In In the matter of Leasing Holdings Pty Limited (formerly Charlie Lovett Pty Limited), a landlord served a Creditor’s Statutory Demand for Payment of Debt on one of its tenants, requiring payment of rental arrears.  The Statutory Demand failed to specify in it an address for service in the same state as the registered office of the debtor tenant as required by the form prescribed in s459E of the Corporations Act 2001 (Cth).  In fact, the Statutory Demand noted the creditor’s address for service as being a business address (not its registered office) In resisting the subsequent winding up application, the debtor sought to rely on that defect as a basis for the Statutory Demand being declared a nullity so that the winding up proceedings could not continue.

Counsel for the debtor Company submitted that, had the Company sought to serve an application to set aside the Statutory Demand by delivery to the shopping centre address (which was not the creditor’s registered office) or by delivery to the centre manager (who was not a director of the creditor) or by facsimile to the number specified, all of which the Statutory Demand invited it to do, that service would have been ineffective and non-compliant with s9 of the Service and Execution and Process Act 1992 (Cth) (SEPA). Effective service of any such application in accordance with SEPA would need to have occurred either by leaving it at or sending it by post to the creditor’s registered office in New South Wales, or serving it personally on a director resident in Australia. Counsel submitted that these matters of non-compliance had the practical effect of misleading the Company that service in the manner specified would be valid; that “the flaws in the Demand were of a misleading character and were so significant as to render that document not properly a creditor’s statutory demand.”

Counsel for the creditor accepted that the Statutory Demand was not in the prescribed form however, citing a number of cases, including Everkind v Hazenform at [16]–[20], submitted that, where the address of the creditor’s registered office (being in the same state as that in which the Statutory Demand was served) has been identified in the Statutory Demand and no application to set it aside is made, the Statutory Demand is not a nullity and should not be set aside because it is not deprived of effect. The Court did not entirely agree with the generality which counsel for the creditor sought to draw from the cases he cited.

The Court noted that not every departure from the prescribed form will amount to a fundamental non-compliance with the statutory requirements of s459E which would render it a nullity and it is open to the Court to have regard to the circumstances at hand and whether the relevant failure in fact had any adverse impact on or whether a substantial injustice was caused to the debtor Company’s ability to set aside the Statutory Demand.

In considering what constitutes a “substantial injustice”, the Court held that a substantial injustice cannot be caused where there is no evidence that the irregularities in the address for service specified in the Statutory Demand had any actual impact on the debtor Company’s approach, particularly in circumstances where the debtor Company never attempted to set aside the Statutory Demand.

Accordingly, the Court was not prepared to render the Statutory Demand a nullity and on that basis determined that the demand was effective and that the creditor could rely on the presumption of insolvency arising from the debtor Company’s non-compliance with it.