A recent Federal Court decision 1 ("ABW Design") has again shown that service of a Creditor's Statutory Demand by post pursuant to section 109X of the Corporations Act 2001 is fraught with danger.
In ABW Design, the Deputy Commissioner of Taxation had issued a Statutory Demand addressed to ABW on 16 June 2011. The Statutory Demand was placed in an envelope and addressed to the registered office of ABW. So far, so good. Unfortunately, the employee who placed the Statutory Demand in the envelope also affixed a "Private and Confidential" stamp to the envelope which had the effect of obliterating the post code of the address of the registered office of ABW.
When the Commissioner commenced proceedings to wind up ABW Design for failing to comply with the Statutory Demand, ABW contended that the Statutory Demand had not been served upon it, as it had not been received. The onus of proof fell upon the Deputy Commissioner to prove that it had properly served the Statutory Demand pursuant to section 109X of the Corporations Act.
The Court held that:
"The obscuring of the post code by over-stamping means that the envelope containing the statutory demand and supporting affidavit has not been sent by the Commissioner by post to the registered office of ABW. That means that the Commissioner has not complied with the terms upon which section 28A of the Acts Interpretation Act and section 109X of the Corporations Act permit a document such as a statutory demand to be served by post on this particular company".
Logan J. held further that "The want of proof of compliance with an authorised mode of service is not a 'mere' defect or irregularity" which the Court could overlook in relation to setting aside a defective Statutory Demand or procedural fairness in respect of the operation of the statutory presumption of insolvency.
Service by post, pursuant to section 109X of the Corporations Act, is confined to service upon the company's registered office. The Court in this case found that the registered office was that as described on the ASIC register, which, in this case, included the post code.
His Honour also determined, albeit obiter, that, after consideration of competing authorities concerning whether or not a post code is to be regarded as part of an address, he was bound to follow the clear expressions of approval by the Full Federal Court in SZLBR v Minister for Immigration & Citizenship 2 and concluded that a postcode is not an essential part of an "address". However, his Honour continued that "such a conclusion does not carry with it the further conclusion that it is impermissible for a company to include a postcode in its registered office as notified to ASIC or for ASIC to include that post code in the register. An 'address' may, but not must, include a post code".
The Court then considered that, even if the Statutory Demand and supporting affidavit had been sent by post to ABW's "address", was the obscuring of the post code immaterial? The Court noted that the Deputy Commissioner had led no evidence as to when the letter containing the documents would have been delivered in the ordinary course of the post to ABW's address at Upper Mt Gravatt if posted on 16 June 2011 from Townsville, (which was the location of the particular ATO which issued the Statutory Demand). No evidence as to when the Statutory Demand and accompanying affidavit were in fact delivered was led by either party. Moreover, ABW had provided proof of non-receipt of the Statutory Demand (although the Court noted that proof of non-receipt, whilst relevant, was not decisive of whether there was non-delivery).
In conclusion, the Commissioner was unable to prove non-compliance with the Statutory Demand, since it was unable to prove valid service of the Statutory Demand. The Commissioner's winding up application against ABW Design was therefore dismissed, with costs.
"At a time like this, scorching irony, not convincing argument, is needed!" 3
The obvious solution to problems raised by cases such as ABW Design is to have a Statutory Demand served personally. The bittersweet irony in this case is that the registered office of ABW was care of its accountants at 1990 Logan Road, Upper Mt Gravatt in Queensland. Logan J then noted that:
"Given the location of ABW's registered office, it may perhaps be a source of surprise to the reader that the making of the Statutory Demand was effected by an officer of the Australian Taxation Office stationed in Townsville in North Queensland. That surprise may be tinged with a note of irony by the following.
"It was common ground in this case, that, amongst the many other offices throughout Australia which the Commissioner maintains, there is an office of the Australian Taxation Office at Logan Road, Upper Mt Gravatt, on the opposite side of that road and about 1km away from ABW's registered office...Though it was but a short walk away from ABW's registered office, the Commissioner's Upper Mt Gravatt office appears not to have been assigned any role either in relation to service of the Statutory Demand, audit or otherwise". 4
Perhaps personal service of this Statutory Demand could have taken 15 minutes? Maybe next time.
1 Deputy Commissioner of Taxation, in the
matter of ABW Design and Construction Pty Limited v ABW Design and
Construction Pty Limited  FCA (4 April 2012, Logan J).
2 2008] FCAFC 85.
3 Frederick Douglass (1818-1895).
4  – 
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