Supreme Court New South Wales Medium Neutral Citation: In the matter of Smith & Young Pty Ltd [2016] NSWSC 1081 Hearing dates: 5 August 2016 Date of orders: 05 August 2016 Decision date: 05 August 2016 Jurisdiction: Equity Before: Barrett AJA Decision: Proceeding dismissed with costs Catchwords: CORPORATIONS – winding up in insolvency under s 459P of the Corporations Act 2001 (Cth) – presumption of insolvency by means of service of statutory demand. PROCEDURE – service – whether service of statutory demand and affidavit effected by post – evidence of solicitor as to office practice – no evidence that practice followed in relation to the particular documents – held service by post not proved. Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Brown v Bluestone Property Services Pty Ltd [2010] NSWSC 869 Re Monger; Ex Parte Browne [2003] WASCA 281 Snow v Snow [2015] NSWSC 90 Category: Principal judgment Parties: Plaintiff - Reynolds Private Wealth Pty Limited ACN 603 111 600 Defendant - Smith & Young Pty Limited ACN 112 202 758 Representation: Counsel: Plaintiff - Mr P Cutler Defendant - Mr EA Walker Solicitors: Plaintiff - Eakin McCaffery Cox Lawyers Defendant - Levitt Robinson Solicitors File Number(s): 2016/113776 Publication restriction: Nil Judgment 1. BARRETT AJA: When this application for winding up in insolvency under s 459P of the Corporations Act 2001 (NSW) came on for hearing this morning, the case quickly reduced itself to a single issue, namely, whether the plaintiff had achieved the benefit of a presumption of insolvency under s 459C(2)(a) by reason of failure to comply with a statutory demand. Having regard to s 459F, there can be no such failure unless the statutory demand and accompanying affidavit were served in accordance with s 459E. The defendant put in issue the question of such service. 2. The plaintiff proceeded on the basis that service had been effected in one of the ways made available by s 109X(1)(a), that is, by posting to the defendant's registered office. There is no dispute that the registered office was, at the relevant time, at 67 King Georges Road, Wiley Park. 3. The plaintiff's solicitor gave evidence on affidavit of steps taken by him on 9 March 2016 to effect service of the statutory demand and accompanying affidavit by post to the Wiley Park address. He also deposed that the letter referred to in his evidence had not been returned to his office. 4. Ms Smith, the sole director of the defendant, gave evidence that she was unaware of any statutory demand until 28 April 2016 when her solicitor, who had been speaking with the plaintiff's solicitor about other proceedings, told her that the plaintiff's solicitor had made reference in the course of conversation to the statutory demand, and indeed, to the commencement of the present winding up proceedings. On Ms Smith's instructions, the defendant's solicitor wrote to the plaintiff's solicitor on that same day asking urgently for copies of various documents, including the statutory demand and accompanying affidavit. 5. In those circumstances, it is necessary to look carefully at the evidence of the plaintiff's solicitor on the matter of posting. 6. The solicitor deposed in an affidavit of 13 April 2016 as follows: "2. I did on 9 March 2016 duly serve Smith & Young Pty Limited ACN 112 202 758 with a signed copy of the following documents:- i) Form 509H Creditor's Statutory demand for Payment of Debt ii) Affidavit Accompanying Statutory demand by sending them by prepaid post to its registered office 67 King Georges Road Wiley Park NSW 2195. 3. A true copy of the Creditor's Statutory demand for Payment of Debt and Affidavit Accompanying Statutory demand are annexed hereto and marked with the letters 'A' & 'B' respectively." 1. The plaintiff, by leave, filed and read at the hearing a further affidavit of the solicitor sworn today. In that further affidavit, the solicitor referred to the earlier affidavit and continued: "4. Further to my affidavit of I did on 9 March 2016 by place my letter dated 9 March 2016 under my hand, a copy of which is annexed and marked 'B', together with the signed Form 509H and Affidavit copies of which are to annexure 'A' and 'B' to my affidavit of 13 April 2016 into my firm's daily mail tray. [sic] 5. It is the practice of my firm that the mail is addressed with an appropriately sized envelope, stamped with the required postage and placed in the Red Australia Post postal box at the corner of Market and Clarence Streets, Sydney by my firm's registration clerk in order to be delivered to its registered office 67 King Georges Road Wiley Park NSW 2195. 6. I have not had the letter returned to my office." (Paragraph 4 is reproduced here in the form in which it appears in the affidavit.) 1. The annexures A and B to the first affidavit referred to in paragraph 4 of the second affidavit are copies of the statutory demand and the accompanying affidavit. 2. Mr Walker, who appeared for the defendant, submitted that this evidence is insufficient to prove posting and therefore service by post. He referred to my decision in Brown v Bluestone Property Services Pty Ltd [2010] NSWSC 869 and, in particular, to the following passage (at [12] – [13]): "The requirements for proof of service by post have been described in a number of recent cases to which Mr Hughes, counsel for the defendant, referred, specifically, Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216, Dwyer v Canon Australia Pty Ltd [2007] SASC 100, Pearlburst Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126 and Grant Thornton (Qld) Pty Ltd v Green Global Technologies Ltd [2009] QSC 262. In order to prove service by post, it is necessary that the evidence of one or more witnesses establish a number of core and indispensable matters: that the document said to have been served by posting of it to a given address was placed inside an envelope, that the envelope had that address written or typed on its face, that a postage stamp or franking of the necessary amount was affixed to the envelope and that the envelope so addressed and stamped or franked was physically deposited in the post either at a post office or by being dropped into a post box for the reception of mail articles." 1. There are like observations in a number of cases. A relatively recent example may be found in the judgment of Hallen J in Snow v Snow [2015] NSWSC 90 at [16]. 2. Mr Cutler, counsel for the plaintiff, submitted that, although in this case no person or combination of persons had deposed precisely to the several steps described in Brown v Bluestone Property Services Pty Ltd (above) as the "core and indispensable matters", there was room to infer from the evidence that those steps had been taken. 3. Ideally, of course, a party seeking to prove service by post will, by the evidence of one or more witnesses, establish that each of the necessary steps has been duly taken, but that is not to say that there does not remain some scope for proof based on evidence of practice. 4. This is shown by the following passage in the judgment of Steytler J (with whom McLure and Johnson JJ agreed) in Re Monger; Ex Parte Browne [2003] WASCA 281 at [5]: "There is affidavit evidence before the Court to the effect that the Form 23, and a covering letter, were placed in the mail collection tray at the insurer's office on 18 December 2002 and that, on that day, the tray was collected at around 3.30 pm and taken to the insurer's mail room, where the letter was franked and placed in an Australia Post mailbag. The mailbag was collected at around 4.30 pm on that day (as happens on every working day) and delivered to the Cloisters Square Post Office." 1. In that case, however, there was not only evidence of the office practice regarding outgoing mail but also evidence that the practice was in fact followed on the day in question and that the particular letter was in fact dealt with in accordance with the practice. The evidence was precise, referring to the happening of the particular events relevant to the practice on the particular day at particular times. There was thus a sound basis for inferring that each of the events required to constitute posting had occurred in relation to the letter in question. 2. In the present case, by contrast, the evidence discloses nothing about what was done with the letter signed by the solicitor (and the two intended enclosures) after he placed them in the mail tray. The second affidavit (which, in paragraph 4, uses confusing and unclear language) does not establish that the deponent prepared and addressed an envelope or saw a prepared and addressed envelope or placed anything in an envelope or saw anyone place anything in an envelope. His affidavit establishes no more than that, having signed the letter and somehow caused the accompanying documents to become associated with it, he simply assumed that someone else would, in accordance with what he understood to be the office practice, prepare and address an envelope, place the letter and accompanying documents in the envelope, affix postage stamps or franking, take the sealed and stamped or franked envelope to the post box at the corner of Market and Clarence Streets and place the envelope in that box. 3. The assumption was based on the office practice to which the solicitor deposed. But here, unlike in Re Monger; Ex Parte Browne (above), there is no basis for a finding that the practice was followed on the particular day. There is therefore no basis for finding that the solicitor's assumption corresponded with what actually happened. 4. With the plaintiff's evidence in that state and Ms Smith, the sole director of the defendant, having deposed that she had no knowledge of the statutory demand until she heard of it indirectly seven weeks after the supposed posting, I am bound to hold that the plaintiff has not proved service of the statutory demand and accompanying affidavit. [Submissions.] 1. The proceedings are dismissed with 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: 08 August 2016