Deputy Commissioner of Taxation v ACN 152 259 839 Pty Ltd

Introduction 1 This is an application for review of orders made by a Judicial Registrar on 24 October 2024. The Judicial Registrar ordered that:

1. ACN 152 259 839 Pty Ltd be wound up in insolvency.
2. Andrew Reginald Yeo, a registered liquidator, is appointed liquidator of the defendant.
3. The plaintiff's costs are fixed in the sum of $2,588.96 and are to be reimbursed in accordance with s 466(2) of the Corporations Act 2001 (Cth).
4. The operation of paragraphs [1]-[3] of these orders be stayed until 1 November 2024 at 4:30 pm, or further order. 2 By interlocutory application dated 31 October 2024, the defendant (the Company) seeks review of the orders of the Judicial Registrar (see s 35A(5) of the Federal Court of Australia Act 1976 (Cth)). Paragraphs 2 to 4 of the interlocutory application seek the following orders:
5. A final order setting aside the orders of Judicial Registrar Luxton dated 24 October 2024.
6. A final order dismissing the Plaintiff's application.
7. An order that the Plaintiff pay the Defendant's costs of the application, including the Defendant's costs of this interlocutory application. 3 The proceeding was commenced by the plaintiff (the DCT) filing an originating process dated 27 June 2024. By that application, the DCT sought orders that: the Company be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth); a liquidator be appointed; and the costs of the DCT be paid out of the assets of the Company. Section C of the originating process states that the DCT relies on the failure of the Company to comply with a statutory demand. It is stated that the statutory demand and an accompanying affidavit were served by being left at the Company's registered office on 20 May 2024 and that the Company failed to pay the amount demanded, or to secure or compound for that amount to the DCT's reasonable satisfaction, within 21 days after the demand was served. 4 It is common ground that the Company's application for review of the decision of the Registrar takes place as a hearing de novo. The DCT therefore bears the onus of establishing that a winding up order against the Company ought to be made. 5 The basis upon which the DCT contends that the winding up order against the Company should be made is set out in the DCT's outline of submissions dated 6 November 2024. However, it is unnecessary to discuss these matters as the Company raises only one issue, which relates to service of the statutory demand. 6 The DCT contends that the statutory demand was served on the Company on 20 May 2024 by being left at its registered office by Dung Dinh, an officer employed in the Australian Taxation Office (the ATO). The essential facts (which are not in dispute) are as follows: (a) as at 20 May 2024, the registered office of the Company (as set out in the records maintained by the Australian Securities and Investments Commission (ASIC) with respect to the Company) was: DIAKOU FAIGEN SUITE 1215 1 QUEENS ROAD MELBOURNE VIC 3004 (b) Mr Dinh placed the statutory demand, together with the accompanying affidavit into an envelope and sealed the envelope. He addressed the envelope to the Company at the registered address. (c) On 20 May 2024, Mr Dinh attended outside the front door of Suite 1215, 1 Queens Road, Melbourne. He attempted to gain entry to the Suite, but the door was locked with no person in attendance. The door was a glass door through which he could see a reception area with a chair/couch. The lights were off. At 2.19 pm, he slid the envelope containing the statutory demand and affidavit under the front door of the Suite, thereby placing it inside the premises of the Suite. (d) At the time, there was a sign on the front door stating: IF THIS OFFICE IS UNATTENDED PLEASE CALL 9863 9868 (e) Mr Dinh did not call the telephone number on the sign as he did not believe this was required to leave documents at the Company's registered office. (f) The office was permanently unattended and had been since about mid-2018. (g) The Company did not receive the statutory demand in the 21 day period after 20 May 2024. 7 The Company accepts that the statutory demand was served on the Company on 20 May 2024 pursuant to s 109X(1)(a) of the Corporations Act 2001 (Cth). That section relevantly provides that a document may be served on a company by "leaving it at or posting it to the company's registered office". However, the Company invokes the principles of "fair notice" discussed in cases including FP Leonard Advertising Pty Ltd v KD Travel Service Pty Ltd (1993) 12 ACSR 136 (FP Leonard) at 139 per Santow J and Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559 (Re Future Life) at 564-565 per McLelland CJ in Eq. The Company submits that in the circumstances (including those described below) there has been a want of fair notice, which provides an over-riding ground for refusing relief notwithstanding that there has been effective service. 8 Thus, the issue to be determined is whether or not the doctrine of fair notice applies here. 9 The Company does not seek to establish that it is solvent. Although at a case management hearing the Company requested that an order be made giving it further time to file an affidavit as to its financial circumstances, and such an order was made, the Company did not file any such affidavit.

Procedural matters 10 At the hearing on 17 December 2024, the DCT relied on the following affidavits: (a) five affidavits of Mr Dinh, dated 20 May 2024, 25 June 2024, 5 September 2024, 16 September 2024 and 2 December 2024; (b) an affidavit of Lynette Harding dated 2 July 2024; (c) an affidavit of Danielle Priftis dated 2 July 2024; (d) an affidavit of Ariel Borland dated 22 August 2024; (e) three affidavits of Mark Wenn dated 3 September 2024, 5 September 2024 and 3 December 2024. 11 Mr Dinh was cross-examined; the other deponents were not. 12 Mr Dinh answered questions candidly. I generally accept his evidence. 13 The Company relied on an affidavit of Dimitrios Jimmy Diakou dated 24 October 2024. Mr Diakou was not cross-examined. The Company also tendered several documents.

Factual findings 14 In addition to the factual matters set out above, I make the following factual findings. 15 Mr Diakou is the sole director and secretary of the Company, having been appointed in that role on 20 May 2022. 16 Mr Diakou is also a director of a company called Kerrili Pty Ltd, which trades as Diakou Faigen, Lawyers. 17 Mr Diakou states in his affidavit (and I accept) that the official address of Diakou Faigen, Lawyers is Suite 1215, 1 Queens Road, Melbourne. He also states (and I accept) that: the Suite is permanently unattended and it has been unattended since about mid-2018; he is a sole practitioner with only one part-time employee, who works remotely; Mr Diakou only attends Suite 1215 when he needs to access an old file, or when he wants to check the premises for maintenance purposes; he otherwise works remotely or from a client's premises. 18 In relation to the sign that was on the front door on 20 May 2024 (see above), the telephone number is that of the firm, Diakou Faigen, Lawyers. Had anyone rung that number, it would have been directed to the phone on Mr Diakou's desk (at his client's premises). If he did not answer the call, it would have been directed to a voicemail system. 19 Mr Dinh is a technical leader at the ATO. He is responsible for training new staff and his job entails debt recovery. He has been employed at the ATO since 2010. Since about 2013 or 2014, his role has included case management (including service of statutory demands). The service of the statutory demand with which this case is concerned was the first time he personally delivered (as distinct from posting) a statutory demand. 20 In his affidavit dated 2 December 2024, Mr Dinh states that: (a) when he delivered the statutory demand to the registered office, he was not aware of any information that informed him, and he had no reason to suspect, that the statutory demand would not come to the attention of the Company; (b) from what he observed at the time he left the statutory demand, the registered office looked temporarily unattended; (c) his understanding of s 109X(1)(a) of the Corporations Act was that, once he had delivered the statutory demand, by sliding it under the door of the registered office of the Company and inside its premises, he had served the Company; (d) he did not speculate as to what would happen afterwards; and (e) he did not send the statutory demand by email to Mr Diakou's email address (which he had) for two reasons: first, he did not consider email to be a safe, secure and/or reliable method; and, secondly, he did not believe that he was required to do so, given he had served the statutory demand by hand at the registered office of the Company. 21 During cross-examination, Mr Dinh was not challenged on the above account of what happened on 20 May 2024. He accepted that: he did not see anybody at the premises on that occasion; he observed that the lights were off; and he was aware that the office was unattended. In re-examination, he clarified that by this he understood the office to be temporarily unattended. 22 I accept Mr Dinh's evidence as set out in the two paragraphs set out above. 23 After Mr Dinh left the registered address on 20 May 2024, he did not take any further steps to satisfy himself that the documents he left would come to the attention of the Company. 24 The former name of the Company is Maxcon Developments Pty Ltd. A former director of the Company is Anthony Elzain. He ceased to be a director of the Company in 2022. In his role at the ATO, Mr Dinh has been involved in a proceeding in this Court to which Mr Elzain and other members of his family are parties. Mr Dinh was involved in that proceeding in December 2023, including obtaining freezing orders. The Company was not a party to that proceeding. 25 In the context of the other proceeding, Mr Dinh received an email from Mr Diakou (who was representing the Elzain family members) and responded to that email. This occurred in December 2023. 26 Mr Dinh accepted during cross-examination that in May 2024 he had Mr Diakou's email address and could have contacted him by email and could have sent the statutory demand to him by email. In re-examination, Mr Dinh was taken to one of the emails he had received from Mr Diakou in December 2023 (the email is annexed to Mr Dinh's 2 December 2024 affidavit). Mr Diakou's email contains address details for the firm, Diakou Faigen, Lawyers. The address is stated as: Suite 1215, 1 Queens Road, Melbourne, 3004. 27 One of the documents in evidence is a one-page document that is an extract from the ATO's Integrated Core Processing System (Ex D1). The Integrated Core Processing System contains details for a taxpayer such as the tax liability, the authorised contact, the relevant type of tax, details of tax returns, etc. The extract in evidence relates to Kerrili Pty Ltd and is arranged in columns headed "Address type", "Contact details", "Start date", "End date" and "Reliability". In the first line of the extract, the Postal Address for Kerrili Pty Ltd (SE 1215 1 Queens Road, Melbourne 3004) is stated to be "unreliable". Further, in the eighth row, the Business Address for Kerrili Pty Ltd (SE 1215 1 Queens Road, Melbourne 3004) is stated to be "unreliable". The end date for each of those lines includes the year as "9999" indicating that it is current. The date range for those two lines included 20 May 2024. 28 Mr Dinh said during cross-examination (and I accept) that he has had access to the Integrated Core Processing System since 2010. In his affidavit dated 2 December 2024, Mr Dinh states (and I accept) that he has no recollection of having accessed information concerning Kerrili Pty Ltd using the Integrated Core Processing System. 29 During cross-examination, Mr Dinh said that his understanding of the word "unreliable" in relation to the postal address was that, if the system was going to issue correspondence (eg, a warning letter or statement of account), the system would say that the address is unreliable in the sense that correspondence would not be received at that address. Mr Dinh also said that his understanding is that the business address is where the business operates. He said he did not know why a business address would be described as unreliable. 30 During cross-examination, Mr Dinh was taken to a NAB Bank Account extract for Kerrili Pty Ltd trading as Diakou Faigen, Lawyers (Ex D2). It seems that the extract was annexed to an affidavit of Mr Dinh filed in the other proceeding referred to above, and therefore that he was aware (contrary to one aspect of his affidavit evidence and one aspect of his oral evidence) as at December 2023 that Kerrili Pty Ltd was the company that traded as Diakou Faigen, Lawyers. 31 During cross-examination, Mr Dinh was taken to the ATO's Work Arrangement Activity Notes for the Company. This document records (on page 28) that on 19 July 2022 a call was received from Mr Diakou requesting a change in the postal address for the Company. 32 There is no suggestion that Mr Dinh was aware (at any time between service of the statutory demand on 20 May 2024 and the commencement of the proceeding) that the registered office of the Company was permanently unattended, or that the Company had not received the statutory demand.

Applicable principles 33 The key relevant principles for present purposes are set out in FP Leonard and Re Future Life. 34 In FP Leonard, Santow J stated at 139-140: There is no doubt that delivery occurred in the present circumstances by virtue of these provisions of the Corporations Law. This is so even if thereafter what was posted was returned, provided this is not by the post office but by the actual recipient at the registered office. But what is the effect, in the present circumstances, of coming to know after postal delivery that the company, no longer resides at the registered office address? Here there may not be even any adventitious connection with that address (whether via the accountants if they have ceased to act or otherwise). One line of authority, based on a doctrine of "fair notice", would suggest that in cases where there is knowledge that the address is "false" or "non-existent" then service will not be effective: Re Gasbourne Pty Ltd (1984) 8 ACLR 618; 2 ACLC 103. This has been formulated in different ways including not being "misled" by the register: Re Otway Coal [1953] VLR 557 at 563. And that it would be an abuse of process to allow judgment in cases, where the defendant knew that the statement of claim had not come to the attention of the defendant: Deputy Federal Commissioner of Taxation v Abberwood Pty Ltd (1990) 2 ACSR 91; 8 ACLC 528. But Abberwood can be distinguished. There the defendant had independent contact with the directors of the company. Yet the defendant told them nothing of the process sent to the registered office and later returned by a subsequent occupant with a notification that the company was no longer at that address. This was held to be an abuse of process. That, in my judgment, should be the proper basis for such an exception to the statutory requirement. Abuse of process underlies the notion of lack of "fair notice". Here, contrary to the facts in Abberwood, such opportunity for indirect contact was diligently pursued by the plaintiff. There was "fair notice" - if that be required - and clearly no abuse of process. There is therefore no basis for failing to give full force to the clear words of the two sections of the Corporations Law in deeming service to have occurred. Finally, in achieving effective service, discretion is placed in the court. Section 220(7) gives a power of the court to authorise service in a manner which it chooses. However this must be prospectively not retrospectively: Racecourse Totalisators Pty Ltd v Hartly Cyber Engineering Pty Ltd (1989) 15 ACLR 457; 7 ACLC 902. Hence it would not be open to me to make an order retrospectively treating the prior communication with Washington Flynn as sufficient service. But given that I consider service occurred at the defendant's registered office by post, notwithstanding return of the documents by the occupant, that issue does not arise. Accordingly I hold that service in the present circumstances, where there was no apparent abuse of process and where delivery by post was effected, is effective service. 35 In Re Future Life, McLelland CJ in Eq stated at 564-565: The question of the construction and effect of s 220(1) [of the Corporations Law] together with s 109Y of the Corporations Law (which deals with service by post) was examined in considerable detail by Santow J (with whose judgment I respectfully agree subject to a minor qualification noted below) in F P Leonard Advertising Pty Ltd v KD Travel Service Pty Ltd (1993) 12 ACSR 136; 11 ACLC 1,203. His Honour expressed his conclusion, so far as presently relevant (at 139; 1205) as follows: "But what is the effect … of coming to know after postal delivery that the company, no longer resides at the registered office address? … One line of authority, based on a doctrine of 'fair notice', would suggest that in cases where there is knowledge that the address is 'false' or 'non-existent' then service will not be effective: Re Gasbourne Pty Ltd (1984) 8 ACLR 618; 2 ACLC 103. This has been formulated in different ways including not being 'misled' by the register: Re Otway Coal [1953] VLR 557 at 563. And that it would be an abuse of process to allow judgment in cases, where the [plaintiff] knew that the statement of claim had not come to the attention of the defendant: Deputy Federal Commissioner of Taxation v Abberwood Pty Ltd (1990) 2 ACSR 91; 8 ACLC 528. But Abberwood can be distinguished. There the [plaintiff] had independent contact with the directors of the company. Yet the [plaintiff] told them nothing of the process sent to the registered office and later returned by a subsequent occupant with the notification that the company was no longer at that address. This was held to be an abuse of process. That, in my judgment, should be the proper basis for such an exception to the statutory requirement. Abuse of process underlies the notion of lack of 'fair notice'. Here, contrary to the facts in Abberwood, such opportunity for indirect contact was diligently pursued by the plaintiff. There was 'fair notice' - if that be required - and clearly no abuse of process. There is therefore no basis for failing to give full force to the clear words of the two sections of the Corporations Law in deeming service to have occurred." The qualification is that an abuse of process in the circumstances postulated by his Honour is not strictly speaking an "exception" to the provisions of s 220(1) (which would suggest that there has been no effective service) but rather constitutes an over-riding ground for refusing relief notwithstanding that there has been effective service. This is really implicit in what his Honour says. 36 These passages were cited with approval in Woodgate v Garard Pty Ltd [2010] NSWSC 508 at [44] per Palmer J. In that paragraph, his Honour summarised a number of principles relating to service. Relevantly for present purposes, his Honour stated at [44]: Inconsistency and uncertainty in an area of the law which is of everyday application merely multiply occasions for dispute. It may, therefore, be useful to summarise the principles which are supported by the preponderance of authority, as follows: … iii. where a creditor serves a Statutory Demand in a prescribed mode and:

• knows, at the time of service or before the s 459G(3) period expires, that the Demand has not actually come to the attention of the company;
• knows that the company would dispute the Demand if made aware of it;
• refrains from bringing the Demand to the actual notice of a responsible officer of the company within the s 459G(3) period; and
• relies on good service of the Demand and the presumption of insolvency arising under s 459C(2)(a), the Court may, in its discretion and in the interests of justice, set aside the Statutory Demand under s 459J(1)(b), not for want of good service but for want of fair notice: FP Leonard Advertising Pty Ltd v KD Travel Service Pty Ltd (1993) 12 ACSR 136, at 139 per Santow J; Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559, at 564F-565C per McLelland CJ in Eq; Faji (Australia) Constructions Pty Ltd v AC Professional Accounting Pty Ltd [2009] NSWSC 180, at [31] per Barrett J; Re Pacific Mobile Phones Pty Ltd [2008] QSC 210, at [21]-[24]; Joe Mangraviti Pty Ltd v Lumley Finance Ltd [2010] NSWSC 61, at [11]-[16] …

Consideration 37 As emphasised by counsel for the Company during closing submissions, the Company accepts that the statutory demand was effectively served in accordance with s 109X(1)(a) of the Corporations Act. However, the Company contends that there was a want of fair notice having regard to, in particular, the following circumstances or contentions: (a) the address at which the statutory demand was left was unattended; (b) the DCT knew that the premises were unattended and that they were an unreliable address for service (having regard to Ex D1), so that it was unlikely that the documents would come to the attention of the Company; and (c) there were steps available that the DCT could have taken to ensure that the statutory demand came to the attention of the Company. 38 The Company contends that, in the circumstances, the commencement of the winding up application was (and is) an abuse of process. It contends that this justifies not granting the relief sought in the originating process. 39 In my view, for the reasons that follow, there was no want of fair notice in the circumstances of the case. 40 First, the wording of the sign on the front door of the registered office is significant. The sign said "if" the office is unattended, please call the telephone number. The word "if" suggested that the office may be unattended from time to time. In other words, it suggested that the office was temporarily unattended. It did not convey that the office was permanently unattended. 41 Secondly, insofar as the Company seeks to attribute to the DCT knowledge of all information within the ATO, I do not accept that submission. The DCT acts through officers and employees. The relevant officer or employee for the purposes of service of the statutory demand was Mr Dinh. It is therefore his knowledge and state of mind that is relevant for present purposes. 42 Thirdly, the information recorded in the Integrated Core Processing System (to the effect that postal address and the business address for Kerrili Pty Ltd were "unreliable") does not assist the Company's contentions. The information related to Kerrili Pty Ltd, not the Company (albeit that Kerrili Pty Ltd traded as Diakou Faigen, Lawyers and Diakou Faigen was named in the registered office of the Company). Mr Dinh was not aware of this information (about the address details for Kerrili Pty Ltd) at any relevant time. In the circumstances, I do not consider that it was incumbent on Mr Dinh (acting reasonably) to check the address details for Kerrili Pty Ltd on the Integrated Core Processing System. 43 For these reasons, I do not accept the Company's submission that the DCT knew that it was unlikely or doubtful that the statutory demand would come to the attention of the Company. 44 To the extent that the Company relied on other matters, I do not consider that these take its contention any further. 45 Unlike some of the cases referred to by the parties, this is not a case where the statutory demand was returned. Further, this is not a case where the DCT knew (at any relevant time) that the statutory demand had not been received by the Company. 46 For these reasons, I conclude that there was no want of fair notice. 47 As noted above, there is no issue that all of the other aspects of the DCT's case for a winding up order are satisfied. Accordingly, I conclude that the winding up order should be affirmed. 48 I will discuss with counsel the form of orders to give effect to these reasons. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Moshinsky.