Austar Finance v Campbell [2007] NSWSC 1493 | Case summary

4954/07 AUSTAR FINANCE GROUP PTY LTD V GUY ALEXANDER CAMPBELL T/A D:COM MARKETING JUDGMENT 1 HIS HONOUR: By an originating process filed 11 October 2007, the plaintiff seeks to set aside the defendant's statutory demand dated 18 September 2007 for $14,000, "for design, and marketing services undertaken for the Company", including "corporate identity programmes and marketing collateral, web sites, web hosting and domain name registrations, marketing and graphic design services". The defendant is an individual, not a company. 2 The plaintiff seeks to set the demand aside on the basis that there is a genuine dispute about the existence of the debt. The hearing raised two issues, namely whether the application to set aside the statutory demand and the supporting affidavit were properly served; and whether there was a genuine dispute with respect to the existence or amount of the debt. I have reached the conclusion that the application was not properly served within the 21-day period prescribed by s 459G(3). It is therefore unnecessary to deal with the question whether there was a genuine dispute, and I shall not do so. Facts 3 The defendant gave evidence that he conducts his business from an office in his home at Mount Druitt, which contains a computer and fax machine. The address for service given in the statutory demand was the Mount Druitt address. The statutory demand did not provide any facsimile number or e-mail address. 4 The statutory demand, dated 18 September 2007, was sent by the defendant by express post to the registered office of the plaintiff on 19 September 2007, and was delivered on 21 September 2007. It is common ground that under s 459G(2) the plaintiff had until 12 October 2007 to comply with the demand or make an application to set it aside. 5 On Wednesday 10 October 2007 the plaintiff's solicitor transmitted to the defendant a facsimile letter and annexures, comprising 27 pages in all, enclosing, purportedly by way of service, an originating process dated 9 October 2007 signed by the solicitor, and Mr Sokarno's signed affidavit made on 9 October 2007 (there is no contest that this is a "supporting" affidavit for the purposes of s 459G). The solicitor's covering letter said "The court date will be provide [sic] to you tomorrow". 6 The facsimile number used by the plaintiff's solicitor was to the fax machine housed in the defendant's office in his home in Mount Druitt. The defendant accepts that he received the documents on 10 October. But the originating process and affidavit had not, at that stage, been filed and sealed. 7 The originating process and Mr Sokarno's affidavit were both filed and sealed on Thursday 11 October 2007, and the Registry of the court allocated a return date for the originating process in the usual way. 8 On Friday 12 October 2007 at 11:19 a.m., the plaintiff's solicitor personally sent a facsimile letter to the defendant at the same facsimile number. The letter purported to enclose a sealed copy of the application to set aside the statutory demand, noting that the return date was 9 November 2007 at 11 a.m. According to the letter, four pages were being transmitted. The letter also said that with the hard copy of the letter there was enclosed "by way of service" the application and Mr Sokarno's affidavit as filed on 11 October. The hard copy of the letter was posted and not received until 16 October, as noted below. 9 The plaintiff's solicitor gave evidence that, while he was standing in front of his fax machine, it stopped transmitting and printed out a transmission report, which showed "stop" in the results column. He attempted to retransmit the material by fax twice, and on both occasions the machine did not connect to the receiving facsimile number. He said that he attempted to contact the defendant by telephone, without success (although the defendant said there were no messages for him from the solicitor in his answering service for that day). He asked another solicitor in his office to send the documents to the defendant by e-mail. 10 In fact only two pages were printed out by the defendant's facsimile machine - that is, the letter itself and an almost blank page. All that appears on the second page is the top part of the typed words "In the Supreme Court of New South Wales No of " (sufficient appears for the reader to guess what those words say) and then, above "No of", the handwritten figures appearing in full, "4954/07". It is as if the page had been transmitted with another blank page superimposed on it so as to obscure what appeared on the page, except for the top part (I do not mean to suggest that this was in fact done). 11 An activity report for the defendant's fax machine shows the receipt of the 27 page facsimile on 10 October, and on 12 October the receipt of two pages from the same transmitting number followed by the annotation "stop" and then a further entry "Receive zero" and then "stop". This suggests that the fax machine stopped for some reason, though there is no adequate explanation for why it did so (the defendant gave evidence that on 13 October he noticed the fax machine was out of paper, but that does not explain why a page was printed that was almost blank). 12 Sometimes a receiving fax machine does not immediately print a facsimile transmission because of lack of paper, although the transmission can be recovered and printed later because it is stored in the receiving fax machine's memory. But in the present case the defendant gave evidence that in such circumstances his fax machine does not retain the transmission in its memory because (he thought) it is defective. 13 Counsel for the plaintiff drew attention to what he said were some irregularities in the defendant's evidence and invited me to reject it. There does seem to be a discrepancy between, on the one hand, the defendant's oral evidence that when he came into his home office on 13 October he found three facsimile pages on the floor near the fax machine, one relating to another matter irrelevant to these proceedings, and on the other hand, the activity report annexed to his second affidavit, according to which only two pages were received on 12 October. In my opinion the defendant's recollection that he saw three pages on the floor is faulty, and in reality there were only two, the two pages identified above. But I do not regard that failure of recollection as undermining his evidence in other respects. I accept his evidence about the fax machine's defective memory. 14 Counsel for the defendant drew attention to the activity reports that are in evidence, submitting that I could infer from them that the facsimile transmission was stopped at the sender's end rather than at the receiver's end. But in my view that inference is not available, on the materials before me. The failure of the facsimile transmission is therefore, on the evidence, a mystery. 15 The defendant gave evidence that he did not see the facsimile transmission until the following day, 13 October, as on Friday 12 October he was out for work purposes during the day and he was out socially until late in the evening, and did not check his office until the following morning. I accept that evidence. 16 At about 11:46 a.m. on 12 October a solicitor in the office of the plaintiff's solicitor scanned the originating process into her computer and attached to an e-mail the scanned copy of the originating process and a copy of the letter that had been transmitted by facsimile on that day. The e-mail drew attention to the return date, and was addressed to the e-mail address shown on the defendant's letterhead. The solicitor gave evidence that if an e-mail sent by her was not delivered, a report would be produced within minutes to inform her of the delivery failure, and no such report was produced in respect of this e-mail. The defendant gave evidence that he did not open the e-mail until Monday 15 October 2007. I accept all of this evidence. 17 Counsel for the defendant submitted that there appeared to be only one attachment to the e-mail, and so the court could not be sure that the originating process was in fact transmitted. I do not accept this submission. In my view it is likely, on the balance of probabilities, that both the letter and the scanned originating process were attached to the e-mail, having regard to the evidence given by the solicitor who sent the e-mail, the terms of the e-mail and letter, and the fact that the defendant has not given evidence to the contrary. The fact that there appears to be only one attachment to the e-mail could be explained on the basis that the originating process is an attachment to the attached letter, rather than an attachment to the e-mail itself. Counsel also submitted that the court could not assume that an attachment to an e-mail is capable of being opened. But it seems to me more likely than not that the attachments were opened in the present case, for the defendant has not given evidence to the contrary when one would have expected him to do so. 18 This evidence leads to the question whether an e-mail transmitted to a person at an e-mail address which that person routinely accesses by a computer located at the address of his place of business is served when transmitted to that e-mail address, although the e-mail is not read. For the purpose of answering that question, it may be relevant to know just what, if anything, is received and held within the computer located at the business address, as opposed to the server of a third-party provider. Unfortunately the evidence that has been provided at this technical level is less than satisfactory, but I must do the best I can with it. 19 The plaintiff relied on affidavit evidence by an information technology expert, who said that the plaintiff's solicitor has an e-mail domain and e-mail server and therefore does not need to use a third-party service provider such as Optus or Hotmail. He said it is clear from the defendant's letterhead that he has his own e-mail domain. According to the expert, this means that any e-mail sent from the plaintiff's solicitor to the defendant's e-mail address would be "received by the defendant" within five minutes, unless there was a notice of delivery failure. Since there was no such notice in the present case, "the e-mail would be sitting in [the defendant's] mailbox virtually from the time it was sent", regardless of when he chose to open his mail. 20 The expert was not cross-examined and no objection was taken to his affidavit. Nevertheless I am not prepared to accept his evidence as literally true. The statement that an e-mail transmitted to the defendant's e-mail address is "received" by the defendant within five minutes, regardless of whether the e-mail is opened, seems to me to make an assumption about the legal meaning of the word "received" which the witness was not qualified to make. The statement that the e-mail would be "sitting in" the defendant's mailbox seems to make some factual assumptions that are not spelled out. 21 The defendant's evidence was that he made use of an internet service provider called "Planet Domain" which provided him with a hosting package including an e-mail facility, for a monthly fee. He said Planet Domain is in Sydney. The defendant said his website and e-mail accounts were on its server, and it provided the same sort of e-mail service as, say, Bigpond or Optus. He said Planet Domain is owned by Primus and he said he believed the server used by Planet Domain is in the United States, because once when the e-mail went down he was told there were problems with the server in America. 22 This evidence leads me to conclude that when the e-mail was transmitted by the plaintiff's solicitor, an electronic message representing the contents of the e-mail was received by a server not located at the Mount Druitt address. Although there is no evidence of this, I assume from general experience that shortly after the e-mail was received by the server, Planet Domain sent an electronic notification to the defendant's computer indicating that an e-mail had been received. When eventually the defendant accessed his e-mail mailbox on 15 October, he discovered that notification and then opened the e-mail, thereby gaining access to what was stored in electronic form on the server. Consequently, notwithstanding the expert's evidence, the e-mail and its attachments were not "received" at the defendant's place of business on 12 October and were not "sitting in" the defendant's computer physically located there. 23 The final relevant event is that on 12 October 2007 the plaintiff's solicitor posted to the defendant, by ordinary post in a sealed envelope, a copy of the originating process and Mr Sokarno's affidavit, as filed. According to the defendant, he received this mail on 16 October 2007. Requirements of s 459G 24 Section 459G of the Corporations Act 2001 (Cth) provides as follows: "459G(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 the 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." 25 Subsections 459G(1) and (2) permit a company to apply to set aside a statutory demand only if the application is made within 21 days after service of the demand. In David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 the High Court held that s 459G defines the jurisdiction of the court by imposing a 21 day time requirement as an essential condition to the company's right to apply to set aside the demand. If the company purports to make its application after the expiry of the time period, the court has no jurisdiction to deal with it. Therefore the question to be considered is whether, in the present case, the plaintiff's application was "made" within the time period expiring on 12 October 2007. 26 The circumstances in which an application is "made" are stated in s 459G(3), which sets out some requirements for both the application and the supporting affidavit. 27 As regards the application itself, s 459G(3) stipulates that the application is made in accordance with the section only if, within the 21 day period, a copy of the application is served on the person who served the demand on the company. 28 What is to be served within the 21 day period is a copy of the "application". It seems to me that, until a proceeding has been initiated in accordance with the procedural rules applying in the relevant court, there is no "application" for the purposes of s 459G. An essential ingredient of initiating a proceeding to set aside a statutory demand in the Supreme Court of New South Wales is that the application (which should be in the form of an originating process under the Supreme Court (Corporations) Rules) is filed in the court (in the Registry or, with leave, in the court itself). 29 That being so, my view is that there is no "application", and a fortiori no application has been "made", prior to filing. Consequently, when s 459G(3)(b) says that an application is made only if a copy of the application is served within the 21 day period, it impliedly requires filing as well as service within the 21 day period, and it also impliedly requires that filing must occur before service. This is because, were the position otherwise, what is served could not be a copy of any "application". 30 Section 459G(3) also deals with the supporting affidavit. According to the subsection, before the application can be said to have been made, there must be an affidavit supporting the application. This implies that there must be a duly attested affidavit, not merely a draft. There are two additional requirements to be satisfied within the 21 day period: that the affidavit be filed with the court; and that a copy of the affidavit be served. Subsection (3) does not require, in its terms, that the filing of the affidavit must occur before the service of a copy of the affidavit, and there is no obvious reason why any such requirement should be implied. 31 Section 459G(3)(a) requires that an affidavit "supporting the application" be filed with the court. This implies that at the time of the filing of the affidavit, either the application has already been filed (so as to have become an application), or the application and affidavit are filed together. While a copy of the application and a copy of the supporting affidavit are required, under s 459G(3)(b), to be served, they are not required to be served together. An unfiled affidavit served before the filing of the application can still be a "supporting affidavit" for the purposes of s 459G(3)(b), because the word "supporting" merely identifies the purpose of the affidavit and serves to make it clear that the affidavit that must be served is the same affidavit that is eventually filed. The affidavit provides support for the application at the point of filing of the application. Requirements for service 32 Form 509H, prescribed for the purposes of s 459E, requires a statutory demand to give the address of the creditor for service of copies of any application and affidavit. However, s 459G does not purport to define what is meant by "serving" a copy of the application and affidavit. That is left to other applicable laws and rules of court. 33 The service of documents on a company or a director or secretary of a company is dealt with in s 109X, which expressly states that its provisions do not affect provisions of any other law that permits a document to be served in a different way, or the power of the court to authorise service in a different way (s 109X(6)). To the extent that there is no inconsistent Commonwealth law, s 459G and the provisions of the Corporations Act that vest jurisdiction in a State Supreme Court have the effect of allowing relevant State laws and rules of court to apply for the purpose of determining whether service of an application and affidavit have validly taken place. 34 Rule 2.7(1) of the Supreme Court (Corporations) Rules 1999 (NSW) is a general rule requiring that, as soon as practicable after the filing of an originating process, and in any case at least five days before the date fixed for hearing, the plaintiff must serve a copy of the originating process and any supporting affidavit on each defendant. 35 The method of service is generally dealt with by rule 10.20(2)(a) of the Uniform Civil Procedure Rules, which states that an originating process in proceedings in the Supreme Court must be personally served. UCPR 10.21(1) provides that personal service of a document on a person is effected by leaving a copy of the document with the person or, if the person does not accept the copy, by putting the copy down in the person's presence and telling the person the nature of the document. There are provisions to cover a case where there is violence or threats of violence (not applicable here) and special provisions dealing with service on a solicitor or by an agreed mode of service (considered below). 36 In interpreting these provisions, courts place emphasis on the substance of what has been done, rather than on technicalities. In Howship Holdings Pty Ltd v Leslie (No.2) (1996) 41 NSWLR 542, the question was whether there had been effective service of a summons that was delivered and received through a document exchange box. Young J held that service through a document exchange is not good service, but that service in the case before him was effective because there was proof of actual receipt. He said (at 544): "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. … If this were not so, one would get the absurd situation referred to by McInerney J in Pino v Prosser [1967] VR 835 at 837, that the conclusion would be one which is: '… remarkable to the point of seeming absurdity, in that the defendant who, on his own affidavit admits that he received the writ… should be held not to have been served.'" 37 After rejecting various arguments, he remarked (at 545): "Accordingly, one gets back to the ordinary principle, has there been personal service, that is has the document come to the notice of the respondent?" Later he added (at 545): "The ultimate issue is whether the document was received by the addressee …. If it is, then in my view no matter how it got to the addressee the addressee has been served …". 38 This approach was applied by Barrett J in Condor Asset Management Ltd v Excelsior Eastern Ltd [2005] NSWSC 1139, where it was held that a statutory demand delivered to an address that was not the plaintiff's registered office, but which came to the plaintiff's attention, was validly served (at [5]). 39 In Hastie & Jenkerson (a firm) v McMahon [1991] 1 All ER 255, at 259, Woolf LJ said that special considerations apply to documents used for initiating legal proceedings, and he made it expressly clear that his finding (that documents could be served by facsimile transmission if there was proof that they had been received in complete and legible form by the intended recipient) was not intended to apply to an originating process. But the principle articulated by Young J in Howship Holdings was expressed in terms capable of applying to originating process, and in Dwyer v Canon Australia Pty Ltd [2007] SASC 100 Debelle J applied it to an originating process, treating it as a "common law requirement" apparently available as an alternative to strict compliance with the rules of court (at [27]). 40 In the case of service of an originating process in proceedings brought under the Corporations Act, including proceedings brought under s 459G, some statutory provisions override the general requirement for personal service under the UCPR, to the extent that they permit service by other means. Service of documents is addressed in the Acts Interpretation Act 1901 (Cth), which is made applicable in a specified way under s 5C of the Corporations Act. In the case of service on an individual as opposed to a company, ss 28A and 29(1) are relevant. 41 Section 28A provides (so far as relevant): "28A(1) For the purposes of any Act that requires or permits a document to be served on a person, … then, unless the contrary intention appears, the document may be served: (a) on a natural person: (i) by delivering it to the person personally; or (ii) by leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document …" 42 Section 29(1) is, relevantly, as follows: "29(1) Where an Act authorises … any document to be served by post, … then unless the contrary intention appears the service shall be deemed to be effected by properly addressing prepaying and posting the document as a letter, and unless the contrary is proved to have been effected at the time at which the letter would be delivered in the ordinary course of post." 43 Section 28A is facultative, and does not exclude the possibility that service may validly be effected in some other way under any other law, including an applicable State law. But since personal service of an originating process is generally required under the UCPR, s 28A effectively defines the circumstances in which something less than personal service of an originating process in proceedings under the Corporations Act is permissible. 44 Counsel for the plaintiff submitted that personal service cannot be required for an application to set aside a statutory demand, for if it were, the creditor could simply serve the demand and take a four-week holiday, returning after the expiry of the mandatory 21 day period. In my view, s 28A is the answer to that submission. By way of exception to the normal rule about service of an originating process, an originating process for an application under the Corporations Act may be served by leaving it at the defendant's place of business or residence. 45 In my view, for the purposes of s 28A of the Acts Interpretation Act, the address of the place of residence of the defendant and the address of his place of business were in each case his Mount Druitt address. Counsel for the plaintiffs submitted that the place of location of the server for the e-mail service to which the defendant subscribed was a place of business of the defendant for the purposes of s 28A. This was because, he said, the defendant displayed his e-mail address on his business letterhead and therefore invited e-mail correspondence to that address, and when the e-mail address was used the e-mails were transmitted to the server. 46 I reject that submission. The location of the server used by the third-party provider, Planet Domain, was irrelevant to the business operations of the defendant. The defendant's business activity with respect to e-mails was conducted in his home office when he opened business e-mails and, presumably, replied to them in the course of business. His place of business was the office in Mount Druitt, and he had no place of business at Planet Domain's server, wherever it may have been located. 47 In my opinion that conclusion is not affected by the fact that the defendant had a web hosting package with Planet Domain that gave him a domain name and web homepage as well as an e-mail address. These facilities were a form of advertising of his business, which he accessed and dealt with from his home office computer, and did not constitute a place of business located wherever the server that provided the facilities was located. Service by facsimile or by e-mail 48 For the purposes of the law of service of documents, facsimile and e-mail transmissions share the common characteristic that the hardcopy document in the hands of the sender is retained, but an electronic image of it is transmitted to a point from which it can be accessed and printed by the receiver. But there are some differences that may be significant with respect to service. In particular, a facsimile transmission is received and (usually) electronically stored in the receiver's fax machine, and is automatically printed out on paper supplied by the receiver. On the other hand, an e-mail is transmitted to and electronically stored by a server which is normally not located in the receiver's premises, and positive action is needed on the part of the receiver to read the e-mail (by accessing it through his or her computer) and to obtain a hard copy (by directing the computer to send the e-mail to the receiver's printer). 49 Notwithstanding these differences, in my view electronic transmission, whether by facsimile or e-mail, cannot constitute service for the purposes of s 459G(3) unless either: · it is shown that the documents electronically transmitted have actually been received in a readable form by the person to be served; or · the case falls within one of the special exceptions permitted by rules of court. 50 The notion that service is effective if the documents are actually received in readable form derives from the liberal interpretation of the concept of personal service identified in such cases as Howship Holdings (at 544). Several cases have applied this line of reasoning to facsimile transmission. Thus, in NM Superannuation Pty Ltd v Hughes (1992) 27 NSWLR 26, a case about whether a notice had been validly sent pursuant to the rules of a superannuation fund, Cohen J said (at 35): "I see no reason for finding that a notice sent and received by facsimile transmission is any less a notice in writing than one which is sent and received in any other fashion." 51 In Hastie & Jenkerson (a firm) v McMahon, supra, the English Court of Appeal held that service of a list of documents in accordance with the direction of the court was effected by sending and receipt of a facsimile copy of the list. 52 In Australian Securities Commission v Bank Leumi Le-Israel (Switzerland) (1996) 69 FCR 531, a case about whether shareholder tracing notices had been "given", Lehane J referred to these two cases and said (at 550) that they "clearly establish that there is nothing in the nature of facsimile transmission which excludes it as a means of giving or serving a document", although the time limits in the provisions he was considering would be enlivened only upon actual receipt of the notice in full and legible form. 53 Those decisions were applied by Debelle J in Dwyer v Canon Australia, supra, where the question related to efficacy of service of an originating process under the Corporations Act on a company. His Honour emphasised that the documents sent by facsimile must come to the notice of the person for whom they are intended, and observed that mere arrival at the receiving facsimile machine is not a completed act of service (at [7]). 54 In Seventh Cameo Nominees Pty Ltd v Holdway Pty Ltd (Supreme Court of Victoria (unreported, Chernov J, 24 April 1998) it was held that an application to set aside a statutory demand and the supporting affidavit, filed within the time limit, transmitted by facsimile and received all on the same day, were validly served for the purposes of s 459G(3). 55 In my opinion the reasoning in these cases also applies to e-mail transmission, provided there is evidence that the document came to the notice of the person to be served, and the document was in readable form. 56 In the absence of such evidence, it will be more difficult to establish that electronic transmission constitutes effective service. The general rule found in UCPR 10.20(2)(a) is that an originating process in proceedings in the Supreme Court must be personally served. Transmission by e-mail is not personal service, because the language of UCPR 10.21(1) requires a physical encounter in which a hard copy of the document is left with the person to be served, or if the person does not accept a copy, is put down in the person's presence and the person is told the nature of the document. There is more room for argument where the document is transmitted by facsimile, especially in light of Chernov J's judgment in the Seventh Cameo Nominees case. It seems to me, however, that the document cannot be left "with" the person to be served (as opposed to being left at the person's premises) unless it happens that the person is present when the receiving fax machine prints the transmission. 57 The general rule requiring personal service is subject to some exceptions. There is no provision in the Acts Interpretation Act expressly dealing with service by electronic transmission. Section 14M of the Electronic Transactions Act 2000 (NSW) permits electronic service, but only for documents filed in an ECM court. The only provisions in the Uniform Civil Procedure Rules expressly dealing with electronic service are in rule 10.5(2)(b) and (c), which permit service on a person by facsimile or electronic mail if the person has an address for service that is a solicitor's office address and the notice advising the address for service includes a facsimile number or electronic mail address. Rule 10.6, expressed in more general terms, would permit electronic service on a party if there is an agreement, acknowledgement or undertaking by which that party is bound. These exceptions are not relevant in the present case. 58 Compare the Civil Procedure Rules in the United Kingdom, which like the UCPR allow for electronic service if there is a written agreement to permit such service (CPR 6.2(1)(e) and CPR 6 PD, para 3.1). Contrast the much wider provision of s 76(3) of the Arbitration Act 1996 (UK) which allows for service of documents in arbitration proceedings "by any effective means", held in Bernuth Lines Ltd v High Seas Shipping Ltd [2006] 1 All ER (Comm) 359 to permit service by e-mail in arbitration proceedings. As was pointed out in that case, a rule permitting service by electronic means is more readily justifiable where those involved are commercial entities represented by or with ready access to lawyers. The service rules of the UCPR are, of course, intended to apply to all kinds of litigation, not confined to commercial parties. A rule permitting service by e-mail on any general basis could in those circumstances lead to real injustice. 59 Is electronic service permitted by s 28A of the Acts Interpretation Act? The reference to delivering the document personally, contained in s 28A(1)(a)(i), appears on its face to refer to physical delivery to the person, a concept that excludes electronic transmission, at any rate where the transmitted document is not brought to the notice of the person to be served in readable form. 60 As regards s 28A(1)(a)(ii), Chernov J in the Seventh Cameo Nominees case appears to have held that if a facsimile document is printed by the receiving fax machine it is "left" at the premises where the fax machine is located. In the case of an e-mail transmission, where the electronic message is received and held by a remote third-party server rather than in the receiver's computer, and there is no hard copy document unless the receiver accesses the e-mail and transmits it to a printer, nothing can be said to have been "left" at the receiver's premises, at least until the e-mail is accessed. Informal or irregular service 61 There is a long line of English cases and Australian cases, thoroughly analysed by Beaumont J in Rochester Communications Group Pty Ltd v Lader Pty Ltd (1997) 143 ALR 648, which appear to be based on a qualification to the principle of natural justice, according to which, while a fundamental failure by a tribunal to afford a party the right to be heard means that the tribunal's determination is absolutely voidable ex debito justiciae, an irregularity in the tribunal's process (including failure to comply strictly with the formal requirements for service) merely means that the determination is open to be set aside but may be confirmed. That line of reasoning has come to be reflected in s 63 of the Civil Procedure Act 2005 (NSW) and UCPR 10.14. 62 Section 63 is as follows: "63(1) This section applies to proceedings in connection with which there is, by reason of anything done or omitted to be done, a failure to comply with any requirement of this Act or rules of court, whether in respect of time, place, manner, form or content or in any other respect. (2) Such a failure: (a) is to be treated as an irregularity, and (b) subject to subsection (3), does not invalidate the proceedings, any step taken in the proceedings or any document, judgment or order in the proceedings. (3) The court may do either or both of the following in respect of proceedings the subject of a failure referred to in subsection (1): (a) it may, by order, set aside the proceedings, any step taken in the proceedings or any document, judgment or order in the proceedings, either wholly or in part; (b) it may exercise its powers to allow amendments and to make orders dealing with the proceedings generally. (4) The court may not take action of the kind referred to in subsection (3)(a) on the application of any party unless the application is made within a reasonable time and, in any case, before the party takes any fresh step in the proceedings after becoming aware of the failure." 63 UCPR 10.14(1) and (2) permit the court to make an order for substituted or informal service. Then sub-rules (3) and (4) provide: "(3) If steps had been taken, otherwise than under an order under this rule, for the purpose of bringing the document to the notice of the person concerned, the court may, by order, direct that the document be taken to have been served on that person on the date specified in the order. (4) Service in accordance with this rule is taken to constitute personal service." 64 In combination, these provisions allow the court to approach a case, where the formal procedural requirements of civil procedure for service have not been satisfied but the party to be served is aware of the document and has not been prejudiced by the non-compliance, by treating the non-compliance as an irregularity not invalidating the proceedings and by giving a direction that the document be taken to have been served on a date specified in the order. 65 In CFC Corporation Pty Ltd v Lanier (Australia) Pty Ltd (1993) 11 ACSR 772, Mildren J used a rule of court of the Supreme Court of the Northern Territory, approximately equivalent to UCPR 10.14(3), to confirm, as valid service, service of an application to set aside a statutory demand and supporting affidavit that were filed and transmitted by facsimile on the last day for service. His Honour found that service by facsimile was not authorised by the corporations legislation or rules of court. With respect, I would disagree with that finding if the facts satisfy the "common law" principle of personal service articulated by Young J in the Howslip Holdings case. Be that as it may, he held that the mode of service was a mere irregularity that could be confirmed under the rule of court, because the documents were transmitted and received within time and there was no prejudice to the defendant. 66 Although Mildren J's decision was given before the David Grant case, it did not involve the decision directly at issue in David Grant, namely whether the court could use s 1322 to cure non-compliance with s 459G when an application and supporting affidavit had been filed and served outside the 21 day period. As Mildren J pointed out, the application in the CFC case was filed within time although it was served irregularly. He said (at 774): "The mode of service to be used is not prescribed by the provisions of Pt 5.4 of the Corporations Law. Nor do the provisions of the Corporations Law elsewhere to be found in that Act prescribe any exclusive mode of service. The mode of service of such an application, being a matter of practice and procedure, is left to the rules of court. Accordingly it is my view that the method of service used in this case was a mere irregularity which could be waived by the defendant: see ATCO Industries (Aust) Pty Ltd v Ancla Maritima SA (1984) 35 SASR 408 at 413-14. As, in my opinion, nothing in the Act precludes the court from prescribing the mode of service of an application, nothing in the Act prevents the court from making an order, pursuant to [the rule of court], confirming irregular service of the application and the supporting affidavit on the defendant. It is clear that an order made under [the rule of court] may be made at any time after informal service and I consider that I now have power to make such an order." 67 Mildren J's approach in the CFC case was subject to unfavourable comment in the decision of the Full Federal Court in Rochester Communications Group Pty Ltd v Lader Pty Ltd, supra. There the application for an order setting aside a statutory demand was filed in time, but it was not served on the corporate defendant either at its registered office or the address for service stipulated in the statutory demand. Instead, it was served at another address used by the defendant in certain other legal proceedings, which was the office of one of the directors of the defendant. Sheppard J held that the application was not validly served, and the applicant's appeal was unanimously dismissed. 68 Having concluded that what had been done did not amount to formally valid service, Beaumont J addressed the question whether the case was one of irregular service such that the irregularity could be overcome by a confirming order under rules of court. He considered the CFC case in detail and said (at 666) that he had difficulty in accepting Mildren J's approach. He pointed out that where the issue is about service of an application to set aside a statutory demand, what is involved is the operation of a statute that goes to jurisdiction, as Gummow J observed in David Grant (at CLR 276). He noted that cases such as ATCO were concerned with irregularities in the issue of the process, rather than its service. He said that Mildren J had appeared to distinguish between the temporal requirements for filing the application, on the one hand, and its service, on the other, and yet the Corporations Law made no such distinction. He added (at 666): "Finally, Mildren J appears to assume that it is within the power of the court retrospectively, and out of time, to validate a defective service. Yet, within the statutory scheme, including its temporal requirements as explained by the High Court, a distinction should, in my view, be drawn between validation before the expiration of the 21 days (within jurisdiction) and purported validation thereafter (in my opinion, without jurisdiction)." 69 He expanded on this last observation later (at 670): "I have difficulty accepting, as Mildren J held, that the court was intended to have the power, available to be exercised after the expiration of the 21 day period, to cure a defect in service ex post facto. Variation or authorisation of a special form of service before that expiration may be another question; it does not arise here. But the object of the scheme in Div 3 of Pt 5.4 would, in my view, be defeated if such power could be exercised so as, as it were, to confer a fresh jurisdiction upon the court after its earlier jurisdiction had lapsed. Such a result would require explicit language, which is not found in Pt 5.4. It would also contradict the clear intention of the Harmer Report that, in the interests of all concerned, including the general body of creditors of a possibly insolvent company, that the situation not only be closely regulated, but that such regulation occur within strictly defined time limits, so that all involved will know where they stand at the expiration of 21 days after service of the demand. If the court were to have a largely unregulated discretion to validate defective service, at any time after that period, this would run the risk, in my view, of undermining a central element of the new statutory scheme." 70 Having made those observations, Beaumont J distinguished the CFC case because it was not concerned with whether service could be effected on a company at a place other than the nominated address for service and the company's registered office (at 666). He did not decide not to follow the CFC case, and so his observations about it are obiter dicta. Whitlam J expressly agreed with Beaumont J's reasoning and his view that an order could not be made under the rules of the Federal Court except within the period of 21 days after the demand had been served (at 676). Those observations also appear to be obiter. Moore J made observations to similar effect (at 685). 71 With respect, Beaumont J's observations (though obiter dicta) are cogent and in my view, they are in accordance with the approach to s 459G taken by the High Court in the David Grant case. The CFC case was decided before David Grant, and without the benefit of the High Court's approach to the section. In the circumstances the correct course for me, sitting as a judge at first instance, is to follow the unanimous view of the Full Federal Court, and consequently to hold that a confirming direction under UCPR 10.14(3) cannot be made, after the expiration of the 21 day time period set by s 459G(3), to cure non-compliance with the legal requirements for service of an application under s 459G. Application to the present facts 72 First, the posting of the letter and enclosures on 12 October did not amount to service of a copy of the application within the 21 day time period prescribed by s 459G. Under s 29(1) of the Acts Interpretation Act, service by post on an individual is taken to have been effected, unless the contrary is proved, at the time at which the letter would be delivered in the ordinary course of post, a date necessarily after 12 October. The evidence is that the defendant actually received the envelope on 16 October. Section 160 of the Evidence Act 1995 (NSW), if applicable, would not accelerate the deemed date of service to any earlier day. 73 Secondly, there was personal service of the supporting affidavit under the "common law" principle enunciated by Young J in the Howship Holdings case on 10 October, when it was transmitted to and received by the defendant. For the reasons I have given, the supporting affidavit was capable of being served so as to satisfy s 459G(3) on 10 October even though neither the affidavit nor the application had been filed at that time. 74 Thirdly, the "application" to set aside the demand did not come into existence until the originating process was filed on 11 October. Consequently the facsimile transmission on 10 October could not be regarded as effective service of the application as required by s 459G(3), even though it was received by the defendant on that day. 75 Fourthly, the facsimile transmission of 12 October did not satisfy Young J's "common law" principle on that day - indeed, it would not have done so even if the full document had been transmitted. This is because the transmitted document did not come to the notice of the defendant until outside the 21 day period, as he did not find the two facsimile pages until 13 October. Further, the facsimile transmission did not satisfy the requirements of the UCPR for personal service on 12 October, as the document was not left "with" the defendant on that day. It is arguable on the authority of Seventh Cameo Nominees that the transmitted document satisfied s 28A(1)(a)(ii) of the Acts Interpretation Act, but the transmitted document was not the full originating process and therefore it cannot be said that the application was served by leaving it at the place of business and residence of the defendant. Section 28A(1)(a)(ii) does not permit the court to link up the document that was transmitted with the unfiled document that had been transmitted and received on 10 October. 76 Fifthly, the e-mail transmission of 12 October did not satisfy Young J's "common law" principle on that day, because the transmitted document did not come to the notice of the defendant until outside the 21 day period, when he opened the e-mail on 15 October. The e-mail transmission did not satisfy the requirements of the UCPR for personal service, or s28A(1)(a)(ii), for the reasons I have given. 77 My conclusion is that, while the supporting affidavit was validly served in compliance with s 459G(3), the application to set aside the demand was not. 78 The following questions then arise: · did the events that happened up to and including 12 October give rise to informal or irregular service that, according to s 63 of the Civil Procedure Act, was not invalid; and · can the court give a direction under UCPR 10.14(3) that the originating process be taken to have been served on the defendant on 12 October, and if so, should it do so? 79 The plaintiff submits that the facts regarding the documents transmitted on 10 and 12 October, taken together, constitute irregular service. His argument is that the documents printed by the defendant's fax machine on 12 October (a letter purporting to enclose an originating process, and an almost blank page) contained enough to show that it was the first page of some court process bearing a number. The defendant already had a copy of the signed form of originating process. The only reasonable inference in the circumstances was that the almost blank page was the first page of a copy of a filed and sealed originating process. The combination of: · the full text of the originating process transmitted on 10 October, · the covering letter of 10 October which foreshadowed that the application was being filed and that the court date would be provided subsequently, · the almost blank page which nevertheless contained a file number, and · the facsimile letter of 12 October which referred to the earlier letter and identified the return date, · provided the defendant, on 12 October, with all the information he would have had if he had been personally served with a full copy of the application on that day. Admittedly, it did not provide him with a document bearing the seal of the court. But he had before him the solicitor's written statement that the originating process had been filed. 80 Counsel for the plaintiff submits that under s 63(1) and (2) of the Civil Procedure Act irregular service is not invalid, unless set aside under subsection (3). That being so, he contends that the court should confirm the efficacy of the informal service that occurred by virtue of the events up to and including the transmission of the facsimile on 12 October, by giving a direction under UCPR 10.14(3). 81 I agree with the factual contentions by counsel for the plaintiff on these matters, but I do not accept his conclusion that because of these matters, there is valid but irregular service and the court can and should make an order. 82 First, it seems to me that s 63 does not apply to the circumstances of this case. I accept that it is appropriate to construe s 63 (which is the successor to s 81 of the Supreme Court Act 1970 (NSW)) in the wide and generous way laid down by the English Court of Appeal in Harkness v Bell's Asbestos and Engineering Ltd [1967] 2 QB 729: Australian Coastal Shipping Commission v Curtis Cruising Pty Ltd (1987) 17 NSWLR 735, 753 per Priestley JA. Nevertheless, the language of the provision necessarily imports a limitation in scope. Section 63 applies only to a failure to comply with a requirement of the Civil Procedure Act or rules of court. Although, as noted above, the Supreme Court (Corporations) Rules contains a general requirement for service of an originating process, in the present case the relevant requirement is the requirement of s 459G(3) that a copy of the application to set aside the statutory demand be served within the 21 day period. Therefore, in my opinion s 63 has no application to the circumstances of this case. 83 Secondly, for the reasons I have given, in my opinion the observations by members of the Full Federal Court in the Rochester Communications Group establish that, because of the absence of service of the application within the time period prescribed by s 459G(3), the court does not have jurisdiction to entertain the application and it cannot now make an order overcoming the defective service. 84 Thirdly, if (contrary to my holding) the court is able to make an order curing the deficiency of service under UCPR 10.14(3) or any other provision, I would not in the exercise of my discretion do so in this case. The principal issue under UCPR 10.14(3) is whether the court considers that appropriate and adequate steps have been taken for the purpose of bringing the document to the notice of the defendant up to the date to be specified in the court's order, namely 12 October 2007. 85 Nothing that was done up to 12 October constituted valid and effective formal service. The plaintiff's solicitor must have been aware that 12 October was the last day for compliance s 459G. He was aware that there was a difficulty in the transmission of the facsimile. He was not able to contact the defendant by telephone and he inferred (correctly according to the defendant's evidence) that the defendant was not at home. Therefore he should have realised that there was at least a substantial prospect that the defendant would not open the e-mail that he caused to be transmitted, until after 12 October. The steps that he took were not calculated to bring the defendant's attention to the originating process within the 21 day period. 86 The defendant might have been served under s 28A(1)(ii) by leaving a copy of the sealed originating process at the Mount Druitt address, even if (as was apparently the case) he was not there until late that night. There is no adequate explanation for the plaintiff's failure to take this formally correct step. The plaintiff's solicitor said he considered sending the documents to the defendant by courier after his unsuccessful attempt to transmit them by facsimile and his failure to contact the defendant by telephone, but he said he did not see any point in attempting to serve the defendant personally as he would not be at the Mount Druitt address. But of course, under s 28A(1)(ii) it would have been enough to leave the document at the defendant's place of residence and business. Conclusions 87 The plaintiff failed to serve the originating process by which it applied to set aside the defendant's statutory demand within the 21 day time limit set by s 459G(3). Consequently, according to that subsection, the application has not been made in accordance with s 459G and the court has no jurisdiction to deal with it. The court does not have the power to make an order curing the deficiency in service, and would not do so even if power existed. Therefore the originating process is to be dismissed. **********

Austar Finance v Campbell

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Judgment (10 paragraphs)

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Cited By (19)