Option Funds Management Pty Ltd as trustee for the Option Greenacre Property Fund v Li

Federal Court of Australia|2024-08-28|Before: Mr J, Thawley J

The application is dismissed.
The plaintiff pay the defendant's costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THAWLEY J: 1 On 17 May 2024 the defendant, Ms Yichen Li, issued a creditor's statutory demand for payment of debt to the plaintiff, Option Funds Management Pty Ltd ACN 057 703 974 as Trustee for the Option Greenacre Property Fund. 2 Later, Option Funds filed an application to set aside the statutory demand. This application was dismissed by a Registrar of this Court on 17 July 2024. In dismissing the application, the Registrar exercised the power derived from s 35A(1)(h) of the Federal Court of Australia Act 1976 (Cth). 3 Under s 35A(5) of the FCA Act the plaintiff seeks a review of the Registrar's exercise of power. Sections 35A(5) and (6) relevantly provide: (5) A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power. (6) The Court may, on application under (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised. 4 A review under s 35A is a de novo review of the exercise of power by the Registrar, not an appeal from the Registrar's orders or decision. 5 At the case management hearing on 21 August 2024, it was agreed that the review raised only two issues: (1) whether the statutory demand dated 17 May 2024 was served on the plaintiff on that day; and (2) whether the application to set aside the statutory demand was made within the 21 day "statutory period" required by s 459G of the Corporations Act 2001 (Cth). 6 The first issue is a new issue, in that it was not raised before the Registrar, because Option Funds then accepted that the statutory demand had been served on 17 May 2024. 7 At the case management hearing, the matter was set down for hearing today. At the hearing, Mr Tzovaras properly conceded that if he failed on the first issue, he must necessarily fail on the second issue. That is, Mr Tzovaras properly conceded that if the statutory demand was served on 17 May 2024, then the application to set aside the statutory demand was filed outside of the 21 day period permitted.

FACTS 8 The statutory demand filed by Ms Li arises from a loan alleged to have been made by Ms Li to Option Funds under a Loan Agreement dated 19 July 2021. 9 On 17 May 2024, at approximately 4:45pm, Mr Antonius Sarangaya, a solicitor for Ms Li, visited the Option Fund's registered office, as recorded in an ASIC search, namely Suite 2203, Level 22, 580 George Street, Sydney NSW 2000. At 4:49pm, he left an envelope containing the relevant documents, including the statutory demand, under the front door of the office. 10 It is not disputed by the plaintiff that the documents were delivered to the office in the way set out in the affidavit evidence of the defendant. 11 On 22 May 2024, at 9:52am, Mr Sarangaya sent an email attaching the documents to Mr Jeff Goss, of Hicksons Lawyers, who were the solicitors for Option Funds at the time of service. This email informed Mr Goss that the documents were served on Option Funds on 17 May 2024. 12 The substance of the affidavit evidence relied upon by the plaintiff is that no person was at the office on the afternoon of 17 May 2024 and no person at any point in time in fact saw the documents which had been left at the office under the front door. That is, although Option Funds accepts that the documents were left at the office, it says those documents did not come to the attention of any person and that, in those circumstances, it could not be said that the documents were received. It submitted that receiving the documents was fundamental to the notion of service of the documents.

STATUTORY FRAMEWORK 13 Section 459E of the Corporations Act permits a creditor to serve a statutory demand on a company. 14 With respect to service, s 109X(1)(a) of the Corporations Act provides that a document may be served on a company by "leaving it at or posting it to the company's registered office". Section 109X(6) provides that the methods of service listed in subsection (1) are not exhaustive. 15 Section 28A of the Acts Interpretation Act 1901 (Cth) provides that: (1) For the purposes of any Act that requires or permits a document to be served on a person, whether the expression "serve", "give" or "send" or any other expression is used, then the document may be served: … (b) on a body corporate - by leaving it at, or sending it by pre-paid post to, the head office, a registered office or a principal office of the body corporate.

LEGAL PRINCIPLES 16 Section 109X(1)(a) was considered by Palmer J in Woodgate v Garard Pty Ltd [2010] NSWSC 508; 239 FLR 339 at [44]. His Honour stated: (i) if a document required to be served on a company by the Corporations Act, whether or not it initiates proceedings, is served in accordance with any of the modes prescribed in s 109X Corporations Act and s 28A Acts Interpretation Act 1901 (Cth) or, in the case of a s 459G application, at an address for service nominated in the statutory demand (all of which are included in "a prescribed mode"), the document is validly served and once service in a prescribed mode is proved, a proceeding cannot be challenged on the basis that the document did not actually come to the attention of the company: Austar Finance (above) at [40]; Allianz Australia Workers' Compensation (NSW) Ltd v Woodfast Joinery (Aust) Pty Ltd [2003] NSWSC 587; Rochester Communications (above); James (above) at [27]; Telstra Corporation Ltd v Ivory [2008] QSC 123 at [61] per Lyons J; Forza Finance Pty Ltd v Vergepoint Sales & Management Pty Ltd [2010] QSC 46 at [14]-[16] per Daubney J; (ii) where service is effected by leaving the document at the company's registered office in accordance with s 109X(1)(a), it makes no difference whether the document is left within or outside normal business hours or within or outside the hours at which that office is kept open, and the date of service is the date of leaving the document, not when it comes to someone's attention: Cornick Pty Ltd v Brains Master Corporation (1995) 60 FCR 565; SV Steel Supplies Pty Ltd v Palwizat [2009] QSC 24, at [30], [31]; Nutri-Care Ltd v ACN 080 633 754 Pty Ltd [2009] SASC 72; Career Training on Line Pty Ltd v BES Training Solutions Pty Ltd [2010] NSWSC 460, at [28], [29] per Barrett J. 17 See also: Intelogent Pty Ltd v Onthego Group Pty Ltd [2021] FCA 257 at [36]; Australian Solar Electrics Pty Ltd v IPD Group Ltd [2012] FCA 786 at [7]; Career Training on Line Pty Ltd v BES Training Solutions Pty Ltd [2010] NSWSC 460 at [27]. 18 It follows from these authorities that the time of service is when the documents are left at the company's registered office. It makes no difference if those documents were picked up or read by a natural person. It would be no answer, for example, if the office at which the documents were left was completely unattended for days after the documents had been left at the office. The focus of the legislation is on the time at which the documents were left, not the time at which the documents came to the attention of any person. It follows that it is no answer to say that the documents were not "received" by a natural person. 19 Mr Tzovaras sought to draw support for his construction of s 109X(1)(a) from s 29(1) of the Acts Interpretation Act. This section provides: Where an Act authorises 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 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. 20 That section was considered by Barrett J in Lane Cove v Geebung Polo Club (No 2) [2002] NSWSC 118; 167 FLR 175, where his Honour noted that it was also concerned with delivery, rather than receipt. His Honour said, at [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. 21 In any event, I doubt that s 29(1) of the Acts Interpretation Act is of significant value in understanding the meaning of s 109X(1)(a). 22 As I have said earlier, Mr Tzovaras properly conceded that the second issue identified at the case management hearing on 21 August 2024 does not arise if the first issue is resolved against his client, as it has been. 23 This concession was properly made as a result of the long line of authorities analysed by Markovic J in Dyirranga Limited v Deputy Commissioner of Taxation [2024] FCA 411 - see, in particular, at [40].

CONCLUSION 24 For these reasons, the application for review must be dismissed.

COSTS 25 Mr Foley for the defendant sought an order for costs on an indemnity basis and, in the alternative, on the ordinary basis. The principal reason Mr Foley says that indemnity costs should be awarded is that the argument put forward by the plaintiff was not seriously arguable. He also noted that the first issue raised on the review was new and that it had previously been conceded that service was effected on 17 May 2024. 26 Mr Tzovaras submits that the submissions he advanced were seriously arguable because the authorities did not address the situation in which a document, which was undoubtedly left at a premises, may not have actually been there at the time at which people subsequently attended the premises. In my view, the authorities, at the very least, come close to addressing that issue. Nevertheless, I note that Mr Tzovaras has prosecuted the review diligently and with expedition, and, with some reluctance, I consider that, in the particular circumstances, an order for indemnity costs would not be appropriate. Accordingly, the court orders the plaintiff to pay the defendant's costs on the ordinary basis. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Thawley.

Corporations Act 2001(Cth)ss 459E, 459G, 109X

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