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Irwin Homes Pty Ltd v Invest Now Australia Pty Ltd

 

[2018] QSC 114

SUPREME COURT OF QUEENSLAND

 

CITATION:

Irwin Homes Pty Ltd v Invest Now Australia Pty Ltd [2018] QSC 114

PARTIES:

IRWIN HOMES PTY LTD

ACN 086 754 707

(applicant)

v

INVEST NOW AUSTRALIA PTY LTD

ACN 147 178 318

(respondent)

FILE NO:

BS4196 of 2018

DIVISION:

Trial Division

PROCEEDING:

Application to set aside statutory demand

DELIVERED ON:

15 May 2018 (ex tempore)

DELIVERED AT:

Brisbane

HEARING DATE:

15 May 2018

JUDGE:

Mullins J

ORDER:

  1. Application dismissed.
  2. The applicant must pay the respondent’s costs of the application. 

 

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – SUPPORTING AFFIDAVIT – TIME FOR MAKING OR FILING – where the applicant filed an application seeking to set aside the statutory demand served by the respondent – where a supporting affidavit sworn by a director of the applicant had been scanned to the applicant’s solicitors – where a filing clerk of the applicant’s solicitors at the same time as filing the application handed to the registry officer the scanned affidavit and a letter from the applicant’s solicitors undertaking to file the original affidavit when it was received by their office – where the scanned copy of the supporting affidavit was placed on the file created by the filing of the application, but was not recorded by the registrar as a document filed in the court file – whether the placing of the scanned affidavit on the file amounted to filing of the affidavit

Corporations Act 2001 (Cth), s 459G

Uniform Civil Procedure Rules 1999 (Qld), r 437, r 964, r  967, r 968, r 977, r 981

David Grant & Co Pty Ltd v Westpac Banking (1995) 184 CLR 265; [1995] HCA 43, followed

Mahony v Building Services Authority [2010] QDC 214, considered

COUNSEL:

P E O’Brien for the applicant

G J Radcliff for the respondent

SOLICITORS:

Crouch & Lyndon Lawyers for the applicant

Radcliff Taylor Lawyers for the respondent

HER HONOUR:   Section 459G of the Corporations Act 2001 sets out the steps that must be taken by a company to apply to the Court for an order setting aside a statutory demand served on the company.  A time limit for making the application is set out in subsection (2).  The requirements for the application are then set out in subsection (3) which provides:

An application is made in accordance with this section only if, within those 21 days:

  1. an affidavit supporting the application is filed with the Court;  and,
  2. a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.

The High Court considered the requirements set out in subsections (2) and (3) in David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 and held that the requirement in section 459G must be strictly observed as the jurisdiction of the Court is defined by the temporal requirements set out in subsections (2) and (3).  The Court has no power to extend the time limits set out in those subsections.  If the application and the supporting affidavit have not been filed and served in accordance with those requirements, the Court has no jurisdiction to hear the application to set aside the statutory demand.

The Applicant in this matter filed an application on 18 April 2018 seeking to set aside the statutory demand served by the Respondent.  The 21 day period expired on 24 April 2018.  The application was, therefore, filed within time.  At the time the Applicant’s solicitors’ filing clerk attended at the Registry, the supporting affidavit by a director of the Applicant had been sworn in Gladstone, but had not been physically received by the Applicant’s solicitors in Brisbane.  The Applicant had sent a scanned copy of the signed affidavit to the Applicant’s solicitors and the filing clerk who filed the application took a scanned copy of the affidavit to the Registry at the same time, accompanied by a letter from the Applicant’s solicitors in these terms:

We act for the Applicant in Supreme Court proceedings filed today to set aside a statutory demand.  Our client resides in Gladstone and has executed the affidavit in support of the application to set aside the statutory demand today and will send the original to our office by express post.  We undertake to file the original affidavit once it is received from our client.

The filing clerk handed that letter and the affidavit across with the copies of the application when her number was called in the Registry.  The clerk received the sealed copy of the application.  The Registry did not return the scanned copy of the affidavit to the filing clerk.  The scanned copy of the affidavit was marked with the letters “POF” by a Registry officer and was placed on the file that was created as a result of the filing of the application.  The issue that has been the subject of argument in this application today is whether that was sufficient to amount to filing of the affidavit. 

The original affidavit went astray and had not been received by the Applicant’s solicitors by 24 April 2018.  That was obviously of some consternation to the Applicant’s solicitors as a paralegal, Ms Thomas, telephoned the Registry on 24 April 2018 and spoke to an unidentified Registry officer.  Paragraph 4 of her affidavit states:

I explained that our client’s original affidavit had been lost by Australia Post and inquired whether another original should be sworn.  I also explained that our client resided in Gladstone and that it would take a couple of days for another affidavit to be sworn and returned to our office.  The Registry officer said that it would not be necessary, as on the return date of the application, which was 10 May 2018, our Counsel could seek leave of the Court to file a copy of the affidavit originally filed with the application advising the Court that the original affidavit had been mislaid in the post.

There are aspects of concern that should be noted in this exchange.  First, the Applicant’s solicitors should not be seeking advice from the Registry as to what they should do in order to file properly their client’s affidavit.  Second, the Registry officer should not be purporting to give advice to solicitors.  In the normal course, that advice that was offered by the Registry officer may be adequate, but, when it comes to the regime under section 459G of the Corporations Act, the filing of an affidavit is essential for the creation of the jurisdiction in the Court to provide the relief that the accompanying application sought.  The Registry officer’s advice was simply wrong in this particular matter. 

What the Applicant’s solicitors should have done with the scanned copy of the affidavit was insist with the Registry, when the document was produced at the Registry on 18 April 2018, that it be filed in the sense of being processed as a document to be placed on the Court file as one of the documents on the file in the proceeding, rather than merely being placed on the file in the correspondence part of the file as relevant information relating to the proceeding, but not an operative document. 

No doubt, the filing clerk who attended did not have knowledge about these things.  The Court facilitates solicitors ensuring that documents have been filed correctly by keeping an index of all documents on each Court file and a search of the electronic file index from 19 April 2018 onwards would have alerted the Applicant’s solicitors to the fact that the scanned copy of Ms Irwin’s affidavit sworn on 18 April 2018 was not on the Court’s file as a document on the file.

Mr O’Brien of Counsel who appeared on behalf of the Applicant submitted that, by being placed physically on the file, the Registry had accepted the scanned copy of the affidavit and it was, therefore, a filed document.  Mr Radcliff of Counsel who appeared for the Respondent relied on the Court’s record of documents filed in the proceeding and took the position that no affidavit in support of the application had been filed in compliance with section 459G(3). 

It was, therefore, necessary to look at the Uniform Civil Procedure Rules and to see what amounts to the filing of a document.  A starting point is rule 437 that, unless the Court gives leave, an affidavit may be used in a proceeding only if it has been filed.  Rule 964 provides that the Registrar must keep a separate file for each proceeding and give the proceeding a distinguishing number.  Subrule (4) states that each document filed in the proceeding must be placed on the relevant file and show the Court serial number for the proceeding at the top right-hand corner of the first page.  Rule 967 provides that a document may be filed by delivering it to the Registry personally, which is the method that was used in this case.  Rule 968 then sets out what happens with documents that are filed personally.  Rule 968 is not entirely free of ambiguity.  I will quote the whole rule:

  1. This rule applies to a document filed by personal delivery in the registry.
  2. However, this rule does not apply to an exhibit or another document that does not require the Court’s seal on it.
  3. The Registrar may record the document and stamp the seal of the Court on it or, if the document does not comply with these rules or may not otherwise be filed, refuse to file the document.
  4. The document is filed when the Registrar records the document and stamps the seal of the Court on it.

In the annotations to rule 968 in Civil Procedure Queensland (LexisNexis) at [r968.20], it is suggested that the recording of a document means when the Registrar places the filing stamp of the Court on the document indicating the date when and the Court in which the document was received.  As a matter of practice, it should be noted that every document that is on the Court file in this proceeding that is recorded in the electronic file index for the proceeding has a stamp in the left-hand top corner that records Supreme Court of Queensland, the date on which the document was filed and the words “filed Brisbane”.  It is not the seal of the Court, but it is a method of indicating the acceptance by the Registrar of the document for filing.

Mr O’Brien argues that rule 968 does not apply to the scanned affidavit or any affidavit as subrule (2) provides the rule does not apply to an exhibit or another document that does not require the Court’s seal on it.  For many years, affidavits have not been sealed with the Court’s seal when filed.  Rule 968(2) does not seem to take account of that.  I would suggest, however, that rule 968(2) is referring to an exhibit such as a document that is tendered in the course of a proceeding that is not part of the Court file.

It is apparent that an affidavit is a document that is required to be filed as per rule 437.  I, therefore, consider that, even though it is a document that does not require the Court seal on it, it is not excluded otherwise from the application of rule 968. I consider that it is appropriate to apply rule 968 in this matter and that the document, the scanned affidavit of Ms Irwin, would only be filed when it was recorded by the Registrar as a document on the Court file.

I consider that, consistent with that approach, rule 977 is also applicable.  It provides in subrule (1) that the Registrar must keep a record in documentary or electronic form of all claims, applications, orders and other things required to be kept under these rules, including under a practice direction.  This is consistent with the practice of the Registrar to keep an electronic file index of all documents on a Court file.  In order to manage the multitude of documents that are sent to the Registry, there has to be a means by which it can be ascertained at any particular time whether a document has been filed or not.  Rule 981 also is relevant as it provides for searches of a document in a Court file and there cannot be a means of properly managing that unless it is apparent what documents are in a Court file.

I, therefore, consider that the fact that a Registry officer placed the letters “POF” on Ms Irwin’s scanned affidavit and placed it with the Applicant’s solicitors’ letter in the correspondence part of the Court’s file did not amount to acceptance by the Registry of the document for filing.  I note that this is consistent with the approach taken by Judge McGill SC in Mahony v Building Services Authority [2010] QDC 214 at [11] where his Honour stated:

In each case there is some formal act required by the Court Registry other than the mere receipt of the document in order to constitute the filing of the document in the Court.

Although Mahony related to an original document that was required to be filed to create the file, I consider the observation of Judge McGill to be apposite to the application of the rules that I have identified in relation to the filing of an affidavit.  If the Applicant’s solicitors had pursued the Registrar to ensure the document was filed and the Registrar had refused to file the affidavit, as it was not an original affidavit, the Applicant’s solicitors could have applied to a Judge for leave to file Ms Irwin’s scanned copy of the affidavit in the absence of the original affidavit, notwithstanding that irregularity.  The means were open before 24 April 2018 for the Applicant’s solicitors to ensure that the scanned affidavit was filed rather than merely being incorporated in the correspondence part of the Court file. 

Leaving a document with the Registry falls short of filing the document, unless there is acceptance of the document by the Registrar as a document to be placed on the file in the sense of being recorded as a document that has been filed in the proceeding.  The question of prejudice to the Respondent is irrelevant to the establishment of the jurisdiction of the Court to entertain the application to set aside the statutory demand.  As the requirements of section 459G(3) were not fulfilled within the mandatory period of 21 days after the statutory demand was served, this Court has no jurisdiction to hear the merits of the application to set aside the statutory demand, the orders that I make are:

  1.  Application dismissed;
  1.  The Applicant must pay the Respondent’s costs of the application.

There was a question raised as to whether indemnity costs should be ordered.  A late offer to the Applicant to consent to the dismissal of the application and pay standard costs was made by the Respondent yesterday after receiving the additional affidavits relied on by the Applicant today.  Mr Radcliff of Counsel for the Respondent makes the point that the jurisdictional problem was apparent when the matter was before Douglas J on 10 May 2018 and that was the purpose of the adjournment until today.  I consider that most of the costs were incurred by the time the offer was made by the Respondent and, in the circumstances, I consider the appropriate order for costs is that which I have indicated.

Editorial Notes

  • Published Case Name:

    Irwin Homes Pty Ltd v Invest Now Australia Pty Ltd

  • Shortened Case Name:

    Irwin Homes Pty Ltd v Invest Now Australia Pty Ltd

  • MNC:

    [2018] QSC 114

  • Court:

    QSC

  • Judge(s):

    Mullins J

  • Date:

    15 May 2018

  • Selected for Reporting:

    Editor's Note

Litigation History

Event Citation or File Date Notes
Primary Judgment [2018] QSC 114 15 May 2018 Application to set aside statutory demand dismissed: Mullins J.

Appeal Status

No Status