Parkes Terminal Land Corporation Pty Limited v Scahill and Co Pty Limited
[2011] FCA 838
•20 July 2011
FEDERAL COURT OF AUSTRALIA
Parkes Terminal Land Corporation Pty Limited v Scahill & Co Pty Limited [2011] FCA 838
Citation: Parkes Terminal Land Corporation Pty Limited v Scahill & Co Pty Limited [2011] FCA 838 Parties: PARKES TERMINAL LAND CORPORATION PTY LIMITED ACN 108 384 069 v SCAHILL & CO PTY LIMITED ACN 114 890 961 File number: NSD 439 of 2011 Judge: PERRAM J Date of judgment: 20 July 2011 Catchwords: CORPORATIONS – Statutory demand – whether statutory demand served – dispute over day of service – whether s 459G application out of time Legislation: Corporations Act 2001 (Cth) ss 459C, 459E, 459F, 459G
Federal Court (Corporations) Rules
Federal Court Rules O 62 r 4Cases cited: David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 cited Date of hearing: 20 July 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 25 Counsel for the Plaintiff: Mr M Smith, appeared on behalf of the Plaintiff Counsel for the Defendant: Ms A Perigo Solicitor for the Defendant: Keith Bagley Lawyer
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 439 of 2011
BETWEEN: PARKES TERMINAL LAND CORPORATION PTY LIMITED ACN 108 384 069
PlaintiffAND: SCAHILL & CO PTY LIMITED ACN 114 890 961
Defendant
JUDGE:
PERRAM J
DATE OF ORDER:
20 JULY 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The application under section 459G of the Corporations Act 2001 (Cth) be dismissed.
2.The plaintiff pay the defendant’s costs, fixed pursuant to Order 62 rule 4(2)(c) of the Federal Court Rules, at the gross sum of $7,632.05.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 439 of 2011
BETWEEN: PARKES TERMINAL LAND CORPORATION PTY LIMITED ACN 108 384 069
PlaintiffAND: SCAHILL & CO PTY LIMITED ACN 114 890 961
Defendant
JUDGE:
PERRAM J
DATE:
20 JULY 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
Today’s case is concerned with the relatively modest sum of $6,881.29. A firm of accountants, Scahill & Co Pty Limited (the ‘accountants’), claims to be a creditor of one of its former clients, Parkes Terminal Land Corporation Pty Limited (the ‘client’).
The debt which the accountants claim the client owes them arises from the provision by the accountants of accounting services; more particularly, so it would seem, of the assessment and claiming of refunds from the Australian Taxation Office, in respect of goods and services tax which had been paid by the client. Between 18 March 2009 and 4 December 2009 the accountants appear to have invoiced the client some 11 times for various sums, which, with one exception, never exceeded $615. The one exception relates to the final invoice of 4 December 2009 which was for $1,905.13.
Nearly two years later, on 17 March 2011, a solicitor acting for the accountants, a Mr Bagley, signed on their behalf a creditor’s statutory demand on the client, pursuant to s 459E(2)(e) of the Corporations Act 2001 (Cth) (the ‘Act’). Attached to the demand was the usual creditor’s affidavit, deposing to the existence of the debt and the non-existence of any genuine dispute about it. The solicitor, Mr Bagley, did not seek to serve the statutory demand himself in person, or using his own staff, although as will later appear it does seem that he sent it through the postal system. Instead, he retained, on the accountants’ behalf, a process server, a Mr Hill, to serve the statutory demand and accompanying affidavit.
It is with the matter of what occurred next that the present dispute is concerned. Mr Hill says that he left the signed statutory demand and statutory affidavit with a male person, apparently over the age of 16 years, at premises situated at 18B Bungalow Avenue, Pymble. This, he says, occurred at 11.01 am on 21 March 2011, which was a Monday. The registered office for the client is 18B Bungalow Avenue, Pymble. That this is Mr Hill’s version of events is known because subsequent to the act of serving the documents he prepared, in the ordinary way, an affidavit of service which he swore. It will be necessary to return to that affidavit in more detail later in these reasons.
A corporation presented with a statutory demand has 21 days within which to apply to set the statutory demand aside. If it fails to meet the demand by paying it, or alternatively by applying successfully to have it set aside, within that period, it is taken to fail to comply with the demand by s 459F of the Act. The consequence of failing to comply with a demand is that the corporation is deemed to be insolvent by s 459C of the Act. The day 21 days after 21 March 2011 was 11 April 2011 and it was by that time, if Mr Hill be correct in his account, that the client had either to pay the amount demanded, or to commence and to serve an application to set aside the statutory demand pursuant to s 459G of the Act.
The inflexible nature of that deadline is established by the High Court decision in David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265. On 12 April 2011, that is, the next day, the client filed such an application. If Mr Hill’s account is to be believed then this application was out of time with the consequence that the client was deemed to be insolvent by s 459C of the Act on 12 April 2011.
Mr Smith, the sole director of the client, disputes that the statutory demand was served in the manner in which Mr Hills says it was. He claims, rather, that the only version of the statutory demand he has received was served by post and that he first received it on 23 March 2011. There is no dispute that the statutory demand and accompanying affidavit were sent under cover of a letter dated Friday 18 March 2011 by Mr Bagley. That letter was placed in evidence, together with an envelope in which Mr Smith says it was delivered, which is postmarked 18 March 2011.
Mr Smith denies that he was served the documents as Mr Hill says he was. On 2 June 2011, District Registrar Wall determined that the issue of whether the demand was served was to be determined separately from, and in advance of, the other issues in the present proceedings. It is with that single question that I am presently concerned.
I turn, then, to the evidence. Mr Hill swore that he attended the premises in question, and that he left the statutory demand and affidavit ‘by delivering them to a male person apparently over the age of 16 years and apparently employed at 18B Bungalow Avenue, Pymble’. Before handing the documents over, he swears this conversation took place:
Mr Hill:Is this the Registered Office of Parkes Terminal Land Corporation Pty Limited?
A male occupant: Yes … cool.
Mr Smith gives a different account. He says that he did not receive the statutory demand and affidavit on Monday 21 March 2011. He says that he first received them under cover of the letter of 18 March 2011, already referred to.
In his original affidavit evidence, Mr Smith sought to take issue with the proposition that the material had been served on a person of more than 16 years of age. Mr Smith’s affidavit evidence tended to suggest that the only person at the premises of 18B Bungalow Avenue near the age of 16 years was his son and, by reason of his son wearing a school uniform, it is unlikely that he would have appeared at 11.01 am, when Mr Hill says the document was served on Monday 21 March 2011, to be a person who could be described as ‘employed’ at those premises.
As events transpired, Mr Smith’s son was not called to give evidence to deny that the document had been served upon him. For reasons which will shortly become apparent, pursuit of that course was rendered unnecessary by the cross-examination of Mr Hill. Mr Hill was called by the accountants to give evidence and he produced in the course of that evidence a file note, which was prepared as a result of what he says was service at the premises 18B Bungalow Avenue, Pymble. He gave evidence that it was the practice of the firm for whom he worked to prepare, in relation to each job, a document of this kind. The particular document was placed in evidence as Exhibit 1.
I will not set the whole of the document out. It suffices for present purposes only to observe that it records a number of material matters. It records the date of service as being 21 March 2011 and the time of service as being 11.01 am. It records the address of service as being 18B Bungalow Avenue, Pymble. Immediately above the words 18B Bungalow Avenue, Pymble are the apparently unusual words ‘Ion Pty Limited’. However, the cross-examination of Mr Hill elucidated the meaning of that expression. It is apparent when one looks at the form as a whole that those are the remaining parts of the full name of the corporation, Parkes Terminal Land Corporation Pty Limited, which appears in the previous line, and what has occurred is that the last three letters of the word ‘Corporation’, together with ‘Pty Limited’, have been moved into the address field.
I do not think that that reflects upon the reliability or otherwise of the document. Under the heading ‘Place of service’, there is some hand writing which reads ‘M/O @ R/O’. Mr Hill’s evidence was that this was a short hand for ‘male occupant at registered office’. Underneath that are the words ‘Yes. Cool.’ which I take to be, and Mr Hill gave evidence that it was, the words which had been said by the male occupant.
More importantly, there is a general section of the document headed ‘Observations’. Words which appear under that heading are as follows:
Residential dwelling.
F/O sitting at table at F/verandah
Called M/O from rear –
M/O 45-55- shorts – working casual.The two critical elements to take away from this document are these. First, that there was sitting at a table, on the front verandah, a female occupant. Secondly, the person upon whom the documents were served was a male occupant aged 45-55. The cross-examination of Mr Hill also revealed that at service at the same premises last week, Mr Hill had made a further comment describing the female occupant as having a ‘gammy leg’.
Mr Smith’s uncontradicted affidavit evidence before me is that he is 41 years of age. His ultimate contention was that I should reject the evidence of Mr Hill, not because Mr Hill was an unreliable witness in the sense of being dishonest, but because he was simply mistaken. The mistake was to be seen at a number of levels. At the highest level, it emerged because, in effect, Mr Smith contended that the document must have been served, not at 18B, but at some other premises, most likely 18A Bungalow Avenue. In that regard he made the point that there was indeed a woman living at 18A Bungalow Avenue and that she was around the age of 50. I interpolate that Mr Hill had said, under cross-examination, that the woman he had seen was of about that age. In support of that contention, Mr Smith also sought to make the submission that Mr Hill’s own file note demonstrated that the person upon whom he had served the documents was aged 45-55 and that he, Mr Smith, was only 41. This formed the basis for a further submission that, given the significant gap between the age range indicated and Mr Smith’s actual age, this was a pointer to the unreliability of his evidence, at least insofar as it related to where the document was served.
In that particular regard, Mr Smith submitted that the age gap was on one view 14 years (that is, being the difference between 55 and 41) and on a more generous view, at least nine years (being the difference between the midpoint between 45-55 and 41). I think another view can be taken, however. Mr Hill was cross-examined about his expertise at estimating ages and he freely conceded that he was not especially expert at that topic. The record on his notes indicates a range of 45-55. Mr Smith’s age is 41. There is only a difference of 4 years between the age of 41 and the age of 45 and, having had the advantage of seeing Mr Smith, it is quite possible that he could be perceived as being of the age of 45.
I do not think, therefore, that the discrepancy between Mr Smith’s age and Mr Hill’s description of his age as being in the range 45-55 throws particularly much doubt upon the account contained in the note. Nor do I feel that the assertions about the lady with the gammy leg next door advanced matters very far. This is not only because there was no direct evidence before me as to who, in terms of female occupants, lived at these premises, but also because the evidence which related to it seemed to me to have little impact upon what is the central problem with the note. The difficulty Mr Smith and the client are confronted with is that Mr Hill has no interest in these proceedings and gave evidence of his great experience in process serving. He has been process serving since 1969. I can see no reason why I should assume that his evidence that he served the document at 18B Bungalow Avenue, Pymble should not be accepted.
It was not put to Mr Hill that there were particular reasons why he might have served at 18A rather than 18B and it was not explored with him how the mistake, which the client now contends must have been made, was made. At the end of the day, the Court is confronted with the fact that there is sworn evidence by a disinterested witness of considerable experience, supported by a contemporaneous note, of a document having been served.
Despite Mr Smith’s efforts to persuade me that there were unreliable aspects in that evidence, I have found myself unable to embrace any of those points. For those reasons I conclude that the document was served precisely as Mr Hill says it was served, that is, on 21 March 2011, at 11.01 am, by handing it to a male person at the premises at 18B Bungalow Avenue, Pymble. There being no other explanation, I conclude therefore that the document in question was served upon the client at the premises at 18B Bungalow Avenue, Pymble, in the manner in which Mr Hill indicates.
The accountants apply for indemnity costs and further to have those costs determined by the Court pursuant to O 62 r 4(2)(c) of the Federal Court Rules as a gross sum order. The client’s case was that it was served the documents in question on Wednesday. The accountants’ case was that it served the documents on Monday. That was a matter in dispute. I have determined that contrary to the interests of the client. Although in reaching that conclusion I have rejected Mr Smith’s evidence, I do not think that the position which was put was necessarily hopeless, although I have not found myself able to accept it. In the circumstances, the order will be an order for costs on the ordinary scale.
However, that may turn out to be rather immaterial because the application made by the accountants for a fixed costs order is one to which I am in principle minded to accede. I do so because the magnitude of the present proceedings is not such as to warrant putting both parties to the further expense of being involved in a complicated Federal Court taxation, and because the nature, scope and ambit of the proceedings is relatively straightforward. Ms Perigo of counsel handed up to me a scale of costs and work done calculated pursuant to the Federal Court (Corporations) Rules, which resulted in a costs figure of $7,367.05. In addition to that, Ms Perigo sought an additional amount in counsel’s fees for today, making for a total of $7,632.05. It seems to me that that is an appropriate order to make. I make a gross sum costs order pursuant to O 62 r 4(2)(c) of the Federal Court Rules in the sum of $7,632.05.
I order that the application pursuant to s 459G of the Corporations Act 2001 (Cth) be dismissed.
The exhibits may be returned.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate:
Dated: 20 July 2011
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