As most of us were in the midst of holding staff Christmas parties in December, the Supreme Court of Victoria highlighted the importance of accountants providing registered office services in passing on correspondence to their clients in a timely manner, particularly in relation to a statutory demand.

In the matter of West Homes Australia Pty Ltd {2023} VSC 732, a statutory demand was delivered by post to the company’s registered office, which was their accountant’s office. However, the accountants took no steps to bring the notice to the attention of their client other than to forward it by post. The post was never received.

The director of the company only became aware of the statutory demand when it was served with the court application to wind up the company.

The company sought the Court’s discretion under S 459S. The Court decided that it was not reasonable just to post such an important document, stating, “It is simply not credible to suggest that an accountant would not have used some other means, perhaps in addition to post, to alert the sole director of a company to the existence of a statutory demand, or having sent it by post, followed up with the sole director to ensure it was received.”

The company also sought to rely on the Masri principle, which says where the directors were not aware of the service of the statutory demand until after the 21-day period but acted reasonably in respect of the collection of mail within the registered office, then fairness requires the company be permitted to raise a ground to challenge the statutory demand. However, that principle was deemed bad law following the High Court decision in Lanepoint Enterprises in 2011.

This meant the company had to prove its solvency to avoid being wound up, could not dispute the debt being owed or claim an offsetting amount or challenge any alleged defect in the demand.

Takeaways

Where you provide Registered Office services and receive a statutory demand on behalf of a client:

1. Ensure the demand is posted or couriered to the director/s.
2. Email a copy of the document as a heads-up to enable the director/s to act in a timely manner. For instance, such notices are time-critical with non-compliance within 21 days, meaning the company is deemed insolvent, and any court application to set aside the notice must be filed and served within 21 days of service of the statutory demand.
3. Confirm the director/s has received the notice and keep a record of that confirmation.