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James v Ash Electrical Services Pty Ltd

James v Ash Electrical Services Pty Ltd

Case [2008] NSWSC 1112 24 October 2008

Winding Up & Liquidation

Statutory Demand

Insolvency Law

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Reported Decision:
220 FLR 328
73 NSWLR 95

New South Wales

Supreme Court

CITATION: James v Ash Electrical Services Pty Ltd [2008] NSWSC 1112

HEARING DATE(S): 20/10/08

JUDGMENT DATE :
24 October 2008

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Separate question answered "No"

CATCHWORDS: CORPORATIONS - winding up - application for winding up on grounds of insolvency - reliance on non-compliance with statutory demand - preliminary question whether statutory demand served on defendant company - whether left at registered office - registered office situated at an office suite inside an office building - statutory demand left at 8pm in letterbox on outside wall of office building - whether document later actually received

LEGISLATION CITED: Corporations Act 2001 (Cth), ss 109X(1)(a), 459C(2)(a), 459F

CATEGORY: Principal judgment

CASES CITED: Howship Holdings Pty Ltd v Leslie (1996) 41 NSWLR 542
Jin Xin Investment & Trade (Australia) Pty Ltd v ISC Property Pty Ltd [2006] NSWSC 7; (2006) 196 FLR 350
Macrae v St Margaret’s Hospital [1999] NSWCA 381; (1999) 19 NSWCCR 1
Polstar Pty Ltd v Agnew [2007] NSWSC 114; (2007]; 208 FLR 226

PARTIES: Craig James - Plaintiff
Ash Electrical Services Pty Ltd - Defendant

FILE NUMBER(S): SC 4308/08

COUNSEL: Mr D A Allen - Plaintiff
Ms A Tsekouras - Defendant

SOLICITORS: Proctor & Associates - Plaintiff
Peter Merity Solicitor Pty Ltd - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

FRIDAY 24 OCTOBER 2008

4308/08 CRAIG JAMES v ASH ELECTRICAL SERVICES PTY LTD

JUDGMENT

1 The plaintiff seeks an order that the defendant be wound up in insolvency and an order that a liquidator be appointed.

2 In pursuing these claims, the plaintiff intends to rely on a presumption of insolvency arising under s 459C(2)(a) of the Corporations Act 2001 (Cth) in consequence of alleged failure of the defendant to comply with a statutory demand a copy of which is attached to the originating process.

3 Essential to the plaintiff’s case is proof that the statutory demand was served on the defendant, this being, under s 459F, an ingredient of proof of failure to comply with such a demand.

4 The question of service has been put in issue by the defendant. Although the plaintiff indicated that it would seek to prove insolvency without the aid of s 459C(2)(a) if the question of service was determined adversely to it, I took the view that the central importance of the availability or unavailability of the presumption was such that the issue of service should be determined as a separate question. The proceedings will take a radically different course if it is determined that the statutory demand was not served, assuming that they continue at all.

5 The separate question is:

“Was the statutory demand dated 18 July 2008 served on the defendant on 21 July 2008?”

6 In approaching the separate question, I am conscious that the onus of establishing service rests with the plaintiff.

7 The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading James v Ash Electrical Services Pty Ltd

Details

AGLC: James v Ash Electrical Services Pty Ltd [2008] NSWSC 1112
Case: [2008] NSWSC 1112
Decision Date: 24 October 2008

CaseChat Overview and Summary

In the matter of James v Ash Electrical Services Pty Ltd, the court was called upon to determine whether a statutory demand had been properly served on a company, Ash Electrical Services Pty Ltd. The applicant, James, sought to wind up the company on the basis of insolvency, arguing that the statutory demand had not been correctly served, as it was left in a letterbox on the outside wall of the building housing the company's registered office, rather than being left at the registered office itself. The dispute centred on whether the statutory demand had been properly served in accordance with the requirements of the Corporations Act 2001 (Cth).

The central legal issue before the court was whether the statutory demand had been left at the registered office of Ash Electrical Services Pty Ltd. The court was required to interpret the relevant provisions of the Corporations Act 2001 (Cth), specifically s 459D(1)(a), which provides that a statutory demand may be served on a company by leaving it at the company's registered office. The court needed to determine whether leaving the statutory demand in a letterbox on the outside wall of the building where the registered office was situated constituted "leaving" it at the registered office. The court also had to consider whether the failure to leave the statutory demand at the registered office invalidated the statutory demand and, consequently, the application for winding up.

The court held that the statutory demand had not been left at the registered office as required by the Corporations Act 2001 (Cth). The court found that the registered office was the specific location within the office building where the company's statutory records were kept, and not the general location of the building itself. Since the statutory demand was left in a letterbox on the outside wall of the building, it had not been left at the registered office. The court concluded that the statutory demand was therefore invalid, and the application for winding up was dismissed. The court emphasised the importance of strictly adhering to the statutory requirements for serving a statutory demand to ensure the validity of the demand and the subsequent winding up application.

Orders