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Express law

1 May 2012

Federal Court decision on the service of documents by post

The decision of Logan J in Deputy Commissioner of Taxation v Manta's on the Beach Pty Ltd [2012] FCA 417 (Manta’s), handed down on 24 April 2012, casts doubt on the effectiveness of serving documents by post.

The Corporations Act 2001, like various other statutory regimes, permits the service of documents by post. Service by post is relatively safe because, as a general rule, service cannot be challenged on the basis that ‘I did not receive the documents’. Instead, it is necessary to prove that the documents were not or could not have been delivered – for example, the documents were returned before they were delivered to the address.

The decision in Manta’s is a reminder about the risks of service by post arising from:

  • the exceptions to this rule
  • the circumstances in which evidence of non-receipt may provide a basis to infer that documents have not been delivered.

General rules relating to service by post

The Corporations Act permits a document to be served on a company by posting it to the company’s registered office.

Where an Act authorises a document to be served by post, service is deemed to:

  • be effective by properly addressing, prepaying and posting the document as a letter
  • have been effected at the time at which the document would be delivered in the ordinary course of post (Acts Interpretation Act 1901 (Cth), s 29, as in force on 1 November 2000).

This presumption can be rebutted by proof that a document was not in fact delivered to the address. Evidence that the document was not received by a person at the address is not sufficient to rebut the presumption but may be relevant to establishing non-delivery and, taken together with evidence of other relevant circumstances, may permit a proper inference of non-delivery to be made. In other words, a company may be able to show that it had a system in place to deal with incoming mail that, together with evidence of non-receipt, may allow an inference to be drawn of non-delivery.

In proceedings, if a document is sent by prepaid post, it is presumed to be received on the fourth working day after having been posted, unless evidence sufficient to raise doubt about the presumption is adduced. (s 160 of the Evidence Act 1995 (Cth); see Scope Data Systems Pty Ltd v David Goman (2007) 70 NSWLR 176 for a discussion as to when equivalent provisions of state Evidence Acts apply to state proceedings).

Background

The Deputy Commissioner of Taxation (DCT) commenced proceedings to wind up Manta’s on the Beach Pty Ltd in insolvency. The DCT relied upon the company’s failure to comply with a creditor’s statutory demand for payment served on the company. The statutory demand was served by post. The central issue was whether service of the statutory demand had been effective.

The Deputy Commissioner of Taxation’s case – the statutory demand was served by post and not returned

The DCT adduced evidence that the statutory demand had been served by posting the demand by prepaid ordinary post to the registered office of the company and that there was no record of the statutory demand having being returned.

The company’s case – the statutory demand was not served, as it was not received

The company alleged that the statutory demand had not been served. The evidence consisted of:

  • two witnesses – the director (the wife) and her then husband (they were estranged at the time of the hearing)
  • the registered office was the wife and husband’s then home
  • the wife did not see a copy of the demand in either August or September 2011
  • the wife was working long hours and the husband would collect the mail from the mail box located at the side of the property
  • the husband would leave any mail for either the wife or the company on the kitchen bench or on the dining room table or on the wife’s desk
  • the wife’s practice was to open regularly and review any mail, including mail addressed to the company
  • the wife’s practice was not to dispose of mail without first opening it and checking its contents
  • the wife did not receive any correspondence by mail from the DCT enclosing a statutory demand in August or September 2011
  • the wife was confident that she would remember the receipt of such a document.

Findings – evidence of non-receipt constituted evidence of non-delivery

The Court found that the envelope containing the statutory demand was not received at the company’s registered office in either August or September 2011. Based upon this finding, the Court held that:

  • the presumption created by s 160 of the Evidence Act– that the statutory demand was received on the fourth working day after having been posted – was rebutted
  • the presumption created by s 29 of the Acts Interpretation Act– that the statutory demand was deemed to have been delivered at the time at which that would have occurred in the ordinary course of the post – was rebutted.

Conclusions

This decision does not set a high bar for when a court may infer that a document was not delivered from evidence that it was not received. Non-delivery may be inferred where there is evidence:

  • of how mail is received
  • of the usual practice in relation to the collection and handling of mail
  • that people with access to the mail did not receive the document
  • that the people with access to the mail would have remembered having seen the document.

It does not seem necessary to adduce evidence:

  • to discount the possibility of mail having been lost or stolen after delivery (that is, the security of the receptacle into which mail is put)
  • actual recollection of the collection of mail during a period – evidence of usual practice is sufficient.

From this decision and a number of previous decisions, the court will more readily draw an inference of non-delivery where:

  • the registered office is the director’s residence
  • the evidence of the non-receipt is not challenged.

Things to keep in mind

If you are relying on service by post and service is challenged on the basis of non-receipt, you may wish to consider:

  • cross-examining the deponents of any affidavits to raise doubt about the efficacy of their system for collection and handling of mail
  • adducing evidence from Australia Post regarding the absence of any delivery difficulties to the address at the relevant times and the expected delivery time to the specific address in the ordinary course of post.

It is important to remember that the evidence required to rebut the presumption created by the Evidence Act 1995 (that is, that documents are received on the fourth working day) is not very high. All that is required is evidence that raises doubt. Without this presumption, there will be no proof as to when a document would have been delivered in the ordinary course of the post and thus no proof that the document was delivered at a particular time.

Where evidence is adduced that raises doubt as to whether a document was received on the fourth working day after being sent, specific evidence from Australia Post as to when documents would have been likely to have been received in the ordinary course of post may be essential.

For further information please contact:

Nigel Oram
Senior Lawyer
T 02 6253 7239
nigel.oram@ags.gov.au

Zita Rowling
Senior Executive Lawyer
Tel 02 6253 7426
Mobile 0408 461 613
zita.rowling@ags.gov.au

Important: The material in Express law is provided to clients as an early, interim view for general information only, and further analysis on the matter may be prepared by AGS. The material should not be relied upon for the purpose of a particular matter. Please contact AGS before any action or decision is taken on the basis of any of the material in this message.