Five G Pty Ltd v Pinacle Funding Group Pty Ltd

[2008] NSWSC 228

CITATION:	Five G Pty Ltd v Pinacle Funding Group Pty Ltd [2008] NSWSC 228 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	13/03/08
JUDGMENT DATE :	17 March 2008
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
DECISION:	Plaintiff given leave to discontinue on basis of payment of defendant's costs
CATCHWORDS:	CORPORATIONS - winding up - statutory demand - application for order setting aside statutory demand - where plaintiff unable or unwilling to show that application for order filed and served within 21 days after service of statutory demand - where plaintiff accordingly seeks leave to discontinue - whether plaintiff should pay defendant's costs
LEGISLATION CITED:	Corporations Act 2001 (Cth), s 459G Uniform Civil Procedure Rules 2005, rules 12.1, 42.19
CATEGORY:	Principal judgment
CASES CITED:	David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265 Emhill Pty Ltd v Bonsoc Pty Ltd [2004] VSC 322; (2004) 50 ACSR 305 Scope Data Systems Pty Ltd v Goman [2007] NSWSC 278; (2007) 210 FLR 161
PARTIES:	Five G Pty Ltd - Plaintiff Pinacle Funding Group Pty Ltd - Defendant
FILE NUMBER(S):	SC 4008/07
COUNSEL:	Mr T J Rickard - Plaintiff Mr M W Sneddon - Defendant
SOLICITORS:	Simmons & McCartney - Plaintiff Worthington William Lawyers - Defendant

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

BARRETT J

MONDAY, 17 MARCH 2008

4008/07 FIVE G PTY LTD v PINACLE FUNDING GROUP PTY LTD

JUDGMENT

1 By an originating process filed on 13 August 2007, the plaintiff made application under s 459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand served on it by the defendant.

2 When the matter came before the court for hearing on 13 March 2008, the plaintiff immediately announced that it wished to withdraw its claim. Its solicitors had given notice to that effect to the defendant’s solicitors on the day before the hearing by a letter as follows:

“We confirm that we will be withdrawing our client’s application to set aside the statutory demand on the grounds that it was served outside the 21 day period.”

3 Mr T J Rickard of counsel, who appeared for the plaintiff, made it plain that the application his client wished to pursue was an application under rule 12.1 of the Uniform Civil Procedure Rules 2005 for leave to file a notice of discontinuance. Mr Rickard accepted that, in the absence of an order to the contrary, the plaintiff would then be required to pay the defendant’s costs in accordance with rule 42.19 of the Uniform Civil Procedure Rules. He submitted that a contrary order should be made, with each party left to bear its own costs.

4 The position taken on behalf of the defendant by Mr M W Sneddon of counsel is that the grant of leave for the plaintiff to discontinue is not opposed, provided that rule 42.19 is left to take its course so that the plaintiff is required to pay the defendant’s costs.

5 The letter by which the plaintiff’s solicitors notified their client’s intention to withdraw reflected a recognition by the plaintiff that it had failed to satisfy an essential condition of the s 459G jurisdiction, namely, that, within 21 days after service of the statutory demand, a copy of the s 459G application and a copy of the supporting affidavit be served on the person who served that statutory demand: see s 459G(3)(b). If that condition is not satisfied, the court has no jurisdiction to set aside the statutory demand: David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265.

6 It seems that the plaintiff’s realisation that the timing requirement had not been satisfied was prompted by documentary evidence produced by the defendant’s solicitors that the envelope containing the statutory demand (which had been despatched by registered post to the plaintiff’s registered office) had been received at the registered office on a particular day. The documentary evidence was in the form of an Australia Post delivery receipt.

7 Before becoming aware of the Australia Post document, the plaintiff and its solicitor were apparently under the impression (expressed, on instructions, in an affidavit of the solicitor) that the demand had been received at the registered office “some time late during the week commencing” on the day disclosed in the Australia Post document. It is possible that they were relying on information received from someone from the firm of accountants at whose premises the registered office was situated and that this information was inaccurate.

8 Both parties apparently now accept that the date shown by the Australia Post document as the date of delivery by post to, and receipt at, the plaintiff’s registered office is the date on which the statutory demand is to be regarded as having been “served”, as referred to in s 459G: see Scope Data Systems Pty Ltd v Goman [2007] NSWSC 278; (2007) 210 FLR 161 at [38]. For present purposes, it is unnecessary for the court to make a finding as to the date of service and I do not intend to do so. I am content merely to proceed on the assumption that the position apparently now accepted by the parties is correct.

9 The question arising upon the present application, broadly stated, is who, in s 459G proceedings, bears the onus of proving the date of service of the statutory demand. More precisely and more immediately, the question is whether a plaintiff who seeks to discontinue upon discovering that the statutory demand was served on a date which makes its s 459G application untenable (that being the position I am now assuming, as just stated) may avoid the normal costs consequences of withdrawal by pointing to a failure of the defendant to discharge some form of responsibility that the defendant has to inform the plaintiff of the actual date of the service of the defendant’s statutory demand on the plaintiff.

10 By resorting to s 459G, a company served with a statutory demand undertakes the task of persuading the court that an order setting aside the demand should be made. It is that company, as plaintiff, that must prove all matters necessary to justify the making of the order. No onus rests with the defendant. One thing that the plaintiff must prove is that the statutory demand was served on it – otherwise the plaintiff fails to establish that it has standing under s 459G(1) to bring the application. Another thing that the plaintiff must prove is that a copy of its originating process and a copy of the supporting affidavit were served on a day that is consistent with the s 459G(3)(b) requirement – otherwise the plaintiff fails to establish what the David Grant case recognises to be a matter going to the existence of the court’s jurisdiction to award the relief the plaintiff seeks. If satisfaction of the condition based on action by the plaintiff within the period of 21 days is put in issue, jurisdiction cannot be seen to exist unless the plaintiff shows when the period began.

11 As Mandie J observed in Emhill Pty Ltd v Bonsoc Pty Ltd [2004] VSC 322; (2004) 50 ACSR 305, “the plaintiff cannot seek an order pursuant to s 459G(1) of the Act setting aside a statutory demand where it wishes to say that it has not been served with the demand.” Service of the demand and identification of the date of service are factual matters without which it cannot be concluded that the court has jurisdiction to set the demand aside.

12 In some cases, the defendant will concede that the s 459G application was regularly and duly initiated and served. The need to show when the relevant period of 21 days ended (and therefore when it began) will then be avoided. In other cases, the parties’ witnesses may give conflicting accounts on the question of the date of service of the statutory demand, in which event the court will decide in the usual way whether the jurisdictional fact centred on filing and service of the originating process and supporting affidavit within the period of 21 days after service of the statutory demand has been proved by the plaintiff.

13 In this case, the message communicated by the plaintiff’s solicitors on the eve of the hearing was, in essence, that the plaintiff would not be seeking to establish that the things required to be done by a s 459G applicant within the period of 21 days after service of the statutory demand had been duly done. The defendant carried no onus of proof in relation to that or any other matter.

14 The deficiency was a deficiency in the case of the plaintiff alone. The plaintiff can be seen to have brought the defendant to court unnecessarily. Withdrawal by the plaintiff should therefore be on the normal basis that, as the price for being allowed to withdraw, it pays the defendant’s costs.

15 The outcome is as follows:

1. Order that the plaintiff have leave under rule 12.1(b) of the Uniform Civil Procedure Rules 2005 to discontinue the proceedings as to all claims for relief.

2. Order that the plaintiff file a notice of discontinuance accordingly within seven days.

3. Note that, as a consequence of discontinuance, the plaintiff must, in accordance with rule 42.19(2) of the Uniform Civil Procedure Rules 2005, pay the defendant’s costs of the proceedings.

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25/03/2008 - Typing error - Paragraph(s) 6