Re Gold Merchants International (Aust) Pty Ltd
[2022] VSC 582
•26 September 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2022 02442
IN THE MATTER of GOLD MERCHANTS INTERNATIONAL (AUST) PTY LTD (ACN 132 180 066)
BETWEEN:
| GOLD MERCHANTS INTERNATIONAL (AUST) PTY LTD (ACN 132 180 066) | Plaintiff |
| v | |
| DEPUTY COMMISSIONER OF TAXATION | Defendant |
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JUDGE: | Gardiner AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 September 2022 |
DATE OF JUDGMENT: | 26 September 2022 ex tempore, revised 30 September 2022 |
CASE MAY BE CITED AS: | Re Gold Merchants International (Aust) Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2022] VSC 582 |
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CORPORATIONS — Application to set aside a statutory demand under s 459G of the Corporations Act 2001 (Cth) (‘the Act’) — Application and supporting affidavit filed on RedCrest within 21 days of service of the demand — Plaintiff then served unsealed copy of the application and supporting affidavit on the defendant and without the proceeding number — Opensoft Australia Pty Ltd v Miller Street Pty Ltd [2011] FCA 653 applied — Finding that application had not been served in compliance with s 459G(3)(b) of the Act — Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms M Passarelli, solicitor | Madgwicks |
| For the Defendant | Mr S Rosewarne of counsel | Australian Government Solicitor |
HIS HONOUR:
The plaintiff (‘Gold Merchants’) makes application by originating process filed on 29 June 2022 to set aside a statutory demand dated 27 May 2022 and served on it by the Deputy Commissioner of Taxation (‘DCT’) on 8 June 2022. The originating process is supported by an affidavit of Peter John August sworn 29 June 2022.
The demand claims that Gold Merchants is indebted to the DCT for $265,340,224. The debt is said to arise from a Running Balance Account deficit debt as at 27 May 2022 due under various provisions of the Income Tax Assessment Act 1997 (Cth) and the Taxation Administration Act 1953 (Cth) which are identified in the schedule to the demand. The demand was accompanied by an affidavit of an officer of the Australian Taxation Office (‘ATO’), Asha Joseph, sworn 27 May 2022, which verified the demand in compliance with s 459E of the Corporations Act 2001 (Cth) (‘the Act’) and r 5.2 of the Supreme Court (Corporations) Rules 2013 (Vic).
On 26 July 2022, consent orders for directions were made on the papers for the future conduct of the proceeding.
The orders provided, inter alia, that the parties file affidavit evidence and written submissions directed to the issue of the Court’s jurisdiction to consider the application. The purpose of this was to confine the evidence and submissions to the issue of whether Gold Merchants had “made” its application in compliance with the requirements of s 459G(3) of the Act.
The application was set down for hearing on 13 October 2022, however, on 16 September 2022, the Australian Government Solicitor, acting on behalf of the DCT, contacted my associate by an email of that date circularised to Madgwicks, the solicitors for Gold Merchants, seeking to have the matter brought on for hearing at an earlier date. The letter described the basis for the request for the earlier hearing date as being that if the DCT was successful in its contention that Gold Merchants had not made application within the requirements of s 459G(3)(b) of the Act, the presumption of insolvency arising from service of the statutory demand on 8 June 2022 would, in the absence of a valid application to set aside the demand, arise on 29 June 2022. Gold Merchants would thereby be presumed to be insolvent pursuant to s 459C(2)(a) of the Act for a period of three months. That presumption would expire on 29 September 2022 and be “stale”.[1] Accordingly, if the DCT was successful in respect of the determination of the preliminary question but that determination was made by the Court after 29 September 2022, the application would have been inutile.
[1]See generally Gryst v Dromana Estate Ltd [2008] FCA 1148, [12]–[13] (Finn J).
In the circumstances, I considered it appropriate to proceed to determine the preliminary issue. The relevant evidence is not controversial and the authorities dealing with the specific issue, which are binding upon me, are clear.
On 9 September 2022, the DCT filed an outline of submissions which, among other things, sought to agitate a submission concerning the application of the postal rule[2] but in a later outline of submissions, the DCT accepted Gold Merchants’ evidence that service of the demand occurred on 8 June 2022.
[2]I.e. the application of s 109X of the Act, s 160 of the Evidence Act (1995) Cth and s 29 of the Acts Interpretation Act (1901) (Cth).
The effect of the DCT’s acceptance that service of the demand occurred on 8 June 2022 was that in order for Gold Merchants to bring a valid application to set aside the statutory demand under s 459G of the Act, it was required to perform all the matters obliged to be done under that section by the end of 29 June 2022, i.e. 21 days after service of the statutory demand.
Section 459G of the Act provides:
Company may apply
(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 remaining preliminary issue raised by the DCT that required determination is whether, by serving copies of its application that did not bear a Court seal, a proceeding number or date of issue, Gold Merchants had served a “copy” of the plaintiff’s application within the meaning of s 459G(3)(b) of the Act.[3] If the answer to that question is that it had not, its application was without jurisdiction and must be dismissed.
[3]The originating process and affidavit of Mr August which were served by email and physical service on 29 August 2022 are exhibited to Ms Nelson’s affidavit.
Gold Merchants filed three affidavits directed to the preliminary issue. The DCT did not file any evidence.
The first is the affidavit of Candy Joy Nelson affirmed 9 August 2022. Ms Nelson is employed by Madgwicks. She deposes to the filing on RedCrest of the originating process and the supporting affidavit of Mr August on 29 June 2022 at approximately 7:50pm. She then states that approximately an hour later, at 8:52pm, she transmitted an email to Asha Joseph at the DCT, which attached a covering letter from Madgwicks, the originating process filed and dated 29 June 2022 and the affidavit of Mr August sworn on the same date. The email was sent to the address nominated in the practitioner details identification section of the affidavit accompanying the statutory demand. Ms Nelson states that on the same evening, at approximately 9:20pm, she and Ms Melissa Passarelli, a senior associate at Madgwicks, attended and served a hard copy of the documents at 747 Collins Street, Docklands, Victoria, the address for service nominated in the statutory demand. Access to the building was gained by a side entrance and the documents were placed in the area which appeared to her to be the reception foyer outside the entrance to the Australian Taxation Office. The documents served by email and by physical service were dated and signed by Madgwicks but did not have a proceeding number nor were they sealed with the court seal pursuant to r 28A.03(2) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘the SCR’). I assume that unsealed copies were served because sealed copies were not yet available.
Ms Nelson states that the following day, she received notification that the originating process and affidavit of Mr August had been sealed by the Court on 29 June 2022. She states that a further copy of the originating process bearing the seal of the Court and noting the time of filing as being 7:50pm on 29 June 2022 were subsequently served on the DCT at her request, apparently on 26 July 2022.
Ms Passarelli affirmed an affidavit on 9 August 2022 confirming Ms Nelson’s evidence as to service at the offices of the Australian Taxation Office on the evening of 29 June 2022.
In an affidavit of Sarwar Nasimi affirmed on 9 September 2022, Mr Nasimi, who is the partner at Madgwicks with the ultimate day‑to‑day control of this application on behalf of Gold Merchants, he exhibits a copy of the statutory demand that had been omitted from the exhibit bundle in Mr August’s affidavit.
There is no dispute that in this case, the documents were filed on RedCrest within the 21 day period on the evening of 29 June 2022. Rule 28A.03(2) of the SCR provides that a document is filed in the Court when it is sealed by the Prothonotary or the Registrar, as the case requires. Section 459G of the Act also requires (by s 459G(3)(b)) that a “copy” of the application and a “copy” of the supporting affidavit be served on the person who served the demand on the company within 21 days after service of the demand.
The DCT submitted that here it cannot be disputed that the documents served on the DCT on 29 June 2022 by email and physical service did not bear the Court’s seal, the signature of the Prothonotary or any other mark signifying that it had been filed in the Court as provided by r 28A of the SCR nor did it bear a proceeding number allocated by the Court.[4] The DCT contended that on an application of the authorities dealing with this specific issue that Gold Merchants had not served a “copy” of the documents within the meaning of s 459G(3)(b) of the Act.
[4]I note that the originating process did bear a return date of 27 July 2022, which I assume was obtained in consultation with the Court Registry.
In this regard, the DCT made reference to several authorities , the first of which was a decision of Jagot J of the Federal Court in Opensoft Australia Pty Ltd v Miller Street Pty Ltd (‘Opensoft’),[5] a matter involving a somewhat similar factual scenario to that here. In Opensoft, the documents relied upon for service were dated and signed by the solicitors for the applicant applying to set aside the demand but they did not bear the seal of the Court. Jagot J reviewed[6] the relevant provisions of the Act and, by reason of the venue for the application, the relevant provisions of the Federal Court (Corporations) Rules 2000 (Cth). Reference was made to r 2.2 of the Federal Court (Corporations) Rules 2000 (Cth). Being model rules, they are identical in terms to r 2.2 of the Supreme Court (Corporations Rules) 2013 (Vic) and provide that a person must make an application required or permitted by the Act to be made to the Court by “filing an originating process”. Rule 2.3 of the Federal Court (Corporations) Rules 2000 (Cth) provides that on receiving an originating process the Registrar (in the case of Victorian rules, the Prothonotary) must fix a time, date and place for hearing and endorse those details on the originating process and may seal a sufficient number of copies for service and proof of service.
[5][2011] FCA 653 (‘Opensoft’).
[6]See [21]–[29].
In her judgment, her Honour reviewed a line of authorities. Jagot J stated:
As the plaintiff acknowledged, there is a long line of authority which stands for the proposition that the requirement of s 459G(3)(b) of the Corporations Act is for a copy of the application and supporting affidavit to be served as filed; or, otherwise put, that copies of the originating process and supporting affidavit as sealed by the Court, bearing a proceeding number and a return date, are required to be served by the terms of s 459G(3)(b). I was taken to a series of cases to this effect, each of which, in substance, the plaintiff said was wrongly decided for the reasons set out below. It is appropriate that I briefly record the effect of these earlier decisions.
In Benonyx Pty Ltd v Fetrona Pty Ltd [1999] NSWSC 1181 (Benonyx), Santow J in the Supreme Court of New South Wales dealt with a matter in which the application as served on the defendant omitted the return date. Santow J held that this was not service in accordance with s 459G(3)(b), observing (at [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 of the application to set aside the statutory demand until after the twenty-one days[?] (question mark in original)
In Chelring Pty Ltd v Coombs [2000] WASC 60, Master Sanderson in the Supreme Court of Western Australia dealt with a matter in which the application as served did not have the action number on the top right-hand corner of the document, did not have the date and time at which the application would be heard, and did not bear the seal of the Supreme Court. Master Sanderson held that the application had not been served in accordance with the requirements of s 459G(3)(b).
In LJAW Enterprises Pty Ltd v RJK Enterprises Pty Ltd [2004] QSC 134, Holmes J of the Supreme Court of Queensland dealt with a matter in which an unsealed copy of an application bearing no return date or file number was faxed on the last day for service. It was held that this was not effective service for the purposes of s 459G(3)(b).
In Cooloola Dairys Pty Ltd v National Foods Milk Ltd [2005] 1 Qd R 12; [2004] QSC 308, Chesterman J dealt with a matter in which the application as served did not contain an application number, the date on which the application would be heard, or the seal of the Court. Consistent with the earlier decisions, which Chesterman J reviewed, it was said (at [34]) that those decisions:
… express… a justifiable exposition of s 459G. 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.
Accordingly, there was no effective service in that case.
In Accommodation West Pty Ltd v Innis [2009] WASC 337, the application as served did bear an action number, the date of filing and the signature of the principal Registrar. The only thing it lacked was a return date. Master Sanderson, however, reviewed the earlier authorities and (at [7]) said that:
I think all of these cases indicate there must be strict compliance with the requirements of s 459G. In this case, there has not been strict compliance with the requirements of the section and the application to set aside the demand is not properly on foot.
Finally, the Supreme Court of Western Australia (Appeal) dealt with the same issue in Robowash Pty Ltd v Robowash Finance Pty Ltd (2000) 158 FLR 338; [2000] WASCA 409. In that case, the only deficiency in the documents as served was that four pages had been omitted from an annexure to the affidavit in support. The Court held that, as what was required to be served was a copy of the supporting affidavit (including annexures), there had not been compliance with the requirements of s 459G(3)(b).[7]
[7]Ibid [31]–[38].
Jagot J concluded:
The requirements of s 459G are clear. Section 459G(1) enables an application to be made to a Court to set aside a statutory demand. An application is made to a Court once it has been accepted by that Court. Under s 459G(2), an application may only be made within the 21-day period specified. Section 459G(3) also specifies that an application is made in accordance with s 459G(1) only if within the same 21 days two things occur: namely, an affidavit supporting the application is filed with the Court; and a copy of the application and of the supporting affidavit are served on the person who served the demand on the company. On the ordinary meaning of these provisions, it is difficult to see how the application and supporting affidavit can be other than the application as filed and the supporting affidavit as filed.
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.[8]
[8]Ibid [41]–[42].
Jagot J determined that the documents in that case, which did not bear a proceeding number, the seal of the Court or the return date of the application, did not comply with the requirements amounting to service as required under s 459G(3)(b) of the Act.
Reference was also made by the DCT to the decision of Stanley J of the Supreme Court of South Australia in Craneford Nominees Pty Ltd v VGC Co-operative Ltd (‘Craneford’).[9]In that case, the Court was required to consider whether a “copy” had been served in circumstances where the Registrar’s signature and filing date had not been included on the service copy provided by the Court, but the proceeding number, return date and Supreme Court “received” stamp were apparent. Stanley J stated:
[9][2012] SASC 74.
An analysis of the authorities demonstrates that a document will satisfy the definition of a “copy of the application” where:
(1) the copy document reflects the form of the originating process accepted by the court within the 21 day period;
(2) the copy document evidences the fact of the court’s acceptance, and hence, the fact that proceedings have been commenced, by some mark, whether it is the seal of the court, the Registrar’s signature, or some other authenticating mark such as the court stamp or action number; and
(3) the copy document records the important fact of the return date of the application.
… The authenticity of the copy application which was served, which evidenced the acceptance of the originating process by the court, is found from two matters, namely, the action number, and the Supreme Court “Received” stamp both appearing on the copy application. These marks, even in the absence of the court’s seal or the Registrar’s signature, evidence the authenticity of the document as a copy of the application accepted by the court for filing.[10]
[10]Ibid [21], [26].
Stanley J concluded that the applicant had complied with the service obligations prescribed by s 459G(3)(b) of the Act.
In my view, the position in these circumstances, of Gold Merchants’ application, is relevantly different to that the subject of consideration by Stanley J in Craneford. Here, there is no seal of the Court or other evidence to indicate its acceptance for filing, nor was there a proceeding number. As such, the documents that were served did not evidence the Court’s acceptance and filing.
While, as has been mentioned, the documents served did note the return date, I respectfully agree with the decision of Mossop AsJ in the decision of the Supreme Court of the Australian Capital Territory in Adhesive Pro Pty Ltd v Blackrock Supplies Pty Ltd,[11] where it was concluded:
Finally, although in Benonyx Santow J was prepared to contemplate the argument that service of a copy of the application annotated with a return date other than as a result of filing in the registry may be sufficient, in the light of the subsequent authority it does not appear to me to be open to hold that an application bearing a correct return date, inserted by the solicitor for the plaintiff, but without any evidence of filing recorded by the registry on the document is sufficient to constitute a copy for the purposes of s 459G(3).[12]
[11](2015) 301 FLR 333.
[12]Ibid [49].
Gold Merchants bears the onus of establishing that it has complied with the requirements of s 459G.[13] In my view, an application of the authorities[14] to which reference has been made requires me to conclude that Gold Merchants has not complied with the requirements of s 459G(3)(b) of the Act and that its application must be dismissed.
[13]See Derma Pharmaceuticals Pty Ltd v HSBC Bank Australia Ltd (2005) 188 FLR 373, [14]; see also discussion in Assaf’s Winding Up in Insolvency, 3rd ed, (‘Assaf’), [5.19].
[14]See also the authorities discussed in Assaf at [5.55]–[5.59].
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