Carter v Australian Securities & Investments Commission

Competing contentions of the parties 13 Mr Carter does not dispute that he received, prior to 31 July 2017, notification of the disqualification in the form of a copy of the Notice and was aware of its terms. Rather, his claim is that, on a proper construction of s 206F(3) and in the events which have occurred he has not been served as required by s 206F(3) and therefore the disqualification has not yet taken effect. He seeks a declaration that the decision dated 20 July 2017 to disqualify him is yet to take effect. 14 ASIC claims that service has been effected because Mr Carter has received the Notice and it has come to his actual attention. As s 206F(3) does not specify how service must take place, there is service if a person in fact receives actual notice. Mr Carter had actual notice, at least from 31 July 2017. Therefore, ASIC says the disqualification has taken effect. 15 Mr Carter claims that what s 206F(3) requires is not simply notification of the fact of the disqualification or information to the effect that a decision has been made and the disqualification has occurred, but the actual service of a notice in the prescribed form by an act on the part of ASIC. He says that ASIC has not effected service of that kind. Therefore, the disqualification has not commenced. 16 Although Mr Carter accepts that the Notice was provided to Mr Christensen, he says that it was provided 'for your reference' (namely, for the reference of Mr Christensen) and not by way of any form of service. He describes the provision of the Letter and Notice to him by Mr Christensen as being for his information. 17 He points to the serious consequences that flow from a disqualification as reasons why there must be demonstrated to have been service by an act of ASIC.

Decision 18 For the following reasons, I have formed the view that there has been service of the kind required by s 206F(3). Therefore, ASIC is entitled to proceed on the basis that Mr Carter has been disqualified from managing corporations under s 206F. It follows that the application should be dismissed.

Proper construction of s 206F(3) 19 Section 206F(3) requires notice in the prescribed form to be served 'on the person'. It is expressed in mandatory terms. I accept that establishing the date from which the disqualification takes effect is a significant matter because s 206A(1) provides that a person who is disqualified from managing corporations commits an offence if, in effect, they act in substantial disregard of the disqualification. The offence is one of strict liability: s 206A(1A). The strict liability nature of the offence means that it is not open to a disqualified person to prove a lack of knowledge by way of defence. 20 Importantly, the notice to be served is one advising the person of the disqualification. Until that occurs the disqualification does not commence. It is not enough that the person comes to know of the disqualification in an informal or indirect way. Rather, the disqualification must be formally notified by ASIC in a manner that satisfies the legislative language. 21 Section 206F(3) uses the expression 'serve … on the person'. It is a requirement for personal service. There is considerable support for the view that a requirement for personal service is met if the document in question comes to the actual attention of the person required to be served: Italiano v Carbone [2005] NSWCA 177 at [56]-[62]; Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd [2012] NSWCA 31 at [57]; Spencer v Bamber [2012] NSWCA 274 at [200]-[212]; and Woodgate v Garard Pty Ltd [2010] NSWSC 508; (2010) 239 FLR 339 at [44]. 22 The express requirement for a notice 'advising' the relevant person of the disqualification supports the conclusion that if the disqualification comes to the actual attention of that person then there has been service on that person of notice advising them of the disqualification. 23 The manifest purpose of these provisions, in the context of s 206A, is that the disqualification does not commence unless and until there is no real doubt as to knowledge on the part of the person of the disqualification by ASIC. On that basis, it is appropriate to impose an offence of strict liability if the person acts in a manner that is a substantial breach of the disqualification because the disqualification cannot start until there has been notification by ASIC. 24 The provision as to service also provides clarity as to the operative date on which the person ceases to be a director. This is a further reason why the commencement of the disqualification should be established in a formal way. When the disqualification takes effect the person ceases to be a director by operation of s 206A(2). There should be no real doubt as to whether third parties are entitled to deal with a person on the basis that they are a director. 25 Finally, there may be reasons why ASIC determines that the disqualification should not occur with immediate effect. For example, there may be a need to make arrangements for the supervision of the affairs of particular corporations before there is disqualification. The terms of s 206F(3) mean that if a decision to disqualify is made then it will not take effect unless and until ASIC itself takes steps to serve the notice. 26 These are all considerations that distinguish service under s 206F(3) from other cases where the courts have held that proof of actual notice is sufficient to satisfy a requirement for service even if personal service has not been effected. Accordingly, I accept the submission that s 206F(3) requires that the service of the notice be effected by ASIC. It is not enough that the disqualification becomes known to the relevant person in some indirect way without the involvement of ASIC. 27 Therefore, if it is the case that ASIC by its act brought the Notice to the actual attention of Mr Carter then the statutory requirement for the commencement of the disqualification has been met.

Application of s 206F(3) to this case 28 The question remains whether, on the facts in this case, the requirement for service by ASIC has been satisfied. 29 ASIC delivered to Mr Christensen by means of an electronic communication, the Letter (from ASIC addressed to Mr Carter personally and signed by the ASIC delegate who made the decision to disqualify) and the Notice. 30 Mr Christensen then forwarded to Mr Carter a copy of the Letter and the Notice. The covering email said that the Notice was 'to be served on Mr Carter'. Therefore, when Mr Carter received the forwarded Letter and Notice he knew from the terms of the email from ASIC to Mr Christensen and from the terms of the Letter that ASIC was taking steps to serve him with the Notice. 31 In those circumstances, when he read the Notice it was personally served. Completion of service by ASIC bringing the document to the actual attention of Mr Carter required it to know that fact. Put another way, service by ASIC could not be effected without ASIC knowing that the required steps had been taken. So, once ASIC knew that Mr Carter had read the Notice in the context of having received the Letter, notice of disqualification in the prescribed form was served on Mr Carter personally by ASIC for the purposes of s 206F(3). 32 This is not a case where the notice was simply provided by ASIC to Mr Christensen who then forwarded it to his client by way of communication between solicitor and client in a manner that might be said not to involve any act by ASIC in effecting service. Nor is it a case where Mr Carter became aware of the fact of the disqualification, but never received the notice. 33 Rather, the communication by Mr Christensen to Mr Carter of a copy of the Letter (being a signed letter addressed to him personally from ASIC and which stated that the Notice was enclosed by way of service) as well as a copy of the Notice followed by his communication with ASIC completed service by ASIC on Mr Carter. The attempt by Mr Carter in his affidavit to characterise the provision of the Letter to him by Mr Christensen as being for the information of Mr Carter does not alter its character as a communication by ASIC addressed to Mr Carter. The information in the forwarded email communicated to Mr Carter included both the Letter addressed to him and the Notice. 34 It is true that ASIC initially communicated with Mr Christensen in a manner that may have indicated that service on Mr Carter was to be arranged. The letter to Mr Christensen was to that effect. However, that did not mean that personal service could not be effected by the delivery of the Notice to Mr Carter personally in the manner that occurred. The way in which Mr Carter received the Letter and the Notice would not have left any real doubt that those communications were by ASIC to him personally. Contrary to the characterisation by Mr Carter in his affidavit that the Decision Related Documents had been sent to him for his information, there was no suggestion from Mr Christensen that he was forwarding the Letter and the Notice to Mr Carter by way of information only. The email from ASIC to Mr Christensen (forwarded to Mr Carter) said only that the Decision Related Documents 'are to be served on Mr Carter, for your reference'. That communication was not sufficient to denude the Letter (signed for ASIC and addressed to Mr Carter) of its character as a communication to him by ASIC when he received it. His contemporaneous communications with ASIC on 30 and 31 July 2017 show that was the manner in which he treated the Letter and the Notice. Therefore, upon receiving and reading the Letter and Notice and the communication of that fact to ASIC, Mr Carter had been served by ASIC with notice of the disqualification. 35 The above conclusion does not depend upon any particular authority on the part of Mr Christensen to receive communications. It depends upon the receipt of the Letter by Mr Carter and the communication to ASIC on 31 July 2017 in unequivocal terms that he had thoroughly read the documents (which included the Letter and the Notice).

Possible application of the Acts Interpretation Act 36 Given the views I have reached, it is not necessary to decide whether there was service under the provisions of s 28A of the Acts Interpretation Act 1901 (Cth). An historical version of that Act applies to the Corporations Act as at 1 January 2005 by operation of s 5C of the Corporations Act. Relevantly, s 28A provides that for the purposes of any Act that requires a document 'to be served on a person', the document may be served on a natural person by delivering it to the person personally. The only evidence of delivery in this case is the forwarding to Mr Carter by Mr Christensen's email of the Letter and the Notice. Delivery by electronic means may not be delivery for the purposes of that provision unless there has been consent to such delivery by the person being served. As to the requirement for consent; see s 9 Electronic Transactions Act 1999 (Cth). In s 28A, the term delivery is used to describe a form of service that is different to leaving the document at or sending it by pre-paid post to the last known address of the person. In my view it requires physical delivery, not electronic delivery. Accordingly, even assuming that s 28A applies on the basis that there is no contrary intention appearing in s 206F(3), I would not have held that there has been service by operation of s 28A.

Conclusion 37 Mr Carter has failed to demonstrate a basis for the declaratory relief sought. The application should be dismissed with costs. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin.