Emhill Pty Ltd v Bonsoc Pty Ltd [2005] VSCA 239

"(1) For the purposes of any law, a document may be served on a company by:

(a) leaving it at, or posting it to, the company's registered office; or

(b) delivering a copy of the document personally to a director of the company who resides in Australia or in an external Territory...

...

(6) This section does not affect:

(a) any other provision of this Act, or any provision of another law, that permits; or

(b) the power of a court to authorise;

a document to be served in a different way." (emphasis added)

3 This short point has had a long procedural history. By originating process dated 16 June 2004, Emhill applied for an order under s.459G of the Act to "set aside a statutory demand asserted as having been served". On 13 August 2004, the Senior Master held that, if and insofar as might be necessary, Bonsoc should have leave nunc pro tunc to serve the statutory demand by delivering it personally to the director, as had been done; and directed that the demand be varied by reducing the sum demanded. The Senior Master declared that the demand as so varied had effect as from when the original demand had been delivered.

4 Emhill appealed from the Senior Master's orders. On 20 August 2004 the appeal came on for hearing before the Judge in charge of the Corporations List. On 3 September 2004, the Judge allowed the appeal and set aside the Senior Master's orders. In lieu thereof, his Honour ordered that the proceeding be treated as an application for a declaration that Emhill was not duly served with a statutory demand; that the proceeding be dismissed on the ground that Emhill was served with a statutory demand; and that Emhill pay the costs of the appeal and the costs of the hearing before the Senior Master.

5 On 22 October 2004, Emhill sought leave to appeal from the orders of the Judge. This Court (Batt and Nettle JJ.A) referred the leave application for hearing by the Court hearing the appeal. In the event, on 23 May 2005 this Court (Callaway, Chernov and Nettle, JJ.A.) granted Emhill leave nunc pro tunc, if leave were needed, to appeal from the order made by the Judge.

The decision at first instance

6 The learned Judge concluded that Bonsoc had failed to serve the statutory demand in accordance with s.109X(1)(b). In his Honour's view, subsection (1) drew -

"a clear distinction between service of a 'document', referred to as 'it' in each of subparagraphs (a), (c) and (d), and service of a 'copy of the document', a phrase used only in subparagraph (b)".

7 His Honour was further of the view that the Court had no power under s.109X(6)(b) to validate such service. In so deciding, his Honour adopted the reasoning of O'Bryan, J. in Racecourse Totalizators Pty. Ltd. v. Hartley Cyber Engineering Pty. Ltd.,[2] a decision which concerned the corresponding provisions of the then Companies (Victoria) Code. His Honour concluded that, since the power under s.109X(6)(b) related only to a document "to be served", it was a power to authorise service in the future and not a power to validate service which had already - purportedly - taken place.

8 His Honour then turned to consider whether the delivery of the statutory demand to the director constituted good service on the company upon some other basis. His Honour noted what was said by Young, J. in Howship Holdings Pty. Ltd. v. Leslie (No.2),[3] that at common law personal service merely meant that the document in question must come to the attention of the person for whom it is intended.

9 Applying that test, his Honour concluded that the statutory demand had been duly served on Emhill, by reason that:

• the person served was the sole director and secretary and shareholder of Emhill, and was thus the company's directing mind and will;

• service of the document of necessity brought the document to the actual attention of the company; and

• the director expressly accepted service of the statutory demand on behalf of the company.

Service of the original complies with the Act

10 I agree with his Honour's conclusion that there was good service of the statutory demand. Accordingly, the appeal must be dismissed. I have, however, arrived at that conclusion by a different process of reasoning, as follows.

11 The question for decision is one of statutory interpretation. The task of the Court is to give effect to Parliament's intention as conveyed by the words of the relevant statutory provision. The statutory words are to be construed, of course, in the context of the legislation as a whole.[4]

12 Emhill's contention is simple. It is that the use of the word "copy" in subparagraph 109X(1)(b) has the inescapable consequence that service of an original does not comply with the provision. Since a copy is made of or from an original, it must follow - so Emhill argues - that the original cannot be a "copy" for this purpose.

13 If this construction is right, it means that, although the statutory demand itself has been served on the company, there has nevertheless not been good service - because only service of a copy would suffice. Counsel for Emhill frankly, and quite properly, conceded that such a result would be universally regarded as absurd. Counsel further conceded, properly, that it was not possible to discern any reason why Parliament might have sought to distinguish, in this way, between an original and a copy of a statutory demand. I should point out that, having made these proper concessions, counsel for Emhill advanced every argument which could responsibly have been advanced on behalf of his client.

14 Where the adoption of a particular construction of a statutory provision would produce a manifestly absurd or inexplicable result, this will almost always indicate that the putative construction does not accord with the legislative purpose. As the High Court said in C.I.C. Insurance Ltd. v. Bankstown Football Club Ltd.[5] -

"[I]nconvenience or improbability of result may assist the Court in preferring to the literal meaning an alternative construction which... is reasonably open and more closely conforms to the legislative intent."[6]

15 The construction advanced by Emhill relies on one of the meanings of the word "copy". As the first of multiple meanings of the word, The Macquarie Dictionary states that "copy" means -

"a transcript, reproduction or imitation of an original."

16 There is another, different, meaning of the word "copy", which involves no reference to, or distinction from, an original. According to the Oxford English Dictionary, in this usage the word "copy" means -

"one of the various (written or printed) specimens of the same writing or work; an individual example of a manuscript or print".[7]

Thus, in ordinary usage it is common to speak of (for example) purchasing several copies of a particular book. There is no single original. Rather, the original edition itself consists of some number of copies.

17 In the age of word processors and printers, one could sensibly speak of a "copy" of a statutory demand in this alternative sense. But, as his Honour held, it seems clear from the language of s.109X as a whole that the word "copy" was here intended to be given the first meaning. That is, Parliament deliberately used the word "copy" in paragraph (1)(b) so as to specify a photocopy or duplicate, in contradistinction to the original, the latter being referred to as "it" or "the document".

18 As Callaway, J.A pointed in argument, however, it does not follow that service of an original is therefore to be regarded as non-compliance with paragraph (b). If it is right to regard service of the original as the highest and best form of service, and service of a copy as in that sense only second-best, then it cannot be supposed that a creditor who does more than the statute requires - by serving an original rather than a mere photocopy - fails to comply. On the contrary, in my view, where doing the lesser would suffice, doing the greater must also suffice.

19 Nor can there be any legitimate complaint that, by serving the original, the creditor has fallen short of "strict compliance", as Emhill contended. The doctrine of strict compliance means that nothing less than that which the statute requires will suffice. Here, the creditor has done more than was required.

20 So to construe the provision will be in accordance with what appears to be the clear intent of s.109X - to facilitate service on companies. This construction is, moreover, consonant with the statement in the Explanatory Memorandum for the Bill which introduced Division 3 of Part 5.4 of the Act, that the provisions were intended to ensure that disputes involving statutory demands would be resolved "on the basis of the commercial justice of the matter, rather than on the basis of technical deficiencies."[8]

21 For these reasons, I conclude that service of the original statutory demand was service which complied with s.109X(1)(b) of the Act. It is therefore unnecessary to consider whether some other basis existed to validate service.

22 Emhill argued, in the alternative, that the trial Judge had impermissibly ignored the other grounds set out in the originating process. Counsel drew attention to paragraph 1 of his Honour's reasons, which states:

"The originating process sets out a number of grounds for the application but the only one relied upon in argument on the appeal was that the statutory demand had not been properly served."

23 At the Court's invitation, Emhill's solicitor wrote to the Court following the conclusion of the hearing of the appeal, stating as follows:

"The Appellant submits that it has raised the following issues which have yet to be determined:

1. that it has a 'genuine dispute' or an 'offsetting claim' for the purposes of s.459H; and

2. that there is 'some other reason' within the meaning of s.459J for the statutory demand to be set aside."

24 The transcript of the hearing before his Honour on 20 August 2004 was before the Court. The transcript records exchanges between his Honour and counsel for Emhill at the conclusion of the hearing, in which counsel confirmed that the only ground relied on by Emhill to have the statutory demand set aside was the ground of invalid service. The relevant passage is as follows:

1 "His Honour: .... Mr Peirce, are there any other arguments in favour of setting aside this statutory demand apart from the service point, or is that the key question?

Mr Peirce: Yes, your Honour, most of the argument revolves around the failure to properly comply with what we argue is a prescriptive requirement under 109X.

His Honour: I must say I couldn't discern any other - you said most of the argument - but I couldn't discern there being any other real argument. This really determines it, doesn't it, one way or the other?

Mr Peirce: Yes, yes, your Honour.

His Honour: In that case unless counsel want to add anything further, I will simply reserve my decision about this, because you've thrown up a few thorny questions, I think.

Mr Peirce: Perhaps your Honour, if I may raise just one other issue? We actually went before Senior Master Mahoney in relation to another issue which related to ulterior purpose.

His Honour: There's no evidence about that.

Mr Peirce: There is some evidence in the affidavit material, but I'm in your hands, your Honour, in terms of whether or not you wish to hear anything on it.

His Honour: I don't think it gets off the ground really. You're not pressing that are you?

Mr Peirce: If your Honour pleases."

25 Accordingly, in my view, paragraph 1 of his Honour's reasons was correct, and his Honour's judgment disposed of Emhill's proceeding in its entirety.

26 I agree with the learned President, but there are some points that I wish to add. First, it is true, as his Honour points out, that the learned primary Judge said that the sole director, secretary and shareholder of Emhill was that company's

"directing mind and will".[9] That expression comes from Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd.[10] For the reasons explained by Lord Hoffmann in Meridian Global Funds Management Asia Ltd. v. Securities Commission[11] and in Director of Public Prosecutions Reference No. 1 of 1996[12] it may be better to say that the sole director, secretary and shareholder could be identified with Emhill for the purpose of serving a statutory demand.

27 Secondly, as the President explains at [18]-[19], doing more than is required in a case like this is not a failure of compliance. (It is not a case of the greater including the lesser, as 10 includes 5, but of the best not being excluded by the second best.) It is unnecessary to decide whether that is a matter of statutory construction or, as I am inclined to think, a positive rule of law.[13]

28 Thirdly, there is another answer to counsel's reliance on the need for "strict compliance". The statutory demand regime is artificial and requires strict compliance,[14] but s.109X is a general provision, applying not only for the purposes of the statutory demand regime but, as the opening words of s.109X(1) say, for the purposes of any law. It would be bad enough if service of the original of a statutory demand were ineffective; it would be intolerable if that were true of service of the original of any document.

29 I agree that the appeal should be dismissed for the reasons advanced by the President and Callaway, J.A.

I certify that this and the preceding 119 pages are a true copy of the reasons for judgment of Maxwell, P., Callaway and Ashley, JJ.A. respectively of the Court of Appeal of the Supreme Court of Victoria delivered on 28 July 2005.

DATED the day of 2005.

[1] See Division 2 of Part 5.4 of the Corporations Act 2001 (Cth).

[2] (1989) 15 A.C.L.R. 457 at 459.

[3] [1996] NSWSC 314; (1996) 41 N.S.W.L.R. 542 at 544.

[4] Project Blue Sky Inc. v. Australian Broadcasting Authority [1998] HCA 28; (1998) 194 C.L.R. 355 at 381 [69].

[5] (1997) 187 C.L.R. 384.

[6] At 408, following Cooper Brookes (Wollongong) Pty. Ltd. v. Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 C.L.R. 297 at 320-1.

[7] The corresponding definition in The Macquarie Dictionary is:

"5. one of the various examples or specimens of the same book, engraving or the like."

[8] Explanatory Memorandum for the Bill for Corporate Law Reform Act 1992 (Cth) [688]: see David Grant & Co. Pty. Ltd. v. Westpac Banking Corporation [1995] HCA 43; (1995) 184 C.L.R. 265 at 270.

[9] His Honour referred to Tesco Supermarkets Ltd. v. Nattrass [1971] UKHL 1; [1972] A.C. 153 at 171.

[10] [1915] A.C. 705.

[11] [1995] UKPC 5; [1995] 2 A.C. 500.

[12] [1998] 3 V.R. 352.

[13] Compare, in a contractual context, Ansett Transport Industries (Operations) Pty. Ltd. v. The Commonwealth [1977] HCA 71; (1977) 139 C.L.R. 54 at 61 per Barwick, C.J. in dissent.

[14] David Grant & Co. Pty. Ltd. v. Westpac Banking Corporation [1995] HCA 43; (1995) 184 C.L.R. 265.