Insolvency procedures: winding up part 7, Inability to pay debts ii
Last week we looked at the service of a statutory demand. This week we will consider in a little more detail what service means for this purpose.
The demand has to have been left at the company's registered office. Therefore faxing it is insufficient. Although it is possible to post the demand, the particular postal arrangements will be important. If for example the company uses a PO box which is at a post office and from which the company collects the mail, it will not have been left at the company's registered office for this purpose. In general proof of posting is not enough. There has to be proof that it was actually delivered. If the letter is delivered and has been sent to the registered office then that is sufficient.
Obviously if there is personal service by someone turning up at the registered office then that is easy to prove. Similarly if posting you would want a form of post that includes proof of delivery. Sometimes even absent such proof if the company has actually admitted receiving a letter at its registered office, then of course that will be sufficient. You might think it inconceivable that the company would admit this, but many cases are based upon admissions made by the other side which prove something that the other party might otherwise have been struggling to demonstrate. For example a letter written back may well refer to the first letter and demonstrated delivery.
If you serve at the registered office then save in the most exceptional circumstances that will be sufficient whether or not anyone in the company was likely to have the demand brought to their attention. Sometimes the registered office may be empty, sometimes it may be obvious that no steps are being taken to obtain or scrutinise the post. In one Australian case when the demand was served at the registered office, that was the office of the firm of accountants. You will often see outside accountants' offices a list of registered companies registered at that address. That is because it is an easy way of being able to monitor and deal with statutory notices rather than have them sent to a trading address. (Imagine a trading company with tens of thousands of customer letters being received daily: it would always be possible for something as important as a statutory demand to go astray with potentially terrible consequences). In the particular Australian case the accountants sent a letter back to the creditor serving the demand stating that they no longer active for the company and had no means of contacting anyone connected with it. The court held that this was still good service. If the company has a registered office then it knows that important documents will have to be served about registered office. It cannot be allowed to frustrate the entire procedure by making itself uncontactable through that registered office. As a matter of public policy the onus must always be on a company to ensure that it complies with such requirements and make sure that its registered office is properly run.
Whilst you can never pigeonhole what exceptional circumstances might make a difference, an illustration came in one case where the registered office contained an erroneous address by mistake and both the creditor and the person serving the demand knew that the address had absolutely nothing to do with the company. That was held to be ineffective service. It will be seen that the public policy considerations about companies registered offices were not undermined by the decision in that case.