Formosa House Pty Ltd v Chang
[2010] VSC 474
•22 October 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST
LIST E
S CI 2010 03045
| FORMOSA HOUSE PTY LTD (ACN 083 415 776) | Plaintiff |
| v | |
| MING CHIEN CHANG | Defendant |
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JUDGE: | FERGUSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 October 2010 | |
DATE OF JUDGMENT: | 22 October 2010 | |
CASE MAY BE CITED AS: | Formosa House Pty Ltd v Ming Chien Chang | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 474 | |
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CORPORATIONS – Statutory demand – Whether Court had jurisdiction to hear application to set aside – When statutory demand served – Service by post – Corporations Act 2001 (Cth) ss 109X, 459G, Acts Interpretation Act 1901 (Cth) s 29, Evidence Act 2008 (Vic) s 160.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Searle | Rigby Cooke Lawyers |
| For the Defendant | Mr R Cook | Liberal Legal |
HER HONOUR:
Introduction and summary of conclusions
The Plaintiff, Formosa House Pty Ltd operates a restaurant business. Lisa Chang is the director of Formosa House. Her brother, Ming Chien Chang (who is the Defendant), claims that Formosa House owes him $106,000. Mr Chang served a statutory demand for payment on Formosa House. The company applied to set aside the demand.[1] Mr Chang says that the application by Formosa House was made too late and that the Court has no jurisdiction to hear it.
[1]The application was made under s 459G Corporations Act 2001 (Cth).
The application was heard by an Associate Judge who held that the Court did have jurisdiction and concluded that the demand should be set aside on the basis that there is a genuine dispute about the debt. His Honour also found that there was an offsetting claim for more than the amount claimed in the statutory demand.
Mr Chang appeals from that decision. Counsel for Mr Chang did not challenge the Associate Judge’s finding that there was a genuine dispute as to the debt or his decision in respect of the offsetting claim. Rather, the appeal proceeded on the basis that the only issue was whether the application to set aside the demand had been served within time. This issue turns on when the statutory demand was served. If it was served on or after 13 May 2010, then the application to set aside was made within time.
The demand was sent by post addressed to the registered office of Formosa House on 10 May 2010. The company had an arrangement that mail would be retained at the post office for collection. The demand was collected from the post office on 14 May 2010 and taken back to the registered office. For the reasons set out below, I find that the demand was served on 14 May 2010. The appeal should be dismissed.
There was a procedural issue about the way that the appeal was brought. For the reasons set out below, I have treated the appeal as if it were brought under the Supreme Court (Corporations) Rules 2003 as of right and by way of rehearing.
When was the statutory demand served?
As noted above, the statutory demand was posted to Formosa House at its registered office on Monday, 10 May 2010. Section 109X of the Corporations Act 2001 (Cth) provides for service by this method. The arrangement that Formosa House has with Nunawading Post Office is such that mail addressed to it is retained at the post office and is collected every week or so by one of its employees. Evidence of this practice was given by Mr Chang and also by the restaurant manager who collected the statutory demand from the post office on Friday, 14 May 2010 and took the demand with him back to the registered office.
Mr Chang sought to rely on the deemed service provision in s 29 of the Acts Interpretation Act 1901 (Cth). That section provides that if a document is properly addressed and sent by prepaid post, service is deemed to have occurred at the time the letter would be delivered in the ordinary course of post unless the contrary is proved. It was contended on behalf of Mr Chang that the effect of that provision in this case was that the demand was deemed to have been served the day after posting on Tuesday, 11 May 2010.
There are a number of authorities dealing with service by post and the interpretation of s 29 and equivalent provisions. It is clear that if non‑delivery of the relevant item is proved, then the presumption in s 29 will not apply. However, the presumption will apply if all that can be established is that the item was not received.[2] The question in cases such as the present is what the position is when mail addressed to a street address is diverted by an arrangement with the post office.
[2]Fancourt and anor v Mercantile Credits Limited (1983) 154 CLR 87.
Most recently, in Scope Data Systems Pty Ltd v Goman as representative of the partnership of BDO Nelson Parkill,[3] a statutory demand had been sent by post addressed to the company’s registered office (which was the address of its accountants). The accountants had an arrangement with the post office such that mail addressed to its street address was not delivered to that address but was instead placed in the post office box which they maintained and from which the mail was collected and taken back to the accountants’ office. White J held that the demand was delivered to the registered office when it was taken there after collection from the post office box. His Honour noted that the diversion of the mail from the street address to the post office box was brought about by an arrangement between the accountants and the post office rather than by an arrangement directly between the company and the post office. In this way, his Honour distinguished the facts from those in Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd.[4]
[3][2007] NSWSC 278.
[4][2006] NSWCA 259.
The Falgat case concerned provision of a payment schedule to a company under the Building and Construction Industry Security of Payment Act 1999 (NSW). The company’s registered office was a residential address. However, by arrangement with the post office, the mail for the company was redirected to a post office box. The payment schedule was delivered by courier to the company’s street address. It was also posted to that address but, in accordance with the arrangement, was redirected to the post office box. Hunt AJA (with whom Handley JA agreed) considered the effect of s 29 of the Acts Interpretation Act in those circumstances. His Honour held that although the company was entitled to prove that the payment schedule was delivered at the registered office at a different time from when it would have arrived in the ordinary course of post, it did not prove this by establishing when it arrived at the diverted destination of the post office box. In respect of s 29 of the Acts Interpretation Act, Hodgson JA was of the opinion that if there is evidence that the document arrives at the registered office, then service is effected at the time of arrival at that address. However, where delivery to the registered office is precluded because the mail has been diverted, then in his Honour’s opinion (with which Hunt AJA and Handley JA did not agree) the time of service is no later than when the document arrives at the address to which it was diverted.
It seems that the Court in that case was not referred to earlier authorities dealing with service by post and s 29 and its equivalent provisions. Many of those authorities were referred to and analysed by White J in the Scope Data case. I respectfully agree with his Honour’s analysis of those earlier authorities and agree with his conclusion that delivery to a post office box cannot be equated to delivery to the registered office of the company. Nor is delivery to and retention at the post office the equivalent of service on the registered office.
If there is evidence of when a document is delivered to the registered office of a company (whether by post or otherwise) then the time of service is the time of delivery at that address and the presumption in s 29 has no application. This is because the s 29 presumption only deems delivery in the ordinary course of post “unless the contrary is proved”, or, in other words, unless actual delivery or non‑delivery to the address is proved. If there is no evidence of actual delivery or non‑delivery, then the presumption will apply and the item will be deemed to be delivered in the ordinary course of post. The ordinary course of post is a matter for evidence. If there is no evidence in this regard, then s 160 of the Evidence Act 2008 (Vic) assists. That section establishes the presumption (in the absence of evidence sufficient to raise doubt about the presumption) that mail sent within Australia is received on the fourth working day after having been posted. Working days exclude weekends and public holidays. Section 160 also assists in circumstances where there is evidence that the item was not delivered in the ordinary course of post, but there is no evidence of when it was delivered.[5]
[5]Scope Data at pp 186-187; Renegade Rigging Pty Ltd v Hanlon Nominees Pty Ltd [2010] VSC 385 at [20]-[21].
Counsel for Mr Chang sought to rely on decisions in Beaumont v Durham Holdings Pty Ltd,[6] Hudson v Louth[7] and Doogan v Colquhoun.[8] However, the deeming provisions as to the time of service of documents in those cases did not include an exception such as that included in s 29 for the situation where it is proved that the document was not delivered in the ordinary course of post. Counsel for Mr Chang also relied on the decision in Perpetual Nominees Limited v Masri Apartments Pty Ltd.[9] However, in that case, which concerned service of a statutory demand by post to the registered office, there was only evidence that the demand had not been received. As noted above, such evidence is insufficient to rebut the presumption in s 29. In the absence of evidence of non‑delivery, the presumption applied.
[6](1973) 131 CLR 8 at 14-15.
[7](1879) 6 LR Ir 69 at 83.
[8](1886) 20 LR Ir 361 at 471, 373.
[9](2004) 49 ACSR 714.
Counsel also urged me to adopt the reasoning in Citystart Pty Ltd v Deputy Commissioner of Taxation.[10] In that case, there was evidence that mail was delivered to the company’s post office box rather than to the company’s registered office and that a director collected the demand. Master Newnes held that s 29(1) applied such that delivery of the demand was deemed to have been effected when it would have been delivered to the registered office if it had not been diverted to the post office box. In Scope Data, White J respectfully did not agree with the Master’s reasoning. With respect, nor do I agree with that reasoning, nor with the Master’s conclusion. For the reasons stated above, the presumption in s 29 does not apply where there is evidence of when the document is actually delivered.
[10](2006) 24 ACLC 354.
Counsel also referred to an extract from McPherson’s Law of Company Liquidation[11] that a “demand will be deemed under s 29(1) to have arrived at the usual time even though, by reason for example of a diversion arrangement between the company and the post office, it in fact arrived at the company’s address at a later date.” For the reasons given above, and with respect to the learned authors, I do not agree that that is the effect of s 29(1). Counsel also relied on an extract from Mr Farid Assaf’s text, Statutory Demands: Law and Practice.[12] However, there is nothing that is said in that text that is inconsistent with the views I have expressed above.
[11]Gronow, MGR and Mason, R, McPherson’s Law of Company Liquidation, 5th ed, Law Book Company p 3-3067.
[12]Assaf, F, Statutory Demands: Law and Practice, Lexus Nexus Butterworths, Australia, 2008 para 3.40.
Finally, counsel for Mr Chang urged me to find that the presumption in s 29(1) applies where there is any diversion of the mail by the company. He gave as one hypothetical example the situation where a director asked the post office to retain all mail and then either never collects it or only collects it every month or so. In the case where mail is never collected, there would only be evidence of non-receipt of the document and, as noted above, that is not sufficient to rebut the presumption and it would apply. If the mail was only collected every month then, depending upon all of the circumstances including the reasons for not collecting the mail more regularly, it may be that the intended recipient would be estopped from denying that the presumption in s 29 applied. However, that is not the situation here. The retention of the mail at the post office and the collection of it every few days was the standard procedure adopted by Formosa House. It was not a procedure adopted to avoid service. In addition, this procedure was well-known to Mr Chang.
Here, the evidence is that the statutory demand was delivered to the registered office when the restaurant manager collected it from the post office on 14 May 2010 and took it back to the office. That is the date of service of the demand.
If, contrary to the view I have formed, the presumption in s 29(1) had applied, the onus was on Mr Chang to establish what time the demand would have been delivered in the ordinary course of post. The demand was posted on Monday, 10 May 2010 at Box Hill and was addressed to the registered office of Formosa House in Nunawading (both suburbs in the Melbourne metropolitan area). In this regard, the person who posted the demand deposed that a notice on the letterbox read “post by 6.00pm. Sunday to Friday. Destination Melbourne metropolitan area. Scheduled delivery for letters, next business day.” Exhibited to the affidavit was an Australia Post document titled “A summary of charges for frequently used services within Australia Post charges easy guide as at 6 July 2009”. Within the body of that document, a table headed “Delivery Timetable for small and large letters by ordinary post” is included. The number of business days for delivery within the metropolitan areas of capital cities in the same State is shown as one day. Mr Chang also relied on the Australian Postal Corporation (Performance Standards) Regulations 1998. In part, regulation 6(2) provides that Australia Post must deliver at least 94% of letters within the metropolitan area of the same city on the next business day after the day of posting. None of this establishes when in the ordinary course of post a letter posted in Box Hill would be delivered to Nunawading. Rather, each goes to what should happen. There was no evidence as to whether the schedule (as listed on the letterbox), timetable for delivery (as included in the Australia Post document) or performance standards (specified in the regulations) are implemented. Counsel for Mr Chang referred to Bayeh v Commissioner of Taxation.[13] There, Beaumont J was prepared to infer (in the absence of any evidence to the contrary) that a letter sent from the City of Parramatta to the Central Business District of Sydney by post would in the ordinary course arrive in Sydney at its destination in no more than two days. I would not draw a similar inference in the circumstances of this case.
[13](1999) 100 FCR 138.
If there had not been evidence of the date of actual delivery, then in the absence of evidence of the ordinary course of post, it would have been necessary to have regard to s 160 of the Evidence Act 2008 (Vic) which, as noted above, provides a presumption that the demand would have been received on the fourth working day after having been posted – in this case Friday, 14 May 2010.
Was the application to set aside the demand served within time?
Under s 459G(2) of the Corporations Act, an application to set aside a statutory demand may only be made within 21 days after the demand is served. If the application is served outside the 21 day period, then the Court has no jurisdiction to hear the application.[14]
[14]David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265.
As the demand was served on 14 May 2010, the 21 day period expired on 4 June 2010. The originating process to set aside the statutory demand and supporting affidavit was served by that date and the application was made within time.
Procedural issues concerning the appeal
The Notice of Appeal filed by Mr Chang stated that he appealed from the decision of the Associate Judge and, in so far as was necessary, sought leave to appeal and applied for the appeal to be heard immediately. The Notice was headed as an appeal under r 77.06 of the Supreme Court (General Civil) Procedure Rules 2005.
However, the proceeding is one brought under the Corporations Act and the Supreme Court (Corporations) Rules 2003 apply to such proceedings.[15] Rule 16.5(1) of the Corporations Rules provides that an appeal lies from an order of an Associate Judge made under those rules as though it were an appellable order of an Associate Judge under the General Civil Procedure Rules. The appeal is therefore as of right and by way of rehearing.[16] On the hearing of the appeal, counsel for Mr Chang sought leave (if necessary) to bring the appeal under r 16.05(1) of the Corporations Rules. I have treated the appeal as one brought under that rule.
[15]Rule 1.3 Supreme Court (Corporations) Rules 2003.
[16]Rule 77.06(7) Supreme Court (General Civil Procedure) Rules 2005.
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