Deputy Commissioner of Taxation v Josway Hospitality Pty Ltd

THE PRINCIPLES 2 On the basis of the authorities referred to below, the relevant principles in relation to delivery of a winding up notice by ordinary post are these: (a) proof of non-receipt by the recipient does not prove non-delivery: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 (at 96-97); Re Rustic Homes Pty Ltd (1988) 49 SASR 41 (at 44); Dwyer v Canon Australia Pty Ltd [2007] SASC 100 per Debelle J (at [8]-[9]); and Deputy Commissioner of Taxation v Contract Synergies Administration Pty Ltd [2011] FCA 743 per Jacobson J (at [5]-[18]); (b) the permissive or facilitative service provisions under s 109X(1)(a) of the Corporations Act will suffice to establish proper service in ordinary circumstances, but this provision is also to be read, in an appropriate case, against the provisions in s 29 of the Acts Interpretation Act 1901 (Cth) and s 160 of the Evidence Act 1995 (Cth), which do, in essence, recognise the possibility that delivery may not have been effected by ordinary prepaid post. Section 29 of the Acts Interpretation Act and s 160 of the Evidence Act respectively and relevantly provide: 29 Meaning of service by post (1) Where an Act authorises or requires any document to be served by post, whether the expression "serve" or the expression "give" or "send" or any other expression is used, then 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. (2) This section does not affect the operation of section 160 of the Evidence Act 1995. … 160 Postal articles (1) It is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia or in an external Territory was received at that address on the fourth working day after having been posted. … (emphasis added) see also Deputy Commissioner of Taxation v Starpicket Pty Ltd (2012) 212 FCR 578 per Greenwood J (at [62]-[74]); (c) proof of non-receipt at a place, as distinct from non-receipt by a person, is likely to prove non-delivery at that place: Scope Data Systems Pty Ltd v Goman (2007) 70 NSWLR 176 per White J (at [49]); and (d) while mere denial of non-receipt by the addressee would scarcely, if ever, suffice to prove 'non-delivery', evidence of non-receipt at a place by an appropriate occupant, depending on the cogency of the evidence, may be sufficient to create a doubt for the purposes of s 160 of the Evidence Act. While such evidence needs to be sufficient to create a 'doubt', it does not need to be proof to the civil standard of fact finding at trial as to actual non-delivery. A 'doubt' ought not to be assimilated with proof or demonstration: Deputy Commissioner of Taxation v Manta's on the Beach Pty Ltd (2012) 88 ATR 193 per Logan J (at [12]).

THE EVIDENCE 3 Before the Registrar, and before me, was an affidavit of service, affirmed by an officer of the Commissioner on 4 October 2017, which deposed relevantly that: … 3. On the fourth day of October 2017, I served the [Company] with a Creditor's Statutory Demand signed by the [Commissioner] together with an Affidavit Accompanying the Statutory Demand under subsection 459E(3) of the Corporations Act 2001, a copy of which is annexed hereto and marked […] as follows: a) I placed the Creditor's Statutory Demand together with the Affidavit Accompanying the Statutory Demand into an envelope and sealed the envelope; b) I addressed the envelope as follows: [The Company] KHT PTY LTD […] LEEDERVILLE WA 6007 c) I affixed postage to the value of $1.50 to the front of the envelope (which includes a $0.50 priority label); and d) I posted the envelope by placing the envelope in the Australia Post mailbox located at […] at 12:05pm on 4 October 2017. 4. Annexed hereto and marked […] is a copy of the sealed, stamped and addressed envelope which I photocopied prior to posting the envelope containing the Creditor's Statutory Demand together with the Affidavit Accompanying the Statutory Demand as described in paragraph 3 hereto. 4 Several affidavits were tendered by the parties in relation to the application to set aside the winding up order filed on 20 March 2018, mainly by the Company. Some of these affidavits went only to the solvency of the Company and did not fall to be considered. Solvency did not need to be determined. The only necessary affidavit requiring examination for resolution of the dispute was that of the addressee's principal occupant. 5 The affidavit (as amended) was in these terms: I [the deponent], of […] in the State of Western Australia, Director say on oath: 1. I am a director of KHT Pty Ltd (KHT), which operates an accounting practice from […] Leederville, Western Australia (and has at all times since 1 July 2016 maintained that address). I have held this position since 2004. 2. The following statements are true to the best of my knowledge, information and belief based on my inquiries as specified. 3. On 28 September 2017, the [Company] ceased to be a client of KHT. I was the principal of the accounting practice responsible for the [Company]. 4. During the period 6 March 2017 to 7 November 2017, KHT was the registered office for the [Company]. KHT Procedure when receiving mail as Registered Office of a Company 5. I established, know and supervise of the systems, policies and administration of KHT and say: (a) Upon receipt of any mail, by ordinary post to the office of KHT which is addressed to a client for whom KHT is the registered office, that mail is opened and immediately send to the relevant office of the company; and (b) If the company is no longer a client and/or KHT is no longer the registered office, or there is some reason why the mail cannot otherwise be dealt with under the above rule, the received mail is brought to my attention (unopened) for the purpose of (a) forwarding the mail to the company and (b) advising the company that it needs to change its address from KHT to reflect it present address. [The Company] 6. I have reviewed my files for the [Company] and made enquiries of the administrative and professional staff at KHT and say, consistent with my recollection, that KHT did not at any time receive the following documents: (a) Creditor's Statutory Demand addressed to the Defendant, dated 4 October 2017; (b) Affidavit accompanying Creditor's Statutory Demand, sworn on 4 October 2017; and (c) Any envelope addressed to the Defendant, in period from 4 October 2017 to today. 7. The last piece of paper work that I caused to be sent from KHT to the [Company] was a refund cheque for a tax return dated 16th May 2017. 8. Had any mail been received that was addressed to [the Company], based on my experience as a Principal and Director of KHT since 2004, I believe it would have been dealt with in accordance with the ordinary procedure I have described above, in paragraphs 5 and 6. 9. Having made the enquiries referred to in this affidavit, I am unaware of any reason, fact or matter which would cause me to doubt my belief as stated in the paragraph above. Sworn /Affirmed by the deponent at Leederville, in Western Australia on 12 March 2018 … 6 I note that the deponent (who is no longer the Company's accountant) was, by reason of a subpoena, in attendance at court to be cross-examined on his affidavit. At the first return date of the application, a few days before the final hearing, counsel who was then appearing for the Commissioner quite properly indicated that cross-examination of the deponent would be required. Ultimately, different counsel appeared for the Commissioner at the final hearing. He (also properly) indicated that the deponent would not be required for cross-examination.

CONSIDERATION 7 The Commissioner correctly stressed that the onus was always on the Company to raise the doubt as to non-delivery at the address. The Commissioner particularly emphasised that proof of non-receipt by the Company director was not proof of non-delivery, a proposition accepted by both parties. The Commissioner argued that the evidence was inadequate and insufficiently robust to prove the existence of a relevant doubt. In particular, the Commissioner pointed to the absence of direct evidence from those employees who would normally process such a notice on its receipt. 8 In my view, the evidence was sufficient to raise a doubt within the meaning and for the purposes of s 160(1) of the Evidence Act. It is known that the deponent not only created the system which he describes, but also expressly 'supervised' the system; a point acknowledged by the Commissioner at the hearing. It is also known that the Company was no longer a client at the date at which the statutory notice would have been received and that, in accordance with the system, any communication directed to a non-client would be brought directly to the deponent for his attention. He deposes that, as a matter of fact, this did not occur. I also note that in the last paragraph of the affidavit, the deponent confirms, in effect, that he has turned his mind to all other possibilities as to how such a document may have gone astray within the system, but can only explain the fact that it never came to his attention, in substance, due to its non-delivery at that address. These statements are plausible. In the absence of any cross-examination, the statements dispose of any suggested possibility that the system broke down. More specifically, it was suggested for the Commissioner that the statutory notice may have been delivered, but not dealt with in the usual manner as it would have been dealt with for a former client due to the fact that the period of time between ceasing to be a client and intended delivery of the notice was relatively brief. Again, in the absence of cross-examination, it is reasonable to infer that the system, developed by the deponent, no doubt to ensure that important client communications did not go astray, was not deficient in this possible sense.

CONCLUSION 9 While the evidence of non-receipt at the address or non-delivery at the address may well require greater scrutiny if it were to be accepted as an established fact at trial, the evidence in this instance is, in my view, sufficient to create a reasonable doubt for the purposes of s 160 of the Evidence Act. As there is now evidence of doubt as to the delivery, evidence which was unavailable to the Registrar, in my view, the order winding up of the Company should be set aside. 10 While the Commissioner has, without any fault, followed the permitted course of serving the statutory demand by ordinary post, he has resisted this application to set aside the winding up order and, in my view, there is no compelling reason why costs should not follow the event in the usual course. The liquidator will also be heard as to consequential relief, if any. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.