In Bioaction Pty Ltd v Ogborne, in the matter of Bioaction Pty Ltd [2022] FCA 436 the Federal Court considered, for the first time by the courts, the deeming provisions of sections 105A and 105B of the Corporations Act regarding service applications to set aside a statutory demand within the 21 day time limit,.  

FACTS

By originating process filed on 3 February 2022, the plaintiff, Bioaction Pty Ltd, sought an order setting aside a statutory demand pursuant to s 459G of the Corporations Act dated 12 January 2022 served by the defendant, Gordon Ogborne (“Ogborne”) [5].

Bioaction  specialises in the design, manufacturing and installation of systems to eliminate or mitigate odorous, hazardous and corrosive gases & Ogborne was its Chief Financial Officer / Chief Operating Officer from December 2019 until November 2021, when he was made redundant [7].

Ogborne and Bioaction were in dispute as to his entitlements where Ogborne claimed he was entitled to any additional sum [8].

On 13 January 2022, Ogborne served the statutory demand on Bioaction seeking payment of $240,688.31 being unpaid:

• salary,
• superannuation,
• salary in lieu of termination,
• annual leave and
• redundancy

pursuant to an employment contract [9].

The statutory demand was in the prescribed form and included paragraph 6 as follows:

The address of the creditor for service of copies of any application and affidavit is CFC Lawyers, Level 1, Oro House, 39 Bay Street, Double Bay NSW 2028.

The statutory demand did not give any email address for service.

It is common ground that:

• service was effected by delivery of a copy of originating documents to the registered office of Bioaction on 13 January 2022 [10].
• the last day of the 21 day statutory period was 3 February 2022 [11].

Between 1 December 2021 and 3 February 202213 the legal representatives of:

• Ogborne, Ms Fu (“Fu”) of CFC Lawyers (“CFC”), and
• Bioaction, Darrin Mitchel (“Mitchell”) of MSD Law,.

engaged in email communication regarding the statutory demand [13] with:

• emails sent by the legal representatives of Bioaction to CFC Lawyers using the work email address of Ms Fu and the general email address for CFC Lawyers, which address is included on the firm’s stationery.
•  Ms Fu sending letters as attachments, using the firm’s stationery which included the CFC general email address in the letterhead [13].

Regarding CFC:

• the registered office of CFC Legal Pty Ltd is “C/- CFC Lawyers ‘Oro House’ Level 1 39 Bay Street Double Bay NSW 2028”.
• its principal place of business is Level 1 39 Bay Street Double Bay NSW 2028 [14]
• Fu is the sole lawyer employed by CFC Lawyers and the only person with a password to log into her computer to obtain access to emails sent to her email address or the CFC general email address [17}.

By email sent at 4:40 pm on 1 February 2022, Mitchell informed Fu that his firm had been instructed to act on behalf of Bioaction and sought information as to the date of service of the statutory demand [15].

On 3 February 2022, the last day of the statutory period [16]:.

•  after sending an email to  Mitchell at 2:47 pm confirming that the originating documents were served on 13 January 2022,  Fu turned her computer off and left the office [17]
• Fu did not access her email from any device until she returned to the office the next day [17].
• at 3:11 pm Bioaction submitted the originating documents to the Court’s electronic portal for filing [18].
• at 4:07 pm, Mitchell sent an unsealed copy of the originating documents to Fu by email addressed to her CFC email address and copied to the CFC general email address [19].
• at 4:35pm, Mitchell received an email from the Court advising that the originating documents lodged had been accepted and processed and were available for download [20].
• at 4:48 pm, Mitchell sent an email attaching a letter and sealed PDF copies of the originating documents to Ms Fu’s CFC email address and copied to the CFC general email address (the Mitchell email) [21].

On 4 February:

• at 11:59 am ,  Fu emailed confirming receipt of Mitchell’s emails of 4:07 pm and 4:48 pm respectively but informed him that:
  • she did not have instructions to accept service of the originating documents by email.
  •  as the originating documents were not received at her offices within the statutory period, Bioaction had not made a valid application to set aside the statutory demand in accordance with s 459G of the Corporations Act [23].
• Mitchell later delivered copies of the originating documents to Fu [24].
• at 4:13 pm  Fu sent an email to Ogborne attaching copies of the originating documents. Until that time,  Ogborne had not received copies of the originating documents nor had the originating documents in any way come to his attention [24].

Counsel for Ogborne established the following facts in  cross-examination of a technology expert engaged by Bioaction:

• that the originating documents that were sent as email attachments were in portable document format (PDF).
•  PDF is generally comprised of elements which include American Standard Code for Information Interchange (ASCII) and binary content or code.
• a PDF is an electronic data file created for the purpose, inter alia, of enabling electronic transmission of the document.
• when a PDF document is sent by email from one server to another it remains in electronic form.
• in order to open a PDF in legible form, from a human perspective, it is necessary to open it with a computer application for example, Adobe Acrobat Reader.
• depending on the form of access one has to an email server it may be possible to display, read or access the content of a PDF in legible form without downloading it (and the email to which it is attached from the server) [22].

Bioaction:

• accepted that it has the onus of establishing service in accordance with s 459G(2) and (3) so as to attract jurisdiction [57].
• contends that the originating documents were served by midnight on 3 February 2022, being the last day of the 21 day statutory period, and that it validly invoked the jurisdiction of the Court pursuant to s 459G [58].

Bioaction relevantly submitted, at [59],  that:

1. notwithstanding that the s 459G application is an originating process of the Court to which formal rules of service will otherwise apply, personal service is not required;
2. the statutory demand nominated the office address of CFC Lawyers as the place where any s 459G application may be served and the service requirement of s 459G was met when the documents are delivered to that address;
3. in the context of s 459G(3) service of electronic copies by facsimile or email is, at the level of principle, permissible ;
4. service by electronic communication is confirmed by the terms of s 600G of the Act;
5. consent of the recipient to delivery by electronic communication is not a pre-requisite to valid service of originating documents under s 459G and cannot be asserted by the defendant so as to restrict the manner in which a plaintiff may comply with the requirements of s 459G(3);
6. Section 600G permits the giving of notice by email where the creditor/recipient has first nominated an email address for receipt of such notices;
7. delivery by electronic communication pursuant to s 600G is permissible if at the time the electronic communication is used it is reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference and there is a nominated electronic address in relation to the recipient;
8. the Mitchell email was capable of being retrieved, in readable form, from the email mail boxes associated with  Fu’s CFC email address and the CFC general email address on the CFC email server within about eleven seconds of 4:48 pm on 3 February 2022
9. it was open to the Court to infer that the originating documents were sent in a readable form in circumstances where Fu did not raise any difficulties in accessing and opening the attachments to the Mitchell email;
10. (the transmission of the Mitchell email resulted in the originating documents being received at the creditor’s address for service nominated in the statutory demand shortly before 5 pm on 3 February 2022;
11. proof of the time and place of receipt of the Mitchell email is facilitated by application of the statutory presumptions in ss 105A and 105B of the Corporations Actand by s 161 of the Evidence Act;

Ogborne submitted that there was no proper service because, at [60]:

• personal service of the originating documents is required by reason of the application of the Federal Court (Corporations) Rules 2000 (Cth) (Corporations Rules) or the Rules;
• Section 600G  does not apply to documents that are required to be served under s 459G;
• even if the deeming provision in ss 105A and 105B of the Corporations Act and s 161 of the Evidence Act apply, the originating documents were not served by merely being delivered to the address nominated in the statutory demand;
• the meaning of “serve” and “service” in the context of s 459G extend beyond mere delivery and contemplate a result that enables the document to be read and dealt with;
• a document sent as a PDF data file attached to an email message is not served at a nominated address for the purposes of s 459G until it has been converted from (illegible) electronic data by being accessed on the receiver’s computer with the use of a PDF reader application (like Acrobat Reader) and rendered into a complete and legible version of the document on a screen of a computer at the nominated address or printed as a hardcopy into a complete and legible copy of the document on a printer at the nominated address;
• accepting that the Mitchell email was likely received by the CFC Server approximately eleven seconds after it was sent, because Fu’s computer was off at that time, it was not in fact delivered to Ms Fu’s computer (or to her office) before 4 February 2022, being after the end of the statutory period;
• even if  ss 105A and 105B of the Corporations Act or s 161 of the Evidence Act apply to establish that the Mitchell email was received at the office of CFC Lawyers within the statutory timeframe, it is still the case that the mere receipt of that electronic communication did not constitute service as the documents were not received in legible form.  All that the provisions establish is that the (illegible) electronic communication had been received, not that copies of the originating documents had been received in complete and legible form;
• the originating documents were not converted into a legible form at the address nominated in the statutory demand until Fu accessed her email and opened the Mitchell email on 4 February 2022;
• Bioaction therefore failed to serve the application and supporting affidavit at the address nominated in the statutory demand within the statutory period required by s 459G of the Corporations Act; 

DECISION

Bioaction  contends that the Mitchell  email was service for the purpose of s 459G [21].

His Honour inferred that the Mitchell email was capable of being retrieved from the mailbox associated with Fu’s CFC email address and the CFC general email address within approximately eleven seconds of the email being sent by Mr Mitchell.

His Honour found that the PDF attachments to the Mitchell email were capable of being opened in legible form from the time they were delivered to the server connected to Fu’s CFC email address and the CFC general email address [21].

In his preliminary comments his Honour stated that:

• the statutory demand must comply with the requirements of s 459E(2), which include that the demand must be in the prescribed form: s 459E(2)(e) of the Corporations Act [30};
• paragraph 6 of Form 509H provides:

The address of the creditor for service of copies of any application and affidavit is (insert the address for service of the documents in the State or Territory in which the demand is served on the company.

• Section 459G provides:

(1) A company may apply to the Court for an order setting aside a statutory demand served on the company.

(2) An application may only be made within the statutory period after the demand is so served.

(3) An application is made in accordance with this section only if, within that period:

(a) an affidavit supporting the application is filed with the Court; and

(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company. [33]

• 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: [34]
• the 21 day time limit for service imposed by s 459G(2) and (3) is strict and immutable [35]
• Section 459G and  s 9 does not define what constitutes service [36] and cited  Howship Holdings Pty Ltd v Leslie [1996] NSWSC 314; 41 NSWLR 542 where the court stated:

Section 459G itself does not deal with what is service. The ordinary meaning of “service” is personal service, and personal service merely means that the document in question must come to the notice of the person for whom it is intended. The means by which that person obtains the document are usually immaterial…

Other means of service are valid if if those other means result in the documents arriving at the nominated address within the statutory period then [39].

What is critical is the result which is achieved by the plaintiff’s efforts, not the manner by which that result has been achieved [39] and while a s 459G application is an originating process of the Court involving  formal rules of service  personal service is not required [40].

As the statutory demand must nominate a place at which any s 459G application may be served on the creditor, the service requirement of the section is met when the documents are served to that address [40].

From 16 December 2020  the Corporations Act was amended to expand the scope for electronic communication of documents [41] with Section 600G relevantly providing [47] – [48]:

Electronic communication of documents

(1) … this section applies to any document that is:

(a) required or permitted to be given to a person (the recipient); or

…

under:

(c) this Chapter; or

…

Giving a document

(2) The document may be given to the recipient by means of an electronic communication.

(3) The document may be given by giving the recipient (by means of an electronic communication or otherwise) sufficient information to allow the recipient to access the document electronically.

(4) However, an electronic communication or electronic access may only be used if, at the time the electronic communication is used or information about the electronic access is given:

(a) it is reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference; and

(b) there is a nominated electronic address in relation to the recipient.

The definitions of “document”, “electronic communication” and “nominated electronic address” have been amended to provide:

document means any record of information, and includes:

…

(c) anything from which sounds, images or writings can be reproduced with or without the aid of anything else; …

electronic communication means:

(a) a communication of information in the form of data, text or images by means of guided and/or unguided electromagnetic energy; or

(b) a communication of information in the form of speech by means of guided and/or unguided electromagnetic energy, where the speech is processed at its destination by an automated voice recognition system.

nominated electronic address, in relation to the addressee of an electronic communication, means:

(a) the most recent electronic address nominated by the addressee to the originator of the electronic communication as the electronic address for receiving electronic communications; or

(b) if:

(i) the addressee has nominated an electronic address as mentioned in paragraph (a) and the originator knows, or there are reasonable grounds to believe, that the address is not a current electronic address for the addressee; or

(ii) the addressee has not nominated an electronic address as mentioned in paragraph (a);

an electronic address that the originator believes on reasonable grounds to be a current electronic address for the addressee for receiving electronic communications.

 Section 600G authorises a document to be given to the recipient by means of an electronic communication provided there is sufficient information to allow the recipient to access the document electronically [51].  That said  electronic communication may only be used if, at the time, it is reasonable to expect the document would be readily accessible so as to be usable for subsequent reference and the recipient has a nominated electronic address [51].

The definition of nominated electronic address extends to cover the situation where the addressee has not in fact nominated such an address in which case it is an electronic address which the originator believes on reasonable grounds is a current electronic address for the addressee for receiving electronic communications [51],

There are presumptions as to when and where service is effected at:

• Section 105A [53] :

(1) This section applies in relation to an electronic communication unless otherwise agreed between the originator and the addressee of the electronic communication.

(2) An electronic communication is sent:

(a) when the electronic communication leaves an information system under the control of the originator or of the party who sent it on behalf of the originator; or

(b) if the electronic communication has not left an information system under the control of the originator or of the party who sent it on behalf of the originator–when the electronic communication is received by the addressee.

Note: Paragraph (b) would apply to a case where the parties exchange electronic communications through the same information system.

(3) Subsection (2) applies even though the place where the information system supporting an electronic address is located may be different from the place where the electronic communication is taken to have been sent under section 105B.

(4) An electronic communication is received when the electronic communication becomes capable of being retrieved by the addressee at the addressee’s nominated electronic address.

(5) It is to be assumed that an electronic communication is capable of being retrieved by the addressee when it reaches the addressee’s nominated electronic address.

(6) Subsection (4) applies even though the place where the information system supporting an electronic address is located may be different from the place where the electronic communication is taken to have been received under section 105B.

• at Section 105B [54]:

(1) This section applies in relation to an electronic communication unless otherwise agreed between the originator and the addressee of the electronic communication.

….

(3) An electronic communication is taken to have been received:

(a) if the originator is a company or registered scheme and the addressee is a member of the company or registered scheme–at the address of the addressee as contained on the register of members of the company or registered scheme at the time the communication is received; and

(b) if the addressee has a registered office and paragraph (a) does not apply–at the registered office of the addressee; and

(ba) if the addressee has a principal place of business in Australia and neither paragraph (a) nor (b) applies–the address of the addressee’s principal place of business in Australia; and

(c) otherwise:

(i) at the most recent physical address nominated by the addressee to the originator; or

(ii) if the addressee has not nominated a physical address as mentioned in subparagraph (i)–at the addressee’s usual residential address in Australia.

• Section 161 of the Evidence Act 1995 (Cth) provides that an electronic communication is presumed to have been  sent or made on the day and at the time it appears to have been sent and was received at the destination to which it appears to have been sent at the time the sending of the communication concluded as shown in the record [55].

The court said, at [63], that the “..starting, and finishing, point must be the text of the relevant provisions in the context of the legislative scheme”.

The statutory demand specified that Ogborne’s address for service of copies of any application and affidavit was CFC Lawyers, Level 1, Oro House, 39 Bay Street, Double Bay NSW 2028, there being a requirement that there is an address for service  by s 459E(2)(e)and Form 509H [65].  The requirement in s 459G(3)(b) to serve the documents “on the person who served the demand” is met where the documents are served at the address for service specified in the statutory demand [66]. Personal service of the s 459G originating documents is not required for the purposes of s 459G(2) and (3) [67].

Ogborne’s submission that personal service is required by reason of the application of the Corporation Rules and the Rules because the s 459G application is an originating process of the Court found little favour with the court because:

• it is contrary to binding authority, Rochester Communications that notwithstanding that the s 459G application is an originating process of the Court, the court rules do not apply and therefore personal service on a creditor who is a natural person is not required.
• where the statutory demand nominated a place at which any s 459G application may be served, the requirements of the section were met when the documents are delivered to and received at that address [68] – [69].

The court stated that where personal service is not required, the means by which documents are served at a nominated address is immaterial, provided they arrive there [71], and that that email service is permissible, citing with approval the conclusions in SGR Pastoral , [72],that:

[37] In the case of service by email, in my view, what must be shown is that the electronic copy of the application and supporting affidavit was received, in a complete and legible form, at the address for service, within the prescribed time. That is, that the email was sent to an email address that belongs to the nominated agent for service …; that the email attaching the documents to be served actually arrived at the email address; and that the email and attached documents were capable of being opened and read (even if they were not opened and read until later).

[38] In this regard, I agree with and adopt White J’s approach in Newsnet. To the extent that Austin J in Austar Finance is to be understood as articulating a requirement that service by email is not effective until the email is actually opened and the documents are read, I disagree and prefer the approach of White J, which is consistent with the general principles as to service, including as discussed by McMurdo J in Conveyor & General Engineering Pty Ltd v Basetec Services, that actual service does not require the recipient to read the document. However, as McMurdo J said, “it does require something in the nature of a receipt of the document”.

[39] This is also consistent with the well-established principle, in the case of service by non-electronic means, that if hard copies of the documents are left at the nominated place for service on a particular day, even if that was by sliding an envelope containing the documents under a closed door (and even if that was after office hours), that would be effective service on the day of delivery.

[40] I can see no reason why the position should be any different, in the case of electronic copies of the documents received either by facsimile transmission or email.

This finding is reinforced by:

•  s 600G where any document may be given to the recipient by means of an electronic communication [74].
• PDF copies of the originating application and supporting affidavit are both documents served under s 459G [75]

The Court rejected the submission that s 600G does not apply to s 459G because to require a document to be given is different to requiring a document to be served under Chapter 5 [76] because:

• the Corporations Act does not define the word “serve” but the Dictionary definition, at [77], includes:

a. to make legal delivery of (a process or writ).

b. to present (a person) with a writ.

• there was no reason to exclude the more general word “given” from the more particular meaning of the word “served” [78]
• the changes effected by the 2020 Reforms extended the operation of s 600G to any document (as broadly defined) [83]
• the intent of the 2020 Reforms was to enable electronic communication [84].

The relevant nominated electronic address was that of Fu’s CFC email address and/or the CFC general email address even though those addresses had not been nominated as electronic addresss [93] because both are electronic addresses that Mitchell believed on reasonable grounds to be a current electronic address for CFC Lawyers for receiving electronic communications. Those reasonable grounds were:

• that Ogborne had been represented from the beginning of the dispute by  Fu of CFC Lawyers.
• the legal representatives of Bioaction and Ogborne communicated with each other by email including in relation to the statutory demand in the period from 21 December 2021 to 3 February 2022 where Fu’s CFC email address and the CFC general email address was used.
• Fu sent emails to Bioaction’s legal representatives from her CFC email address and letters as attachments were sent using the firm’s stationery which included the CFC general email address [93].

The Mitchell email was capable of being retrieved from the CFC Server connected to Fu’s CFC email address and the CFC general email address shortly after it was sent,  within the statutory period) [94]. His Honour found that  the issue of the nominated email addresses being supported by an external server was irrelevant.

His Honour stated that:

• proof of effective service does not require that there be proof that the documents were actually accessed or reviewed or even came to the attention of the addressee or anyone else [95].
• the place where the Mitchell email was received by the CFC general mail address and  Fu’s CFC email address respectively was deemed by s 105B(3)(b) and (c)(i) respectively to be the address of CFC Lawyers [96].

The court found that the the statutory demand and the affidavit supporting were filed and served within the 21 day statutory period specified in s 459G of the Corporations Act [97].

ISSUE

This is the first ruling on the operation of the sections 105A and 105B and a detailed consideration of the provisions relating to service by email or other electronic means.  Given the 21 day deadline is immutable issues of service are often critical.