“IF”: a small word with big consequences

I have written several articles in the past about serving Creditor’s Statutory Demands (CSD) in Australia. A decision of the Federal Court of Australia just before Christmas 2024 [1] highlights that debtors who leave their registered offices empty take a big risk when a creditor serves a CSD there. One little word made all the difference.

Section 109X of the Corporations Act 2001 permits a CSD to be formally served upon a company by (relevantly):

(a)  leaving it at, or posting it to, the company’s registered office; or

(b)  delivering a copy of the document personally to a director of the company who resides in Australia or in an external Territory.

The facts

ACN 152 259 839 Pty Ltd (the Company) owed approximately $23million to the Deputy Commissioner of Taxation (DCT). The DCT issued a CSD to the Company in May 2024, and a DCT employee hand delivered the CSD to the registered office of the Company. At the time, the office was closed, the lights were off, but there was a sign on the door which read:

IF THIS OFFICE IS UNATTENDED PLEASE CALL [….]

The DCT employee did not call the provided number but instead placed the CSD in an envelope and slid it under the door. Unbeknownst to him, the Company had not occupied the office since 2018 !  His unchallenged evidence was that he believed the office to be temporarily unattended.

Whilst the DCT had the Company’s director’s email address, service of a CSD by email is not effective under section 109X. Hence the CSD was not sent to the director by email.

The DCT subsequently commenced proceedings to wind up the Company, which was ordered by the Registrar.

The Company, through its sole director – who, oddly, was also its solicitor on the application – filed an application in the Federal Court to review the Registrar’s decision. The Company accepted that the CSD was validly served, however it raised the issue of “fair notice.” This concept is discussed in several cases[2]. The Company submitted that in the circumstances there has been a “want of fair notice”, which provided an over-riding ground for refusing relief notwithstanding that there has been effective service of the CSD.

Given that the DCT’s records indicated that the Company owed approximately $23million to the DCT, it is not surprising that the Company did not attempt to provide that it was solvent.

The Court held that the sign said “if” the office is unattended, please call the telephone number.  The word “if” suggested that the office may be unattended from time to time.  In other words, it suggested that the office was temporarily unattended.  It did not convey that the office was permanently unattended.

The Court concluded that this was not a case where the statutory demand was returned to the creditor.  Further, this was not a case where the DCT knew (at any relevant time) that the CSD had not been received by the Company.  Accordingly, the Court found that there was no “want of fair justice” sufficient to set aside the previous winding up orders of the Registrar.

A subsequent urgent application for a stay of the Court’s judgment was unsuccessful.

Conclusions

Would the result had been different had the sign on the Company’s door simply said THIS OFFICE IS UNATTENDED. PLEASE CALL [….] ? Absolutely.  At that point, the DCT would have been on explicit notice that the registered office was unattended, and not just temporarily, and would have had to call the given phone number to bring the CSD to the Company’s attention.

The lesson therefore is, if your registered office is not usually occupied (or in fact is permanently empty!), be very careful about any sign you use for visitors. One little word, such as “IF”, can result in the company being wound up.

[1] Deputy Commissioner of Taxation v ACN 152 259 839 Pty Ltd [2024] FCA 1489 (18 December 2024)

[2] FP Leonard Advertising Pty Ltd v KD Travel Service Pty Ltd (1993) 12 ACSR 136 ( at 139 per Santow J and Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559 at 564-565 per McLelland CJ in Eq