Re W B Sharpe Constructions P/L

[2001] QSC 253

SUPREME COURT OF QUEENSLAND

CITATION:

W B Sharpe Constructions P/L, Re [2001] QSC 253

PARTIES:

IN THE MATTER of the CORPORATIONS LAW and
IN THE MATTER OF W.B. SHARPE CONSTRUCTIONS PTY LTD
(Applicant)

FILE NO/S:

1/2001

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court Cairns

DELIVERED ON:

30 March, 2001

DELIVERED AT:

Cairns

HEARING DATE:

30 January 2001

JUDGE:

Jones J

ORDER:

1.   The application is allowed

2.   That the statutory demand served by post on 18 December 2000 be set aside.

3.   Give the parties leave to make submissions on costs within 14 days from the date hereof.

CATCHWORDS:

CORPORATIONS LAW – statutory demand – application for order to set aside notice of demand pursuant to s459G Corporations Law – whether facsimile service of notice of demand effective service - whether facsimile service of application and supporting affidavit effective service – whether Corporations Law or rules of particular court to apply.

CORPORATIONS LAW – whether genuine dispute or offsetting claim pursuant to s459H Corporations Law.

Corporations Law ss 109X, 109Y, 459E, 459G, 459H.
Corporations Law Rules (Schedule 1A to the Uniform Civil Procedure Rules (Qld) 1999) r2.7.
Uniform Civil Procedure Rules (Qld) 1999 r112.

David Grant & Co. Pty Ltd –v- Westpac Banking Corporation (1995) 184 CLR 265, considered
CFC Corporation Pty Ltd –v- Lanier (Australia)Pty Ltd (1993) 11 ACSR 772, considered

Rochester Communications Groups Pty Ltd –v- Lader Pty Ltd (1997) 143 ALR 648, considered.

COUNSEL:

Mr. C. Ryall for the Applicant
Mr. D. Morzone for the Respondent

SOLICITORS:

Williams Graham & Carman for the Applicant
Connolly Suthers for the Respondent

1. This is an application pursuant to s.459G of the Corporations Law for an order to set aside a Notice of Demand, made in accordance with s.459E (“the demand”) served upon W.P. Sharpe Pty Ltd (“the applicant”) by Windmill Bricklaying Pty Ltd (“the respondent”).

1. In December, 2000 the respondent served the demand for payment of an alleged debt of $20,764.00.  The respondent claims service was effected on 14 December by its dispatch of a facsimile copy of the demand and supporting affidavit to the applicant’s registered office at Brisbane.[1]  The respondent also sent those documents by post to the registered office and they were received on 18 December – a date which would coincide with delivery “in the ordinary course of post”.  The demand duly made reference to the time limit for the making of this application and gave the address for service as the office of the respondent’s solicitors.

   [1]Affidavit of Gregory Humphries (25.01.01) exhibits 1-2

1. On 4 January, 2001 the applicant filed this application and at the same time filed an affidavit in support by William Benjamin Sharpe.  These documents were served by facsimile transmission on that day to the respondent’s solicitors.

1. The respondent argues that there was no effective service of the copy application and supporting documents by reason of their having been sent by facsimile transmission to the office of the respondent’s solicitors and because a sealed copy of the application had not been received by 4.00 pm on that date.

1. The applicant argues that it was the respondent’s solicitors who prepared and served the demand and determined the address for service of the application and supporting affidavit.  The applicant further contends that though the original transmission of the application was not of a sealed copy of the application, a later transmission was of the sealed copy and that transmission was completed by 3.58 pm on 4 January, 2001.

1. On the factual issue as to what documents were sent by facsimile, I accept as correct the applicant’s contention since it is established by the tendering of the copy of the transmission report. (Ex. AD5 to the affidavit of Alison Delaney sworn 24 January, 2001.)  I am satisfied that the facsimile transmission of the sealed application and a copy of the supporting affidavit was received at the authorised address for service before 4 pm on 4 January 2001.

1. By my calculation even if I ruled that service of the demand was effected on 14 December the last date for the filing of the application would be 5 January, 2001.  Consequently, I do not see the necessity to consider further arguments going to service of the demand.

The application

1. Section 459G of the Corporations Law provides:-

“Company may apply

459G(1)[Application to set aside statutory demand]    A company may apply to the Court for an order setting aside a statutory demand served on the company.

[Time limit on application] (2)     An application may only be made within 21 days after the demand is so served.

[Requirements for effective application] (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.”

1. The requirement for service of the application and a copy of the supporting affidavit being served within 21 days must be met if the Court is to have jurisdiction. See David Grant & Co. Pty Ltd v Westpac Banking Corporation[2]. 

   [2](1995) 184 CLR 265 at p.278

1. The respondent argues that there is no provision in either the Corporations Law or the rules made thereunder for service of the documents by facsimile to the nominated address of the company’s solicitor and argues therefore that the service of the documents did not comply with s.459G and that such non-compliance was fatal to the application.

1. The only provision for service of documents under the Corporations Law is found in ss 109X and 109Y. These rules provide for service of a document on a corporation by “leaving it at, or posting it to, the company’s registered office or by delivering a copy of the document personally to a director of the company…” Once, however, an application is issued in the court it is the rules of that court relating to service which are to be applied.

1. In Queensland the Corporations Law Rules (Schedule 1A to the Uniform Civil Procedure Rules) do not make any special rule relating to service of proceedings. Rule 2.7 is of general application and is not relevant to the issue. The provisions which are relevant to the mode of service (as opposed to the time of service) are thus found in r 112 of UCPR. These provide inter alia –

“112 (1)     If these rules do not require personal service of a document, the following are ways by which the document may be served on the person to be served –

(a)     leaving it with someone who is apparently an adult living at the relevant address;

…

(d)     posting it to the relevant address;

…

(f)      if the solicitor for the person has –

(i)      an exchange box at a document exchange – leaving the document in the exchange box or another exchange box available for documents to be transferred to the solicitor’s exchange box; or

(ii)     a fax – faxing the document to the solicitor; or

(iii)   an email address – emailing the document to the solicitor;

….”

1. The applicant relies upon sub-rule (1)(f) to contend that service of the relevant document was achieved at 3.58 pm on 4 January, 2001.

1. In this regard counsel for the applicant relied upon the judgment of Mildren J in CFC Corporation Pty Ltd v Lanier (Australia) Pty Ltd[3].  In that case the company, on the last day provided by the statute served an application to set aside by facsimile rather than by service personally or at the registered office of the respondent.  At p.774 Mildren J said:-

“But in this case, there was service of the summons and the supporting affidavit required by the section, within the time limited by the section, albeit irregular service.  The mode of service to be used is not prescribed by the provisions of Pt. 5.4 of the Corporations Law.  Nor do the provisions of the Corporations Law elsewhere to be found in that Act prescribe any exclusive mode of service.  The mode of service of such an application, being a matter of practice and procedure, is left to the rules of this court.  Accordingly it is my view that the method of service used in this case was a mere irregularity which could be waived by the defendant: see ATCO Industries (Aust) Pty Ltd v Ancla Maritima SA (1984) 35 SASR 408 at 413-14. As, in my opinion, nothing in the Act precludes the court from prescribing the mode of service of an applications, nothing in the Act prevents a court from making an order, pursuant to r 6, confirming irregular service of the application and the supporting affidavit on the defendant. It is clear that an order under r 6.10 may be made at any time after informal service and I consider that I now have power to make such an order.”

Mildren J was there dealing with the relevant court rules for the Northern Territory Supreme Court. 

[3](1993) 11 ACSR 772

1. That case was considered by the Full Court of the Federal Court in a wide ranging review of court rules relating to service on companies.  The case is Rochester Communications Groups Pty Ltd v Lader Pty Ltd [4] where the question was whether service of an application at the personal premises of a director was sufficient in the circumstances where the notice of demand authorised service on the creditor’s solicitors and the rules of court provided only for service on an officer of the company at the registered office or at the principal place of business.  In that case Beaumont J (at p.666) expressed difficulty in following the approach of Mildren J and identified four arguments against his so doing, but he also noted that CFC Corporation was concerned with the manner of service and not with the question of the proper place for service.

   [4](1997) 143 ALR 648

1. What distinguishes both these cases in the present circumstances is that in Queensland the court rules, by r 112 above, provide a mode for ordinary service as the demand authorised namely, service on the respondent’s solicitors. There is therefore no need to consider the questions arising in Rochester as to what is the proper place of service. Further, because R.112 provides how that service may be effected, facsimile transmission was in fact permissible.  Unlike the situation in CFC Corporation, the service of the application and supporting documents in this instance was regular.

1. I therefore conclude that there was proper service of the application and supporting document within the 21 days provided by s.459G of the Corporations Law and that I  have jurisdiction to deal with this application.

Is there a genuine dispute?

1. The next issue is whether in terms of s.459H of the Corporations Law there exists a genuine dispute between the parties or alternatively, that the applicant has an offsetting claim.

1. The supporting affidavit of the applicant identifies the fact that a contract between the applicant and the respondent was entered into on 22 January, 2000.  The work undertaken pursuant to the contract was completed in September 2000. Resulting from that work the respondent claims $20,764.00 in accordance with an invoice which was exhibited to that affidavit.  The applicant says the claim is incorrect.  The points of dispute are identified as relating to retention money, hire of bins, construction of door frames, defective work and an alleged over-claim in connection with the scope of the work performed.

1. Details of the disputed items thus identified in the supporting affidavit were further refined in later affidavits with the result that there still remains some dispute as to what was even bargained for in the original contract. 

1. The applicant’s complaint about the quality of work arose well before there was any suggestion of a statutory demand.  This fact is acknowledged (though the allegation is disputed) in a letter by the respondent dated 12 July, 2000[5].  The more significant contribution to the dispute, namely the scope of the work done, appears to have arisen more recently.

   [5]Ex. “CJK4” to affidavit of Conor Kersh – 25.01.01

1. The respondent urges upon me an approach which virtually involves determining the disputes on the allegations contained in correspondence passing between the respondent’s solicitors on 3, 4 and 5 January 2001.  I am not prepared to embark upon a hearing of disputed issues nor comment on the force of the various allegations.  That is a task which will ultimately be undertaken, presumably, in the Magistrates Court.

1. The principles which guide my determination in applying s.459H of the Corporations Law were set out in Spencer v Aldridge[6] where the members of the Full Court (Northrop, Merkel and Goldberg JJ) after considering a number of authorities came to the view that -

   [6](1997) 147 ALR 444

“a “genuine” dispute requires that:-

·     the dispute be both bona fide and truly exist in fact;

·     the grounds for alleging the existence of the dispute are real and not spurious, hypothetical, illusory or misconceived.” (at 455-456)

1. Applying this test in the circumstances of this case I am satisfied that there is a genuine dispute between the applicant and the respondent about the existence of the debt to which the demand relates.  This takes account both of the challenge to the items set out in the respondent’s invoice and to the existence of an offsetting claim.

1. I take into account also the purpose of the legislation and note that the contents of the affidavit of Peter Mangan, filed by leave, are to the effect that the applicant company is indeed solvent.

Orders

1. 1.     The application is allowed. 

2.       That the statutory demand served by post on 18 December 2000 be set aside.

3.       I give the parties leave to make submissions on costs within 14 days from the date hereof.