Bioaction Pty Ltd v Ogborne, in the matter of Bioaction Pty Ltd  FCA 436
Statutory demands and applications to set aside a statutory demand may be served by email, however this manner of service is fraught with danger. The requirements for effective service are more complicated and the onus for showing effective service is heavier than more traditional methods of service. As a result, creditors and debtors should not rely on email to serve documents.
Statutorily approved methods of service
The safest methods to affect service of a statutory demand are set out in section 109X of the Corporation Act 2001 (Cth) (Corporations Act). Service is most commonly affected under this section by leaving the relevant documents at or posting them to the company’s registered address (section 109X(1) Corporations Act). The benefit of this method of service is that it is clear cut and reasonably easy to prove.
However, section 109X of the Corporations Act is permissive rather than prescriptive. This means that other methods of service may be sufficient to constitute service on a company. Service by email is one method of service which may be effective as an alternative method of service, as demonstrated in Bioaction Pty Ltd v Ogborne, in the matter of Bioaction Pty Ltd  FCA 436 (Bioaction v Ogborne).
Bioaction v Ogborne – facts
Mr Ogborne was the former chief financial officer/chief operating officer of Bioaction. Mr Ogborne was made redundant by Bioaction and a dispute arose in relation to his entitlements.
Mr Obgorne served a statutory demand on Bioaction under s 109X(1) of the Corporations Act seeking payment of the amount he claimed was payable for his entitlements. Mr Obgorne’s statutory demand listed the physical office address of his solicitors as the address for service of any application to set aside the statutory demand.
Bioaction had 21 days to file and serve a set aside application on Bioaction under section 459G of the Corporations Act (statutory period). At 4:48pm on the last day of the statutory period, Bioaction’s solicitors sent an email attaching a sealed application to set aside the statutory demand and supporting documents to Mr Ogborne’s solicitors (Service Email). Mr Ogborne’s solicitors received but did not read the email that day. Mr Ogborne himself did not receive the application and supporting documentation until 2 days later.
Bioaction v Ogborne – issues and resolution
The issue for the Court to determine was whether the set aside application and supporting affidavit had been filed and served within the statutory period.
This required answering three main questions:
- Does the set aside application have to be personally served?
- Can the set aside application be served electronically where only a physical address is nominated in the statutory demand?
- Does the recipient have to actually see or open the electronic communication for service to be affected?
Does the set aside application have to be personally served?
No. Although “service” will usually mean personal service, the Court found that “service” under section 459G does not require personal service.
The standard form of the statutory demand allows the creditor serving the demand to nominate an address for service and the requirements for service under section 459G are met if (among other things) the debtor serves the relevant documents at the nominated address rather than personally on the creditor.
Can the set aside application be served electronically where only a physical address is nominated in the statutory demand?
Yes, it can.
When determining whether a document is served, the Court found that the result (i.e. the fact of service) is more important than the method (i.e. the way service occurs). As long as the documents arrive at the address nominated in the statutory demand, it is immaterial how they arrive there.
In forming this view, the Court had regard to sections 600G, 105A and 105B of the Corporations Act. These sections were inserted or amended under 2020 reforms to the Corporations Act. In short, section 600G which states that any document required or permitted to be given to a person under Chapter 5 of the Corporations Act may be given electronically . Section 459G of the Corporations Act is in Chapter 5 of the Corporations Act.
Section 105A and 105B of the Corporations Act are deeming provisions. Section 105A deems when an electronic communication is sent and received and section 105B deems where an electronic communication is sent and received. In particular, section 105B provides (among other things) that an electronic communication may be taken to be received at the most recent physical address nominated by the addressee to the person sending the electronic communication (section 105B(3)(c)(i)).
In this case, Mr Obgorne had nominated his solicitor’s physical address and Bioware’s solicitors had sent the set aside application and supporting documents to Mr Obgorne’s solicitors by email. Section 105B means that service by email was sufficient to constitute service at the physical address.
Does the recipient have to actually see or open the electronic communication for service to be affected?
No, the recipient does not have to see or open the electronic communication for service to be affected. The electronic communication only needs to be capable of being seen and opened.
In reaching this finding, the Court relied primarily on sections 105A(4) and 105A(5) of the Corporations Act. Those sections deem that:
- a recipient receives an electronic communication when the electronic communication becomes capable of being retrieved by the recipient at their nominated electronic address (section 105A(4)); and
- the Court may assume an electronic communication is capable of being retrieved by the recipient when it reaches the nominated electronic address (section 105A(5)).
Expert evidence was adduced during the hearing that the Service Email and the pdf attachments to the Service Email reached Mr Ogborne’s solicitors within 11 seconds of the Service Email being sent by Bioware’s solicitors. The Court also found that the pdf attachments were capable of being opened at the time received by Mr Ogborne’s solicitors.
As the Service email was sent at 4:48pm on the last day for service, service of the set aside application and supporting documents were affected within time.
Drawbacks to relying on email/electronic service
Email is simple and quick to use. It is less cumbersome than physically going to an address or posting documents. So why wouldn’t you rely on email to serve documents?
The first problem with email service is the onus is on the person relying on service to prove that service was actually affected. In the Bioware v Ogborne case, this meant Bioware was required to adduce expert evidence to show when the Service Email was received by Mr Ogborne’s solicitors. Expert evidence is expensive and time consuming to adduce, particularly in comparison to the cost of an envelope and stamp.
In addition, section 600G requires that an electronic communication may only be used if it is reasonable to expect that the document would be readily accessible and there is a nominated electronic address in relation to the recipient. This section could pose difficulties where the documents being served are too large to sent attached to the email and need to be accessed by a link though a file transfer protocol (e.g. Dropbox, SharePoint, etc.). That section also raises difficult questions about whether the recipient has nominated an electronic address and, if so, what was the nominated electronic address.
Although email service may initially be quicker and easier than complying with the requirements of section 109X(1), in the long run it may lead to spending more time and money if service is contested by the recipient of the document.
Bioware v Ogborne demonstrates that set aside applications may be served by email. Since section 600G of the Corporations Act applies to any document required or permitted to be given under Chapter 5, that section also applies to statutory demands. As a result, the reasoning in Bioware v Ogborne applies to service of both statutory demands and set aside applications.
Despite the fact that email can be used to serve these documents, creditors and debtors should first and foremost rely on traditional methods of service to avoid the evidentiary problems that arise when email is challenged. If desired, the statutory demand or set aside application can still be sent by email to help bring the application to the attention of the recipient.
If you would like to discuss this article with us further, please contact David Greenberg, Partner, or Victoria Caldwell, Senior Associate on (02) 9261 5900.