Golden Orchid Pty Ltd v Comax Pty Ltd

[1995] FCA 444

CATCHWORDS

CORPORATIONS - service of statutory demand - registered office of company in two-storey building having a number of occupants some connected with the company and some not - address of building specified as registered office - no other specification of it - demand left with employee of shop not bearing company's name - demand in fact reached managing director of company although not for two weeks after service - whether service effective.

Corporations Law, ss.100, 218, 220, 459G, 459S

GOLDEN ORCHID PTY LIMITED v COMAX PTY LIMITED

No. NG 3126 of 1995

CORAM:    SHEPPARD J

PLACE:    SYDNEY

DATE:     30 JUNE 1995

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 3126 of 1995
  )

GENERAL DIVISION                 )

BETWEEN:  GOLDEN ORCHID PTY LIMITED
  Applicant

AND:     COMAX PTY LIMITED
  Respondent

CORAM:    SHEPPARD J
PLACE:    SYDNEY
DATE:     30 JUNE 1995

REASONS FOR JUDGMENT

HIS HONOUR: This is an application under s.459G of the Corporations Law in which the applicant seeks an order setting aside a statutory demand served on it.  The demand is dated 14 February 1995.  The applicant contends that the demand was either not served or not served until 14 days or so after the respondent claims that it was.  The respondent to the application has commenced proceedings (No. NG 3189 of 1995) for the winding up of the applicant to which I shall sometimes refer as "the company".

Section 459G provides that a company may apply to the Court for an order setting aside a statutory demand served on it. An application may "only" be made within 21 days after the demand is so served. The application must be made in accordance with the section and will only be treated as duly made, if within 21 days, an affidavit supporting the application is filed with the Court and a copy of the application and a copy of the supporting affidavit are served on the person who served the demand on the company. There is no issue between the parties that the demand was served. It is the date of service which is in question. The respondent contends that the application was served on 14 February 1995. The applicant contends that it was not served until 27 or 28 February 1995 when Mr Kee Sun Lee, who is the managing director of the applicant, was handed a copy of the demand. He said that that was the first time he saw the demand and supporting affidavit. He caused it to be forwarded to his solicitor, Mr Hassett. If Mr Lee be right, the application to set aside the statutory demand is within time, it having been filed on 17 March 1995.

The evidence establishes that the registered office of the applicant is 274 Victoria Street, Darlinghurst.  It was registered as a shelf company on 14 January 1994 and assumed its present name on 22 April 1994.  Its registered office was notified as being 274 Victoria Street, Darlinghurst, on 25 January 1994.

The process server who claims to have effected service of the demand on 14 February 1995 is Mr Szittner.  He said that on 14 February 1995 he duly served the applicant with a signed and sealed copy of the creditor's statutory demand for payment of debt and the affidavit in support of the demand.  Copies of these documents are annexed to his affidavit.  He said that he served the documents by delivering them to one Catherine Pak a female person apparently not less than 16 years of age at the registered office of the company at 274 Victoria Street, Darlinghurst.  He said that at the time of service, he asked Ms Pak whether the premises were the registered office of the applicant.  She replied, "Yes, this company is at Alexandria, they are all connected".

In her affidavit Ms Pak said that she was a sales manager at the KeiSei Duty Free Shop situated at 274 Victoria Street, Darlinghurst.  She said that the shop was owned by Keisei International Pty Ltd.  She was an employee of the company during February of 1995.  Her usual task was to serve behind the counter in the shop.  She remembered that, "in late February 1995", she was given some legal documents concerning the applicant.  The person who gave her the documents said, "Is this Golden Orchid?".  Ms Pak said, "Golden Orchid is at Alexandria, it is another one of Mr Kee Sun Lee's companies.  He owns this shop."  The person with the documents then said, "Can you give him these documents?".  Ms Pak said "OK".  She took the documents and gave them to the accountant for the KeiSei shop and asked him to send them to Alexandria.  Ms Pak denied that the person serving the documents, i.e. Mr Szittner, said to her, "Is this the registered office of Golden Orchid Pty Ltd?".  She denied assenting to this proposition.  She also said that until she spoke to Mr Hassett on 20 April 1995, she did not know where the registered office of the applicant was.  She said that the retail operations of the applicant were conducted at Alexandria and so she "organised the documents to be sent there."

Mr Lee swore two affidavits.  In the first he said that the applicant's registered office was situated on the ground floor of 274 Victoria Street.  The building has in fact marked on it the address, 274-290 Victoria Street.  He said that it was comprised of an office which was marked on the door with the words, "Golden Orchid Pty Ltd".  He said that also situated on the ground floor of 274 Victoria Street was the KeiSei Duty Free shop operated by another company of which he was a shareholder.  He said that during working hours he was usually seated in the applicant's office.  He said a secretary was present at all times.  He said that at no time on 14 February 1995 or at any other time did any person serve the statutory demand or affidavit in support thereof at the registered office of the defendant.  It was not served while he was there and he was informed by his secretary that it was not ever given to her.  He said that he was handed the demand and supporting affidavit in late February by "one of the girls" working in the KeiSei Duty Free shop who told him that the documents had come from "next door".  He said that this was the first time he had seen the demand.  As mentioned, he sent them to Mr Hassett. 

In his second affidavit Mr Lee repeated his statements concerning the whereabouts of the applicant's registered office and again described his own office which was marked with the applicant's name.  He said that situated on the ground floor of 274 Victoria Street was the KeiSei Duty Free shop and the office of Kook Je Corporation Pty Ltd which was in a different office.  The building has two storeys.  Other tenants in the building, apart from those mentioned, were the Excalibur Night Club, the Blue Jazz Bar, the Bulaka Indian Restaurant and a residential apartment.  He said that he had no connection with any of these other tenants. 

He said that during and prior to February 1995 the principal business office of the applicant was at 48 O'Riordan Street, Alexandria.  This was where the staff worked and where the opal factory it operated was situated.  The customers of the applicant, usually tourists, were taken to Alexandria.  He said that, within the trade, the applicant was known to be based at Alexandria. 

The matter was in the list for directions on 22 June last.  During the directions hearing it emerged that there was this issue about the service of the demand.  I asked whether it would be possible for the matter to be dealt with on 21 June.  The parties made enquiries and I was informed that they would be ready to proceed at 2.15 p.m. on that day.  When the hearing of the matter began, I was informed by counsel that it was proposed to cross-examine Mr Szittner, but that there would be no other cross-examination.  Counsel agreed between themselves that the fact that the other witnesses were not called to be cross-examined was not to give rise to a situation in which counsel for the applicant could make adverse comment on the absence of the applicant's witnesses from the witness box. 

The only material point of conflict in the evidence is the difference between Mr Szittner and Ms Pak as to whether Mr Szittner made any mention to her of the registered office of the company.  Mr Szittner says that he did; Ms Pak denies this.  I do not think the matter is of any significance because the demand was left at 274 Victoria Street, Darlinghurst.  I thought Mr Szittner an honest and reliable witness.  He is an experienced process server.  I think it likely that, when serving companies, his usual procedure is to ask whether the premises are the registered office of the company being served.  I find that he followed this practice in the present case.  I can well understand that Ms Pak does not remember these words being used.  Furthermore, it seems doubtful whether she would have understood their significance if she had remembered them.  She thought she knew where the documents should be sent.  But the address was in fact the
registered office.  The demand was eventually brought to Mr Lee's attention.

I should now refer to some of the provisions of the Corporations Law and to some authorities. I have earlier referred to the provisions of s.459G which is the section pursuant to which this application is made. Section 217 provides that a company shall, as from its registration day, have a registered office within Australia to which all communications and notices may be addressed and which shall be open during hours which are specified in the section. Subsection 218(1) provides that, on the lodging of an application for the registration of a company, there shall be lodged a notice in the prescribed form of the address of its proposed registered office. Section 100 provides that, where a provision of the Law requires a notice to be lodged of the address of an office, or of a proposed office, of a body corporate, the notice shall specify the full address of the relevant office including, where applicable, the number of the room and of the floor or level of the building on which the office is situated.

Subsection 220(1) of the Law provides that a document may be served on the company by leaving it at, or by sending it by post to, the registered office of the company.  Subsection 220(2) of the Law provides that, for the purposes of subsec. (1) the situation of the registered office of a company in a case to which neither para. (b) nor para. (c) applies shall be deemed to be the place notice of the address of which has been lodged under subsec. 218(1).  Paragraphs (a) and (b) of subsec. 220(2) deal with cases where there have been one or more changes in the situation of the registered office of a company.  So far as the evidence discloses, neither of those provisions is relevant to the circumstances of the present case.

Finally, s.459S provides that, insofar as an application for a company to be wound up in insolvency relies on a failure by the company to comply with the statutory demand, the company may not, without the leave of the Court, oppose the application on a ground that the company relied on a statutory demand being set aside or that the company could have so relied on, but did not rely on the notice being set aside. The Court is not to grant leave unless it is satisfied that the ground is material to proving that the company is solvent. It follows that, if a company fails to have a notice of statutory demand set aside under s.459G, it will be very difficult for it to avoid facing the question of its solvency in proceedings to wind it up. Its failure to have the demand set aside will mean that it will be unlikely that it can, in the winding up proceedings, contest those proceedings on the ground that it does not owe the amount claimed by the creditor or that there is a real question as to its liability to pay that amount. It is of critical importance, therefore, to ascertain whether the statutory demand was served, as the respondent contends, on 14 February 1995. If it was not, it seems to me that I should take the view either that the demand has not been served at all or that it was served, at the earliest, on 27 or 28 February when Mr Lee says it came to his notice.

The authorities in this area are numerous.  In the view I take of the matter it is sufficient to refer principally to the decision of McLelland CJ in Eq in Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559. There a statutory demand was left at the registered office of the debtor company which was the office of a firm of accountants. In fact the accountants had had no contact with the company for several years. Mail for the company passed on by the accountants to an address they had been given for the company had been returned unclaimed. His Honour held (at 565) that the service was good because it was effected in conformity with the provisions of s.220 of the Law.

There were some other matters dealt with in the judgment including the significance, if any, to be attached to the fact that the creditor was advised by the accountants that they had had no contact with the company for several years.  The question was whether there was an abuse of process.  In the course of his treatment of this question, McLelland CJ in Eq referred to the decision of von Doussa J (when a judge of the Supreme Court of South Australia) in Re Rustic Homes Pty Ltd (1988) 49 SASR 41. His Honour took a different view from that taken by von Doussa J. Here there can be no question of any abuse of process. It was not suggested that there was. The documents did in fact come to the attention of Mr Lee albeit that some two weeks had passed between the time they were served and the time they reached him. I do not need to express a view upon the question upon which the two judges differed and I do not.

Two further authorities were referred to in argument.  These were In Re Alpina Pty Ltd (1977) 17 SASR 528, a decision of Hogarth J of the Supreme Court of South Australia, and in Re Third Lojebo Pty Ltd (1982) 1 ACLC 138, a decision of Brooking J of the Supreme Court of Victoria. These cases were decided under earlier legislation not dissimilar from the present but not containing the more specific provisions concerning the need to identify precisely the whereabouts in a building of a registered office contained in s.100 of the Law. It may be noted in passing that Hogarth J in Alpina suggested that the legislation ought to contain provisions along these lines; see at 533.  There are some differences between the judgments of Hogarth J and Brooking J.  In the light of the decision of McLelland CJ in Eq, with which, on the point in question, I am in respectful agreement, I do not need to refer to these particularly as the legislation considered in the earlier judgments is not on all fours with the present legislation. 

The real complaint of the company in this case is that the demand was left in a shop not bearing the name of the company in an office building having a number of businesses. But the demand was nevertheless left at the company's registered office notified by it in the records kept by the Australian Securities Commission. The provisions of s.100 of the Law obliged the company to be specific about its location in the building which it occupied. It was required to designate the number of the room and of the floor or level of the building on which the office was situated. This was not done. It chose to specify only the fact that its office was to be found somewhere within the building.

There is no evidence that there was a directory at the entrance to or in the vestibule of the building, and no precise evidence of how easy or difficult it was to find the office referred to in Mr Lee's affidavit.  Mr Szittner took steps to see to it that he did leave the demand with someone in the building who knew of the company.  It did in fact come to Mr Lee's knowledge although some two weeks after service.  He may have believed that the documents had only just been served - he does not say this expressly - but there is no evidence whether he made any enquiries about that matter.  In the result I am satisfied that the demand was served on 14 February 1995.

The matter will be stood over for a short time to enable the parties and their legal advisers to consider what I have said.  When the matter is again in the list I shall deal with
the consequence of my finding of the date of service of the demand and make, if it be necessary to do so, directions as to the future conduct of the hearing.

I certify that this and the eleven (11) preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Sheppard.

Associate

Dated:  30 June 1995

APPEARANCES

Counsel for the Applicant:       -

Solicitors for the Applicant:        J.F. Hassett

Counsel for the Respondent:      M. Young

Solicitors for the Respondent:    Aubrey F. Crawley & Co.

Date of Hearing:                 22 June 1995

Place of Hearing:                Sydney

Date of Judgment:                30 June 1995