Derma Pharmaceuticals P/L v HSBC Bank Australia Ltd No. Scciv-03-1619

[2004] SASC 70

DERMA PHARMACEUTICALS PTY LTD v HSBC BANK AUSTRALIA LTD
[2004] SASC 70

1. JUDGE BURLEY.             The plaintiff has applied for an order setting aside a statutory demand.  A copy of the statutory demand is Exhibit A to the affidavit of Mr J C Alexander sworn on 1 December 2003 and filed by the defendant.  The defendant, a Bank, asserted in the statutory demand that the sum of $207,176.71 was owing by the plaintiff to the defendant.  The statutory demand was accompanied by an affidavit verifying the debt.  The debt is not in dispute.  The plaintiff asserts that it has an off-setting claim greater than the amount of the statutory demand and that consequently the statutory demand should be set aside.

2. The defendant contends that the plaintiff is not entitled to the orders sought because:

   (a)the necessary application was not made within 21 days of service of the statutory demand; and

   (b)in any event, the plaintiff has failed to establish that it has an off-setting claim against the defendant.

3. The plaintiff’s claim to an entitlement to have the statutory demand set aside is confined to Section 459H of the Corporations Act.  If the plaintiff is to obtain an order, it must establish that it has brought the necessary application within 21 days of service of the statutory demand and that it has an off-setting claim as defined in Section 459H(2) of the Act.  The plaintiff says that the statutory demand was not served until 24 October and if that is the case, it has commenced the application to set aside the statutory demand within the 21 day period, the originating process having been issued on 13 November 2003.  The defendant contends that the originating process was served on about 15 October 2003.  If the defendant is correct, the plaintiff’s application is out of time, the 21 day period may not be extended and the application should be dismissed: David Grant & Co Pty Ltd (Receiver Appointed) v Westpac Banking Corporation (1995) 184 CLR 265.

   Service of the Statutory Demand

4. The affidavit material filed by the defendant clearly establishes that the envelope containing the statutory demand was received at the relevant post office on 14 October 2003.  The envelope was addressed to the defendant at its registered office, namely C/- Luestner and Associates, 553 Magill Road, Magill, SA 5072.  Luestner and Associates have the facility of a post office box at the post office to which the statutory demand was forwarded.  It has been established by the affidavits filed by the defendant that the practice of the post office is to place letters in the post office box held by the addressee even where the addressee has an address to which mail might otherwise be sent.

5. In light of the affidavit evidence filed by the defendant, I find that the envelope containing the statutory demand was addressed to the defendant at its registered office and was, on 14 October 2003, placed by a post office employee in the post office box held by Luestner and Associates. 

6. There is no direct evidence as to when, if at all, the envelope containing the demand was taken out of the post office box and carried to the registered office of the plaintiff.  The affidavit of Mr D Friedrichs, the managing director of the plaintiff, discloses that he received the statutory demand at the business premises of the plaintiff, namely 8 Stepney Street, Stepney, on 24 October 2003.  He said that the notice (the statutory demand) “was in an envelope that arrived by postal delivery at 8 Stepney Street Stepney in the said State on the 24^th October 2003”.  Whilst I accept that evidence, I find that the statutory demand was not forwarded to the plaintiff by the defendant in that manner.  I infer, from the evidence adduced both by the plaintiff and the defendant, that the envelope containing the statutory demand forwarded by the defendant was cleared from the post office box at the relevant post office at some time after its delivery to the post office box on 14 October 2003.  The clearance of the post office box was effected by an employee of Luestner and Associates who took the envelope back to the business premises of Luestner and Associates, which was also the registered office of the plaintiff.  There is no evidence as to when that occurred. 

7. The envelope containing the statutory demand was opened at the business premises of Luestner and Associates and was then placed in another envelope addressed to the plaintiff at its business premises at 8 Stepney Street, Stepney, and was then posted by Luestner and Associates to the plaintiff.

8. The defendant argued that any finding I made as to the date of service of the statutory demand was to be made by reference to Section 459E(1) of the Corporations Act, which allows a person to serve on a company a demand, Section 109X(1)(a) of the Act, which permits service by posting the document to the company’s registered office and Section 29(1) of the Acts Interpretation Act 1901 (Cth), which is a deeming provision relating to the time at which documents are said to be served. Section 29(1) is as follows:

   “(1)Where an Act authorizes or requires any document to be served by post, ... then unless the contrary intention appears the service shall be deemed to be effected by properly addressing prepaying and posting the document as a letter, and unless the contrary is proved to have been effected at the time at which the letter would be delivered in the ordinary course of post.”

9. Sub-section (2) of that section also refers to Section 160 of the Evidence Act (Cth) but for the reasons advanced by Barrett J in Lane Cove Council v Geebung Polo Club Pty Ltd (Green as liq) and Others (No 2) (2002) 41 ACSR 15 at para [42], I consider that the applicable section is Section 29 of the Acts Interpretation Act.

10. It was submitted by Mr Morecombe QC, counsel for the defendant, that I should deem that delivery in the ordinary course of post was achieved by 15 October 2003 at the latest. I do not agree with that submission. It overlooks the proof to the contrary provision contained in Section 29(1) of the Acts Interpretation Act.  The proof to the contrary is that the envelope was placed in the post office box held by Luestner and Associates.  In light of that evidence, it would be inappropriate to deem that delivery to the registered office was effected on a particular day.

11. Mr Oks argued that the delivery of the envelope to the post office box did not constitute delivery to the registered office of the plaintiff. 

12. As a matter of fact, that contention is correct.  The post office box provided by Australia Post to Luestner and Associates was kept at the relevant post office.  Delivery to the post office box by employees of Australia Post does not constitute delivery of the mail article to the registered office of the plaintiff.  When considered as a matter of law, the question becomes: does delivery to a post office box retained by the addressee, whose street address constitutes the registered office of the company, constitute as a matter of law delivery to the registered office as contemplated by Section 109X(1)(a) of the Corporations Act?  In my view, on the proper construction of Section 109X(1)(a), delivery to a post office box is not contemplated by the provision.  It provides for the posting of a document to the registered office of the company.  This, in my view, means physical delivery to the actual registered office. 

13. In light of this reasoning, it cannot be said that the statutory demand was delivered to the registered office by no later than 15 October 2003.  In light of my finding that the envelope containing the statutory demand was collected from the post office box, taken to the registered office and then posted by an employee of Luestner and Associates to the plaintiff at its business address, the only finding which may be made in relation to the delivery of the statutory demand to the registered office of the plaintiff is that at some time between the deposit of the statutory demand in the post office box held by Luestner and Associates by an employee of Australia Post and the time at which the statutory demand was posted by an employee of Luestner and Associates to the plaintiff, the statutory demand was received at the registered office of the plaintiff.  The commencement date of that period is 14 October 2003.  The latest time by which the statutory demand may be said to have been taken to the registered office of the plaintiff is the day before the receipt of the statutory demand by Mr Friedrichs.  He has deposed to the fact that he received the statutory demand at the business premises of the plaintiff on 24 October 2003.

14. Although I do not accept the defendant’s argument that the statutory demand was deemed to have been served by no later than 15 October, this does not mean that the plaintiff is out of the woods in relation to the question of whether or not the application to set aside the statutory demand has been made within the 21 day period.  In my view, the plaintiff has invoked the jurisdiction of the court requesting it to set aside the statutory demand.  It is clear that such an application must be made within the relevant 21 day period.  It is, in my view, incumbent upon the plaintiff to establish that it has correctly invoked the relevant jurisdiction of the court and, in particular, that it has complied with the requirement that the relevant application is made within the 21 day period.  In my view, the evidence by Mr Friedrichs that he received the statutory demand in the post on 24 October 2003 does not constitute proof that the statutory demand was received at the registered office of the plaintiff within 21 days prior to the commencement of this application.  All that has been established is that the statutory demand, on the balance of probabilities, was taken by an employee of Luestner and Associates from the post office box to the registered office of the defendant at some time between 14 and 23 October 2003.  That is not sufficient proof that this application was commenced within the 21 day period.  It follows that the application to set aside the statutory demand should be dismissed. 

15. The other question debated during the course of the hearing was whether or not the plaintiff had an off-setting claim to the extent that the statutory demand should be set aside.  The essence of the plaintiff’s contention in that regard was that, through the agency of Mr Steven Knobben, the defendant extended to the plaintiff an overdraft facility, the upper limit of which was not defined other than by reference to the plaintiff’s needs for working capital and which was said to be of an undetermined duration.  Whilst I accept that it is not for the court on an application such as this finally to determine the rights and liabilities of the parties, it is necessary for the plaintiff who seeks to have the statutory demand set aside to establish some plausible basis upon which it might be said that there is a genuine off-setting claim: Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785. According to this authority, it is not appropriate to proceed to the stage of making findings in relation to credit. I would add that on an application such as this, which proceeded on affidavits, it is not possible to make any finding as to credit. Nevertheless, the court must make some assessment of the plausibility of the contentions of the plaintiff.

16. In this case, Mr Friedrichs deposed to the conversations he had with Mr Knobben, the effect of which, according to Mr Friedrichs’ understanding, was that an overdraft of an unfixed amount and of an undetermined duration was afforded to the plaintiff.  In circumstances such as these, it seems to me that an objective assessment may be made of the contentions based on such assertions without having to decide whether or not the deponent is telling the truth.  This is so because the nature of the “evidence” given by Mr Friedrichs in his affidavits consists of his understanding of the legal effect of the arrangement reached between himself and Mr Knobben.  It is possible for him to refer truthfully to the existence of a conversation but he may not necessarily accurately understand the legal effect of that conversation.  In addition, it is possible to reach conclusions as to the reliability of the overall affect of Mr Friedrichs’ evidence by reference to the documentary evidence that has been exhibited to the affidavit of Mr J C Alexander, who is “an Executive of Credit Risk Management of the defendant”.

17. The documentary evidence relied upon by the defendant is quite at odds with the assertions made by the plaintiff as to the effect of the arrangement said to have been reached between Mr Friedrichs and Mr Knobben.  This raises questions about the plausibility of the plaintiff’s contentions.

18. Mr Friedrichs has deposed to a number of conversations he said that he had with Mr Knobben.  The defendant has not put before the court any affidavit from Mr Knobben and, in the absence of Mr Knobben swearing an affidavit as to what he says occurred, it is not possible to conclude that the plaintiff’s contentions are without substance.  Put another way, as was referred to in Eyota, the plaintiff has raised triable issues in relation to whether or not it may maintain a claim against the plaintiff.

19. As to the quantum of that claim, although I have some doubt as to the ability of the plaintiff, if it can otherwise make out its claim, to recover the large sums of money deposed to by Mr Friedrichs, there is sufficient before me to indicate that the counterclaim is arguably in excess of the amount of the debt which exists between the defendant and the plaintiff.  Nevertheless, because the plaintiff has not established that its application was brought within the relevant 21 day period, the application must be dismissed.