Lane Cove v Geebung [2002] NSWSC 118 | Case summary

Supreme Court of NSW|2002-03-05|Before: Mr J, Barrett J

The application 1 Before the court is an interlocutory process which, by leave, was filed in court when this matter came back before me on 25 February 2002. The interlocutory process shows that some attempt has been made to rectify shortcomings which were identified on 7 February 2002 when there was first before the court a challenge to the order for the winding up of Geebung Polo Club Pty Ltd ("Geebung"): see [2002] NSWSC 41. The winding up order was made by a registrar of the court on the application of Lane Cove Council ("the Council") following failure by Geebung to satisfy a statutory demand in relation to a debt for outstanding local government rates. The attempt to rectify the shortcomings to which I have referred has been only partly successful and it is necessary to deal first with some procedural matters. 2 The applicants by whom the interlocutory process was initiated are Martin Grant La Nauze and Carol Shirley Hayes. This is so even though the relief sought (apart from leave under s.471A(1A)(d) of the Corporations Act 2001 (Cth) to which I shall come presently) is, first, an order that the statutory demand under s.459E non-compliance with which grounded the winding up order be set aside, second, an order that the winding up order be set aside, third (and as additional or alternative relief) an order that the winding up order be set aside pursuant to Pt.40 r.9 of the Supreme Court Rules and, fourth (and again as additional or alternative relief), an order that the winding up order "be reviewed pursuant to Pt.61 r.3 of the Court's Rules and/or Division 16 of the Corporations Act Rules". 3 Generally speaking, the appropriate applicant for all such relief is Geebung itself. This appears to be recognised in para 1 of the interlocutory process which contains a prayer that "the Court's approval be given to one or both of the applicants making this application pursuant to sec 471A(1A) of the Corporations Act 2001". I infer that the approval sought is for either or both of the individual applicants to act as an officer of Geebung in causing it to seek the other relief to which I have referred. The applicants 4 It eventually became clear that Ms Hayes did not seek any of the orders in the interlocutory process. This is not surprising since it appears that she has no connection with Geebung, although she may have a connection with a holding company or shareholder of Geebung. She is incapable of being granted s.471A(1A)(d) approval in relation to Geebung. Nor did she seek, as a creditor or contributory of Geebung (if she is one), to assert any claim to an order under s.482. 5 The application, as eventually pursued, involved Mr La Nauze alone. He is the sole director of Geebung. He does not claim to be a creditor or contributory. He therefore does not assert any claim to an order under s.482. He lacks standing to do so. Mr La Nauze seeks only relief for Geebung itself and it is therefore convenient to deal first with the questions concerning approval of the court under s.471A(1A)(d). The need for approval under s.471A(1A)(d) 6 In the reasons published on 7 February, I expressed the opinion that it is not open to Mr La Nauze, the sole director of Geebung, to set that company in motion to challenge the order for its winding up unless he has received the approval of the liquidator or the court so to do. Mr George of counsel, who appeared for Mr La Nauze, submitted on 25 February that this is not correct and that, notwithstanding the decisions to which reference was made on the earlier occasion (including the decision of the Queensland Court of Appeal in Rock Bottom Fashion Market Pty Ltd v H R & C E Griffiths Pty Ltd [2000] 2 Qd R 573, (7 November 1997)), the directors of a company in liquidation retain a residual power to cause the company to challenge the winding up order without having obtained approval under s.471A(1A)(c) or s.471A(1A)(d). 7 The basis on which this submission was advanced is that s.471A was amended by the Treasury Legislation Amendment (Application of Criminal Code) Act 2001 with effect from 15 December 2001 and that the amending Act had done nothing to alter those aspects of the original section relevant to this point, they being aspects in light of which courts had, for several years after the introduction of the original section with effect from 23 June 1993, recognised the residual power of directors to challenge a winding up order. 8 I do not accept that submission. The amending Act of 2001 did not alter the section in any way relevant to the present inquiry. Its purpose, clearly enough, was to insert into s.471A a new sub-section dealing with criminal responsibility. The parts of the section presently relevant became the subject of some purely drafting changes to accommodate that insertion. They were not amended in any way that could conceivably be thought to have affected their substance. The inference I draw, with respect to the substantive operation of the section in the context under discussion, is that Parliament must be presumed to have been content with the construction of the section which commended itself to the Queensland Court of Appeal in November 1997 and therefore took no steps to counter the effect of that decision. 9 As the liquidator has not approved Mr La Nauze's activating Geebung to challenge the winding up order, that company cannot do so through Mr La Nauze's instrumentality without the approval of the court under s.471A(1A)(d). Considerations relevant to grant of approval under s.471A)(1A(d) 10 By the interlocutory process, Mr La Nauze seeks such approval. The problem is that he has not shown that pursuit of the substantive application by the company will avoid relevant prejudice. The company is in liquidation because of a statutory presumption of insolvency. The objective of the substantive application is to see that position reversed or reviewed. But if it is not reversed or reviewed, the company's assets will remain in the hands of the liquidator for the benefit of its creditors in the first instance. It would be inappropriate for the funds of the company to be applied in meeting the costs of these proceedings unless the outcome was that the winding up did not continue and the regime presided over by the liquidator for the benefit of creditors came to an end. 11 It was for this reason, I think, that, in Rodgers v CJS Panels Pty Ltd [2001] VSC 470 (23 November 2001), Warren J commented in analogous circumstances that the court would need to be satisfied about the solvency of the subject company before allowing a director to cause it to institute an appeal against an order for its winding up. Her Honour was clearly concerned to ensure that the position of creditors was not prejudiced by inroads made by the expenses of such an appeal upon the resources of an insolvent company. 12 Protecting those resources seems to me to be an indispensable requirement in any exercise of the court's discretion under s.471A(1A)(d) in a case such as this. But proof of solvency is not necessarily the only way of achieving that protection. Another possibility is for the court to sanction, as a condition of the grant of s.471A(1A)(d) approval, arrangements to ensure that the relevant costs are to be borne by the applicant for approval (or perhaps by contributories) on the basis that there will be no recourse to the assets of the company for reimbursement unless and until the winding up comes to an end. I do not say that an applicant's willingness to agree to such arrangements would ensure success in a s.471A(1A)(d) application but it would go quite a way towards resolving the concern by reference to which Warren J mentioned the need to be satisfied about solvency. 13 Mr George submitted that two matters are relevant to the decision whether to grant s.471A(1A)(d) approval: the existence of a prima facie case and that the costs of the application can be met from the assets of the company. The latter, it seems to me, misconstrues the position. The fact that there may be in the hands of the liquidator sufficient funds to meet the costs of the application has nothing to do with the kinds of safeguard to which I have just referred. It is necessary to see either that the company is in reality solvent or that its assets will be protected from claims for costs unless and until it emerges that the winding up is not to continue. Neither of those things is shown here, even though Mr George has led evidence of ownership of substantial real property by Geebung. Even if a prima facie case on the merits is shown, Mr La Nauze has not satisfied what I regard as an indispensable prerequisite to the grant of approval under s.471A(1A)(d). His application must therefore be refused. 14 Since, for reasons I have stated, Geebung is probably the only competent applicant for the balance of the relief in the interlocutory process, I should, in one sense, proceed at once to dismiss the remaining claims. But there is, I suppose, a possibility that a renewed application for s.471A(1A)(d) will be made in such a way as to permit Mr La Nauze to proceed and it is therefore desirable that I deal with the claims for substantive relief. Application for an order setting aside the statutory demand 15 The first substantive relief sought in the interlocutory process is an order that the s.459E statutory demand on which the winding up order was founded be set aside. This aspect may be dealt with shortly. The only jurisdiction the court has to set aside a statutory demand is that conferred by Div.3 of Pt.5.4 of the Corporations Act. An application for such an order may only be made within 21 days after the demand was served: s.459G(2). There is no way in which that time limit can be extended: David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265. In this case, the time limit expired long before any application was made. An order setting aside the statutory demand therefore cannot be made and must be refused. The challenge to the winding up order - procedure 16 The attack on the winding up order is formulated in various ways, although by reference to a single underlying complaint, namely, that neither the statutory demand nor the winding up application was sufficiently notified to Geebung. Mr George advanced his client's case by reference to Pt.40 r.9 and Pt.61 r.3 of the Supreme Court Rules "and/or" r.16.1 of the Corporations Act Rules, plus s.23 of the Supreme Court Act 1970 and "the court's inherent jurisdiction to control its own process and proceedings". 17 In terms of the Supreme Court Rules, it can be said at once that the applicant cannot proceed under Pt.61 r.3 which makes general provision for review by the court of decisions and acts of registrar. This is because of the express provision in Pt.61 r.3(6) that Pt.61 r.3 as a whole does not apply to, among other things, an order to which rule 16.1 of the Corporations Act Rules applies, that is, an order for the winding up of a company. Pt.61. r.3 may therefore be ignored. 18 Pt.40 r.9 of the Supreme Court Rules and Corporations Act Rule 16.1 do provide alternative avenues but, in the present case, the latter will not produce any useful result for the applicant. The reasons emerge in part from Pt.60 rr.9 and 11 to 15 which, by Corporations Act Rule 16.1(2), are made to apply to such an appeal subject to the adaptations in Corporations Act Rule 16.1(3). There is thus a requirement that an appeal be instituted by a notice of appeal (Pt.60 r.11(1)) stating the matters in Pt.60 r.12 and that this be done within 28 days after the making of the winding up order or such extended time as the registrar or the court may fix: Pt.60 r.11(2). None of those requirements has been satisfied in this case. 19 Turning toPt.40 r.9(3), it is clear that the aspect upon which the applicant would seek to rely is that empowering the court to set aside an order made in the absence of a party. Generally speaking, this power will be exercised only where the absent party makes some case of viable defence on the merits. Where, as here, it is said that the statutory demand and application for winding up were not effectively served, those matters alone, if sufficiently shown, will constitute such a defence. It will be otherwise if the asserted defence is based on some defect in the statutory demand or is to the effect that the debt claimed in the demand is disputed or subject to an offsetting claim. In view of Division 3 of Part 5.4 of the Corporations Act and, in particular, the strictures imposed by s.459S such matters may in general not be asserted in defence to an application for a winding up order. 20 In Re Rick Wilson Pty Ltd (1982) 7 ACLR 354, McLelland J considered the general question of which procedure should be followed in cases such as the present where it is sought to challenge a winding up order made in the absence of an aggrieved party. He expressed a preference for the procedure under Pt.40 r.9, rather than the procedure of appeal. In general, I think that the preference so expressed should still be accepted where the company itself seeks to overturn a winding up order made in its absence, assuming that it is set in motion to do so consistently with s.471A. A third course (not available when McLelland J expressed his preference) is, of course, an application for a stay or termination of the winding up under s.482 of the Corporations Act 2001 by a person having standing under that section. The challenge to the winding up order - substance 21 As I have said, Mr La Nauze's complaint about the making of the winding up order is based wholly on what he alleges to be failure of the Council to bring sufficiently to Geebung's notice both the statutory demand non-compliance which was the basis for the winding up application and the application itself. There is no suggestion of any attempt to rebut the statutory presumption of insolvency. 22 Were it shown that either or both of the documents had not been served in accordance with the Act, it would follow that an essential pre-requisite to the making of the winding up order had been lacking. It is failure to comply with a statutory demand which causes the presumption of insolvency to arise via s.459C(2)(a). The relevant concept of failure emerges from s.459F and requires that a particular state of affairs be seen to exist at the end of a period of 21 days after the demand is "served". There can thus be no failure leading to the presumption of insolvency unless the demand has been "served". 23 In the case of the application for a winding up order, the service requirement arises under s.465A(b). That section obliges the applicant to "serve" a copy of the application on the company within 14 days after the application is made. Although there is no provision of the Act precluding the making of a winding up order in the absence of service of the application, the fundamental principle that it is service which founds the court's jurisdiction produces that result. Any order made in the absence of the affected party in circumstances where it later became clear that that party had not been served would be set aside virtually as a mater of course. Where, as in the case of an order for winding up, the court is exercising a statutory jurisdiction and the statute prescribes a conventional service regime, it is to that regime that the court will have regard. 24 I proceed, therefore, to consider Mr La Nauze's case based on supposed lack of service of both the statutory demand and the application for the winding up order. The evidence concerning service 25 It is not disputed that, at all material times, the registered office of Geebung was at 27 Mars Road Lane Cove. Ms Britton, a clerk in the office of the solicitors acting for the Council, deposes that, on 5 October 2001, she served the statutory demand and accompanying affidavit on Geebung by sending them by ordinary pre-paid post addressed to its registered office at 27 Mars Road Lane Cove; also that, on 14 November 2001, she served Geebung with a copy of the application for winding up and other documents in the same way. Mr La Nauze testified that he is the only person with a key to the mailbox at 27 Mars Road, that he opened and cleared it regularly and that the two items were not found by him in the box. 26 The evidence of Mr La Nauze is that he first became aware that Geebung was in liquidation when he received a phone call from Mr Bourke of the liquidator's firm. Mr La Nauze's affidavit relates the following conversation: Caller: "Mr La Nauze, my name is John Bourke, from BDO. I work with John Green who has been appointed liquidator of Geebung Polo Club Pty Ltd by the Supreme Court." Me: "What? How has this happened. Who petitioned to have the company liquidated and why?" Bourke: "Lane Cove Council." Me: "Aren't papers supposed to be served on the company or me." Bourke: "They were served on the company's registered office." Me: "That can't be right. That is here and nothing was received by me." Bourke: "Well that's the Council's problem." Me: "Don't do anything, until I get back to you. This is incredible." 27 Apparently jumping immediately to the conclusion that the required service would have been by post rather than in any other way, Mr La Nauze then telephoned the Lane Cove Post Office where he spoke to a person who identified himself as Carl. Mr La Nauze gave evidence of the following conversation with Carl: Me: "My name is Martin La Nauze. I am at 27 Mars Road. There has been mail sent to us, that we do not appear to have received. Is there any reason for this." Carl: "Not that I know of. I will put it in the computer and have it checked out. The reference number you should quote in future is NH 398613. What are the names of the tenants at the premises." Me: "Geebung Polo Club Pty Ltd, Paddington Chocolates, Gogard Pty Ltd, Weushka Pty Ltd, Ellict Pty Ltd, Mars Trading Pty Ltd, Dranought Pty Ltd, Rainmush Pty Ltd, Fondant Salisbury Pty Ltd, Paddington Gifts & Baskets Pty Ltd, Macadamia Properties Pty Ltd, Yengrin Pty Ltd and Carbest Pty Ltd." 28 Mr La Nauze next gave evidence of receiving on 18 December 2001 a telephone call from a person who identified herself as Amanda. He recounted his conversation with her in the following terms: Amanda: "I work with Australia Post. You have requested an investigation about what is happening to your mail." Me: "That is right." Amanda: "I have spoken to the Distribution Centre. It appears that all mail addressed to tenants at 27 Mars Road, Lane Cove, has been marked 'returned to sender' by the Centre." Me: "Why on earth was that?" Amanda: "A woman that used to work at the Centre told them that was to happen and all mail has therefore been returned." Me: "That's hopeless. Because of this we have not received mail and now are facing losses." Amanda: "If you want to lodge a formal complaint, send to our Customer Contact Centre at 219 241 Cleveland Street, Strawberry Hills, 1420."

29 Mr La Nauze then wrote to the manager of Australia Post's Customer Contact Centre. The letter, dated 18 December 2001, was on paper headed "Paddington Chocolates", with a reference at the bottom of the page to "Rainmush Pty Ltd T/As Paddington Chocolates". The letter read as follows: "Dear Sir/Madam, Ref: NH398613 I requested an investigation on Thursday 13 December 2001, regarding non-delivery of mail to our letterbox, for this and a number of other companies. I have been advised that all mail sent to Paddington Chocolates at the Lane Cove delivery centre was to be returned to sender. We have been at this address for nearly 2 years, and we also have a mailbox clearly marked "27", however we do not receive mail, including correspondence from the ATO and from ASIC. Due to the non-delivery of mail, we have suffered loss. I await your prompt reply. Yours faithfully Martin La Nauze"

There is no evidence of any reply to this letter. 30 Mr La Nauze deposes that on 21 January 2002 he telephoned the Customer Service Call Centre of Australia Post and spoke to someone who identified herself as Nancy. He says that, after he had given Nancy the relevant reference number, she said: "Everything has been fixed up with your mail now. You will be getting mail. The postman on the route has been spoken to and he will be looking out especially for your mail." 31 Mr La Nauze also gave evidence about physical features of the Mars Road property. He deposed that the land has an area of 15,000 square metres and is the site of a warehouse of 10,000 square metres. There is a street frontage of about 100 feet. The premises are known as 21 to 27 Mars Road Lane Cove. There are in evidence photographs of the mail boxes at 21 to 27 Mars Road taken by Mr La Nauze. These, viewed in the light of his cross-examination, establish that, for at least the last 18 months, there has existed a fixture in the ground at the street frontage containing eleven mail boxes, six in an upper row and five in the lower row. Disregarding writing placed on one of the boxes after the time material to these proceedings, it is clear that six of the boxes carry signs referring to units in 21 Mars Road (for example, "Unit 1, 21 Mars Rd"), another without unit or street identification carries the words "Owners Corporation", another also without unit or street identification is marked "Storage King", two have nothing at all on them and the last - at the left of the upper row - is marked "27" in characters larger than those on others and apparently quite visible. 32 Ms Britton gave evidence that, in the normal course of her duties in the firm of solicitors acting for the Council, she arranges for the posting of statutory demands and any subsequent winding up applications. She also deposed to a practice within that firm that, if such documents are returned after posting, they are immediately sent to the company's principal place of business as disclosed by the ASIC search (I infer that this only happens if a principal place of business different from the registered office is shown in the search), with a copies being forwarded to the directors. According to Ms Britton's evidence, the documents sent to Geebung at the registered office at 27 Mars Road were not returned and the procedure she described was not followed. This relates to both the statutory demand and the subsequent application for winding up. 33 Evidence was given by Mr Mayhew, the Council's financial controller, that, according to the Council's records, "Martin", representing himself to be a director of Geebung, spoke to an employee of the Council by telephone in May 2001 about overdue rates and, in the course of doing so, said words which caused the employee to record, "They have been having problems with the property address"; also, "Post address has been changed from the property address to their PO box in Camperdown." At a time not identified by Mr Mayhew, the Council began sending Geebung's rate notices to both 27 Mars Road and PO Box 102 Camperdown. In January 2001, a notice was returned through the post marked "unknown at address" but Mr Mayhew does not say whether that notice had been posted to 27 Mars Road or to PO Box 102 Camperdown. Significantly, however, My Mayhew's affidavit concludes: "Other than as disclosed above, I am unaware of any of the Council rate notices being returned from either address to the Plaintiff."

The statutory provisions about service 34 Section 459E of the Corporations Act allows a person to "serve" a statutory demand on a company. As noted above, s.465A, dealing with an application for winding up on the grounds of insolvency, requires the applicant to "serve" a copy of the application on the company within 14 days after the application is made. Section 109X specifies ways in which a document "may be served" on a company. One method is by "posting it to" the company's registered office. The s.459F concept of "compliance" with a statutory demand makes it necessary to ascertain the day on which a demand so posted is "served". This is because, as already noticed, compliance or non-compliance is to be judged at the expiration of a particular period "after the demand is served". The day of service of the copy of the application under s.465A must likewise be identified because of the need to show that service occurred within the period of 14 days to which that provision refers. 35 In a case involving service by post, this inquiry as to the day of service of a statutory demand or copy application brings into play one of two statutory provisions, being s.29 of the Acts Interpretation Act 1901 (Cth) and s.160(1) of the Evidence Act 1995. The potential relevance of the latter to a situation such as the present was recognised in Howship Holdings Pty Ltd v Leslie (1996) 41 NSWLR 542, although in a statutory context somewhat different from that now prevailing. I shall return to that case in due course. 36 Section 29 of the Acts Interpretation Act is in the following terms: "(1) Where an Act authorizes 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 unless the contrary intention appears 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." 37 Section 160(1) of the Evidence Act reads: "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." Section 160(3) defines "working day" for this purpose. Are the Evidence Acts relevant? 38 When s.29(2) of the Acts Interpretation Act of the Commonwealth refers to "the Evidence Act 1995", it is, clearly enough, referring to the Commonwealth Act with that short title, rather than the Act of the Parliament of New South Wales having the same short title, both of which contain a s.160(1) in the terms set out above. If a reference to the State Act had been intended, s.29(2) would, as contemplated by s.40(1)(c), have made reference to the State of New South Wales. 39 In the present proceedings, there is no room for the operation of the Evidence Act 1995 (Cth). That Act is expressed by its own s.4(1) to apply "in relation to all proceedings in a federal court or an ACT court". The expressions "federal court" and "ACT court" are, as one would expect, defined in the Act's dictionary in terms which do not encompass the Supreme Court of New South Wales. It follows that s.160 of the Commonwealth Evidence Act has no bearing on the interpretation of s.109X of the Commonwealth Corporations Act in this case. The reference to s.160 in s.29(2) of the Acts Interpretation Act may, for present purposes, be disregarded, with the result that s.29(1) operates without qualification. 40 Nor is s.160(1) of the Evidence Act of this State relevant to the interpretation of s.109X of the Commonwealth Corporations Act. Section 160(1) of the New South Wales Act does no more than to state a rule of evidence to be applied in proceedings in a "NSW court", that is, this court or any other court created by the Parliament of New South Wales: see ss.3 and 4 and the dictionary's definition of "NSW court". The content of a rule of evidence the State Act requires this court to apply does not seem to me to have any bearing upon the interpretation of a substantive provision of a Commonwealth statute, such as s.109X of the Corporations Act, where there exists, in the form of s.29 of the Acts Interpretation Act, an express directive in Commonwealth law relevant to such interpretation. 41 Under the statutory scheme now based on the Corporations Act 2001 (Cth) rather than the Corporations Laws of the States and Territories, there is no longer any need to resort to the kind of analysis undertaken by Young J in relation to a similar issue in Howship Holdings Pty Ltd v Leslie (above). That analysis depended, to a large extent, on questions about implied repeal of one enactment by a later enactment. No such question arises here, the Corporations Act 2001 having been enacted after both s.29 of the Acts Interpretation Act and s.160 of the Evidence Act. There is also the point that s.109Y of the Corporations Law, interaction of which with s.109X played a central role in Howship Holdings, has no counterpart in the Corporations Act 2001, even though s.109X is retained and re-enacted

Section 29(1) of the Acts Interpretation Act fixes the time of service by post 42 The correct approach, it seems to me, is to apply s.29(1) of the Acts Interpretation Act in a case of this kind, rather than s.160 of the Evidence Act of either the Commonwealth or the State. Section 29(1) is expressed to apply in every instance where "an Act" (which, having regard to s.38(1), means a Commonwealth Act and thus includes the Corporations Act 2001) "authorises or requires any document to be served by post". Because of its s.109X, the Corporations Act 2001 is unquestionably such an Act and the specification in s.29(1) accordingly operates. For reasons already canvassed, both Evidence Acts must be regarded as irrelevant to the inquiry.

43 Under s.29(1) of the Acts Interpretation Act, service is taken to occur when the posted article "would be delivered in the ordinary course of post", unless the contrary is proved. The reference to and emphasis upon delivery rather than receipt are important. They mean that the proof to the contrary with which the section is concerned is proof concerning delivery rather than proof concerning receipt. 44 The progenitor of s.29(1) is s.26 of the Interpretation Act 1889 (UK). Relevant (indeed, binding) in relation to the meaning and effect of s.29 and all other provisions adopting the United Kingdom model is the decision of the High Court in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87. The joint judgment of Mason, Murphy, Wilson, Deane and Dawson JJ in that case contains the following passage: "There is a line of cases, commencing with Reg v County of London Quarter Sessions Appeals Committee; Ex parte Rossi ([1956] 1 QB 682, which deal with the effect of proof of non-delivery where service by post is permitted and used, having regard to s.26 of the Interpretation Act 1889 (UK). That section is the equivalent of s.39(1) of the Queensland Acts Interpretation Acts . The effect of the cases appears to be that proof of non-delivery means that service cannot be deemed to have taken place under the second limb of the section at the time of delivery in the ordinary course of the post and cannot be established as having taken place at any other time. The consequence is that where it is necessary to establish service at a particular time, proof of non-delivery is as effective as proof of non-service, notwithstanding that service by post is in the circumstances permitted and the requirements of the Interpretation Act are observed: see Beer v Davies [1958] 2 QB 187; Hewitt v Leicester Corporation [1969] 1 WLR 855; [1969] 2 All ER 802; Saga Ltd v Avalon Promotions [1972] 2 QB 325n; A/S Cathrineholm v Norequipment [1972] 2 QB 314; cf Lombard Australia Ltd v Mohrwinkel (1973) 21 FLR 277; 1 ACTR 57. It may be thought that there is an anomaly in such a result because it means that, notwithstanding the adoption of a permitted means of service, the service is nevertheless ineffective if there is proof of non-delivery. It is, however, unnecessary to pursue these decisions here save to remark that they are all cases in which delivery was disproved, the fact of non-receipt does not displace the result that delivery is deemed to have been effected at the time at which it would have taken place in the ordinary course of the post. There is here no evidence of non-delivery. It follows that the application of s.39(1) of the Acts Interpretation Acts in no way affects the proof of service of the notices in this case in accordance with s.42(1)(c) of the Hire-Purchase Act and that such service is deemed to have taken place in the due course of the post." 45 It is by reference to these principles that this matter must be determined. Applying the law to the facts of this case 46 The inquiry to be made in the present case in relation to both the statutory demand and the copy application for winding up must concentrate on the evidence relevant to non-delivery as distinct from evidence of non-receipt. I therefore put to one side Mr La Nauze's evidence of non-receipt (except insofar as it throws light on the issue of delivery) and turn to the evidence relevant to the question of delivery. First and foremost, in that area, there is the evidence of Ms Britton that she attended to posting of the statutory demand and, on a later occasion, the copy of the application and, importantly, that neither was returned through the post. Even accepting, for the moment, what Mr La Nauze's said he was told by Amanda (the probative value of which is highly questionable), the clear expectation would have been one of return to the sender of any item posted to 27 Mars Road. According to Mr La Nauze's description of Amanda's account of the basis on which the distribution Centre was operating in relation to mail addressed to 27 Mars Road, all such mail was to be marked "return to sender" by the Centre, with the result, Amanda said, that "all mail has therefore been returned". If that were so, there would have been a very strong expectation of return to Ms Britton's office of the envelopes containing the statutory demand and the copy application. Yet she testified that neither was returned. 47 Common experience would suggest that Australia Post would not simply retain mail indefinitely. Nor does the account attributed to Amanda suggest that it would have done so in this case. The regime supposedly in place at the distribution centre was one under which everything was returned to sender without any attempt at delivery being made. It will also be recalled that Mr Mayhew testified to the Council's having sent quarterly rate notices to Geebung at both the Mars Road address and the post office box at Camperdown since at least January 2001 and of only one having been returned, with a marking "unknown at address". That marking is consistent with that article having reached a destination and therefore inconsistent with any intercepting "return to sender" regime administered within the distribution centre. 48 There is, in any event, a very distinct air of unreality about what Amanda is reported to have relayed to Mr La Nauze. Resorting again to common experience, one would not expect an Australia Post distribution centre to adopt a practice of wholesale return of all mail addressed to a particular location on the apparently oral instruction of "a woman who used to work at the Centre", that is, the distribution centre itself. Such organisations may be expected to take very seriously their responsibility to convey any mail article to the address appearing on its face unless formal procedures to interrupt that normal flow have been adopted. One would expect that such interruption would only be effected on written instructions and in accordance with established and documented processes. 49 I should refer also to Mr La Nauze's evidence about the physical state of the mailboxes at 21 to 27 Mars Road. The existence, at all material times, of a box clearly marked "27" and obviously intended for the deposit of incoming mail would seem to me to rule out, for all practical purposes, any suggestion that delivery of such mail could (or would) have been impeded or prevented by the inability of a deliverer to find an appropriate place to leave it. The possibility of any such cause of non-delivery may accordingly be discarded. 50 In light of the evidence as a whole and, in particular, the matters to which I have just referred, I am satisfied that the rule laid down by s.29(1) of the Acts Interpretation Act is not, in this case, displaced by proof of non-delivery. The result is therefore that the statutory demand and the copy winding up application sent by post to the registered office of Geebung at 27 Mars Road are both deemed by that section to have been served at the time when the envelope would have been delivered in the ordinary course of post. Since payment in response to the statutory demand was never forthcoming, there is no need to decide precisely when the ordinary course of post would have resulted in delivery. Non-compliance with the statutory demand is established. In the case of the copy of the application for winding up, I note that the interlocutory process was filed in the court's registry on 12 November 2001 and that the posting to which Ms Britton testified was effected on 14 November 2001. In those circumstances, I entertain no doubt that the ordinary course of post would have caused delivery of the copy application to occur within 14 days after 12 November 2001. "Fair notice" 51 It was submitted on behalf of Mr La Nauze that even if service had been effected, the winding up order should still be set aside because, in fact, fair notice of the statutory demand and winding up application had not been given to Geebung. Cited in support of that submission was the following passage in the judgment of von Doussa J in Re Rustic Homes Pty Ltd (1988) 49 SASR 41, a case involving service by delivery to the registered office: "… Good and effective service will be assumed where documents are left at the registered office unless and until there is information before the court which suggests that the documents probably did not come to the notice of the company. There is a duty on the plaintiff and the plaintiff's solicitors to disclose the real situation concerning the company to the court; and in a case where there is reason to suspect that the company probably has not received notice of documents the plaintiff may then either utilise the mode of service provided in s.528(4) or obtain directions from the court." 52 Even if the observation of von Doussa J is accepted, there is nothing in the facts of this case to suggest that the Council entertained any relevant suspicion or did not disclose the real situation. There is, in any event, good reason to question whether von Doussa's statement should be accepted. In Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559, McLelland CJ in Eq said: "With great respect it is difficult to reconcile what was said in Re Rustic Homes Pty Ltd with the clear and unequivocal words of s.220(1), or with the approach adopted by the High Court to the construction of a provision as to the service of documents by post in the Acts Interpretation Act 1954 (Qld) in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, particularly at 95-97. The question of the construction and effect of s.220(1) together with s.109Y of the Corporations Law (which deals with service by post) was examined in considerable detail by Santow J (with whose judgment I respectfully agree subject to a minor qualification noted below) in F P Leonard Advertising Pty Ltd v KD Travel Service Pty Ltd (1993) 12 ACSR 136; 11 ACLC 1,203. His Honour expressed his conclusion, so far as presently relevant (at 139; 1205) as follows: 'But what is the effect … of coming to know after postal delivery that the company, longer resides at the registered office address? … One line of authority, based on a doctrine of 'fair notice', would suggest that in cases where there is knowledge that the address is 'false' or 'non-existent' then service will not be effective: Re Gasbourne Pty Ltd (1984) 8 ACLR 618; 2 ACLC 103. This has been formulated in different ways including not being 'misled' by the register: Re Otway Coal [1953] VLR 557 at 563. And that it would be an abuse of process to allow judgment in cases, where the [plaintiff] knew that the statement of claim had not come to the attention of the defendant: Deputy Federal Commissioner of Taxation v Abberwood Pty Ltd (1990) 2 ACSR 91; 8ACLC 528. But Abberwood can be distinguished. There the [plaintiff] had independent contact with the directors of the company. Yet the [plaintiff] told them nothing of the process sent to the registered office and later returned by a subsequent occupant with the notification that the company was no longer at that address. This was held to be an abuse of process. That, in my judgment, should be the proper basis for such an exception to the statutory requirement. Abuse of process underlies the notion of lack of 'fair notice'. Here, contrary to the facts in Abberwood , such opportunity for indirect contact was diligently pursued by the plaintiff. There was 'fair notice' - if that be required - and clearly no abuse of process. There is therefore no basis for failing to give full force to the clear words of the two sections of the Corporations Law in deeming service to have occurred.' The qualification is that an abuse of process in the circumstances postulated by his Honour is not strictly speaking an 'exception' to the provisions of s.220(1) (which would suggest that there has been no effective service) but rather constitutes an over-riding ground for refusing relief notwithstanding that there has been effective service. This is rally implicit in what his Honour says."

53 As Austin J emphasised in Chief Commissioner of Stamp Duties v Paliflex Pty Ltd (1999) 149 FLR 179, there is room for some overriding notion of "fair notice" only where, despite literal compliance with the rules as to service, a document does not come to the notice of the party to be served because of deliberate suppression or some other improperly motivated conduct of the serving party. It is conduct of that kind which brings into play abuse of process considerations. Nothing of that kind occurred here. Any "fair notice" doctrine therefore has no application to this case. Conclusion and orders 54 Both the statutory demand and the copy application for winding up were served on Geebung as required by the Corporations Act. The statutory presumption of insolvency arose and the court properly exercised the jurisdiction to make a winding up order. The making of that order is not susceptible to challenge on any of the bases put forward by Mr La Nauze in the interlocutory process filed in court on 25 February 2002. Nor would the winding up order be susceptible to challenge in any of those ways if Geebung rather than Mr La Nauze was the moving party. 55 All claims in the interlocutory process filed in court on 25 February 2002 are dismissed, as are all claims in the notice of motion filed on 22 January 2002. The applicants named in the interlocutory process, being Martin Grant La Nauze and Carol Shirley Hayes, must pay the costs of the Council and of the liquidator of and incidental to the interlocutory process. Mr La Nauze, being the sole applicant named in the notice of motion, must pay the costs of the Council and of the liquidator incidental to that notice of motion. 56 I repeat, in conclusion, that no attempt was made in these proceedings to rebut the statutory presumption of insolvency. Nor did any shareholder of Geebung seek to show that the company is both solvent and able to function in a financially responsible way so as to justify an order under s.482 terminating the winding up.

Last Modified: 03/06/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

CITATION : Lane Cove v Geebung (No 2) [2002] NSWSC 118 CURRENT JURISDICTION: Equity Division Corporations List FILE NUMBER(S) : SC 5480/01 HEARING DATE(S) : 25/02/02 JUDGMENT DATE : 5 March 2002

COUNSEL : Mr J.T. Johnson - Plaintiff and Liquidator Mr G.P. George - Applicants SOLICITORS : Sally Nash & Co - Plaintiff and Liquidator L.G. Parker & Co - Applicants CATCHWORDS : CORPORATIONS - winding up - challenge to winding up order - choice among various procedural avenues - insufficient service alleged - application dismissed - STATUTES - interpretation - Acts Interpretation Act 1901 determines deemed time of service of posted document under s.109X of Corporations Act 2001 - Evidence Acts not relevant LEGISLATION CITED : Acts Interpretation Act 1901 (Cth) Corporations Act 2001 (Cth) Chief Commissioner of Stamp Duties v Paliflex Pty Ltd (1999) 149 FLR 179 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559 CASES CITED : Howship Holdings Pty Ltd v Leslie (1996) 41 NSWLR 542 Re Rick Wilson Pty Ltd (1982) 7 ACLR 354 Rock Bottom Fashion Market Pty Ltd v H R & C E Griffiths Pty Ltd [2000] 2 Qd R 573 Rodgers v CJS Panels Pty Ltd [2001] VSC 470 Re Rustic Homes Pty Ltd (1988) 49 SASR 41 DECISION : Application dismissed

Lane Cove v Geebung

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