Gillis v ACN 000 007 492 Ltd
[2007] FCA 1151
•3 July 2007
FEDERAL COURT OF AUSTRALIA
Gillis v ACN 000 007 492 Ltd [2007] FCA 1151
Corporations Act 2001 (Cth), s 109X(1)
MICHAEL JOSEPH GILLIS & ORS v ACN 000 007 492 LTD
NSD448 OF 2007
EMMETT J
3 JULY 2007
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD448 OF 2007
BETWEEN:
MICHAEL JOSEPH GILLIS
First PlaintiffMADELINE TRACEY INGLIS
Second PlaintiffDAVID THOMAS NEWEY
Third PlaintiffGEOFFREY DAVID STEIN
Fourth PlaintiffDAVID ARTHUR VEASEY
Fifth PlaintiffJOHN PAUL VOHRALIK
Sixth PlaintiffPETER JOSEPH WRIGHT
Seventh PlaintiffCHRISTOPHER HERBERT BROWN
Eighth PlaintiffAND:
ACN 000 007 492 LTD
DefendantJUDGE:
EMMETT J
DATE OF ORDER:
3 JULY 2007
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The Plaintiff pay the Defendant’s costs of the proceeding.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD448 OF 2007
BETWEEN:
MICHAEL JOSEPH GILLIS
First PlaintiffMADELINE TRACEY INGLIS
Second PlaintiffDAVID THOMAS NEWEY
Third PlaintiffGEOFFREY DAVID STEIN
Fourth PlaintiffDAVID ARTHUR VEASEY
Fifth PlaintiffJOHN PAUL VOHRALIK
Sixth PlaintiffPETER JOSEPH WRIGHT
Seventh PlaintiffCHRISTOPHER HERBERT BROWN
Eighth PlaintiffAND:
ACN 000 007 492 LTD
Defendant
JUDGE:
EMMETT J
DATE:
3 JULY 2007
PLACE:
SYDNEY
REASONS FOR JUDGMENT
By originating process filed on 21 March 2007, the plaintiffs who are a firm of solicitors (the Firm), seek orders for the winding up of the defendant, ACN 000 007 492 (the Company). The basis of the application for winding up was the insolvency of the Company.
In making the application, the Firm claimed to rely on a statutory demand served on the Company on 17 January 2007. The demand related to what was said to be a judgment in respect of costs owed by the Company to the Firm. Ultimately, after several aborted attempts, the matter was listed for hearing today when the Firm indicated that they accepted that they could not succeed on the winding up application based on insolvency in the light of evidence filed on behalf of the Company indicating that it is, indeed solvent, notwithstanding that it is subject to administration. It is appropriate, therefore, that the application be dismissed.
Both parties have asked for special orders as to costs. The Firm say that there should be no order as to the costs of the proceeding since they have accepted the evidence indicating that the Company is solvent. However, nothing has been advanced, in my view, to suggest that the ordinary principle should not be applied, namely, that costs follow the event. This is not a case where there has been some real compromise on the part of the Firm. They persisted in their application to wind up on the ground of insolvency and finally accepted that the Company was not insolvent.
Had there been no issue about the service of a statutory demand and failure to comply with it, it may be that the Firm would have had a basis for saying that they should have their costs at least up to the time when the Company filed and served evidence indicating that it was, indeed, solvent. However, there are difficulties with the demand. The evidence is that the attempts to serve the statutory demand were made by sending it to an address that is not, in fact, the registered address of the Company.
The demand was posted to 130 Bourke Street, Sydney, 2000. The registered office of the Company is, in fact, 130 Bourke Street, Woolloomooloo, 2011. Subsequently, the originating process was served by being sent to 130 Bourke Street, Sydney, 2000. It was, in fact, received at the registered office at 130 Bourke Street, Woolloomooloo, 2011. The evidence filed on behalf of the Company suggests that the Company did not become aware of the statutory demand until 12 April 2007, when the originating process was found at the registered office of the Company.
The office at 130 Bourke Street, Woolloomooloo has not been occupied since September 2005. However, since that time, one of the directors of the company, Aaron Geoffrey Stephenson, has regularly attended the office to collect mail and to check on the property. On the basis of the material deposed to in Mr Stephenson’s affidavit of 4 May 2007, several inferences are open. One is that the statutory demand was not actually delivered to the office in Woolloomooloo. Another inference is that, having regard to the fact that the envelope containing the statutory demand was not returned undelivered, the demand was, in fact, delivered to the office in Woolloomooloo, notwithstanding that it did not come to the attention of the director.
It is not possible for me, on the basis of the material, to make a finding one way or the other as to whether or not the demand was actually served on the Company. Much has been made of the provisions of s 109X(1) of the Corporations Act 2001 (Cth) (the Act) which provides for the way in which a document may be served on a company. In a sense, however, that is irrelevant; the question is whether or not the statutory demand was delivered to the registered office. It is not an issue that 130 Bourke Street, Woolloomooloo, 2011 was, in fact, the registered office of the Company. That of itself suggests some lack of attention to detail on the part of the Company, having as its registered office an unoccupied building. However, that is a risk that the Company has been willing to take.
The real issue before me this morning is whether or not, as the Company asks, I should make an order for indemnity costs of the proceeding. The basis for the Court being asked to do so is that it should have been apparent to the Firm that the proceeding was likely to fail, in circumstances where they purported to serve the statutory demand by sending it to the wrong address.
However, the Company did not take unequivocal action to draw to the Firm’s attention the point that is now made, namely, that the demand was never served. In the notice of appearance, filed on 19 April 2007, which included grounds of opposition to winding up, no issue was raised concerning the service of the statutory demand. The grounds of opposition raised eight different matters, none of which hinted at a failure to serve the statutory demand.
On 3 May 2007, the Company’s solicitors wrote to the Firm referring to the notice of appearance and grounds of opposition. They indicated that they intended to seek leave to amend the grounds of opposition in order to add two extra grounds, namely, that the statutory demand was not served at the registered office of the Company and that it was not served on the administrator of the Company in accordance with s 109X(1)(d) of the Act. There is no suggestion in that letter that the demand had not been served at all and that it had not come to the attention of the Company prior to the commencement of the proceeding.
On 4 May 2007, the Company’s solicitors sent to the Firm a copy of the affidavit of 4 May 2007, to which I have referred. That affidavit, as outlined above, is capable of giving rise to two inferences, one of which favours the Firm, one of which favours the Company. There was no unequivocal statement in the affidavit that the demand had not been served at the Company’s registered office; the only statement was that it had not come to the attention of the Company until it received the originating process.
On 4 May 2007, written submissions were filed on behalf of the company setting out the grounds of opposition intended to be relied upon. One of the matters referred to in the written submissions concerns service of the statutory demand. The submission referred, in some detail, to s 109X(1)(d). The closest that can be said that the submission comes to taking the point now being taken was as follows:
Indeed on the face of the evidence the documents seem to have been sent to 130 Bourke Street, Sydney 2000 which is not the registered office of the company. It is rather, Suite 1, 130 Bourke Street, Woolloomooloo, NSW 2011… Accordingly, the notice of demand has not been served in accordance with the Act and the plaintiff cannot rely upon it as evidence of insolvency. This is quite apart from the other defects, namely, the lack of verification in accordance with the rules.
Even when the amended notice of appearance and statement of opposition was filed on 25 May 2007, the ground relied upon, relevantly, was identified as follows:
The statutory demand upon which the plaintiffs rely does not prove insolvency for the following reasons:
(a)It was not served upon the defendant, pursuant to the provision of section 108X(1) of the Corporation Act or indeed at all [sic].
Reference was made to s 108X and to the fact that there is evidence from the Company that it did not receive the demand. The statement of opposition gets much closer to informing the Firm of a deficiency in relation to the notice of demand. However, I am not persuaded that the conduct of the Firm was so unreasonable in pressing on with the application, that there should be a special order as to costs.
I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 8 August 2007
Counsel for the Plaintiffs: Mr D P O’Dowd Solicitor for the Plaintiffs: Gillis Delaney Lawyers Counsel for the Defendant: Mr J Sleight Solicitor for the Defendant: Boyd-Boland Law Date of Hearing: 3 July 2007 Date of Judgment: 3 July 2007
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