Partners of Piper Alderman v Sharjade Pty Limited [2011] NSWSC 6 (1 February 2011)

Last Updated: 10 June 2011

Supreme Court New South Wales

Case Title:	Partners of Piper Alderman v Sharjade Pty Limited
Medium Neutral Citation:	[2011] NSWSC 6
Hearing Date(s):	31 January 2011
Decision Date:	01 February 2011
Jurisdiction:
Before:	Barrett J
Decision:	1. Order that Sharjade Pty Limited ACN 082 305 637 be wound up in insolvency. 2. Order that Andrew Hugh Jenner Wily of Armstrong Wily, Level 5, 75 Castlereagh Street, Sydney, an official liquidator, be appointed liquidator of Sharjade Pty Limited. 3. Order that the defendant pay the plaintiff's costs of the proceedings. 4. Direct that the orders be entered forthwith.
Catchwords:	CORPORATIONS - winding up - application for winding up in insolvency based on non-compliance with statutory demand - defendant alleges non-receipt of statutory demand - service by post proved - presumption of insolvency therefore available - no attempt by defendant to prove solvency - relevance of non-receipt of statutory demand to exercise of discretion whether to order winding up - no basis to exercise discretion against making of order
Legislation Cited:	Acts Interpretation Act 1901 (Cth), s 29 Corporations Act 2001 (Cth), ss 109X(1)(a), 459C(2)(a), 459S(1), (2), 467(1) Income Tax Assessment Act 1936 (Cth), s 222AOF
Cases Cited:	Deputy Commissioner of Taxation v Meredith (2007) NSWCA 354; (2007) 229 FLR 243 Macrae v St Margaret's Hospital [1999] NSWCA 381; (1999) 19 NSWCCR 1 Commonwealth Broadcasting Corp Pty Ltd v Pacific Mobile Phones Pty Ltd [2008] QSC 210; (2008) 219 QSC 442
Texts Cited:
Category:	Principal judgment
Parties:	The Partners of Piper Alderman (Plaintiff) Sharjade Pty Limited (Defendant)
Representation
- Counsel:	Counsel: Mr A Ivantsoff (Plaintiff) Mr M Akbarian, Director of Defendant in person (Defendant)
- Solicitors:	Solicitors: Piper Alderman (Plaintiff) Mr M Akbarian, Director of Defendant in person (Defendant)
File number(s):	2010/323723
Publication Restriction:

Judgment

1. The plaintiffs are a firm of solicitors. They seek an order that the defendant, a former client, be wound up in insolvency.
2. The plaintiffs have the benefit of a presumption of insolvency arising from non-compliance by the defendant with a statutory demand. The statutory demand was in the sum of $46,013.11 and was served by being posted on 10 June 2010 to the registered office of the defendant at Unit [X], [Y] Milson Road Cremorne Point. Posting is proved by the affidavit of Ms Grant. The situation of a registered office is proved by the affidavit of Mr Grieve.
3. This evidence establishes service of the statutory demand in accordance with the s 109X(1)(a) of the Corporations Act 2001 (Cth).
4. The court has no option but to proceed on the basis that, according to s 459C(2)(a), the defendant is presumed to be insolvent so that the ground on which the plaintiffs rely is established.
5. It is said on behalf of the defendant, however, that the statutory demand was not received. That, if established, does not detract from the proposition that the statutory demand was served. This is because, under s 109X(1)(a), due posting to the registered office is alone sufficient to constitute service, with that service being effective at the time when the letter would be delivered in the ordinary course of post. Non-receipt may be relevant in another way to which I shall come in due course.
6. The defendant maintains that it is not indebted to the plaintiffs in the way stated in the statutory demand. The defendant is, however, precluded by section 459S(1) from raising that proposition by way of defence to the winding up application. The defendant did make an application for leave under s 459S(1) to allow it to defend on the basis just stated. That application was determined on 6 December 2010 adversely to the defendant. Apart from anything else, the defendant placed nothing before the court relevant to the s 459S(2) aspect.
7. Upon the hearing of the winding up application the defendant has not sought to prove that it is solvent. The defendant's director, Mr Akbarian, who spoke for it in court, referred from the bar table to the fact that the plaintiffs are the defendant's only creditor and that it has the financial capacity to pay the debt of $46,013.11. He also referred to draft financial statements for the year ended 30 June 2010. However, the defendant did not attempt to lead evidence on these matters with the result that the court can come to no view about them and cannot take them into account.
8. Given the evidence before the court, it is necessary to proceed on the basis that the defendant is insolvent unless the contrary is proved; and that no attempt to prove the contrary has been made. The only finding available is that the defendant is insolvent and that the plaintiffs are therefore entitled to a winding up order unless there is some matter relevant to the discretion of the court preserved by s 467(1) such that, as a discretionary matter, a winding up order should not be made.
9. It is at this point that I return to the question of non-receipt of the statutory demand. The address of the registered office to which the statutory demand was posted is, as I have said, Unit [X], [Y] Milson Road, Cremorne. This is a residential unit which is the home of Mr and Mrs Akbarian. They are the only directors of the defendant. Mr Akbarian is the secretary.
10. Mr Akbarian deposes that he did not receive or see the statutory demand at any time before receiving, on or about 13 October 2010, a letter of 7 October 2010 which was apparently a covering letter accompanying the winding up application and related documents. Mrs Akbarian deposes that she did not see or receive the statutory demand until shown it by Mr Akbarian on or about 13 October 2010. Mrs Akbarian also gave evidence about the physical circumstances of the mail boxes at [Y] Milson Road and practices relating to the delivery and receipt of mail. I quote from her affidavit:

"All mails received at [X]/[Y] Milson Rd, Cremorne Point are delivered to our mail box which is located adjacent in the public walkway in front of the building. I or Mr Akbarian normally check the mail box on a regular basis. On each occasion we sort out the mail, pick the mail that is in our name and put the remaining mail on the mirror table near the door without opening them. I have found mails addressed to 4 Milson Rd in our mailbox a few times and have returned them to number 4."

11. This evidence shows that the mail box for Unit [X] is adjacent to the public walkway in front of the home unit building at [Y] Milson Road. I infer from this that anyone walking off the street towards the entrance to the building passes a collection of mail boxes one of which is that of Unit [X]; and that such a person could put things into and take things out of the box for Unit [X]. Nothing is said about the box - for example, the size of it, what it might hold, what might cause it to overflow, and whether it has a lock on it. The absence of any reference to the box being locked is, I think, sufficient for me to proceed on the basis that it has no lock and, like a great many mail boxes one is accustomed to seeing in suburban Sydney whether at houses or apartment blocks, can be opened by anyone who chooses to open it.
12. In addition, Mrs Akbarian's evidence suggests that it is by no means uncommon for articles directed to units at [Y] Milson Road other than Unit [X] to be delivered to the box for Unit [X], since she refers to a practice of extracting misdelivered articles from the Unit [X] box and leaving them on a table near the door of the building (presumably inside that door). There is also reference to articles for No 4 Milson Road - a quite separate building - being delivered to the box for Unit [X], No [Y].
13. It has been held in a number of cases that a person who complies in a literal sense with the requirements for service should not be allowed to proceed on the basis of the benefit of that service if the person knows that the document in fact did not come to the notice of the party to be served. Examples are where a posted document is returned unclaimed through the post office marked "Left Address" or, as in Commonwealth Broadcasting Corp Pty Ltd v Pacific Mobile Phones Pty Ltd [2008] QSC 210; (2008) 219 QSC 442, where the building in which the registered office is situated is undergoing major renovation so that no-one can enter it.
14. A serving party who knows that, for this kind of reason, a document technically served did not in fact reach its destination may be denied a benefit that would be available on the basis of the technically correct and sufficient service.
15. Another relevant principle, however, is that stated with Basten JA with whom Ipp JA agreed in Deputy Commissioner of Taxation v Meredith (2007) NSWCA 354; (2007) 229 FLR 243. His Honour was discussing s 29 of the Acts Interpretation Act 1901 (Commonwealth), which is in relevant respects the same as section 109X(1)(a) of the Corporations Act . Basten JA said at [76]:

"Section 29 in effect imposes on the intended recipient responsibility for ensuring that the document does not go astray after delivery to the postal address".
And I emphasise the words "after delivery to the postal address."

16. Speaking of s 222AOF of the Income Tax Assessment Act 1936 (Cth) which is also relevantly identical with the provision with which I am here concerned, Basten JA said that the section "places the risk of loss within the postal system on the intended recipient."
17. I consider both these observations of Basten J to be pertinent in a case of service by post under s 109X(1)(a) of the Corporations Act .
18. Another point should be made in amplification of what has just been said. A company's registered office must be at some defined and readily accessible place consisting of, or being within, a building. The specification of the address of the registered office must be such as to accommodate the possibility recognised in s 109X(1)(a) of the Corporations Act that documents will be served by posting them to the registered office. Implicit in the statutory scheme, therefore, is an expectation that there will be in place at the registered office a system for the safe and secure reception of documents delivered by post.
19. In the present case, the defendant company saw fit to locate its registered office at premises served by a mail box located outside the confines of the registered office itself and outside the confines of the relevant building. The mail box formed part of a collection of boxes apparently accessible to anyone passing by. This calls to mind yet again the observation of Davies AJA in Macrae v St Margaret's Hospital [1999] NSWCA 381; [1999] NSWCA 381; (1999) 19 NSWCCR 1 that "anything might happen to business letters put into a letter box at the gate of the hospital."
20. The present defendant chose as its registered office premises with mail delivery facilities prompting the like observation - that anything might happen to documents put into a letter box situated on the public walkway in front of the residential unit building and providing access to that building from the street.
21. On the facts of this case there was, as I have said, good and effective service of the statutory demand by the plaintiffs. It has not been shown that a letter addressed to the Cremorne address would for any reason that the plaintiffs knew or ought to have known not to be delivered to the defendant; nor does the evidence show any basis for a conclusion that there was no delivery to the mail box for Unit [X], [Y] Milson Road, being the box to which the defendant's specification of registered office would have caused the envelope containing the statutory demand it to be taken by the postal service.
22. Non-receipt of itself represents no sound basis for declining to award the relief they seek. Such a basis would exist if only the plaintiffs has initiated the winding up application in circumstances where they had knowledge making it unfair for them to proceed on the basis that the statutory demand had been duly served. No such basis exists here.
23. The orders of the court are as follows;

1. Order that Sharjade Pty Limited ACN 082 305 637 be wound up in insolvency.

2. Order that Andrew Hugh Jenner Wily of Armstrong Wily, Level 5, 75 Castlereagh Street, Sydney, an official liquidator, be appointed liquidator of Sharjade Pty Limited.

3. Order that the defendant pay the plaintiff's costs of the proceedings.

24. I direct that the orders be entered forthwith.

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