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SEPA Notice is not needed at first, but can still matter later…
The Federal Court’s decision in Kookaburra Educational Resources Pty Limited v MacGear Limited Partnership trading as MacGear Australia, in the matter of Kookaburra Educational Resources Pty Limited [2021] FCA 797 is important for creditors and debtors dealing with statutory demands across state lines. The case involved a Queensland creditor, MacGear, and a New South Wales debtor, Kookaburra. The central lesson is more nuanced than a simple interstate service point. A SEPA notice is not required when serving the statutory demand itself, but interstate service issues can re-emerge once the matter moves from the demand to the court process used to set it aside. That distinction can determine whether a debtor is heard on the merits at all. (Kookaburra at [1]-[3], [45]-[54], [72]-[75])
On the facts, MacGear claimed just over $1.04 million for goods supplied to Kookaburra, including hand sanitising gel, disposable face masks and disposable gloves. The demand nominated MacGear’s solicitors in Brisbane as the address for service of any application to set it aside, even though the demand was served in New South Wales. The documents were sent by express post and registered post to Kookaburra’s registered office in Coffs Harbour. (Kookaburra at [2], [7]-[15])
The statutory framework mattered immediately. Halley J restated the strict position under s 459G of the Corporations Act. A company has 21 days after service of the demand to make an application to set it aside, and that means more than merely drafting documents or sending unfiled copies. The application and supporting affidavit must be filed and served within the 21 day period. In Kookaburra, unfiled documents were emailed on 16 March 2021, the documents were filed on 17 March 2021, and sealed copies were served on 18 March 2021. If the demand had already been served on 23 February 2021, that was too late. (Kookaburra at [16]-[24], [40]-[43])
Another important feature of the judgment is the court’s treatment of the prescribed form. Halley J noted that Form 509H requires the creditor’s address for service to be in the State or Territory in which the demand is served on the company. That point is easily overlooked in practice, particularly where a creditor and its solicitors are based in another state. In Kookaburra, the demand was served in New South Wales but specified a Brisbane address for service. That was not a trivial drafting detail. It went to compliance with the prescribed form itself. (Kookaburra at [19]-[20], [66])
Kookaburra argued that because the matter crossed state borders, service of the demand had to comply with the Service and Execution of Process Act 1992 (Cth), including the use of the prescribed SEPA notice. Halley J rejected that submission. His Honour held that SEPA has no application to the service of statutory demands. The reasoning was that SEPA is directed to curial process and related interstate court procedures. A statutory demand is not initiating process, is not a proceeding, and is not enforcement of a judgment. In that context, the court also referred to earlier authority treating a SEPA notice attached to a statutory demand as unnecessary. (Kookaburra at [45]-[54])
Once SEPA fell away, the service question had to be analysed under the Corporations Act and the ordinary principles governing service on companies. Halley J repeated that s 109X is facultative and not proscriptive. In practical terms, that means service is not confined to one rigid method if the document in fact comes to the attention of a responsible officer of the company. The real issue is whether the serving party can prove that the document was brought to the attention of someone authorised, expressly or impliedly, to deal with it. (Kookaburra at [55]-[57])
That factual issue was decisive. The evidence showed that Kookaburra’s accountant received the first demand on 23 February 2021, telephoned director Tom Sinclair to tell him about it, and then emailed the demand to him the same day. Halley J found that this was enough. Even if there had been some problem with delivery to the registered office, the demand had in fact reached a responsible officer on 23 February 2021. That amounted to effective informal service. The debtor therefore could not postpone time running by arguing that the relevant date was the later registered post delivery on 26 February 2021. (Kookaburra at [58]-[60])
The court also rejected an argument that the second copy of the demand restarted the statutory clock. Halley J held that the two demands were identical and differed only in the mode of service. There was no principled basis for treating the first demand as withdrawn and the second as starting a fresh 21 day period. For practitioners, that is a sharp warning. Sending a duplicate demand may provide evidentiary comfort, but it does not ordinarily buy more time for the debtor. (Kookaburra at [61]-[63])
Importantly, however, the creditor did not escape criticism on form. Halley J accepted that the demand did not comply with Form 509H because it nominated an interstate address for service. His Honour said that this may well have been a defect that Kookaburra could have relied on if the application had been made within time. But once the 21 days had expired, the court’s jurisdiction under s 459G was not enlivened, and the defect point could not be used in the ordinary way to set aside the demand. (Kookaburra at [65]-[66], [75])
This is the point at which the SEPA issue may become relevant again in interstate statutory demand matters. Halley J made clear that SEPA did not govern service of the statutory demand itself. But when discussing Re International Materials and Technologies Pty Limited, his Honour recognised the earlier reasoning that an interstate address for service can entrap a debtor into serving its court application interstate in a manner said to be contrary to SEPA. So, while a SEPA notice is not needed for the demand, interstate court process may still create a SEPA problem once the debtor is forced to commence and serve a s 459G application across borders. (Kookaburra at [67]-[72])
Kookaburra could not obtain relief on that basis because its application was already out of time. Halley J declined to treat the interstate address point as an exceptional circumstance warranting a declaration that the demand was null and void. His Honour distinguished International Materials because, in that case, the application had been filed and served within the 21 day period, whereas Kookaburra’s filing and service both occurred outside time. The judgment therefore reinforces that exceptional relief will remain rare and will not be allowed to undermine the strict time limits in s 459G. (Kookaburra at [72]-[73])
The practical lesson for creditors is straightforward. Do not attach a SEPA Form 1 notice to a statutory demand as if the demand were interstate court process. That is unnecessary. But do make sure the demand complies with Form 509H by specifying an address for service in the same State or Territory in which the demand is served. Also ensure there is clear evidence that the demand reached a responsible officer, because effective informal service may be enough to start time running even where there are delivery irregularities. (Kookaburra at [19]-[20], [45]-[60], [66])
The practical lesson for debtors is equally important. Do not assume that an interstate statutory demand is invalid simply because no SEPA notice was attached. Instead, identify the earliest date on which the demand came to the attention of a responsible officer and calculate the 21 day period from that date. If the demand specifies an interstate address for service, move immediately. That point may be a real defect, but it must usually be raised within time. If time has expired, the issue may need to be preserved for the winding up hearing, which Halley J identified as the proper forum for out of time defect arguments. (Kookaburra at [56]-[60], [66]-[75])
Kookaburra is therefore best understood as drawing a careful line between the demand and the litigation that may follow it. For the demand itself, no SEPA notice is required. For the later court process, interstate service issues may still matter, particularly where the demand directs the debtor to serve documents in another state. For lawyers acting in recovery and insolvency matters, that distinction is the real significance of the case and the point most likely to affect outcome. (Kookaburra at [45]-[54], [66]-[75])