Re Cocoa Bean Enterprises Pty Ltd (Preliminary Question re Service)
[2022] VSC 721
•25 November 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2022 03883
IN THE MATTER of COCOA BEAN ENTERPRISES PTY LTD (ACN 120 092 015)
BETWEEN:
| COCOA BEAN ENTERPRISES PTY LTD (ACN 120 092 015) | First Plaintiff |
| PHPR CONVENIENCE PTY LTD (ACN 141 607 150) | Second Plaintiff |
| v | |
| DEPUTY COMMISSIONER OF TAXATION | Defendant |
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JUDGE: | Matthews AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 22 November 2022 |
DATE OF JUDGMENT: | 25 November 2022 |
CASE MAY BE CITED AS: | Re Cocoa Bean Enterprises Pty Ltd (Preliminary Question re Service) |
MEDIUM NEUTRAL CITATION: | [2022] VSC 721 |
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CORPORATIONS – Application to set aside statutory demand pursuant to s 459G of the Corporations Act 2001 (Cth) – Trial of preliminary question pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules 2015 as to when statutory demand was served at registered office – Applicability of presumption of service by post to the registered office – s 109X, Corporations Act 2001 (Cth); ss 28A and 29 Acts Interpretation Act 1901 (Cth); s 160 Evidence Act 2008 (Vic) considered – Presumption that service occurred on seventh business day after posting rebutted as evidence establishes that service occurred earlier than that date.
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APPEARANCES: | Counsel | Solicitors |
| For the First Plaintiff | Mr B. Petrie of counsel | Rigby Cooke Lawyers |
| No appearance by the Second Plaintiff | ||
| For the Defendant | Mr E Cummings, solicitor | ATO Litigation & Legal Services |
HER HONOUR:
Introduction
By originating process filed 3 October 2022, the Plaintiffs seek orders pursuant to s 459G of the Corporations Act 2001 (Cth) (‘Act’) that a statutory demand dated 1 September 2022 (‘Statutory Demand’) served on the First Plaintiff, Cocoa Bean Enterprises Pty Ltd (‘Company’) be set aside.
By orders made on 9 November 2022 by Hetyey AsJ, his Honour directed that the question of when the Statutory Demand was served on the Company be determined as a preliminary question pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules 2015 before the balance of the proceeding (‘Preliminary Question’). His Honour then listed the Preliminary Question for hearing on 22 November 2022 at 10.30am before Gardiner AsJ, however that has been re-allocated to me. Hetyey AsJ made orders for the filing and service of any further affidavit material by the Defendant and the Company and for short submissions of no more than 8 pages.
Accordingly, the only issue before me is the Preliminary Question.
The Defendant relies upon the following:
(a) affidavit of Tejashree Gorakhia sworn 7 November 2022 (‘Gorakhia Affidavit’);
(b) affidavit of Christopher William Hallinan sworn 11 November 2022 (‘Hallinan Affidavit’);
(c) affidavit of Annette Trefoni sworn 11 November 2022 (‘Trefoni Affidavit’); and
(d) the written outline dated 18 November 2022 (‘Defendant’s Written Outline’).
The Company relies upon its written outline dated 18 November 2022 (‘Company’s Written Outline’). The Company did not file any evidence specific to the Preliminary Question. In support of their originating process, the Plaintiffs filed an affidavit of Con Kiourtsidis sworn 3 October 2022 (‘Kiourtsidis Affidavit’) and an affidavit of Jim Kouloubaritsis sworn 3 October 2022 (‘Kouloubaritsis Affidavit’).
The Company accepts that the Statutory Demand was served on it and states that the only question is the date of service. The Company says that the Statutory Demand is presumed to have been served on 12 September 2022, whereas the Defendant says that the Statutory Demand was served by no later than 9 September 2022.
For the reasons which follow, the answer to the Preliminary Question is that the Statutory Demand was served on the Company on 9 September 2022.
Evidence
The Statutory Demand is dated 1 September 2022[1] and is addressed to the Company at ‘Offices 209-210 20 Convention Centre Place South Wharf VIC 3006’. The ASIC extract exhibited to the Kiourtsidis Affidavit[2] establishes that this address has been the registered address of the Company since 28 November 2018 (‘Registered Office Address’).
[1]Exhibit CK-1, pp. 15-19 of Kiourtsidis Affidavit.
[2]Exhibit CK-1, p. 2 of Kiourtsidis Affidavit.
Annette Trefoni (‘Trefoni’) deposes that on 1 September 2022 they posted the Statutory Demand by prepaid priority post to the Company at the Registered Office Address.[3]
[3]Trefoni Affidavit, [14]. See also Exhibit AT-1, p. 13, which is a photocopy of the envelope addressed in this manner.
Tejashree Gorakhia (‘Gorakhia’) deposes that they are an officer in the Commonwealth public service employed at the Australian Taxation Office (‘ATO’).[4] Gorakhia deposes that on 9 September 2022, they received a call from Peggy of PPF Partners (‘PPF’) ’in regard to the s 459E statutory demand dated 1 September 2022 and served on the Plaintiff by the Defendant‘.[5] Gorakhia deposes that PPF is the Company’s tax agent.[6]
[4]Gorakhia Affidavit, [1].
[5]Gorakhia Affidavit, [5].
[6]Gorakhia Affidavit, [5].
Gorakhia deposes that they made a file note at approximately 2.49pm on 9 September 2022 of her conversation with Peggy on the ATO’s records system which stores correspondence and records interactions with taxpayers and a copy of that file note is exhibited to the Gorakhia Affidavit.[7]
[7]Gorakhia Affidavit, [3]-[6].
The first file note (‘First File Note’)[8] refers to the ‘client name’ as that of the Company and to PPF as the ‘tax practitioner’. The note states:
[8]Exhibit TG-1 to the Gorakhia Affidavit.
Peggy from PPF Partners called for the S459E issued to client who is the Beneficiary for the partnership.
ABN 45283675441
Entity THE TRUSTEE FOR KIOURTSIDIS FAMILY TRUST AND THE TRUSTEE FOR PHPR DFO TRUSTReferring to the Activity 1-UYAKWEB under this partnership
New to S 459 E hence I took the details from the Agent and advise that I call her back.
Client was not sure of the Amount listed on S459E which is nearly $342k however the Cocoa Beans is only $24k, Fawl has been issued to COCOA Beans on 8th Sep
Agent was not sure that why this notice has been issued and she was concerned about the debt type like FBT and other roles which does not exist for this client
Spoke to Coach and contacted Peggy back
Gorakhia also deposes that on the same date they telephoned PPF in response to the abovementioned conversation and had a further conversation, and exhibits the file note they made on the ATO’s record system at approximately 3.26pm on 9 September 2022.[9]
[9]Gorakhia Affidavit, [7]-[8].
The second file note (‘Second File Note’)[10] is in a similar form regarding client name and tax practitioner. The note states:
Entity COCOA BEAN ENTERPRISES PTY LTD Is the trustee for the Partnership entity which has outstanding Debt
Name of the entity THE TRUSTEE FOR KIOURTSIDIS FAMILY TRUST AND THE TRUSTEE FOR PHPR DFO TRUSTABN 45283675441
Tax Agency PPF Partners is not listed as an authorised contact however, S 459E was issued to Beneficiary entity COCOA Bean hence I advised Agent that they need to advise client about the parent partnership entity debt and payment proposal to discuss with ATO
Peggy advised she know little bit about the Tax Agent for the other partnership that they disappeared and Client is chasing them up however I advised that if payment plan is not to be discussed then next process is wind up of the business.
Agent Peggy is going to contact client and contact ATO back
[10]Exhibit TG-2 to the Gorakhia Affidavit.
Both the First File Note and the Second File Note record a ‘TAN’ of 77174004.
Christopher Hallinan (‘Hallinan’) deposes they are an officer employed in the ATO[11] that on 11 November 2022 they searched the records of the Tax Practitioners Board available online in relation to registration number 77174004 and exhibits a copy of the registration details.[12] That record shows that 77174004 is the registration number for PPF.[13]
[11]Hallinan Affidavit, [1].
[12]Hallinan Affidavit, [4].
[13]Exhibit CH-1, pp. 4-6 to the Hallinan Affidavit.
Hallinan also deposes that on the same date, they accessed the website of PPF and exhibits a copy of the contact page from that website.[14] That contact page shows the address for PPF as being ‘Offices 209-210, 20 Convention Centre Place, South Wharf VIC 3006’.[15]
[14]Hallinan Affidavit, [5].
[15]Exhibit CH-1, pp. 11-12 to the Hallinan Affidavit.
Applicable law
Section 109X(1) of the Act (‘Section 109X’) relevantly provides:
For the purposes of any law, a document may be served on a company by:
(a) leaving it at, or posting it to, the company’s registered office;
…
Section 28A(1) of the Acts Interpretation Act 1901 (Cth) (‘Section 28A’) relevantly provides:
For the purposes of any Act that requires or permits a document to be served on a person, whether the expression “serve”, “give” or “send” or any other expression is used, then the document may be served:
…
(b)on a body corporate – by leaving it at, or sending it by pre-paid post to, the head office, a registered office or a principal office of the body corporate.
Section 29 of the Acts Interpretation Act 1901 (Cth) (‘Section 29’) relevantly provides:
(1)Where an Act authorises or requires any document to be served by post, whether the expression “serve” or the expression “give” or “send” or any other expression is used, then the service shall be deemed to be effected by properly addressing, prepaying and posting the document as a letter and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.
(2)This section does not affect the operation of section 160 of the Evidence Act 1995.
Section 160(1) of the Evidence Act 2008 (Vic) (‘Section 160’), which is the relevant Evidence Act in respect of this proceeding, relevantly provides:
It is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia or in an external Territory was received at that address on the seventh working day after having been posted.
The author of Assaf’s Winding Up in Insolvency[16] summarises the applicable law in this regard as follows:
[16]Farid Assaf, Assaf’s Winding Up in Insolvency (Third Edition, 2021, Lexis Nexus Butterworths Australia) (‘Assaf Text’), [4.66] (citations omitted).
Service of a statutory demand can be effected by posting a statutory demand to the company’s registered office. In order to establish that a document, including a statutory demand, has been served on a company by ‘posting it to the company’s registered office’ under s 109X, the following elements must be proved:
·that the envelope was properly addressed;
·that the envelope contained the relevant document to be served;
·that the envelope was prepaid;
·that the document was placed in the post and posted as a letter; and
·that the envelope was sent to the registered office of the company.
Service by post will not be established unless each of those facts has been proved although in some cases appropriate inferences may be drawn by the court.
In effect, the combined operation of s 109X, s 28A and s 29 creates a presumption that if a document is posted to the registered office of a company, it is deemed to have been served on the company unless the contrary is proved. Section 29 deems service to have been effected at the time the letter would be delivered in the ordinary course of post, unless the contrary is proved. Section 160 creates a presumption that a prepaid postal article is received at the relevant address on the seventh working day after being posted unless evidence sufficient to raise doubt is adduced.
Submissions
Defendant’s submissions
Service by post
The Defendant submits that as the evidence demonstrates that the Statutory Demand was posted on 1 September 2022, s 160 has the effect that unless evidence sufficient to raise doubt about the presumption is adduced, it must be presumed that the Statutory Demand was delivered on 12 September 2022. It was common ground that 12 September 2022 was the seventh working day after the Statutory Demand was posted.
The Defendant submits that the PPF representative’s conversation with Gorakhia on 9 September 2022 expressly related to the Statutory Demand and expressed specific knowledge of its contents. The Defendant contends that the First File Note demonstrates that Peggy from PPF had knowledge of the details of the Statutory Demand including the type and quantum of the debt disclosed. The Defendant says that it appears the first digit of the total quantum was misstated or mis-recorded as ‘3’ rather than ‘4’. The Defendant points to the file notes recording the tax practitioner as PPF and the TAN as 77174004.
The Defendant also submits that the address listed for PPF on its website is identical to the Registered Office Address of the Company.
The Defendant says that in the absence of any evidence supporting any other method by which PPF may have become aware of the Statutory Demand and its contents, the Court should find that, on the balance of probabilities, PPF became aware of the Statutory Demand because it was delivered to their office no later than 9 September 2022 after being sent to that address by Trefoni on 1 September 2022.
The Defendant observes that no evidence has been adduced by the Company from any employee of PPF and says that they could reasonably be expected to be best placed to give evidence in relation to delivery of post to their office. The Defendant submits that the Court should infer that the evidence by relevant employees of PPF would not assist the Company’s case.
The Defendant also notes that Mr Kiourtsidis does not depose to the date of receiving the Statutory Demand. Notwithstanding that the date of service is based on delivery rather than receipt,[17] the Defendant says that certain inferences may be drawn from evidence as to receipt, such as that delivery occurred no later than receipt. The Defendant submits that Mr Kiourtsidis’ failure to depose to the date of receipt, both in the Kiourtsidis Affidavit or in any further affidavit they had the opportunity to provide in accordance with the orders made on 9 November 2022, warrants the drawing of an inference that his evidence in relation to this issue would not assist the Company’s case.
[17]Section 29.
The Defendant submits that the evidence referred to is sufficient to raise doubt about the presumption under s 160 and that the Court can be satisfied, on the balance of probabilities, that the Statutory Demand was served on the Company on or before 9 September 2022.
Effective informal service
Section 109X refers to ways a company may be served and the Defendant submits that this is facultative rather than mandatory.[18] It says that it is open to the Court to find that service has been effected on the basis of the material being sufficient to satisfy the Court, on the balance of probabilities, that the document actually came to the attention of an officer of the company who was either expressly or implicitly authorised by the company to deal directly and responsively with the document, or documents of that nature.[19] In this regard, the Court should not lightly draw inferences or make assumptions as to the time of service.[20]
[18]Emhill Pty Ltd v Bonsoc Pty Ltd [2004] VSC 322, [27]; Howship Holdings Pty Ltd v Leslie & Anor [1996] NSWSC 314, [8].
[19]Woodgate v Garard Pty Ltd [2010] NSWSC 508, [44(iv)].
[20]Woodgate v Garard Pty Ltd [2010] NSWSC 508, [44(vii)].
The Defendant submits that as a registered tax agent, PPF is part of a regulated industry. A representative of PPF contacted the ATO on 9 September 2022 and sought information regarding the Statutory Demand in their capacity as agent for the Company. To the extent that they were not authorised to do so, this could have consequences for PPF under regulatory provisions and/or s 8XA of the Taxation Administration Act 1953 (Cth), which makes unauthorised access to taxation records an offence.
The Defendant says that in the absence of any evidence regarding what instructions were given to PPF before the contact made with the ATO on 9 September 2022, or any evidence being adduced from an employee of PPF, the Court should infer that PPF were acting as agent for the Company in relation to the Statutory Demand in accordance with instructions provided by an officer of the Company who was either expressly or implicitly authorised by the Company to deal directly and responsively with the Statutory Demand, and therefore that the Statutory Demand was effectively served no later than 9 September 2022.
Consequences of the date of service of the Statutory Demand
The Originating Process and the affidavit in support of it were served on the Defendant on 3 October 2022. That is not in contest. However, for the application to set aside the Statutory Demand to be in accordance with s 459G of the Act, service of that application must have occurred within 21 days after service of the Statutory Demand. The Defendant says that for this reason, unless the Statutory Demand was served on the Company by no earlier than 10 September 2022,[21] the Court has no jurisdiction to set aside the Statutory Demand.
[21]The Company says that if the date of service is earlier than 12 September 2022 then its application is out of time. Nothing turns on this distinction between 10 and 12 September, since the real dispute is whether the date of service is 9 September or 12 September. If it is 9 September, then the Company’s application is out of time. If it is 12 September, then the Company’s application is within time.
The Defendant submits that on the evidence, the Court should find that the Statutory Demand was served on the Company by no later than 9 September 2022 and accordingly the Plaintiffs’ application to set aside the Statutory Demand should be dismissed for want of jurisdiction.
The Company’s submissions
Other than the First and Second File Notes referring to Gorakhia’s conversations with Peggy, the Company submits that Gorakhia does not otherwise depose to what, exactly, was discussed.
The Company submits that the following inferences may be gleaned from the Gorakhia Affidavit:
(a) Gorakhia is new to dealing with statutory demands;
(b) Gorakhia operates under the supervision of a ‘coach’;
(c) there was some uncertainty ‘Peggy’ about the details of the document that was discussed, and Gorakhia subsequently needed to discuss this issue with her coach before calling ‘Peggy’ back;[22]
[22]I have taken this wording exactly from the Company’s Written Outline at 14(c), and note that the grammar/syntax of “there was some uncertainty ‘Peggy’ about the details” is not clear to me.
(d) Gorakhia had a discussion with her coach about the matters identified by Peggy;
(e) in their second discussion, Peggy informed Gorakhia that ’she know little bit about the Tax Agent for the other partnership …’; and
(f) Peggy was going to contact the ‘client’ and contact ATO back. It is not clear, however, whether Peggy was referring to the First Plaintiff or the Second Plaintiff. There is no evidence before the Court that Peggy ever contacted the ‘client’.
The Company says that there is no evidence from the coach who Gorakhia consulted with and there is no evidence before the Court about when the Statutory Demand would have been delivered in the ordinary course of post.
The Company relies on s 160 to say that service of the Statutory Demand on the Company occurred on 12 September 2022. They say that the Defendant bears the onus of establishing ’evidence sufficient to raise doubt about the presumption‘.[23]
[23]Deputy Commissioner of Taxation v Manta’s on the Beach Pty Ltd [2010] FCA 417, [12]. In that case, it was the debtor company who sought to displace the presumption.
The Company submits that where the presumption is displaced, the effect will be that the Defendant cannot rely on s 160 to prove the date of service and will instead need to prove, on admissible evidence, an alternative date of service. According to the Company, raising sufficient doubt so as to displace the statutory presumption is a significant forensic exercise. While most of the cases are ones where it is the debtor company who seeks to displace the presumption, not the creditor, the Company says that there is no reason in principle why the evidential burden on the Defendant would be any different to that imposed on a debtor that seeks to rebut the presumption.
The Company says that where s 160 does not apply, a party may also rely upon s 29 which provides that, unless the contrary is proved, an article is deemed to be received in the ordinary course of post.
The Company says that the following propositions regarding the application of these statutory presumptions are well established:
(a) where a party relies on service by ordinary post, if s 160 does not apply then they will be left to rely upon s 29. This will be a question of fact to be proved by the evidence. The phrase ‘ordinary post’ is not concerned with the particular idiosyncrasies of the particular addressee, but rather with the general delivery practices of the postal service.[24] In the absence of evidence on when delivery by ordinary post would have occurred, the inevitable conclusion is that the document will be taken not to have been served by ordinary post;[25]
[24]Relying on Bowman & IH Bowman Pty Ltd v Durham Holdings Pty Ltd (1973) 131 CLR 8, 14-15 (‘Bowman’).
[25]Relying on Scope Data Systems Pty Ltd v Goman (2007) 70 NSWLR 176, [37]-[38].
(b) a party is not permitted to rebut the presumption created by Section 160 by reference to ‘inferential possibilities’ of alternate dates of delivery, or by reference to speculation. A party that seeks to rebut the presumption must provide the factual foundation to support a finding that delivery occurred on some other date;[26]
[26]Relying on Re AXF Group Pty Ltd [2019] VSC 671, [77]-[83].
(c) the Company accepts that s 109X is not an exhaustive code of the way in which a company may be served. As Sifris J (as his Honour then was) observed in Chen v Kornucopia Pty Ltd (No 1),[27] the ‘effective informal service’ rule has been applied many times in relation to service of statutory demands and other documents in ways that are not provided for by s 109X. The Company says that Sifris J cited with approval the following principles:
[27](2019) 59 VR 305, [50]-[51] (‘Chen v Kornucopia (No 1)’).
(i) the question is whether the mode of informal service ’actually brought the document to the attention of a responsible officer‘, being an officer of the company that was authorised by the company to deal with documents of that nature;
(ii) a party invoking the informal service rule bears the onus of proving the time at which the document came to the actual attention of a responsible officer of the company and, in view of the serious consequences which may attend, the court will not lightly draw inferences or make assumptions as to the time of service; and
(iii) in the case of service by email, it will be sufficient to demonstrate that the document was actually received by a responsible company officer, whether or not it came to their ‘attention’.
(d) even if service is properly effected in accordance with s 109X or some other statutory provision, the doctrine of fair notice provides that the Court retains an overall discretion to refuse relief (for example, to refuse a winding-up order). For instance, the courts have recognised that it may be an abuse of process for a creditor to take advantage of a company by relying on literal compliance with statutory provisions for service. The question in such circumstances is usually whether the creditor has done all they reasonably could to ensure that fair notice of the statutory demand was given to those in control of the affairs of the debtor.[28] If a court is not so satisfied, then it may refuse to grant a winding-up order.
[28]Relying on Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559; Re Intercorp Estate Pty Ltd [2016] NSWSC 1590, [14]-[15].
The Company submits that as the Defendant does not rely on s 160 to establish service, if it wishes to establish effective service by ordinary post then it must rely on s 29, which according to Bowman requires evidence of general delivery practices of the postal service.
The Company says that the Defendant has adduced no evidence of when the Statutory Demand would have been delivered by ordinary post. For instance, it could have, but has elected not to, adduce evidence from Australia Post about standard delivery times. Accordingly, there is no factual foundation on which the Court can conclude that the Statutory Demand was served by ordinary post.
To the extent that the Defendant relies upon the telephone conversations between Gorakhia and Peggy on 9 September 2022, then the Company says that those conversations do not establish service by ordinary post. Neither Gorakhia nor Peggy can depose to the general delivery practices of the postal service. The Court is therefore left to speculate about any number of inferential possibilities, which is insufficient to displace the statutory presumption.
The Company submits that in the circumstances, it is apparent that the Defendant can only establish service by establishing effective informal service, which it cannot do. That is because there is no evidence whatsoever that the Statutory Demand was either brought to the attention of an officer of the Company or was even received by an officer of the Company, noting that receipt of the Statutory Demand by an agent of the Company would be insufficient to constitute effective informal service. For these reasons, says the Company, the Defendant cannot establish effective informal service.
The Company also submits that to allow this to constitute effective informal service would be to drastically reduce what is required to be proven and would be a dangerous precedent to set, being one which open the floodgates in an undesirable way.
The Company submits that in view of the serious consequences which may attend the outcome of the Preliminary Question, the Court should give little weight to Gorakhia’s evidence for at least the following reasons:
(a) there is a decisive lack of detail in what was discussed between Gorakhia and Peggy;
(b) there is no direct evidence that they discussed the Statutory Demand, as opposed to some other document;
(c) without intending any criticism of Gorakhia, she is ‘new’ to s 469E [sic] of the Act,[29] and the Court should be slow to rely upon her evidence where the result might inexorably lead to the Company being wound up; and
(d) related to this last point, there is no evidence from the coach that Gorahkia spoke with.
[29]Company’s Written Outline, [34] refers to it as s 469E of the Act. I assume this is a typographical error in the submission, as the First and Second File Notes both specifically refer to s 459E, not s 469E.
The Company submits that even if the Court were to accept that the Statutory Demand came to the attention of Peggy (cf. an officer of the Company), it is unusual, to say the least, for a creditor (cf. a debtor) to seek to rebut the statutory presumption in order to establish an earlier date of service. In this regard, the Company says that at no time before it says the Statutory Demand expired did the Defendant give the Company notice that it intended to argue that the date of service is 9 September 2022 as opposed to 12 September 2022. The Court may take judicial notice that it is standard practice for the Defendant and companies that use an accountant’s office as a registered office to rely upon the operation of s 160. In the circumstances, the Defendant has not adhered to its own model litigant obligations. At the very least, it clearly did not do all it reasonably could to bring this fact to the Company’s attention, and the Company would therefore have good prospects of resisting a winding-up order in reliance on the doctrine of fair notice.
The Company says that if, on the other hand, the Court finds that the Defendant has not displaced the presumption in s 160, the result will simply be that the application to set aside the Statutory Demand will be resolved on its merits.
The Company therefore submits that the Preliminary Question should be resolved in the Company’s favour, and the Court should find that the Statutory Demand was served on 12 September 2022 in accordance with s 160.
Consideration
The Company does not dispute that Trefoni sent the Statutory Demand by post on 1 September 2022 to the Company’s Registered Office Address.[30] The Company does not dispute that the Statutory Demand was served – the only question, it says, is the date of service.[31]
[30]Company’s Written Outline, [8].
[31]Company’s Written Outline, [17].
It is common ground that if the presumption in s 160 applies, then service is taken to have occurred on 12 September 2022, with the result that the Company’s s 459G application was filed and served within time.
The Company also does not dispute that PPF is a registered tax agent. For the purposes of the Preliminary Question only, the Company does not dispute that PPF is its accountant.[32]
[32]Company’s Written Outline, [4].
Despite the Company’s position as I have set out in paragraph 52 above, there is a thread throughout the Company’s submission that if the presumption in s 160 does not apply then because there has been no evidence adduced as to the ‘ordinary course of post’ for the purposes of s 29, service of the Statutory Demand by post has not been established.
I do not accept that the Company has correctly characterised the issues which arise on the evidence in respect of answering the Preliminary Question. On the Company’s own submissions, it is the timing of service by post which is disputed and not the fact of service by post.
Section 160 is primarily concerned with creating a presumption, which is rebuttable, that an article sent by prepaid post is received on the seventh working day after being posted. It is the timing of that service which is dealt with by s 160. What can be rebutted, by evidence sufficient to raise doubt about the presumption, is that service occurred on that date, and/or that service by post did not occur.
Mr Kiourtsidis deposes that he is the director and secretary of the Company[33]and he says that he received the Statutory Demand.[34] He does not say when or how he received it. Thus the Company’s submission at paragraph 46 above that there is no evidence the Statutory Demand was received by an officer of the Company is not accurate: it was, but there is no evidence of when. However, the import of the Company’s submission that this cannot be relied upon to establish when informal service may have been effected is correct.
[33]Kiourtsidis Affidavit, [1].
[34]Kiourtsidis Affidavit, [17].
The Company’s Registered Office Address is exactly the same as PPF’s address. The evidence establishes that the Defendant sent the Statutory Demand to the Company by post to the Registered Office Address on 1 September 2022.
There is no direct evidence establishing precisely when the Statutory Demand was delivered to the Registered Office Address.
However, there is evidence, which I accept, that establishes that the Statutory Demand was delivered to the Registered Office Address on or before 9 September 2022. I accept that the Gorakhia Affidavit establishes that the Statutory Demand was delivered to the Registered Office Address on or before 9 September 2022 because:
(a) on that date Gorakhia received a telephone call from Peggy of PPF;
(b) PPF’s address is the Company’s Registered Office Address;
(c) PPF is, for the purposes of the Preliminary Question, the Company’s accountant;
(d) Peggy was asking questions about the Statutory Demand issued to the Company. I accept that the combination of Gorakhia’s evidence at paragraph 5 of her affidavit that the call was about the s 459E statutory demand, dated 1 September 2022 and served on the ‘Plaintiff’ by the Defendant, and the content of the First and Second File Notes sufficiently establish that the subject of the call was the Statutory Demand. Describing it in the file notes as the s 459E is quite precise, it is clearly a statutory demand being discussed which is also evident from the Second File Note where Gorakhia records that she told Peggy that if a payment plan is not to be discussed the next step is winding up the business; there is some detail referred to that corresponds to the Statutory Demand (although not exactly in terms of the total amount claimed);[35] the ‘client’ is identified as the Company; and PPF is identified as the ‘tax practitioner’ and its registration number 77174004 is recorded. I accept the Defendant’s submission that the amount of ’$342k‘ referred to in the First File Note is a misstatement or mis-recording of ’$442k‘. I do not accept the Company’s submission that only the conversation aspect of the First and Second File Notes should be taken into account. The records identify the client as the Company;
(e) I do not need to have recourse to the ‘evidence from the Bar table’ by Mr Cummings as to what some of the information recorded in the First and Second File Notes means in order to be satisfied that it was the Statutory Demand being discussed. In my view, the First and Second File Notes speak for themselves and it is sufficiently clear on their face that the Statutory Demand was being discussed; and
(f) I do not accept any of the Plaintiffs’ submissions as set out in paragraph 48 above. As I have already said, there was sufficient detail in what Gorakhia and Peggy discussed to satisfy me that they were discussing the Statutory Demand. There is direct evidence, in the form of paragraph 5 of the Gorakhia Affidavit, that they discussed the Statutory Demand and there is no reason to downplay Gorakhia’s evidence or to reject it because she is ‘new’ to statutory demands. There being no evidence from the coach who Gorakhia spoke to is not of any moment here and certainly does not cause me to doubt Gorakhia’s evidence or her file notes. In any event, as the Defendant submitted in reply, any evidence from the coach would have been hearsay.
[35]The total amount claimed in the Statutory Demand is $442,505.76.
In Chan v Kornucopia (No 1), Sifris J stated that:
It is elementary law, that in civil proceedings, an inference can be drawn from circumstantial evidence if it is the more probable inference to be drawn as against some other competing inference which is less probable. It need not be the only available inference from the evidence.[36]
[36]Chan v Kornucopia (No 1), [61] (citations omitted, emphasis in original).
Here, there is no inference available on the evidence that Peggy’s call to the ATO on 9 September 2022 about the Statutory Demand arose other than because the Statutory Demand had been delivered to PPF’s address (which is the Company’s Registered Office Address) on or before that date. In the absence of any such evidence from the Company or PPF, and in the face of the Plaintiffs having failed to adduce any evidence as to when the Statutory Demand was delivered to the Registered Office Address or came to the attention of one of its officers, which evidence was within its control, it simply defies common sense for the Court to refuse to infer that the Statutory Demand was delivered to the Registered Office Address by no later than 9 September 2022. I am satisfied that the more probable inference is that the Statutory Demand was delivered to the Registered Office Address by no later than 9 September 2022.
By commenting on the absence of evidence to the contrary from the Company, I should not be taken as having reversed the onus. Clearly, the onus of rebutting the presumption is on the Defendant. In this case, the Defendant has adduced sufficient evidence to raise doubt about the presumption. It has adduced evidence sufficient to establish that delivery occurred on or before 9 September 2022. In such circumstances, it was open to the Company to seek to adduce contrary evidence, but it has not done so. It is therefore open to me to infer that this evidence would not have assisted the Company. While I accept this is the case, it is not determinative as I consider service by 9 September 2022 has been established on the Defendant’s evidence.
There is insufficient evidence to determine precisely what date delivery occurred on, however there is sufficient evidence to be satisfied that it was by 9 September 2022 because that was the date upon which Peggy called the ATO.
Looking at the elements set out in the Assaf Text as to what must be proved for service of a statutory demand by post (see paragraph 22 above), there is evidence here which establishes that:
(a) the envelope was properly addressed;[37]
[37]Trefoni Affidavit, [4(b)]; Exhibit AT-1, p. 13.
(b) the envelope contained the Statutory Demand;[38]
[38]Trefoni Affidavit, [4(a)].
(c) the envelope was prepaid;[39]
(d) the envelope was placed in the post;[40] and
(e) the envelope was sent to the Company’s Registered Office Address.[41]
[39]Trefoni Affidavit, [4(c)].
[40]Trefoni Affidavit, [4(d)].
[41]Trefoni Affidavit, [4(b)]; Exhibit CK-1, p. 2 to the Kiourtsidis Affidavit.
Further, none of these elements are disputed, and the only dispute is as to the date of service.
In light of Gorakhia’s evidence and the matters referred to in the preceding two paragraphs, there is a sufficient factual foundation to support the finding that delivery of the Statutory Demand by post occurred not on 12 September 2022, but by no later than 9 September 2022. It is of no consequence in these circumstances that the Defendant has not adduced evidence as to the ‘ordinary course of post’.
I do not accept the rolled up submission by the Company as set out in paragraph 49 above. There was no obligation on the Defendant to give the Company notice that it was not going to rely on the presumption in s 160. It is not as if there is any evidence other than the conversations between Peggy and Gorakhia of any contact between the Company or anyone on its behalf with the Defendant between the time of serving the Statutory Demand and the application being filed, so there can be no suggestion for example that the Defendant lulled the Company into thinking that it was relying on the presumption. One may ask why, in those circumstances, would the Defendant be obliged to bring this to the Company’s attention? How is it a transgression of the model litigant rules? Why, indeed, would the Defendant have any reason to think that the Company would dispute that it had been served with the Statutory Demand by 9 September 2022 given that its accountant had telephoned the ATO on that date about the Statutory Demand? In respect of the Company’s submission about fair notice, I would simply say that this has nothing to do with the Preliminary Question.
I do not accept the Company’s submission made at the hearing that to accept the Defendant’s submission on service by post would be to undermine the operation of s 160 or to open the floodgates to all manner of arguments about service. Simply because it may be unusual for a creditor rather than a debtor to seek to displace the statutory presumption, it does not affect the provisions of the Act creating strict timelines for s 459G applications. I do not accept the Company’s submission that the Defendant’s position has the capacity to create real uncertainty to a settled regime.
To the extent that the Defendant relies on informal service of the Statutory Demand, I am struggling to see how informal service comes into play when the only mode of service relied upon by the Defendant is service by post to the Registered Office Address of the Company. However, even if it does come into play, I do not accept that the evidence establishes informal service here, for the reason that there is no evidence as to when the Statutory Demand came to the attention of a responsible officer of the Company. I am not prepared to make the inferences which the Defendant urges upon me (as summarised in paragraphs 32 and 33 above) in this regard. It follows that I do not need to contend with the Company’s submissions[42] as to the precedent which may be created if I did accept the Defendant’s position regarding informal service. Nor do I need to deal with the Company’s submissions as to there being no evidence that Peggy from PPF raised the Statutory Demand or her conversations with the ATO on 9 September 2022 with an officer of the Company – that would only be relevant to the question of informal service, which I have already not accepted. It is irrelevant to the consideration of the Defendant’s primary submission as to service by post.
[42]See paragraph 47 above.
Nonetheless, due to my findings set out above and for the reasons there expressed, the answer to the Preliminary Question is that the Statutory Demand was served by no later than 9 September 2022. That is because it was delivered by post to the Registered Office Address by that date.
Conclusion
The answer to the Preliminary Question is that the Statutory Demand was served by no later than 9 September 2022.
The parties are directed to confer as to a form of orders to give effect to this decision and as to costs, and to provide my Chambers with a proposed form of orders by 30 November 2022. If the parties are in disagreement as to the orders to be made, then the proceeding will be listed for 10.00am on 2 December 2022 before me for the making of orders.
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