Brown v Bluestone Property Services Pty Ltd

CATCHWORDS : CORPORATIONS - winding up - application for winding up order based on alleged insolvency - plaintiff seeks to rely on presumption of insolvency arising from non-compliance with statutory demand - defendant seeks declaration that demand not served - PROCEDURE - service - service by post - need for proof of various acts culminating in depositing of addressed and stamped or franked envelope into the post - only evidence is that identified document "was forwarded by mail to the defendant" - hearsay - no evidence of acts of deponent - no evidence of existence, addressing or stamping of any envelope - no evidence of deposit into post

LEGISLATION CITED : Corporations Act 2001 (Cth), ss 109X(1)(a), 459A, 459C(2)(c), 459E(3) Evidence Act 1995, s 59

Dwyer v Canon Australia Pty Ltd [2007] SASC 100 CASES CITED : Grant Thornton (Qld) Pty Ltd v Green Global Technologies Ltd [2009] QSC 262 Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216 Pearlburst Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126

Justin John Brown - First Plaintiff Brooke Brown - Second Plaintiff PARTIES : Sharlotte Pty Ltd - Third Plaintiff Abadeen Group Pty Ltd - Fourth Plaintiff Southern Cross Constructions (NSW) Pty Ltd - Fifth Plaintiff Bluestone Property Services Pty Limited - Defendant

COUNSEL : Mr D E Baran - Plaintiffs Mr T D F Hughes - Defendant

SOLICITORS : Burkett & Taylor Lawyers - Plaintiffs G H Healey & Co - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

2010/135825 JUSTIN BROWN & 4 ORS v BLUESTONE PROPERTY SERVICES PTY LIMITED JUDGMENT 1 These are winding up proceedings brought by the plaintiffs under s 459A of the Corporations Act 2001 (Cth). The plaintiffs allege that the defendant is insolvent and claim a winding up order on that ground. 2 In pursuing their application, the plaintiffs seek to rely on a presumption of insolvency under s 459C(2)(c) of the Corporations Act arising from the defendant's failure to comply with a statutory demand dated 18 February 2010 served on it by the plaintiffs. 3 The defendant has filed an interlocutory process (styled notice of motion) by which it puts in issue the question whether the statutory demand on which the plaintiffs rely was, as the plaintiffs allege, served on the defendant. Service of a statutory demand is an essential element in the creation of the presumption of insolvency: see s 459F. 4 I am dealing now with the defendant's interlocutory process seeking a declaration that the statutory demand dated 18 February 2010 was not served on the defendant. 5 It is accepted on both sides that, at the material time, the address of the registered office of the defendant was: "Lane & Associates, Suite G04, 282 Oxford Street, Bondi Junction 2022." 6 It is the contention of the plaintiffs that the statutory demand was served on the defendant by "posting it to" that address. Under s 109X(1)(a) of the Corporations Act, a document may be served on a company by "posting it to" the company's registered office. 7 The defendant relies on evidence given by a number of persons connected with it the substance of which is that, while they were aware of an earlier statutory demand served by the plaintiffs but later withdrawn, they did not become aware of the statutory demand dated 18 February 2010 until the originating process in these proceedings was served after being filed on 1 June 2010. 8 The evidence the defendant relies on includes evidence of Mr Lane, the principal of the accountancy practice, Lane & Associates, conducted at the address in question. Mr Lane was cross-examined. He was taken to various entries in his computerized record and correspondence management system. He was asked questions about both particular entries and the working of the system generally. His answers did not in any way suggest that there was a record of the receipt of the statutory demand. His description of the system was such as to suggest its reliability and that it would be highly unlikely that any document delivered to his office by post would not be recorded. 9 The plaintiff relies on an affidavit of its solicitor, Mr Gutierrez, of Burkett & Taylor Lawyers, sworn on 28 May 2010. Mr Gutierrez deposes as follows: "1. On 1 March 2010 a letter enclosing a statutory demand was forwarded by mail to the Defendant at its registered office Suite G04, 282 Oxford Street, Bondi Junction 2022. A copy of this letter is annexed hereto and marked with the letter 'A'.

2. I enclose a copy of the Burkett & Taylor Lawyers outgoing mail register for 1 March 2010. A copy of which is annexed hereto and marked with the letter 'B'." 10 The annexure "A" to the affidavit consists in part of a copy of a letter dated 26 February 2010 addressed to the defendant at "Suite G04, 282 Oxford Street, Bondi Junction 2022", without any reference to "Lane & Associates". The letter is on the letterhead of Burkett & Taylor Lawyers. It carries an illegible signature above the typed words "Zak Tayyar Executive Lawyer". The letter refers to nine enclosures, being the statutory demand, three affidavits (apparently affidavits under s 459E(3)) and five deeds apparently intended to show the title of the plaintiffs by assignment. Copies of the nine enclosures also form part of the annexure "A" to Mr Gutierrez's affidavit. 11 The annexure B to the affidavit is a copy of a handwritten sheet headed "Outgoing Mail" most of the content of which is masked so as to be invisible. What can be seen are four column headings at the top of the sheet - "Date", "Matter", Description" and "Code" - and one entry somewhat more than half way down the page showing in the respective columns, "1/3/10", "Babcock", "Bluestone - Stat Demand" and "Post". This was supplemented by tender of the full sheet and the book of which it is a page. 12 The requirements for proof of service by post have been described in a number of recent cases to which Mr Hughes, counsel for the defendant, referred, specifically, Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216, Dwyer v Canon Australia Pty Ltd [2007] SASC 100, Pearlburst Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126 and Grant Thornton (Qld) Pty Ltd v Green Global Technologies Ltd [2009] QSC 262. 13 In order to prove service by post, it is necessary that the evidence of one or more witnesses establish a number of core and indispensable matters: that the document said to have been served by posting of it to a given address was placed inside an envelope, that the envelope had that address written or typed on its face, that a postage stamp or franking of the necessary amount was affixed to the envelope and that the envelope so addressed and stamped or franked was physically deposited in the post either at a post office or by being dropped into a post box for the reception of mail articles. 14 The plaintiffs have not proved these things. The evidence says nothing about an envelope or the placing of anything into an envelope (in particular, the letter dated 26 February 2010 and the documents listed in it). The evidence says nothing about the writing or typing of a name and address on the face of any envelope or about any stamp or franking. No one deposes to having handed over a stamped and addressed envelope at a post office or deposited it into a post box for the reception of mail articles. 15 Mr Gutierrez's affidavit proves the existence, as at the date of the swearing of the affidavit, of a letter on the letterhead of the plaintiffs' solicitors dated 26 February 2010, carrying an illegible signature represented as that of "Zak Tayyar Executive Lawyer", addressed to the defendant at "Suite G04, 282 Oxford Street, Bondi Junction 2022" and referring to relevant documents the existence of which, as at the date of the swearing of the affidavit, is also proved. Mr Gutierrez's affidavit also proves the existence, as at the date of the swearing of the affidavit, of the sheet headed "Outgoing Mail". The latter matter is supplemented by the tender of the book which shows that the particular entry in the sheet forms part of a sequential series of entries identified by date. 16 Mr Gutierrez's statement in his affidavit that the letter a copy of which is the annexure "A" "was forwarded by mail to the Defendant" at the address stated is not a statement of something that he himself did or saw. He does not depose that he posted any letter or that he saw someone else post any letter. The only available conclusion is that someone else told Mr Gutierrez that they had posted a letter, which causes his statement regarding posting to be evidence of a previous representation by another person of the fact of posting and therefore inadmissible under s 59 of the Evidence Act 1995 to prove posting. 17 The several deficiencies in the plaintiffs' evidence, coupled with the evidence of the defendant's witnesses about not being aware of and having no record of the receipt of any statutory demand dated 18 February 2010 until after these proceedings were commenced on 1 June 2010, lead to the conclusion that service of any such statutory demand on the defendant is not proved in these proceedings. 18 The defendant is therefore entitled to the relief sought in the interlocutory process, that is, a declaration that there has been no service of the statutory demand. I make a declaration in terms of paragraph 1 of the notice of motion filed on 15 June 2010.

[Counsel addressed on costs] 19 I order that the plaintiffs as respondents to the interlocutory process pay the costs of the defendant as applicant under the interlocutory process.

[Short adjournment] 20 I grant leave to the plaintiffs to file a notice of discontinuance of the winding up proceedings. **********

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