In the matter of SNL Mining Pty Ltd

[2016] NSWSC 1970

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of SNL Mining Pty Ltd [2016] NSWSC 1970
Hearing dates:	Wednesday, 10 February 2016
Date of orders:	10 February 2016
Decision date:	10 February 2016
Jurisdiction:	Equity - Corporations List
Before:	Brereton J
Decision:	Winding up order made
Catchwords:	CORPORATIONS – winding up – winding up in insolvency – where service of creditor’s statutory demand is disputed – held, satisfied on balance of probabilities that server did hand demand to employee at registered office of defendant   CORPORATIONS – winding up – winding up in insolvency – whether service of statutory demand effective when left in shop not bearing the name of the company but on same floor as the registered address of the company where signage is absent
Legislation Cited:	(CTH) Corporations Act 2001
Cases Cited:	Golden Orchid Pty Ltd v Comax Pty Ltd (1995) 58 FCR 113 Technology Licensing Ltd v Climit Pty Ltd [2001] QSC 84; [2002] 1 Qd R 566
Category:	Principal judgment
Parties:	Sinopec International (Australia) Pty Ltd SNL Mining Pty Ltd (defendant)
Representation:	Counsel: J Willis (plaintiff) N Kabilafkas (defendant)
File Number(s):	2015/00347241

Judgment (EX TEMPORE)

1. HIS HONOUR: By originating process filed on 25 November 2015, the plaintiff Sinopec International (Australia) Pty Limited seeks an order that the defendant company SNL Mining Pty Ltd be wound up in insolvency and liquidators appointed. Christopher Clark Hill and Andrew Scott of PPB Advisory have consented to act as liquidators.

2. The winding up is sought on the ground of the presumption of insolvency arising from failure to comply with a creditor’s statutory demand for payment of debt issued by the plaintiff on 28 October 2015, claiming from the defendant a debt of $10,885,687.36. As the existence and amount of the debt in question is not in dispute on this application, it is unnecessary to describe the debt any further. The requisite notice to ASIC of the making of the application and advertisement of the hearing of the application on the Insolvency Notices website have been given and published respectively. There is evidence that the debt remains due and payable. The company accepts that it cannot rebut any presumption of insolvency, if that presumption in fact arises.

3. The only issue on this application is whether the creditor’s statutory demand was served, as the plaintiff contends, on 28 October 2015. On that issue, the evidence of a process server Mark Slater says that on 28 October 2015 at 1.59pm, he delivered copies of the creditor’s statutory demand and accompanying affidavit to a male person apparently over the age of 16 years and apparently employed at Level 1, 194-198 Lakemba Street, Lakemba, and that before delivery, he asked the person served whether it was the registered office of the defendant, which elicited the answer "yes", and ascertained that the person served went by the name of "Jimmy". Contemporaneously with serving the demand, Mr Slater made a short note in handwriting on a “job card” of the date of service, being “28/10/2015”; the time of service, being “1.59pm”; and under the heading "Observations" wrote "Jimmy (Asian)".

4. For the defendant, an employee Mr Jian Ming Lee conceded in cross-examination, and at least implicitly in his affidavit, that he is known by the name "Jimmy". He says that he was present at Level 1, 194-198 Lakemba Street, Lakemba, in his capacity as an employee of the defendant between approximately 12 noon and 2pm on 28 October 2015, and that to his recollection he was the only employee of SNL Mining present at that time. Mr Lee says that he was able to ascertain and confirm his presence by reference to emails sent by him during that period. He denies that he took delivery of the creditor’s statutory demand on 28 October 2015.

5. The ASIC Register records the registered office of the defendant as "Level 1, 194-198 Lakemba Street, Lakemba NSW 2195", and that it has been at that registered office since 26 February 2015. In his oral evidence, Mr Lee confirmed that the company had moved to that location in early 2015. It emerged that in fact the company (or perhaps a related company) owns the whole building. At first, it occupied the whole of the first floor of the building, although it did not necessarily use the whole space. More recently, it has leased part of the first floor – about 1,000m2 of the 1,200m2 space – to MAX Employment, a company which provides job finding and related services. Mr Lee said in his first affidavit that there is no signage indicating the entrance for SNL Mining's office on the first floor, or for that matter anywhere else in the building; and that mail for the company is sometimes received by MAX Employment.

6. In a second affidavit sworn on 3 February 2016, Mr Slater elaborated on the service of the creditor’s statutory demand. He said that he did not observe any signage for SNL Mining within the building, and that is conceded to be correct. He had accessed Level 1 via a set of stairs, and at the top of the stairs on Level 1 there was an office to the left and an office to the right. He says that as there was no signage for the company, he approached a small number of women in the office to the right of the stairs and asked whether that was the registered office of SNL, at which time a male approached him and confirmed that it was the registered office, and told him that his name was Jimmy. Immediately thereafter, he completed the "job card", to which I have already referred. The office to the right of the stairs to which Mr Slater went is now occupied by MAX Employment, but he says he observed no signage of MAX Employment, or any signage at all, on that level or at the entrance to the office in question.

7. In his second affidavit, also of 3 February 2016, Mr Lee exhibited photographs of the premises which depict signage of MAX Employment on the exterior of the building, in the ground floor lobby on Level 1 outside the lift, and at the entrance to MAX's offices. Mr Slater said that so far as he could recall none of that signage was present when he attended the premises on 28 October 2015. Mr Lee also explained that the door to the office now used by SNL Mining has an electronic lock on it, and that it is normally kept locked, even when the office is attended. Mr Slater said that he initially encountered three Asian ladies working in the office that he entered, prior to being approached by "Jimmy".

8. In further questioning of Mr Lee, it emerged that there was at best a lack of precision as to when MAX Employment moved into the office to the right. Although he denied that SNL had ever placed furniture in there, he did say that it had used a kitchen adjacent to or in what is now the MAX Employment premises, and, at another point, that initially SNL had had the whole floor – although it did not in fact use all of it – but subsequently leased part of the floor to MAX Employment. He said that SNL had had the whole floor until about the middle of 2015, and contracted to a smaller space of about 200m2 when renovations in preparation for MAX Employment’s arrival, in about mid-2015, commenced and then continued for a month or two. Mr Lee conceded that it was possible that it was as late as September that MAX Employment moved in, but denied that it could have been as late as October. Nonetheless, it seems to me that the explanation for Mr Slater's evidence may well be that, as at 28 October 2015, MAX Employment did not yet occupy the office to the right. If that be so, then there is no problem with Mr Slater's evidence.

9. But the most telling objective indicator is Mr Slater's contemporaneous note of 28 October 2015 and its identification of the person served as "Jimmy (Asian)". That this note accurately described a person who worked for SNL at its registered office at the relevant time would be an extraordinary coincidence if not true. Although it was suggested that Mr Slater could have got the name and description from one of the persons to whom he spoke to in MAX Employment’s office and with whom he hypothetically might have left the document to be passed on to "Jimmy", that would be quite inconsistent with the practice of process servers, as known to the court from case after case, in which they will note and record the name of the person to whom a document is given, rather than the name of someone to whom the document is to be passed on by the person to whom it is given. In my view, Mr Slater's contemporaneous note provides a powerful basis for a conclusion that the creditor’s statutory demand was handed to "Jimmy" on 28 October 2015.

10. Mr Lee's evidence, on the other hand, suffered from a number of problems. He appeared frequently uncertain or unsure as to many of the matters about which he was asked. Inconsistencies emerged as to when he had first seen or read the various documents. I am compelled to conclude that his affidavit is largely not his own work, because it uses words that he did not understand – including, for example, a reference to "pleadings"; and he seemed less than familiar with other aspects of what he had apparently deposed to. Significantly, he gave evidence that his boss had convened an urgent or special meeting on 28 October 2015 to ask for some document to be resent, and it seems very likely that that document was the creditor’s statutory demand, allegedly received initially by email on or about that date, but alternatively, it might have been that the original was handed by Mr Lee to his boss around that date. In any event, it seems highly probable that, by one means or another, the company was on notice of the creditor’s statutory demand by 28 October 2015.

11. But it is unnecessary to rely on any notion of informal service. First, I am satisfied on balance of probabilities that Mr Slater did hand the creditor’s statutory demand to Jimmy at the registered office, being somewhere on Level 1, on 28 October 2015. The reasoning which leads me to that conclusion will be apparent from what I have already said, but in essence the combination of Mr Slater's contemporaneous note, the accuracy of that note in naming “Jimmy (Asian)”, the absence of any plausible alternative explanation for Mr Slater being able to make such a note, the availability of the explanation that MAX Employment were not yet in occupation of the other office, and the deficiencies in Mr Lee's evidence, are the important factors in reaching it.

12. Alternatively, even if MAX Employment were in occupation of the other office, and even if the creditor’s statutory demand was left with an employee of MAX Employment in the other office on 28 October 2015, I am satisfied that, in the circumstances, that amounts legally to service on the company. The company identified Level 1 of the building as its registered office. As I have said, no signage anywhere in the building – let alone on Level 1 – identified any specific office or offices as occupied by the company. The office that was in fact on Mr Lee's evidence occupied by the company was kept locked. The only open office on that floor was the office of MAX Employment. The fact that the only office open on the floor was designated and signed MAX Employment – if that be the case – is not inconsistent with it also being the registered office of another company. It is well known that companies may have their registered offices in premises not occupied by them but occupied by others. The (CTH) Corporations Act 2001 specifically contemplates this by requiring such a company to be able to provide evidence of the occupier’s consent.

13. In Golden Orchid Pty Ltd v Comax Pty Ltd (1995) 58 FCR 113, Sheppard J held that there was good service of a statutory demand at the applicant's registered office when it was left with an employee of or in a shop operated by another company on the ground floor of a two storey building, in circumstances where the registered office was identified only by the street address of a two storey building. As in that case, so too in the present case, the description of the registered office was ambiguous. On the assumption that MAX Employment occupied one office on Level 1, and the company another, the creditor’s statutory demand was left at a place within the ambit of the ambiguity. There was no directory or signage which would assist anyone seeking out the registered office to identify it separately from any other part of Level 1. The only open office on the floor was that at which the document was left, and the occupant apparently said that it was the registered office.

14. The defendant relied on the judgment of Chesterman J in Technology Licensing Ltd v Climit Pty Ltd [2001] QSC 84; [2002] 1 Qd R 566. In that case, where the facts were somewhat similar to Golden Orchid, it was held that there was not valid service when the statutory demand was left at an office within the description of the registered office on the ASIC Register, but in circumstances where signage at the premises clearly differentiated which of the premises at that address were the company’s from those which were not. His Honour explained (at [2002] 1 Qd R 566 at 569):

A company which gives an ambiguous address (as did Golden Orchid Proprietary Limited) may not complain when documents are left at a place within the limits of the ambiguity. But where a company has offices at a location more or less precisely identified, it is not too much to expect that service will be effected at those premises and not some other.

15. In referring to premises at a location "more or less precisely identified", his Honour must necessarily have been referring to the circumstance that the premises in fact occupied by the company at the address given were clearly identifiable from the signage. In this case, that distinction from Golden Orchid does not apply. Golden Orchid and not Technology Licensing provides the governing rule for this case.

Conclusion

16. Accordingly, I am satisfied on multiple grounds that the creditor’s statutory demand was duly served on the defendant on 28 October 2015. No application was made within 21 days, or at all, to set aside or vary the Demand which has not been complied with. The defendant, as I have said, accepts that the presumption of insolvency cannot be rebutted. In those circumstances, the company is presumed to be insolvent.

17. The court orders that the defendant be wound up in insolvency, and that Christopher Clark Hill and Andrew Scott of PPB Advisory, level 7, 8-12 Chifley Square, Sydney, be appointed joint and several liquidators of the company.

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Decision last updated: 18 May 2018