A & M Short v Prestige Residential Marketing Pty Ltd [2019] NSWSC 1716 | Case summary

A & M Short v Prestige Residential Marketing Pty Ltd [2019] NSWSC 1716 | Case summary | Zoe

Amendment of Originating Process

The first is an application by the plaintiff to amend the Originating Process to change the name of the defendant from "Capital Pitch Pty Ltd" to "Capital Pitch Ventures Fund 1, ILP". By the Originating Process, the plaintiff seeks to set aside a statutory demand. The Originating Process was filed 20 days after service of the demand and thus within the 21 days prescribed by section 459G of the Corporations Act 2001 (Cth).
The difficulty arises in this way. On 11 September 2019, Capital Pitch Ventures Fund 1, ILP issued a statutory demand to the plaintiff. The statutory demand made clear that Capital Pitch Ventures Fund 1, ILP was the creditor, but gave as the address of the creditor: "Capital Pitch c/- Hitch Advisory". The Originating Process named "Capital Pitch Pty Ltd" as the defendant rather than the name of the creditor.
This came about by reason of a genuine error by the plaintiff's solicitor, which is explained in an affidavit of Jonathan O'Loughlin of 30 November 2019. In particular, a member of staff conducted a business name search of "Capital Pitch" on the Australian Securities and Investments Commission register, which returned the result of Capital Pitch Pty Ltd. Mr O'Loughlin frankly acknowledges that this was a genuine oversight by the plaintiff's solicitor which was not detected or corrected.
The error was also not detected by the defendant, which was emailed the statutory demand at Hitch Advisory in early October 2019. It was not until 5 November 2019 that the error was detected by the defendant's solicitor and a letter sent on 8 November 2019 advising the plaintiff's solicitor that the wrong company had been sued. On 20 November 2019, the defendant filed an Interlocutory Process to strike out the proceedings on the basis that the claim was frivolous. An Interlocutory Process was then filed by the plaintiff to amend the Originating Process in the way now sought.
The authorities on this difficulty are straightforward. I have been taken to A & M Short v Prestige Residential Marketing Pty Ltd (2005) 54 ACSR 760; [2005] NSWSC 872, in particular, at [27] and [35] where his Honour Young CJ in Eq cited the definitive Australian case of Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231; [1991] HCA 45; and East West Airlines Ltd v Turner (2010) 78 NSWLR 1 [2010] NSWCA 53 at [50], [51] and [58] (special leave refused: [2010] HCATrans 238).
An authority which is also of assistance is the judgment of the White J in Austin Australia Pty Ltd (in liquidation) v A & G Scaffolding and Rigging Service Pty Ltd (2007) 25 ACLC 1,363; [2007] NSWSC 1077 where his Honour explained the ability of the Court to amend an originating process in "time sensitive" proceedings under the Corporations Act, which these are. Those proceedings concerned a voidable transactions application under section 588FF. His Honour noted that the name of a party may be amended where there is a misnomer and, at [28], considered the line between the correction of a misnomer or mis-description in the name of a party and the substitution of a different party. His Honour cited the test by Devlin LJ in Davies v Elsby Brothers Ltd [1960] 3 All ER 672 at 676: The question is not what the writer of the document intended or meant, but what a reasonable man reading the document would understand it to mean...the test must be: How would a reasonable person receiving the document take it? If, in all the circumstances of the case and looking at the document as a whole, he would say to himself, 'Of course it must mean me, but they have got my name wrong.' Then there is a case of mere misnomer. If, on the other hand, he would say, 'I cannot tell from the document itself whether they mean me or not and I shall have to make enquiries.' Then it seems to me that one is getting beyond the realm of misnomer. Here, the evidence of the plaintiff suggests that this is a mere misnomer. The defendant did not, itself, identify any problem with the naming of the defendant for about a month and, in the meantime, participated in these proceedings as if the defendant had been correctly named.
The ability to amend the name of a party under sections 64(1)(b) and 65(2)(b) of the Civil Procedure Act 2005 (NSW) has the result that the name of the substituted person is to be treated as if they had been originally named as such in the Originating Process when these proceedings were commenced, despite any limitation period: section 65(3). As White J explains in Austin Australia, section 79 of the Judiciary Act 1903 (Cth), has the effect that New South Wales procedural legislation applies when this Court is exercising federal jurisdiction. No question arises of extending time past the 21-day limit imposed by the Corporations Act, since the Civil Procedure Act contemplates the amendment having retrospective effect to avoid precisely that issue. There is no prejudice to the defendant, save that they are no longer able to contend that these proceedings are improperly commenced. That is not real prejudice within the meaning of the Civil Procedure Act.
In those circumstances I make the following orders: 1. Grant leave to the plaintiff to amend the Originating Process in the form annexed to its Interlocutory Process filed on 1 December 2019. 2. Order the defendant to pay the plaintiff's costs of the Interlocutory Process filed on 1 December 2019.

[4]

Strike out for late service

The second application is brought by the defendant to dismiss the plaintiff's claim under rule 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) on the basis that the Originating Process has not been served in time. The Interlocutory Process originally sought to dismiss the claim because of the wrongly-named defendant, but the defendant's solicitor accepts that this aspect falls away in light of my ruling.
Section 459G of the Corporations Act provides: (emphasis added) Company may apply (1) A company may apply to the Court for an order setting aside a statutory demand served on the company. (2) An application may only be made within 21 days after the demand is so served. (3) An application is made in accordance with this section only if, within those 21 days: (a) an affidavit supporting the application is filed with the Court; and (b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company. Unless the timing requirement imposed by s 459G is met - both in respect of filing an application to set aside a demand and service of the application and supporting affidavit - this Court has no jurisdiction under Part 5.4, Division 3 to set aside a statutory demand: David Grant and Co Pty Ltd v Westpac (1995) 184 CLR 265; [1995] HCA 43 per Gummow J for the Court at 276-7.
The method of calculating when the 21 days referred to in section 459G expires is helpfully described by Justice Barrett in Autumn Solar Insulation Pty Ltd v Solar Magic Australia Pty Ltd [2010] NSWSC 463 at [5], [6] and [11]. Applying His Honour's analysis to this case, one excludes the date on which the statutory demand was served, being 12 September 2019, and the result is that the time in which to file and serve the application to set aside the demand expired at midnight on 3 October 2019.
On 2 October 2019 at 3.46pm the Originating Process was filed and at 4.16pm was served by e-mail on the defendant's solicitor.
Section 459G does not define what is meant by "serving" the application and affidavit. This is determined by other applicable laws and rules of Court: Austar Finance Pty Ltd v Campbell (2007) 215 FLR 464; [2007] NSWSC 1493 per Austin J at [32]-[33].
The plaintiff submits, as I understand it, that service by e-mail on the defendant's solicitor was expressly authorised by the defendant or was otherwise "effective informal service" within the 21 day period relying on Greenmint Pty Ltd v O'Keeffe (2015) 301 FLR 165; [2015] VSC 326.
As to agreement to accept service in this way, the plaintiff relies on the affidavit of its solicitor, Jonathan O'Loughlin, who deposes that since mid-March 2019 he has been in communications with the defendant's solicitor to facilitate a resolution of the dispute between them. Mr O'Loughlin has predominantly corresponded with Mr Marshall by e-mail. Examples of e-mails and letters sent between the parties are referred to; indeed the statutory demand itself was initialled served by e-mail.
In particular, on 27 September 2019, Mr Marshall sent a letter by e-mail to the plaintiff's solicitors saying, amongst other things: We confirm we hold instructions to accept any set-aside application and are confident of successfully opposing the same. For reasons unclear to me, Mr Marshall thought it also appropriate to remind the plaintiff's solicitor of the potential for personal costs orders to be made in the event of a vexatious and baseless application.
The signature portion of the letter bore Mr Marshall's name followed by his e-mail address at which the parties had, it would appear, routinely corresponded for the preceding six months.
Having received that letter by e-mail, on 2 October 2019, by e-mail, the plaintiffs sent the originating process and affidavit in support to the defendant's solicitor.
Rule 3.7 of the UCPR provides: Electronic service of a document A party to any proceedings before the court may use electronic mail to serve a document on any other party to proceedings, whether by means of Online Registry or otherwise, but only with the consent of the other party.
Although the statutory demand did not include an e-mail address for the defendant's solicitor, it seems to me from the evidence of Mr O'Loughlin, together with the letter from the defendant's solicitor of 27 September 2019, that it can be inferred that the defendant consented to being served by e-mail with an application to set aside the statutory demand. That is the means by which these parties had been corresponding for six months. That was how the inclusion of the defendant's solicitor's signature portion of his letter could be reasonably understood. It seems to me that consent had been given under rule 3.7 of the Rules and, thus, the application was validly served by e-mail on 2 October 2019.
Even if I had not come to that view, the Originating Process may still have been served by e-mail if it had actually come to the attention of the defendant by that means: Howship Holdings Pty Ltd v Leslie (No 2) (1996) 41 NSWLR 542 at 544-5.
As I set out in In the Matter of Boss Constructions (NSW) Pty Ltd [2019] NSWSC 543, at [22]: E-mails are transmitted to, and electronically stored, on a server and positive action is needed on the part of the receiver to access the e-mail through their computer and read it. As such, electronic service by e-mails is not generally taken to have been effective until the recipient of the e-mail downloads the e-mail from the server and reads it. In this case, Mr Marshall deposed that in the week of 30 September 2019 to 4 October 2019 he was predominantly focussed on the completion of a multi-million dollar acquisition and did not regularly check his e-mail inbox unless it related to that acquisition. For that reason, although the e-mail was sent to him on 2 October 2019, he says that he did not open the e-mail until 4 October 2019, which I note is beyond the 21 day period provided by section 459G.
It appears to me from reading Mr Marshall's affidavit that he regularly looked at what had arrived in his e-mail inbox as he was engaged in an important transaction. It would therefore, I infer, have come to his notice that an e-mail had been received from the plaintiff's solicitor in respect of this matter. I note that the email in question had the subject "In the matter of Outix Corporation Pty Ltd, NSW Supreme Court Proceeding 2019/00308032". Presumably, as the defendant's solicitor, he was looking to see whether the plaintiff sought to set aside the statutory demand within the 21 day period.
If Mr Marshall chose not to open an e-mail which arrived in his inbox during the 21-day period, that does not seem to me to have the effect that he thereby prevented the e-mail from coming to his notice and therefore the attention of his client. Here, as in Greenmint, it seems to me that the defendant had, by the address for service in the statutory demand, expressly authorised its solicitor to deal directly and responsibly with any application to set aside the demand and supporting affidavit that may be served. As I said in In the matter of Fugace Pty Limited [2019] NSWSC 1203 at [15]: … It is reasonable to infer that solicitors working at a law firm in Sydney during ordinary business hours will be at or in reasonable proximity to their desks, have ready access to their computers, receive emails from the law firm's server in a timely manner without the solicitor having to perform any significant task such as logging on to their computer, restarting their computer or entering a password, and will also likely read and open emails which are sent to them, particularly in matters which were 'time critical'. I am thus inclined to infer, unlike the factual circumstances in Sheraz and Boss Constructions, that [the defendant's solicitor] received the email attaching the Originating Process, which they were authorised to accept on behalf of the defendant albeit not by that specific means of communication. I more readily draw that inference where there is no evidence that the email 'bounced' or that the defendant's solicitor was otherwise occupied.
I am not satisfied that the defendant's solicitor was "otherwise occupied" in this matter. The fact that he was focussing on a particular transaction does not mean that he could not see other emails that arrived in his inbox on other matters in which he was retained.
In these circumstances, I make the following further orders: (3) Dismiss the defendant's Interlocutory Process filed on 20 November 2019. (4) Order the defendant to pay the plaintiff's costs of the Interlocutory Process filed on 20 November 2019.

A & M Short v Prestige Residential Marketing Pty Ltd

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