Setting aside a Statutory Demand? Look out, you could be struck out if serving interstate

When serving an application to set aside a statutory demand interstate, the strict modes prescribed by SEPA trump service under the Corporations Act (or any mode of informal effective service which might otherwise suffice). Practitioners forgetting this may face a rather abrupt conclusion to proceedings.

A recent decision of the Supreme Court of Victoria confirmed the supremacy of the Service and Execution of Process Act 1992 (Cth) (SEPA) for service of any application crossing state boundaries, over and above service pursuant to the Corporations Act 2001 (Cth).  The case serves as a timely warning of the strict technical regime applicable to both the service of statutory demands, and applications to set them aside.

Complete Equipment Solutions Pty Ltd v Tesab Engineering Limited [2016] VSC 253

The defendant (a company incorporated in the United Kingdom) served a statutory demand asserting an undisputed debt on the plaintiff’s registered office in Victoria.  The statutory demand properly nominated an address in Victoria for service of any application to set aside.  However, the plaintiff chose to ignore the address, and instead served its application via facsimile and email to the Queensland office of the defendant’s solicitors with whom it had separately been negotiating the debt.  Its decision to do so proved fatal.

Section 15 of SEPA enables the service of any proceedings issued in one state to be served in another.  Importantly, SEPA mandates that service on any company, registered body or other body corporate must be effected in accordance with ss 9 or 10 of SEPA as applicable – namely:

  • on the defendant’s registered office or on a director resident in Australia (ss 9(1)-(2)); or
  • for any other body corporate, in accordance with the laws of the state in which it is to be served (or, where those laws are silent, at the defendant’s head office) (ss 10(2)-(3)).

Thus SEPA deprives plaintiffs of the benefit of the “informal effective service” rule[1] otherwise available where proceedings are served in the home state of the court in which the application to set aside the statutory demand is commenced.  That rule could otherwise have validated the plaintiff’s service by facsimile and email if the proceedings were brought to the attention of a responsible officer of the defendant company (which, in any event, the plaintiff had failed to establish).

In this case, the fact that the defendant was a foreign company, and did not have an Australian-resident director, left the plaintiff with only two places to serve the proceedings it issued in the Supreme Court of Victoria: on the Victorian address nominated in the statutory demand, or on the defendant company’s registered office in the United Kingdom.[2]

The case serves as a timely reminder of:

  • the caution that must be exercised when seeking to set aside a statutory demand; and
  • the fact that the choice to serve proceedings in another state will render service entirely invalid unless the strict requirements of ss 9 and 10 of SEPA are adhered to.

 

[1]      See Woodgate v Garard Pty Ltd (2010) 78 ACSR 468 per Palmer J at [44] for a comprehensive review of the effective informal service rule.  The rule has developed from the “non-exclusive” methods of service otherwise available for proceedings served within the state pursuant to ss 459G(3) and 109X of the Corporations Act 2001 (Cth) and s 28A(1)(b) of the Acts Interpretation Act 1901 (Cth).  See also Renegade Rigging Pty Ltd v Hanlon Nominees Pty Ltd [2010] VSC 385 per Ferguson J at [40].

[2]    Somewhat circuitously, the possibility of service under r 117 of the Uniform Civil Procedure Rules 1999 (Qld) also arose by operation of s 10 of SEPA if evidence had established the process had come to the attention of the defendant, which in this case it did not.

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1 Response

  1. Andrew Tragardh says:

    Great work!

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