Dr Andrew Roberts-Szudzinski Pty Ltd v .au Domain Administration Ltd [2006] NSWSC 950 | Case summary

1613/06 DR ANDREW ROBERTS-SZUDZINSKI PTY LIMITED v .au DOMAIN ADMINISTRATION LIMITED JUDGMENT 1 By an originating process filed on 24 February 2006, the plaintiff, a company called "Dr Andrew Roberts-Szudzinski Pty Limited", makes application under s.459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand served on it by the defendant, .au Domain Administration Limited. 2 The statutory demand is dated 3 February 2006. It refers to a debt of $268,125 described as follows: "Amounts owing to the Creditor being the Release Fee of $825 payable for each of the 325 domain names released to Dr. Andrew Roberts-Szudzinski Pty Ltd pursuant to the Terms and Conditions of the auDA Commercial Geographic Names Ballot." 3 The plaintiff operates a medical practice through which Dr Andrew Roberts-Szudzinski practises his profession of cosmetic surgeon. At all material times, the directors of the plaintiff were Dr Roberts-Szudzinski and his wife. His son Mariusz Szudzinski was the company secretary. The son no longer holds that office. 4 The ground on which the plaintiff seeks an order setting aside the statutory demand is that there exists a genuine dispute as to the existence of the debt: s.459H(1)(a). The plaintiff concedes that Mariusz Szudzinski, who was, at the time, the secretary of the plaintiff, had contacts and dealings with a company which may have been a representative or agent of the defendant. But the plaintiff denies that Mariusz Szudzinski acted with the actual, ostensible or implied authority of the plaintiff to commit it to any contract with the defendant for the acquisition of 325 (or any) domain names through the "Geographic Names Ballot", either directly or through the intermediation of any agent of the defendant. 5 The defendant is an industry body endorsed by the Commonwealth Government to administer the .au internet domain name system. In the period 1 June 2005 to 31 July 2005, the defendant conducted a ballot through which members of the public were given the opportunity to acquire .au domain names consisting of the names of towns and localities in Australia. To be eligible for inclusion in the ballot, an application had to be lodged on-line with one of several participating "registrars" for the purposes of the ballot. One such registrar was Melbourne IT Limited, generally referred to as simply "Melbourne IT". 6 The plaintiff had, for some time, had a business relationship with Melbourne IT in connection with the upkeep and renewal of its "cosmeticmedical.com.au" website, for which, according to Dr Roberts-Szudzinski, Mariusz Szudzinski was primarily responsible. There is in evidence a notice from Melbourne IT to: "Mariusz Szudzinski The Cosmetic Medical Centre 426 Crown St SURRY HILLS NSW 2010"

The email made a demand for immediate payment. 14 An email dated 21 September 2005 from Melbourne IT to "fabryka@cosmeticmedical.com.au" was headed "Regarding dispute over .au Geographic Names". It was addressed "Dear Mariusz Szudzinski". 15 The documents to which I have so far referred were put into evidence by the plaintiff. I next refer to some documents annexed to the affidavit of Dr Tonkin who gave evidence for the defendant. 16 The first such document is an extract from the records of Melbourne IT concerning an account with it established on 27 July 2005. Against the heading "Institution" appears the name of the plaintiff. The "Account Type" is described as "Business". The "Login Name" is "FABRYKA". There is a section headed "Primary Contact Person". In that section appear the name "Mariusz Szudzinski", the address in Lucas Road, Burwood, a telephone number and the email address "fabryka@cosmeticmedical.com.au". Dr Tonkin testified that the domain name "cosmeticmedical.com.au" is currently registered under this account. 17 Dr Tonkin annexed to his affidavit a copy of a printout from the records of Melbourne IT showing the registration of the "cosmeticmedical" domain name. The "account user name" is recorded as "FABRYKA". 18 Also attached to Dr Tonkin's affidavit is a printout from the records of Melbourne IT of logs relating to orders for geographic domain names showing among other things the account name recorded in respect of the order. The document shows a very large number of geographic domain names with the account, in each case, identified as "FABRYKA". 19 Finally, Dr Tonkin has put into evidence an email of 14 September 2005 to him from a colleague headed "Our Doctor Friend, FABRYKA" and beginning: "I have finally been able to track down the elusive Mariusz Szudzinski of FABRYKA fame". 20 As I have said, it is the contention of the plaintiff that Mariusz Szudzinski did not act with the actual, ostensible or implied authority when he made application to Melbourne IT for 325 geographic domain names. There seems to be no real doubt that Mariusz Szudzinski submitted the application. The document (paper or electronic) by which he did so is not in evidence. The acknowledgment by Melbourne IT dated 31 July 2005 in respect of one of the names was addressed "Dear Mariusz Szudzinski" and sent to "fabryka@cosmeticmedical.com.au" which I am prepared to think was an email address of the plaintiff. The Melbourne IT email of 25 August 2005 addressed "Dear Mariusz" and saying "You have 'WON' the ballot …" was also sent to that email address. Likewise with the Melbourne IT emails of 13 September and 21 September 2005. The Melbourne IT letter of 1 September 2005, perhaps sent by conventional mail, was addressed to Mariusz Szudzinski, with the plaintiff's name on the next line. It was sent to an address which, according to an ASIC extract in evidence is both the registered office of the plaintiff and the home address of not only Mariusz Szudzinski but also his parents, the directors of the plaintiff. That letter also began "Dear Mariusz Szudzinski". It said "you have been successful". 21 This correspondence leaves at large the question whether it was the plaintiff or Mariusz Szudzinski on his own account who had dealings with Melbourne IT. The references to "you" are, in terms, references to Mariusz Szudzinski, following, as they do, salutations to him by name, although in one instance his name appears above the plaintiff's name. In the email communications, the email address at which communication with Mariusz Szudzinski was made is that of the plaintiff. But in light of what I think must be the universally recognised reality that many thousands of company officers and employees use company email facilities every day for personal communication, that circumstance is equivocal. Nowhere in any of the communications is Mariusz Szudzinski identified as the secretary of the plaintiff, although he is named as the "Primary Contact Person" in Melbourne IT's records relating to the plaintiff's account. 22 The only other relevant documentary material is that from Melbourne IT showing an association between the "FABRYKA" account and the application for the 325 names. Beyond the fact that FABRYKA was a name identifying the plaintiff's account with Melbourne IT regarding its website, that really shows nothing. 23 My task in this proceeding is not to decide whether the debt claimed by the defendant is owing, due or payable. I am called upon only to say whether there is a "genuine dispute" as to the existence of the debt - in other words, whether the assertion of dispute is such as to involve "a plausible contention requiring investigation": Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at p.787; and whether the grounds of dispute alleged can be seen to be "real and not spurious, hypothetical, illusory or misconceived": Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452. The plaintiff's contentions based on the absence of any clear basis on which to conclude that Mariusz Szudzinski, in acting as he did, acted with its authority must therefore be assessed against the defendant's competing contentions. 24 The defendant says that, whether Mariusz Szudzinski had actual authority is not to the point: the defendant is entitled to make and act on the assumption in s.129(2)(b) of the Corporations Act as to Mariusz Szudzinski's authority; and the plaintiff is estopped by s.128(1) from asserting that that assumption is incorrect. The defendant also says that it was entitled to make a further assumption, namely, that Mariusz Szudzinski had ostensible authority to enter into the relevant transaction. Further, the defendant relies on the indoor management rule, or rule in Turquand's case (Royal British Bank v Turquand (1856) 6 E & B 327). 25 Section 129(2) of the Corporations Act is in these terms: "A person may assume that anyone who appears, from information provided by the company that is available to the public from ASIC, to be a director or a company secretary of the company: (a) has been duly appointed; and (b) has authority to exercise the powers and perform the duties customarily exercised or performed by a director or company secretary of a similar company." 26 Section 128(1) reads: "A person is entitled to make the assumptions in section 129 in relation to dealings with a company. The company is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect." 27 It may be accepted, for the purposes of the defendant's contentions based on these sections, that Mariusz Szudzinski appeared, from ASIC records generally available at the relevant time, to be the secretary of the plaintiff. To that extent, the defendant's resort to ss.129(2)(b) and 128(1) is justified. But then comes a large question about what are referred to in s.129(2)(b) as powers and duties "customarily" exercised and performed by the secretary of a "similar company". Presumably, a "similar company" means a company "similar" to the plaintiff - but in what respects? The plaintiff, at material times, had two directors, husband and wife. Would a board of directors so constituted be an attribute of a "similar" company? One of the plaintiff's directors was a medical practitioner. Is that an indicium of a "similar" company? The plaintiff conducted a medical practice or, more specifically, a cosmetic surgery practice. Is the "similar" company concept confined to companies conducting medical practices or cosmetic surgery practices? These are among the questions that would need to be determined in any proceeding in which the defendant sued the plaintiff for the alleged debt relying on an estoppel based on ss.129(2)(b) and 128(1). 28 Any such debt action would also entail questions about what is "customarily" done by the secretary of a company having regard to whatever are the attributes of the "similar company" to which s.129(2)(b) refers. What is "customary" would no doubt be a matter of evidence. And the evidence would no doubt have to be indicative of a custom applicable to cases of a kind in which 325 domain names are ordered from a domain name provider. 29 In relation to the separate and non-statutory matter of ostensible authority, the defendant points to judicial statements to the effect that a company secretary's duties extend to making contracts connected with the administrative side of a company's affairs: Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711. It is also possible to point to judicial statements to the effect, on the one hand, that a company secretary is a mere clerk or servant (George Whitechurch Ltd v Cavanagh [1902] AC 117) and, on the other, that a company secretary is a senior executive officer owing fiduciary duties to the company (Minlabs Pty Ltd v Assaycorp Pty Ltd (2001) 37 ACSR 509). Again there would be fertile ground for debate in any debt action. Matters of context and comparable cases would be relevant. 30 The indoor management rule is to the general effect that persons dealing with companies are entitled to assume that all provisions regulating internal management have been complied with so that, for example, a person dealing with a company secretary is entitled to assume that he or she has all such powers as he or she purports to exercise if they are powers that, according to the constitution, the secretary could have. The availability of this so-called rule depends, of course, on the person whose act is in question having purported to act as an officer. On the material now before the court, it is not at all clear how the defendant would show that Mariusz Szudzinski had purported to act as the secretary of the plaintiff. He was held out by the company (if at all) only as the "Primary Contact Person" in relation to the website account. There is nothing in the documents portraying him as company secretary. 31 I have not so far mentioned another matter of significance. Let it be assumed that Mariusz Szudzinski acted with the authority of the plaintiff. The entity with which he had dealings was Melbourne IT. All the communications in evidence were between Mariusz Szudzinski and Melbourne IT or, at least, persons purporting to act for Melbourne IT. There are documents in evidence suggesting that Melbourne IT acted as a representative or agent of the defendant in the ballot process. But it is by no means clear that Melbourne IT dealt with Mariusz Szudzinski as an agent of the defendant. In the email message of 31 July 2005 to Mariusz Szudzinski acknowledging receipt of the applicant, Melbourne IT said that after 31 July 2005, "all eligible ballot applications will be forwarded by Melbourne IT to AusRegistry". The message of 25 August 2005 said that "au.DA" had "authorised Melbourne IT to inform you …". The payment requested was payment to Melbourne IT. The follow up requests for payment also referred to payment to Melbourne IT. 32 In these circumstances, there is a question as to contractual intentions which existed when Mariusz Szudzinski communicated with Melbourne IT. He never, it seems, had direct contact with the defendant. 33 As I have said, I am not called upon to decide whether the alleged debt is owing, due or payable. I am required only to say whether the dispute as to the existence of the debt asserted by the plaintiff is genuine, in the sense that it involves "a plausible contention requiring investigation". For the reasons I have given, that test is amply satisfied. There is a clear need for separate litigation to establish whether or not the plaintiff is indebted to the defendant as alleged. 34 I make the following orders: 1. Order that the statutory demand dated 3 February 2006 served by the defendant on the plaintiff be set aside. 2. Order that the defendant pay the plaintiff's costs of the proceedings. **********

Dr Andrew Roberts-Szudzinski Pty Ltd v .au Domain Administration Ltd

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