Legal
Hedging your bets How to ensure your statutory demand has been properly served By Phoebe Pitt MICM and Mark Wenn MICM*
Phoebe Pitt MICM
Properly used, a creditors statutory demand pursuant to s459E of the Corporations Act 2001 (Cth) (CA) can result in orders for the winding up of a debtor company, and an order that the creditor’s costs of the winding up be paid out of the debtor company in liquidation with priority ahead of other creditors. A recent Federal Court case again highlights the complexity for creditors in the proper use of statutory demands, particularly as regards service. In the age of “working from home” and virtual offices, where administration protocols for mail dispatch may be less sophisticated, this case is a further timely reminder of the need for rigor around the effective use of statutory demands.
Facts In Intelogent Pty Limited v Onthego Group Pty Limited [2021] FCA 257, a creditor’s application to wind up the respondent (Onthego) under s459P CA was dismissed on the basis that – due to irregularities in service and the invocation of the effective informal service rule – the statutory demand
Mark Wenn MICM
and its supporting affidavit had been served in time. Onthego is a purely online sporting apparel company, to which the creditor (Intelogent) provided IT services. Intelogent issued the demand in respect of two invoices totalling approximately $25,000. Shortly before the demand was prepared, Onthego had vacated its registered office (a fact known to Intelogent) and was working from the mezzanine floor (Mezzanine) at its operations factory (Factory), a fact also known to Intelogent. Onthego gave evidence, which the Court accepted, that its office did not comprise the entirety of the Factory, but solely the Mezzanine. The relevant director, Mr Spencer, sometimes worked from his office on the Mezzanine but also often worked from his home office in Canberra. Intelogent sent the demand by prepaid express post on 3 February 2021, not to the address at which it was then registered with ASIC, but to the Factory (importantly, though, not to the Mezzanine). Onthego claimed that the affidavit did not come to Mr
“In the age of “working from home” and virtual offices ... this case is a further timely reminder of the need for rigor around the effective use of statutory demands.”
60 CREDIT MANAGEMENT IN AUSTRALIA • July 2021
