Latham Moore and Associates (Vic) Pty Ltd v Funktion Enterprises Pty Ltd
[2010] VSC 656
•23 February 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2009 9150
List E
BETWEEN
| LATHAM MOORE & ASSOCIATES (VIC) PTY LTD (ACN 113 089 437) | Plaintiff |
| v | |
| FUNKTION ENTERPRISES PTY LTD (ACN 074 482 901) | Defendant |
ASSOCIATE JUSTICE: | Gardiner AsJ | |
WHERE HELD: | Melbourne | |
DATES OF HEARING: | 2 December 2009 | |
DATE OF JUDGMENT: | 23 February 2010 | |
CASE MAY BE CITED AS: | Latham Moore & Associates (VIC) Pty Ltd v Funktion Enterprises Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 656 | Revised 25 August 2011 |
---
CORPORATIONS – Application for winding up in insolvency pursuant to s 459P of the Corporations Act 2001 (Cth) – consideration of preliminary issue as to whether plaintiff has proven service of statutory demand – service of demand proven.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S Hopper | Hayton Kosky |
| For the Defendant | Mr E Moon | Hall & Wilcox |
HIS HONOUR:
On 22 September 2009, the plaintiff, Latham Moore & Associates Pty Ltd (“Latham Moore”), filed an originating process making application under s 459P of the Corporations Act 2001 (“the Act”) for an order that the defendant, Funktion Enterprises Pty Ltd (“Funktion”), be wound up in insolvency under the Act.
The application relied on the alleged failure by Funktion to comply with a statutory demand which was said to have been served on Funktion by being posted to it at its registered office, Level 1, 429 Nepean Highway, Brighton 3186.
The demand makes a claim for $12,475 in respect of services rendered by Latham Moore to Funktion for the period May to October 2008. Latham Moore was Funktion’s former accountant. The demand was accompanied by an affidavit of Victor Lee Doree, sworn 30 June 2009, which verified the demand as required by the Act and the Supreme Court (Corporations) Rules 2005 (“the Rules”).
On 21 October 2009, Funktion filed a notice of appearance and set out its grounds of opposition to the winding up application. It says, first, that the demand is defective in that there has been no effective service on it and, in the alternative, that Funktion is solvent.
When this matter first came on for hearing on 21 October 2009, I gave directions for the filing of further affidavit material in respect of the issue of service of the statutory demand and of the application itself, as well as the associated issue of alleged abuse of process which was raised that day by Counsel on behalf of Funktion. I determined to treat those issues as preliminary issues and to postpone the consideration of the issue of solvency until after those preliminary issues had been determined.
At the outset, I observe that the voluminous affidavit material which has been filed, the length of Court time occupied in considering the preliminary issues and the legal costs which must have been expended to date are quite extraordinary when one considers the relatively modest amount claimed in the statutory demand.
The plaintiff’s primary evidence of service of the demand is the affidavit of Ellen June McGettigan sworn 18 September 2009. She states that on 30 June 2009 she served a statutory demand and the affidavit in support dated 30 June 2009 by posting those documents by ordinary pre-paid post in the mailbox at the corner of Neerim Road and Mimosa Road, Carnegie in an envelope addressed to Funktion at its registered office at Level 1, 429 Nepean Highway, Brighton , Victoria.
There was no reaction to the demand and the originating process was filed on 22 September 2009. The ASIC extract for Funktion identifies its registered office as “Latham Moore & Associates Pty Ltd, Level 1, 429 Nepean Highway, Brighton, Vic”[1]. The commencement date from which that address operated as the registered office was 10 August 2007. The curious position arises whereby Funktion’s current registered office was at one time the office of Latham Moore. The principal place of business from 20 June 1996 is noted as being Lot 9, Lyndale Park, Pyalong Road, Tallarook, Victoria. The extract also notes that this is the address of its sole director, Allan Webster. I note that the search indicates that the previous principal place of business was Lot 9, Lyndale Pyalong Road, Tallarook, Victoria, which appears to be a description of the same address.
[1]That address is stated to be in East Brighton in Mr Doree’s affidavit sworn 9 November 2009.
Amanda Lee, a solicitor at Hall & Wilcox, the solicitors for Funktion, swore an affidavit on 20 October 2009 which exhibits correspondence passing between the respective parties. On 20 October 2009, the day before the first return of the application, the solicitors for Funktion wrote to Latham Moore making certain observations and complaints, including that, as the premises of Latham Moore was the registered office of Funktion, Latham Moore had an obligation to bring the demand and winding up proceeding to Funktion’s attention. The letter culminated in an ultimatum that unless the winding up application was withdrawn, Funktion would oppose the application and seek costs on an indemnity basis.
Latham Moore’s solicitors, Hayton Kosky, responded by a letter of 20 October 2009. They state that Latham Moore had not occupied the premises at Level 1, 429 Nepean Highway, Brighton since September 2007. The author of the letter, Mr Chapman, states that Mr Webster, the director of Funktion, would have been fully aware of the demand and the winding up application and the preceding demand. Mr Chapman’s letter appends copies of the covering letter accompanying the demand addressed to the Brighton address and of an email to Mr Webster of 30 June 2009 which attaches a PDF copy of the demand and the accompanying affidavit of Mr Doree. The letter also appends other documentation, including copies of emails sent to Mr Webster and his wife, Libby, by Mr Chapman.
Ms McGettigan deposes in an affidavit of 20 October 2009 that the originating process, a copy of the affidavit of service of the statutory demand with exhibits and the consent of liquidator was served by post upon the registered office at Level 1, 429 Nepean Highway, Brighton, on 22 September 2009. The affidavit in support of the originating process was not served with the originating process as the Act requires. Mr Chapman deposes in an affidavit of 9 November 2009 that the copy of the affidavit in support of the winding up application was posted with the registered office of Funktion by him late on 22 September 2009. It was also emailed, together with the other documents accompanying the originating process earlier that day to Mr Webster’s email address, [email protected]. One of the documents attached to Mr Chapman’s letter of 20 October 2009 was an electronic confirmation that such email had been successfully delivered to that email address.
In response to the directions made on 21 October 2009, numerous affidavits were filed by the parties. Mr Doree, who is the director of Latham Moore, swore an affidavit on 9 November 2009. He states that between November 2007 and 29 September 2008, Latham Moore conducted its business at 429 Nepean Highway, East Brighton. He states that from September 2008 to September 2009 he told Mr Webster, both in writing and by telephone, that, as Latham Moore no longer occupied that address, he should ensure that Funktion filed a change of address of registered office as any documents served on Funktion would not necessarily come to its attention.
Mr Doree exhibits communications from Latham Moore requesting Mr Webster on a number of occasions to change the location of Funktion’s registered office because Latham Moore had departed the Brighton address. He states that from June to December 2008, Latham Moore received several “originating processes” which had been sent to the vacated registered office and re-directed to Latham Moore’s current address. Mr Doree exhibits the documents referred to. They are not originating processes properly so called but rather demands from alleged creditors, including Co-Invest Limited and the Housing Industry Association Limited.
I note that the letter from Co-Invest Limited was addressed to Funktion at 9/465 Tallarook-Pyalong Road, Tallarook, a relatively remote rural address, similar but not identical to Funktion’s nominated principal place of business referred to above. It is not explained how Latham Moore came to receive such documents if they were sent to Funktion’s address in Tallarook. Mr Doree deposes that Latham Moore sent such copies of correspondence and demands to the principal place of business.
Mr Doree also exhibits a letter from Latham Moore to “The Proper Officer, Funktion Enterprises Pty Ltd, Unit 8/465 Tallarook-Pyalong Road, Tallarook”, of 1 October 2008 noting the change of Latham Moore’s business address and reminding Funktion to change the location of its registered office with ASIC. It is not explained why it was sent to Unit 8 rather than Unit 9 at 465 Tallarook-Pyalong Road.
Also exhibited is a statutory demand from the Housing Industry Association (“HIA”) dated 2 December 2008 for $8,825 in respect of a Magistrates’ Court judgment. It is not said by any answering affidavit from Funktion as to what transpired in relation to this statutory demand. Also exhibited is a facsimile sent to Mr Webster at Funktion on 15 December 2008 enclosing another statutory demand and reminding Mr Webster to effect change of the location of the registered office.
Mr Doree deposes that on 1 July 2009 he received a telephone call from Mr Webster and in the ensuing discussion Mr Webster acknowledged receiving the statutory demand dated 30 June 2009 by email from Mr Chapman and that Funktion “would pay” the moneys owing. He exhibits the telephone log maintained by Latham Moore. That document notes a call on 1 July 2009 from Allan Webster and gives the mobile telephone number 0419 255 269. It will be seen below that a controversy arises in respect of that entry. Mr Doree says that Mr Chapman (whose offices are at the same location, Level 1, 300 Centre Road, Bentleigh) was present in his office throughout the discussion.
Mr Doree exhibits a number of emails between himself and Mr Webster in respect of the indebtedness of Funktion for the period 3 December 2008 to 28 September 2009.
On 3 December 2008, Mr Webster emailed Mr Doree:
“. . . We have paid out nearly all debts, and it looks like in 2009 we will be able to go forward. We are currently working our arses off and should receive a progress payment any day now, from which I will be able to pay some funds to you. I have previously stated this clearly to David.
I have always met my financial commitments to you and have no plan to change that. Let me know when it is convenient to give you a call, I guess you are typically as busy as buggery”.
Mr Doree responded the same day:
“There are no problems and happy to help, David is just a little disappointed but I understand that we all get short and I know that you will pay us so I am not so worried. Let me know what you need or you can ring me if you like after 12.00 as I am in meetings this morning. You need to get on track for this super audit.”
On 1 June 2009, Mr Doree emailed Mr Webster and stated:
“Its been over a year now. Can you pay our account.”
In an email of 28 September 2009, Mr Webster states to Mr Doree:
“I have a huge week bringing two jobs to a conclusion this week. This is the source of funds with which I will pay you. Have you got any civilised humans that you know might be able to assist me this week to make sure we reach our deadline?”
I note that this last email was shortly after the filing and service of the originating process on Funktion and provision of a copy of it to Mr Webster by email on 22 September 2009.
The emails from Mr Webster originated from the email address [email protected].
Mr Chapman, the solicitor for Latham Moore, also swore an affidavit on 9 November 2009. He states that he was present in Mr Doree’s office on 1 July 2009 and confirms the accuracy of the matters in respect of the conversation that Mr Doree had with Mr Webster on that day. He states the discussion was heard by him via the loudspeaker device incorporated into the Panasonic telephone on which the discussion was conducted. Mr Chapman states that he had emailed a copy of the demand and accompanying documentation to Mr Webster at his email address, [email protected] on 30 June 2009. In his later affidavit of 3 December 2009 he exhibits an electronically-generated receipt which states that the email was successfully delivered to that email address. This document of course does not establish that Mr Webster read or had notice of the contents of that email. He posted copies of the originating process and other documents to the same address on 22 September 2009 and emailed them to Mr Webster. He also deposes to serving the affidavit in support of the originating process by post on 22 September 2009 as he noticed that it had been omitted from the bundle of documents served with the originating process earlier that day.
Latham Moore also relied on an affidavit of Jacob Keinan, sworn 9 November 2009. Mr Keinan is an information technology consultant who has examined Mr Chapman’s computer. He states:
“…I am able to state that in my professional opinion and beyond reasonable doubt that Mr Allan Webster of the defendant’s electronic address, namely [email protected], did on 30 June 2009 receive the following documents which were transmitted from an electronic address...”
The reception of this affidavit was objected to by Mr Moon, Counsel for Funktion. In my view, the affidavit carries very little, if any, probative weight at all. It rather begs the question of whether Mr Webster had notice of the demand by means of the email. It contends, rather ambitiously in my view, that in the deponent’s “professional opinion and beyond reasonable doubt” Mr Webster received the documents.
In an affidavit of 24 November 2009 Mr Webster, the sole director and secretary of Funktion, states that in or about early August 2007, he retained Latham Moore to act on Funktion’s behalf in relation to a statutory demand which had been served on Funktion. He states that, in October 2007, he received a telephone call from Mr Doree who told him that the plaintiff had moved its business address to BHP House, Level 1, 114-116 Boundary Road, Braeside, Victoria. Mr Webster states that in December 2007 a statutory demand was served on Funktion at its registered office (at Nepean Highway, Brighton) by a creditor and Mr Doree advised him of this by an email of 17 December 2007. In March 2008, Mr Doree emailed Mr Webster advising that the plaintiff was moving to new premises at 578 Plummer Road, Port Melbourne.
In September 2008, Mr Webster was told in a telephone conversation with Mr Chapman that Latham Moore had moved from the Port Melbourne address to Suite 3, 300 Centre Road, Bentleigh. He says that since 24 September 2008 he has not received any emails from Mr Chapman. Mr Webster also states that he did not receive any letter from Latham Moore dated 1 October 2008 and notes that the address on the letter is not the defendant’s principal place of business or his own residential address.[2]
[2]Latham Moore’s letter of 1 October 2008 was sent to 8/465 Tallarook-Pyalong Road, Tallarook.
Mr Webster states that Funktion had been served with three statutory demands between August 2007 and December 2008 and that he was aware of the serious consequences that could result from a failure to respond to a statutory demand. He does not explain why, if that be the case, he did not change the location of the registered office to one at which he would receive prompt notice of documents which were served despite on his own evidence being informed on several occasions that Latham Moore had moved offices and that Mr Webster needed to change the location of the registered office of Funktion.
Mr Webster states that as to the invoices the subject of the demand, he has only received a copy of the Latham Moore tax invoice 000132 of 24 September 2008 as an attachment to an email from a Suzanne Cuvelier on or about that date. He states that he has not received or seen the other invoices. Further, he swears that he has not received any envelope addressed to Funktion and sent to the registered office, nor did he receive any email sent on 30 June by Mr Chapman, although he does state that his email address is [email protected].
Mr Webster states that his mobile telephone number is 0419 255 269 and that he has reviewed the tax invoice issued to Funktion in relation to his mobile telephone for the period ending 20 July 2009. He states that on the date that he is alleged to have made a telephone call to Mr Chapman, 1 July 2009, on his mobile telephone, only two calls were made to fixed line numbers, the first being a five-second call to his home phone number and a four-minute call made to a Campbellfield number which was that of a sandblasting business. He states that he records important calls made or received and meetings attended in relation to Funktion’s affairs and there is no record of any telephone call to Mr Doree on this day. He denies acknowledging the receipt of the demand in any telephone conversation with Mr Doree either on 1 July 2009 or at any other time. He also denies advising Mr Doree at any time that Funktion would pay the moneys that were outstanding to Latham Moore.
Mr Webster states that he did not become aware of Latham Moore’s purported service of the demand until 14 October 2009. He then deposes as to the location of the server through which his email is processed. That server is located in the United States and because of the passage of time it is no longer possible to verify whether any email from Mr Chapman was received by his internet service provider’s mail server on 30 June 2009.
Mr Webster then addresses matters involving the service of the originating process. He states that he did not receive the hard copy originating process or email version of it in or about September 2009. It was only when he was contacted by one Mr Jenner of 180 Corporate Pty Ltd that he became aware of its existence. The exhibits to Mr Webster’s affidavit consist of numerous communications passing from Latham Moore to Funktion by Mr Webster. These include:
· An email of 17 December 2007 informing Mr Webster of the receipt of a statutory demand for $33,891. By this time, Latham Moore’s address had changed to Boundary Road, Braeside.
· In an email of 19 March 2008, Mr Doree informed Mr Webster of Funktion’s position in respect of what appears to be Magistrates’ Court litigation. Mr Webster is informed of the importance of the matter as the other party to that litigation may serve a statutory demand. The email culminates in an observation that the registered office of the company was to change to Plummer Road, Port Melbourne.
· On 3 March 2008, Mr Doree indicated that Funktion had received four Magistrates’ Court complaints in the past few months and that Latham Moore:
“. . . cannot act as your registered office any more therefore can you please make the necessary arrangements to change the registered office from our address immediately. I have enclosed a Form 484 for your convenience.”
· On the same day, 3 March 2008, Mr Webster emailed Mr Doree. The letter contains a promise to pay $5,000 to Mr Doree and asks him to reconsider the decision in relation to acting as the registered office.
· On 4 March 2008 Mr Doree emailed Mr Webster stating that Magistrates’ Court complaints are coming in “thick and fast”. He warns that the company will be liquidated if the situation is not addressed. Since Latham Moore had left the Brighton address in September 2007, I infer that those complaints were being served at the former office of Latham Moore, being the registered office of Funktion and forwarded on to Latham Moore by redirection.
· On 12 March 2008, Mr Webster emailed Mr Doree indicating that he had “…just received notification about payment from shire and will pay $5k as discussed.” I note that this debt predates the debts the subject of the present demand. The following day, Mr Doree sent a short email to Mr Webster indicating that a statutory demand had been received from the HIA that day.
· On 15 December 2008, Latham Moore sent a letter by post to Mr Webster at the 8/465 Tallarook-Pyalong Road, Tallarook address, enclosing a copy of a creditor’s statutory demand sent to Latham Moore’s former offices at Nepean High, East Brighton, which continued to be the location of the registered office of Funktion. The letter recommends that the location of the registered office be changed. Mr Webster denies receipt of this document, saying that the address to which the letter was sent was not the principal place of business of the company or his residential address. He does not say what occurred in relation to that statutory demand and the creditor concerned is not identified.
· He exhibits a copy of Funktion’s mobile telephone account covering the July 2007 period for mobile number 0419 255 269. There is no call recorded in that account to Latham Moore’s number on 1 July 2009. I note that Funktion’s address in this account is “9/465 Tallarook Pyalong Road, Lyndale Park, Lot 9, Tallarook, Vic, 3659”.
Mr Webster is silent as to the context of his email to Mr Doree of 28 September 2009 referred to above in which he referred to a source of funds from which Latham Moore would be paid.
On 3 December 2009, Ms McGettigan swore a further affidavit. She states that she is the telephonist for the plaintiff’s solicitors, Hayton Kosky, as well as three other organisations including it would seem Latham Moore, all of which have the same landline number, 9557 0055.
She states that she is Mr Chapman’s personal assistant and she typed the statutory demand on 30 June 2009. She says that on 1 July 2009 the file in respect of the matter was on her desk. On that day, she recollects receiving a telephone call from Mr Webster who asked to be connected to Mr Doree of Latham Moore. She states that Latham Moore has a policy of retaining a typed notation of all calls received to the landline number and that the telephone number of the incoming call is momentarily recorded on a display panel of the telephone system. Once transferred, the number is no longer displayed. When more than one incoming call is received at a time by the system, the number from the first call is displayed and is then subsequently overridden by the subsequent call. Ms McGettigan states that it is common practice for her not to transcribe the telephone number from which the telephone call is received due to those factors and, instead, she frequently just takes the number from the file. She says for this reason it is unlikely that the number which is recorded in the telephone records of the plaintiff is in fact the number from which Mr Webster called on 1 July 2009. She states that the number that appears in the plaintiff’s records is the number which she transcribed from the cover page of the Funktion file which was on her desk.
In an affidavit of 1 December 2009, Ms Lee, who has conduct of this matter at Funktion’s solicitors, exhibits a letter on the letterhead of Latham Moore’s solicitors. That letter is a circular letter to various parties which the solicitors contend may be owed money by Funktion. The letter includes an invitation to the creditors to attend Court at the hearing of this matter and support the application commenced by Latham Moore for winding up. It is evidence, if it were needed, of the degree of animosity between the parties.
In an affidavit of 7 December 2009, Mr Webster states that on 1 July 2009 (the date he was alleged to have telephoned Mr Doree) he was working at Funktion’s workshop at Campbellfield. He states that there is no fixed telephone line at that address, only a facsimile which operates through an internet connection. He states that he is only able to make calls at that location by mobile telephone.
None of the deponents to the affidavits referred to above were cross-examined. On the basis of the affidavits, I make the following observations:
(i)Latham Moore served the hard copy of the demand and accompanying affidavit at the Brighton address some 18 months after it had departed that premises. By so doing, Latham Moore and its solicitors would have known that, although this was service at its registered office, it was more probable than not that that documentation would not come to the attention of Funktion by that means.
(ii)Mr Doree and Mr Chapman swear that on 1 July 2009, Mr Webster telephoned Mr Doree’s office when Mr Chapman was present and a conversation ensued in which Mr Webster acknowledged that he had notice of the statutory demand (presumably by reason that the previous day Mr Chapman had emailed that documentation to Mr Webster at his email address and that he “would pay” the debt). Mr Webster denies that this conversation took place.
(iii)Ms McGettigan, Mr Chapman’s secretary, confirms that she took a call from Mr Webster and transferred it to Mr Doree. Her evidence concerning the telephone number from which that call was sourced was problematic in that she recorded the number which the call from Mr Webster emanated as being his mobile number. Mr Webster exhibits the account for that number from Funktion’s mobile carrier which states no such call was made on that mobile on that day. In a later affidavit, Ms McGettigan gives an explanation as to why that number was recorded, which I regard as plausible. Mr Webster says however, in turn, that he was working at his factory at Beaconsfield that day and did not have a fixed line there to make a telephone call. The call could, of course, have originated from another number.
(iv)Mr Doree and Chapman deposed to the call and their evidence is confirmed to some degree by Ms McGettigan who states that she put the call through. Their account of the circumstances of the call and what was said is unequivocal and is, to some degree, supported by the entry on the telephone log, albeit with the problematical evidence in regard to the number from which the call emanated.
(v)On several occasions, Latham Moore requested Funktion to change its registered office as it had vacated the Nepean Highway, Brighton, address. Mr Webster did not explain why Funktion did not change its registered office. There is evidence in Funktion’s own affidavit material that Mr Webster had been made aware that Latham Moore had changed its office location and that Mr Webster knew the significance and importance of having a registered office at which he would promptly receive notices of demands and legal process which were coming “thick and fast”.
(vi)Latham Moore could have but did not personally serve the demand on Mr Webster at Tallarook Pyalong Road address although it was clearly aware not only from the ASIC search as to his address but from other correspondence it forwarded to that address that he could be found there.
I find on the balance of probabilities that there was such a call on 1 July 2009 as deposed to by Mr Doree and Mr Chapman and in that telephone conversation, Mr ebster did refer to the demand and indicate that the debt would be paid. I am satisfied that Mr Webster, the sole director of the company, had notice of the demand by seeing the PDF attached to the email sent by Mr Chapman the previous day and made the promise to pay alleged by Mr Doree and confirmed by Mr Chapman.
Legal Principles
Section 109X of the Act provides that a document may be served on a company by, inter alia, leaving it at, or posting it to, a company’s registered office or delivering a copy of the document personally to a director of the company. Service on the registered office is good service irrespective of whether or not there is receipt by the company or actual notice.[3] Service on a company will be considered to be effective under s 109X of the Act by posting it to the registered office but on occasions service may be regarded as an abuse of process. An example of this would be when a document is served on the company’s registered office and the person is aware that the office is vacant and does not bring this fact to the attention of the Court.[4] In order to constitute an abuse, knowledge that the document will not come to the actual attention of the company is required such that, in the present context of a statutory demand, concealment of service of the documents until time for compliance with the demand has expired.[5] If there are reasonable attempts on the part of the person serving the document to draw the attention of the company to the existence of the document, this will cure any alleged abuse. Some authorities refer to this as the doctrine of “fair notice”. In CGU Workers’ Compensation (Victoria) Limited (formerly known as NZI Workers’ Compensation (Victoria) Limited) v Carousel Bar Pty Ltd[6] Gillard J observed at para [83]:
[3]Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87.
[4]See Rustic Homes Pty Ltd (1980 13 ACLR 105 at 108 per von Doussa J (Rustic Homes).
[5]See Chief Commissioner of Stamp Duties v Paliflex Pty Ltd (1999) 149 FLR 179.
[6](1999) 17 ACLC 1213 (Carousel Bar).
“[83] These cases state that there is a qualification to the effect of s109X and s109Y. Those sections establish service by post by delivery in the ordinary course of post. If the documents are returned within the statutory period having been delivered to the registered office address what is the effect of the return on the service which has been effected properly?
[84] The qualification is that unless it is established that the creditor has taken all reasonable steps to bring the demand to the attention of the company after the demand has been returned, it would be an abuse of process to bring a winding up application knowing that the demand never came to the notice of the company. But if all steps were diligently pursued by the creditor to bring the statutory demand to the notice of the company then service would be effective and the proceeding would not be an abuse of process.
[85] Santow J in F.P. Leonard Advertising, expressed the principle as follows –
“That in my judgment should be the proper basis for such an exception to the statutory requirement. Abuse of process underlies the notion of lack of 'fair notice'. Here contrary to the facts in Abberwood, such opportunity for indirect contact was diligently pursued by the plaintiff. There was 'fair notice' – if that be required – and clearly no abuse of process. There is therefore no basis for failing to give force to the clear words of the two sections of the Corporations Law in deeming service to have occurred.’
- see 12 ACSR at p 139.
[86] In Re Future Life, supra, McLelland CJ in Eq. agreed subject to a qualification which he expressed at p 134 –
“The qualification is that an abuse of process in the circumstances postulated by his Honour is not strictly speaking an exception to the provisions of s.220(1) (which would suggest that there has been no effective service) but rather constitutes an overriding ground for refusing relief notwithstanding that there has been effective service.”
[87] In both those cases the statutory demand was actually delivered to the registered office of the company, and returned by the occupant informing the creditor that the company could not be traced
. . .
[89] In each case the creditor upon receiving the demand took steps to bring it to the notice of the company by other means. The court held that there was "fair notice" and hence no abuse of process. Therefore the creditor had proven service.”
At para [102] of Carousel Bar, Gillard J considered the meaning of the expression “fair notice”. He then extracted, from paras [102] – [110] inclusive, passages of the decision of Santow J in FP Leonard Advertising Pty Ltd v K D Travel Service Pty Ltd[7]. At [110], he stated:
[7]12 ACSR 136 (FP Leonard).
“[110] The reasoning of Santow J can be stated in propositional form –
(i) Service of the statutory demand effected by post by delivery to the registered office of the company is effective service by reason of s109X and s109Y if delivery is not disproved.
(ii) If prior to the issue of the application to wind up, the document is returned to the creditor in circumstances which show that the document never came to the knowledge of the company, it would be an abuse of process to proceed with the application unless steps are taken to give fair notice to the company.
(iii) What is fair notice appears to be taking all steps diligently to give notice of the demand to the company.”
Gillard J, at para [111], referred to the decision of McLelland CJ in Eq in Re Future Life Enterprises Pty Ltd[8], at page 565 where he stated:
[8](1994) 33 NSWLR 559 (Future Life).
"In the present case, there is no possible basis for suggesting an abuse of process on the part of Friends' Provident whose solicitors did all they reasonably could to ensure that fair notice of the statutory demand was given to those in control of the affairs of Future Life."
At page [122] Gillard J stated:
[122]Whether or not there is such a doctrine of fair notice, it seems to me that the true question is whether on the balance of probabilities the court is satisfied that the document came to the notice of the intended recipient?
[123]This will depend upon all the circumstances. In my view it would not be satisfied by showing that the creditor took all diligent steps. The court would have to be satisfied on the evidence on the balance of probabilities that the document came to the notice of the intended recipient.
In Chief Commissioner of Stamp Duties v Palifex Pty Ltd[9], Austin J reviewed the service provisions of the Act and stated at para [24]:
[9][1999] NSW SC 15 (Paliflex).
[24] Literally, these provisions mean that if the demand is left at the address which is the registered office of a company according to the Commission’s records (the last notification of change of address having been lodged more than seven days previously), then the demand has been effectively served on the company. As far as effective service is concerned, this is the result regardless of whether the registered office has in fact been changed though not notified to the Commission, and of whether the creditor is aware that the company no longer has an office there at the time when service is effected.
At para [32] Austin J stated:
[32]The plaintiff could have sent a copy of the demand and affidavit to the Elizabeth Bay address, and also to the defendant's solicitors. It could have sent them a copy of Mr Hewer's first affidavit of service dated 18 May 1998. But I do not believe its failure to take these steps, though they may well have been a prudent precaution, amounts to an abuse of process in the sense discussed in the cases. I do not accept that there was any intentional suppression of the demand until the expiry of the period for compliance, for the purpose of preventing the defendant from applying to set it aside. While the plaintiff was aware that the defendant initially claimed that no stamp duty was payable on the contract and transfer, apart from a nominal sum, the defendant had subsequently undertaken to pay the assessed duty and interest and Mr Anstee and Mr Cunneen had several discussions about payment. That being so, it is unlikely in my opinion that the plaintiff would have expected any challenge to the demand. My impression from Mr Staka's evidence is that he is inexperienced and not especially cautious but was not improperly motivated.”
In Lane Cove Council v Geebung Polo Club Pty Limited,[10] Justice Barrett of the Supreme Court of New South Wales referred to the Palifex, Futurelife and Rustic Homes cases and stated at [53]:
[10](2002) 41 ACSR 15.
[53]As Austin J emphasised in [Palifex], there is room for some overriding notion of ‘fair notice’ only where, despite literal compliance with the rules as to service, a document does not come to the notice of the party to be served because of deliberate suppression or some other improperly motivated conduct of the serving party. It is conduct of that kind which brings into play abuse of process considerations. Nothing of that kind occurred here. Any ‘fair notice’ doctrine therefore has no application in this case.
Conclusion
In this case, I consider that service was effected at the registered office of Funktion by ordinary pre-paid post on 30 June 2009 and the document was not returned. Latham Moore had, on several occasions, requested Funktion to change its registered office and this is admitted by Funktion. Latham Moore, perhaps because of an awareness that despite compliance with s 109X of the Act the document would not have come to the attention of the company, sent a copy of the demand to the email address of its sole director.
Section 142(1) of the Act provides that a company must have a registered office. If the location of the registered office changes s 142(2) of the Act provides that the company must lodge a notice of such change with ASIC within 28 days of the change. If the occupier of the premises withdraws consent to nominate its premises as the registered office, it may cause ASIC to give written notice under s 143(2) of the Act to the director of ASIC’s intention to change the address of the registered office to that of the director.
In the present circumstances, Latham Moore could not effect change of the registered office to a new location as it could not lodge the requisite notice under the Act but it could prevail upon ASIC to do so. Here, Funktion was told on several occasions by Latham Moore to change the location of its registered office but it neglected to do so.
Mr Webster in his affidavit acknowledges the importance of maintaining a registered office which would enable him to receive prompt notice of documents which were served on the company but gives no explanation as to why he did not effect such a change, despite being reminded several times by Latham Moore to do so.
On the other hand, Latham Moore could have availed itself of the provisions of s 143(2) by formally withdrawing its consent to act as the registered office but it did not do so, perhaps because it was ignorant of such provisions. As such, both parties are culpable for the current predicament which was easily avoidable.
As I have said above, I find, on the balance of probabilities, that Mr Webster received the email version of that document and, further, I accept the evidence of Mr Doree and Mr Chapman that Mr Webster telephoned Mr Doree the next day, 1 July 2009, and had the conversation with Mr Doree which is deposed to by Mr Doree. In that conversation, Mr Webster said that the debt would be paid. I consider that insofar as service of the demand at Latham Moore’s former office may have potentially given rise to an abuse of process, this was discharged by the sending of the email and notice of it being acknowledged in the conversation the following day with Mr Doree. Mr Webster made promises to pay in emails of as late as 28 September 2009, (consistent, in my view, with him having received notice of the originating process by Hayton Kosky’s email of 22 September 2009) and before that on 3 December 2008.[11]
[11]See exhibit VLD-6 to Mr Doree’s affidavit and exhibit AEW-7 to Mr Webster’s affidavit of 24 November 2009.
While I reject the reception of Mr Keinan’s affidavit as to receipt of the email, I note that Mr Webster has clearly received emails before and after 30 June 2009. In the circumstances, I find that there has been service of the demand at the registered office and that there has been no abuse of process for the reasons set out above. For that reason, I find that Funktion committed an act of insolvency upon expiry of the compliance period for that demand which entitled the plaintiff to commence the present winding up application.
I will make directions in respect of the matter proceeding on the issue of the solvency of the defendant. I will also make orders extending the time within which the application must be determined pursuant to s 459R of the Act.
---
0
5
0