Supreme Court New South Wales Medium Neutral Citation: In the matter of Dyldam Developments Pty Limited [2019] NSWSC 1518 Hearing dates: 16 September 2019 Date of orders: 16 September 2019 Decision date: 16 September 2019 Jurisdiction: Equity - Corporations List Before: Black J Decision: The Originating Process filed by the Plaintiff on 31 July 2019 be dismissed. The Plaintiff pay the Defendant's costs of the application, as agreed or as assessed. Catchwords: CORPORATIONS – application to set aside a creditor's statutory demand – separate question – identification of date of service of statutory demand – where chief financial officer received statutory demand day after the delivery date recorded in tracking receipt – whether application to set aside statutory demand was filed and served within time. COSTS – application for costs on an indemnity basis – whether indemnity costs should be ordered. Legislation Cited: - Corporations Act 2001 (Cth) ss 109X, 459G, 459H, 459J - Evidence Act 1995 (NSW) s 136 Cases Cited: - Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 - Gerard Cassegrain & Co Pty Ltd v Cassegrain [2013] NSWCA 453; (2013) 87 NSWLR 284 - Pearlburst Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126 - Re Edifice Australia Pty Ltd [2017] NSWSC 1620 - Re Futre Developments Pty Ltd [2014] NSWSC 1712; (2014) 292 FLR 256 - Shaolin Temple Foundation (Australia) Ltd [2016] NSWSC 804 Category: Principal judgment Parties: Dyldam Developments Pty Limited (Plaintiff) Jeongwoon Yoon trading as Ideal Partners (Defendant) Representation: Counsel: D Ratnam (Plaintiff) D Krochmalik (Defendant) Solicitors: Madison Marcus Law Firm (Plaintiff) Assured Legal Solutions (Defendant) File Number(s): 2019/237970 Judgment – ex tempore (revised 19 september 2019 Application to set aside creditor's statutory demand 1. By Originating Process filed on 31 July 2019 the Plaintiff, Dyldam Developments Pty Limited ("Dyldam") applied to set aside a creditor's statutory demand served by Mr Yoon trading as Ideal Partners ("Demand"), pursuant to ss 459G, 459H and 459J of the Corporations Act 2001 (Cth). Section 459G of the Act relevantly provides that a company may apply to the Court for an order setting aside a statutory demand served on the company, but such an application may only be made within 21 days after the demand is so served. It is apparent here that, excluding the date of service in accordance with the case law, if the Demand was served on Dyldam on 9 July 2019, then the application to set aside the Demand is outside the 21 day period and the case law makes clear that the Court has no jurisdiction to entertain it. If the Demand was served on 10 July 2019 or afterwards, then the application to set aside the Demand is within time. 2. The matter is listed today to determine a separate question whether Dyldam's application to set aside the Demand was filed and served within the 21 day period specified in s 459G of the Act, on the basis that that would likely determine the fate of the application, if that application was filed and served outside that 21 day period. 3. The Defendant, represented by Mr Krochmalik, seeks to establish that the application to set aside the Demand was made outside the 21 day period. He relies on the affidavit dated 31 July 2019 of Ms Belinda Comber, an executive assistant with the Defendant's solicitors. Ms Comber refers to the process she adopted to serve the Demand, by placing it in a prepaid express post envelope, sealing that envelope, and placing that envelope in a yellow (and, I infer, an express) postbox in York Street, Sydney on 8 July 2019. Mr Ratnam, who appears for Dyldam, points out that there is no evidence of the time that Ms Comber placed the express post envelope in that postbox. That is correct, but not to the point for the reasons I will note below. Ms Comber noted that she retained the express post tracking label from the envelope, and annexes a contemporaneous record of express post envelopes sent by the firm which record the date of dispatch, the relevant matter, and the tracking number. That record confirms the tracking number for the documents sent to Dyldam, and the date of dispatch of 8 July is consistent with her evidence. Ms Comber in turn refers to a delivery record produced by Australia Post, which records that the item had reached the Australia Post facility at Strathfield by 12:37am on 9 July 2019, which is, I note, the reason that it is not relevant when it was placed in the express post envelope. It was on board for delivery at Rydalmere, New South Wales by 7:39am on 9 July 2019 and it is recorded as delivered at Parramatta at 9:50am on 9 July 2019. 4. The Defendant also relies on the affidavit of Mr Warwick, a solicitor employed by the Defendant's solicitors, in respect of correspondence between the solicitors. That evidence does not take the matter significantly further in respect of the events of 9 and 10 July. 5. Dyldam in turn relies on the affidavit of Mr Sam Fayad sworn 31 July 2019, as to which only one paragraph was read as relevant to the separate issue. That affidavit stated that Dyldam received an envelope in the post at the address which is shown to be its registered office, at 74 Macquarie Street, Parramatta, containing, inter alia, the Demand and the affidavit accompanying the Demand sworn by Mr Yoon. That paragraph also stated that that receipt took place on or about 10 July 2019, but that statement was admitted with a limiting order under s 136 of the Evidence Act 1995 (NSW) as a submission and not proof of the fact. There is no evidence that Mr Fayad was, for example, present in the mailroom when the envelope was received, or had tracked the process of delivery around Dyldam's office, and there is no reason to think that a director of the company would have done so. 6. Dyldam also relies on the affidavit of its chief financial officer, Mr Raymond Koura, dated 16 August 2019 but apparently sworn on 19 August 2019. Mr Koura relevantly states that, in his experience as chief financial officer of Dyldam, "mail is collected daily from the mail room/DX by the receptionist or a member of the accounts team as and when it arrives at the Company's office", referring to Dyldam's registered office address. Mr Koura stated, in evidence admitted with a limiting order under s 136 of the Evidence Act as to his understanding and not as proof of the fact, that once mail was collected, it was dispersed by the receptionist or a member of the accounts team to the relevant persons within the company. I pause to note that that evidence indicates that the process for distribution of mail within Dyldam involved a three-stage process, by which mail is first received at the mailroom, then collected by a receptionist or member of the accounts team through whose hands it passes, and then provided to an ultimate recipient. 7. Mr Koura states that, as chief financial officer, he is usually the first point of contact and the first recipient of mail concerning legal and finance matters involving Dyldam. That evidence must be read subject to the earlier evidence that, in fact, he would be the recipient after that mail has passed first through the mailroom, then through the receptionist or a member of the accounts team. Mr Koura's evidence, consistent with his evidence as to the practice, is that on 10 July 2019, the receptionist or a member of the accounts team provided him with mail which included the Demand and affidavit accompanying the Demand. I pause to note that Mr Koura's evidence as to that matter says nothing as to when the Demand was received by Dyldam, as distinct from received by Mr Koura, because it is equally consistent with receipt by the mailroom on 9 July, collection by the receptionist or a member of the accounts team on 9 July and delivery to Mr Koura on 10 July; or with receipt by the mailroom on 9 July and collection by the receptionist or a member of the accounts team on 10 July and delivery to Mr Koura on 10 July. Mr Koura then indicates the steps he took after he personally received the documents on 10 July. 8. Dyldam also relies on an affidavit dated 30 August 2019 of its solicitor, Mr Glamcevski, which refers to an inquiry which he had made with Australia Post which, in substance, confirmed the information provided in the tracking receipt but took the matter no further. Australia Post confirmed to Mr Glamcevski, as the tracking receipt indicated, that the item was delivered to Parramatta on 9 July at 9:50am, but indicated that Australia Post could not confirm the delivery address, because that was not a matter recorded on its system. That, of course, might have been a matter of significance if it was, for example, contended that Dyldam had never received the Demand and affidavit in support, but that is not the case here. It is common ground that Dyldam did receive the Demand and accompanying affidavit prior to when Mr Koura received it on the morning of 10 July, after it had passed first through the mailroom and through a receptionist or member of the accounts staff. 9. Both Mr Krochmalik, on the one hand, and Mr Ratnam, on the other, have taken me to the authorities which have dealt with similar situations. Mr Ratnam commenced by referring to Pearlburst Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126, where Barrett J referred (at [22]) to the matters which needed to be included in addressing an envelope, in the context of relying on s 109X of the Corporations Act. It seems to me that that decision is, with respect, not to the point, because there is no doubt here that the information included on the envelope (although that envelope is not in evidence) was sufficient to bring about the delivery of the Demand and supporting affidavit to Dyldam's registered office address. 10. Both Counsel draw attention to the observations of Robb J in Re Futre Developments Pty Ltd [2014] NSWSC 1712; (2014) 292 FLR 256 as to the weight which can be given to a tracking record prepared by Australia Post. His Honour there referred to the process adopted by Australia Post in respect of such tracking records, and also noted the relevance of administrative arrangements that a recipient may put in place to record delivery of such documents. In that case, his Honour accepted that the tracking record was sufficient, in the context of the totality of the evidence before him, to establish service on the earlier date for which the defendant contended, so that the plaintiff's application to set aside the statutory demand was out of time in that case. 11. I followed the decision of Re Futre Developments Pty Ltd above in Re Shaolin Temple Foundation (Australia) Ltd [2016] NSWSC 804, although I reached a different result on the particular facts. The facts of that case were quite different from the present case, not least because there was a factual dispute in that case as to whether the relevant demand was served on 23 December 2015, as the tracking record suggested, or not until 18 January 2016, possibly because it had gone astray after delivery by Australia Post to premises occupied by several entities during the Christmas period. I there noted that I did not disagree with any aspect of the analysis of Robb J in Re Futre Developments Pty Ltd above, although I also recognised the likely uncontroversial possibility that Australia Post may not be infallible and such tracking records would not be determinative. In that case, I was not persuaded that delivery on the earlier date was established by the tracking record, where there was evidence both of the checking of the mailbox in the period between late December and early January, without that document being received, and specific evidence by the person who had collected the mail on 16 January 2016 of having collected that mail on that date. I accepted that evidence, on an assessment of that witness's credibility after she was cross-examined, and that evidence plainly displaced the inference that would otherwise have followed the tracking record. In that case, the tracking record could not demonstrate delivery to the registered office on the earlier date, once I had accepted, as a matter of fact, the evidence of the witness who had collected the document on a later date. 12. In Re Edifice Australia Pty Ltd [2017] NSWSC 1620, to which Mr Ratnam refers, I again referred to Re Futre Developments Pty Ltd above, but found that the tracking record did not there establish delivery, where again there was a significant distinguishing factor, namely that it was sought to prove delivery to a registered office situated at a street address in Hurlstone Park and, for whatever reason, the tracking record recorded delivery at Kingsgrove. That, in the particular circumstances, introduced confusion such that the onus of establishing delivery was not discharged. 13. It seems to me that this case is on all fours with Re Futre Developments Pty Ltd above, and the tracking record and the probabilities established by the evidence leave no real room for doubt that delivery occurred to Dyldam's registered office on the earlier date, 9 July 2019. I reach that conclusion because the tracking record makes clear that delivery took place at Parramatta early on 9 July 2019, at 9:50am; there is no alternative candidate for a delivery location in Parramatta on that date other than Dyldam's registered office; it is apparent that the documents did reach Dyldam's registered office; there is no evidence from any staff of Dyldam's mailroom, or its accounts staff, as to how they treated the documents upon delivery, and the possibility that the document was held by a receptionist or member of the accounts staff from delivery until it was provided to Mr Koura is not sought to be displaced; and the evidence of Mr Koura goes no further than to show when he, as distinct from Dyldam, received the relevant documents. 14. I would have reached that result without relying upon any presumption that may arise from Dyldam's failure to lead evidence that would be within its control. However, as Mr Krochmalik points out, the Court may more readily reach that result where Dyldam's evidence is silent in significant respects. There is no evidence, for example, as to whether it maintains a record of delivery of items, or at least of significant items such as creditor's statutory demands, in the form of a mail book or some form of receipt stamp. There is no evidence led by any member of the mailroom or accounts staff as to the process adopted for dealing with such documents, when they are received, and no evidence of any particular person who dealt with this creditor's statutory demand when it was received. It is unclear, of course, whether statutory demands are, for Dyldam, a matter of routine or a matter out of the ordinary, but if they are out of the ordinary, then a member of the accounts staff may more readily recall how he or she dealt with one on a particular occasion. In any event, evidence of the steps taken in the mailroom or by the receptionist to deal with the Demand is plainly evidence which was in Dyldam's control, as is evidence of any system adopted by it to record the delivery of documents, and no such evidence is led. I infer that such evidence would not assist in displacing the inferences that can otherwise be drawn from the tracking receipt and evidence of delivery to Dyldam's registered office address: Gerard Cassegrain & Co Pty Ltd v Cassegrain [2013] NSWCA 453; (2013) 87 NSWLR 284 at [26], applying principles deriving from Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970. 15. For the reasons noted above, the application to set aside the Demand was not brought within the 21 day period specified in s 459G of the Act, and the Court does not have jurisdiction to entertain it. Accordingly, I order that: 1. The Originating Process filed by the Plaintiff on 31 July 2019 be dismissed. 2. The Plaintiff pay the Defendant's costs of the application, as agreed or as assessed. Application for indemnity costs 1. The Defendant seeks an order for costs on an indemnity basis. That application relies on an email dated 31 July 2019 from the Defendant's solicitor to Dyldam's solicitor, confirming the service of the Demand on 9 July 2019 and attaching the draft affidavit of Ms Comber to which I have referred above, together with the tracking record provided by Australia Post. Mr Krochmalik submits that, in these circumstances, it should have been apparent to Dyldam that its application to set aside the Demand was brought outside the 21 day period and would fail. 2. It does not seem to me that that matter could be said to be self-evident, although it perhaps became more likely given the limited evidence led by Dyldam, and the absence of evidence of any internal system or its mailroom or accounting process for dealing with statutory demands, in an admissible form, or given by persons who had direct involvement in that process. However, it seems to me that there was a degree of openness in the case law, following Re Futre Developments Pty Ltd above, as to the circumstances in which a tracking record would establish evidence of delivery on a particular date. I have held that this case is, as I noted above, analogous to the position in Re Futre Developments Pty Ltd above, and the evidence led by Dyldam falls short of the evidence led in other cases where the inference available from a tracking record was displaced. It does not seem to me that a case for indemnity costs is established here, given the different results reached in those earlier cases. It may be that a case for indemnity costs will be established in future cases, where a tracking record is tendered, and the evidence led to displace it is not capable of doing so. For that reason, I retain an order that costs be paid on the ordinary basis, as agreed or as assessed. ********** 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: 06 November 2019