Career Training on Line Pty Ltd v BES Training Solutions Pty Ltd

[2010] NSWSC 460

CITATION:	Career Training on Line Pty Ltd v B E S Training Solutions Pty Ltd; v Buckland [2010] NSWSC 460
HEARING DATE(S):	10/05/10
JUDGMENT DATE :	14 May 2010
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
DECISION:	Originating process dismissed with costs.
CATCHWORDS:	CORPORATIONS - winding up - statutory demand - application for order setting aside - time limit in s 459G measured from service of statutory demand - service by leaving at registered office - ascertaining situation of registered office defined by street address, floor number and accountancy practice - where street doors habitually locked carried sign identifying those doors as access to accountancy practice - observations on service outside normal office hours
LEGISLATION CITED:	Companies Act 1961, s 222 Corporations Act 2001 (Cth) ss 109X(1)(a), 145(1), 459E, 459G
CATEGORY:	Principal judgment
CASES CITED:	Cornick Pty Ltd v Brains Master Corporation (1995) 60 FCR 565 David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265 Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259; (2006) 23 BCL 292 James v Ash Electrical Services Pty Ltd [2008] NSWSC 1112; (2008) 73 NSWLR 95 Jin Xin Investment and Trade (Australia) Pty Ltd v ISC Property Pty Ltd [2006] NSWSC 7; (2006) 196 FLR 350 Nutri-Care Ltd v ACN 080 663 754 Pty Ltd [2009] SASC 72 Re Emeritus Pty Ltd [1967] 1 NSWR 458 Saferack Pty Ltd v Marketing Heads Australia Pty Ltd [2007] NSWSC 1143; (2007) 214 FLR 393 SV Steel Supplies Pty Ltd v Palwizat [2007] QSC 24; (2007) 208 FLR 113
PARTIES:	(1) Career Training Online Pty Ltd - Plaintiff B E S Training Solutions Pty Limited - Defendant (2) Career Training Online Pty Ltd - Plaintiff Susan Caroline Buckland - Defendant
FILE NUMBER(S):	SC (1) 2010/017465; (2) 2010/017475
COUNSEL:	Mr P A Beale - Plaintiff Mr K L Andronos - Defendant
SOLICITORS:	Spencer Whitby & Co MWA Lawyers - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

FRIDAY, 14 MAY 2010

2010/017465 CAREER TRAINING ON LINE PTY LTD v

B E S TRAINING SOLUTIONS PTY LTD

2010/017475 CAREER TRAINING ON LINE PTY LTD v SUSAN CAROLINE BUCKLAND

JUDGMENT

1 These two proceedings were heard together. Each purports to be an application under s 459G of the Corporations Act 2001 (Cth) in relation to a statutory demand served on the plaintiff, in one case by Ms Buckland and in the other by a company controlled by her.

2 There arises, in each proceeding, a threshold question concerning service of the statutory demand. The facts concerning service are the same in each case. This is because both demands were, at the relevant time, together in a single envelope with the respective accompanying affidavits.

3 It is not disputed that the defendant in each case served a statutory demand on the defendant. There is, however, a dispute about the time of service, that being an important matter under s 459G:

“(1) A company may apply to the Court for an order setting aside a statutory demand served on the company.

(2) An application may only be made within 21 days after the demand is so served.

(3) An application is made in accordance with this section only if, within those 21 days:
(a) an affidavit supporting the application is filed with the Court; and
(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.”

4 Each defendant maintains that its statutory demand was served on 23 December 2009 by “leaving it at” the plaintiff’s registered office: Corporations Act, s 109X(1)(a). If that was in truth the date of service, the originating process filed in each proceeding on 19 January 2010 was not filed within the period referred to in s 459G(2) and s 459G(3); and if that is the case, the court has no choice but to dismiss the originating process: David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265.

5 The situation of the plaintiff’s registered office was, at the relevant time, recorded by Australian Securities and Investments Commission as:

“Watson & Proud, Ground Floor, 31 Egerton Street, Silverwater NSW 2128.”

6 Watson & Proud is an accountancy practice conducted by Mr Michael Watson. It operates on the ground floor of a two-storey building at 31 Egerton Street, Silverwater. It is necessary to describe physical features of the building.

7 Access to the ground floor of 31 Egerton Street from the street is through glass doors positioned at the top of a flight of nine stairs leading from a concrete footpath. Inside those glass doors is a vestibule from which another flight of stairs leads to the upper storey. On the left-hand wall of the vestibule, as one enters the glass doors from the street, is a second set of glass doors. These provide access to an office suite. Visible through the second set of doors (but not, it seems, through the glass doors on the street frontage) is lettering identifying the suite as the office of Watson & Proud. The left-hand edge of the second set of doors is somewhat less than a metre along the vestibule wall from the street doors.

8 The actions on 23 December 2009 said by each defendant to have amounted to service were actions of Ms Buckland. She deposes that she went to 31 Egerton Street at about 1.30pm on 23 December 2009. She found the outer glass doors – those providing access to the building from the street – locked. There was a sign affixed to one of the doors:

“Watson & Proud
To gain access please call 9648 1666 or 0412 XXX XXX.”

(I have omitted the last digits of the mobile number as it is Mr Watson’s private telephone; those digits did, however, appear in the sign.)

9 Ms Buckland observed mail wedged between the two locked glass doors on the street frontage. This made her think that no-one was inside. She then slid under the glass doors the envelope containing the statutory demands.

10 At that point, Ms Buckland realised that she had failed to correct an error in the address written on the envelope. She removed the mail wedged between the two doors to make it easier to retrieve the envelope. She managed to get the envelope back from under the doors. She then corrected the address on the envelope, again pushed it under the doors and replaced the wedged mail in about the position she had found it.

11 The defendants have put into evidence a photograph taken by Ms Buckland’s son (who was with her) showing the envelope deposited by Ms Buckland on the carpeted floor of the vestibule, wholly inside the glass doors and sufficiently clear of them not to be able to be reached by anyone outside. The photograph also shows what appear to be four envelopes wedged between the two doors.

12 Mr Watson closed his office early on 23 December 2003. All staff members other than himself left before 1pm. Mr Watson left “close to 2” he said, although accepting that it could have been around 1.30pm. No one attended the office the next day, which was Christmas Eve. The envelope containing the statutory demands was found in the ground floor vestibule at 31 Egerton Street by an employee of the Watson & Proud practice on 29 December 2009, the first business day after the Christmas break.

13 Mr Beale of counsel, who appeared for the plaintiff, accepted that the statutory demands had been served on the plaintiff but submitted that the date of service was 29 December 2009. Mr Andronos of counsel submitted on the defendant’s behalf that service took place on 23 December 2009. There is no challenge to Ms Buckland’s account of her actions at about 1.30pm on 23 December 2009.

14 Mr Beale’s basic contention is that service occurred only when the documents came into the possession of the Watson & Proud employee on 29 December 2009. In resisting the proposition that there was service on 23 December 2009, Mr Beale sought to draw a parallel with Jin Xin Investment and Trade (Australia) Pty Ltd v ISC Property Pty Ltd [2006] NSWSC 7; (2006) 196 FLR 350. That case concerned service of an originating process on a company the address for service of which was:

“David Kam & Co, Solicitors and Migration Agents, Suite 103, Level 1, The Chambers, 370 Pitt Street, Sydney NSW 2000.”

15 The originating process was left in a letterbox in the ground floor lobby of the multi-storey office building at 370 Pitt Street. It was held that it had not been left at the nominated address on Level 1.

16 Mr Beale also relied on James v Ash Electrical Services Pty Ltd [2008] NSWSC 1112; (2008) 73 NSWLR 95 where it was held that a statutory demand placed in a letterbox on the external wall of a building at 14 Pacific Highway, Wyong was not left at a registered office described as

“Berkman, Suite 1A, 14 Pacific Highway, Wyong NSW 2259”.

17 Mr Andronos referred to a decision of McLelland CJ in Eq in Re Emeritus Pty Ltd [1967] 1 NSWR 458, a case involving s 222 of the Companies Act 1961, a forerunner of the present s 459E. Under s 222(2), a presumption of insolvency arose if certain conditions were satisfied, including that the creditor had “served on the company by leaving at the registered office” a demand for payment. The company in question had a registered office described as

“Rooms Nos 2, 3 and 4, First Floor, corner of Hume Highway and Highland Avenue, Yagoona”.

18 The affidavit of service of the demand referred to the process server’s “placing the same under the door on the ground floor of premises situated at the Corner of Hume Highway and Highland Avenue Yagoona aforesaid giving access to the stairway leading to rooms numbers 2, 3 and 4 on the first floor of the said premises, the said door having been found by me to be locked”. The court stated, without elaboration or explanation, that “service of the notice of demand did comply with the provisions of s 222(2) …”.

19 In all three cases mentioned, a particular suite or room on a particular floor was identified as the location of the registered office. In two instances, the name of a practice or firm (“David Kam & Co” or “Berkman”) also formed part of the description of the registered office.

20 The present case is different in that, while the name of a practice or firm is mentioned (“Watson & Proud”), there is no reference to a suite number or room number. There is merely a reference to the ground floor without identification of any part or section of it.

21 This makes the circumstances of the present case much more akin to those in Saferack Pty Ltd v Marketing Heads Australia Pty Ltd [2007] NSWSC 1143; (2007) 214 FLR 393. That case concerned a registered office recorded as:

“c/- Stratford Fisher & Associates, Level 4, 44 Miller Street, North Sydney NSW 2060”.

22 The solicitor seeking to effect service by leaving documents at that registered office went to Level 4 and saw on a desk in a reception area a sheet of A4 paper in the nature of a sign bearing the words “Stratford Fisher & Associates”. Service by leaving the documents with a person at the location of that A4 sign was held to be good service within s 109X(1)(a) since, on the evidence, the A4 sign was used to identify the part of Level 4 at which contact could be made with Stratford Fisher & Associates. There was a finding that the sign had been put there by the principal of Stratford Fisher & Associates.

23 In the present case, the registered office is identified by three characteristics. The first is the street address of the relevant building, 31 Egerton Street. The second is the level within the building, that is, the ground floor. The third is the accounting practice, Watson & Proud. A person who has located the building at 31 Egerton Street thus has the task of finding Watson & Proud on the ground floor.

24 Anyone who went to 31 Egerton Street on 23 December 2009 found the name “Watson & Proud” prominently displayed on the sign affixed to the locked doors at the street frontage. The message conveyed by the sign was that the premises inside those doors were the premises of Watson & Proud. No reference to any part of those premises was contained in the sign. The remainder of the sign’s content, coupled with the fact that the outer doors were locked, indicated that anyone wishing to enter in order to visit Watson & Proud should call one of the telephone numbers. Someone who wished merely to deposit documents and not to visit had no need to enter if, as was the case, it was possible to cause the envelope to be placed inside the identified premises by sliding it under the locked door to which the identifying sign was attached.

25 Mr Watson made it clear in his evidence that no one other than Watson & Proud occupied any part of the ground floor (apart from the Watson & Proud office suite and an electrical control room, the ground floor was vacant). He also made it clear and that it was his habit to keep the street doors locked at all times. He had control over the locking and unlocking of the street doors. Having chosen to keep them locked, he made it known by means of the sign attached to them that the locked doors were the means of access to Watson & Proud and that Watson & Proud was located behind those doors.

26 Here, as in Saferack Pty Ltd v Marketing Heads Australia Pty Ltd (above), the real question is as to the identification of a place described as “Watson & Proud, Ground Floor, 31 Egerton Street, Silverwater NSW 2128”. The answer is that there was a place so identifiable at 31 Egerton Street: that the sign affixed by Mr Watson to the locked doors at the building’s street frontage identified the ground floor premises behind those doors as those of Watson & Proud.

27 It follows that the action of Ms Buckland in depositing the envelope containing the two statutory demands under the glass doors at the street frontage so as to be wholly within the premises behind those doors constituted “leaving” each such document “at” the registered office of the plaintiff. Each statutory demand was therefore served on the plaintiff on 23 December 2009.

28 Mr Beale referred to the fact that s 145(1), dealing with opening hours of a registered office, requires that such an office be “open to the public” on each business day “from at least 10am to 12 noon and from at least 2pm to 4pm” (I leave to one side the alternative of “at least 3 hours chosen by the company between 9am and 5pm”, given the absence of evidence of any specification of particular hours in accordance with s 145(2)); and that Ms Buckland’s visit was at 1.30pm, that is, within the permitted period of closing. But there is nothing in s 109X, s 145 or elsewhere that somehow vitiates service effected by leaving a document at a registered office outside the hours that s 145(1) requires it to be “open to the public”. The most that might flow from that is the possibility referred to as follows by Hodgson JA in Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259; (2006) 23 BCL 292 at [54] with specific reference to s 109X of the Corporations Act:

”In the case of leaving a document at a company’s registered office, prima facie the time service is effected would be the time of leaving the document; although, if a document is left there outside normal office hours, at a time when the office is in fact closed, it is at least arguable that service is not effected until the document is either detected by a person acting on behalf of the company, or the commencement of the next period of normal office hours, whichever is the earlier.”

29 It may be observed, however, that this suggestion in obiter dicta that the effective time of service made by delivery outside “normal office hours” is postponed until the earlier of the two later times mentioned does not seem to sit well with decided cases in which the point has arisen for determination: see, for example, Cornick Pty Ltd v Brains Master Corporation (1995) 60 FCR 565, SV Steel Supplies Pty Ltd v Palwizat [2007] QSC 24; (2007) 208 FLR 113 and Nutri-Care Ltd v ACN 080 663 754 Pty Ltd [2009] SASC 72 where it was held that delivery to the registered office after normal office hours was good service and occurred on the day of delivery.

30 It is not necessary in this case to pinpoint the precise time of service. Even if the approach suggested by Hodgson JA should be taken, s 145(1) warrants the conclusion that what his Honour called “the next period of normal office hours” commenced at 2pm on 23 December 2009, some thirty minutes after Ms Buckland placed the documents inside the locked doors at the street frontage. Whatever view one takes about “normal office hours” and their significance, service of each statutory demand occurred on 23 December 2009.

31 The filing of each originating process and supporting affidavit on 19 January 2010 (and subsequent service thereof) therefore occurred outside (and not “within”) the period of 21 days referred to in s 459G(2) and s 459G(3).

32 Consistently with David Grant & Co Pty Ltd v Westpac Banking Corporation Ltd (above), the originating process in each proceeding must be dismissed. It will also be ordered, in each case, that the plaintiff pay the defendant’s costs of the proceedings.

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