11.37 pm and 11.56 pm on 15 June 2023, Riverina's solicitors sent a series of emails to Tellhow's solicitors attaching copies of the originating application, the supporting affidavit, the exhibit to the supporting affidavit, and the notice required by section 16 of the SEP Act. Those emails were received before midnight.
Her Honour Justice Williams determined that the matter could be resolved by consideration of the following four issues:
Does section 600G of the Corporations Act apply to the service of an application and supporting affidavit under section 459G?
If the answer to (1) is yes, is service in accordance with section 600G sufficient to satisfy section 459G(3) of the Corporations Act in circumstances where section 15(3) of the SEP Act requires service to be effected in accordance with section 9 of the SEP Act?
If the answer to both (1) and (2) is yes, does the sending of an email, attaching relevant documents, to the email address of the solicitor acting on behalf of a creditor, in respect of a statutory demand, amount to leaving those documents at the creditor's registered office within the meaning of section 9(5) of the SEP Act?
If the answer to (1), (2) and (3) is yes, was service by email effective in this case in circumstances where the prescribed notice under section 16 of the SEP Act was given by email?
Relevantly, section 459G(3) of the Corporations Act provides that an application to set aside a statutory demand is made in accordance with section 459G where copies of the application and supporting affidavit are served on the person who served the demand on the company.
Section 600G of the Corporations Act (which has since been repealed) provided that, with documents served pursuant to Chapter 5, documents "required or permitted to be given to a person" could be given to the recipient by electronic communication or by giving the recipient sufficient information to allow the recipient to access the document electronically.
Section 9 of the SEP Act provides that service of a process, order or document under the SEP Act on a registered body is to be effected by leaving it at, or by posting it to, the body's registered office. Section 15(3) of the SEP Act provides that service on a company or registered body must be effected in accordance with section 9. Section 16 of the SEP Act provides that service is only effective if copies of prescribed notices are attached to the process served.
Decision
In regard to the first issue, her Honour held that section 600G of the Corporations Act did apply to the service of the section 459G application and supporting affidavit in this case. In coming to this conclusion, her Honour considered in detail the decision of Cheeseman J in In the matter of Bioaction Pty Ltd (2022) 402 ALR 542. In that case, which notably did not involve the SEP Act, Cheeseman J held that:
- Section 600G of the Corporations Act applied to any document
required or permitted to be given to a person under Chapter 5 of
the Corporations Act.
- An application under section 459G of the Corporations Act and
supporting affidavit fall within the definition of documents in
section 9 of the Corporations Act.
- Such broad interpretations were supported by the legislative history and wording of section 600G and section 459G, respectively.
In regard to the second issue, her Honour held that service in accordance with section 600G was not sufficient to satisfy section 459G(3) of the Corporations Act in circumstances where section 15(3) of the SEP Act requires service to be effected in accordance with section 9 of the SEP Act. Her Honour found that the provisions of section 15(3) of the SEP Act are specific and mandatory, and could not be overridden by the 'general, facultative provisions' of section 600G of the Corporations Act.
In regard to the third issue, her Honour held that emailing an application and supporting affidavit to a creditor's solicitors did not constitute leaving such documents at the creditor's registered office within the meaning of section 9(5) of the SEP Act.
Her Honour noted that a solicitor is a fiduciary who acts on behalf of and in the interests of their client; thus, a solicitor's email and geographical addresses are not interchangeable with those of the client.
In light of her Honour's conclusions as to the second and third issues, her Honour determined it was unnecessary to consider the fourth issue.
Her Honour ultimately found that the application to set aside the statutory demand had not been served within the 21-day statutory period because sending the application and supporting affidavit to Tellhow's solicitors by email did not comply with section 15(3) of the SEP Act and, therefore, did not constitute effective service.
Comment
While the decision highlights how issues can arise due to the technicalities of service requirements, it is a reminder to carefully consider service requirements and act promptly in effecting service, and correcting any errors which have been made.
The repeal of section 600G of the Corporations Act means that service of documents under Chapter 5 of the Corporations Act by email will not constitute valid service going forward. Further, when serving documents under the Corporations Act interstate, the provisions of the SEP Act, which expressly excludes the application of sections 109X and 601CX of the Corporations Act, must be complied with.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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