HIS HONOUR: This is a summons to wind up the defendant.

The summons was issued on 14 July 1997, and the evidence shows that it was issued no later than 1 pm on that day. It sought to wind the defendant up in insolvency. The summons noted that there had been compliance with

s 459Q of the Corporations Law and recited that a statutory demand had been served by posting it to the defendant on 18 June 1997 and that there had been no compliance with the demand.

The plaintiff's officer, Mr Andrews-Reading, gave evidence that on 18 June 1997 at approximately 1 pm he posted the statutory demand relied on by the plaintiff at the Castlereagh Street Post Office after placing it in an "Express Post" envelope addressed to the defendant at its registered office, Level 5, 99 Walker Street, North Sydney 2060 and posting it in a gold coloured mailbox.

Mr Jurke, the secretary of the defendant, says that no mail is actually delivered to Level 5, 99 Walker Street, North Sydney by the Post Office unless that occurs through error. A group of companies, of which the defendant is one, holds Post Office Box 6219 at the Shoppingworld Post Office North Sydney and James W Byrnes, a senior executive of the defendant, has Box 6411 at the same Post Office, and the Post Office identifies mail for the group and usually places it in one or other of those Post Office boxes. Mr Jurke says that he attends the Post Office each day at about 10 am, collects the mail, enters it in the inward mail register, and then he and the receptionist distribute it. He says no missive from the plaintiff arrived on 18, 19, 20 or 23 June 1997 (21 and 22 June were Saturday and Sunday). He says that at 11.30 am on Monday 23 June 1997, the receptionist handed him the statutory demand, not in an envelope, and said to him that somebody must have left it at the front desk when she was photocopying in a back room.

On 14 July 1997, which would have been the twenty-first day of the period referred to in the statutory demand had it been served on 23 June 1997, the company delivered a cheque by courier to the plaintiff. Mr Andrews-Reading says that he received this cheque at about 3 pm on that day. This was almost two hours after he had personally served the summons to wind up the company at its registered office. Mr Andrews-Reading says that on receiving the cheque he conferred with other officers of the Chatswood office of the plaintiff and on 15 July, returned it to the defendant under cover of a letter of that day. The cheque actually was not a cheque from the company but a cheque from another company in the group involving Mr James W Byrnes.

All of the formal matters necessary to be proved before the court could make a winding up order were established, though the advertisements were not in the best of form. The only other formal defect was that the defendant was, both in the statutory demand and in the margin of the summons, described as "Barroleg Pty Ltd as Trustee for the Barroleg Trust". It should not have been so entitled, it is the company that is being wound up and if it is wound up, it is wound up in all capacities, not only in its capacity as trustee.

2. Can a person who serves a winding up summons reciting compliance with s 459Q also rely on other evidence of insolvency without amending the summons?

3. Is there sufficient evidence that, outside non-compliance with the statutory demand, the company was insolvent on 14 July 1997?

4. Is there any reason why Mr H J Wily should not be appointed?

1. Section 459E(1) of the Corporations Law provides that a person may serve a statutory demand on a company. Section 109X of the Law provides that where the Law uses the word "serve", that includes sending the relevant document by post to a registered office of a body corporate. Section 109Y then provides that -

"(b) Unless the contrary is proved, the service is taken to have

been effected at the time at which the letter would have been

In Howship Holdings Pty Ltd v Leslie [1996] NSWSC 314; (1996) 21 ACSR 440, I considered the matter of service of a statutory demand generally. I there held that s 109Y(b) of the Corporations Law applied, and not s 160 of the Evidence Act 1995, to postal service of a statutory demand and no-one has argued to the contrary in the present case. In the Howship case the vital fact was that however it got there, the document was actually received by the company and there was sufficient evidence to determine when it was received. Accordingly, it was not necessary to consider when it might have been received in the ordinary course of post. However, it is to be noted that at p 445, there was in fact evidence in the Howship case from an officer of Australia Post as to when a letter posted in Sydney, would, in the ordinary course, have been delivered to Nelson Bay, where the company had its registered office. Apart from two matters, there was no such evidence in the instant case.

The first matter was that Exhibit DX02 is an Express Post envelope identical to that in which the statutory demand was inserted and posted. This envelope bears the words in bold text "Guaranteed Next Day Delivery". However, when one reads the small print, all this guarantee means is "If we do not deliver as promised, you will receive another Express Post envelope free. That's the guarantee."

That evidence does not go very far because "ordinary course of post" connotes ordinary course of ordinary post, not some expedited method of delivery.

The cases do show, however, that even though a letter is posted by certified mail or registered post or express post, it is still posted within the meaning of s 109Y. The word "ordinary" merely deals with the time at which it was deemed to be received; see T O Supplies (London) Ltd v Jerry Creighton Ltd [1952] 1 KB 42.

Secondly, there was evidence that a letter posted in the Jannali area to the company's registered office by another creditor was in fact received the next day because the company faxed its reply the next day. This is some evidence that the ordinary course of post between Sydney suburbs is next day delivery, but it is very difficult in a vitally important point in a case to infer what is in the ordinary course of post from one other letter.

I should note that Mr Rollinson, for the company, did submit that there was no evidence that the envelope was sent by pre-paid post. The evidence was that to use an Express Post envelope, one purchases the same from a Post Office and the Post Office then puts a rubber stamp impression on the envelope to show it has been paid for. One then addresses it, may remove the adhesive on which is impressed the words "Sender to keep" together with the serial number of the envelope and then posts the envelope into a gold coloured receptacle. An officer of the Post Office is then supposed to remove another adhesive strip from the envelope so that it cannot be used again.

The words "pre-paid post" in sections such as 109Y(a) are used in contradistinction to a system of post whereby the recipient pays the postage. It seems to me that where someone purchases an Express Post envelope, addresses it, and either places it in the appropriate receptacle or hands it to a Post Office official, the criteria of posting the document by pre-paid post has been made out.

Returning to the main point, what is meant by the ordinary course of post in s 109Y?

This type of phrase has been construed by the courts on occasions in the past. In Brady v Millgate (1965) 82 WN (Pt 1)(NSW) 282, the question was whether a notice to quit under the Agricultural Holdings Act 1941 which was served by post had been served on the appropriate day. There was extensive evidence as to the postal regulations and what happened when a letter was sent by post to a country address out of Orange. Isaacs, J held that the question was a question of fact, but the relevant time is when the postman calls at the address with the letter even though no-one may happen to be home on that occasion (page 291).

The High Court had to consider the matter in Bowman v Durham Holdings Pty Ltd [1973] HCA 55; (1973) 131 CLR 8, which concerned when a letter extending an option would have been received in the ordinary course of post. Stephen, J, with whom Barwick, CJ and Menzies, J agreed, said at p 14, that "The ordinary course of post" is "not, I think, concerned with the particular idiosyncrasies of a particular addressee but rather with the general delivery practices of the postal service. It does not concern itself with particular circumstances of an addressee which may, if known to the postman on his round, deter him from attempting to effect delivery to a particular addressee; for instance the fact that the postman is aware in advance that the addressee's premises will be closed so that he will be unable to effect delivery of a registered letter in accordance with appropriate regulations." See also Thomas v Johnson (1979) ANZ Conv Rep 160, 163, where Roden, J said that in the case of a registered letter to a country area outside Gilgandra, where the addressee had to call at the Post Office to collect his mail, when considering the ordinary course of post of a registered letter, one had to look at the question of fact as to when "the non-existent but ubiquitous `ordinary reasonable man', this time not in his Clapham omnibus but on his Gilgandra farm" would call at the Post Office. See also Kemp v Wanklyn [1894] 1 QB 583.

There have been some cases where it has been held that a provision in a contract or a statute such as s 109Y(b) does not apply where the document has not in fact been delivered, particularly if that fact is known to the person relying on the presumption. See Lewis v Evans (1874) LR 10 CP 297, where there was no postal service to the place where the respondent was living and Re Thundercrest Ltd [1995] 1 BCLC 117, where the evidence was accepted that the letter had never been received. However, neither of these cases is a problem with s 109Y(b) because the presumption set out in the paragraph yields to the contrary facts being proved. Here, not only is there no contrary evidence, but the evidence is that the notice certainly was received no later than 11.30 am on 23 June 1997.

I should make some other comments about s 109Y(b). The first is that there was some debate before me as to the meaning of the words "as a letter" in s 109Y. This paragraph provides that the notice must be sent "as a letter" for the presumption to apply. "Letter" is defined in s 3 of the Australian Postal Corporation Act 1989 as meaning any form of written communication and the significance of the document being a letter is that it is carried by the letter service of Australia Post. Accordingly, the paragraph is not directed as to what is in the envelope which is posted, but rather whether it is sent by letter post or by some other form such as packet and parcel service or courier service.

The next matter is the significance of the company's mail being redirected as a matter of ordinary routine to Post Office boxes. In a case decided under the Companies Code, Senior Master Mahony held in Re Amanatidis Holdings Pty Ltd (1991) 9 ACLC 507, that where a statutory demand was allegedly served by security post but the postman left a card at the registered office for the letter to be collected at the Post Office, there had not been service at the registered office. It may be that that case has no relevance under s 109Y in any event. However, Owen, J in the Supreme Court of Western Australia distinguished that case in Bellway Corp Ltd v Ausdrill Ltd (1995) 13 ACLC 1663, which, with respect, is a well reasoned and authoritative decision on the present section. His Honour there held in conformity with authority that where the company has an arrangement with the Post Office under which mail is dealt with in a particular way, a statutory demand sent by mail is still properly served. His Honour held that the ordinary course of post ought to include a methodological as well as a temporal application and should relate to the ordinary course of post as it affected the company to which the letter was addressed.

This latter matter may need to be explored further on some subsequent occasion. For instance, if one sends mail to a Cabinet Minister or a Judge, where it is commonly known that all mail passes through a security process which causes some delay, it may be that the ordinary course of post qua that person is a day or so longer than with other people. However, to say that, whilst involving an element of common sense, is contrary to the general principle that ordinary course of post refers to the post service and to how letters generally are received by the hypothetical occupier of the premises concerned.

However, returning to the facts of the instant case, the authorities clearly show that it is up to the person who relies on a provision such as s 109Y(b) to show, on the balance of probabilities, that on the facts the ordinary course of post means that the document concerned was deemed to be delivered on or by a certain day. In the instant case, apart from the two skimpy pieces of evidence to which I have already referred, there has been no attempt to establish the question of fact at all. Under the old tests, there would be a scintilla of evidence, but as a question of fact I am not prepared to hold on that evidence, on the balance of probabilities, that the notice was received at a time before the company says it was received, namely 11.30 am on 23 June 1997.

As the summons was filed on 14 July 1997, it was filed one day too early because, at the time the summons was filed, there had been no non-compliance with the statutory demand because the time allowed for compliance had not expired. This makes it unnecessary to consider whether the cheque that was proffered to the plaintiff was a compliance with the demand or not. I should, however, say two things about this. The first is that the evidence of Mr Jurke is that he deliberately waited to the last day to pay the demand. This is understandable in a company which may have cash flow problems or worse, but waiting until the last day is always a dangerous course to plot and if one makes a mistake, the court will not always overlook a non-compliance, and indeed, sometimes it cannot do so. One must never wait to the last day for doing anything unless one is one hundred percent sure that one is right, and has good insurance.

The second matter is that although the company purportedly had the full amount demanded, the payment was by cheque and not the company's cheque. However, prima facie this would have been compliance with the demand. As the letter returning the cheque never took any point that the cheque was insufficient tender as a matter of law, any possible point as to the formality of the tender must be taken to be waived; see George v Cluning (1979) 28 ALR 57. Thus, had this matter been relevant, I would have held that there had been compliance with the statutory demand.

2. Before the Corporate Law Reform Act 1992, which introduced Part 5.4 of the Corporations Law in its present form, it was always open to a petitioning creditor who was not able to rely on a statutory demand to prove insolvency by some other method. Mr Rollinson says that this is no longer the case and that where a summons expressly refers to s 459Q and to a statutory demand, then, unless there is some other intimation, the plaintiff is limited to relying on non-compliance with a statutory demand. In Re Turf Enterprises Pty Ltd [1975] Qd R 266, 274, Dunn, J had to consider a situation where creditor A issued a statutory demand and then company B was substituted as a petitioner. At 274, his Honour said, "Mr Row of counsel, for the company, submitted that, if a petitioner alleges non-compliance with a `Section 222 demand', and relies upon the consequential deemed inability of the company to pay its debts, he may not rely on any other mode of proof to the satisfaction of the Court that the company is unable to pay its debts. I am unable to accept this submission. The relevant ground is that `the company is unable to pay its debts', and this may be proved by any admissible evidence." See also In re Capital Annuities Ltd [1979] 1 WLR 170, 189 and cases there cited. The question is thus whether that line of decision still applies under the current legislation.

Part 5.4 of the Corporations Law deals with winding up in insolvency. Section 459A provides:

"On an application under section 459P, the Court may order that an

Section 459 then maps out who may apply for such an order. This seems to me to be closely analogous to the former ground, that the company is unable to pay its debts.

The only decided case which appears to be of any relevance at all to this question is Deputy Commissioner of Taxation v Guy Holdings Pty Ltd [1994] TASSC 126; (1994) 14 ACSR 580, a decision of Zeeman, J in the Supreme Court of Tasmania. In that case, the debt was paid after the expiry of the statutory demand but before the hearing. Zeeman, J said at 585 that it would not always be the case that the court would refuse to grant an order for winding up of the company where the petitioner had been paid its debt as claimed in the statutory demand but claimed some other amount and the evidence indicated that the company was insolvent. This could only arise if, even under Part 5.4, it was open for the creditor to prove insolvency under s 459A by any appropriate means.

Accordingly, in my view, the law as stated in Re Turf Enterprises Pty Ltd continues to apply. It is open to the creditor to prove insolvency, either by non-compliance with the statutory demand which is mentioned in the summons, or by any other means open to it. There are, of course, two provisos. The first is that if the company is taken by surprise, then it may apply for an adjournment to meet the revised case. That is not applicable in the instant case because I was informed by Mr Murphy of counsel for the plaintiff, without objection, that the company had said when this matter was before the Master that there would be some evidence of solvency, but that evidence was never filed. Accordingly, the company was not taken by surprise that the question of its solvency outside the statutory demand might be in issue. Secondly, there would be some cases where the court might think that it would be unjust to make an order for winding up where a creditor had given the debtor the impression that it was only pressing for payment of part of the debt, namely, the debt in the statutory demand; see De Montford v Southern Cross Exploration NL (1987) 17 NSWLR 468, 471.

3. The evidence shows that this company was actually wound up on a summons filed by another creditor earlier this year, but its appeal against the winding up order was allowed. During the period between the order for winding up and the allowance of the appeal, Mr H J Wily, one of the official liquidators, was in charge of the company. In the course of Mr Wily's administration, he made an investigation into the affairs of the company, and on 14 April 1997, presented what he called the "Second Report to the Supreme Court of New South Wales Re Barroleg Pty Ltd". That report is on p 42 of affidavit D of Mr Andrews-Reading. This evidence was admitted without objection. It showed that the company did not have any assets other than trust funds, whose maximum value was $346,506. Mr Wily considered that the true position was that there was a deficiency of trust funds of $816,249. This figure was said by Mr Wily to be hard to work out exactly because the accounts of Mr Jurke and the accounts prepared by chartered accountants were quite different and there were also some differences in valuations, and there appear to be intergroup transactions. However, the report is done by a professional company liquidator who is well aware of these sort of difficulties, the company has not put on any evidence to refute what Mr Wily has said, so the best evidence the court has is that the company has no assets, it has liabilities and the indemnity to which it is entitled out of the trust assets, on the balance of probabilities, is worthless.

Added to this is the fact that on 5 September 1997, a notice was served on the company by Stancorp Pty Ltd, a company of which Mr Jurke has signed under the common seal as a director, notifying the company that the charge held by Stancorp over the company's assets had crystallised.

Mr Rollinson says that Mr Wily's report, which was done in April, and the action by the mortgagee in September, is insufficient to show that as at July the company was insolvent. With respect, I disagree. The company has not given any evidence, it was clearly insolvent in April and the fact that the mortgagee has taken action in September reinforces the presumption of continuance.

Accordingly I find that the company was insolvent as at 14 July 1997.

The company being insolvent, the procedural matters having been established, and there being no reason why it should not be wound up, the creditor is entitled to an order that the company be wound up.

4. Mr Wily has already done a considerable amount of work in connection with the liquidation of this company and I would have thought it would be appropriate that he be reappointed as liquidator. There is, however, a problem under s 532(2)(b) in that Mr Wily is owed fees in excess of $5,000 for his previous work as liquidator. This would disqualify him unless the court gave leave. I have not been able to find any authority that assists as to when a court should give leave in the context of a former liquidator who is a creditor. There were a number of cases under previous versions of the Law where the court had to consider whether the company's auditor should be appointed liquidator; see eg Re Photo Holdings Pty Ltd (1976) 2 ACLR 117. The basic principle applied in such cases was that liquidators must be, and must be seen to be, completely independent: Re Allebart Pty Ltd [1971] 1 NSWLR 24; Re Stewden Nominees No 4 Pty Ltd (1975) 1 ACLR 185. Thus the disqualification in s 532 is to guard against the prima facie conflict of duty between a person who is a creditor in his or her own right and a person who is administering the company in the interests of the creditors as a whole. Accordingly, where the debt owed to the liquidator is a debt in connection with the administration of the company in insolvency and the court can see that there will be a general saving to the creditors by appointing a person who has already spent hours in investigating the affairs of the company, the advantages of appointing the same person as liquidator outweigh the detriment caused by any possible conflict.

Accordingly, the court orders that the company be wound up, the court gives leave to Mr Hugh Jenner Wily to act as liquidator of the company notwithstanding that he is a creditor of the company and the court appoints Hugh Jenner Wily of Armstrong Wily & Co, Level 6, 50 Margaret Street, Sydney as the liquidator of the company.