Solos Limited v Aussie Hoops Pty Ltd

Case [2022] FCA 1022

FEDERAL COURT OF AUSTRALIA

Solos Limited v Aussie Hoops Pty Ltd [2022] FCA 1022

File number: NSD 381 of 2022
Judgment of: MARKOVIC J
Date of judgment: 1 September 2022
Catchwords: CORPORATIONS – application to set aside statutory demand – separate question – whether application served within 21 days as required by s 459G of the Corporations Act 2001 (Cth) – where the question turns on the date the statutory demand was served on the plaintiff – where presumption that the statutory demand was delivered “in the ordinary course of post” – whether evidence sufficient to “prove the contrary” – where Australian Postal Corporation tracking information indicates statutory demand was delivered to “Bundall QLD” on 3 May 2022 –– where plaintiff received the statutory demand on 4 May 2022 – where the evidence considered as a whole proves demand was delivered on 3 May 2022 – where answer to the question is “no”
Legislation:

Acts Interpretation Act 1901 (Cth) s 29(1)

Corporations Act 2001 (Cth) s 109X, s 459G

Corporations Regulations 2001 (Cth)

Evidence Act 1995 (Cth) s 160

Federal Court Rules 2011 (Cth) r 30.01

Cases cited:

Chen v Kornucopia Pty Ltd (No 1) (2019) VR 305

Deputy Commissioner of Taxationv Melking Holdings Pty Ltd (2019) 137 ACSR 411; [2019] FCA 988

Fancourt v Mercantile Credits Limited (1983) 154 CLR 87

In the matter of AXF Group Pty Ltd [2019] VSC 671; 348 FLR 391

In the matter of Myao Travel Pty Ltd (2020) 148 ACSR 563; [2020] NSWSC 1219

Re Crowe Consulting Pty Ltd (2019) 140 ACSR 450; [2019] NSWSC 1414
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 56
Date of hearing: 11 August 2022
Counsel for the Plaintiff: Mr S.E Gray
Solicitor for the Plaintiff: HWL Ebsworth Lawyers
Counsel for the Defendant: Ms E.L Beechey
Solicitor for the Defendant: Mills Oakley Lawyers

ORDERS

NSD 381 of 2022
BETWEEN:

SOLOS LIMITED ACN 626 339 857

Plaintiff
AND:

AUSSIE HOOPS PTY LTD ACN 619 010 285

Defendant

ORDER MADE BY:

MARKOVIC J

DATE OF ORDER:

1 SEPTEMBER 2022

THE COURT ORDERS THAT:

1.The separate question be answered as follows:

Question: was the originating process filed by the plaintiff for an order setting aside the statutory demand dated 26 April 2022 and the affidavit in support of that originating process filed and served within the 21 day statutory period specified in s 459G of the Corporations Act 2001 (Cth)?

Answer: No.

2.The plaintiff is to pay the defendant’s costs of the determination of the separate question.

3.Unless the parties provide consent orders to Chambers disposing of the proceeding, the proceeding be listed for case management hearing on 8 September 2022 at 9.30 am AEST.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

MARKOVIC J:

  1. On 14 June 2022 an order was made pursuant to r 30.01 of the Federal…

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Solos Limited v Aussie Hoops Pty Ltd [2022] FCA 1022
Case
[2022] FCA 1022
Decision Date

CaseChat Overview and Summary

In Solos Limited v Aussie Hoops Pty Ltd, the Court was tasked with determining the date on which a statutory demand was served on the plaintiff, Solos Limited, by the defendant, Aussie Hoops Pty Ltd. This determination was crucial as it would affect the Court's jurisdiction over the matter. Aussie Hoops argued that the statutory demand was served on 3 May 2022, while Solos contended that service occurred on 4 May 2022. The crux of the dispute lay in the interpretation of the statutory presumptions under the Corporations Act 2001 (Cth) and the Evidence Act 1995 (Cth), particularly regarding the delivery of postal items to the plaintiff's registered office.

The Court examined the established presumption that a postal article sent by prepaid post would be received on the seventh working day after being posted. This presumption could only be rebutted if sufficient evidence was presented to raise doubt about the presumption. Aussie Hoops relied on Australian Postal Corporation tracking information indicating that the statutory demand was delivered to Bundall, QLD, on 3 May 2022, and Solos received the demand on 4 May 2022. The Court concluded that the evidence, including the tracking information and the testimony of MJG Partnership's office manager, indicated that it was more probable than not that the statutory demand was delivered on 3 May 2022. Thus, the Court found that the statutory demand was served on that date.

Consequently, the Court determined that the application to set aside the statutory demand and the supporting affidavit were not filed within the 21-day statutory period specified in section 459G of the Corporations Act. As a result, Aussie Hoops was successful in its submission, and Solos was ordered to pay Aussie Hoops' costs for the determination of the separate question. The Court scheduled a case management hearing to determine the future of the proceeding, pending any resolution between the parties.

Orders

Orders of the court

1. The separate question be answered as follows:

Question: was the originating process filed by the plaintiff for an order setting aside the statutory demand dated 26 April 2022 and the affidavit in support of that originating process filed and served within the 21 day statutory period specified in s 459G of the Corporations Act 2001 (Cth)?

Answer: No.

2. The plaintiff is to pay the defendant’s costs of the determination of the separate question.

3. Unless the parties provide consent orders to Chambers disposing of the proceeding, the proceeding be listed for case management hearing on 8 September 2022 at 9.30 am AEST.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The 21 day statutory period is calculated having regard to the date on which the Second Statutory Demand was served on Solos. The resolution of the preliminary question turns on the identification of that date about which there is a dispute which must be resolved. Relevantly, Aussie Hoops contends that service was effected on 3 May 2022, while Solos contends that service was effected on 4 May 2022. The parties agreed that if the date of service of the Second Statutory Demand is found to be 3 May 2022, as Aussie Hoops contends, then the answer to the preliminary question will be “no” and it will follow that the Court will have no jurisdiction to entertain Solos’ originating process. BACKGROUND The preliminary question arises in the following circumstances. On 26 April 2022 Mills Oakley, the solicitors for Aussie Hoops, sent a letter by registered prepaid post to the proper officer, Solos at Evandale Place, Level 3, 142 Bundall Rd, Bundall QLD 4217 (26 April 2022 Letter) enclosing the Second Statutory and an affidavit of Thomas Darcy Greer sworn on 26 April 2022 (Greer Affidavit). The tracking number for the 26 April 2022 Letter was 02 01007 44651 20060 50995 (Tracking Number).Solos’ registered office is the office of MJG Partnership It was not in dispute that the registered office of Solos is, as recorded in a current and historical extract obtained from the database maintained by the Australian Securities and Investments Commission on 22 April 2022, “Evandale Place, Level 3, 142 Bundall Rd, Bundall QLD 4217”. The premises at Evandale Place, Level 3, 142 Bundall Rd, Bundall QLD 4217 are occupied in part by an accounting firm, MJG Partnership, who are Solos’ accountants. The building known as Evandale Place comprises six levels: ground level and levels 1 to 5. MJG Partnership occupies suites 1 and 2 on level 3. The ground floor of the building has a common lobby area which includes a desk as well as a number of tenancies and the other levels of the building are occupied by other tenants. The mailboxes for the building are located outside of, but adjacent to, the building on the street front. MJG Partnership’s office is accessible to members of the public between 8.30 am and 5.00 pm each weekday. Upon exiting the lifts on level 3 the glass front door of MJG Partnership’s office is immediately visible. The reception desk is located just inside the door. MJG Partnership’s usual practice for the receipt of mail Jane Elizabeth Bohl is MJG Partnership’s office manager, a position she has held since 2016. When at work, Ms Bohl sits at the reception desk referred to in the preceding paragraph. During office hours, the reception desk is not left unattended other than for the occasional, very short period. As part of her duties as office manager Ms Bohl receives and records any mail delivered to MJG Partnership which is addressed to its clients. In doing so Ms Bohl has the following general practice:(1)she notes on the document when it was received;(2)where a legal document, including a creditor’s statutory demand, is served on MJG Partnership as the registered office, she completes a “court documents received” checklist;(3)she scans and then emails to the relevant person a copy of the legal document received with a notation of when it was received. The scanned copy is then saved in the relevant client’s database file;(4)she takes a photocopy of the legal document and saves it in the client’s file; and(5)depending on the client, she may then post the original to it.

Evidence

Evidence Before The Court

Section 160 of the Evidence Act 1995 (Cth) relevantly provides:(1)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.…(3) In this section—working day means a day that is not—(a)a Saturday or a Sunday, or(b)a public holiday or a bank holiday in the place to which the postal article was addressed. In the matter of AXF Group Pty Ltd [2019] VSC 671; 348 FLR 391 concerned the question of whether statutory demands had been served on the company. Relevantly the company’s registered office address was the address of its solicitor. However, unbeknownst to the director of the company, the solicitor moved premises. In doing so the solicitor arranged for Australia Post to redirect all mail sent to his previous address to his new premises. A preliminary question arose in relation to the service of the demands, namely whether they had been served on a date less than 21 days before a particular date. At first instance that question was answered in the affirmative in relation to both demands. The company appealed. After referring to s 109X of the Corporations Act and s 29(1) of the Acts Interpretation Act, at [41]-[42] Sifris J said:41The Demands were, in accordance with s 109X of the Act, and s 29(1) of the AIA Act, properly addressed, prepaid and posted to the registered address of the Company. Evidence of these matters is sufficient to raise the presumption. The Associate Judge was correct in holding that service had been presumed to be effective four days after the Demands had been posted on 17 January 2019. Service is presumed to have taken place on Wednesday, 23 January 2019.42The relevant authorities make clear that the Company bears the onus of establishing ‘proof to the contrary’. The Company does this by proving non-delivery of the Demands to the premises to which they were addressed (the registered office) or actual delivery to some other address (here, the redirection address). If non-delivery of the Demands is proven, the presumption does not apply and proof of non-delivery is effective as proof of non-service. If actual delivery to some other address is established, the sender must establish service without relying upon s 29(1), that is, by establishing, for instance, the Demands had been physically delivered at a later time by a company employee from the redirection address to its registered office. However, if there is only proof that the Demands have not been received by the Company, the presumption is not displaced and service has been effective according to s 29(1).(Footnotes omitted; emphasis added.) At [61] Sifris J said:It is for a company or its agents to maintain adequate records with ASIC. Creditors are entitled to expect that documents posted to a company’s registered office (and subject to any instances of misdelivery) have been effectively served on the company. Strangers to the company are not privy to information beyond that disclosed by the ASIC register and are not obliged to make further inquiries as to current addresses or mail redirections which have been arranged either by the company or its agents. This is the policy basis which underpins the ability for a person to serve a company pursuant to s 109X of the Act and upon which a presumption of service arises under s 29(1) of the AIA Act. It is also the reason why presumed service under s 29(1) is concerned with (and displaced by) delivery and not receipt of a document.(Emphasis added.)

Decision

Reasons for decision

MJG Partnership had a system in place for the “safe and secure reception of documents delivered by post” which involved more than one possibility for the delivery of postal items. In short, I am satisfied that it is more probable than not that the 26 April 2022 Letter was delivered on 3 May 2022 to one of two places identified by Ms Bohl (set out at [51(5)(c)-(d)] above) for the delivery of mail and that service was effected on that date. That it may not in fact have been delivered to level 3 does not alter my conclusion given Ms Bohl’s evidence that there are a number of ways by which Australia Post achieves delivery at the office of MJG Partnership (see [13] above). CONCLUSION For those reasons, the answer to the preliminary question is no. That is the application for an order setting aside the Second Statutory Demand and the Greer Affidavit supporting that application were not filed and served within the 21 day statutory period specified in s 459G of the Corporations Act. As Aussie Hoops has been successful in relation to the separate question, it should have its costs of the determination of that question. As the parties noted at the hearing, a negative answer to the preliminary question affects the Court’s jurisdiction to determine the proceeding. I will list the proceeding for case management hearing at which time the parties can inform the Court as to the fate of the proceeding, in light of the conclusion I have reached. Alternatively, if the parties reach a consensual position in the meantime, they can provide draft orders to my Associate to be made in Chambers. I will make orders accordingly.

Ratio Decidendi

Legal Principle Established

Commencing at [45] Sifris J referred to the decision in Deputy Commissioner of Taxationv Melking Holdings Pty Ltd (2019) 137 ACSR 411; [2019] FCA 988. His Honour relevantly continued at [46]-[47]:46Furthermore, as Colvin J also said in Melking Holdings, ‘[t]he registered office of a company must be a location that accommodates the possibility of service by post’. In Partners of Piper Alderman v Sharjade Pty Ltd, Barrett J said there is, implicit in the statutory regime, ‘an expectation that there will be in place at the registered office a system for the safe and secure reception of documents delivered by post’. … Where there are numerous such possibilities, but no evidence tending to suggest which is most likely, the Court may inevitably hold that service (that is, delivery) has been effective, for that is the default position by virtue of the presumption, and no evidence has been adduced to suggest that it has not occurred.47I reiterate that it is incumbent on the company to adduce proof of non-delivery. If there is only proof that the statutory demands have not been received by the Company, the presumption is not displaced and service has been effective according to s 29(1). While proof of non-receipt does not prove non-delivery, proof of non-receipt at a place by its occupant, as distinct from non-receipt by a person who is not an occupant, may prove non-delivery at that place for the purpose of s 29(1) of the AIA Act. That is, however, subject to what was said by McKerracher J said in Josway:while mere denial of non-receipt by the addressee would scarcely, if ever, suffice to prove ‘non-delivery’, evidence of non-receipt at a place by an appropriate occupant, depending on the cogency of the evidence, may be sufficient to create a doubt for the purposes of s 160 of the Evidence Act. While such evidence needs to be sufficient to create a ‘doubt’ it does not need to be proof to the civil standard of fact finding at trial as to actual non-delivery. A ‘doubt’ ought not to be assimilated with proof or demonstration.(Footnotes omitted; emphasis in original.)CONSIDERATION As set out at [1] above, the only question before the Court is the date of service of the 26 April 2022 Letter which enclosed the Second Statutory Demand and the Greer Affidavit. So far as that question is concerned it was not in dispute, insofar as the 26 April 2022 Letter is concerned, that the matters required to raise the presumption under s 29(1) of the Acts Interpretation Act had been established. That is, the envelope: bore the correct name and address; contained the relevant documents to be served, bore the correct cost of postage; and it was placed in the post: see Chen at [43]. That being so, a presumption arises that service of the 26 April 2022 Letter and its enclosures was effected at the time at which that letter would be delivered in the ordinary course of post, unless the contrary is proved. The ordinary course of post would, unless sufficient evidence to raise doubt about the presumption is adduced, be the day that is seven working days after the 26 April 2022 Letter was posted i.e. 5 May 2022.