Quayside Finance Group Pty Ltd v Stokko Pty Ltd

[1996] FCA 878

IN THE FEDERAL COURT OF AUSTRALIA   )
VICTORIA DISTRICT REGISTRY         )  No. VG3291 of 1996
GENERAL DIVISION                   ) 

BETWEEN:QUAYSIDE FINANCE GROUP PTY. LTD.

Applicant

AND:STOKKO PTY. LTD.

Respondent

CORAM:    Jenkinson J.

PLACE:    Melbourne

DATE:     8 October, 1996

REASONS FOR JUDGMENT

Trial of questions in a proceeding under Division 3 of Part 5.4 of the Corporations Law for an order setting aside a statutory demand.

The statutory demand was served on 21 May 1996. The time within which an application to set aside the demand might be made therefore expired at the end of 11 June 1996 : sub-section 459G(2) of the Corporations Law. Sub-section 459G(3) provides:

"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 originating application and an affidavit supporting it were filed with the court on 11 June 1996, but the respondent submits that a copy of each of those documents was not served on it until 12 June 1996.  The High Court has declared in David Grant & co. Pty. Ltd. v. Westpac Banking Corporation (1995) 184 C.L.R. 265 at 269, 276-277:

"In providing that an application to the court for an order setting aside a statutory demand `may only' be made within the twenty-one day period there specified and that an application is made in accordance with s.459G only if, within those twenty-one days, a supporting affidavit is filed and a copy thereof and of the applications are served, sub-ss. (2) and (3) of s.459G attach a limitation or condition upon the authority of the court to set aside the demand. In this setting, the use in s.459G(2) of the term `may' does not give rise to the considerations which apply where legislation confers upon a decision-maker an authority of a discretionary kind and the issue is whether `may' is used in a facultative and permissive sense or an imperative sense Ward v. Williams (1955) 92 CLR 496 at 505-506; Commissioner of State Revenue (Vict) v. Royal Insurance Australia Ltd. (1994) 182 CLR 51 at 63, 84-85, 97-98. Here, the phrase `[a]n application may only be made within 21 days' should be read as a whole. The force of the term `may only' is to define the jurisdiction of the court by imposing a requirement as to time as an essential condition of the new right conferred by s.459G. An integer or element of the right created by s.459G is its exercise by application made within the time specified. To adapt what was said by Isaacs J. in The Crown v. McNeil (1922) 31 CLR 76 at 100-101. See also (1922) 31 CLR 76 at 96, per Knox CJ and Starke J and Australian Iron & Steel Ltd. v. Hoogland (1962) 108 CLR 471 at 488-489, per Windeyer J, it is a condition of the gift in sub-s. (1) of s.459G that sub-s. (2) be observed and, unless this is so, the gift can never take effect. The same is true of sub-s.(3)."

Paragraph 459E(2)(e) of the Corporations Law provides:   

"The demand:

........ ........ ........ ........ ........ .......

(e)must be in the prescribed form (if any);"

The Corporations Regulations of Victoria, being regulations in force under s.22 of the Corporations Act 1989 (Cth), which apply as regulations in force for the purposes of the Corporations Law of Victoria by virtue of s.8 of the Corporations (Victoria) Act 1990, include a provision prescribing the form of that demand : Regulation 1.03, Item 51H of the First Schedule and Form 509H in the Second Schedule. The following is part of that prescribed form:

"5.Section 459G of the Corporations Law provides that a company served with a demand may apply to a court having jurisdiction under the Corporations Law for an order setting the demand aside. An application must be made within 21 days after the demand is served and, within the same period:

(a) an affidavit supporting the application must be filed with the court; and

(b) a copy of the application and a copy of the affidavit must be served on the person who served the demand.

6.The address of the creditor for service of copies of any application and affidavit is (insert the address for service of the documents in the State or Territory in which the demand is served on the company, being, if solicitors are acting for the creditor, the address of the solicitors)."

Paragraph 22(u)(ii) of the Corporations Act 1989 (Cth) provides:

"The Governor-General may make regulations, not inconsistent with this Act or the Law, prescribing matters:

........ ........ ........ ........ ........ .......

(u)for or in relation to the manner in which:

........ ........ ........ ........ ........ .

(ii)documents that are required or permitted by the Law to be served on a person may be so served;"

The respondent's demand included the following:

"6.The address of the creditor for service of copies of any application and affidavit is C/- George Schifter, Johansson & Co., Solicitors, 4th Floor, 462 Bourke Street, Melbourne Victoria 3000."

The demand was signed by George Peter Schifter as "solicitor for" the respondent.  A facsimile transmission of a copy of the originating application and a copy of the supporting affidavit were received at Mr. Schifter's office on 11 June 1996.  The transmission commenced at 4.27 p.m. on that day.

Mr. Gardiner of counsel for the respondent submitted that the Federal Court Rules require personal service of originating process and that the modes of personal service prescribed or permitted by those Rules do not include service
by facsimile transmission.

In Order 7 of the Federal Court Rules the following provisions are found:

"1. (1)   Subject to the provisions of this Order, originating process shall be served personally on each respondent.

........ ........ ........ ........ ........ .......

(3)  Where a respondent to any originating process files an unconditional appearance, the originating process shall be taken to have been served on him personally on the date on which his notice of appearance is filed or on such earlier date as may be proved.

2.   (1)  Personal service of a document is effected on:

(a)an individual - by leaving a copy of the document with him;

(b)a corporation - by leaving a copy of the document with some person apparently an officer of or in the service of the corporation and apparently of or above the age of sixteen years:

(i)at the registered office of the corporation; or

(ii)if there is no registered office, at the principal place of business or the principal office of the corporation;

[Order 1 Rule 4 provides that the word `corporation' includes any artificial person other than an organisation]

........ ........ ........ ........ ........ .......

or as the Court or a Judge may direct.

........ ........ ........ ........ ........ .......

(4) In spite of subrule 2 (1), for the purposes of Order 71, personal service may be effected:

(a)on a company, as defined in section 9 of the Corporations Act 1989 of the Commonwealth or corresponding legislation of a State or Territory (`the Corporations Law'), in any manner permitted by section 220 of the Corporations Law; and

(b)on the liquidator of a company, in the manner permitted by subsection 220 (5) of the Corporations Law; and

(c)on an official manager of a company, in the manner permitted by subsection 220 (6) of the Corporations Law.

(5)  For the purposes of Order 71, a document served by sending it by pre-paid post addressed to:

(a)a company at the registered office of the company; or

(b)a liquidator at the last address of the office of the liquidator notice of which has been lodged; or

(c)an official manager at the last address of the office of the official manager notice of which has been lodged;

is taken to be served on the seventh day after posting.

[There is no reference to facsimile transmission in s.220 of the Corporations Law]

3.   A document which is not an originating process and which is required or permitted to be served     in any proceeding may be served personally, but unless personal service is expressly required, it need not be served personally.

4.   (1)  Where personal service of a document is not required, the document may be served:

(a)by leaving a copy of the document at the proper address of the person to be served between the hours of nine in the morning and five in the afternoon on any day on which the Registry in that State or Territory is open; or

(b)by sending a copy of the document by pre-paid post addressed to the person to be served at his proper address; or

(c)where any enactment of the Commonwealth or of the State or Territory in which service is to be effected provides for service of a document on a corporation or organisation by serving the document in accordance with such provision; or

(d)where a person to be served has, under rule 7 of this Order, filed a notice for service at an exchange box of a solicitor, by leaving a copy of the document, addressed to that solicitor, in that exchange box; or

(e)by facsimile transmission directed to the facsimile transmission number operated at, or in connection with, the proper address.

(2)  For the purposes of subrule (1), the proper address of a person shall be the address for service of that person in the proceeding but if, at the time when the copy is left or posted pursuant to subrule (1), he has no address for service in the proceeding, his usual or last known place of business or of abode shall be his proper address.

(3)  The time of service of any document for the purpose of any proceeding shall, where the copy of the document:

(a)is sent by pre-paid post in accordance with paragraph (1)(b)-be seven days after the copy is so sent; or

(b)is left in an exchange box in accordance with paragraph (1)(d)-be two days after the copy is so left; or

(c)is sent by facsimile transmission in accordance with paragraph (1)(e)-be one day after the copy is transmitted excluding Saturdays, Sundays and public holidays."

Provision is made in other rules of Order 7 concerning the notification of an address for service.  Such a notification can be effected by a respondent only after the commencement of
a proceeding.

Nowhere in Order 7 is to be found a provision which expressly sanctions service of originating process by facsimile transmission, although sub-rule 9(1) empowers the court to "order that, instead of service, such steps be taken as are specified in the order for the purpose of bringing the document to the notice of the person to be served".  And rule 10 provides:

"Where for any reason it is impractical to serve a document in the manner set out in the Rules, but steps have been taken to bring the document to the notice of the person to be served, the Court may order that the document be taken to have been served on that person on a date specified in the order."

And rule 14 authorises service of originating process in a manner agreed by a respondent.

Section 220 of the Corporations Law makes provision with respect to service of a "document" on a company, by leaving it at, or sending it by post to, the registered office of the company, or by delivering a copy of the document personally to each of 2 directors or, in the case of a proprietary company that has only one director, to that director. Provision is also made for service on a liquidator and on an official manager. sub-section 220(7) provides:

"Nothing in this section affects:

(a)the power of the court to authorise a document to be served on a company in a manner not provided for by this section; or

(b)the operation of an Australian law authorising a document to be served on a company in a manner not provided for by this section."

The expression "Australian law" is defined in s.9 of the Corporations Law to mean "a law of the Commonwealth or of a State or Territory".  In my opinion paragraph 6 of Form 509H in the Second Schedule to the Corporations Regulations of Victoria, Regulation 1.03 thereof, Item 51H of the Second Schedule thereto, s.8 of the Corporations (Victoria) Act 1990 and paragraph 22(u)(ii) of the Corporations Act 1989 (Cth) all fall within the meaning of that expression. And the provision those Australian laws make for and in relation to the service of documents of the description specified in paragraph 459G(3)(b) of the Corporations Law is specifically designed to overcome the difficulty that ordinarily a suitable place for service of curial process cannot be established until the proceeding has commenced and the defendant or respondent has been made aware that it has commenced. In the case of companies under a legal regime requiring public record of an address and of directors the difficulty can be overcome by provisions for service of originating process such as s.220 of the Corporations Law and O.7 R.2(1)(b)(i). But a statutory demand may be served by a natural person who resides in a State or Territory other than that in which the subject of the demand has its business and its registered office. Hence the
provisions of paragraph 6 in Form 509H.  Those provisions plainly go beyond what is provided by the rules of court in this court and in the Supreme Courts of the States and Territories, in which service of originating process on a solicitor can be effective only to the extent that the defendant consents to that mode of service or the court by special order authorises that mode in a particular case.  In my opinion a legislative intention is clearly disclosed by those "Australian laws" that a special mode of service, different from any mode of service prescribed by rules of court in the States and Territories, be available in a case where "solicitors are acting for the creditor".  This was such a case.  Effect must in my opinion be given to that legislative intention.

The respondent cannot invoke the prescription in O.7 R.4(3)(c) of the time as at which a document sent by facsimile transmission is to be regarded as having been served so as to establish that service in this case was effected on 12 June. That prescription is made for the purposes of the modes of service authorised by O.7 R.4(1), most of which are at the "proper address", and none of which is at "the address of the solicitor". (Cf. "exchange box of a solicitor" in O.7 R.4(1)(d)). The quite different mode of service ordained by the "Australian laws" specified above determines the place at which service is to be effected and leaves at large the question as to what events occurring at that place or elsewhere will constitute service at that place. That question is to be answered by reference to the rules of the court in which the proceeding for the order is instituted and the common law.

Mr. Lucarelli of counsel for the applicant supported his submission, that reproduction by a fax machine, operating at the address specified in paragraph 6 of the notice, of a clear, legible copy of the two documents during business hours on 11 June constituted service of these documents, by reference to Hastie & Jenkerson v. McMahon [1990] 1 W.L.R. 1575 and NM Superannuation Pty. Ltd. v. Hughes (1992) 27 N.S.W.L.R. 26. But neither of those cases concerned service of originating curial process and in the first of those cases Woolf L.J. was at pains to point out that nothing in his judgment was intended to apply to such process.

If it be assumed that no other objection to the efficacy of service of originating curial process by facsimile transmission exists, there is in this court, as in the Supreme Court of Victoria and elsewhere in this country, the objection which is raised by O.7 R.1(2) of this court's Rules, and by 0.6.03(2) of the General Rules of Procedure in Civil Proceedings 1996 in the Supreme Court, is difficult to overcome. Those rules require service of a copy for service which must be sealed. Facsimile transmission will produce at the address for service only a copy of that sealed copy. This difficulty was overlooked by me during the hearing, during which neither counsel referred to it.

Notice of unconditional appearance was filed on 24 June 1996. The first directions hearing occurred the next day. On that occasion the respondent's solicitor informed the Deputy Registrar that the court would be moved for an order that the proceeding be dismissed on the ground that service had not been effected within the time prescribed by paragraph 459G(3)(b). Submissions were advanced to me by counsel as to whether or not there had been waiver of the irregularity in service and whether the unconditional appearance had constituted submission to the jurisdiction of the court to hear and determine the application. Some aspects of those questions may have been given less consideration than they deserve. I propose to invite counsel to make further submissions concerning the requirement of service of a sealed copy. And at the same time I will hear counsel as to whether the questions of waiver should be the subject of further submissions. Some of the considerations which may be relevant to those questions are discussed in Williams' Civil Procedure paragraphs [16.02.45], [16.02.50], [18,02.15]-[18.02.45], [18.02.65].

Further consideration of the questions being

separately heard will be adjourned to a date to be fixed.

I certify that this and the preceding 12 pages are a true copy of the Reasons for Judgment of the Honourable Justice Jenkinson.

Associate

Dated:  8 October, 1996

Counsel for the Applicant       :   Mr. N. Lucarelli

Solicitors for the Applicant     :   Kenna Croxford & Co.

Counsel for the Respondent      :   Mr. S.P. Gardiner

Solicitors for the Respondent    :   George Schifter, Johansson & Co.

Date of Hearing                 :   31 July, 1996

Date of Judgment                :   8 October, 1996