Liberty Funding Pty Ltd v Drakeswood Pty Ltd No. Scciv-02-84

[2002] SASC 54

LIBERTY FUNDING PTY LTD  V DRAKESWOOD PTY LTD

[2002] SASC 54

1. JUDGE BURLEY. The plaintiff has sought an order for the winding up of the defendant company pursuant to Section 459P of the Corporations Law. It appears from the file that on 16 October 2001 the plaintiff delivered to the registered office of the company a statutory demand with supporting affidavit pursuant to Section 459E of the Law. It has been established that the statutory demand was placed into a letterbox at the premises. The defendant has neither paid the amount demanded nor applied to set the statutory demand aside. The plaintiff then issued an application for a winding up order based on the deemed insolvency which arises when a statutory demand remains unsatisfied. The winding up application papers were served at the registered office of the defendant by leaving the same in the letterbox at the relevant address.

2. When the application came on for hearing on 12 February 2002, there was no appearance for the defendant.  Counsel for the plaintiff sought a winding up order but informed the Court that when the winding up application was served at the registered office, the process server noticed that the statutory demand was still in the letterbox.  Counsel submitted, nevertheless, that the defendant had been duly served with the statutory demand and the application to wind up and that a winding up order should be made.  I agree that, but for the question of whether there has been effective service, the plaintiff has demonstrated that it is entitled to an order for the winding up of the defendant.

3. Counsel referred me to Re Nicholls Pty Ltd (1982) 1 ACLC 408. In that case Kearney J found, in relation to service, as follows (at 411):

   “The proper inference to be drawn from the evidence is that there was not at any relevant time any employee of Kaleel and Associates at 291 George Street and, furthermore, that no sealed copy of the petition was received by Kaleel and Associates on behalf of the company.  However, it appears that a registered letter dated 17 March 1981 from the petitioner’s solicitors, addressed to the company care of Kaleel and Associates at their former address and forwarding a copy of the winding up order, was received through the post by Kaleel and Associates, and the contents thereof immediately transmitted to the company.”

4. The last known registered office of the company was care of Kaleel and Associates, Suite 3, 7th Floor, 291 George Street, Sydney.

5. In those circumstances, his Honour found that there had been effective service of the proceedings upon the defendant, notwithstanding some irregularities in relation to the affidavit of service sworn by the process server.

6. In Paterson Bros Pty Ltd v Rustic Homes Pty Ltd (1988) 49 SASR 41, von Doussa J dealt with service by post under the provisions of Section 528 of the Companies Code. In that case the plaintiff attempted to serve a petition to wind up by post at the registered office of the company but the letter was returned unclaimed. His Honour held that there had been no effective service because, among other things, it was clear that the proceedings had not come to the attention of the company because the letter was returned unclaimed.

7. In these proceedings it is equally clear that the statutory demand has not come to the notice of the director of the defendant because the demand was still in the letterbox at the registered office when the process server came to serve the application to wind up at the registered office.  I think it may safely be inferred that the company has received no notice of the application to wind it up.

8. The plaintiff’s solicitors, realizing that the Court may be reluctant to make a winding up order in such circumstances, has sought to serve the sole director of the company personally.  The company extract obtained from ASIC disclosed that the sole director of the company, Anne Stevenson, resided at 5 Stanley Street, Maida Vale, Western Australia.  The process server swore an affidavit that he attended at that address on 25, 29 and 30 January 2002 with a view to serving the director with the proceedings.  On the first and second occasions he was unable to effect service because no one was present at the address.  The process served attended twice on 30 January 2002.  Initially no one was present but later in the day when he returned to the premises he spoke to persons whom he described as “a couple”.  They informed the process server that they had purchased the house at auction in November 2001 by way of mortgagee sale.  They were not able to inform him of Ms Stevenson’s present whereabouts.  The process server also attended at Number 7 Stanley Street, but his enquiries did not reveal the whereabouts of Ms Stevenson.

9. The process server has also checked the Electoral Rolls.  He found that there were four listings in the name of “Anne Stevenson” but upon checking those names he found that none of them was the respondent.  The process server has also checked with Telstra and the telephone directory but without success.

10. It is trite to say that the requirement that a company have a registered office facilitates the service of documents upon the company.  This is a necessary part of commercial life.  There is, in my view, an obligation upon the directors of the company to ensure that any notification, whether it be of Court proceedings or otherwise, delivered to the registered office, is collected by or forwarded to the directors of the company or any employee of the company to whom that function is delegated.

11. If, as in this case, the sole director fails to clear the letterbox at the registered office on a regular basis, the company runs the risk of not becoming aware that proceedings have been commenced against it.  For this reason, when considering whether or not there has been effective service at a registered office in circumstances where it is apparent that the proceedings have not come to the attention of the sole director of the company, the question must be asked whether or not the responsibility for the lack of notice lies with the plaintiff seeking to serve the proceedings by delivering the same to the registered office or with the sole director.  If, for example, it could be established that a director deliberately refrained from clearing a letterbox situated at the registered office of the company, it could hardly be said that there had been a failure on the part of the plaintiff to bring to the notice of the company the fact that the plaintiff had commenced proceedings for the winding up of the company.

12. In this case there is no such direct evidence but it is possible to infer, from the evidence given by way of affidavit by the process server, that Ms Stevenson has failed, at least by neglect, to clear the letterbox at the registered office of the company.  It appears from the company extract (Exhibit PB1) that the company has never filed an annual return and that strike-off action is in progress.  The application to wind up reveals that the company has failed to pay an indebtedness amounting to nearly $44,000.00 to the plaintiff.  It is apparent that the property at which Ms Stevenson resided, or at least gave as her address for the purposes of the ASIC extract, was sold late last year pursuant to a mortgagee sale.  Her name is not on any of the Electoral Rolls searched by the process server nor does she have a telephone number recorded in the telephone directory.  It seems to me that an inference might be drawn that Ms Stevenson and the company’s financial position is poor and from that the inference might properly be drawn that she is neglecting her responsibilities in relation to the company.  In those circumstances, I consider that the failure to bring the winding up proceedings to the notice of the sole director should be attributed to her.  In those circumstances, I do not consider that the service by the plaintiff of the winding up application has been defective.

13. In arriving at that conclusion I have taken into account what was said by von Doussa J in Re Rustic Homes.  I accept that the stated principles contained in his Honour’s judgment are correct, but I consider that the case is to be distinguished from the proceedings before me because of the additional information which has been put before the Court by the process server.  In those circumstances, I hold that there has been effective service of the winding up application upon the defendant.  As the Court file otherwise discloses an entitlement to a winding up order, there will be an order for the winding up of the defendant in terms of the Minutes.