New South Wales Supreme Court CITATION : John Hawkins Real Estate (Holdings) Pty Ltd and ors v Cassaniti [2002] NSWSC 1212 revised - 5/03/2003 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3312/02; 3313/02; 3314/02 HEARING DATE(S) : 9 October, 5, 14 November 2002 JUDGMENT DATE : 17 December 2002 John Hawkins Real Estate (Holdings) Pty Limited (Plaintiff 3312/02) PARTIES : Pan.Min Developments Pty Limited (Plaintiff 3313/02) 8 Tosari Pty Limited (Plaintiff 3314/02) Sam Peter Cassaniti, trading as Cassaniti & Associates (Defendant) JUDGMENT OF : Master McLaughlin COUNSEL : J.Johnson (Plaintiffs) P. Barham (Defendant) SOLICITORS : Dibbs Barker Gosling Lawyers (Plaintiffs) Mark Rumore Solicitors (Defendant) CATCHWORDS : Corporations - Statutory demand - Application to set aside - Service by post - Date of service of demand - Whether application has been made within prescribed period - Whether there is a genuine dispute as to existence of debt. LEGISLATION CITED : Corporations Act 2001 Evidence Act 1995 DECISION : (1). I make orders as sought in prayers 1 and 2 in the originating process. (2). The exhibits may be returned. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER McLAUGHLIN Tuesday, 17 December 2002 3312/02 JOHN HAWKINS REAL ESTATE (HOLDINGS) PTY LIMITED -v- CASSANITI 3313/02 PAN.MIN DEVELOPMENTS PTY LIMITED -v- CASSANITI 3314/02 8 TOSARI PTY LIMITED -v- CASSANITI JUDGMENT 1 MASTER: These three proceedings were heard sequentially. 2 In each proceeding the Plaintiff seeks to set aside a statutory demand served upon it by the Defendant. 3 By originating process 3312 of 2002, filed on 25 June 2002, John Hawkins Real Estate (Holdings) Pty Limited (to which I shall refer as "John Hawkins Real Estate") seeks to set aside the statutory demand dated 30 May 2002 served upon it by Sam Peter Cassaniti, trading as Cassaniti & Associates (who is the Defendant to the proceedings). By that demand the Plaintiff claimed the sum of $5,060, being the amount of the debt described in the schedule to that demand, as follows, Amount of moneys due and payable by the company to the creditor for cost of managing taxation affairs and other accounting matters as at 10 January 2002 $5,060 4 By originating process 3313 of 2002 filed on 25 June 2002 Pan.Min Developments Pty Limited (to which I shall refer as "Pan.Min") seeks to set aside the statutory demand dated 30 May 2002 served upon it by Sam Peter Cassaniti, trading as Cassaniti & Associates (who is the Defendant to the proceedings). By that demand the Defendant claimed the sum of $5,005, being the amount of the debt described in the schedule to that demand, as follows, Amount of moneys due and payable by the company to the creditor for cost of managing taxation affairs and other accounting matters as at 10 January 2002 $5,005 5 By originating process 3315 of 2002 filed on 25 June 2002 8 Tosari Pty Limited (to which I shall refer as "8 Tosari") seeks to set aside the statutory demand dated 30 May 2002 served upon it by Sam Peter Cassaniti, trading as Cassaniti & Associates (who is the Defendant to the proceedings). By that demand the Defendant claimed the sum of $6,050, being the amount of the debt described in the schedule to that demand, as follows, Amount of moneys due and payable by the company to the creditor for cost of managing taxation affairs and other accounting matters as at 10 January 2002 $6,050 6 Each of the proceedings is brought pursuant to the provisions of Part 5.4 Division 3 of the Corporations Act. In each case the Plaintiff asserts that there is a genuine dispute as to the existence of the debt alleged in the statutory demand, and that, in consequence, the demand must be set aside pursuant to section 459H of that statute. The Defendant, however, asserts that proceedings 3312 of 2002 brought by John Hawkins Real Estate and proceedings 3313 of 2002 brought by Pan.Min Developments were not instituted within the twenty-one day period required by section 459G(2) of the Act, and that, in consequence, the proceedings must be dismissed (consonant with the decision of the High Court of Australia in David Grant & Co. Pty Limited v Westpac Banking Corporation (1995) 184 CLR 265). 7 The Defendant did not dispute that proceedings 3314 of 2002 brought by 8 Tosari Pty Limited had been instituted within time. 8 It is appropriate, therefore, that I should firstly in the proceedings instituted by respectively John Hawkins Real Estate and Pan.Min Developments deal with the foregoing assertion on the part of the Defendant that the proceedings were not instituted within the twenty-one day period required by section 459G(2) of the Act. If the Defendant is successful in establishing that the proceedings were not instituted within that period, then that is the end to each of proceedings 3312 of 2002 and 3313 of 2002, and it will not be necessary for the Court to proceed to a consideration of the question of whether or not there is a genuine dispute as to the debt asserted in the statutory demand served upon each of John Hawkins Real Estate and Pan.Min Developments. 9 At the outset of the hearing on 9 October 2002 the Defendant relied upon the notice to admit facts dated 12 September 2002 which had been served by the Defendant upon the Plaintiff in each of those two proceedings, and the admission consequent upon the failure of each such Plaintiff to respond to that notice. 10 After receiving evidence (including oral evidence from the solicitor for the Plaintiff), I granted to the Plaintiff leave (pursuant to Part 18 rule 5(3) of the Supreme Court Rules) to withdraw the admission consequent upon the failure of the Plaintiff to respond to that notice to admit facts (pursuant to Part 18 rule 5(2)), and made certain directions concerning the further progress of the proceedings. 11 When the hearing resumed on 5 November 2002 it was necessary that I should first deal with the question of whether the proceedings were instituted within the twenty-one day period to which I have already adverted. 12 It was not in dispute that if the demand was served on or before 4 June 2002 the proceedings were brought out of time, and that, in consequence, the proceedings, not having been constituted in accordance with the statutory regime prescribed by section 459G of the Corporations Act, must be dismissed. It was also not in dispute that if, as asserted by each of those Plaintiffs, the demand was served on 5 June 2002, the proceedings were instituted within time. 13 The issue between the parties was in respect to the timing of the service of the statutory demand. (There was no suggestion of non-delivery of the demand by the Defendant or of non-receipt of the demand by the Plaintiff.) 14 In each case the statutory demand was served by Express Post, under cover of a letter dated 3 June 2002 from the Defendant. It was addressed to the Plaintiff at 84 Wentworth Road, Vaucluse NSW 2030, that being the address of the registered office of the Plaintiff. According to John Campbell Hawkins, director of the Plaintiff company, the address of 84 Wentworth Road, Vaucluse is a residential address, being the registered office of the Plaintiff, at which Mr Hawkins resides. At the front of the property is what Mr Hawkins described as being a security wall, with a postbox enabling delivery of mail from the outside, so that it may be collected on the inside. Mr Hawkins stated that it was his practice to collect all mail which is deposited in the postbox at those premises on a daily basis in the afternoon. He said that it was his practice to open such mail immediately after collection. Under cross-examination Mr Hawkins said that it was his usual practice to leave home at nine o'clock, and that he usually returned between six o'clock and eight o'clock in the evening. 15 According to Mr Hawkins, on the afternoon of Wednesday, 5 June 2002, he collected the mail from the postbox at those premises, and found two envelopes, apparently being Express Post envelopes, in the postbox, one addressed to John Hawkins Real Estate (Holdings) Pty Limited, and the other to Pan.Min Developments Pty Limited, each addressed to the same address. 16 Mr Hawkins said that he opened the envelope addressed to John Hawkins Real Estate and found the letter and enclosures which are now Exhibit C in the proceedings. The handwriting which appears on the first page of the exhibit, "Rec'd 5/6/02", is in Mr Hawkins' handwriting, which he said he placed on the letter a few minutes after opening the envelope. 17 Mr Hawkins also said that, having contacted his solicitor, Martin English (who also acts for each Plaintiff in the proceedings), he delivered each envelope and its respective enclosure to Mr English's office, for the purposes of obtaining advice and for the purposes of the commencement of proceedings to set aside each statutory demand. 18 Mr Hawkins said that he had previously cleared the mail from the postbox at the Wentworth Road premises on 4 June 2002, and that after clearing it that postbox was empty, and, further, that the Express Post letters were not in the letter box at that time. 19 It will be appreciated that where, as here, service is effected by post (as is permitted by section 109X(1) of the Corporations Act), it is unusual that direct evidence of the date or time of service can be given on behalf of the party which caused the document to be served. Usually the most that that party can offer is evidence of the consignment to the post of the document to be served. By the very nature of the situation it is unusual that that party can proffer any direct evidence as to the date of the receipt of the document by the party upon whom the document is to be served. 20 In the instant cases the Defendant adverted to section 160 of the Evidence Act 1995, which provides, relevantly, that there is a rebuttable presumption that a postal article sent by pre-paid post addressed to a person at a specified address in Australia or an external Territory was received at that address on the fourth working day after it had been posted. In each of the instant cases the Defendant submits that that presumption is rebutted, on account of the evidence of the Defendant set forth in his affidavit of 9 August 2002. (In each of these two matters the affidavit is in almost identical terms). That affidavit annexes a copy of the covering letter dated 3 June 2002 with which the statutory demand was enclosed. The Defendant states the number of the Express Post envelope in which that letter was sent. To that affidavit is also annexed a communication from Australia Post enclosing the barcode match for the same Express Post envelope number scanned at the Rose Bay Mailing Centre at a time and date therein stated. That letter from Australia Post contains the following, The status "scanned on" is the date that Australia Post would have delivered the express post. The WCID 254860 Rose Bay DC is the delivery centre that the express post would have been delivered from. The information on the scan is not a confirmation of delivery as we do not obtain a signature on delivery of express post articles. 21 The foregoing is the extent of the evidence offered on behalf of the Defendant which might be regarded as direct evidence as to the date of the delivery of the statutory demand at the registered office of the Plaintiff. No evidence was presented from, for example, the officer of Australia Post who actually delivered the demand at 84 Wentworth Road, Vaucluse. 22 The only other evidence relating to the date of the delivery was that of John Campbell Hawkins, the principal of each Plaintiff company, whose evidence I have already set forth. 23 Mr Hawkins was extensively cross-examined at the instance of the Defendant. 24 Somewhat curiously, that cross-examination was directed almost entirely to the credit of Mr Hawkins, rather than to, for example, the date when he received each statutory demand. 25 The topics in respect of which that cross-examination was directed were three in number. 26 The first related to proceedings in the District Court of New South Wales brought against Mr Hawkins by a company Pegg's Rock Pty Limited, and a judgment entered in favour of that company. According to Mr Hawkins an application has been made to set aside that judgment. 27 Counsel for the Defendant sought to make much of the fact that Mr Hawkins through his solicitors had in correspondence foreshadowed a claim in those District Court proceedings in an amount in excess of $1 million, but, in the event, he had ultimately filed an affidavit asserting an indebtedness to him of only $50,000. 28 I do not consider that those facts are in any way relevant to the credit of Mr Hawkins, let alone reflect adversely upon his credit. 29 Next, the Defendant elicited from Mr Hawkins that in 1994 he had been made bankrupt, his liabilities being in a total amount of $66,273,353. It emerged, however, that that bankruptcy had subsequently been annulled. 30 I do not consider that the mere fact of bankruptcy necessarily impacts upon the credit of the bankrupt. Where, as here, the bankruptcy has subsequently been annulled, I regard the original making of the sequestration order as being totally irrelevant to the credit of the person against whom the order was made. 31 The final matter relied upon by the Defendant as reflecting adversely upon the credit of Mr Hawkins related to the date of Mr Hawkins' appointment as a director of each of these two Plaintiffs. According to Mr Hawkins, those appointments were effected on 24 June 2002, that being the date upon which he signed the relevant affidavits in each of which he described himself as being a director of the relevant company; whilst the ASIC records disclose the date as being 22 August 2002. It will be appreciated that ASIC records reveal only information provided to it by someone else (usually the company in respect to which the records relate). In the absence of the original return lodged with ASIC by the Plaintiff, it is not possible for the Court to be satisfied that the date of 24 June 2002 asserted by Mr Hawkins was not the date provided by the Plaintiff to ASIC. 32 I do not consider that any of the cross-examination of Mr Hawkins impacted in any way upon his credit as a witness. 33 The Court has before it direct evidence from Mr Hawkins that the statutory demands addressed to John Hawkins Real Estate and Pan.Min Developments were each delivered at the address of the registered office of each of those companies on 5 June 2002. The Court has no direct evidence to the contrary. The evidence presented on behalf of the Defendant merely goes to the date upon which the documents were posted by the Defendant, not to the date upon which they were received by those Plaintiffs. 34 The only other relevant evidence is that revealed by a note in the diary of the solicitor for the Plaintiffs, Mr English. A photocopy of the relevant part of that diary (Exhibit 1) contains on the date of Wednesday, 5 June 2002 the notation "6pm Hawkins". 35 As I understand it, that note in the office diary of Mr English was relied upon by the Defendant to support the suggestion that Mr Hawkins had an appointment to see Mr English at 6pm on Wednesday, 5 June. If that was the case, then, so it was submitted on behalf of the Defendant, Mr Hawkins must have received the documentation before 6pm on 5 June, and must have communicated with Mr English before that time. Further, in the light of the evidence of Mr Hawkins that he delivered the material at Mr English's office on the day after he discovered it in his postbox, and that it was on the day after the material was served that he had his appointment with Mr English, the conclusion which the Defendant submits should be accepted is that the statutory demands and their respective covering letters were received by Mr Hawkins on the preceding day, that is, Tuesday, 4 June, and not (as is asserted in the evidence of Mr Hawkins) on Wednesday, 5 June. 36 Mr English's diary did not disclose any reference to Mr Hawkins on Thursday, 6 June 2002. 37 No evidence was offered by Mr English in regard to the note in his diary. There was no explanation offered for the absence of any evidence from him in the hearing of the substantive proceedings. 38 I recognise, of course, that evidence was, in fact, given, as oral evidence, by Mr English on the first day of the hearing, Wednesday, 9 October 2002, that evidence being presented to the Court in support of the application made on behalf of the Plaintiffs for leave to withdraw the admission which arose consequent upon the non-response by the Plaintiffs to the notice to admit facts which had been served upon them by the Defendants. 39 On the first day of the hearing, when he gave oral evidence, Mr English was cross-examined concerning the delivery of the documents to him by Mr Hawkins. He was asked, during the course of his evidence in chief, concerning the handwritten endorsement on Exhibit C (which Mr Hawkins said he had himself written upon receipt of that statutory demand). Mr English was not able to recollect whether that endorsement was on the document when it was delivered to him by Mr Hawkins. 40 Mr English was not cross-examined concerning the note in his office diary referring to "6pm Hawkins" on Wednesday, 5 June. He offered no explanation as to when that note was placed in his diary, or when Mr Hawkins actually visited him to discuss the matter. 41 It is difficult, in the absence of any express evidence by Mr English concerning the circumstances in which he made the notation in his diary, or concerning the date upon which he saw Mr Hawkins, to reconcile that diary note with the evidence of Mr Hawkins that he delivered the documents and saw Mr English on the day subsequent to the receipt by Mr Hawkins of the statutory demands. That is, if Mr Hawkins (as he says that he did) received the statutory demands on Wednesday, 5 June, and immediately contacted Mr English by telephone in the late afternoon or early evening of that date, and delivered the documents to Mr English and personally saw Mr English on the following day, it is difficult to reconcile that delivery and visit to Mr English (which must, on the evidence of Mr Hawkins, have occurred on Thursday, 6 June) with the diary notation indicating an appointment by Mr English with Mr Hawkins on Wednesday, 5 June. 42 Nevertheless, I am prepared to accept the evidence of Mr Hawkins that the handwritten endorsement on Exhibit C is in his handwriting, and that that endorsement was placed on that exhibit shortly after he received the two statutory demands, and certainly on the same day as he received them. There would be no reason why at the time when he placed the endorsement on the statutory demand Mr Hawkins would have chosen to have endorsed it with a date other than the date upon which he received it. It could not be assumed that he was thereby preparing the ground for some rebuttal of a future allegation that the proceedings were instituted out of time. It was never suggested to Mr Hawkins (and any such suggestion would have no basis either in logic or in fact) that on the date when he received the statutory demand he had in contemplation that either he or his solicitor would be so dilatory that they would not institute the proceedings to set aside that demand within the twenty-one day period required by section 459G(2) of the Corporations Act. 43 Accordingly, I accept the evidence of Mr Hawkins that he made the endorsement on Exhibit C on the date when he received that exhibit, and that that date was the date appearing in the endorsement, being 5 June 2002. 44 It follows from the conclusion which I have just expressed, that the proceedings were instituted within the required twenty-one day period. Accordingly, the challenge made by the Defendant to the institution of proceedings brought by John Hawkins Real Estate and Pan.Min Developments fails. 45 I turn now to the essential issue raised in each of the three proceedings. That issue is whether there is a genuine dispute as to the existence of the debt claimed in each of the three statutory demands. 46 The relevant authorities in this regard are well recognised. It is unnecessary to rehearse them in this judgment. 47 Each of the statutory demands is in similar form, claiming an amount said to be due by the Plaintiff company to which the demand is addressed, the debt being described in identical terms as "amount of moneys due and payable by the company to the creditor for cost of managing taxation affairs and other accounting matters as at 10 January 2002". 48 In each case the Plaintiff relies upon an affidavit sworn by Mr Hawkins on 24 June 2002. Apart from the asserted annexure of the appropriate statutory demand, and the different amount of the alleged indebtedness relating to each company, each of those three affidavits is in identical terms. In each affidavit the deponent states that the Plaintiff has never received an invoice for the accounting services referred to in the schedule to the demand. Each affidavit contains as paragraph 5 (which was admitted in the face of objection by the Defendant) the following, The Defendant has not provided the services referred to in the Schedule to the Demand. 49 In each case there has been filed an affidavit of the Defendant, Sam Peter Cassaniti, sworn 9 August 2002. Those affidavits (apart from the respective amounts asserted to be owing by each of the three Defendants, and the difference in the annexures thereto) are in identical terms. Each of those affidavits refers to and annexes a copy of what is described as a letter of engagement dated 14 May 2001 signed by John Campbell Hawkins ("Engagement Letter"), employing Cassaniti & Associates to carry out accounting services. Those letters of engagement are (apart from the addressee) in identical terms. Those addressees are as follows, Mr John Hawkins John Hawkins Real Estate (Holdings) Pty Ltd 68 Riley Street East Sydney, NSW 2010 Mr John Hawkins Tropina Pty Limited 68 Riley Street East Sydney, NSW 2010 Mr John Hawkins 8 Tosari Pty Limited 68 Riley Street East Sydney, NSW 2010 50 (Pan.Min Developments Pty Limited was formerly known as Tropina Pty Limited.) 51 As to the address shown on each of those letters, 68 Riley Street, East Sydney, it emerged under the cross-examination of Mr Hawkins that in June 2002 he was engaged in his occupation as a property developer and was conducting his business as such probably in the area of East Sydney. 52 Each of the foregoing affidavits of Mr Cassaniti contains the following, as paragraph 4 (which was admitted into evidence in the face of objection on behalf of the respective Plaintiff referred to in the affidavit), Cassaniti and Associates carried out certain accounting services on behalf of the Plaintiff, and rendered an invoice for those services on 10 January, 2002 in accordance with the provisions of the Engagement Letter. Anenxed and marked with the letter "B" is a copy of the tax invoice dated 10 January 2002 which I hand delivered to Mr John Campbell Hawkins at a meeting we both attended on 2 February, 2002 at the Bourbon and Beefsteak Restaurant, Kings Cross. 53 It will be appreciated from the foregoing that there is an express assertion by the Defendant that it carried out certain accounting services on behalf of each Plaintiff and rendered an invoice for those services on a specific date, and there is an express denial by each respective Plaintiff that that Plaintiff received such an invoice, and a statement that the Defendant has not provided the services referred to in the schedule to the demand. 54 The only function of the Court is to decide whether there is a genuine dispute as to the existence of the debt which the Defendant asserts in each statutory demand. If the Court identifies the existence of such a genuine dispute, it must set aside the statutory demand. It is no part of the Court's function to express any view as to the respective strengths or weaknesses of the case of each party to such a dispute, let alone to attempt to resolve the dispute. 55 It is appropriate here to observe that although Mr Cassaniti has in each of the foregoing affidavits referred to (and annexed a copy of) a tax invoice dated 10 January 2002, which he asserts was handed by him to Mr Hawkins on 2 February 2002, no reference is made in any of the three statutory demands to such a tax invoice. In any event, as I have already recorded, Mr Hawkins denies ever having received any such tax invoice. 56 Despite the submission on the part of the Defendant that in each case there is no plausible contention requiring investigation, I am satisfied in each case that there is. I am satisfied in each case that there is a genuine dispute as to the existence of the debt which is the subject of the statutory demand. 57 It follows therefore that each demand must be set aside. 58 Accordingly, in each proceeding I make the following order: (1). I make orders as sought in prayers 1 and 2 in the originating process. (2). The exhibits may be returned. ********** Last Modified: 03/06/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.