Rosefarms Pty Limited v Stourhead Pty Limited [2000] ACTSC 3 (4 February 2000)

Last Updated: 16 October 2000

ROSEFARMS PTY LIMITED v STOURHEAD PTY LIMITED [2000] ACTSC 3 (4 February 2000)

CATCHWORDS

STATUTORY DEMAND - on company - application under the Corporations Law to set aside statutory demand - requirement that documents in support of the application to set aside the demand be filed and served on person making the demand within 21 days - documents sent by fax and DX mail to respondent's solicitors - whether this mode of service is sufficient - consideration of relevant Corporations Law and Rules of Court - decided personal service effected within the time - held that the Court has jurisdiction to consider the application to set aside the statutory demand.

Corporations Law (Cth), s 459G(1)

Service and Execution of Process Act 1901 (Cth)

David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 69 ALJR 778

Howship Holdings Pty Ltd v Leslie & Anor (1996) 14 ACLC 1549

Re Drinkwater (1929) 46 WN (NSW) 202

Davies v Alliance Acceptance Co (1993) 110 FLR 153

R v Heron; exp Mulder (1884) 10 VLR 314

No. SC 791 of 1999

Judge: Higgins J

Supreme Court of the ACT

Date: 4 February 2000

IN THE SUPREME COURT OF THE )

) No. SC 791 of 1999

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: ROSEFARMS PTY LIMITED (ACN 056 551 154)

Applicant

AND: STOURHEAD PTY LIMITED (ACN 004 894 188)

Respondent

ORDER

Judge: Higgins J

Date: 4 February 2000

Place: Canberra

THE COURT ORDERS THAT:

1. The Court has jurisdiction to consider the application to set aside the statutory demand.

1. This is an application to set aside a statutory demand made pursuant to s 459G(1) of the Corporations Law (Cth) (the Law).

2. The demand was dated 17 September 1999.

3. It specified the address of the Creditor (the respondent) as "c/- Hunt & Hunt, Lawyers, Gateway Building, 1 Macquarie Place, Sydney, NSW, 2000 (JGH:7201504)."

4. The Schedule to the demand alleged:

"1. Pursuant to an agreement made on 30 November 1992, Headingly Farm Contractors Pty Limited ("Headingly"), lent $200,000.00 to Rosefarms ("the loan agreement") for the purpose of financing capital improvements to Yarrawah being approximately 12,000 acres of land described in Certificates of Title Volume 14803 Folio 20, 9/756766 and 13/6756766 ("Yarrawah").

2. The terms of the loan agreement referred to in paragraph 1 herein of the Schedule, were varied by letter agreement dated 13 December 1994.

3. On or about 19 February 1996 Headingly assigned the benefit of the loan agreement to Alnick Pty Limited ("Alnick"), and notice in writing of the assignment was given to the company.

4. By agreement dated 20 August 1997 Alnick assigned the benefit of the loan agreement to the Creditor, and notice in writing of the assignment was given to the company.

5. The Creditor by Notice of Demand dated 23 December 1997 demanded by 27 February 1998:

(a) the repayment of the principal sum of $200,000; and,

(b) the repayment of all interest to the date of the repayment.

6. The company has failed to make any repayment of the principal sum of $200,000.

TOTAL PRINCIPAL $200,000.00

7. Pursuant to the varied loan agreement, interest payment due on 30/6/99 is overdue and payable by the Company to the Creditor as follows:

Principal $200,000.00

Default Interest Rate 20% p.a.

Number of Quarterly Instalments 1

TOTAL INTEREST $10,000.00"

5. It was signed by "James Geoffrey Fulton Harrowell" as solicitor for the respondent. Mr Harrowell is, and then was, a member of the firm of Hunt & Hunt.

6. The demand was supported by an affidavit sworn on 16 September 1999 by John Willem De Wijn. Mr De Wijn deposed that he was a barrister and a Director of the respondent. The affidavit verified the matters set out in the Schedule to the demand.

7. It was served on the applicant on 28 September 1999 (at 8.50 am) at "Andrew S Lea, Chartered Accountant, 197 Tarcutta Street, Wagga Wagga".

8. The application to set aside the demand was filed on 18 October 1999. Such an application must be made within 21 days after service of the demand. That time limit expired on 19 October 1999.

9. Sub-section 459G(3) further requires that an affidavit supporting the application is to be filed with the Court within that time. An affidavit of Stephen William Clancy, a director of the applicant, supporting the application, was filed on 18 October 1999.

10. Sub-section 459G(3)(b) further requires that, within that time:

"a copy of the application, and a copy of the supporting affidavit, are [to be] served on the person who served the demand on the company."

11. Mr Clancy deposed that the debt claimed by the respondent (as an assignee of the original creditor) related to a debt collateral to arrangements between the respondent, Mr Neil Forsyth (since deceased) and four of his associated companies. One of those companies was the original creditor, Headingly. Another was the first assignee of the debt, Alnick. A third such company was the respondent, the assignee of the debt from Alnick and the alleged Creditor.

12. The loan of $200,000 had been made to the applicant by Headingly for the purpose of carrying out improvements to a rural property known as "Yarrawah". That property was the subject of an option to the applicant to purchase it from Mr Forsyth and/or his "associated companies". The contract for the option was the subject of litigation in the Supreme Court of New South Wales between the applicant and a fourth "associated company", Salienta Pty Ltd (Salienta).

13. On 14 September 1999 judgment was given in favour of Salienta by Bryson J. An appeal is pending, due for hearing on 16 & 17 December 1999. Beazley JA granted a stay to the applicant of the orders made by Bryson J pending resolution of the appeal.

14. The purchase not having proceeded, it is the applicant's contention that the value of the improvements should be set-off against the loan.

15. The respondent contends that the application and affidavit were not served in accordance with s 459G(3)(b).

16. That is the nature of a preliminary objection to the competence of this application. It relies upon the decision of the High Court in David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 69 ALJR 778. That case held that unless there was strict compliance with s 459G, a court has no jurisdiction to set aside a demand notice.

17. The evidence in this case is that copies of the application and supporting affidavit were despatched both by facsimile machine to Messrs Hunt & Hunt's Sydney address, and by Document Exchange on 18 October 1999.

18. The respondent contends that neither of those modes of delivery is sufficient for "service" within the meaning of s 459G(3)(b) of the Law.

19. Section 109X of the Law permits service on a "company or recognized company" by:

"1(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..."

20. However, whilst I accept that service in accordance with s 109X was not effected, that does not seem to me to be a barrier to the validity of this application.

21. In the first place, s 109X is couched in permissive terms. It does not purport to exclude any other mode of service recognized as effective.

22. In the second place, s 109X is directed towards service of documents on "companies or recognized companies". Those terms are defined in s 9. Section 459G(3)(b) requires service "on the person who served the demand on the company." Such a person might not necessarily be a "company".

23. Any person may serve a demand (see s 459E). It must relate to a debt (or debts) owing to the person then due and payable and, in aggregate, in excess of the statutory minimum.

24. "The person who served the demand" is not the process server who delivers it or the solicitor who signed it. Section 459G(2)(f) contemplates that the demand "must be signed by or on behalf of the creditor". It follows that "the person who served the demand", is the creditor.

25. Thus, the application and accompanying affidavit had to be served on the respondent on or before 19 October 1999.

26. The respondent nominated its lawyers' office as its address for service. That nomination of an address for service was not required by any Rule of Court. The demand was not and is not a court document. The expression "served" is to be given its natural meaning as "personal" service. The giving of an "address for service" is part of the prescribed form for a demand notice.

27. Delivery to the nominated address for service would suffice. So also would any other mode of service recognized as effective personal service upon a corporation.

28. Order 10 r 9 of the Rules of this Court permits service to be effected by document exchange or facsimile machine. Such service is presumed to be effected:

* By pre-paid post - 3 days after it was posted.

* By document exchange - 2 days after it was left at a collection point.

* By facsimile - 1 day after transmission.

29. In any such case, those times are subject to proof to the contrary.

30. In this case, service by facsimile would certainly have caused the documents in question to be at the address for service, capable of being read on behalf of the respondent, at least on 19 October 1999 during normal business hours on that day.

31. Messrs Hunt & Hunt responded to the proposed application by letter dated 20 October 1999.

32. It is not suggested by the respondent's solicitors that the facsimile did not arrive at their offices nor that they did not receive it, at least by 19 October 1999.

33. Thus I conclude that Mr Kildea, for the applicant, had, within twenty-one days from service of the demand, caused a copy of the application to set it aside to be delivered to the respondent, together with the supporting affidavit.

34. It is not alleged that the application and affidavit were in any way defective in form.

35. However, the respondent contends that service so effected is ineffectual.

36. Young J had to consider an analogous issue in Howship Holdings Pty Ltd v Leslie & Anor (1996) 14 ACLC 1549. As his Honour noted:

"The ordinary meaning of "service" is personal service, and personal service merely means that the document in question must come to the notice of the person for whom it is intended. The means by which that person obtains the document are usually immaterial."

37. Further, where a party has specified an address for service that address will be a place at which documents relevant to the matter for the purpose of which the address was given, may be served. His Honour referred with approval to Re Drinkwater (1992) 46 WN (NSW) 202 (see also Form 509H par 6).

38. His Honour rejected the view that s 109X of the Law is a code for the purpose of service on companies. With respect, I agree with that view.

39. I would also, with respect, agree with Gallop J in Davies v Alliance Acceptance Co (1993) 110 FLR 153, 156. His Honour there cited and adopted the statement of Higginbotham J in R v Heron; exp Mulder (1884) 10 VLR 314:

"...what is personal service? I apprehend that if the proper notice is either delivered to the person himself into his own hands, or so that he is enabled to obtain possession of it, or if it be sufficiently shown that it has come into his hands, there has been personal service upon him to all intents and purposes."

40. In Davies case Gallop J was dealing with service effected purportedly pursuant to the Service and Execution of Process Act 1901 (Cth). Certain endorsements required by the Act were omitted. Hence the service, though "personal", was irregular. Such service was nevertheless, held to be effective. The irregularity might be waived. It would remain good till set aside.

41. In the context of s 459G of the Law, Young J was prepared to accept that even irregular service effected within the allowed twenty-one days would be sufficient for the Court to become seized of the matter.

42. In the present case, the documents were delivered to the nominated address for service. At the latest, unless the facsimile transmission could be shown to have substantively failed, the Rules of this Court would assume that delivery had taken place on 19 October 1999. That constitutes personal service within the meaning of the Rules and, in any event, within the natural and ordinary meaning of that term in the context of modern technology such as facsimile machines and e-mail.

43. Of course, service by facsimile or e-mail does carry the risk of technical failure. The onus is on the party seeking to effect service to show that it has occurred. Ordinarily, proof of transmission will suffice for that purpose.

44. In the present case, it not being contended that the applicant's facsimile transmission failed, then, whether or not the Document Exchange delivery took place on 19 October 1999 rather than on 20 October 1999 as presumed by the Rules, that delivery by facsimile machine constitutes effective personal service.

45. Consequently, the objection of the respondent that the Court lacks jurisdiction to entertain this application is dismissed.

I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Higgins.

Associate:

Date: 4 February 2000

Counsel for the Applicant: Mr B Kildea

Solicitor for the Applicant: Ken Cush & Associates

Counsel for the Respondent: Mr G Corr

Solicitor for the Respondent: Hunt & Hunt

Date of hearing: 5 November 1999

Date of judgment: 4 February 2000