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Corporations Act - Application to set aside statutory demand - Creditor's address specified as address for service - Whether service on solicitors was effective service - Turns on own facts

Corporations Act 2001 (Cth), s 459G

Z-Tek Computers Pty Ltd v Aus.Linx International Pty Ltd (1997) 15 ACLC 1233

Benonyx Pty Ltd v Fetrona Pty Ltd [1999] NSWSC 1181

Beralt Pty Ltd v Japaul Pty Ltd [2000] ACL Rep 120 Qld 2

Beralt Pty Ltd v Joe Battaglia Plastering Pty Ltd, unreported SCt Qld (Ambrose J); 3 September 1999

Bruce v Vanmeld [2001] NSWSC 362

Callite Pty Ltd v Adams [2001] NSWSC 52

Chelring Pty Ltd v Coombs [2000] WASC 60

Complete Windscreen Service Nominees Pty Ltd v Nielsen & Moller Windscreens Pty Ltd (1995) 18 ACSR 320

Esanda Finance Corporation Ltd v Alvaro, unreported; SCt of WA; Library No 980310; 3 June 1998

Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785

Graywinter Properties Pty Ltd v Gas and Fuel Corporation Superannuation Fund [1996] FCA 822; (1996) 21 ACSR 581

McGill v Minskie Holdings Pty Ltd [2000] NSWSC 909; (2000) 35 ACSR 346

Quitstar Pty Ltd v Cooline Pacific Pty Ltd [2002] NSWSC 402; (2002) 20 ACLC 1695

Seventh Cameo Nominees Pty Ltd v Holdway Pty Ltd, unreported SCt Vic (Chernov J); 24 April 1998

Sterling Press Pty Ltd v Paycroft Pty Ltd, unreported; SCt NSW (Einstein J), 19 March 1998

Vicbar Pty Ltd v Development Constructions (Newcastle) Pty Ltd (1995) 13 ACLC 1220

Zenaust Imports Pty Ltd v Alembic Chemicals Works Co Ltd (1998) 28 ACSR 465

1 MASTER NEWNES: This is an application by the plaintiff to set aside a statutory demand under s 459G of the Corporations Act 2001 (Cth).

2 On 2 October 2003, the plaintiff was served with a statutory demand requiring payment to the defendant of the sum of $18,361.61. That sum was said to be "fees and reimbursements" due and owing by the plaintiff to the defendant. The demand was signed on behalf of the defendant by a director, Mr Garton Smith. Paragraph 6 of the demand specified the address of the defendant for service of copies of any application or affidavit under s 459G to be 13 Nairn Street, Fremantle. That is the registered office of the defendant.

3 The statutory demand was served under cover of a letter from a firm of solicitors, Chris Stokes & Associates, dated 2 October 2003. The letter stated that the solicitors acted for the defendant. It set out in some detail a number of complaints by the defendant regarding the plaintiff's alleged conduct, including in relation to its performance of an agreement made between the plaintiff and the defendant. Among those complaints was an allegation that the plaintiff had failed to pay fees and disbursements due to the defendant under the agreement. The solicitors attached, by way of service, the statutory demand.

4 The plaintiff's solicitors responded by letter of 20 October 2003. In it they said, among other things, that the plaintiff believed it had strong grounds to apply to set aside the statutory demand on the basis that there was a genuine dispute over the fees and that the plaintiff had significant offsetting claims against the defendant. They invited the defendant to withdraw the statutory demand to avoid the costs of an application to set it aside.

5 The statutory demand was not withdrawn and on 23 October 2003 the plaintiff's solicitors filed an application to set it aside, together with a supporting affidavit. At the same time, it filed an application and supporting affidavit to set aside a separate statutory demand served on another company, associated with the plaintiff, EFF Ltd, by Mr Garton Smith, trading as Garton Smith & Co, whose address for service, specified in the demand, was also 13 Nairn Street, Fremantle. The latter application was made in proceedings COR 348 of 2003.

6 It appears that a mix-up occurred when service of the two applications was effected. According to an affidavit of Candice Distefano, a legal secretary employed by Chris Stokes & Associates, at approximately 5.15 pm on 23 October 2003, two envelopes were delivered by courier to the solicitors' offices. Each of the envelopes contained a copy of the application and supporting affidavit in respect of the statutory demand served by the defendant on the plaintiff. In one envelope was a covering letter referring to the parties to this application and Court file COR 349 of 2003, but in the other was a letter referring to the parties to the other application and Court file COR 348 of 2003.

7 The defendant has also filed an affidavit of Robert Garton Smith, the managing director of the defendant. Mr Garton Smith says that about 5.30 pm on 23 October 2003 he was at 13 Nairn Street, Fremantle when two envelopes were delivered. Each envelope contained a copy of the application and supporting affidavit in COR 348 of 2003.

8 It seems clear that the plaintiff had intended to serve both the defendant, at its address for service, and the solicitors, with the application to set aside this statutory demand, but by error served two copies of the application on the defendant's solicitors and none on the defendant at its registered office. Instead, it served two copies of the application and affidavit in COR 348 of 2003 at 13 Nairn Street.

9 The defendant submits that in this matter no application was served on it within the 21-day period stipulated in s 459G(3) and, accordingly, the current application must be dismissed on that basis alone.

10 It was not in issue that the application and supporting affidavit must be served within 21 days of the service of the statutory demand and that that period cannot be extended. Unless there is strict compliance with s 459G, a Court has no jurisdiction to set aside a statutory demand: David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 13 ACLC 1572.

11 The plaintiff was therefore constrained to argue that proper service had been effected on the defendant by service on the solicitors on 23 October 2003.

12 The plaintiff's counsel submitted that there was no prescribed method of service of an application under s 459G. It was not the case that service could only be effected on the creditor. In fact, the prescribed form of statutory demand, form 509H, contemplates that where a solicitor is acting for the creditor, the address for service of any application and affidavit will be the address of the solicitor. In this case, as appeared from the letter from Chris Stokes & Associates, they were acting for the defendant. Although the statutory demand stated the address for service of the defendant was at 13 Nairn Street, Fremantle, service on its solicitors was, nevertheless, good service.

13 Alternatively, the plaintiff's counsel argued that the solicitors had implied or apparent authority to accept service of the application and supporting affidavit on behalf of the defendant and service on the solicitors was, accordingly, good service.

14 It is provided in s 459G that an application and affidavit under that section must be served "on the person who served the demand on the company". The "person who served the demand" is not the process server who delivers it or the solicitor who signed it, but it is the creditor: Rosefarms Pty Ltd v Stourhead Pty Ltd [2000] ACTSC 3. As no method of service is prescribed, any mode of service that is recognised as effective service on a corporation will be sufficient. Where an address for service is specified, service may be effected at that address. Even if service is not effected at the registered office or an address for service, it will normally be sufficient to show actual receipt of the documents by the person to be served, however that is effected: Howship Holdings Pty Ltd v Leslie (1996) 14 ACLC 1549, Davies v Alliance Acceptance Co Ltd (1993) 110 FLR 153, at 156.

15 I do not consider that in the present case service on the solicitors was good service on the defendant. The demand was clear in its terms. It specified an address for service of any application and affidavit under s 459G. There was nothing to suggest that the defendant had authorised, or that it led the plaintiff to believe that it had authorised, the solicitors to accept service on the defendant's behalf. The statutory demand was not signed by the solicitors, but by a director on behalf of the defendant. The address for service specified in it was not the address of the solicitors, but was the defendant's address. It is true that the statutory demand was enclosed with a letter from the solicitors to the plaintiff, but nothing in that letter indicated that service other than at the address for service would be sufficient. The specification of the plaintiff's address as the address for service was, in my view, inconsistent with any implied, ostensible or apparent authority of the solicitors to accept service on behalf of the defendant.

16 I do not think that in these circumstances any implication as to the authority of the solicitors to accept service can be drawn from the terms of form 509H. In my view, the reference there to the designation of the address of the solicitors as the address for service "if solicitors are acting for the creditor", refers to circumstances where the solicitor's retainer includes accepting service on behalf of the creditor. Where solicitors are instructed to sign or serve a statutory demand, and even where the solicitors also act in relation to the matter in other respects, it is up to the creditor to determine whether it will retain the solicitors for the purpose of accepting service of any application and affidavit by the debtor under s 459G. It is not obliged to do so. In the current circumstances where another address is specified as the address for service, the debtor is not entitled to assume the solicitors are authorised to accept service on the creditor's behalf and, in the absence of notification in some form that service at the solicitors' address will be sufficient, service on the solicitors will not constitute service on the creditor. In this case, there was, in my view, no indication that service at the solicitors' offices would be sufficient and, in fact, it does not appear that in this case the plaintiff assumed it would. It is evident that the plaintiff intended to serve both the solicitors and the registered office of the defendant, but due to a clerical error served the wrong documents at the latter.

17 I should add that there is no evidence that within the 21-day period the application came into the hands of the defendant or that the defendant had notice of it. The lateness of the hour at which it was received by the solicitors on 23 October 2003, the last day for service, would itself suggest that that was most unlikely.

18 The result, unfortunate as I think it is in the circumstances, is that the application and supporting affidavit were not served within the period prescribed by s 459G of the Act and, accordingly, the application to set aside the statutory demand must be dismissed. It is therefore unnecessary to have regard to the further issues that were argued as to whether or not there was a genuine dispute about the debt claimed in the statutory demand.