Monsere Pty Ltd v RDM Nominees Pty Ltd
[2019] SASC 126
•24 July 2019
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
MONSERE PTY LTD & ANOR v RDM NOMINEES PTY LTD
[2019] SASC 126
Judgment of Judge Bochner a Master of the Supreme Court
24 July 2019
CORPORATIONS
Corporations Act 2001 (Cth) s 459G - whether the originating process complies with the act - whether the Court lacks jurisdiction.
Held: The originating process does not comply with s 459G of the Act. The plaintiffs' claim is dismissed.
Corporations Act 2001 (Cth) s 459G, referred to.
Cooloola Dairys Pty Ltd v National Foods Milk Ltd (2004) 211 ALR 293; Benonyx Pty Ltd v Fetrona Pty Ltd [1999] NSWSC 1181; Craneford Nominees Pty Ltd v VGC Co-Operative Ltd [2012] SASC 74; Chelring Pty Ltd v Coombs [2000] WASC 60; Universal Trade Exchange Pty Ltd v Westpac Banking Corporation (2002) 20 ACLC 1302; Accommodation West Pty Ltd v Innis [2009] WASC 337; LJAW Enterprises Pty Ltd v RJK Enterprises Pty Ltd [2004] QSC 134; TBK Beef Pty Ltd v Ark Mangoes Pty Ltd (2012) 32 NTLR 68; Bache Business & Printing Services Pty Ltd v SA Hub Productions Pty Ltd [2009] SASC 369; Opensoft Australia Pty Ltd v Miller Street Pty Ltd [2011] FCA 653; Australian Foods Company Pty Ltd v O'Donnell [2002] WASC 129, considered.
MONSERE PTY LTD & ANOR v RDM NOMINEES PTY LTD
[2019] SASC 126
By way of originating process dated 5 April 2019, the plaintiffs seek, among other things, to set aside a statutory demand issued to it by the defendant on 19 March 2019. This decision deals with a preliminary issue raised by the defendant.
With respect to the statutory demand, the first plaintiff contends that there is a genuine dispute and that it has an offsetting claim in relation to the debt. Alternatively, the first plaintiff submits that the statutory demand should be set aside on some other ground pursuant to s 459J(1)(b).
The defendant argues that, because the originating process (“FDN1”) does not bear a return date in the Notice to the Defendant at Part B, the plaintiffs have not complied with s 459G of the Corporations Act 2001 (Cth) (the Act) and that the Court consequently lacks jurisdiction to make orders in respect of the statutory demand. This is the issue dealt with herein.
Compliance with Section 459G of the Act
Section 459G provides:
(1) A company may apply to the Court for an order setting aside a statutory demand served on the company.
(2)An application may only be made within 21 days after the demand is so served.
(3) An application is made in accordance with this section only if, within those 21 days:
(a) an affidavit supporting the application is filed with the Court; and
(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.
The Corporations Rules 2003 (South Australia) (the Rules) detail the requirements of an application made under the Act in this Court. Rule 2.2 relevantly states:
Unless these rules otherwise provide, a person must make an application required or permitted by the Corporations Act to be made to the Court:
If the application is not made in a proceeding already commenced in the Court – by filing an originating process; and
…
An originating process must:
be in accordance with Form 2: and
…
Note In an application for winding up in insolvency on the ground that the company has failed to comply with a statutory demand, the applicant should consider completing Part C of Form 2 as shown in Schedule 1.
Form 2 in Schedule 1 of the Rules prescribes a template comprising five parts: Part A requiring the details of the application, Part B being the Notice to the defendant(s), Part C being a section to be completed if the originating process is seeking an order that a company be wound up in insolvency on the ground that the company has failed to comply with a statutory demand, Part D providing for filing details to be input by the registry and Part E noting the plaintiff’s address for service.
Whilst not mandated, it is common for the wording under Part C to be deleted if it is not applicable to the application, that is, if it is not an application seeking the winding up of the company on the basis of failure to comply with statutory demand.
When filed at the registry, in accordance with Rule 2.3 the Registrar must fix a time, date and place for hearing and endorse those details on the originating process. These details are to be endorsed at Part B of Form 2 in the following section:
This application will be heard by . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . at [address of Court] at . . . . . . . . *am/*pm on . . . . . . . . .
On 5 April 2019, the plaintiffs’ solicitor, Mr McCabe, attended the Supreme Court Registry and filed FDN 1. A sealed copy of FDN 1 was served on the same day at the offices of the solicitor for the second defendant.
It was later discovered that the return date for the application was not endorsed at Part B. Part C had been retained. The Registry endorsed the date and time for the hearing of FDN 1 in the space left for the insertion of the date of service of the statutory demand.
The defendant’s position
It is the defendant’s position that the plaintiffs’ originating process does not comply with s 459G because it does not bear a return date at Part B.
With respect to the date written at Part C, the defendant says that because the matter was not one to which Part C applied, the date written in Part C cannot be read as the return date for the hearing, particularly by any ordinary reader. The defendant submits that there is no indication that the date was actually the return date and to read it as such requires anyone relying on the document to interpret it otherwise than in accordance with the ordinary meaning of its words.
The defendant submits that this is a case where strict compliance with s 459G is required.
The first plaintiff’s position
In his affidavit of 10 May 2019, FDN5, Mr McCabe deposed to the process by which he attended to the filing and service of FDN 1 on 5 April 2019. He stated that he did not notice at the time that the Registry staff member had written “30 April 2019 at 2.15pm” at Part C instead of Part B.
He subsequently received a letter from Mr Barrett, the defendant’s solicitor, on 18 April 2019. Mr Barrett’s letter noted the absence of the return date and inquired as to whether the application was listed for hearing.
On the same date Mr McCabe responded to Mr Barrett and advised that the return date was recorded at Part C on FDN 1, rather than Part B. He confirmed that FDN 1 had been listed for hearing on 30 April 2019 at 2.15pm.
I note that the plaintiff does not suggest that the communications on 18 April 2019 amounted to sufficient notification of the return date, as they were outside the twenty-one day period prescribed under s 459G from the date of service of the statutory demand.
In his affidavit, Mr McCabe stated that, in circumstances where the plaintiff had not served any statutory demand on the defendant and where the date at Part C was a future date, it should have been obvious to the defendant that the Registry had made a mistake and listed the return date in Part C.
In submissions, the plaintiff put to me that the person served with the document would know that the court had made a mistake. It was said that no reasonable person receiving FDN 1 would read it in any way other than to understand that the hearing date was the date inserted in Part C. The mistake was obvious to the defendant and therefore there was substantial (and sufficient) compliance with the Act. FDN 1 achieves its required purpose, of alerting the defendant of the time and date of hearing.
In support of this submission, the plaintiff compared the matter to the situation in Cooloola Dairys Pty Ltd v National Foods Milk Ltd[1] (Cooloola Dairys) where four applications to set aside four statutory demands were filed at once. Three of the applications were endorsed with a return date and the fourth was not so endorsed, requiring the defendant to ‘guess’ that the return date of the fourth was the same as the others. In that case, the court held that the application without the endorsement did not comply with the requirements of the Act, and dismissed the application. The plaintiff submitted this case should be distinguished, because of the differing circumstances.
[1] (2004) 211 ALR 293.
The plaintiff further submitted that the other authorities relied on by the defendant should be distinguished, because they turned on the question of whether the copy served was the exact copy of the document on the court file, or dealt with the situation where no return date was endorsed on the documents. It submitted that these cases are distinguishable, because the service copy is identical in all respects to the document on the court file. Thus, these cases deal with a different question.
The authorities
I have considered various authorities relied on by the parties.[2] Whilst none relates to a situation where the date was place in the wrong section of the form, in each of the matters where there was no return date on the served copy it was considered fatal to the application, whether or not it was the fault of the applicant.
[2] Cooloola Dairys Pty Ltd v National Foods Milk Ltd (2004) 211 ALR 293 at [34], Craneford Nominees Pty Ltd v VGC Co-Operative Ltd [2012] SASC 74 at [21(3)], Benonyx Pty Ltd v Fetrona Pty Ltd [1999] NSWSC 1181 (Santow J), Chelring Pty Ltd v Coombs [2000] WASC 60, Universal Trade Exchange Pty Ltd v Westpac Banking Corporation (2002) 20 ACLC 1302, Accommodation West Pty Ltd v Innis [2009] WASC 337, LJAW Enterprises Pty Ltd v RJK Enterprises Pty Ltd [2004] QSC 134, TBK Beef Pty Ltd v Ark Mangoes Pty Ltd (2012) 32 NTLR 68, Bache Business & Printing Services Pty Ltd v SA Hub Productions Pty Ltd [2009] SASC 369, Opensoft Australia Pty Ltd v Miller Street Pty Ltd [2011] FCA 653, Australian Foods Company Pty Ltd v O’Donnell [2002] WASC 129.
In Benonyx Pty Ltd v Fetrona Pty Ltd[3] (“Benonyx”) the plaintiff served on the defendant an application to set aside a statutory demand, which did not have on it the time and date for hearing. The defendant was not apprised of the return date until some six days after the expiry of the twenty-one day period. Santow J referred to the strict nature of the regime and queried (at [6]):
[6] …how can the party who is served have received proper notice of the proceedings for which attendance is required within the twenty-one days when that party is not told of the important fact of the return date for the application to set aside the statutory demand till after the twenty-one days.
[3] [1999] NSWSC 1181.
Santow J’s decision in Benonyx has been referred to and applied in numerous subsequent decisions including Cooloola Dairys. In Cooloola Dairys, Chesterman J said (at [34] – [35]):
The copy of the application which the section requires to be served must show that an application has been filed and when the respondent is required to attend and answer it. It will not perform these functions if it is not sealed and does not show the action number allocated by the court. The inclusion of the return date is obviously necessary.
The authorities establish that the copy of the application served on the respondent must be such as to show that it is a replication of the application which has been filed in the court. To do that it must show the action number given it by the court and it must show the return date for the hearing of the application. It must, also, I think, show the seal of the court to indicate that there are curial proceedings on foot. The document in question did not exhibit those attributes. It was not therefore a copy of the application. The result is that the terms of s 459G(3) were not complied with and the application must be dismissed with costs.
In reliance on these authorities, Judge Lunn, in Bache Business and Printing Services Pty Ltd v SA Hub Productions[4] dismissed an application to set aside a statutory demand, where the Registry had omitted to place on the originating process the time and date for hearing. He said:
The authorities are clear cut that a failure to serve a copy of the originating process giving notice of the time and place of the hearing of the application, let alone any other significant omissions from the Form 2, within the 21 day period is fatal to the application to set aside the statutory demand succeeding.
[4] [2009] SASC 369.
In Opensoft Australia Pty Ltd v Miller Street Pty Ltd[5] (“Opensoft”) the originating process was filed within time electronically in the Federal Court but was not endorsed until after 5pm on the day of expiry of the twenty-one day period. A copy of the unsealed version of the originating process was served within the requisite timeframe. In dismissing the application, Jagot J referred to the decision of Santow J in Benonyx, and said:
[42] As a matter of purpose, moreover, compliance with s 459G, as the authorities make clear, requires that the documents as served inform the recipient that the proceeding has in fact been commenced through acceptance by the court of the originating process. They must also inform the recipient of what Santow J described in Benonyx as the “important fact” of the return date for the application.
[43] Accordingly, I decline to depart from the authorities to which I have referred above.
[44] The implication for the present case is that Mr Price’s delivery of the folder of documents to TW Agency — which documents did not bear a proceeding number, the seal of the court, or the return date of the application — did not amount to service as required by s 459G(3)(b).
[5] [2011] FCA 653.
In Craneford Nominees Pty Ltd v VGC Co-Operative Ltd[6] (“Craneford”) Stanley J considered a case where the served copy of the application omitted the signature of the registrar and filing date both of which were endorsed on the original. It otherwise bore the court seal and return date. After referring to both Cooloola Dairys[7] and Opensoft,[8] Stanley J stated (at [18]):
[18] The requirement in s 459G(3)(b) for service of a copy of the application and the supporting affidavit on the person who served the statutory demand exists to ensure that person has proper notice the curial proceedings have been commenced by the person subject to the statutory demand, the basis upon which that person asserts that a genuine dispute exists in relation to the debt constituting the statutory demand, and the date upon which those proceedings are to be heard by the court.
[6] [2012] SASC 74.
[7] At [12].
[8] At [13].
His Honour found that the document served was a “copy” within the meaning of the Act, as it evidenced the filing of the document with the court within the prescribed time period and the acceptance of the document by the court through an authenticating mark, and it recorded the return date.
Consideration
It is clear from the authorities that notification of the return date, within the twenty-one day period, is crucial to invoke the jurisdiction of this Court. In my view, the endorsement of the time and date at Part C does not satisfy this requirement. It is not immediately obvious to the reader that the hearing date is the date recorded at Part C. It is not for the defendant to attempt to ascertain the true meaning of Part C; the time and date for hearing must be evident on the face of the document, without requiring the defendant to make any assumptions. In my view, this case cannot be distinguished from Cooloola Dairies, despite the factual differences; both cases required the defendant to guess, make an assumption or take some other step to ensure that it was aware of the hearing date for the application.
I am unable to accept the plaintiff’s submission that the authorities should be distinguished, either on the basis that they turned on the question of whether what was served was a copy, or on the basis that they dealt with the situation where no date was endorsed on the originating application at all.
The authorities make it clear that, it is not the fact that the served document is an exact replica of the filed document that is important; what is essential is that each of them contains certain essential pieces of information, being evidence of filing with the Court, the date of filing, and the time and date for hearing, within the appropriate form.
In my view, the placement of the time and date for hearing in the wrong section of the form is akin to their not being on the form at all. Even an experienced lawyer would be required to assume or infer that the time and date in Part C was the time and date for hearing, rather than service of the demand. A lay person should not be expected to exercise such powers of deduction when dealing with matters as important as this. Their placement in Part C rendered them meaningless.
While the facts of this matter are different to those found in Cooloola Dairys, Opensoft and Benonyx, the principles to be applied are the same. The placement of the time and date in the wrong part had the same effect as there being no time and date nominated at all.
I conclude that the requirements of s 459G have not been satisfied. The plaintiff’s application must be dismissed.
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