In the matter of Anton Fabrications (NSW) Pty Limited - Bentley Smythe Pty Ltd v Anton Fabrications

Judgment 1The substantive claim in the Originating Process is for the winding up of the defendant, Carbon and Energy Reductions Pty Limited (the Company), at the suit of James McElhinney, the plaintiff. By Interlocutory Process filed on 3 July 2014 the Company makes application to set aside the statutory demand on the basis, inter alia, that it was not served on the Company (the service point). Although there are other bases upon which the Company makes its claim, the application restricted to the service point was heard on 7 July 2014. Mr A Barlow, of counsel, appeared for the Company and Mr B Crowley, solicitor, appeared for the plaintiff. 2The plaintiff relied on the affidavit of service of Mr Crowley sworn on 20 June 2014. The Company relied upon the affidavits of Richard George Hayes, a director and the secretary of the Company, sworn on 3 July 2014 and Matthew James Sulman, the Company's solicitor, sworn on 3 July 2014. Background 3Disputation arose between the parties in the latter part of 2013 in relation to a particular bank account and various payments out of that account. Proceedings were commenced and finalised in January 2014. It appears that final orders were made in February 2014 when the proceedings were discontinued and it was declared that the plaintiff ceased to be a director of the Company from 31 January 2014. 4Between the conclusion of the proceedings in late January/early February 2014 and 12 June 2014 the plaintiff's solicitor, Mr Crowley, communicated with the Company's solicitor, Mr Sulman, by email on numerous occasions in respect of final arrangements to be made in respect of those proceedings and some other matters. The Statutory Demand 5On 28 February 2014 the plaintiff signed a statutory demand directed to the Company claiming an amount of $102,500 as the "balance of an unpaid dividend of $50,000" with accrued interest of $52,500. 6The plaintiff claimed that the statutory demand was served on the Company on 8 March 2014. Mr Crowley's affidavit sworn on 20 June 2014 (originally sworn on 25 March 2014) included the following: I did on 8 March 2014 at 12.40pm serve the Defendant, CARBON AND ENERGY REDUCTIONS PTY LTD ACN 132 363 396, with an original Demand under section 459E(2)(e) of the Corporations Act by leaving it at the Defendant's registered office at Unit 14, 248 Pacific Highway, GREENWICH NSW. 7There was no communication with Mr Sulman about the statutory demand until Sunday 15 June 2014 when Mr Crowley wrote to him attaching the Originating Process for the winding up of the Company. Mr Crowley noted that the hearing was scheduled for 30 May 2014 and because he had not served the documents, he had appeared in Court on that day and had the matter adjourned to 4 July 2014. Mr Crowley advised Mr Sulman that he would arrange for the documents to be formally served on the Company the following day at its registered office unless Mr Sulman accepted service. 8On 16 June 2014 Mr Sulman advised Mr Crowley that he was instructed that the Company had not been served with any statutory demand and requested provision of a copy "forthwith". Mr Sulman requested particulars of the debt, how it arose and the provision of supporting documentation. Mr Sulman advised that unless the plaintiff unreservedly withdrew the winding up application he was instructed to appear and oppose the application on 4 July 2014. 9On 16 June 2014 Mr Crowley wrote to Mr Sulman advising that he was not in the office and that he would forward the statutory demand to him when he returned to the office. Mr Crowley also advised that he intended to file an Amended Originating Process because he had inadvertently not strictly complied with the Corporations Act 2001 (Cth) (the Act). In respect of service Mr Crowley said: In regard to the service of the statutory demand, I served it personally, so there is no doubt that it was served. 10On 19 June 2014 Mr Crowley provided a copy of the statutory demand dated 28 February 2014 together with a copy of the Affidavit of Service to Mr Sulman by email. 11On 23 June 2014 Mr Sulman wrote to Mr Crowley in terms that included the following (emphasis in original): 1. The company has not been served with the statutory demand prior to the receipt of same by the writer on Thursday, 19 June 2014. Our client's registered office is a private residence located within a security apartment block. You will be aware of the rules concerning service upon a company's registered office which require that the documents be accepted by a person over the age of 16 at those premises. Kindly indicate the name of the person to whom the documents were handed on 8 March 2014. 12Mr Sulman also set out a detailed response (in paragraph 2 of this letter) disputing that the alleged debt set out in the statutory demand was due or payable to the plaintiff. Mr Sulman referred back to his email of 16 June 2014 in which he requested the particulars of the alleged debt and how it arose. He noted that no such particulars had been provided and reiterated the request for those particulars to enable him to advise the Company. 13The affidavit in support of the Originating Process sworn by the plaintiff included the following: The demand, a copy of which is attached to the originating process, was signed by me. The demand was served by Brett Crowley, the plaintiff's solicitor, who delivered it personally to the registered office of the defendant at Unit 14, 248 Pacific Highway, GREENWICH NSW on 8 March 2014. 14On 24 June 2014 Mr Crowley wrote to Mr Sulman in response to his letter of 23 June 2014 providing the amended documents that were filed with the Court. That email included the following: Re service of the statutory demand, I disagree entirely with paragraph of your letter. There is no legal basis for any of the statements made therein. The demand was served in accordance with the Corporations Act. As a result of the statutory demand being served in accordance with the Corporations Act on 8 March 2014, paragraph 2 of your letter is redundant. 15On 1 July 2014 Mr Sulman wrote again to Mr Crowley in terms that included the following: Your affidavit of 25 March 2014 re-sworn on 20 June 2014 alleges service of the Demand on the Respondent ("the Company") on 8 March 2014 by you personally by leaving it at the Company's registered office. The time and date of alleged service was a Saturday afternoon. Corporations do not ordinarily operate outside ordinary business hours from Monday to Friday. As previously indicated, the Company's registered office is located within a security building. The mailboxes however are located externally and are not secure. Neither Mr Hayes nor his wife, who reside at the address, have received the Statutory Demand despite the alleged service set out in your sworn affidavit. It is reasonable to assume that had the Statutory Demand actually come to the attention of the Company that appropriate action would have been taken to address it given the dire consequences of not doing so. In the circumstances, your client's originally filed Winding Up Application (which was returnable on 30 May 2014 and presumably heard ex-parte) was also inappropriate. Please provide further details of the manner in which the Statutory Demand was allegedly served. In particular (i) Is it alleged that the Demand was served upon the Company by leaving it in the mailbox at the registered address? Please identify the mailbox into which the Demand was allegedly deposited. (ii) Is it alleged that the Demand was placed under or affixed to the door of the registered office? If so, how was the Demand so affixed? (iii) Is it alleged that the Demand was served upon the Company by leaving it in the presence of a person over the age of 16 years who was on the premises at the time? If so, please identify that person and set out any words that were exchanged at the time. (iv) If it is alleged that the Demand was served by means other than by leaving it in the unsecure mailbox located external to the registered office, please provide details as to how it was that you gained entry to the private security building. Further, upon whose authority you were permitted entry to said private security building. 16On 2 July 2014 Mr Crowley wrote to Mr Sulman in terms that included the following: The demand was served in accordance with section 109X of the Corporations Act (the "Act") by leaving it at the registered office of the Company in the mailbox near the entrance to the property. 17When the matter was returnable before the Court on 4 July 2014 it was referred to the Corporations List on 7 July 2014 for the hearing of the interlocutory application in respect of the service point. Although not framed formally as a separate question by the Registrar who referred the matter for hearing, the parties have proceeded on the basis that the separate question for determination is whether service of the statutory demand was effected on 8 March 2014 when Mr Crowley left it "in the mailbox near the entrance to the property". Consideration 18Section 109X of the Act provides relevantly that the statutory demand may be served by "leaving it at" the Company's registered office: s 109X(1)(a). It is not in issue that the registered office is correctly identified as Unit 14, 248 Pacific Highway, Greenwich NSW. 19Mr Barlow submitted that the facts of this case are "on all fours" with the application before Barrett J (as his Honour then was) in Jin Xin Investment & Trade (Aust) Pty Ltd v ISC Property Pty Ltd [2006] NSWSC 7; (2006) 196 FLR 350. In that case one of the issues for determination was whether an Originating Process seeking orders under s 459G of the Act setting aside the statutory demand was served on the plaintiff company pursuant to the provisions of the Act. The statutory demand identified the address of the plaintiff creditor as Suite 103, Level 1, 370 Pitt Street, Sydney. The documents had been left in the letterbox. Barrett J said at [21]: Leaving documents in a letterbox on the ground floor of an office building cannot be regarded as (or as equivalent of) leaving them at a particular numbered suite on the first floor of the building. Had it been intended that the ground floor letterbox might be used, para 6 of the statutory demand would not have referred to suite 103 or to level 1. 20Barrett J held that the documents were not delivered to Suite 103, on Level 1 of the building and that service under the Act did not take place: at [24]. 21Mr Barlow also relied on Barrett J's judgment in James v Ash Electrical Services Pty Ltd [2008] NSWSC 1112. In that case the separate question was whether the statutory demand had been served on the defendant by placing it in an envelope addressed to the company care of an accountancy firm and placing the envelope in the letterbox at the front of the office building. The registered office of the company was recorded as "Berkman, Suite 1A, 14 Pacific Highway, Wyong NSW 2259". Berkman was the principal of the accounting practice, Berkmans, operating at that address. 22The evidence established that there were eight letterboxes set into the outside wall of the office building near the street door. The boxes were recessed into what appeared to be a brick wall so that the panel with a slot for posting or depositing letters was flush with the wall. Each box had a key hole on the panel, indicating that someone standing outside of the building could unlock the box and remove items from it: at [10]. The process server gave evidence that one of the boxes had "1a" handwritten on its front panel: at [11]. Barrett J found that the process server placed the statutory demand in the box marked "1a" on the relevant date. His Honour referred to Jin Xin Investments & Trade (Australia) Pty Ltd v ISC Property Pty Limited and said: 21. There is a reference in the extract from the judgment in Polstar v Agnew (above) to the concept that the "registered office" is a place consisting of "premises" - such as a building or a room in a section of a building; also that the registered office must be capable of being "open to the public". Section 145 sets times during which a registered office must be "open to the public" on "each business day"; either at least the four hours 10am to 12 noon and 2pm to 4pm or, if the company prefers, at least three hours chosen by the company between 9am and 5pm. In the latter event, the chosen hours must be notified to ASIC (s 145(2)) and are available by means of research of ASIC records (as, of course, is the situation of a registered office). 22. Section 109X(1)(a), to the extent that it contemplates the leaving of documents "at" the registered office, must be taken to recognise and have in contemplation the provisions about registered offices. The provisions make it clear that a registered office will be "open to the public" at certain times. A document will be regarded as left "at" the registered office if it is deposited at the premises that constitute the registered office by someone who enters the premises at a time when they are open to the public. I am prepared to think that a document would also be regarded as left "at" the registered office if, at the time when those premises were not open it was deposited inside them by being slipped under the door, or put through a mail slot in the door so that it came to rest inside. 23. In this case, however, the actions taken on the plaintiff's behalf did not, of themselves cause the statutory demand to be deposited inside the part of the building at 14 Pacific Highway, Wyong, described as "Berkman, Suite 1A, 14 Pacific Highway, Wyong, NSW 2259". 24. Rather, the actions taken on behalf of the plaintiff caused the statutory demand to be deposited in a letterbox outside the part of the building so described (indeed, outside the building as a whole) for reasons corresponding with those stated in the Jin Xin case, there was no service "at" that part of the building in terms of s 109X(1)(a). And as Davies AJA observed in Macrae v St Margaret's Hospital [1999] NSWCA 381; (1999) 19 NSWCCR 1 in a passage quoted at paragraph [23] in the Jin Xin judgment (above): "[A]nything might happen to business letters put in the letterbox at the gate of the hospital." 23Mr Crowley submitted that the circumstances of this case are distinguishable from Jin Xin in that the registered office is a residential address as opposed to part of a commercial property. There is no issue that the address of the Company's registered office was part of a residential complex. In those circumstances Mr Crowley submitted that the decision of Ward J (as her Honour then was) in In the matter of Anton Fabrications (NSW) Pty Ltd - Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd [2011] NSWSC 186 establishes that leaving the statutory demand in the mailbox was effective service. 24Anton Fabrications was a case in which the registered office was recorded as "1 Northbri Avenue, Salisbury East, South Australia, 5109". At that address there was a free standing house. The relevant documents were left in the letterbox situated inside the boundary of the residential property. The question before her Honour was whether leaving the statutory demand in a sealed envelope in the letterbox at the property satisfied the requirement for service for the purposes of reliance on the statutory presumption of insolvency in s 459C(2)(a) of the Act. 25Ward J said at [28]: Therefore, it is by no means easy to apply the principles derived from cases looking at service of demands at registered offices located within multi-storey office blocks to the case of service at a residential home, at least where the home is the only dwelling on the block of land (and not, for example, an apartment within an apartment building). 26Her Honour concluded at [39]: I am of the view that where the registered office specified in ASIC's records is a residential address (and is not a particular portion (i.e. suite or unit or room) of a building on the land denoted by that address, as would be the case if the address was a particular unit in an apartment building), then the place at which documents must be left is the house. 27Her Honour was satisfied that service by leaving the statutory demand in the letterbox which was wholly inside the boundaries of the parcel of land identified as the registered office was validly effected: at [43]. I am not satisfied that this decision assists the plaintiff, having regard to her Honour's distinction between a residential single dwelling and a block of apartments. 28Swerus v Central Mortgage Registry of Australia Pty Ltd [1989] ANZ ConvR 169 (a case referred to by Barrett J in Jin Xin) was a case in which Cohen J considered whether service had been effected under s 170 of the Conveyancing Act 1919 (as it then provided) by leaving the relevant notice "at the last known place of abode" of the relevant party (changed in 1991, to "the last known residential address": Real Property and Conveyancing (Amendment) Act 1991). The place of abode was Unit 3 on the upper floor of a block of seven units. Within the grounds there were seven numbered letterboxes set into a brick wall. The box numbered 3 had an operating lock on it at the relevant time. A path near the letterboxes led to the front door of the building. The letterbox was not part of the unit nor contained within the title of the unit. 29Cohen J concluded that service should be effected in such a way as to enable a mortgagor to know of a demand made upon him, or at least to provide a means by which that was likely to happen and said at 171: In those circumstances it seems to me that if a mortgagor provides a means whereby mail may be left at his place of abode, that is to say by having a letterbox in close proximity to the building in which he abides, then he has provided an extension of his abode for the purpose of mail or other material being left at the home for him. This is not the same situation as might occur if a letter were merely left in a hallway which is common to the use of a number of occupiers of a building. Here unit 3 had its own locked letter box identified as being appropriate to that unit. In my opinion it can properly be said that the specified letter box is incorporated in the use of the home unit as part of the ordinary living facilities of those who live in it. Accordingly I regard the leaving of a notice in that designated letter box as sufficiently complying with the means of service by leaving it at the place of abode. 30As was the case in Jin Xin, the question before me is not whether there was service at a place of abode but rather whether there was service at the Company's "registered office at Unit 14, 248 Pacific Highway, Greenwich NSW". I am not satisfied that one can equate "a place of abode" with a "registered office" of a company, particularly where a unit or suite number is prescribed as the location of that office: Polstar Pty Ltd v Agnew [2007] NSWSC 114; (2007) 208 FLR 226 at 230-231. 31In Brand & Media Pty Ltd v Aeropack Australia Pty Ltd [2007] NSWSC 854; (2007) 212 FLR 357, Hammerschlag J considered the issue of whether a statutory demand had been served pursuant to s 109X(1)(a) of the Act by posting it to the registered office of the company in circumstances where the post was delivered to a mailroom some 400 metres from the plaintiff's suite that had been designated as its registered office. His Honour said at [17]: In my view the registered office of the plaintiff was its particular suite, that is Suite 15, not the mailroom under the control of security to which post was delivered but not directly to the plaintiff. It does not seem to me that the mailroom was, or was part of, the plaintiff's registered office, in the sense of a particular place contemplated by the Act. 32His Honour concluded that delivery to the registered office of the plaintiff was not at the time of delivery to the mailroom or the mailbox in it, but at the time the demand reached the suite: at [18]. 33Even if Cohen J's analysis in Swerus v Central Mortgage Registry of Australia Pty Ltd were to be applied to the mailbox at the "property" of which Unit 14 is part, the plaintiff has some serious deficiencies in his evidence. 34Mr Crowley's affidavit of service stated that he served the statutory demand by "leaving it at the Defendant's registered office at Unit 14, 248 Pacific Highway, Greenwich NSW". Although on 16 June 2014, Mr Crowley claimed that he had served the statutory demand personally, it was not until 2 July 2014 that he advised Mr Sulman that he served it by "leaving it at the registered office of the Company in the mailbox near the entrance to the property". 35Although at one stage during the course of the application Mr Crowley suggested that he might seek leave to give some oral evidence to describe the premises and the location and nature of the mailbox at which he left the statutory demand, he did not proceed with such an application. Accordingly there is no evidence as to where the mailbox was actually located. There was no evidence of how many units are in the apartment block other than by inference from the fact that the registered office is "Unit 14". There is no evidence of whether the mailbox into which the document was placed had any sign or writing upon it. For instance, Mr Crowley did not state in his affidavit that he deposited the document into a mailbox identified as the mailbox of Unit 14. Having regard to the correspondence, it would appear that there is no issue that the mailboxes were not secure. 36Although Mr Crowley's letter explained that he left the statutory demand in the mailbox "near the entrance of the property", there was no evidence of whether this was a reference to the entrance of Unit 14, the registered office, or the entrance to the residential complex of which the registered office was part. 37I am not satisfied that the statutory demand was left "at the registered office" of the company. 38I am satisfied that service was not validly effected under s 109X(1)(a) of the Act. 39I am satisfied that the statutory demand should be set aside. I will hear the parties on what consequential orders should be made.