Re Dennis Hanger Pty Ltd v Kanambra Pty Ltd [1992] FCA 56; (1992) 10 ACLC 284 (1992) 6 Ascr 687 (1992) 106 ALR 544 (1992) 34 FCR 242 (21 February 1992)

FEDERAL COURT OF AUSTRALIA

Re: DENNIS HANGER PTY. LTD.
And: KANAMBRA PTY. LTD.
No. V G3064 of 1991
FED No. 66
Corporations
[1992] FCA 56; (1992) 10 ACLC 284
(1992) 6 ASCR 687
(1992) 106 ALR 544
(1992) 34 FCR 242

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Heerey J.(1)

CATCHWORDS

Corporations - winding up - notice of demand purporting to be signed by solicitors for the creditor on its behalf - whether necessary to prove express authority for signing of demand.

Corporations Law: s.460(2)(a)

DFC of T v Players Entertainment Network Pty Ltd (1988) 6 ACLC 902, followed

HEARING

MELBOURNE
21:2:1992

Counsel for the Applicant: Mr R.N. Cameron

Solicitors for the Applicant: Wilmoth Field and Warne

Counsel for the Respondent: Mr M. Cahill

Solicitors for the Respondent: Andrews and Backhouse

ORDER

Kanambra Pty Ltd ("the company") be wound up by the Court under the provisions of the Corporations Law.

Graham John Clark of 111 Lonsdale Street, Melbourne, an official liquidator, be appointed the liquidator of the affairs of the company.

The applicant shall have its costs of the winding up.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

The applicant seeks an order for the winding up of the respondent company on the grounds that it is unable to pay its debts and alternatively on the just and equitable ground.

2. When the matter came on for hearing I rejected an application by the company for an adjournment. The matter proceeded and the only ground taken on behalf of the company in opposition to a winding up order was a contention that there was no evidence that the demand under s.460(2)(a) of the Corporations Law was "signed by or on behalf of the creditor".

3. The demand is dated 15 May 1991 and is in the usual form. The debt demanded is $21,586.73 being the amount of a judgment obtained in the Magistrates' Court at Melbourne for the price of fruit and vegetables supplied to the company, together with interest and costs. Below the date on the demand appears a signature "Wilmoth Field and Warne" and under that the typed words "Wilmoth Field and Warne" and the description "Solicitors and Agents for Dennis Hanger Pty Ltd".

4. In an affidavit sworn 8 August 1991 Mr Dennis Raftopoulos deposes that he is a director of the applicant and is duly authorised to make the affidavit on its behalf. He deposes to the existence of the judgment debt already mentioned. The affidavit then continues,

"4. On 15 May, 1991 the Applicant served on the Company a
demand sealed by the Applicant requiring the Company to pay
the said sum. Now produced and shown to me and marked with
the letters "DR 1" is a copy of the Demand. I am informed
that service was effected by the Applicant's solicitors,
Messrs. Wilmoth Field and Warne, who have been instructed to
swear an Affidavit of Service of the Demand."

5. Mr Raftopoulos then deposes to the company's failure for 3 weeks after service of the demand to pay or secure or compound the sum to the reasonable satisfaction of the applicant.

6. The exhibit "DR 1" to the affidavit of Mr Raftopoulos is a demand in the form I have described. It is not sealed by the applicant but purports to be signed by solicitors on its behalf. Some point of this was made by counsel for the company, but I think clearly the explanation is that the affidavit was drafted with careless reliance on an inappropriate precedent. On the balance of probabilities, and having regard in particular to the affidavit of service which I shall shortly mention, I find that the document in fact served on the company was a demand signed by solicitors.

7. In an affidavit sworn on 8 August 1991 Miss Kelly Bramich deposes that she is an office clerk "in the sole and permanent employ of Messrs Wilmoth Field and Warne, Solicitors for the Applicant who have the care and conduct of this matter." She further deposes that on 15 May 1991 she posted by prepaid certified mail a letter bearing that date enclosing "a Notice of Demand executed by Messrs Wilmoth Field and Warne as agents for and on behalf of Dennis Hanger Pty. Ltd." A copy of that notice of demand, together with a return receipt from Australia Post, is produced. The notice of demand is in the form to which I have already referred. Neither Mr Raftopoulos nor Miss Bramich were cross-examined.

8. The short answer to the company's contention is that upon the evidence before me I find on the balance of probabilities that the applicant authorised Wilmoth Field and Warne to sign the demand on its behalf. In the paragraph of his affidavit already quoted, Mr Raftopoulos, a director of the company, clearly states that the demand was served by Wilmoth Field and Warne on behalf of the applicant. I think the inference can reasonably be drawn, certainly in the absence of any evidence to the contrary, that the demand which was served by those solicitors on behalf of the applicant was also signed by the same solicitors on its behalf. Other evidence supporting that inference is contained in the affidavit of Miss Bramich who deposes that the demand was executed by Wilmoth Field and Warne as agents for and on behalf of the applicant.

9. I do not think I have to be satisfied that there was express authority specifically for the signing of the demand; see Bird v Boulter (1833) 4 B and Ad 443; [1832] EngR 379; 110 ER 55. Even if the applicant did no more in terms than instruct its solicitors to wind up the company, that would necessarily imply authority to take all appropriate steps, including the signing and service of a demand under s.460(2)(a). It seems to me more likely than not, especially given direct evidence of the authorisation of service of the demand, that there was some form of authorisation of the solicitors to sign the notice, whether that authorisation was express or implied, and that the solicitors were correct in describing themselves as "solicitors and agents for the applicant".

10. I was referred to some authorities in the Supreme Courts of New South Wales and Queensland which indicate that there is a practice in those States that the authority of a creditor to an agent to sign the demand under s.460(2)(a) must be proved by evidence. Thus in Commonwealth v Pavanui Investments Pty Ltd (1986) 4 ACLC 607, 608, Bryson J., speaking of the predecessor of s.460(2), said

"I regard sec. 364(2) as machinery which must be fulfilled
strictly and to the letter if the result which it is
designed to produce is in fact to be produced, that is if a
court is to deem the company subject to such a notice to be
unable to pay its debts. The nature of the proceedings and
the effect on a company of a winding up order are such that
technicalities must be observed strictly. For this reason
it appears to be the practice, which I would do nothing to
disturb, to require evidence of the authority of a person
other than the creditor to sign a demand notice so as to
make out proof of the reference in subpara. (a) to the
demand being 'signed by or on behalf of the creditor'."

11. In Collins Bros Stationers Pty Ltd v Zebra Graphics Pty Ltd (1986) 4 ACLC 234, 235, Young J. thought that if there was no evidence of any authority given to a solicitor to sign a demand on behalf of a petitioning creditor the demand would be "probably invalid". In Re Kieran Byrne and Associates Geotechnical Consultants Pty Ltd (1988) 6 ACLC 76 Ryan J. in the Supreme Court of Queensland dismissed an application for winding up on the ground that there was no evidence that the applicant gave authority to solicitors to sign the demand on its behalf.

12. In DFC of T v Players Entertainment Network Pty Ltd (1988) 6 ACLC 902 the Victorian Full Court distinguished the New South Wales and Queensland decisions already referred to on the ground that the Victorian Supreme Court (Companies and Securities) Rules 1985 provide for a statutory form of affidavit (form 15) which includes an assertion that "the applicant served on the company a demand signed by or on behalf of the applicant requiring the company to pay the said sum." By r.8.08 such an affidavit "is sufficient prima facie evidence of facts relied on for the motion in support of which it is filed." An affidavit in this form had been sworn on behalf of the applicant in Players and the Full Court held this constituted sufficient proof of the authority to sign the demand.

13. There are no truly comparable provisions to the Victorian rules in the New South Wales and Queensland rules and the same would appear to be true of the Federal Court Rules; see 0.71 r.37. However, Gobbo J., with whom Murphy and Ormiston JJ. agreed, went on to make the following comment (at 904),

"... I do not agree with the view that where the notice of demand
is signed by a solicitor that necessarily then calls for express
evidence of authority on the solicitor to sign the notice on
behalf of the creditor. It would seem to me that the document,
where it is signed by a person describing himself as the solicitor
of the creditor, carries with it an assertion of agency. It would
not seem necessary to have explicit evidence of authority which
is, as it were, claimed and prima facie made out on the face of
the document."

14. I would respectfully agree with the comment of Gobbo J. In Ataxtin Pty Ltd v Gordon Pacific Development Pty Ltd (1991) 29 FCR 564 I followed that line of cases which requires a strict compliance with the requirements of s.460(2)(a) if the demand is to answer the description of the statute and thus trigger the statutory deeming of inability to pay debts. However, the particular requirement of s.460(2)(a) now under consideration, that is to say that the demand was "signed by or on behalf of the creditor", simply poses a question of fact. The applicant need do no more than establish the existence of that fact on the balance of probabilities by the ordinary rules of evidence and proof. I refer in this regard to the comments of Ormiston J. in Players at 905-6.

15. There will be an order that the company be wound up under the provisions of the Corporations Law.