Supreme Court New South Wales Medium Neutral Citation: In the matter of Fugace Pty Limited [2019] NSWSC 1203 Hearing dates: 9 September 2019 Date of orders: 09 September 2019 Decision date: 09 September 2019 Jurisdiction: Equity - Corporations List Before: Rees J Decision: 1. Order pursuant to section 459H(1)(a) of the Corporations Act 2001 (Cth) that the statutory demand issued by S Cartwright & Sons (Coachbuilders) Ltd dated 3 May 2019 be set aside. 2. Order the defendant to pay the plaintiff's costs of the proceedings. Catchwords: CORPORATIONS — Statutory demand — Application to set aside — Whether application properly served —"effective informal service" — Where address for service was that of defendant's solicitors — defendant's solicitors thus authorised by the company — Post, DX, facsimile and telephone provided but not email — Plaintiff asked by email whether service by email would be accepted — defendant's solicitors responded that email service not accepted — Plaintiff purported to serve by email at 4.04 pm that day — No response — No evidence of non-receipt — Reasonable inference that city solicitors received email during business hours in 'time critical' matter Legislation Cited: Corporations Act 2001 (Cth), ss 459E, 459G, 459H Corporations Regulations 2001 (Cth) reg. 1.0.03; Sch 1, Sch 2 Uniform Civil Procedure Rules 2005 (NSW), r 3.7 Cases Cited: Austar Finance Pty Ltd v Campbell (2007) 215 FLR 464; [2007] NSWSC Autumn Solar Installations Pty Ltd v Solar Magic Australia Pty Ltd [2010] NSWSC 463 David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265; [1995] HCA 43 Graywinter Properties Pty Ltd v Gas and Fuel Corporation Superannuation Fund (1996) 70 FCR 452; (1996) 21 ACSR 581 Greenmint Pty Ltd v O'Keeffe (2015) 301 FLR 165; [2015] VSC 326 In the matter of Boss Constructions (NSW) Pty Ltd [2019] NSWSC 543 Sheraz Pty Ltd v Rumsley (2019) 37 ACLC ¶19-018; [2019] FCA 493 Woodgate v Garard Pty Ltd (2010) 78 ACSR 468; [2010] NSWSC 508 Category: Principal judgment Parties: Fugace Pty Limited (Plaintiff) S Cartwright & Sons (Coachbuilders) Ltd (Defendant) Representation: Counsel: Mr S O'Brien (Plaintiff) Mr MA Karam (Defendant) Solicitors: Steele+Co (Plaintiff) Bartier Perry (Defendant) File Number(s): 2019/182541 EX TEMPORE Judgment 1. HER HONOUR: This is an application to set aside a statutory demand. The statutory demand was issued by S Cartwright & Sons (Coachbuilders) Ltd, a company with a registered office in Cheshire in the United Kingdom. The statutory demand was issued to the plaintiff, Fugace Pty Ltd, a company with a registered office in Bathurst, New South Wales. The statutory demand was prepared on 3 May 2019 and sought the payment of ₤973,643.58. The address for service nominated in the statutory demand was: C/- Bartier Perry Solicitors Level 10, 77 Castlereagh St Sydney NSW 2000 DX 109 Sydney The telephone and facsimile numbers for Bartier Perry were also provided. No email address was given in the statutory demand. The statutory demand was sent by express post to Fugace's registered office in Bathurst and the parties agree that it arrived on 22 May 2019. 1. Section 459G of the Corporations Act 2001 (Cth) provides: Company may apply (1) A company may apply to the Court for an order setting aside a statutory demand served on the company. (2) An application may only be made within 21 days after the demand is so served. (3) An application is made in accordance with this section only if, within those 21 days: (a) an affidavit supporting the application is filed with the Court; and (b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company. 1. Section 459G does not define what is meant by "serving" the application and affidavit. This is determined by other applicable laws and rules of court: Austar Finance Pty Ltd v Campbell (2007) 215 FLR 464; [2007] NSWSC 1493 per Austin J at [32]–[33]. 2. Unless the timing requirement imposed by section 459G is met, this Court has no jurisdiction under Part 5.4 Division 3 to set aside a statutory demand: David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265; [1995] HCA 43 per Gummow J for the court at 276–7; Graywinter Properties Pty Ltd v Gas and Fuel Corporation Superannuation Fund (1996) 70 FCR 452 at 459; (1996) 21 ACSR 581 at 587 per Sundberg J. The method of calculating when the 21 days referred to in section 459G expires is helpfully described by Barrett J in Autumn Solar Installations Pty Ltd v Solar Magic Australia Pty Ltd [2010] NSWSC 463 at [5], [6] and [11]. Applying his Honour's analysis to this case, one excludes the date on which the statutory demand was served, being 22 May 2019, and the result is that the time in which to file an application to set aside the creditor's statutory demand expired at midnight on 12 June 2019. 3. On 12 June 2019, being the last day on which an application to set aside the statutory demand could be filed and served, the plaintiff's solicitor sent an email to Bartier Perry asking whether they would agree to electronic service by email. This email was sent at 12.23 pm. At 3.39 pm, the plaintiff filed an originating process and supporting affidavit and served these documents by document exchange on Bartier Perry. At 3.59 pm, after having tried to get instructions from their UK client but having failed due to the time difference, Bartier Perry sent an email the plaintiff's solicitor advising that they had not been able to get instructions from their client and thus could not agree to accept service by email. At 4.04 pm, the plaintiff's solicitors sent an email to Bartier Perry nonetheless attaching the Originating Process and affidavit and advising that the material had also been served by document exchange. So far as the evidence suggests, there was nothing preventing Bartier Perry forwarding the documents to their client to be read when morning broke in Cheshire. 4. On 13 June 2019, the Originating Process and affidavit in support were delivered by document exchange and Bartier Perry sent an email to their client attaching the documents. Although, within five minutes of Bartier Perry informing the plaintiff's solicitor on 12 June 2019 that they did not have instructions to accept service by email they received the Originating Process and affidavit in support by email, Bartier Perry did not forward the documents to their client until the next day. Further, whilst Bartier Perry deposed that they did not forward the documents to their client until 13 June 2019, they did not say that they did not otherwise inform their client that the documents had arrived or of the import of the documents. 5. Fugace submits that electronic service on Bartier Perry by email was "effective informal service" within the 21 day period, relying on Woodgate v Garard Pty Ltd (2010) 78 ACSR 468; [2010] NSWSC 508; Greenmint Pty Ltd v O'Keeffe (2015) 301 FLR 165; [2015] VSC 326. The defendant submits that its solicitor had expressly indicated that electronic service was not agreed given that there was insufficient time to take instructions after the request to accept service in that manner was made; the document did not come to the attention of the officers of the defendant until 13 May 2019; no inferences are available to support the plaintiff's contention and thus the plaintiff has not discharged its onus of establishing the documents were served within the 21 day period; and relying on Sheraz Pty Ltd v Rumsley (2019) 37 ACLC ¶19-018; [2019] FCA 493, Fugace has taken the risk of serving the documents by email late in the day on the last day for service in circumstances where the email was not given an address for service and the movements of the email recipient, and the prospects of the recipient checking their emails, were unknown. 6. Palmer J summarised the principles in Woodgate at [44]: (citations omitted) Inconsistency and uncertainty in an area of the law which is of everyday application merely multiply occasions for dispute. It may, therefore, be useful to summarise the principles which are supported by the preponderance of authority, as follows: … iv) the prescribed modes are not exclusive of other modes of service: if some other mode of service is employed, whether it is good service depends upon whether the serving party can prove to the Court's satisfaction that the document actually came to the attention of an officer of the company who was either expressly or implicitly authorised by the company to deal directly and responsively with the document, or documents of that nature ("a responsible officer") … ; v) there is no special exception to the "effective informal service rule" in the case of service by e-mail or facsimile – the question remains whether that mode of service actually brought the document to the attention of a responsible officer; … vii) a party invoking the effective informal service rule bears the onus of proving the time at which the document came to the actual attention of a responsible officer of the company and, in view of the serious consequences which may attend, the Court will not lightly draw inferences or make assumptions as to the time of service …. The definition of "a responsible officer" within this summary makes plain that an officer of the company is not limited to its directors or secretaries but includes anyone authorised by the company to deal directly and responsively with the document, or documents of that nature. This may include an employee or retained professional, such as an accountant or lawyer. 1. Greenmint is a case which is similar to the case at hand as the party issuing the statutory demand, Mr O'Keeffe, identified his solicitors as being the address for service in the demand. The facsimile number and email address of the law firm were not mentioned in the address for service as modes by which an application to set aside the demand could be served. On the last day on which an application could be filed and served, the application and supporting affidavit were sent to Mr O'Keeffe's solicitor by facsimile and email and also posted, although the posted documents did not arrive at the solicitor's office until the next day. At the hearing of the matter, in response to a question from the Court, counsel for Mr O'Keeffe conceded that the facsimile transmission was received at the solicitor's office, but nonetheless submitted that this did not constitute valid service in light of the relevant authorities. At [16]: (footnote omitted): In this case it has been conceded on behalf of Mr O'Keeffe that there has been received, within the prescribed time, at the physical address for service, copies of the sealed application and affidavit in the form that they were filed in Court. … [I]t has been demonstrated that the documents electronically transmitted (at least the documents sent by facsimile transmission) have actually been received in a readable form by the person to be served, who in this context I consider to be the solicitors for Mr O'Keeffe at the physical address identified in the address for service in the demand or, adopting the formulation of Palmer J in Woodgate, Greenmint has proved to the Court's satisfaction that the documents actually came to the attention of Mr O'Keeffe's solicitors who were expressly authorised by Mr O'Keeffe to 'deal directly and responsible with the document, or documents of that nature' by reason of those solicitors being identified as being the address for service in the demand. 1. In Sheraz Pty Ltd v Rumsley, the person issuing the statutory demand, Mr Rumsley, does not appear to have been represented by a solicitor but was himself a solicitor. The address for service of the demand as provided by Mr Rumsley was a physical address, not an email address. At 4.58 pm and 5.00 pm on the last day of the 21 day period, two emails were sent to Mr Rumsley attaching the application to set aside the demand and affidavit in support. Mr Rumsley deposed that, due to a series of personal circumstances, he did not have cause to clear his emails and therefore was not notified of the application until some 10 days later. Mr Rumsley's affidavit evidence is set out at [18] of her Honour's judgment. Her Honour was satisfied on the evidence before her that Sheraz had not established that the emails sent to Mr Rumsley were opened or that their contents otherwise came to his attention until when he cleared his emails some 10 days later. It was against this background that her Honour made the comments relied upon by the defendant at [33]: … there is no evidence that the email came to the actual attention of Mr Rumsley within the 21 day period. There is no evidence that the email sent by Ms Kiel was opened at the physical address until 25 February 2019. There is no evidence of any other agreement or consent on the part of Mr Rumsley to service by email. There is clearly a risk in purporting to serve such an application by email late in the day on the last day for service, and in circumstances where email is not the given address for service and the movements of the email recipient, and so the prospects that the recipient will check emails, are unknown. That is, there was evidence that the email serving the application had not come to Mr Rumsley's attention within the 21 day period. This does not mean that the onus shifted to Mr Rumsley to prove non-receipt, but that on the evidence before the Court, Sheraz had not discharged its onus of proving that service by non-nominated means had nonetheless had the result of bringing the matter to Mr Rumsley's attention. 1. I considered Sheraz in In the matter of Boss Constructions (NSW) Pty Ltd [2019] NSWSC 543. In that case, a statutory demand was issued by the Council of the City of Broken Hill to Boss Constructions (NSW) Pty Limited for unpaid rates. The address for service in the statutory demand was a law firm in Sydney, for which the street address, telephone number and facsimile number were provided. On the last day on which Boss Constructions could apply to set aside the statutory demand, an application was filed online at 9.50 pm and sent by email to the Council's solicitor at 9.59 pm. The Council's solicitor deposed, unsurprisingly, that he usually left the office at 5.30 pm and did not read the email until he arrived at work at about 9.00 am the following day. I noted in that case, and it remains pertinent in this case, that rule 3.7 of the Uniform Civil Procedure Rules 2005 (NSW) provides that parties may electronically serve documents only with the consent of the other parties. At [21]–[22]: 21 That aside, the originating process may still have been served by email if it had actually come to the attention of the Council by that means: Howship Holdings Pty Ltd v Leslie (No 2) (1996) 41 NSWLR 542 at 544-5; (1996) 21 ACSR 440 at 443-4 per Young J. … 22 Emails are transmitted to and electronically stored on a server and positive action is needed on the part of the receiver to access the email through their computer and read it. As such, service by email does not constitute service under section 459G(3) unless the email has actually been accessed on the receiver's computer: Austar Finance Pty Ltd v Campbell at [48]-[50]; Opensoft Australia Pty Ltd v Miller Street Pty Ltd [2011] FCA 653 at [54]-[55] per Jagot J … [and] Banks-Smith J … in Sheraz Pty Ltd v Rumsley [2019] FCA 493 at [33]: … Of particular note is that the solicitor purportedly served at 9.59 pm gave evidence, similar to that in Sheraz, that he had not in fact opened the email that day (or, more precisely, that evening). 1. Returning to the facts of this case, the creditor who issued the statutory demand was located in the United Kingdom and was obliged under the Corporations Regulations 2001 (Cth) to nominate in the demand an address for service in New South Wales, that being where the demand was to be served: see section 459E(2)(e) of the Act, regulation 1.0.03; Schedule 1, Item 51H; Schedule 2, Form 509H, paragraph [6] of the Regulations. The defendant did so, nominating a Sydney solicitor and providing their street address, document exchange, facsimile number and telephone number. 2. Fugace submitted that the fact that the facsimile number was given indicates that electronic service was contemplated, albeit not necessarily by email. Accepting that in modern litigation practice parties do not ordinarily serve one another by facsimile at all but usually by email, this submission does not sit well with rule 3.7 of the Uniform Civil Procedure Rules 2005 (NSW). The authorities refer, in respect of facsimiles and emails, to the extent to which the recipient of the communique has to do anything before the communique is received. For facsimiles, the cases refer to the facsimile being received at the physical address for service on the day in question: a facsimile sent will arrive without the participation of the addressee and will generate a report at the sender's end to confirm whether the transmission has been successful or not. Receipt of an email requires the participation of the recipient, albeit minimal, before the email is downloaded and thus received. 3. The question is whether Fugace has established that the Originating Process and supporting affidavit actually came to the attention of the defendant by email on 12 June 2019. Did the documents actually come to the attention of someone authorised by the company to deal with the documents? Here, as in Greenmint, it seems to me that the defendant had, by the address for service in the statutory demand, expressly authorised Bartier Perry to deal directly and responsibly with any application to set aside the statutory demand and supporting affidavit that may be served. 4. Further, on 12 June 2019, when Fugace's solicitor sought agreement from Bartier Perry to accept service by email, it is apparent from the emails exchanged that day that emails which were sent to Bartier Perry were being received, read, and in the first case at least, responded to. It is reasonable to infer that solicitors working at a law firm in Sydney during ordinary business hours will be at or in reasonable proximity to their desks, have ready access to their computers, receive emails from the law firm's server in a timely manner without the solicitor having to perform any significant task such as logging on to their computer, restarting their computer or entering a password, and will also likely read and open emails which are sent to them, particularly in matters which were 'time critical'. I am thus inclined to infer, unlike the factual circumstances in Sheraz and Boss Constructions, that Bartier Perry received the email attaching the Originating Process, which they were authorised to accept on behalf of the defendant albeit not by that specific means of communication. I more readily draw that inference where there is no evidence that the email 'bounced' or that the defendant's solicitor was otherwise occupied. 5. In sending the Originating Process and affidavit in support to the creditor's authorised representative in New South Wales, I conclude that the plaintiff is likely to have brought the documents to the attention of the creditor. The plaintiff has discharged its onus of proving that it filed and served the application to set aside the statutory demand on the last day on which this could be attended to. An application has thus been made in time and this Court has jurisdiction to set aside the statutory demand. The defendant does not contest that the plaintiff is otherwise entitled to have the statutory demand set aside and in those circumstances I make the following orders: 1. Order pursuant to section 459H(1)(a) of the Corporations Act 2001 (Cth) that the statutory demand issued by S Cartwright & Sons (Coachbuilders) Ltd dated 3 May 2019 be set aside. 2. Order the defendant to pay the plaintiff's costs of the proceedings. ********** 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: 11 September 2019