You’ve been served! 5 simple steps you can take to protect you and your client

Are you an accountant or professional advisor and have been served with a Statement of Claim or Creditor’s Statutory Demand on behalf of a client company? What do you do when your office is served?

If your business premises are the registered office for client companies you may from time to time receive legal documents such as a Statement of Claim or a Creditor’s Statutory Demand. While it probably won’t be quite as dramatic as the title of this article suggests, and will most likely have been received at your office by post, considerable care should be exercised.

The absence of appropriate procedures in your office to deal with the receipt and handling of legal documents could easily result in significant consequences for your client, and could even expose you to a potential claim for damages. A Statement of Claim or Creditor’s Statutory Demand could easily sit in a mail tray on someone’s desk for a week or more, be filed in error, be posted to a client’s previous address or sent to a client who is on holidays.

It would be beneficial to your client if service documents could be forwarded to their lawyers in the event of your client’s absence, to avoid unnecessary and costly delays.

What does it mean when you get served?

Section 109X of the Corporations Act 2001 provides that for the purpose of any law, a document may be served on a company by:

(a) leaving it at, or posting it to, the company’s registered office; or
(b) delivering a copy of the document personally to a director of the company who  resides in Australia or in an external Territory; or
(c) if a liquidator of the company has been appointed-leaving it at, or posting it to, the address of the liquidator’s office in the most recent notice of that address lodged with ASIC; or
(d) if an administrator of the company has been appointed-leaving it at, or posting it to, the address of the administrator in the most recent notice of that address lodged with ASIC.

The significance of the above section is that service is deemed to have been effected by the mere posting of the document to the company’s registered office and depending on the particular jurisdiction, your client may have a limited period of time in which to respond. Time is therefore of the essence, and your actions dealing with the document could have serious implications for your client, and could result in significant costs to them.

In the case of a Statement of Claim, the date of service is the fourth working day after it was posted and as a defendant your client will be in default if a defence is not filed with the court within 28 days of being served. If the company fails to file a defence or pay the debt claimed within this 28 day period, it may have a judgment entered against it without further notice.

In the case of a Statutory Demand, a company has 21 days within which to apply to the court to have the demand set aside. Failure of which may result in the creditor commencing winding up proceedings against the company, resulting in significant costs to your client, or even worse, the appointment of a liquidator.

What can you do to protect you and your client?

To protect you and your client, we suggest you consider the following 5 simple points:

1. Develop a written office policy for handling incoming and outgoing mail, including legal documents, and ensure all staff are familiar with and understand the policy;
2. Ensure that a partner or senior member of your firm is immediately advised when a legal document has been received on behalf of a client;
3. Immediately telephone a director of the client company and advise them of service so as to obtain instructions from the director as to where the document should be forwarded, and ideally have it faxed or emailed to them as soon as possible;
4. Keep a copy of the document on file, and a record of when and where it was forwarded; and
5. Obtain the client’s lawyers details and a standard written direction from your client that, in the absence of being able to contact you within 48 hours, that the documents may be forwarded to the client’s lawyer.

If you follow the simple steps above, both you and your client should be protected from any unnecessary costs and liability. Baker Love Lawyers can assist you with this.

If you would like further information about the above, please don’t hesitate to contact our office.