Anscorp P/L v G.R.S. Nominees P/L
[1994] FCA 106
•11 MARCH 1994
ANSCORP PTY LTD and G.R.S. NOMINEES PTY LTD
No. VG3391 of 1993
FED No. 106/94
Number of pages - 13
Corporations Law
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
OLNEY J
CATCHWORDS
Corporations Law - statutory demand - application to set aside demand - form of demand - substantial compliance with statutory form - application filed and served out of time - whether Court has power to extend time for making application.
Corporations Law, ss 1094, 1095, 1322, Chapter 5, Pat 5.4, (ss 459 - 459 T)
Corporations Regulations, r 104, Form 509H
Federal Court Rules, O 71 r 36A, Form 93B
Supreme Court Rules (Victoria), Chap V : O 7A r 1, Form 5-7A
re Cavetina Pty Ltd (1994) 12 ACLC 44
Texel Pty Ltd v Commonwealth Bank of Australia 11 ACSR 537
De Pelligrin Pty Ltd v Reinforced Earth Pty Ltd VG 3421 of 1993, (unreported Olney J, 11 March 1994).
HEARING
MELBOURNE, 23, 24, 25 February 1994
#DATE 11:3:1994
Mr H.D. Denton (instructed by Coltmans) appeared for the applicant.
Mr M. Clarke (instructed by J.M. Smith and Emmerton) appeared for the respondent.
ORDER
THE COURT ORDERS THAT:
1. The application be struck out as incompetent.
2. The applicant pay the respondent's costs of the application including any reserved costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
OLNEY J On 17 November 1993 the applicant applied to the Court seeking:
1. Pursuant to Section 459G and/or 459H and/or 459J of the Corporations Law, an Order that the Creditor's Statutory Demand for payment of debt dated 25th October, 1993 served by the Respondent upon the Applicant on or about the 29 October, 1993 be set aside.
2. Pursuant to Section 459H of the Corporations Law, such further or other Orders or declarations as this Honourable Court deems fit in all the circumstances.
3. Pursuant to Section 459N of the Corporations Law, an Order that the Respondent pay the Applicant's costs of and incidental to this Application.
On the same day the applicant filed an affidavit of Charles Leonidas (Leonidas) sworn on 17 November 1993 supporting the application.
The supporting affidavit is fairly brief. The deponent is a solicitor employed by the applicant's solicitors. He exhibits to the affidavit copies of documents which he describes as "the purported Creditor's Statutory Demand for Payment of Debt dated 25 October 1993 and purported affidavit under section 459E of the Corporations Law". The deponent says that he is instructed by Paul Sussich a director of the applicant that there is a genuine dispute between the applicant and the respondent about the existence and the amount of the debt to which the demand relates.
In advance of the return date (13 December 1993) the applicant filed an affidavit of Marino Sussich, a director of the applicant, sworn 8 December 1993. The respondent filed an affidavit of Matthew Hendrick Avendson sworn 18 November 1993 to which copies of the statutory demand and attached affidavit are exhibited and an affidavit of Geoffrey Ralph Sutcliffe (Sutcliffe), a director of the respondent sworn 10 December 1993. On 13 December 1993 the applicant filed in Court a further affidavit of Marino Sussich sworn 13 December 1993 and the respondent filed a further affidavit of Sutcliffe sworn 13 December 1993.
On the return of the application Deputy Registrar Wood directed that any further affidavit material that the applicant sought to rely on be filed and served by 21 January 1994 and any material that the respondent sought to rely on be filed and served by 12 February 1994. The application was adjourned to 23 February 1994 for hearing.
On 10 February 1994 the applicant filed a further affidavit of Leonidas sworn 9 February 1994 and on 11 February 1994 the applicant filed affidavits of Phillip Victor Mannerheim (a director of the applicant) Marino Sussich, Paul Sussich (a director of the applicant) and Carole McAnulty (an employee of the applicant) all sworn 10 February 1994.
The application was not reached until late in the day on 23 February 1994. The hearing proceeded for only a short time when it was adjourned to 24 February 1994. On that occasion the matter continued for about one hour and was adjourned to 25 February 1994 when the hearing was completed and I reserved my decision.
During the course of proceedings on 25 February 1994 the respondent sought and obtained leave to file two further affidavits, namely affidavits of David Charles Newman and Brian Wilcock both sworn 25 February 1994.
THE STATUTORY SCHEME
9. Chapter 5, Part 5.4, of the Corporations Law deals with the winding up of companies in insolvency. Part 5.4 is comprised of ss 459 to 459T (inclusive). The whole of Part 5.4 was inserted in the Corporations Law by way of the Corporate Law Reform Act 1992 (Commonwealth) which came into operation on 23 June 1993.
On an application pursuant to s 459P the Court may order that an insolvent company be wound up in insolvency (s 459A). The Court must presume that a company is insolvent if during or after the three months ending on the day when the application was made (inter alia) the company failed to comply with a statutory demand (s 459C(2)(a)), and such presumption operates except so far as the contrary is proved for the purposes of the application (s 459C(3)).
A person may serve a statutory demand on a company relating to a single debt or two or more debts that the company owes to the person, that is and are, due and payable whose amount is, or total, at least the statutory minimum ($2,000) (s 459E(1)). The demand must be in writing in the prescribed form signed by or on behalf of the creditor and must specify the debt and its amount, or the total of the amounts of the debts, (as the case may be) and must require the company to pay the amount of the debt, or the total of the debts, or to secure or compound for that amount, or total, to the creditor's reasonable satisfaction, within 21 days after the demand is served on the company (s 459E(2)).
The Corporations Regulations prescribe a form of Creditor's Statutory Demand for Payment of Debt (Form 509H) for the purposes of s 459E(2)(e) of the Corporations Law. Unless the debt or each of the debts is a judgment debt, the demand must be accompanied by an affidavit that verifies that the debt, or the total of the amounts of the debts, is due and payable by the company and which complies with the rules (s 459E(3)). The term "rules" is defined in s 9 to mean the rules of the Federal Court or the rules of the Supreme Court of "this or another jurisdiction". The latter term means a State, the Northern Territory or the Australian Capital Territory. Order 71 r 36A of the Federal Court Rules prescribes a form of Affidavit in Support of Statutory Demand (Form 93B). The Victorian Supreme Court Rules (Chapter V; Order 7A r 1) also prescribe a form of Affidavit Accompanying Statutory Demand (Form 5-7A). The two forms differ in several respects.
If at the end of the period for compliance with a statutory demand, the demand is still in effect and the company has not complied with it, the company is taken to fail to comply with the demand at the end of that period (s 459F). The period for compliance with a statutory demand in a case where the company applies to set aside the demand and the Court makes an order extending the period for compliance with the demand, is the period specified in the order or otherwise the period beginning on the day when the demand is served and ending seven days after the application to set aside the demand is finally determined or otherwise disposed of (s 459F(2)(a)). In all other cases, the period for compliance is 21 days after the demand is served (s 459F (2)(b)).
A company may apply to the Court for an order setting aside a statutory demand served on it (s 459G(1)). An application may only be made within 21 days after the demand is served (s 459G(2)). An application is made in accordance with s 459G only if, within the 21 days referred to in s 459G(2), an affidavit supporting the application is filed with the Court and a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company (s 459G(3)).
On an application under s 459G, if the Court is satisfied that there is a genuine dispute between the company and the person who served the demand about the existence or amount of a debt to which the demand relates and/or that the company has an offsetting claim, the Court must calculate the substantiated amount of the demand, and if the substantiated amount is less than the statutory minimum, the Court must by order set aside the demand (s 459H(1),(2),(3)). If the substantiated amount is at least as great as the statutory minimum, the Court may make an order varying the demand as specified in the order and declaring the demand to have had effect, as so varied, as from when the demand was served on the company (s 459H(4)). (The substantiated amount is calculated in accordance with a formula in s 459H(2) in respect of which definitions in s 459H(5) are relevant). On an application under s 459G, the Court may set aside the demand if it is satisfied that because of a defect in the demand, substantial injustice will be caused unless the demand is set aside or there is some other reason why the demand should be set aside but the Court must not set aside a demand merely because of a defect (s 459J).
A statutory demand has no effect while an order under s 459H or s 459J setting aside the demand is in force (s 459K). An order under s 459H or s 459J may be made subject to conditions (s 459M).
If an application for a company to be wound up in insolvency relies upon a failure by the company to comply with a statutory demand the application must set out particulars of service of the demand and the failure to comply with it. It must also have attached to it a copy of the demand and a copy of any order varying the demand made pursuant to s 459H. Unless the debt or each of the debts to which the demand relates is a judgment debt, the application must be accompanied by an affidavit that verifies that the debt (or the total of the debts) is due and payable by the company. The application must also comply with the rules (s 459Q).
Insofar as an application to wind up a company in insolvency relies upon a failure to comply with a statutory demand, the company may not without the leave of the Court oppose the application on a ground that the company relied upon, or could have relied upon but did not rely upon, for the purposes of an application to set aside the demand (whether it made such an application or not) (s 459S(1)). The Court is not to grant leave unless it is satisfied that the ground is material to proving that the company is solvent (s 459S(2)).
THE FACTS OF THE CASE
19. The affidavit evidence adduced by the parties to this application establishes to my satisfaction the following facts.
On 25 October 1993 Sutcliffe in his capacity as a director of the respondent signed a document substantially in the form of Form 509H in the Corporations Regulations which was addressed to the applicant and claimed that the applicant owed the respondent the sum of $185,000 being monies due and payable by the applicant pursuant to an agreement dated 13 September 1991. In paragraph 1 of the demand the respondent is named and is identified as "the creditor" in the manner indicated in the prescribed form. Below Sutcliffe's signature at the foot of the demand, his full name is typed beside which appear the words:
"Capacity - Director of Creditor"
The form does not contain the words:
"Corporation of partnership name (if applicable)"
as appears on Form 509H nor does it contain the heading NOTES and all that follows in Form 509H. The corporate name of the respondent does not appear at the end of the form. It appears only once, in paragraph 1.
On 25 October 1993 Sutcliffe swore an affidavit substantially in the form of Form 93B of the Federal Court Rules. The matters deposed to were as follows:
1. I am a director of G.R.S. Nominees Proprietary Limited (ACN 005 029 407)("the creditor"). I am duly authorised to make this Affidavit on behalf of the creditor and do so from my own knowledge save where indicated otherwise.
2. To my knowledge the amount of $185,000.00 ("the Debt") is due and payable by the debtor to the creditor.
3. The creditor has on various occasions, at the request of the debtor, advanced monies totalling $200,000.00 ("the Loan Monies") to or for the benefit of the debtor.
4. Prior to 1 July 1993 the debtor has repaid the sum of $15,000.00.
5. By a Shareholders Agreement dated 13 September 1991 ("the Agreement") the creditor agreed not to make any claim or demand for any part of the Loan Monies until after 1 July 1993.
6. By letter of demand dated 21 September 1993 and forwarded to the debtor by certified mail on 21 September 1993 the creditor demanded the Debt be paid in full by the debtor within 7 days.
7. As at the date hereof the debtor has failed, refused or neglected to pay the Debt or any part thereof.
A copy of the statutory demand and of the affidavit were posted by pre-paid post at about 5.30pm on 25 October 1993 at the General Post Office in Melbourne in an envelope addressed:
The Secretary
Anscorp Pty Ltd (ACN 005 969 264)
First Floor
Unit 2, 215 Watton Street
Werribee, Vic
3030
The applicant is a registered Australian proprietary company which has since 29 January 1992 had its registered office at First Floor Unit 2, 215 Watton Street Werribee, Vic 3030. The registered office is at the address of the applicant's accountant.
On 28 October 1993 Carole McAnulty attended at the office of the applicant's accountants and collected mail addressed to the applicant including the envelope containing the copy statutory demand and affidavit. Her attendance at the accountant's office was as a result of a telephone call to her from the accountant that day advising her that mail addressed to the applicant had been received.
The Postal Manager of the Australian Post Branch at 568 Collins Street Melbourne, one Brian Wilcox, has sworn (and I accept it to be fact) that in the ordinary course of post a letter posted on Tuesday 25 October 1993 before 6.00pm at the General Post Office Melbourne and addressed "The Secretary, Anscorp Pty Ltd (ACN 005 969 264), First Floor, Unit 2, 215 Watton Street Werribee Vic 3030" would be delivered to that address on Wednesday 26 October 1993. In the absence of any contradictory evidence I find that the envelope addressed to the applicant containing the statutory demand and supporting affidavit would, in the ordinary course of post, have been delivered to the registered office of the applicant on 26 October 1993.
The application herein and an affidavit in support were filed on 17 November 1993 and although there is no evidence of the fact it is conceded that both were served on the respondent on that day.
THE FORM OF THE STATUTORY NOTICE
28. The applicant objects to the form of the statutory notice because it does not show at the foot thereof the "corporation or partnership name" of the creditor. Apart from the merely technical aspect of the objection it is said that the form is confusing in that as it is signed by Sutcliffe, there is some uncertainty as to whether it is Sutcliffe or the respondent who is claiming payment. I reject this submission. The first paragraph of the demand sets out the full name of the respondent which is described therein as "the creditor". At the end of the form, adjacent to the heading "Capacity" which appears beside Sutcliffe's signature, the words "Director of Creditor" have been inserted. There can be no doubt either that the demand was made in the name of the respondent or that it was signed by Sutcliffe on behalf of the respondent and not in a personal capacity.
Regulation 1.04 of the Corporations Regulations requires that a form must be completed in accordance with the directions and instructions specified in the form. However, s 109U of the Corporations Law provides that where the law prescribes a form, strict compliance with the form is not required and substantial compliance is sufficient. The statutory demand is substantially in accordance with the prescribed form. The irregularity to which the applicant has referred is minor in the extreme and is not capable of confusing the recipient of the demand as to the identity of the person making the demand.
The statutory demand is not invalid.
THE AFFIDAVIT VERIFYING THE DEBT
31. The affidavit of Sutcliffe sworn 25 October 1993 forwarded with the statutory demand complies with s 459E(3)(a) of the Corporations Law and with O 71 r 36A of the Federal Court Rules. The form of affidavit substantially conforms with form 93B in the Federal Court Rules and is adequate to comply with s 459E(3)(b).
SERVICE OF THE NOTICE
32. Section 459E(1) provides that a person may serve a statutory demand on a company. The term "serve" is not defined in the Corporations Law, however s 220 provides that a document may be served on a company by leaving it at, or by sending it by post to, the registered office of the company. Where a provision of the Corporations Law authorises or requires a document to be served by post, the service is taken to be effected by properly addressing and posting (under pre-paid post) the document as a letter to the last known address of the person to be served and unless the contrary is proved, the service is taken to have been effected at the time at which the letter would have been delivered in the ordinary course of post (s 109Y).
In the present case, the notice and accompanying affidavit were sent by pre-paid post properly addressed to the applicant at its registered office. The posting took place before 6.00pm on 25 October 1993 and in the ordinary course of post the documents would have been delivered on 26 October 1993. Unless the contrary is proved, service is to be taken to have been effected on 26 October 1993 (s 109Y).
The applicant asserts that the evidence is sufficient to prove the contrary of the statutory presumption. The relevant evidence is found in the affidavits of Marino Sussich sworn 13 December 1993 and of Carole McAnulty sworn 10 February 1994. In paragraphs 3 to 5 (inclusive) of his affidavit Sussich says:
3. The manner in which mail is received by the Applicant is, Carole McAnulty, an employee in the sole and permanent employ of the Applicant, every morning collects from the Post Office at Watton Street, Werribee, mail delivered to that Post Office.
4. The registered office of the Applicant is 1st Floor, Unit 2, 215 Watton Street, Werribee and is the office of the Accountants of the Applicant. When mail is received by the Applicant's Accountants the Applicant receives a telephone call asking the Applicant to come and collect the mail received at that office. As part of Carol's duties she collects the mail from the Post Office and Accountants and opens all mail received on a daily basis and places all mail received on my desk. I every morning go through all mail received and deal with it appropriately.
5. I am advised by Carol McAnulty and verily believe that the letter being annexure "A" to the Affidavit of Service of Mr Arendsen sworn the 18th November, 1993 was received by her on the 28th October, 1993 and placed on my desk. I did on that morning of that day read that letter that was addressed to me as Secretary of the Applicant.
The full text of the matters sworn to by Ms McAnulty is as follows:
1. I was employed as a Secretary of the Applicant on a permanent basis from January 1992 to September 1993.
2. I make this Affidavit from my own personal knowledge save where otherwise expressed.
3. I have read the Affidavit of Marino Sussich sworn 30th December 1993 and agree with its contents.
4. On 28 October 1993, I did attend the offices of the Applicant's Accountant situate at 1st Floor, Unit 2-215 Watton Street, Werribee and collected all the mail received at the Accountant's office that day. I did attend the Accountant's office and collect the mail. This was as a consequence of receiving a telephone call from the Accountant earlier that day that mail addressed to the Applicant had been received.
5. As part of my duties when I receive the mail, I open it and place it on the desk of Marino Sussich for him to attend. I did this in relation to the letter which I collected, being Exhibit "CL1" to Affidavit of Charles Leonidas sworn 17th November 1994. This letter was collected by me from the Accountant's office on 20th October 1993, the day on which the letter was received.
Ms McAnulty's affidavit appears to contain at least two errors. First, in paragraph 3 she presumably means to refer to Sussich's affidavit of 13th December 1993 rather than of 30th December 1993; and in paragraph 5, the date 20th October 1993 is presumably intended to refer to 28th October 1993. Furthermore, there is a conflict between the evidence of Sussich and Ms McAnulty as to the latter's true status at the relevant time. Sussich says that Ms McAnulty is an employee in the sole and permanent employ of the applicant whereas Ms McAnulty says that she was employed on a permanent basis from January 1992 to September 1993. There is no credible evidence as to her actual status at 28 October 1993.
The evidence does not establish that the notice was received at the registered office of the applicant on 28th October 1993. Sussich says that every morning Ms McAnulty collects from the Post Office at Watton Street Werribee mail addressed to that address and when mail is received by the applicant's accountant the applicant receives a telephone call asking the applicant to come and collect it. Ms McAnulty says that she collected mail (including the statutory demand) on 28 October 1993 in response to a telephone call earlier that day. There is no evidence to establish, or from which an inference can be drawn, that the statutory demand was delivered to the registered office on 28 October 1993. No one from the accountant's office has provided any evidence nor has Ms McAnulty, or anyone else for that matter, said that mail was collected from the accountant's office on 26 or 27 October 1993. Ms McAnulty's assertion that the mail was collected on the day it was received is pure hearsay. She has not asserted her means of knowledge and in the circumstances her statement that the statutory demand was received by the accountant on 28 October 1993 lacks any probative value.
In the absence of proof to the contrary, the statutory notice is to be taken to have been served on 26 October 1993.
WAS THE APPLICATION MADE IN TIME?
39. Section 459G(2) provides that an application to set aside a statutory notice may only be made within 21 days after the demand is served. And s 459G(3) provides that an application is made in accordance with the section only if within those 21 days an affidavit supporting the application is filed with the Court and a copy of the application and a copy of the supporting affidavit are served on the person who served the demand. The section contemplates that two separate steps are necessary to constitute the making of an application in accordance with the section; first, the filing of the application and supporting affidavit; and second, the service of copies of the application and affidavit. And both steps must be taken within 21 days of the service of the statutory demand.
In the instant case, service of the statutory demand is taken to have been effected on 26 October 1993. Accordingly, the last day for making the application was 16 November 1993. The application was in fact filed on 17 November 1993 and unless the Court has power to extend the time within which to make and serve the application, it must be treated as not having been made in accordance with s 459G.
CAN THE COURT EXTEND TIME?
41. In a literal sense s 459G(3) requires that an application to set aside a statutory demand and the affidavit in support to be both filed and served within 21 days after the demand is served on the company. Whether or not the Court has power to extend the time for filing and serving an application under s 459G depends upon the proper construction of the relevant sections and this is a matter on which divergent views have been expressed. If the Court has such a power it can only be derived from s 1322 of the Corporations Law, the relevant parts of which provide:
1322(1) In this section, unless the contrary intention appears:
(a) a reference to a proceeding under this Law is a reference to any proceeding whether a legal proceeding or not; and
(b) a reference to a procedural irregularity includes a reference to:
(i) the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation or at a joint meeting of creditors and members of a corporation; and
(ii) a defect, irregularity or deficiency of notice or time.
(2) A proceeding under this Law is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid.
(3) ...
(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Law, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes.
...
(d) an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Law or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court thinks fit.
(5) ...
(6) The Court shall not make an order under this section unless it is satisfied:
(a) ...
(b) ...
(c) in every case - that no substantial injustice has been or is likely to be caused to any person.
In Texel Pty Ltd v Commonwealth Bank of Australia 11 ACSR 545, Hayne J in the Supreme Court of Victoria was of the view that the general provisions of s 1322 of the Corporations Law may not be applied to extend the time prescribed in s 459G(2). The decision in Texel was given on 14 September 1993.
On 4 November 1993, in the Supreme Court of Queensland, in re Cavetina Pty Ltd (1994) 12 ACLC 44 Dennington J came to a contrary conclusion and granted an extension of the time prescribed in s 459G(3) for the service of an application and affidavit. In that case the application was made within time but service was effected out of time. Dennington J did not refer to Texel and presumably was not referred to it.
In reasons which I intend to publish on the same day as these reasons in re Pellegrin Pty Ltd v Reinforced Earth Pty Ltd (VG3421 of 1993) I explain in detail the basis of my conclusion that the Court does not have power to extend the time for complying with s 459G(2) and (3). In summary it is my opinion that the use of the word "only" in both subsections (2) and (3) of s 459G can only be explained as indicating a clear legislative intention that the limits there prescribed are to be inviolable. In my opinion s 459G(2) and s 459G(3) indicate a clear legislative intention sufficient to ensure that the provisions of s 1322 do not apply so as to permit time to be extended. This view is supported by the fact that s 459G was inserted into the Corporations Law by way of amending legislation passed in 1992. Section 1322 had been enacted as part of the original Corporations Law and was unaffected by the amendments made by the Corporate Law Reform Act 1992. The emphatic use of the word "only" twice in s 459G indicates an intention that the time limits there prescribed are not susceptible to variation by order pursuant to s 1322.
It follows from the conclusions I have reached that the application in this matter, having been made out of time, is not an application made in accordance with s 459G and is not an application upon which the Court can exercise the powers conferred by s 459H or s 459J.
CONCLUSION
46. It is unnecessary to express any opinion as to the existence of a genuine dispute concerning the debt claimed in the statutory demand. The application to set aside the statutory demand must fail for the reason that it was not made within the time prescribed by s 459G(2) and (3) of the Corporations Law.
The application will be struck out as incompetent.
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