By originating process filed on 20 July 2017 the plaintiff company Boss Constructions (NSW) Pty Ltd applies under (CTH) Corporations Act 2001, s 459G, to set aside a creditor's statutory demand served on it by the defendant claiming an amount of $489,069 being payroll tax and interest for the period 1 July 2009 to 30 June 2014 and interest thereon. There are live issues as to whether that liability was properly attributable to the company, and if so whether it has been compromised for a smaller amount. However, the defendant contends that the demand was served on 27 June 2017, and that the application was therefore filed outside the 21-day period referred to in s 459G, so that the court has no jurisdiction to entertain it. On 11 September 2011, on the application of the defendant, I ordered that the question of the date of service of the demand be determined separately and before the other issues in the proceedings. The hearing of the separate question commenced on 18 September, and continued on 25 September.
On the question with which I am presently concerned, namely whether the demand was served on 29 June 2017 (as the company, which was represented by its director Mr Bobos, maintains), or on 27 June 2017 (as the defendant, for whom Mr Krochmalik of counsel appeared, contends) the defendant, who contends for the earlier date, bears the onus of proof; according to the civil standard of the balance of probabilities.
The defendant says that the demand was served by Mark Victor Mead on 27 June at 3.15pm by delivery to the company's registered office at 184 Gaffney Street Broken Hill, by handing it to William Borrill, a male person at that address. The plaintiff says that it was delivered to Mr Borrill at that address at about 4.00pm on 29 June. [1]
Mr Mead was essentially a sub-agent; his instructions were received through Express Mercantile, who had presumably been retained by the defendant to serve the demand, on 16 May 2017. To attend to this and a number of other jobs in western New South Wales, he left his residence on the Gold Coast at 5.00am on 26 June 2017. Although his affidavit of 14 September 2017 is somewhat confusing in some respects, his documentary records reveal a reasonably clear picture of his movements. En route, on 26 June he made a Facebook post from Moree, to the effect that he was on the way to Broken Hill again. He overnighted in Wee Waa on 26/7 June, where a motel receipt and EFTPOS receipt show that he paid for his accommodation at 6.07pm on 26 June. According his affidavit and oral evidence, he left Wee Waa at about 4.30am on 27 June for Wilcannia, where he performed a number of jobs between 11.45am and 12.38pm. There is some suggestion that the last of the Wilcannia jobs was completed at 1.10pm, but he explained this as a typing error, and from the sequence numbering of his Wilcannia attendances I favour the view that his first attendance was at 11.45am (wrongly entered as 12.45), and his last at 12.38, and that the jobs recorded at 1.04 and 1.10 were in fact at 12.04 and 12.10.
He then proceeded to Broken Hill, a distance of 198 kilometres. According to his affidavit, he arrived at about 1.00pm; this cannot be correct as the trip is admittedly one of about two hours, and he could not have arrived before about 1.30 CST (there being a time difference of 30 minutes between Wilcannia and Broken Hill). His movements are then unaccounted for until 2.32pm, when (according to a tax invoice and report of 28 June) he attended at 218 Argent Street to repossess a vehicle, then conducted a "thorough search" resulting in location of the vehicle in a public car park in Sulphide Street, then called in a tow truck operator, and conducted a search to find the owner and obtain the keys.
According to his affidavit he made a field call at 2.45pm (which seems remarkably close to the 2.32pm event, given the activity it involved). A tax invoice and report of 28 June records an attendance at 2.45pm at the City Council to try to locate a rural address, and (emphasis added) :
Staff were real helpful and after 70 minutes and extensive enquiries the result came back that no-one knows… Agent then went to NSW Police in Broken Hill arriving at 4.12pm … We advise that agent spent over 90 minutes on this 1 file …
His attendance at the City Council on 27 June - but not the time - is confirmed by a Facebook post.
He next claims to have served the demand at 3.15pm, at 184 Gaffney Street. In his affidavit of service, dated 29 June 2017, he deposes that on 27 June at 3.15pm he delivered the demand to the company at 184 Gaffney Street Broken Hill, by handing it to William Borrill, a male person at that address. He says that he asked "Will you confirm that this is the registered office for Boss Constructions (NSW) Pty Ltd", and was answered "Yes. Can I help you?". He said "I have legal documents for Boss Constructions (NSW) Pty Ltd. Are you authorised to accept them?", and was answered "Yes". He asked "What is your name?", and the reply was "William Borrill".
An entry was made in the Express Mercantile database, to which Mr Mead's firm had access for such purposes, timed 15:15:11 on 27 June, by Janelle Tucknott (whose identity the evidence does not establish, but by inference is a member of Mr Mead's staff):
Our agent attended 184 Gaffney Street, Broken Hill NSW 2880. There, our agent effected service on the Debtor, Boss Constructions (NSW) Pty Ltd ACN 140 181 488, by handing the documents to William Borrill, a male employee over the age of 16 years who is authorised to accept service. We confirm our Affidavit of Service will follow in due course. We thank you for your instructions in this matter.
Just how this came to be made is not explained, but it must have been triggered by an immediate report by Mr Mead to his office.
At 3.24 he refuelled his car (as confirmed by an EFTPOS receipt of P & K Ruhs Automotive of Patton Street Broken Hill). According to his affidavit, he made a further field call at 3.36pm, and a tax invoice and report of 28 June records an attendance at 30 Patton Street at that time. Another tax invoice and report of 28 June records an attendance at 3.46pm at 277 Eyre Street. At 4.08pm he purchased some food from a KFC outlet, as confirmed by an EFTPOS receipt. According to his report of the attendance on the Council, at 4.12pm he attended the police station. However, a tax invoice and report of 28 June records an attendance at 4.16pm at 745 Beryl Street, and at 4.22pm he paid for one night's accommodation at the Argent Broken Hill, where he overnighted, as confirmed by a motel receipt and EFTPOS receipt. Another tax invoice and report of 28 June records an attendance at 4.27pm at 746 Horsington Street; and yet another tax invoice and report of 28 June records an attendance at 4.45pm at 738 Lane Street.
According to his affidavit, Mr Mead left Broken Hill at about 5.00am on 28 June, for Coonamble. At 9.23am he sent from his phone an email to his office containing reports of his jobs in Broken Hill, including that he had at 3.15pm attended 184 Gaffney Street, spoken to William Borrill and handed the documents to him. From that report his staff (Ms Ploenges) raised the invoices and reports to which reference has been made; the relevant invoice to Express Mercantile in respect of the service of the demand on the plaintiff, which included the report of service, was generated at 10.46am. Also on 28 June, at 10:42:33, an entry was made in the Express Mercantile database which replicated the service report.
According to his affidavit, Mr Mead completed his jobs in Coonamble at about 2.00pm, and then commenced the trip home to the Gold Coast, overnighting on 28/9 June at Inverell, as confirmed by a motel and EFTPOS receipt. He reached his office on the Gold Coast at about noon on 29 June, when he swore the affidavit of service in the presence of his staff member Ms Ploenges, a Justice of the Peace, who had prepared it from the earlier report; he also sent an email to his employees.
Mr Bobos says that on 27 June between 1230 and 1630 CST he was working with Tarrant Smith, in a site office located outside the main building, on preparing a payment claim, and did not receive any documents from Mr Borrill, nor notice anyone entering the office with documents. He says that he would have seen some who went into the office with documents. Mr Smith corroborated this, but conceded that he could not exclude the possibility that someone entered the front office and handed documents to Mr Borrill during that period.
William Borrill, in his affidavit of 22 August 2017, deposes that on 29 June at approximately 4.00pm an older male walked into the office with a set of papers and said "I have some documents for the owner of this business" and then handed over some papers, and as he left said "He's just been served". Mr Borrill says that he passed the documents immediately to Mr Bobos.
Mr Bobos says that on 29 June he submitted the payment claim on which he had been working during the week, and had instructed Mr Borrill to post the claim. He had a meeting at 1630 with a builder and his workshop supervisor Steven Kakosche. Between 1530 and 1630 he was in his office in the main office building at 184 Gaffney Street, and was in the course of a telephone call when Mr Borrill entered his office and handed him the demand. He says that he made a note in his diary to remind him when it was served, and in his diary for 29 June appears the entry [sic]:
Will O/S/R
State Demand
At 1605 Mr Kakoschke walked into his office while he was reading the documents, asked whether he was "alright", and he answered "Not really, I just got another legal issue that I have to sort out". Mr Kakosche confirmed this conversation and, inferentially, that Mr Bobos appeared upset by receipt of the documents.
On Friday 14 July, Mr Bobos endeavoured to contact David Rousseau at the Office of State Revenue (OSR), but the call went to message bank. On Monday 17 July, he called again, and left a message asking Mr Rousseau to call him back. Mr Rousseau returned the call later in the day, and in the course of the conversation - in which Mr Rousseau indicated that he would have the legal team call Mr Bobos - Mr Bobos said "Okay, I will wait for the call but I will need to sort it out before Thursday the 20th of July, as this is the date it expires". Mr Rousseau replied, "I will get the legal team to advise what date it was served and get back to you as soon as possible".
On Tuesday 18 July, Mr Bobos endeavoured to contact Mr Rousseau as he had heard nothing further; he sent an email at 12.09pm asking that Mr Rousseau please call back that day. In an email sent at 3:53pm, Mr Rousseau explained that there had been a "drill" at the office (which could hardly explain away an entire day), and that he had been advised by his legal team that Mr Bobos would be contacted the following morning (why he could not be contacted that day was not explained). Mr Bobos responded at 4:05pm, "It would be good to sort it out tomorrow. To save cost on legal fees and filing fees. Wait for your reply".
On 19 July at 10.19am, Mr Bobos sent Mr Rousseau an email:
I was served the statutory demand on Thursday the 29/6/2017 and is due tomorrow
And I will be filing to set it aside if we can't work it out today. I prefer to send you the money for this costs
At 12.55pm, Mr Bobos sent to Mr Rousseau by email a letter of offer. The letter commenced:
In response to the Creditors Statutory demand for Payment of Debt served on Boss Constructions (NSW) Pty Ltd on Thursday 29th June 2017. As per our previous discussion and arrangements I make the below offer which is valid until 12:00pm AEST tomorrow (Thursday 20/07/2017).
Boss Constructions (NSW) Pty Ltd will pay the remaining outstanding balance of $29,500.00 of the agreed amount of $35,000.00 in 12 monthly instalments with an upfront payment of $4,500.00 made upon confirmation/acceptance of this offer.
…
Please note as per above this offer is only valid until 12:00pm AEST tomorrow. If this offer is not accepted we will continue to file our response to your Statutory demand.
Mr Bobos then received a call from Wei Luk of OSR, in which they discussed the offer and she said that if he could show that he could make the payments, the offer would be accepted. At 3.24pm, Wei Luk sent to Mr Bobos an email requesting further information "for us to reconsider your offer of $35,000", together with "confirmation of your payment of $4,500", and attaching (without further comment) a "copy of the affidavit of service [of Mark Mead of 29 June] we received today for the above matter". At first sight, the date 29 June (being the date of the affidavit) appears very prominently on that affidavit, although on closer reading it is apparent that it deposes to service on 27 June. At 3:48pm, Mr Bobos responded "Payment of $4500 made today", attaching proof of payment.
In a further phone call, Wei Luk rejected the offer and added "I sent you the affidavit of service, you are out of time anyway". Mr Bobos responded "No I am not. I have until Thursday the 20th. I have explained this to David many times". As has been mentioned, the application was filed the following day, Thursday 20 July - the 21st day after 29 June.
Mr Bobos's evidence of the conversations and communications between 14 July and 19 July stands uncontradicted and unchallenged. The conversations to which he deposes conform with the written communications. It would have been easy for the OSR officers with whom he had conversations to dispute them if they were inaccurate. In those circumstances, I should and do accept Mr Bobos's evidence in this respect.
There is no doubt that the documents were received at Boss' registered office, and that they were received in the first instance by Mr Borrill from a man who handed them to him. (There is no room for any hypothesis that they might have been "blown away", as was suggested). Nor is there is any real doubt that the man was Mr Mead. (There is nothing to support the hypothesis that he might have entrusted them to someone else to serve. It is true that Mr Borrill, who was cross-examined by telephone due to his remoteness, did not see Mr Mead on court. However, some evidence emerged during the hearing, albeit indirectly, which suggested that Mr Borrill had subsequently viewed the webpage for Mr Mead's business, and if the person who appeared on it as Mr Mead did not accord with Mr Borrill's recollection of the "older man" who served the documents, he could easily have said so). Given that Mr Mead noted Mr Borrill's name in his contemporaneous records, there can be no serious dispute that Mr Mead handed the demand to Mr Borrill at the registered office.
Thus the issue is simply whether this happened on 27 or 29 June. There are plainly some difficulties with aspects of Mr Mead's evidence, the most significant of which is that it is not apparent how he could have spent 70 minutes at the Council from 2.45pm (until 3.55pm), then proceeded to the police station (at 4.12), and yet served the demand at 3.15pm. However, there is compelling evidence that he attended a service station at 3.24, so he cannot have remained at the Council offices for 70 minutes from 2.45pm; perhaps he left the Council while employees there made inquiries and later returned.
Mr Borrill was cross-examined to the effect that there was no reason why Mr Mead would have said any such thing as he left the office as "He's just been served". However, this may well have been Mr Mead providing the immediate report of service which triggered the 27 June 15:15:11 entry in the Express Mercantile database, which would support the view that Mr Borrill was mistaken as to the date of service. The 27 June entry in the Express Mercantile database, apparently computer recorded, is very telling, as are the 28 June reports: it is not apparent how these could have been generated if service were not effected until 29 June. On 27 June, Mr Bobos was not in the main office but in another building and, as Mr Smith conceded, it is not impossible that someone could have entered the main building and approached Mr Borrill without Mr Bobos or Mr Smith noticing. The contemporaneous documentary evidence objectively establishes, to a very high degree, that Mr Mead was in Broken Hill on 27 June, and that he was not there on 29 June. This is so notwithstanding the various inconsistencies which have been identified in Mr Mead's evidence. I find that service was in fact effected on 27 June.
However, I accept that, at least by 14 July, Mr Bobos honestly believed that service had been effected on 29 June and that the company had until 20 July to comply or apply to set aside the demand. It is possible that the documents did not come to his attention until that date; or perhaps more likely that whenever they did come to his attention, he did not immediately turn his mind to the date of service and at a later date reconstructed that they had been served on 29 June. Regardless, by 17 July he clearly believed that they had been served on 29 June, and that time for compliance expired on 20 July: he asserted as much to Mr Rousseau then, and again the following day, and had he not had that belief he would plainly have made a timely application to set aside the demand, since his awareness of the imperative of doing so is apparent from his communications with OSR on those and the following days.
Not only did he entertain that belief, but the defendant knew that he did so: he communicated it to them on 17 July and again on 18 July. And although Mr Rousseau undertook on 17 July "to get the legal team to advise what date it was served and get back to you as soon as possible", there was no such response on 18 July - despite Mr Bobos pressing for one - until he was informed at 3:53pm that the legal team would contact him the following morning. It is implicit in Mr Bobos' response at 4.05pm, and his communications of the following morning, that he continued to believe that time expired on 20 July, and was proceeding on that basis.
Even if, as the OSR email of 19 July at 3.24pm asserts, the affidavit of service was received by the OSR legal team only that day, it must be concluded that the defendant already knew that its agent would depose to having served the demand on 27 June, and thus that time expired not on 20 July (as it knew Mr Bobos to believe to be the case), but on 18 July. That conclusion follows, first, from the circumstance that on any view it had that knowledge by its sub-agent Mr Mead and its agent Express Mercantile; and additionally (though this is unnecessary to the conclusion), from the circumstance that in the ordinary course service agents promptly report their outcomes to their principals - as Mr Mead evidently did to Express Mercantile here - so that even if an affidavit of service is delayed, a report of service is provided. There is no adequate explanation of why there was no response to Mr Bobos by 18 June - a "drill in the office" could not sensibly explain away a whole day. I find that those who were dealing with Mr Bobos on behalf of the defendant were, by 18 July, aware - or at the very least ought to have been aware because of the knowledge of and reports made by its service agents, and the criticality of the question of the date of service in the context of what Mr Bobos was proposing - that he was proceeding on a mistaken assumption as to the date of service and hence the date of expiry of the demand. This conclusion is fortified by the circumstance that even the following day, they waited until they had secured payment from the company of the first instalment of $4,500 before rejecting its offer and pointing out that it was out of time.
Mr Bobos's evidence and submissions more than once emphasised that he had told the OSR that service had been effected on 29 June and that he had until 20 July to comply, and that they had delayed in responding to him until after they had secured payment of the first instalment and the demand had (on the defendant's case) expired; there was more than a hint of a complaint that he had not been dealt with fairly in that respect. Unsurprisingly for a self-represented litigant, he did not in terms invoke the doctrine of equitable estoppel; but those contentions are, to a lawyer, redolent of the principle that a party will be estopped in equity from denying the truth of an assumption on which the other has acted to his or her detriment, if the first party has played such a part in its adoption that it would be unfair or unjust if he or she were left free to ignore it, on the footing that it would be unconscionable for the defendant to deny the truth of the assumption. [2] The unconscionability which attracts the intervention of equity is the first party's failure, having induced or acquiesced in the adoption of the assumption or expectation, to fulfil it, or otherwise to avoid the detriment which that failure would occasion. [3] While it is essential to an equitable estoppel that the first party knows or intends that the party who adopts the assumption will act or abstain from acting in reliance on it, [4] and such knowledge or intention may easily be inferred where the adoption, assumption or expectation is induced by the making of a promise or representation, it may also be found where a defendant encourages a plaintiff to adhere to an assumption or expectation already formed, or acquiesces in an assumption or expectation when, in conscience, objection ought to be stated. [5] As Brennan J explained in Waltons v Maher [6] (emphasis added):
… it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.
The potential for an estoppel of this kind to operate so as to preclude a defendant from relying on the expiry of a limitation period is apparent from Commonwealth v Verwayen. [7]
Here, for the reasons given above, the defendant knew (or at the least ought to have known) that the plaintiff's assumption could only be fulfilled by extending until 20 July the period for compliance which would otherwise expire on 18 July, knew (or ought to have known) that reliance on the assumption would cause detriment to the plaintiff (namely, loss of the opportunity to apply to set aside the demand) if it were not fulfilled; but failed to deny the correctness of the plaintiff's assumption, until it was too late - and until it had secured payment of the first instalment of $4,500. Only then did the defendant reject the plaintiff's offer and point out that it was out of time. In other words, with knowledge that the company was proceeding on the mistaken assumption that it had until 20 July to comply with the demand, and would thereby incur the detriment of losing the opportunity to apply to set aside the demand, it stood by, when good conscience demanded that it dispel the plaintiff of its misconception.
I accept that from first communication to it on 17 July of the plaintiff's mistaken assumption there was only a little time - perhaps 24 hours or so - for the defendant to correct it while leaving time for the company to take timely action, but the timeframes triggered by service of a statutory demand are tight and rigid, and it is not unreasonable to expect those who invoke such procedures to be as punctilious in meeting their obligations as is required of the recipient of a demand; and the prompt response of the company on 20 July when its offer was rejected late on 19 July shows that it could have filed a timely application had it been disabused of its misconception a few hours before close of business on 18 July. There is no disproportionality between the detriment (the loss of the opportunity to apply to set aside the demand) and the remedy of holding the defendant estopped from asserting an earlier service date than 29 July. Nor would the operation of the doctrine of estoppel to preclude the defendant from asserting that an application filed on 20 July was out of time be disproportionately burdensome to the defendant; accordingly it would not be unjust. [8]
Accordingly, although I would conclude that service was in fact effected on 27 June 2017, I hold that the defendant is estopped from disputing that service was not effected until 29 June 2017, or that the originating process was filed within time.
[3]
Endnotes
Although the plaintiff contends that Mr Borrill was not authorised to accept service on behalf of the company that is beside the point, as all that is required is that it be left at the registered office: (CTH) Corporations Act 2001, s 109X(1)(a).
Grundt v Great Boulder Gold Mines Limited (1937) 59 CLR 641, 675; Thompson v Palmer (1933) 49 CLR 507, 547; Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387, 404 (Mason CJ and Wilson J).
Waltons v Maher, 423 (Brennan J).
Crabb v Arun District Council [1976] Ch 179, 188; Waltons v Maher, 423 (Brennan J).
Waltons v Maher, 423 (Brennan J).
(1988) 164 CLR 387, 428-9.
(1990) 170 CLR 394.
Cf Commonwealth v Verwayen (1990) 170 CLR 394 at 445-446, 447 (Deane J).
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Decision last updated: 04 October 2017