You’ve been served! Federal Court of Australia affirms recent amendments to modernise the Corporations Act

In Bioaction Pty Ltd -v- Ogborne, in the matter of Bioaction Pty Ltd [2022] FCA 436 (Bioaction), her Honour Justice Cheeseman considered whether an application to set aside a statutory demand was served within the 21-day period as provided for in Section 459G of the Corporations Act 2001 (Cth) (the Act). In deciding this matter, her Honour was required to consider newly enacted amendments to specific sections of the Act that broaden the scope of electronic service. Notably, both parties were unable to find supporting precedent that apply to the legislation in its current form.

Background

This matter concerned two parties; Bioaction and Mr Gordon Ogborne (Mr Ogborne). Bioaction is a company that specialises in the creation and installation of systems that act to eliminate or mitigate odorous, hazardous, and corrosive gases. Mr Ogborne was Bioaction’s Chief Financial Officer and Chief Operating Officer from December 2019 until November 2021, when he was made redundant by Bioaction.

The initial dispute arose regarding Mr Ogborne’s entitlements as a result of his redundancy. A payment was made to Mr Ogborne upon his cessation of employment with Bioaction, however Mr Ogborne contended that he was entitled to a further $240,688.31 for unpaid salary, superannuation, leave, and redundancy pursuant to his employment contract. The Statutory Demand (Demand) at the heart of these proceedings was the vehicle through which Mr Ogborne outlined his claim.

Mr Ogborne was represented by a Ms Cerena Fu (Ms Fu) of CFC Lawyers, and Bioaction by a Mr Darrin Mitchell of MSD Law (Mr Mitchell). The Demand was served on Bioaction on 13 January 2022 via delivery of physical documents to the registered office of Bioaction on 13 January 2022. Importantly, the Demand did not give any email address for service and outlined that the last day of the 21-day statutory period to comply with the Demand was 3 February 2022.

There were some email communications between the legal representatives for the parties concerning the Demand from 21 December 2021 to 3 February 2022. Notably, Ms Fu used both her work address and the general email address for her Firm, with the various letters attached containing the relevant address details in their letterheads.

At 4.40pm on 1 February 2022, Mr Mitchell informed Ms Fu via email that he now represented Bioaction and asked when the statutory period pursuant to the Demand expired. Ms Fu replied to this email on 3 February (the final day of the statutory period) at 2.47pm confirming that the Demand was served on 13 January 2022, before turning off her computer and leaving the office. She did not access her email on any device until she returned the next day. Ms Fu is also the sole lawyer of CFC Lawyers, and thus the only person with access to the relevant inbox.

At 3.11pm on 3 February 2022, Bioaction submitted the originating application (and supporting documents) for an order setting aside the Demand to the Court’s electronic portal for filing, and at 4.07pm, sent an unsealed copy of the application to Ms Fu by email addressed to her CFC email address and copied to the CFC general email. At 4.48pm, Bioaction sent a final email attaching sealed PDF copies of the originating application and supporting documents to the same two CFC email addresses. On 4 February 2022, Ms Fu confirmed receipt of the above emails, but advised that she did not have instructions to accept service by email, and as she considered the documents to have arrived after the deadline, Mr Ogborne would act on the basis that Bioaction had not made a valid application to set aside the Demand.

Submissions and considerations

As canvassed earlier, the parties were unable to find binding authority on the relevant sections in their current form due to the 2020 amendments made to the Act.

The Court first considered s 459E of the Act regarding the form of a statutory demand and found that the Demand complied with the requirements prescribed.

Secondly, her Honour considered s 459G of the Act which provides for a company to make application to set aside a Demand, as in this instance. The burden of proof lies with the party upon which the demands were served to establish that service was effected in a manner satisfying s 459G. Section 459G does not define what constitutes service. The term is not defined in s 9 of the Act. Her Honour found that personal service was not required and that the service requirements are met when the documents are served to the address provided on the Demand.

Mr Ogborne argued that mere receipt of the electronic communication did not constitute service, and that as the document in this instance was a PDF, service was not completed until the PDF was opened in an appropriate program and thus readable. Her Honour disagreed, citing SGR Pastoral at [23] illustrating that when personal service is not required, so long as the documents arrive at the nominated address, service shall be achieved.

Mr Ogborne further submitted that S 600G does not apply to s 459G because, whilst they are in the same Chapter, there is a distinction between requiring a document to be given and served. Her Honour did not accept this submission because of the definitions in the Act, on a plain reading of the sections, the legislative history, and that such submission was contrary to authority. Speaking candidly, her Honour went as far as to describe this submission as a deliberate attempt to enliven certain requirements of service and rules of court to assist their position, and again rejected the submission.

Mr Ogborne also submited that there was no authority to support Bioaction’s contention that s 600G should be construed to apply to service of an application under s 459G. Her Honour found that whilst this is true; neither side were able to find relevant authority pertaining to s 600G as it only came into force in December 2020. Her Honour was of the view that s 600G does apply with regard to s 459G, and that even if it did not, the email containing the relevant documents was nevertheless an electronic communication within the meaning of that term as defined in the Act.

Finally, the question of whether service was validly effected within time and at the correct place was considered. Pursuant to section 105S (4)-(6), the relevant nominated electronic address was Ms Fu’s CFC email address and/or the CFC general email address. This was because it was reasonable for Bioaction to believe that this was the current electronic address for CFC Lawyers for receiving electronic communications. This was further supported by the very fact that correspondence between the two parties had taken place exclusively via emails to the abovenamed addresses.  As the Bioaction email was capable of being retrieved from the CFC Server connected to Ms Fu’s and CFC’s email addresses within eleven seconds of being sent, her Honour was of the view that the documents were indeed served before the deadline. Further, her Honour cited SGR Pastoral at [72] and affirmed that proof of effective service does not require that there be proof that the documents were actually accessed or reviewed by anyone – what matters is that they could have been had the addressee sought to do so. This is further supported by s 105A of the Act which does not require the addressee to become aware of the communication for service to occur.

Ultimately, Bioaction’s originating application sent via email was deemed to have been served in accordance with the legislation.

Key takeaway

1. All parties should be mindful of the newly expanded rules regarding electronic service of documents.
2. Pre-existing email correspondence between the parties is relevant to service via email.
3. Importantly, effective service does not require that there be proof that the documents were actually accessed or reviewed, only that they could have been had someone sought to do so.
4. The amendments have removed the requirement for the consent of the recipient as a condition of service via electronic communication. Parties should be aware that ‘nominated electronic address’ can include instances where an address has not been nominated, but that the sender has a reasonable belief that the address in question is the current electronic address for the receipt of electronic communications.

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Authored by:

Scott Couper, Partner
Adam Marsh, Solicitor