Challenge v EtienneBelmore v Etienne

[2007] NSWSC 1145

CITATION:	Challenge v EtienneBelmore v Etienne [2007] NSWSC 1145 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	10/10/07
JUDGMENT DATE :	10 October 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	Associate Justice Macready at 1
EX TEMPORE JUDGMENT DATE:	10 October 2007
DECISION:	Paragraph 39
CATCHWORDS:	Corporations Law. Application to set aside statutory demand under s459G of the Corporations Act. Application filed one day out of time. Application dismissed.
PARTIES:	Challenge Homes Loans v Etienne Lawyers Belmore Properties Pty Limited v Etienne Lawyers
FILE NUMBER(S):	SC 4253/2007; 4254/2007
COUNSEL:	C. Lambert for plaintiff J. O'Sullivan for defendant
SOLICITORS:	North Shore Lawyers for plaintiff Ettienne Lawyers for defendant

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE MACREADY

Wednesday 10 October 2007

4253/07 CHALLENGE HOME LOANS v ETIENNE LAWYERS
4254/07 BELMORE PROPERTIES PTY LIMITED v ETIENNE LAWYERS

JUDGMENT

1 HIS HONOUR: This is the hearing of two applications to set aside statutory demands served by the defendant on the plaintiff in each case. The plaintiffs are related and the defendant acted for the plaintiffs in the provision of legal services.

2 I have heard both matters together with the evidence in one being evidence in the other.

3 A substantial question which was argued is whether the applications were made within time. According to the defendants the demand was served on 6 August 2007. On the plaintiff's case it is said to have been served on 7 August 2007.

4 An application to set aside a demand was filed in Court on 28 August 2007 and, one assumes, although this did not arise in evidence, that the affidavits were served, and they were certainly filed on that day.

5 Under section 459G (2) an application may only be made within 21 days after the demand is so served. If it was served on 6 August the question arises as to what is meant by the words "within 21 days".

6 Section 36 of the Acts Interpretation Act is in the following terms:

“Reckoning of time.
1) Where in an Act any period of time, dating from a given day, act, or event is prescribed or allowed for any purpose, the time shall, unless the contrary intention appears, be reckoned exclusive of such day or of the day of such act or event.
(2) Where the last day of any period prescribed or allowed by an Act for the doing of anything falls on a Saturday, on a Sunday or on a day which is a public holiday or a bank holiday in the place in which the thing is to be or may be done, the thing may be done on the first day following which is not a Saturday, a Sunday or a public holiday or bank holiday in that place.”

7 Plainly in this case if the demands were served on 6 August then the applications had to be filed by the latest on 27 August 2007. If they were served on 7 August then obviously the applications were within time.

8 It is necessary to look at the affidavit evidence and other evidence that was given on this question. There was cross-examination of the relevant deponents of the affidavits having regard to the fact that a decision had to be made on this point.

9 In Mr Brown’s affidavit, he being the relevant principal of Etienne Lawyers, sworn 18 September 2007, he deposes to the process in which he prepared the statutory demand on 6 August 2007 at Ermington at an office of Etienne Lawyers. He tried to obtain a process server to serve them but says as he could not do that he in fact himself drove to the registered office of the company, which was in Harris Park next to Parramatta.

10 He says that at 4.45 pm on 6 August he served the receptionist at the registered office of the plaintiff companies with the statutory demands with the affidavits in support. He served them by leaving the documents with the receptionist at the office of Scahill and Company Pty Ltd at 119 Alfred St, Parramatta. The evidence satisfies me that that is in fact the registered office of the plaintiff companies.

11 He said he had a conversation with Charlene Faye Rudolph, the receptionist at the time, who indicated she was the receptionist and he indicated he had documents to serve upon their clients at the registered office. Charlene asked if he wished to see anyone and he said "No, just make sure they are given to the appropriate person" and asked her name. The receptionist gave the name “Charlene”. He then wrote her name and a time on a copy of the statutory demand. The time is shown as 4.45 pm and the copy which is exhibited has the name “Charlene” written thereon. There is no date but the document itself is dated 6 August 2007.

12 As I have already mentioned, the place where the documents were left is the registered office of the companies. Section 109X (1) (a) provides that:

“for the purposes of any law a document may be served on a company by… leaving it at or posting it to the companies registered office.”

13 The leaving of the document at the registered office is sufficient service and, notwithstanding submissions to the contrary, I do not think it is necessary that it be brought to the notice of appropriate people.

14 The evidence for the plaintiff’s was given by two people. One was the accountant, Mr Scahill who maintained an accountancy practice there are and which was the registered office for a number of companies. There was also evidence given by the receptionist, Charlene Rudolph. She gave evidence of her occupation and in paragraph 2 referred to the affidavit of Mr Brown sworn 18 September 2007 and went on to say:

“I don't recall the conversation deposed to and I don't recall anyone coming in at such a late hour in the day. It is very rare for someone to attend the office at that time other than by a pre-arranged appointment. I would remember such a conversation and the importance of such documents.”

15 She then went on in paragraph 3 to say:

“I recall a male person coming in without appointment the next day 7 August 2007 wearing a leather jacket, approximately 5 foot 7 inches and bald. I don't remember the conversation and was handed an envelope and put it on Mr Scahills’s desk.”

16 She identified the person to whom she was referring to as Mr Brown, the deponent of the affidavit and the principal of the defendant. It can be seen from her affidavit that she says she did not remember the conversation but when the terms of the conversation with Mr Brown were suggested to her, she readily agreed a conversation to that effect had taken place.

17 The other thing to note about her evidence when she was cross examined is that there is no system in the offices of Mr Scahill to record deliveries when they are received by the receptionist, or to record generally mail when it is received.

18 She did give some evidence that she thought that it was on the next day before some accountants were coming to or going to a meeting in the office and that is what triggered her recollection about being before 10:30 am. It was quite obviously a different recollection to what is deposed to by Mr Brown who says he was there at 4:45 pm the day before.

19 No doubt they are both talking about the same event; it is a question of when it occurred.

20 Mr Scahill’s affidavit gave evidence, in particular in paragraph 3, in these terms:

“I say that on either the 7 August ;2007 the statutory demand exhibited to the affidavit of Mr Brown was received by me in my office and it was amongst other mail.”

21 He also gave evidence he made inquiries of his staff and no one could recall the attendance deposed to by Mr Brown.

22 It is plain from his evidence in cross-examination that he did not receive anything from Charlene, who apparently put it on his desk at some time either in the afternoon of the 6, if it was served on the 6, or on the morning of 7 August. It is notable that he says it was amongst other mail. Normally, mail is opened early in the morning and placed on his desk by an administrative assistant, whose job it is to open the mail, separate it between the two relevant people who occupy the offices, and deliver it.

23 It is a question really of what is more likely and that requires a consideration of the corroborating evidence that might be available. There have been printed out by Mr Brown his time costing records for 6 and 7 August. These on 6 August show that a statutory demand was served on Charlene at Scahill’s office on that day and a charge put forward for it. There is no similar such charge on 7 August.

24 The other evidence that is available is the mobile phone records of Mr Brown. He has a particular mobile phone which he uses in his business and the records relating to that phone show that he made a call from Ermington at 10:28 am on 6 August. Those records also show between 4.56 and 5:20 pm calls made in the Parramatta area. There is also in that time calls under the heading of "origin Sydney" which relate to call connect and some other services which are probably not relevant.

25 It seems to me they seem to indicate that shortly after the time of service claimed by Mr Brown he was in the Parramatta area.

26 There is also evidence of his chief financial officer, Mr Blunt, who gave evidence that on 6 August he was at 34 River Road, Ermington at 4 p.m. that day, and he left Ermington in his car.

27 There was some debate in cross-examination about whether it would have taken 45 minutes to drive to Parramatta from Ermington, it being a short distance. The explanation, so far as Mr Brown is concerned, was that, as is usual at that time, there were substantial traffic delays.

28 On this evidence it is certainly clear that there is some independent evidence. The time sheets are in evidence and no doubt, as the solicitor’s practice would provide, they would be filled out promptly so the billing times could be reimbursed.

29 His position is clearly fixed moving from Ermington to Parramatta at about 4 p.m. and being in the Parramatta area shortly after 4:45 pm. It is not suggested that the records were false or concocted in any way and, accordingly, they are substantially corroborative of Mr Brown's records of events.

30 The difficulty with the plaintiff's case is that they have no record of the receipt of the document. The accounts of the witnesses is given based upon recollection, obviously brought out again 45 days later once the affidavits had to be prepared. The receptionist, Charlene, may well be mistaken as to when the particular events occurred. She has nothing other than the matters I have referred to to try and fix any of this in her mind, but that only goes to time, not as to date.. She has no documents to help her in her recollection of the date.

31 Mr Scahill’s evidence really is of very little assistance. Plainly the affidavit was corrected because later he swore another affidavit which did not have the word "either" in it and that fault had been picked up. But in the draft of the affidavit that actually ended up in evidence before me he contemplated that it was either on 7 August 2007 or some other date, be it 6 August or some other date, that the statutory demand was received in his office. Accordingly, I think very little weight can be placed on that evidence.

32 More likely what has happened is the demand has been placed on the desk, his mail has been placed on his desk in the morning of 7, and all that has happened is that he picked it up and dealt with the matter.

33 In those circumstances I prefer the evidence of the defendant as to when service occurred and I am satisfied that both demands were served on 6 August 2007. In those circumstances, the applications are out of time.

34 There was also a submission based upon the substantive merits of the dispute in question and that is that the lawyer’s bills which were issued at about the same time as the demand were served in a manner which may not come to the attention of the company did not comply with the requirements of the Legal Profession Act and therefore they were not recoverable and due under section 317 (1) of the Legal Profession Act 2004. It was submitted that there were a number of areas where a there has not been sufficient disclosure which would prevent the bills being payable until assessed. The evidence before me is that the bills have recently been sought to be assessed, are not yet assessed, and accordingly the amount would not be payable.

35 The cases I was referred to certainly confirm the point, which is a self evident one, that an abuse of process such as this where bills are not recoverable might be another reason under section 459G (1) (b) for the demand to be set aside. However, unless the application to set aside a demand is made in time, then the plaintiff cannot rely upon this ground as a basis for setting aside the demand.

36 It may well be, and I pass no view on the merits of this, that the presentation of a summons for the winding up of the defendant may be able to be resisted on the ground that the debt is not due and owing to the actual defendants if they were to bring proceedings for winding up the plaintiffs.

37 However, that is not the point in the present case. The point is whether or not the application is made within time and, if it is not, the proceedings should be dismissed. That will result in the statutory insolvency of the company which may be relied upon by some other creditor to bring proceedings or in any other ways in winding up or a liquidation if such matters were to eventuate.

38 Accordingly, it seems to me that there is no basis for suggesting at this stage that I ought to take any steps in relation to any such proceedings if they were proposed. Whether they will be brought or not it is not known and it is somewhat premature.

39 Accordingly, I dismiss the proceedings with costs. I order that exhibit 11 be returned and not those which are attached to affidavits filed in the proceedings.

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19/10/2007 - Correction to counsel's initial - Paragraph(s) Not application