Pursuant to the GDA, TCL would manufacturer and deliver air conditioners to a port in China and Castel would arrange for the products to be delivered to and sold in Australia. Relevantly, the GDA expressly denied that Castel operated as agent or legal representative of TCL, and stipulated that Castel had no authority to bind TCL to any transaction in Australia.
The GDA continued for several years until it was terminated by Castel after it had alleged that TCL had repudiated the contract. TCL and Castel engaged in arbitration to settle the dispute. In January 2011, the arbitrators published awards with a balance of at least $3.2 million in favour of Castel. The Federal Court registered the awards in November 2012.
In response to TCL’s failure to comply with the judgment debt, Castel served a statutory demand on TCL at an address in Queensland and by email to TCL’s solicitors in relation to the dispute, Norton Rose. Norton Rose responded to receipt of the demand by asserting that TCL was not registered in Australia and did not carry on business in Australia.
An unregistered foreign company may be a Part 5.7 body if it “carries on business in Australia”. Subsections 21(2) and (3) of the CA clarify the meaning of that expression.
McKerracher J in the Federal Court noted that at common law, 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.
His Honour also referred to the recent decision of Tiger Yacht Management Ltd v Morris  FCAFC 8 which confirmed that, amongst other applicable principles, a company does not need to have an office or maintain an identifiable place of business within Australia to be “carrying on business” in the country.
Ultimately, the process adopted by the parties (and deposed to by Castel’s managing director) led McKerracher J to conclude that taking into account all the circumstances, TCL “… was doing much more than simply selling and exporting goods disinterestedly from China to buyers in Australia” but rather was, at relevant times, carrying on business in Australia. The relevant factors included:
“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) …”Under s 585 of the CA, service of a statutory demand may be effected by leaving the demand at the Part 5.7 body’s “principal place of business in this jurisdiction”. Notwithstanding this requirement, his Honour inferred that the statutory demand came to the attention of TCL because Norton Rose, who responded to receipt of the statutory demand by effectively asserting that TCL was not amenable to the Australian jurisdiction, “would not have sent such a letter without instructions”.
Whether a company “carries on business” in Australia is ultimately a factual inquiry, and there is no ‘one size fits all’ approach to the issue.
The ‘effective informal service rule’ is not limited to Australian companies and the essential factor is whether it can be established that the notice came to the attention of the person to be served.
McCabe Curwood has extensive experience in matters relating to corporate insolvency. For more information on winding up a foreign company, see video by Gidon Kangisser.