Supreme Court New South Wales Medium Neutral Citation: In the matter of Shaolin Temple Foundation (Australia) Ltd [2016] NSWSC 804 Hearing dates: 1 June 2016 Decision date: 01 June 2016 Jurisdiction: Equity - Corporations List Before: Black J Decision: The Court determines that the application to set aside the creditor's statutory demand was served within the statutory 21 day period and that the Court has jurisdiction to determine an application to set aside the creditor's statutory demand. The question of costs be reserved. Catchwords: CORPORATIONS — Creditor's statutory demand — Application to set aside creditor's statutory demand – where creditor contended that application to set aside the creditor's statutory demand was not served within the statutory 21 day period and that the Court did not have jurisdiction to determine the application to set aside the demand – where there was a dispute between the parties as to when the demand was served on the debtor company – where creditor company relied on a tracking receipt issued by Australia Post as evidence of service on a particular date – whether the Court has jurisdiction to determine the application to set aside the demand. Legislation Cited: - Acts Interpretation Act 1901 (Cth), s 29 - Corporations Act 2001 (Cth), ss 109X, 459G - Evidence Act 1995 (NSW), s 160 Cases Cited: - Re Futre Developments Pty Ltd [2014] NSWSC 1712 - Scope Data Systems Pty Ltd v Goman (as representative of the partnership of BDO Nelson Parkhill) [2007] NSWSC 278; (2007) 70 NSWLR 176 Category: Procedural and other rulings Parties: Shaolin Temple Foundation (Australia) Ltd (Plaintiff) Street Quinn Pty Ltd (Defendant) Representation: Counsel: J Lockhart SC (Plaintiff) T Rickard (Defendant) Solicitors: Logie-Smith Lanyon (Plaintiff) Chamberlains (Defendant) File Number(s): 2016/37802 Judgment – ex tempore 1. The question of the date of service of a creditor's statutory demand ("Demand") served by Street Quinn Pty Ltd ("Street Quinn") on Shaolin Temple Foundation (Australia) Limited ("Shaolin Temple"), and a consequential question as to jurisdiction, is to be determined as a separate question prior to the determination of remaining issues in these proceedings. That issue is to be determined as a separate and preliminary question because, under s 459G of the Corporations Act 2001 (Cth), an application to set aside a creditor's statutory demand may only be made within 21 days after the demand is so served, and the Court does not have jurisdiction to determine an application made outside that period. 2. In the present case, it is common ground that, if, as Street Quinn contends, the Demand was served on 23 December 2015, then the application to set it aside brought by Shaolin Temple was out of time. It is also common ground that if that Demand was served, or at least delivered, on 18 January 2016, as Shaolin Temple contends, then the application to set aside the Demand was within time and the Court has jurisdiction to determine it. The determination of the separate question will therefore be determinative at least in the sense, that if Street Quinn is successful in it, then the Demand cannot be set aside, and the application to set it aside must be dismissed. On the other hand, if Shaolin Temple can affirmatively establish jurisdiction, by establishing as a matter of fact that the Demand was served upon it on 18 January 2016, by displacing the factual evidence led by Street Quinn and the presumptions on which Street Quinn relies, then it preserves the opportunity to establish that the Demand should be set aside, at a future hearing on the merits. 3. The relevant statutory provisions are straightforward, and have been considered in several cases. It is necessary to refer to them only briefly. Section 109X of the Corporations Act provides a means of serving documents, including a creditor's statutory demand on a company, by leaving it at or posting it to a company's registered office. In the present case, Street Quinn relied on that provision to serve the Demand on Shaolin Temple, by posting it to its registered office at the offices of its accountants. 4. Although there was previously a degree of controversy in the case law, the balance of authority now establishes that s 109X of the Corporations Act can operate together with s 29 of the Acts Interpretation Act 1901 (Cth) and s 160 of the Evidence Act 1995 (NSW) so as to create presumptions as to when a creditor's statutory demand is served by post. That view was taken by White J in Scope Data Systems Pty Ltd v Goman (as representative of the partnership BDO Nelson Parkhill) [2007] NSWSC 278; (2007) 70 NSWLR 176 ("Scope Data Systems") and has since been followed in several other decisions in this State. In making that observation, I do not neglect the fact that Mr Rickard, who appears for Street Quinn, contends that Street Quinn has established that the Demand was delivered on 23 December as a matter of fact, but I deal with the provisions establishing presumptions at this point because they are also relevant. In particular, s 29 of the Acts Interpretation Act provides that, where an Act, here the Corporations Act, authorises a document to be served by post, unless the contrary is proved, service shall be deemed to be effected at the time at which the letter would be delivered in the ordinary course of post. Street Quinn here leads evidence, by reference to the affidavit of Ms Brest dated 27 May 2016, which seeks to establish the ordinary course of post in respect of delivery of documents by express post, being delivery on the next business day. 5. Section 160(1) of the Evidence Act in turn provides that 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 an external territory, was received at that address on the fourth working day after having been posted. The presumption which would arise under that section would have delivery at a later date than the presumption which would arise under s 29 of the Acts Interpretation Act, if the ordinary course of post for express post is one business day, but would still cause delivery to be presumed at a point where the application to set aside the Demand would be outside time. 6. It seems to me that these provisions work together in the way that White J described in Scope Data Systems above. As his Honour there recognises, if the evidence establishes the time at which the article is delivered to the postal address, then that is the time at which service is taken to be effected, because if that time is inconsistent with what would result with an application of the presumption in s 29 of the Acts Interpretation Act or s 160 of the Evidence Act, then that presumption will be displaced. I should note, for completeness, that Mr Rickard also relies on the decision of Robb J in Re Futre Developments Pty Ltd [2014] NSWSC 1712 ("Futre Developments"). That decision contains a comprehensive review of Australia Post's contractual provisions in respect of the delivery of mail, and also points to the circumstances in which the Court may, in an appropriate case, treat the presumptions under s 29 of the Acts Interpretation Act as displaced by a record of delivery reported in a tracking receipt issued by Australia Post. I do not disagree with any aspect of his Honour's analysis, although I should note that I do not understand his Honour to be excluding the possibility that Australia Post, like every other organisation, may be capable of delay or error. It follows that, in a particular case, where evidence of fact is led as to a delay in delivery of mail, and that evidence of fact is accepted, then at least one possible inference will be error or delay on the part of Australia Post, although no doubt other inferences may also be available. In particular, I do not understand his Honour to be suggesting that a tracking receipt issued by Australia Post is determinative, in a manner that displaces other factual inquiry. 7. I should now refer to the evidence which is led in respect of the application. I have already pointed to the fact that Street Quinn relies on the affidavit of Ms Brest, to establish the ordinary course of delivery by way of express post. Street Quinn also relies on the affidavit of Ms Ann Balding dated 6 April 2016, which establishes the posting of the Demand, by express post, by the Demand having been placed in a post box marked express post outside Nowra Post Office on 21 December 2015. I do not understand there to be any contest as to Ms Balding's evidence of the fact of posting of the creditor's statutory demand in that manner. 8. An issue arose as to whether, when the Demand was posted, Ms Balding wrongly allocated a tracking number ending in the three digits 093, to that Demand, having exchanged that tracking number with the tracking number for another item sent on that day. There is at least some basis for confusion as to that matter, because Mr Phillip Balding leads evidence, also by an affidavit dated 6 April 2016, that he witnessed Ms Balding place the demand in an Express Post envelope with a tracking number ending "090". That would be of some significance in the present matter, because the tracking receipt on which Street Quinn relies relates to the item with tracking number "093" and not the item with tracking number "090". On balance, it seems to me likely that Ms Balding's evidence as to this matter should be accepted, and Mr Balding should be treated as mistaken in his reference to the tracking number, since Ms Balding appears to have had a significantly closer involvement in the posting of the relevant material. 9. As I noted above, Street Quinn relies on a tracking record issued by Australia Post for item "093" to prove delivery of the relevant item. I have regard to the weight which was given to such a record In Futre Developments above, but it should be recognised that each case will turn on its own facts, including, on the one hand, the strength of the inference which may be drawn from such a record and, on the other hand, the strength of the other evidence that is before the Court. 10. That tracking record identifies the fact that the item was held at Alexandria New South Wales, which it is submitted, and I will assume, is the mail distribution centre, for delivery on Wednesday 23 December, and there is a record of delivery on that date, with the location recorded as "Alexandria NSW". It seems to me that that document ought to be understood as recording at least Australia Post's understanding that the document had been delivered at the correct address on 23 December 2015. To that extent, it seems to me that the reference to Alexandria New South Wales, on which Mr Lockhart relied on in submissions, and which I raised in turn with Mr Rickard in submissions, is something of a distraction, and is to be understood, as Mr Rickard submitted, as a reference to the distribution centre, and not as inconsistent with delivery to the correct address. However, it seems to me that that document can ultimately go no further than being a record that that is Australia Post's understanding, by reference to the systems which it adopts, which has some evidentiary weight for the reasons noted by Robb J in Futre Developments above. However, I would not assume that those systems are infallible, or that there is no room for error in Australia Post's understanding. 11. Mr Balding also refers, in his affidavit, in a matter which was noted by Mr Rickard in closing submissions, to other documents sent to the accountant for Street Quinn, and there is a suggestion that those other documents have not been received. I give little weight to those matters in the present case, both because they were not fully explored before me, and it was not apparent that they were in issue before me until reference was made to them in closing submissions and attention was drawn to the part of Mr Balding's affidavit that refers to them, but also because the weight to be given to evidence of tendency or coincidence is always a matter of difficulty. It is not beyond the realms of possibility, by reason of coincidence, bad luck or the physical structure of a set of mailboxes, that mail could go astray more than once in respect of a particular recipient. 12. Shaolin Temple in turn relies on the affidavit of Mr Wang dated 23 May 2016, which sets out the system adopted by his firm for dealing with mail, and the circumstances in which two creditor's statutory demands relating to Shaolin Temple were received, on his evidence in relatively close succession, in January 2016. Mr Wang refers to the physical structure of mailboxes contained in the lobby of the building at which his office is situated. However, it does not seem to me that it was ultimately a necessary part of Shaolin Temple's case to provide an explanation of how the Demand had gone astray, for a period, if it did, where what it sought to do was prove by evidence of fact the date on which it was delivered to its registered office. Having said that, I note, as Mr Rickard himself recognised in drawing attention to this matter in submissions, that the physical structure of the mailboxes leaves open a possible explanation for such delay, which can never be more than speculation in the present case, namely that the Demand had been placed in an adjoining or nearby mailbox, and then placed by the owner of that mailbox in the mailbox of Mr Wang's firm after the end of the Christmas break. I do not rely on that speculation in this judgment, because I recognise that that is no more than speculation. I do not, however, accept Mr Rickard's submission that an inference that evidence of this matter would not have assisted Shaolin Temple is to be drawn from the fact that Mr Wang did not canvass his neighbours, near or far, in the World Tower Building, to find one of them who could lead evidence that the document had been placed in that person's mailbox and then by that person in the mailbox of his firm. 13. Mr Wang leads evidence, importantly, of the fact that he attended his office on a regular basis over the Christmas period, between 23 December 2015 and 1 January 2016 by reason of the need to feed the fish in that office. His evidence is that he checked the mailbox in that period, and a delivery of the item in that period would have been received and come to his attention. There is also evidence that he did not receive the Demand, in the period after his return from leave on 11 January, and he gives evidence of the circumstances on which it came to his attention, when it was provided to him by his receptionist on 18 January 2016. 14. I interpolate that, in the interim, a previous creditor's statutory demand, issued by another entity in respect of Shaolin Temple had been received and Mr Wang's evidence is that he had drawn his staff's attention to the significance of such an item at that time. There are also contemporaneous records of Mr Wang advising Shaolin Temple, by electronic communication, of when the two creditor's statutory demands were received by him. I am conscious, however, that they do not themselves establish the date of delivery to the mailbox, as distinct from the point at which Mr Wang claims those creditor's statutory demands came to his personal attention. 15. It seems to me that the evidence that is ultimately of greater significance in this case is the evidence of Ms Xu, partly by her affidavit dated 23 May 2016, but primarily in her lengthy cross-examination by Mr Rickard. I should note that the process which was adopted to prepare Ms Xu's affidavit was undesirable, in two respects. First, it appears that Ms Xu did not have direct contact with the solicitor who prepared the affidavit, at least prior to the point at which the affidavit was provided to her in draft and then sworn, and it is likely that her account of events was provided by her to Mr Wang and by Mr Wang to the solicitor. That is an undesirable course. Second, the form of the affidavit is undesirable, so far as it largely amounts to confirmation of the contents of Mr Wang's affidavit, which is ultimately a form of hearsay. However, the affidavit was admitted where no objection was taken to it, and the absence of objection may well have been a sensible one on Mr Rickard's part, where this application is, at least in one sense, interlocutory in character. 16. Ms Xu's affidavit was, however, in more satisfactory form so far as she led evidence of her recollection of collecting the creditor's statutory demand from the mailbox of the firm on 18 January 2016 at noon. It seemed to me that her evidence of having a specific recollection of that matter, referrable to the fact that the Demand was received only a couple of days after the receipt of another creditor's statutory demand issued to Shaolin Temple, and after Mr Wang had emphasised the significance of such documents and the significance of the client, was credible, and I accept her evidence in that respect. That evidence is of particular significance, because, putting aside forms of manipulation which were not suggested to have occurred, the fact of collection of the Demand from the mailbox on a particular date, it not having been received previously, is strong evidence of its delivery on that date. 17. I should add, in that regard, that it seemed to me that the difficulties with the form of Ms Xu's affidavit were largely displaced by the fact that Ms Xu was cross-examined at considerable length by Mr Rickard, and I had the opportunity to observe her evidence in the witness box. Ms Xu was not a particularly fluent witness and it seemed to me that, from time to time, she struggled a little in answering questions, although she largely understood the substance of those questions. Ms Xu did not have any particular interest in the proceedings which might lead her to give dishonest evidence in the proceedings, and it seemed to me that she was giving honest evidence of her recollection in cross-examination. Aspects of her evidence, and Mr Wang's evidence, including the reference in conversation, after the Demand was received, to "another one" by Mr Wang, which I understand to be a not particularly surprising reaction to the fact that a second demand had been received in respect of the same entity within a short period, support a finding that this Demand was received on a date after the other demand issued to Shaolin Temple. 18. I appreciate that Mr Rickard advanced several criticisms of the mechanisms maintained by Mr Wang's firm to maintain its mail system, but the fact is that Ms Xu is a receptionist in the firm, implementing the system which she has been asked to implement, and as I understood her evidence, giving her evidence of her recollection of events. It may or may not be that it is surprising that the firm chooses to collect the mail twice a day, if it is delivered only once a day by Australia Post. I need not engage with that question, and I also need not engage with the question whether the firm could have, if it wished, adopted more exacting systems to record when mail was received. It is not necessary to engage with those matters because, once the Court accepts, and I do, that Ms Xu was giving honest evidence of her recollection, and that her recollection is likely to reflect an accurate recollection of what occurred, in the particular circumstances that this was the second creditor's statutory demand for a significant client, shortly after she had been told of the significance of such demands and the significance of that client, then that determines the date of delivery of the Demand. 19. It may be, in those circumstances, that the Demand was, as Mr Rickard at one point suggested, delayed within Australia Post, after the point at which Australia Post recorded its delivery. It may be that it was put in another mail box. It is not necessary to speculate on those matters, because how the Demand went astray for a period is not relevant, once one finds as a matter of fact, on the evidence before the Court, that it did. 20. In these circumstances, I am satisfied that the Demand was in fact served on 18 January 2016. It is common ground between the parties that the application to set aside the Demand on that basis is within time and the Court has jurisdiction to determine it. 21. I therefore determine the preliminary question upon the basis that the Court has jurisdiction to entertain the application to set aside the Demand. Given the lateness of the hour, and the fact that I have already imposed significantly upon court reporting staff in sitting well beyond the ordinary hearing hours, it will not be possible to make directions in respect of the matters today. I propose to refer both matters to the Corporations List and I will, unless there is agreement between Counsel as to costs, reserve the question of costs. ********** 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. Decision last updated: 17 June 2016