In the matter of VO Group Australia Pty Ltd

[2023] NSWSC 852

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of VO Group Australia Pty Ltd [2023] NSWSC 852

Hearing dates:

17 July 2023

Date of orders:

17 July 2023

Decision date:

17 July 2023

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

The Court has jurisdiction to determine the application and the Defendant to pay the costs of and incidental to the separate issue.

Catchwords:

CORPORATIONS — Winding up — Statutory demand — Application to set aside – Service by post - Where affidavit evidence is that statutory demand was sent by express post to address with an incorrect postcode – Whether service of the statutory demand was deemed effective

CORPORATIONS — Winding up — Statutory demand — Application to set aside – Whether delivery of the statutory demand by an electronic means to an employee constituted effective informal service

Legislation Cited:

- Acts Interpretation Act 1901 (Cth), s 29

- Corporations Act 2001 (Cth), ss 109X, 459G, 600G

- Evidence Act 1995 (Cth), s 160

Cases Cited:

- Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd (2018) 98 NSWLR 473; [2018] NSWCA 270

- Deputy Commissioner of Taxation v ABW Design & Construction Pty Ltd (2012) 203 FCR 70; 291 ALR 127; [2012] FCA 346

- Dwyer v Canon Australia Pty Ltd [2007] SASC 100

- Pearlburst Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126

- Perpetual Nominees v Masri [2004] 49 ACSR 714; [2004] NSWSC 500

- Re Dyldam Developments Pty Ltd [2019] NSWSC 1518

- Woodgate v Gerard Pty Ltd (2010) 78 ACSR 468; [2010] NSWSC 508

Category:

Procedural rulings

Parties:

VO Group Australia Pty Ltd (Plaintiff)
Watpac Construction Pty Ltd (Defendant)

Representation:

Counsel:
L Chan & A Lim (Plaintiff)
J Hastie (Defendant)

Solicitors:
Brightstone Legal (Plaintiff)
BESIX Watpac (In-House Counsel) (Defendant)

File Number(s):

2023/00131472

JUDGMENT – ex tempore (Revised 18 July 2023)

1. These proceedings are an unfortunate example of the technicalities which sometimes arise in proceedings to set aside a creditor’s statutory demand. By Originating Process filed on 24 April 2023 the Plaintiff, VO Group Australia Pty Ltd ("VO") applies to set aside a creditor’s statutory demand dated 21 March 2023 (“Demand”) which is there described as served on VO on 4 April 2023. That application was within time, for the purposes of s 459G of the Corporations Act 2001 (Cth) (“Act”), if the Demand was in fact served on 4 April 2023, but out of time if it was served at a prior date.

2. The Defendant, Watpac Construction Pty Ltd ("Watpac") now contends that the Demand was in fact served at a prior date, notwithstanding an exchange of emails between VO and Watpac by which Watpac had previously confirmed 4 April 2023 as the date of service. On that basis, Watpac contends that the application to set aside the Demand was filed out of time, and that the Court has no jurisdiction to deal with it. Watpac has indeed gone further, so as to now file a winding up application on the basis that the period of time for filing that application was not extended by VO filing the application to set aside the Demand, and that winding up application needed to be filed and served on Friday 14 July 2023 in order to comply with the three month time limit specified in s 459C of the Act.

Affidavit evidence

3. With that background, I will now turn to the affidavit evidence on which the parties rely, before returning to the relatively narrow issues that are in dispute between them.

4. Watpac relies on two affidavits dated 14 and 17 July 2023 of its Contracts Manager, Mr Peter Hall. He refers to the entry into a contract titled Major Works Subcontract between VO and Watpac and to the issue of the Demand to VO in respect of a debt claimed under that subcontract. He refers to a copy of the Demand together with his accompanying affidavit dated 21 March 2023 in support of the Demand. He sets out the steps which were taken to serve the Demand by post. A difficulty arose in respect of that evidence, so far as he says, in paragraph 11 of his affidavit dated 14 July 2023 (and to similar effect in paragraph 5 of his second affidavit dated 17 July 2023) that a company search of VO showed VO's registered office to be at an address situated in Arthur Street, North Sydney, 2000 ("Relevant Registered Office") and says in his first affidavit that he marked the envelope in which the Demand was sent with the address of the Relevant Registered Office and, in his second affidavit, says that he marked the envelope with the address in Arthur Street, North Sydney, NSW, 2000.

5. It appears to be common ground between the parties that the postcode 2000 is that of the central business district of Sydney, and the postcode required to address an envelope to Arthur Street, North Sydney, would be 2060. At least on the face of Mr Hall's affidavit, the envelope by which he caused the Demand to be served by express post was not addressed to the address of VO’s registered office in North Sydney, because it included a postcode in the Sydney central business district, not a postcode in North Sydney. Mr Hall refers to the posting of the envelope at a post office box in Sydney by an assistant, Ms Ristevski, and she gives evidence in that respect. Mr Hall also addresses, in his first affidavit, notice which had previously been given by VO to another employee of Watpac of a proposed change of registered office, which had not become effective by notification given by VO to the Australian Securities Investments Commission at the time the Demand was served.

6. In his first affidavit, Mr Hall in turn refers to tracking information in relation to the delivery of the Demand by express post, and indicates that he received an email from Australia Post on 23 March 2023 advising that the envelope had been delivered on that day. A copy of that email is exhibited to his affidavit and recorded that the “shipment” had been delivered, and identified the tracking number, but it did not indicate where the “shipment” had been delivered. He also refers to having accessed the item search available from Australia Post at that time, but the result of his doing so is not in evidence, and it appears that information is no longer available through Australia Post given the lapse of time. He refers to an email which he sent at that time which advised other persons within Watpac of delivery of the Demand by express post and noted that he had followed that up with an Aconex message to VO. He did not there record the address to which the Demand had been delivered, at least so far as it emerged from any information from Australia Post that he had accessed at that time. Mr Hall’s evidence is that he has since made further inquiries with Australia Post, who have advised that an item with the relevant tracking number was delivered on 23 March 2023 "as addressed", but that advice does not disclose what Australia Post did with the envelope where (on Mr Hall’s evidence) the street address and postcode are inconsistent.

7. Mr Hall also refers to causing the Demand and accompanying affidavit to be sent to VO by a system called Aconex, which is used in respect of the administration of construction contracts, and there is no dispute that the Demand and supporting affidavit was received by an employee of VO, Mr Wang, on or about 23 March 2023 in that manner. Mr Wang was not a director of VO and I address a question as to the scope of his authority below.

8. Watpac contends that Mr Wang was the "subcontractor's representative" for the purposes of the Major Works Subcontract to which I referred above, and I bear in mind that cl 18 of that subcontract provides that any “Direction” given to the representative shall be deemed to be given to VO, and the term "Direction" is widely defined to include a notice. However, that is a contractual provision which operates for the purposes of the subcontract, and not part of the statutory regime which governs the service of creditor’s statutory demands or the relevant provisions in the Evidence Act 1995 (Cth) which provide certain timing presumptions as to when such demands are delivered.

9. Mr Hall gives evidence, and I accept, that he was not personally aware that VO had changed, or intended to change, its registered office at the time the Demand was served. There is no basis to think that Mr Hall intended to proceed in a way that would deprive VO of notice of the Demand, and the evidence to the contrary is clear, where Mr Hall had taken the trouble to also send the Demand and accompanying affidavit to VO by Aconex, which would, and did, bring it to the attention of Mr Wang so far as he was VO’s representative for the purpose of the subcontract.

10. A second affidavit of Mr Hall dated 17 July 2023 confirms his previous evidence as to the address at which the Demand was served, again referring to the incorrect postcode, and he also gives evidence of a meeting on 13 April 2023 which I need not further address.

11. Watpac also reads an affidavit dated 14 July 2023 of Ms Ristevski, where she gives evidence of her practice as to the posting of mail. There is no reason not to accept that evidence as to her practice, and no reason to think that that practice was not followed in this case, in respect of the envelope referred to in Mr Hall’s affidavit evidence. Watpac also reads an affidavit dated 17 July 2023 of Mr Young, addressing aspects of the administration of the subcontract, and referring to circumstances in which Mr Wang, as subcontractor representative, attended meetings in respect of the administration of the subcontract.

12. Watpac also tendered an affidavit of Mr Wang dated 24 April 2023, filed in relation to VO’s application to set aside the Demand, which acknowledged that Mr Wang had received a copy of the Demand and supporting affidavit by Aconex message dated 23 March 2023 and indicates that the Aconex message and the Demand came to Mr Wang's attention when he read them on 24 March 2023. Mr Wang there noted that the address on the Demand was not the current registered office of VO. His evidence in that respect was not correct, given the change of VO’s registered office did not become effective until a later date. He appears to have treated the Demand as of no effect, because it was addressed to VO’s existing registered office address in North Sydney, and he sought to have Watpac reissue the Demand to the new registered office of VO despite the fact that change had not yet taken effect.

13. VO in turn reads two affidavits of its solicitor, Ms Yanran Wang, dated 13 and 16 July 2023, which related to aspects of the matter and, in particular, to the confirmation previously provided by Watpac that the Demand was served on 4 April 2023. Nothing turns on that matter, since appellate authority makes clear that it is not possible for VO to establish an estoppel which will confer jurisdiction on the Court when it does not have it under s 459G of the Act, by reason of a confirmation of that character: Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd (2018) 98 NSWLR 473; [2018] NSWCA 270.

14. VO also reads the affidavit of Mr Wang dated 16 July 2023, when he refers to the change of VO’s registered office and gives evidence of an oral confirmation by Mr Hall that the Demand was withdrawn and that service on a later date, 4 April, should be treated as an effective date. It is not necessary to decide whether that evidence should be accepted, where I have noted above that no estoppel can operate so as to confer jurisdiction on the Court which it does not have under s 459G of the Act. Mr Wang also there again addresses the receipt of the copy of the Demand by an Aconex message, but goes on to say that he had told employees of Watpac, including Mr Hall, that VO had changed its registered address and asked them to redeliver the Demand to the new registered address and says that he did not bring the Demand he received by Aconex to the attention of the sole director of VO.

Determination

15. Three issues now arise in respect of the question whether the Demand was served prior to 4 April 2023, which determines the question whether the Court now has jurisdiction to determine the application to set it aside brought by VO and will also, likely, determine whether the winding up application filed by Watpac on 14 July 2023 should now be dismissed.

16. Mr Hastie, who appears for Watpac, puts Watpac's primary position that the delivery of the Demand and accompanying affidavit was effective service at the then registered office of VO on 23 March 2023, and he challenges a submission put by VO that service was not effected because, by that time, the North Sydney address had ceased to be the registered office. I cannot accept that submission put by VO, because the North Sydney address had not ceased to be VO's registered office as at that time, where VO’s change of registered office did not take effect until a later date: compare Perpetual Nominees v Masri [2004] 49 ACSR 714; [2004] NSWSC 500.

17. Mr Hastie relies on s 109X of the Act and on provisions that deal with the deeming of the time of service, where service is effected by post, to establish delivery of the Demand by express post to VO’s registered office. I should add something further in addition to the observations in my oral judgment as to the scope of those provisions. Under s 109X(1)(a) of the Act, a creditor’s statutory demand may be served on a company by, among other things, posting it to that company’s registered office. Under s 29(1) of the Acts Interpretation Act 1901 (Cth), service by post is deemed to be effected by properly addressing, pre-paying and posting that document as a letter and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post (emphasis added); see Dwyer v Canon Australia Pty Ltd [2007] SASC 100 at [6]–[9].

18. Mr Hastie, in dealing with these matters, understandably proceeded on the basis that service had been effected at the North Sydney address on 23 March 2023, where part of VO's case was originally directed to displacing the proposition that service at that address amounted to effective service. As the evidence developed in the course of this hearing, the basis for that proposition has been eroded. The difficulty that has now developed in Watpac’s reliance on these provisions to establish that the Demand was served at VO’s registered office is that s 109X of the Act establishes, and the case law recognises, minimum requirements for the proof of service at a registered office so as to allow Watpac to invoke s 109X of the Act and the statutory presumptions as to time of service. In Dwyer v Canon Australia Pty Ltd [2007] SASC 100 at [6], Debelle J noted that the first of the requirements in order to rely on the presumption under s 109X of the Act is that the envelope which enclosed a creditor’s statutory demand is properly addressed. That observation was subsequently applied by Barrett J in Pearlburst Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126 at [22], to which I referred in Re Dyldam Developments Pty Ltd [2019] NSWSC 1518. Here, unfortunately for Watpac, it cannot establish that matter, because Mr Hall, possibly by error, has twice identified by his affidavit evidence that the envelope was posted to a street address in North Sydney in an envelope showing the postcode for the Sydney central business district. I do not consider that I can disregard Mr Hall’s evidence of that matter. That has the consequence, consistent with the result in similar circumstances in Deputy Commissioner of Taxation v ABW Design & Construction Pty Ltd (2012) 203 FCR 70; 291 ALR 127; [2012] FCA 346, that the matters necessary to give rise to the application of s 109X of the Act are not established, and the presumption of service that comes from service at the registered office under that section is not available. No question of timing of that service arises.

19. I have not neglected the fact that one document tendered in the exhibit to Mr Hall's affidavit suggests that Australia Post may have inferred that a Demand addressed to a street in North Sydney was to be delivered to North Sydney, and not to an address in the Sydney central business district. However, that evidence is only the start of proving service at VO’s then registered office as a matter of fact. Watpac cannot prove service at that address, in fact, because it has been unable to access or tender a tracking record which records service at that address.

20. The next question, which I can deal with more briefly, is whether service by Aconex of the Demand and affidavit addressed to Mr Wang can be treated as effective informal service for the purposes of the case law. Mr Hastie rightly points to the observations of Palmer J in Woodgate v Gerard Pty Ltd (2010) 78 ACSR 468; [2010] NSWSC 508 at [44] that, if service other than by a prescribed mode of service takes place:

"[w]hether it is good service depends upon whether the serving party can prove to the Court's satisfaction that the document actually came to the attention of an officer of the company who was either expressly or implicitly authorised by the company to deal directly and responsively with the document, or documents of that nature...”

21. There is no doubt, including by reason of Mr Wang’s evidence, that the Demand and affidavit came to Mr Wang’s attention on or about 23 or 24 March 2023. There is also no doubt that Mr Wang was authorised, under the Major Works Subcontract, to deal with notices given under that subcontract, so far as he was the subcontractor's representative under that subcontract. However, there is no evidence that he was expressly authorised by VO to deal with creditor’s statutory demands. It seems to me that I also could not find that he was impliedly authorised by VO to deal with those matters, given the significant consequences of non-compliance with a creditor’s statutory demand within the 21-day period specified in the Act, and, as I have noted above, he was not a director or shareholder of VO. I do not think that I should adopt an approach which has the consequence that creditor’s statutory demands under a construction contract could generally be served by Aconex upon persons who are responsible for the administration of individual projects, where they are designated as subcontractor representatives in respect of those individual projects, rather than to a company’s registered office or to persons within the corporate administration who are more likely to recognise the significance of a creditor’s statutory demand and the substantive consequences of not properly addressing it. In these circumstances, while I accept that the Demand and supporting affidavit was provided to Mr Wang, on or about 23 or 24 March 2023, I cannot accept that that constituted effective informal service on VO in the relevant circumstances.

22. Mr Hastie also refers to s 600G of the Act, which has expanded the scope of service and arguably permits service by email and possibly also by the Aconex system so far as it is an electronic system. However, that does not assist Watpac in circumstances that service upon Mr Wang, by email or by Aconex, cannot be treated as service upon VO for the reasons noted above.

23. In these circumstances, it seems to me that Watpac has not established that the Demand was served prior to the 4 April 2023 date as to which it is common ground that it was served. As matters have emerged, that result is consistent with the position previously accepted by Watpac when it represented to VO, in response to VO's inquiry, that the Demand had been served on 4 April 2023. Watpac has now not established service of the Demand at an earlier date, and the result which would have followed, had an estoppel been available to VO, has resulted by a different route. It seems to me that, in those circumstances, the outcome could not be said to be an unfair one. For these reasons, I do not find that the Court is without jurisdiction to determine the application to set aside the Demand, and the Court will need to make directions to progress that application. It seems to me that Watpac must pay VO's costs of and incidental to the separate issue as to whether the Court has jurisdiction to set aside the Demand.

21. Subject to hearing the parties, it seems to me that the winding up application filed by Watpac on 14 July 2023 must also be dismissed with costs, because a winding up application plainly cannot be filed prior to the determination of a valid application to set aside the Demand. Equally, Watpac need not be concerned that the presumption of insolvency that may ultimately arise from the Demand has become stale, where the three-month period under s 459C of the Act in respect of that presumption will not commence to run until the determination of the application to set aside the Demand.

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Decision last updated: 20 July 2023