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Is a Creditor's Statutory Demand for Payment of Debt left in a letter box validly served? |
This question was considered in the NSW Supreme Court the recent matter of James v Ash Electrical Services Pty Ltd (2008) 26 ACLC 1252. |
In this matter the plaintiff sought to wind up the defendant company on the grounds of insolvency. Essential to an application of this type is proof that the Creditor's Statutory Demand for Payment of Debt was properly served on the debtor. |
The onus of establishing service rests with the plaintiff in these matters. |
The process server placed the statutory demand in an envelope, addressed to the defendant, care of its accountant's office at Suite 1A of the road side address, and placed the envelope in the Suite 1A letter box out the front of the office building at 8pm one evening when the office was closed. |
The plaintiff maintained that the statutory demand was served on the defendant in accordance with Section 109X(1)(a) of the Corporations Act 2001 which states that:
"… For the purpose of any law, a document may be served on a company by: (a) leaving it at… the company's registered office…"
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The defendant argued that the letter box, which was located on the outside wall of the office building, could not be regarded as part of the registered office. |
The court found that service had not been affected because the plaintiff had failed to produce evidence that demonstrated that the envelope left in the letter box at 8pm had in fact entered Suite 1A so as to come to the attention of the agents of the defendant. |
The result of this decision meant that the plaintiff did not have the benefit of any presumption of insolvency under Section 459 C (2) (a) of the Corporations Act 2001 and was faced with the task of proving insolvency of the defendant by other means. |
