Cornick Pty Ltd v Brains Master Corporation

[1995] FCA 1125

CATCHWORDS

CORPORATIONS - Internal administration of companies - Service of documents at registered office of company - Service after 5.00pm effective.

Corporations Law, s 220(1).

CORNICK PTY LTD v BRAINS MASTER CORPORATION

No.     NG 3512 of 1995

Coram:           Whitlam J
Place:              Sydney
Date:              1 December 1995

IN THE FEDERAL COURT OF AUSTRALIA                   )
  )
NEW SOUTH WALES DISTRICT REGISTRY                  )          NG 3512 of 1995
  )
GENERAL DIVISION  )

IN THE MATTER OF CORNICK PTY LTD
  ACN 001 621 610

CORNICK PTY LTD

Applicant

BRAINS MASTER CORPORATION

Respondent

Coram:           Whitlam J
Place:              Sydney

Date:1 December 1995

REASONS FOR JUDGMENT

The parties have requested the Court to decide separately two questions in advance of the hearing of an application under s459G(1) of the Corporations Law ("the Law").  The evidence on these questions may be shortly stated.

On the afternoon of 22 August 1995 a search was conducted of records maintained by the Australian Securities Commission ("the ASC").  The search revealed that the registered office of the applicant was situated at 225 Ramsay Road, Haberfield and that its principal business office was situated at 3 Hannabus Place, Mulgrave.  The next day, 23 August, the respondent's solicitors wrote to the applicant's directors at 225 Ramsay Street, Haberfield enclosing "by way of service" a statutory demand dated 23 August 1995 and a

supporting affidavit under s459E of the Law. An envelope, containing all three documents, was delivered to that address by a courier driver at about 5.45pm that same day. The driver placed the envelope under the door of the premises. He noted on his run sheet in the space provided for the name and signature of the person receiving delivery "no one home - no signature".

Two days later, on 25 August 1995, the respondent's solicitors wrote to the applicant's directors at the Mulgrave address as follows:

"Enclosed for your information is a copy of Creditor's Statutory Demand for Payment of Debt and Affidavit in Support served at the registered office of your company on 23rd August 1995."

It is agreed that a copy of the solicitors' earlier letter of 23 August was also enclosed with the letter of 25 August.

The applicant's managing director said that he had been unaware of "the issue" of the statutory demand until Monday, 28 August, when he received a copy of the demand from the respondent's solicitors. He said that the applicant no longer occupied the premises at 225 Ramsay Street, but that it had relocated to the neighbouring property at 223 Ramsay Street in "about October 1993".  (In fact, it appears from a subsequent search conducted by the respondent's solicitors that the applicant notified the ASC on 19 October 1995 that it had changed its registered office to 223 Ramsay Street on 1 March 1994.)

The application to set aside the statutory demand was not filed until 15 September. Faced with the jurisdictional obstacles posed by the temporal requirements of s459G(2) and (3) of the Law, the applicant submits that a statutory demand may not be served by leaving it at a company's registered office at 5.45pm and, if that proposition be wrong, then the respondent has elected to rely instead on service effected by the letter of 25 August sent to the Mulgrave address.

Section 220(1) of the Law permits a document to be served on a company by leaving it at its registered office. Counsel for the applicant submits that such service may only be effected between 9.00am and 5.00pm at a time when the office is open. This conclusion is said to be compelled by clear implication from the provisions of Part 3.1 of the Law and by the application of the Corporations Rules.

Part 3.1 comprises ss 217-220 of the Law. Section 217 provides that a company must have a registered office which must be open either (a) for the hours between 9am and 5pm of each business day specified in a notice lodged by the company with the ASC, or (b) for not less than 5 hours between 10am and 4pm of each business day. (There was no evidence that the applicant had lodged such a notice with the ASC.) Section 220(2) provides that "for the purposes of subsection (1)" the situation of a company's registered office is deemed to be the place notified to the ASC. But there is no provision requiring service to be effected when the registered office is open and, in my view, no such qualification or gloss needs to be placed on the express language of s220(1). A company which has not notified its opening hours might choose to close at any time between 10am and 4pm which might vary on any business day. It cannot be supposed that a document could not be served by leaving it at the office during such a closure which might extend up to 60 minutes. Further, how might service be effected where a company fails to keep its registered office open in compliance with s217 of the Law? There is no provision deeming the office to be open for the purposes of s220(1). Indeed, there is no good reason that springs to mind why service should be confined to business days. The important thing is that service is effected at the address notified by the company. Section 100 of the Law requires detailed specification of such address. Service at a nominated room situated on a specified floor or level of a building may, of course, pose practical problems for access during certain hours. Service after 5pm or on a non-business day may fairly be expected to come to the attention of a company on the next business day.

Rule 3(2) of the Corporations Rules provides that the provisions of the other Orders of the Federal Court Rules ("the Rules") "apply, so far as practicable, to proceedings arising under the Corporations Law." Counsel for the applicant submits that the provisions of Order 7 of the Rules (dealing with service) apply to the service of a statutory demand under s459E of the Law. Counsel for the respondent contends, however, that a statutory demand is not a "proceeding" for the purposes of the Rules. I think that this submission is clearly correct.

The statutory demand is not a proceeding in the Court. It is signed by the creditor. It is not filed in court. It is true that s459E(3)(b) of the Law provides that the accompanying affidavit must comply "with the rules". But that expression is defined by s9 of the Law to mean the Rules or "rules of the Supreme Court", as the case requires. Here the affidavit in support has obviously been drawn to comply with the Supreme Court Rules, 1970 (NSW).  Had the affidavit verifying been made under r 36A of the Corporations Rules, it would have made no difference. That rule is made by virtue of s60(1)(b) of the Corporations Act 1989
because it is required by s459E(3) of the Law, not because it relates to "proceedings" in the Court. The heading to Form 93B and paragraph (2) of the "Important Note" set out in that form correctly show that no proceedings have been commenced.

Counsel for the applicant also points to the power of the Court under s220(7)(a) of the Law to order an alternative form of service for a document. But the mere existence of that power does not mean that the Rules apply. The applicant's first submission is accordingly rejected.

Section 220(1) of the Law also permits service by post. Counsel for the applicant submits that service at the registered office and service by post are "alternative and inconsistent rights" of the type identified by Mason J in Sargent v A.S.L. Developments Ltd (1974) 131 CLR 634 at 655. Accordingly it is said that the respondent must be taken to have elected to serve its demand by its solicitors' letter dated 25 August. For what its worth, I do not consider that either manner of service provides any kind of "right". If there is a "right", it is that provided by s459E of the Law. But the fatal objection to the applicant's submission is that the letter of 25 August does not purport, in terms, to serve any demand. Nor can it, on any fair reading, be so construed. The applicant's alternative submission also fails.

The applicant proposes as the first separate question:

"1. WHETHER the placing of the documents at about 5.45 pm in an envelope under the door of the premises situated at 225 Ramsay Street, Haberfield when that office was closed constituted service within the provisions of section 459E(1) of the Corporations Law."

The respondent wishes to delete the words "when that office was closed".  I accept that deletion.  It accords with the evidence.  The inference that the office was closed does not necessarily follow from the fact that it was 5.45pm, that the door under which the envelope was placed was probably closed, and that no one was "home".

The second question is agreed as follows:

"2. WHETHER by reason of the Applicant being sent a copy of the notice to a different address and which arrived later than the time referred to in 1. above, so that this application has been brought within 21 days of such receipt, the Respondent is precluded from relying on the notice referred to in 1. above."

I propose to answer the questions respectively "Yes" and "No". On the material before me I should have thought that such decisions would make it inevitable that the application be dismissed. It follows that it should definitely not be regarded as implicit in the second answer that the applicant has any right to pursue its application by treating the forwarding of a copy of the demand to the Mulgrave address as separate service for the purposes of s459G of the Law. The parties are directed within 7 days to bring in short minutes of proposed orders in accordance with these reasons, including any directions for the further conduct of the application.

I certify that this and the preceding five pages are a  true copy of the reasons for judgment herein of the Hon. Justice A.P. Whitlam

Associate:

Date:    1 December 1995

Counsel for the applicant:               D.J. Hammerschlag

Solicitor for the applicant:               Parish Patience

Counsel for the respondent: J.T. Johnson

Solicitor for the respondent: Roach and Halligan

Date of hearing:  24 November 1995