Reported Decision : 221 FLR 393 New South Wales Supreme Court CITATION : Energy Conservation Systems Pty Ltd v Downer EDI Engineering Electrical Pty Ltd [2008] NSWSC 1139 HEARING DATE(S) : 27/10/08 JUDGMENT DATE : 28 October 2008 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Barrett J DECISION : Proceedings dismissed with costs CATCHWORDS : CORPORATIONS - winding up - statutory demand - application for order setting aside - whether application served on company that issued the demand - application sent to address in Queensland that was not that company's registered office - applicability of Service and Execution of Process Act 1992 (Cth) LEGISLATION CITED : Corporations Act 2001 (Cth), ss 109X(1), (2), (3), 459G Service and Execution of Process Act 1992 (Cth), ss 3(1), 9, 15(1), 15(3), 16 CATEGORY : Principal judgment Elan Copra Trading Pty Ltd v JK International Pty Ltd [2005] SASC 501; (2005) 195 FLR 229 CASES CITED : Italiano v Carbone [2005] NSWCA 177 Marlan Financial Services Pty Ltd v New England Agricultural Traders Pty Ltd [1999] VSC 435; (1999) 158 FLR 256 PARTIES : Energy Conservation Systems Pty Limited - Plaintiff Downer EDI Engineering Electrical Pty Limited - Defendant FILE NUMBER(S) : SC 3837/08 COUNSEL : Mr R G Forster SC - Plaintiff Mr J Ratanatray - Defendant SOLICITORS : Arnold Bloch Leibler - Plaintiff Birch & Co by their Sydney Agents Makinson & d'Apice - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST Barrett J Tuesday 28 October 2008 3837/08 ENERGY CONSERVATION SYSTEMS PTY LIMITED v DOWNER EDI ENGINEERING ELECTRICAL PTY LIMITED Judgment 1 The question before me is whether the plaintiff's application under s 459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand and a copy of the affidavit in support were served on the defendant in accordance with s 459G(2). 2 The question goes not to the time of service but to whether there was service at all. 3 The statutory demand which is the subject of the s 459G application was served at the plaintiff's registered office. The registered office is in Victoria. The statutory demand stated in its paragraph 6 an address of the defendant for service of any s 459G application and affidavit. The address given was an address in Melbourne. This was in conformity with the requirement in Form 509H that this address for service be in the State or Territory in which the statutory demand was served. 4 The plaintiff did not, however, attempt to serve the s 459G application and supporting affidavit at the Melbourne address specified in the statutory demand. Rather, it faxed them to – and later sent them by post to – an address at Mt Gravatt in suburban Brisbane. To be more precise, a copy of the application and part of the affidavit were faxed and the whole of each was later sent by post to the Mt Gravatt address. 5 It is not disputed by the defendant that that address was one at which it could be reached, in that it is the address of solicitors who act for the defendant. However, those solicitors had no instructions to accept service and, importantly, their office was not the registered office of the defendant under the Corporations Act. 6 The actions involving faxing and posting were taken by Shand & Associates, the plaintiff's then solicitors. Their office is in Pitt Street, Sydney. 7 The defendant contends that the question of valid and effective service is governed by the Service and Execution of Process Act 1992 (Cth) and in particular ss 15(1) and 15(3): "(1) An initiating process issued in a State may be served in another State. … (3) Service on a company or a registered body must be effected in accordance with section 9." 8 The originating process in these proceedings is within the definition of "initiating process" in the Service and Execution of Process Act. The effect of s 15(1) is therefore to allow the originating process filed in the Supreme Court of New South Wales in these proceedings to be served in another State, with the mode of service being in accordance with the Service and Execution of Process Act. 9 Section 3(1) of the Act contains the definition of company: " 'company' means a company incorporated, or taken to be incorporated, under the Corporations Act 2001 ." 10 It is not disputed that the defendant is a "company" within this definition. Section 15(3) therefore applies. 11 The terms of s 15(3) are compulsory. It uses the word "must", thereby precluding, in respect of an initiating process filed in this court, any mode of service on a company in a part of Australia outside New South Wales other than service in accordance with s 9. 12 Section 9(1) is as follows: "Service of a process, order or document under this Act on a company is to be effected by leaving it at, or by sending it by post to, the company's registered office." 13 There is a definition of "registered office" in s 9(11). The expression is there given the same meaning as it has in the Corporations Act. As I have said, the address at Mt Gravatt in Queensland to which the documents were faxed and posted by the plaintiff is not the registered office of the defendant for the purposes of the Corporations Act. 14 Section 9(1), like s 15(3), is compulsory. It uses the words "is to be". The compulsion is mitigated by sub-ss (2), (3) and (4A) of s 9, none of which, however, is of relevance here. The compulsory specification in s 9(1) concerned with registered office therefore applied in this case. It was not observed. 15 There is a second matter. Section 16 of the Service and Execution of Process Act provides: "Service is effective only if copies of such notices as are prescribed are attached to the process, or the copy of the process, served." 16 The prescribed notice in this case is Form 1. It was not attached. An element made essential to "effective" service by s 16 was therefore lacking. 17 It is also to be noted that, by force of both s 9(9) of the Service and Execution of Process Act and s 109X(3) of the Corporations Act, the facultative provisions in ss 109X(1) and 109X(2) of the latter Act in relation to service do not apply to a document that may be served under s 9 of the former Act. 18 This is not the first time that this situation has arisen. It arose in Marlan Financial Services Pty Ltd v New England Agricultural Traders Pty Ltd [1999] VSC 435; (1999) 158 FLR 256. I quote paragraph [15] of the judgment of Byrne J: "Where, as in the present case, the creditor to be served is interstate, it is necessary to have regard also to the Service and Execution of Process Act 1992. By s. 15(3) service of initiating process, which includes the s. 459G application, must be effected in accordance with s. 9. Likewise the affidavits: s. 55(3). Section 9(1) specifies that the service is to be effected by leaving the documents at or by sending them by post to the company's registered office or by personal service if them on a director who resides in Australia. Section 16 requires that, for service to be effective, certain prescribed notices are to be attached to the initiating process. These are the notices which were not attached in the present case. Section 9(9) expressly provides that s. 109X of the Corporations Law has no application to process which may be served under the Service and Execution of Process Act. See, also, Corporations Law, s. 109X(3). Section 8 of the Service and Execution of Process Act also provides that that Act applies to the exclusion of a law of a State, so that there can be no question of serving the application under the Victorian Rules of Court." 19 Byrne J went on to address the case where a recipient of a statutory demand containing an address for service of any s 459G application serves at that address in one State an application filed in a court of another State. He expressed the opinion that that (which is not the case here) is insufficient because of the mandatory provisions of the Service and Execution of Process Act centred on the registered office. 20 Byrne J concluded at paragraph [24]: "[S]ervice interstate of an application made in accordance with section 459G must comply with the requirements of the Service and Execution of Process Act including its notice requirements. If it does not it is ineffective." 21 I was also taken to the more recent decision of the Full Court of the Supreme Court of South Australia in Elan Copra Trading Pty Ltd v JK International Pty Ltd [2005] SASC 501; (2005) 195 FLR 229 where the analysis was similar. An issue considered there was whether there could be an agreement between parties as to a mode of service different from that prescribed by the Service and Execution of Process Act or whether a party could waive the formalities of the Act. 22 It was not necessary for those questions to be decided but the court expressed doubt whether such expedients are accommodated by the statutory scheme. Those questions do not arise here. Nor has the defendant sought to argue here that there was, in this case, informal service in the sense referred to by Basten JA in Italiano v Carbone [2005] NSWCA 177 at [57] and following. The doubts expressed by the South Australian court would apply to that matter also. 23 My own view is that if there is no compliance with s 16 (which presupposes also compliance with s 15), the conclusion must be that there is no service; and that this is so whether or not the document has actually come into the possession of the defendant. The opening words of s 16 are, "Service is effective only if". It must follow that if the condition then stated is not satisfied, there is no effective service and that this is so whatever the position may be about agreement of the parties, actual receipt and actual notice. The terms of the section are strict rather than facultative. 24 The Full Court of the Supreme Court of South Australia expressed disquiet about the result it was compelled to reach. Paragraph [46] of the judgment of White J (with whom Doyle CJ and Perry J agreed) is as follows: "For the reasons which I have given above, I would dismiss the appeal. I do not regard this decision as producing a result which is satisfactory. This is a case in which despite the deficiencies in the method of service adopted, the application and supporting affidavit were received by the respondent's solicitors within the prescribed 21 day period and furthermore, were brought to the attention of the respondent itself within that same period. There is no suggestion that the absence of the notice prescribed by s 16 of SEPA prejudiced the respondent in any way. ..." 25 I would only add that the disquiet is particularly pronounced when the strictures apply in the context of a statutory scheme under which Parliament has seen fit to invest a number of superior courts in Australia with Federal jurisdiction under a national system of corporations regulation which contains its own rules as to service. There are, as I have said, clear provisions which subordinate those rules to the strict requirements of the Service and Execution of Process Act. Whether that is the better course in the circumstances of today's Australia is a question for legislators, not courts. 26 The outcome is that the ourt is compelled to find that the plaintiff's s 459G application and supporting affidavit were not served on the defendant as required by s 459G(2). 27 Yesterday afternoon, after the hearing of this matter, the court noted an agreement between the parties in part as follows: "If the court finds that the plaintiff's originating process and affidavit in support have not been served in accordance with section 459G of the Corporations Act then (a) the defendant shall seek an order for the costs of those proceedings to be assessed on the ordinary basis and the plaintiff will not oppose such an order being made, and (b) the defendant shall, upon delivery of such judgment, give an undertaking that it will not by itself, its servants or agents make any application to the court for the plaintiff to be wound up, such undertaking to be effective up to and including 3 November 2008." [Counsel handed up short minutes giving effect to this agreement] 28 I make the orders 1 and 2 in the short minutes of order which I initial and date. I note the defendant's undertaking to the court set out in paragraph 3 of the short minutes. ********** 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.