PACCAR FINANCIAL PTY LTD (ACN 005 592 049) v MENZIES HAULAGE PTY LTD

REASONS FOR JUDGMENT 1 Before the Court is a motion, notice of which was given by the Defendant, Menzies Haulage Pty Ltd (ACN 119 502 555) ("Menzies Haulage"), on 24 September 2009, seeking an extension of time to file and serve an application to review a decision of Registrar Caporale of 3 September 2009. 2 By way of summary, Paccar Financial Pty Ltd (ACN 005 592 049) ("Paccar"), served a statutory demand for payment of a debt on Menzies Haulage in the sum of $373,541.09. On 27 July 2009, Paccar made application under s 459P of the Corporations Act 2001 (Cth) ("the Corporations Act") seeking the winding up of Menzies Haulage on the ground of insolvency and that a liquidator be appointed. On 3 September 2009, Registrar Caporale granted that application and made the necessary orders. 3 Section 35A(5) of the Federal Court of Australia Act 1976 (Cth) ("the FCA Act") provides that a party may apply to the Court to review a Registrar's exercise of power. Order 46 r 7B(1) of the Federal Court Rules ("the Rules") provides that such application must be made within 21 days after the day on which the power was exercised. However, pursuant to O 3 r 3(1) of the Rules, the Court has power to extend any time fixed by the Rules. 4 In support of an application for extension of time in which to seek to review Registrar Caporale's exercise of power, Menzies Haulage relies on a draft notice of motion received by the Court on 9 November 2009, together with two supporting affidavits; one of Ian David Menzies and the second of Colleen Ann Menzies, both received on 10 November 2009, together with a number of exhibits referred to in the affidavit of Ian David Menzies. 5 The discretion under O 3 r 3 of the Rules to extend any time fixed by the Rules is granted to the Court to ensure that injustice is avoided to the parties. Generally, in considering whether to exercise the discretion to extend time, the Court will examine the explanation for the delay, the amount of delay, whether the plaintiff has an arguable case and, finally, whether any prejudice would be suffered by the defendant to the application. These principles are summarised in Bahonko v The Nurses Board of Victoria (No 4) [2007] FCA 1449 at [48] in relation to a similar statutory provision. 6 In the present case, the delay is small. Moreover, the explanation for the delay is explicable. The directors of Menzies Haulage appear for Menzies Haulage and were unaware of the time limits specified in the Rules. (I will return to the question of the directors appearing for the company shortly). That brings me to consider the other matters relevant to the exercise of the discretion, namely whether or not Menzies Haulage has an arguable case and the question of prejudice to the defendant to the application. 7 The difficulty for Menzies Haulage in this case is it has no prospect of success on the application to review. That conclusion requires some explanation. 8 The statutory demand was for payment of a debt owed by Menzies Haulage in the sum of $373,541.09. At the hearing of the application under s 459P of the Corporations Act before Registrar Caporale, Paccar relied upon an affidavit of service of Ms Kristine Hopkins sworn on 24 July 2009 in which Ms Hopkins, the principal of Hopkins Lawyers, deposed that at 5:15 pm on 7 May 2009 she placed a letter dated 5 May 2009, together with a creditor's statutory demand dated 24 April 2009 and an affidavit in support, in an envelope addressed to "The Director/Secretary of Menzies Haulage" at 55 Pollack Avenue, Wyong, New South Wales, 2259, sealed the envelope and posted the envelope by prepaid post at a particular post box in Melbourne. Attached to her affidavit of service was a copy of the letter and the statutory demand. In addition to that affidavit of service, Paccar relied upon a further affidavit which deposed to the registered office of Menzies Haulage being located at the address identified in the covering letter. 9 As I indicated to Mr and Mrs Menzies during the course of argument, service of the statutory demand in that manner is presumed to have occurred by reason of two separate but interrelated provisions of different Acts. The first is s 109X of the Corporations Act which provides for effective service of a document on a company by posting it to the company's registered office. Section 160 of the Evidence Act 1995 (Cth) then operates to presume that an article sent by prepaid post to that address (the registered office), is taken to have been received at that address on the fourth working day after it is posted. 10 As a result, the statutory demand is presumed to have been served in accordance with those provisions. Significantly, no evidence has been filed by Menzies Haulage that is sufficient to rebut or overturn that presumption. Mr Menzies, on behalf of Menzies Haulage, referred me to two documents. The first was a statement attached to the notice of appearance in response to Paccar's application under s 459P of the Corporations Act, namely an assertion that they had received no such demand and, secondly, an explanation in the affidavit received by the Court on 10 November, that upon leaving 55 Pollack Avenue, Wyong, they had arranged a redirection of their mail to a post office box but they believe the mail may have been misplaced by confusion caused by separate redirections from the one address. 11 As I have said, the difficulty about this material is that it is not sufficient to rebut the statutory presumption. Moreover, as Mr Davies, Counsel for Paccar, submitted, in Grant Thornton Services (NSW) Pty Limited v St George Wholesale Distributors Pty Limited [2008] FCA 1777 Perram J identified that the issue is determined by examining the reasonableness of steps taken by Menzies Haulage concerning its registered office. In my view, no reasonable steps were taken in this case. 12 Finally, prejudice would be suffered if time was extended. While the delay is small on the part of Menzies Haulage, a liquidator was appointed on 3 September 2009. Challenge to that decision now, two months after the appointment, would inevitably create uncertainty. 13 For those reasons, the application for an extension of time would be refused. However, it is important in the present context to refer to some other further matters that would support that order in any event. 14 First, although application under s 459S of the Corporations Act would have been necessary by Menzies Haulage to rely on material to establish that Menzies Haulage was solvent, no such application was made, no material was placed before the Court in support of such an application and, in fact, the material before the Court would appear to indicate that Menzies Haulage is not solvent, or, at the very least, raises serious doubts about its solvency. The facts that support that conclusion include, but are by no means limited to: 1. Menzies Haulage has paid up capital of $2.00 comprising two $1.00 shares; 2. the affidavit evidence from Mr Menzies states that Menzies Haulage has not traded since 26 August 2008; 3. the affidavit evidence from Mr Menzies states that Mr and Mrs Menzies, as directors and shareholders of Menzies Haulage, have been paying the company's bills in an attempt to discharge the debts of Menzies Haulage. Put simply, there is no positive evidence of solvency and, in fact, evidence which tends to suggest that the company, in fact, is insolvent. 15 Finally, as submitted by Mr Davies in his written submissions filed in opposition to the application, there are procedural difficulties with the application. Any application by an officer of a company to bring proceedings on its behalf would require leave. Such an application would need to be made under s 471A of the Corporations Act. In my view, given the history of this matter and the circumstances that I have identified above, I would not have granted leave pursuant to s 471A: see HVAC Construction (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd [2002] FCA 1638 per French J, and the decisions which have subsequently considered that decision. 16 For those reasons, I would refuse the application by Menzies Haulage for extension of time to file and serve an application to review the decision of Registrar Caporale of 3 September 2009 and I would order Menzies Haulage to pay the costs of Paccar in opposition to the application. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.