FEDERAL COURT OF AUSTRALIA

TCL Airconditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd, in the matter of TCL Airconditioner (Zhongshan) Co Ltd (No 2) [2019] FCA 257

ORDERS

THE COURT ORDERS THAT:

1.    The application be dismissed.

2.    The plaintiff pay the costs of the defendant, to be assessed if not agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MCKERRACHER J:

INTRODUCTION

1    TCL Airconditioner (Zhongshan) Co Ltd was ostensibly served by Castel Electronics Pty Ltd ACN 074 561 087 with a statutory demand pursuant to s 585 of the Corporations Act 2001 (Cth) (CA). TCL seeks a declaration that TCL is not a Pt 5.7 body pursuant to the CA.

ISSUES

2    There are two issues for consideration:

(1)    whether TCL ‘carries on business in Australia’ so as to constitute a Pt 5.7 body; and

(2)    if it is found that TCL ‘carries on a business’, whether the demand came to the notice of TCL such that service of the demand was effected.

3    I address the second issue briefly in these reasons, even though TCL’s counsel accepted at the final hearing that if the Court found against TCL on the first issue (and found TCL ‘carries on a business in Australia’) then TCL would accept ‘the effective informal service rule’.

4    Broadly speaking, the issue of whether TCL has carried on business in Australia involves the application of the non-exhaustive definition under s 21(3) of the CA and general law concepts regarding the question of whether TCL itself, as distinct from TCL through Castel, conducted some form of commercial enterprise in Australia, systematically and regularly with a view to profit.

BACKGROUND

5    By letter of 31 March 2017, Castel’s solicitors purported to serve a demand for payment on TCL at an address in Queensland. They also copied it to TCL’s solicitors, who have acted for TCL in respect of long standing disputes between the parties.

6    Relevant to both issues is the fact that TCL does not have a registered office in Australia.

7    From the affidavit evidence filed in relation to this application, it is apparent that Castel and TCL entered into a general distribution agreement (GDA) under which TCL appointed Castel as its exclusive distributor of airconditioning products in Australia. Castel was to use its efforts to promote the sale of TCL products and TCL was to provide a design to Castel to ‘unify TCL’s brand Visions Image’. TCL guaranteed each airconditioner compressor sold for a period of five years and the entire unit for a period of one year. Under the GDA, TCL and Castel would negotiate and agree the retail price of the products. If there was any alleged breach of the GDA the parties were to try and settle the matter. If not settled within 60 days, the dispute was to be referred to arbitration in Australia.

8    Significantly, and the subject of considerable emphasis by TCL, the GDA provided that the relationship between TCL and Castel was solely that of seller and buyer and under no circumstance was Castel to be considered to be the agent or legal representative of TCL for any purposes whatsoever. The GDA further provided that the agreement was the entire agreement between the parties. Castel did order airconditioners to be manufactured by TCL. TCL manufactured airconditioners in accordance with the orders and delivered them to Castel to a port in China. Castel had no authority under the GDA to bind TCL in any respect in relation to business done in Australia.

9    The GDA provided the business platform for the parties for some years. However, the GDA was terminated by Castel on the basis of what Castel characterised as repudiatory conduct and breaches of the GDA on the part of TCL. As a consequence of that termination, there was an arbitration between the parties. On 23 December 2010, the arbitrators published an award in which Castel was awarded damages in the sum of $3,369,351 for TCL’s breaches of the GDA, less the $209,035 sum awarded to TCL as damages for Castel not having met a minimum purchase obligation in the GDA. On 27 January 2011, a further award was published in favour of Castel for its costs.

10    These arbitral awards were registered by this Court on 19 November 2012 as judgments: see Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd (No 2) (2012) 232 FCR 311. It is this judgment debt which forms the subject of the demand.

11    Further, in 2012, Castel commenced a proceeding against TCL in the Supreme Court of Victoria for breach of the GDA. TCL sought to set aside service of that proceeding. The application to set it aside was heard by Daly AsJ, who published reasons in Castel Electronics Pty Ltd v TCL Airconditioner (Zhougshan) Co Ltd [2012] VSC 548 (the Jurisdiction Decision). In that case, the Court was required to consider whether the sales contracts were made in Victoria or in China. Both TCL and Castel agreed in that proceeding that the formation of the sales contract was governed by Pt II of the United Nations Convention on Contracts with International Sale of Goods (the Vienna Convention). In the Jurisdiction Decision it was held that it was ‘strongly arguable’ that each sales contract was formed in Victoria.

LEGISLATIVE CONSIDERATIONS AND PRINCIPLES

12    A Pt 5.7 body is defined in s 9 of the CA as meaning:

(a)    a registrable body that is a registrable Australian body and:

(i)    is registered under Division 1 of Part 5B.2; or

(ii)    is not registered under that Division but carries on business in this jurisdiction and outside its place of origin; or

(b)    a registrable body that is a foreign company and:

(i)    is registered under Division 2 of Part 5B.2; or

(ii)    is not registered under that Division but carries on business in Australia; or

…

(Emphasis added.)

13    A registrable body can be a registrable Australian body or a foreign company. TCL is a foreign company, therefore, the question of whether TCL is a Pt 5.7 body turns upon consideration of whether it carries on business in Australia.

14    Section 21 of the CA provides:

21    Carrying on business in Australia or a State or Territory

(1)    A body corporate that has a place of business in Australia, or in a State or Territory, carries on business in Australia, or in that State or Territory, as the case may be.

(2)    A reference to a body corporate carrying on business in Australia, or in a State or Territory, includes a reference to the body:

(a)    establishing or using a share transfer office or share registration office in Australia, or in the State or Territory, as the case may be; or

(b)    administering, managing, or otherwise dealing with, property situated in Australia, or in the State or Territory, as the case may be, as an agent, legal personal representative or trustee, whether by employees or agents or otherwise.

(3)    Despite subsection (2), a body corporate does not carry on business in Australia, or in a State or Territory, merely because, in Australia, or in the State or Territory, as the case may be, the body:

(a)    is or becomes a party to a proceeding or effects settlement of a proceeding or of a claim or dispute; or

(b)    holds meetings of its directors or shareholders or carries on other activities concerning its internal affairs; or

(c)    maintains a bank account; or

(d)    effects a sale through an independent contractor; or

(e)    solicits or procures an order that becomes a binding contract only if the order is accepted outside Australia, or the State or Territory, as the case may be; or

(f)    creates evidence of a debt, or creates a security interest in property, including PPSA retention of title property of the body; or

(g)    secures or collects any of its debts or enforces its rights in regard to any securities relating to such debts; or

(h)    conducts an isolated transaction that is completed within a period of 31 days, not being one of a number of similar transactions repeated from time to time; or

(j)    invests any of its funds or holds any property.

(Emphasis added.)

15    It was held in Campbell v Gebo Investments (Labuan) Ltd (2005) 190 FLR 209 by Barrett J (at [37]) that while s 21(3) of the CA precludes a finding that a company carries on business in Australia where only one factor of the nine is present, it does not prevent such a finding where several of the activities are engaged in.

16    Section 21 is not necessarily an ‘exhaustive or exclusive’ definition of carrying on business in Australia (noting that s 21(2) uses the word ‘includes’). There remains scope for the application of concepts of carrying on business derived from the general law: see Gebo (at [36]).

17    The principles applicable to an assessment of whether the threshold of ‘carries on a business’ have recently been revisited in Tiger Yacht Management Ltd v Morris [2019] FCAFC 8. The Full Court (McKerracher, Derrington and Colvin JJ) therein noted (at [50]-[53]):

50    The expression ‘carrying on business’ may have different meanings in different contexts: Luckins v Highway Motel (Carnarvon) Pty Ltd [1975] HCA 50; (1975) 133 CLR 164 at 178 (Gibbs J). So, care must be taken to understand the context in which the requirement is being considered. However, when used to ensure a jurisdictional nexus as a matter of comity it will have a meaning informed by the requirement to ensure there is sufficient connection with the country asserting jurisdiction. It requires resort to the usual or ordinary meaning of the phrase and invites a factual inquiry. As the Court said in Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd [2018] FCAFC 6 at [99]:

Whether a company is carrying on business in Australia is a question of fact: Luckins (Receiver & Manager of Australian Trailways Pty Ltd) v Highway Motel (Carnarvon) Pty Ltd (1975) 133 CLR 164 at 186. While it is correct to say that a company may be found to carry on business in Australia even though it does not maintain an office in Australia or the bulk of its business is carried on outside Australia, it does not follow that such a company will be found to carry on business in Australia merely because it has engaged in a small number of isolated transactions. Each case will depend on its own facts.

51    The activities must form a commercial enterprise: Australian Competition and Consumer Commission v Valve Corp (No 3) [2016] FCA 196 at [197].

52    The words ‘carrying on’ imply the repetition of acts and activities which possess something of a permanent character: Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1 at 8 (Mason J). Participation in a single transaction or a number of isolated transactions will not satisfy this aspect.

53    A company may be carrying on business in Australia even though it does not have an identifiable place of business within Australia: Bray v F Hoffmann-La Roche Ltd [2002] FCA 243; (2002) 118 FCR 1 at [63].

18    The question of whether or not a company is carrying on business in a particular territory is a question of fact which turns on all the circumstances of the particular case. This has been reflected in a number of decisions, including Australian Securities and Investments Commission v Edwards [2004] QSC 344 per McMurdo J (at [62]).

19    It was held a considerable time ago that carrying on business generally connotes a commercial enterprise conducted systematically and regularly with a view to profit or a succession of acts designed to advance some enterprise of the company pursued with the view to pecuniary gain: Hyde v Sullivan (1955) 56 SR (NSW) 113 (at 119). But as Barrett J emphasised in Gebo, it is not necessary for the purposes of Pt 5.7 that the company in question engages in a series of acts within Australia. Particularly, in modern times, a company may be found to be carrying on business in Australia even though the bulk of its business is conducted elsewhere. This, indeed, has long been the case: see, for example, Dunlop Pneumatic Tyre Co Ltd v AG Cudell & Co [1902] 1 KB 342.

20    More recently in Australia, in Smith v Capewell (1979) 142 CLR 509, Gibbs J held that a single transaction with an intention that it be the first of several, may suffice. His Honour considered several cases in which isolated conduct or the effecting of a single transaction had nevertheless been found to amount to the carrying on of a business, before concluding (at 518):

… In these cases, although the defendant engaged in only one transaction of the kind proscribed, that transaction was done in the course of carrying on a business. A single transaction may amount to the carrying on of a business, although no other transaction has so far been effected, if it is proved that there was an intention to carry on a business and that the transaction was undertaken in pursuance of that intention: Fairway Estates Pty. Ltd. v. Federal Commissioner of Taxation. It seems clear that a solitary transaction of sale or purchase of skins in New South Wales will only constitute an offence against s. 105 (a) of the Act, if the sale of purchase has been made by the defendant with the intention that it shall be the first of several transactions in a business which he thereby commences to carry on, or if it has been made in the course of a business which the defendant is carrying on elsewhere.

(Citations omitted.)

21    In relation to carrying on business through an agent, Barrett J discussed these issues in Gebo, emphasising the need for physical human activity in Australia. His Honour said (at [31]-[33]):

31    ... Case law makes it clear that the territorial concept of carrying on business involves acts within the relevant territory that amount to or are ancillary to transactions that make up or support the business. Many of the cases concern persons acting as agents within the jurisdiction of enterprise bases and operating outside the jurisdiction. One view has traditionally been taken where the agent within the jurisdiction has authority to bind the principal to dealings there; while another view has been taken of cases in which the agent is empowered to do no more than receive proposals or orders within the jurisdiction (often, no doubt, in response to solicitation there) and retransmit them to the principal. The distinction is discussed in several cases, including Okura & Co Ltd v Forsbacka Jernverks Aktiebolag [1914] 1 KB 715. Buckley LJ, speaking of a situation of the latter kind, there said (at p 721):

These being the facts, 101, Leadenhall Street is really only an address from which business is from time to time offered to the foreign corporation; the question whether any particular business shall or shall not be done is determined by the foreign corporation in Sweden and not by any one in London. In my opinion the defendants are not “here” by an alter ego who does business for them here, or who is competent to bind them in any way. They are not doing business here by a person but through a person. That person has to communicate with them, and the ultimate determination, resulting in a contract, is made not by the agents in London, but by the defendants in Sweden. It follows from this that one of the essential elements which must be present before a writ can be served in this country on the agent of a foreign corporation is lacking in this case. This appeal must, therefore, be dismissed.

32    By the same reasoning, the mere employment by a foreign company of a commercial traveller in Victoria to receive orders on commission and to forward them to its office abroad was held, in Pearce v Tower Manufacturing & Novelty Co Ltd (1898) 24 VLR 506, not to be carrying on business in Victoria.

33    Advances in technology making it possible for material uploaded on to the Internet in some place unknown to be accessed with ease by anyone in Australia with Internet facilities who wishes (or chances) to access it cannot be seen as having carried with them any alteration of principles as to the place of carrying on business developed at times when such communication was unknown. It has never been suggested that someone who by, say, letters posted in another country and addressed to recipients in Australia, seeks to interest those persons in business transactions to be entered into in the other country and in fact succeeds in concluding such transactions with some of them thereby carries on business in Australia, even though, depending on precise circumstances, the solicitation may contravene some other Australian law. There is a need for some physical activity in Australia through human instrumentalities, being activity that itself forms part of the course of conducting business.

…

(Emphasis added.)

22    Dealing with the general law concepts, Barrett J said (at [38]):

38    I return to the general law concept of carrying on business. According to those concepts, carrying on of business generally involves conducting some form of commercial enterprise, systematically and regularly with a view to profit (see, for example, Hyde v Sullivan (1955) 56 SR (NSW) 113 at 119), although, as a number of cases emphasise, there may be a finding that business is carried on even where some of the usual elements are missing …

(Emphasis added.)

23    In Vautin v BY Winddown, Inc. (formerly Bertram Yachts) (No 4) [2018] FCA 426, Derrington J held (at [238]) that the actions of Bertram through Eagle Yachts in relation to the provision of warranty cards to purchasers, the provision of service facilities to Bertram owners and the enforcement of Eagle Yachts’ obligation to promote Bertram vessels by use of Bertram approved materials was sufficient to reach the conclusion that it carried on business in Australia.

24    In relation to the temporal nature of the phrase, it does not matter that a company is no longer carrying on business in Australia: Gebo per Barrett J (at [25]). In Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 1) (2012) 92 ACSR 614, Dodds-Streeton J, in addressing an application for leave to join a United States corporation, said (at [39]):

[39]    As the LLCs were foreign companies, the Court’s jurisdiction depended on whether the LLCs had carried on business in Australia, albeit such business activities may have ceased. In Australian Securities and Investments Commission v Edwards [2004] QSC 344 at [41] (Edwards), McMurdo J stated:

Once a registrable body that is a foreign company becomes registered under Division 2 of Part 5B.2 or carries on business in Australia, it becomes a Part 5.7 body which is thereafter susceptible to an order for winding up, regardless of whether it subsequently becomes deregistered or ceases to carry on business in Australia. Once it becomes a Part 5.7 body it has effectively submitted to the jurisdiction conferred by the Act for its winding up. Such an interpretation of the definition of a Part 5.7 body is clearly beneficial to the operation of Part 5.7. The contrary interpretation would enable a foreign company, which carried on business here illegally by being unregistered, to avoid an order for winding up in Australia by ceasing its business here just ahead of a winding up application. Especially where an expressed circumstance for winding up is the cessation of business in Australia, it is difficult to see that such a limitation upon the operation of Part 5.7 was intended.

(Citations omitted.)

TCL’S ARGUMENTS

25    TCL contends that:

(a)    the carrying on of business by TCL with Castel pursuant to the GDA was not the carrying on of business in Australia by TCL itself, but rather through an agent (Castel) and not by an agent;

(b)    the sale in Australia by others of airconditioners manufactured in China by TCL, and not sold by Castel, was not the carrying on of business in Australia by TCL itself; and

(c)    TCL has not engaged in other activities that amount to the carrying on of business in Australia by TCL itself.

26    As TCL submits, at common law a corporation could only be amenable to the jurisdiction of the Court if it was ‘present’ within the jurisdiction by carrying on its business within the territory. Traditionally, in order to be carrying on its business within the territory three conditions had to be met. Those conditions were outlined by Holland J in National Commercial Bank v Wimborne (1979) 11 NSWLR 156, in which his Honour said (at 165):

…

First, it must be carrying on its business here and this it can do only by an agent and will not be doing unless the agent has authority on behalf of the corporation to make contracts with persons in New South Wales binding on the corporation. Secondly, the business must be carried on at some fixed and definite place within the State. Thirdly, the business must have continued for a sufficiently substantial period of time …

27    As to the first condition, and as has always been acknowledged, it is not enough to show that the foreign corporation has an agent that is carrying on its own business and not the business of the foreign corporation. In relation to the question of the location of carrying on a business, it may be relevant to consider whether the name of the foreign corporation was displayed at the agent’s place of business, whether it owned or leased the premises or paid rent, whether it employed staff or paid office expenses, indeed, anything which one would expect to find if a person doing business had established or maintained a place or office for doing it in a particular territory: see Windborne (at 165-166) and Adams v Cape Industries plc [1990] 1 Ch 433 per Slade LJ (at 530-531), applied more recently in Noble Caledonia Limited v Air Niugini Limited [2017] EWHC 1095 (at [32]-[37]).

28    TCL says that Castel and other distributors carried on their own businesses of airconditioner sales in Australia from their own places of business in Australia. They had no authority under the GDA with TCL to bind TCL to dealings in Australia. The GDA makes it clear that it was Castel that carried on its own business in Australia of selling TCL airconditioners from its own place of business in Australia. It carried on business in its own right and not on behalf of TCL, as is expressly provided for by the terms of the GDA.

29    TCL’s case is that the formation of the GDA was intended to enable Castel to obtain TCL airconditioners from China to sell in Australia as exclusive distributor and the acceptance of orders by TCL under the GDA was not TCL itself separately carrying on a business of selling airconditioners in Australia from a place of business in Australia. This, it is said, is the proper construction to give to the relationship between the parties, even if some of the matters preliminary to, or facilitative of, the GDA such as sale orders or contracts were accepted within Australia and the GDA was governed by the law of Victoria. These facts (that the sales orders were accepted within Australia and governed by the law of Victoria), according to TCL, do not indicate that it, the Chinese supplier, carried on a separate business in Australia.

30    TCL also argues, addressing the third Wimborne condition, that it did not conduct business for a ‘sufficiently substantial period of time’ because while the sales orders or contracts were for legal purposes made in Australia, in actual fact, all steps taken by TCL in relation to the sales orders and contracts were taken by it in China. Those acts were irregular and did not themselves constitute a separate business being carried on in Australia by TCL, nor did they continue for a sufficiently substantial period of time to constitute a separate business being carried on in Australia.

CONSIDERATION

31    In terms of actual activities, the managing director of Castel deposed to the process leading up to each sales contract, which involved the physical presence of both TCL in Australia and Castel in China. Prior to reaching agreement on the individual sales contracts:

(a)    Castel was in regular contact with TCL regarding the availability and supply of products for the Australian market;

(b)    Castel would visit TCL’s offices in China each year;

(c)    TCL would come to Australia to meet with Castel each year;

(d)    following those discussions, TCL would usually provide Castel with a written quotation with details of products and prices;

(e)    Castel would not place an order until TCL had clarified that the products met relevant Australian regulatory standards;

(f)    Castel would then place an order by submitting an order form listing types of products by model, number required and the unit cost;

(g)    TCL and Castel dealt with each other on the basis that TCL was free to accept an order for less than the whole and that Castel was committed for so much of the order as TCL accepted. Neither party treated Castel’s order as only open for acceptance as a whole, or as rejected if TCL did not accept the whole order. The parties dealt on the basis TCL could accept part of the order;

(h)    TCL would respond to an order by issuing a pro forma invoice to Castel detailing the goods that would be supplied; and

(i)    following receipt of the invoice, Castel would arrange for a letter of credit to be issued to TCL.

32    I respectfully agree with the observations of Daly AsJ in the Jurisdiction Decision that the ‘preponderance of connecting factors’ between the parties lies with Victoria. As her Honour observed (at [56]):

… Of particular significance is the fact that the GDA, which governed the broad parameters of the commercial relationship between Castel and TCL, provided for disputes between the parties to be arbitrated in Australia, and the acceptance by TCL of ongoing obligations with respect to the repair and replacement of goods found to be defective in Australia. Further, by reason of the GDA, Castel was to be TCL’s exclusive distributor in Australia, and the goods had to be manufactured to Australian specifications. Transactions were conducted in English, and the focus of the communications of the parties were the particular needs of the Australian market.

33    It is true that Castel was not, contractually, by force of the GDA, an agent for TCL but rather Castel was a buyer and TCL a seller. That is not the end of the inquiry as the real test is what TCL was actually doing, if anything, in Australia. In my view, on the evidence, it was doing much more than simply selling and exporting goods disinterestedly from China to buyers in Australia. Rather, it was actively involved in developing, protecting and controlling its Australian market, even though some of these steps were carried out remotely. In my assessment, taking into account the totality of the following factors together, not separately, one is led to the conclusion that TCL, at relevant times, carried on business in Australia:

(1)    Pursuant to the GDA entered into between Castel and TCL on 29 December 2003:

(a)    TCL appointed Castel as its exclusive distributor of airconditioning products in Australia (by Art 1);

(b)    Castel was to use its best efforts to promote the sale of TCL products and TCL would ‘provide PRODUCTTS [sic] VI designed to [Castel] to unify [TCL’s] brand Visions Image’ (by Art 7);

(c)    TCL guaranteed the compressor for five years and the unit for one year (by Art 9);

(d)    TCL and Castel would negotiate and agree the retail price of the products (by Art 10); and

(e)    if there was any breach of the GDA, the parties were to try to settle the matter and if not settled within 60 days the dispute was to be referred to arbitration in Australia (by Art 12).

(3)    Notwithstanding that Castel was not TCL’s agent and did not carry on activities on behalf of TCL, the separate sales contracts entered into between Castel and TCL for the sale of TCL airconditioners in Australia were accepted in Australia and deemed to be governed by Australian law.

(4)    The sales benefitted not only Castel but clearly benefitted TCL. The benefit to TCL was also reflected in other terms of the arrangements, including the obligation on Castel to use its best efforts to promote the sale of TCL products clearly for the benefit of TCL as well as Castel and to do so in its capacity as the exclusive distributor of TCL’s airconditioning products in Australia.

(5)    The quality of the products was important to TCL as was its trade mark and reputation to the extent that it guaranteed the compressors for five years and the units for one year.

(6)    TCL retained control over the retail price of the products.

(7)    TCL influenced the marketing of the products insofar as it provided materials consistent with its ‘brand Visions Image’ and TCL guaranteed the products supplied.

(8)    By a variation agreement TCL agreed to ‘promptly respond/rectify all faults/supply spare parts at its own cost to Castel when required by Castel to service all airconditioning units with faults exceeding 2%’.

(Emphasis added.)

34    The fact that employees of TCL travelled to Australia on an annual basis to meet with representatives of Castel is not of significance taken alone but it does tend to lead to an inference that the purpose of the meetings was to protect and improve TCL’s goodwill for its sales in Australia. Discussions at such meetings included topics of forthcoming orders, retail pricing, compliance with regulatory requirements, the nature of the warranty and promotional assistance. The resulting contracts were made in Australia.

35    Each sales contract was formed once TCL accepted the offer through provision of its pro forma invoice. That acceptance was effective when it was received by Castel. It was received by Castel in Victoria and as a consequence, each sales contract was formed in Victoria.

36    TCL had an actual and real business presence in Australia. TCL’s commercial arrangement with Castel under the GDA subsisted for a substantial period of time, during which TCL derived a presumably considerable commercial benefit and exerted, pursuant to the terms of the GDA, control over the marketing and price of the airconditioning products. The statutory consideration of whether a foreign company ‘carries on a business’ will not be determined by the terms of a private contract. While the terms of the GDA are relevant (as has already been observed), the conclusion as to what TCL was, as a commercial reality pursuing in Australia, necessitates a broader consideration of the business activities by and arrangements between the parties. In light of the factors laid out in detail above, I consider TCL was a Pt 5.7 body by virtue of it carrying on business in Australia.

SERVICE

37    Section 585(a) of the CA provides that a Pt 5.7 body is taken to be unable to pay its debts if:

…

(a)    a creditor, by assignment or otherwise, to whom the Part 5.7 body is indebted in a sum exceeding the statutory minimum then due has served on the Part 5.7 body, by leaving at its principal place of business in this jurisdiction or by delivering to the secretary or a director or senior manager of the Part 5.7 body or by otherwise serving in such manner as the Court approves or directs, a demand, signed by or on behalf of the creditor, requiring the body to pay the sum so due and the body has, for 3 weeks after the service of the demand, failed to pay the sum or to secure or compound for it to the satisfaction of the creditor; or

…

(Emphasis added.)

38    It is unnecessary, in light of TCL now accepting the ‘effective informal service rule’ to deal with the second question at length. However, for completeness, I should state my reasons why I am satisfied that service has been effected, not by delivery to the Queensland address, but by email to TCL’s solicitors, Norton Rose Fulbright. It is common ground that Norton Rose acted for TCL in relation to its dispute with Castel since at least 2009, including in the Supreme Court proceedings referred to above, in the arbitration, in the Federal Court proceeding and in the High Court application for a constitutional writ. They continue to represent TCL in this dispute.

39    Following delivery of the demand by email, Norton Rose responded by letter referring to the demand and asserting that TCL was not registered in Australia and did not carry on business in Australia. I accept that Norton Rose would not have sent such a letter without instructions. In those circumstances, I infer that the demand came to the attention of TCL at least by the time of Norton Rose’s letter of 31 March 2017.

40    In Howship Holdings Pty Ltd v Leslie (No 1) (1996) 133 FLR 303, in the context of service of an application to set aside a statutory demand pursuant to s 459G of the CA, Young J observed that (at 304):

Section 459G itself does not deal with what is service.

The ordinary meaning of “service” is personal service, and personal service merely means that the document in question must come to the notice of the person for whom it is intended. The means by which that person obtains the document are usually immaterial. This is clear in cases that have been considered good law over the centuries, including Hope v Hope (1852) 4 De GM & G 328; 43 ER 534 at 539-40; R v Heron. Ex parte Mulder (1884) 10 VLR(L) 314 at 315; Pino v Prosser [1967] VR 835 at 838. Some of those cases were complicated by the requirement in the former statutes that a person serving initiating process had to endorse the initiating process, but the principle is clear from them.

If this were not so, one would get the absurd situation referred to by McInerney J in Pino’s case (at 837), that the conclusion would be one which is “remarkable to the point of seeming absurdity, in that the defendant who, on his own affidavit admits that he received the writ . . . should be held not to have been served.”

(Emphasis added.)

41    More recently, in Woodgate v Garard Pty Ltd (2010) 239 FLR 339, Palmer J in reference to the pragmatic approach taken by Young J in Howship, described it as the ‘effective informal service rule’ describing the rule in these terms (at [44]):

… 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) …

(Emphasis added.)

42    Although the effective informal service rule has only been applied to Australian companies, I see no reason in principle why it ought not be extended to the service of a notice provided for under Australian law on a foreign company carrying on business in Australia. The essential factor is whether it can be established that the notice came to the attention of the person to be served. As indicated, I have inferred that it did. This is indeed accepted by TCL.

CONCLUSION

43    For those reasons, the application will be dismissed with costs.

Associate:

Dated:    1 March 2019