Aussie Victoriaplant Hire Pty Ltd v Esanda Finance Corporation Ltd

[2007] VSCA 121
212 FLR 56

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(Judgment by: Maxwell P, Neave J)

Aussie Victoriaplant Hire Pty Ltd
vEsanda Finance Corporation Ltd

Court:

Judges:
Maxwell PChernov J
Nettle J
Ashley J

Neave J

Subject References:
Corporations
Winding-Up
Insolvency
Statutory Demand
Application to Set Aside Statutory Demand Refused By Master
Appeal to Judge From Master'S Decision
Time for Compliance With Statutory Demand Ex-Tended By Master But Expired Before Hearing of Appeal From Master'S Decision
Whether Power to Extend Time May Be Exercised After Expiry of Time for Compliance
Corporations Act 2001 Ss 70, 459F, 459G.
Precedents
National Legislation
Corporations Act 2001
Decisions of Other Courts At First Instance
Dictum of Another Intermediate Court of Appeal
Whether Decisions Should Be Followed.
Practice and Procedure
Leave to Appeal
Whether Order Dismissing Appeal From Refusal to Set Aside Statutory Demand An 'Order in An Interlocutory Application'
Supreme Court Act 1986 S 17A(4)(B).

Legislative References:
Corporations Act 2001 - 70; 459F; 459G
Supreme Court Act 1986 - 17A(4)(B)
Bankruptcy Act 1966 - 41(6A)
Limitation of Actions Act 1958 - 23A
Supreme Court Act 1970 (NSW) - 101(2)(p)
Bankruptcy Act 1906 - 41(6A)
County Court Act 1958 (Vic) - 74(2D)
Acts Interpretation Act 1901 - The Act

Hearing date: 2 February 2007
Judgment date: 14 June 2007

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Judgment by:
Maxwell P
Neave J

[1] Esanda Finance Corporation Ltd ("Esanda") is a creditor of Aussie Vic Plant Hire Pty Ltd ("Aussie"). Esanda served a statutory demand on Aussie, as it was entitled to do under s 459E of the Corporations Act 2001. Aussie applied under s 459G to set aside the demand. A Master of the Court dismissed the application on its merits, but extended the time for compliance with the statutory demand to 4 July 2006.

[2] Aussie exercised its right of appeal to a judge of the Trial Division. An appeal from a decision of a Master is a hearing de novo of the application to the Master. ^[1] Ordinarily, therefore, the judge would have re-heard Aussie's application on its merits. In the event, his Honour upheld a preliminary objection by Esanda and dismissed the appeal as incompetent.

[3] The preliminary objection, and his Honour's decision, turned on the fact that the time for compliance with the statutory demand (as earlier extended by the Master) had expired. The notice of appeal from the Master had been filed before time expired on 4 July, but the matter did not come on for hearing before his Honour until 28 July. Aussie's appeal was accompanied by an application for an extension of the time for compliance. His Honour dismissed that application and the appeal itself, holding that he was bound by the decision of this Court in Buckland Products Pty Ltd v Deputy Commissioner of Taxation ("Buckland") ^[2] to do so.

[4] Aussie filed a notice of appeal to this Court. On 5 October 2006, ^[3] we granted Aussie's application for an order restraining Esanda from taking any further step in the winding-up proceeding pending the hearing and determination of the appeal. As Counsel for Esanda pointed out that the authorities were unclear as to whether Aussie required leave to appeal, we referred that question for consideration on the hearing of the appeal. Because counsel for Aussie foreshadowed a challenge to the decision in Buckland , a bench of five was convened to hear the appeal. Because the question is one of general importance, the appeal was brought on for hearing as a matter of priority.

Leave to appeal

[5] In our opinion, leave to appeal is required as the order sought to be appealed was an "order in an interlocutory application", within the meaning of s 17A(4)(b) of the Supreme Court Act 1986.

[6] As this Court restated in Dodoro v Knighting : ^[4]

The general rule is that an order is interlocutory unless, in the words of Windeyer J in Hall v Nominal Defendant , ^[5] it 'finally determine[s] the rights of the parties in a principal cause pending between them'. Whether it does so is determined by the legal, not the practical, effect of the order. ^[6]

[7] In Mibor Investments Pty Ltd v Commonwealth Bank of Australia (" Mibor "), ^[7] Hayne J held that an application to set aside a statutory demand was an interlocutory proceeding. In that case the nature of the proceeding was relevant not to the question of leave to appeal but to the admissibility of hearsay evidence under r 43.03(2). The test is, however, very similar ("whether the application will decide the rights of parties"), and what his Honour said is equally applicable to the present question:

[T]he present proceeding [under s 459G] determines only whether a demand may stand or not. If the demand stands, the consequences are serious but there is no final determination of any right. All that follows from the demand not being set aside is that the company will have a further perhaps short period within which it must meet the demand or face a conclusion that it is to be presumed insolvent (unless it proves the contrary). No order can be made under s 459G which finally determines the rights of parties. ^[8]

[8] We respectfully adopt his Honour's conclusion and the reasons for it. The same conclusion was arrived at by the Full Federal Court in Vista Commercial Construction Pty Ltd v Deputy Commissioner of Taxation (" Vista "), ^[9] on the cognate question of whether an order refusing an extension of time for compliance with a statutory demand was interlocutory or final. The Court said the order was clearly interlocutory "in the sense that it did not decide finally the rights of the parties to any issue". ^[10]

[9] Counsel for Esanda drew attention to a number of interstate decisions which were said to be inconsistent with this conclusion. ^[11] The leading decision is that of the New South Wales Court of Appeal in A-Pak Plastics Pty Ltd v Merhone Pty Ltd (" A-Pak Plastics "). ^[12] The Court held that the only proceeding on foot was the application under s 459G and that the order setting aside the statutory demand "finally determined the rights of the claimant concerning the statutory demand". ^[13] The West Australian Full Court in Asian Century Holdings Inc v Fleuris Pty Ltd ^[14] followed A-Pak Plastics , while conceding that there was "some attraction in the contrary view" as expressed by Hayne J in Mibor . ^[15]

[10] In our view the decision in A-Pak Plastics does not determine the issue before us. As Nettle JA says, it may be accepted that an order setting aside the statutory demand is final, because it means that the creditor can no longer rely on the demand to have the company wound up on the ground of its insolvency. ^[16]

[11] The issue in the present case is whether an order dismissing the application to set aside a statutory demand is a final order. As Dodoro emphasised, the question whether an order is final or interlocutory depends on its legal rather than its practical effect. ^[17] As Hayne J said in Mibor , if the demand stands, the consequences are serious but there is no final determination of any right. ^[18]

[12] As Nettle JA also points out, the fact that an order setting aside a statutory demand is final (as in A-Pak Plastics ) does not mean that an order dismissing an application to set aside a statutory demand must be characterised in the same way. There is ample authority for the proposition that an application may give rise to a final order if it is decided in one way, even though if it were decided the other way the order would be interlocutory, because it would not have finally determined the rights of the parties. ^[19]

[13] If (contrary to our view) the decision in A-Pak Plastics were to be viewed as inconsistent with the view of Hayne J in Mibor , we consider that the reasoning in Mibor is to be preferred. That reasonable minds can differ on the question whether an order is interlocutory or final only underlines the continuing uncertainty which attends this distinction. As Lord Denning MR said decades ago:

This question of 'final' or 'interlocutory' is so uncertain that the only thing for practitioners to do is to look up the practice books and see what has been decided on the point. ^[20]

That the uncertainty persists in 2007 -- and this Court has seen several recent instances of it -- suggests that it may be time for the legislature to consider adopting a different criterion for deciding whether leave to appeal is required in a given case.

The statutory scheme

[14] The relevant provisions fall within Pt 5.4 of the Corporations Act 2001, which is headed "Winding Up in Insolvency". As Gummow J explained in David Grant & Co Pty Ltd v Westpac Banking Corporation ("David Grant"), ^[21] the provisions of Pt 5.4:

constitute a legislative scheme for quick resolution of the issue of solvency and the determination of whether the company should be wound up without the interposition of disputes about debts, unless they are raised promptly. ^[22]

[15] Under s 459E a creditor may serve a statutory demand on a company. Failure by the company to comply with the demand within the period for compliance may found an application that the company be wound up in insolvency. If, during or after the three months ending on the day when the application is made, the company fails to comply with the demand, the Court must presume that the company is insolvent. ^[23]

[16] The period for compliance is 21 days after the demand is served: s 459F(2)(b). If, however, the company applies in accordance with s 459G for an order setting aside the demand, the applicable period is that specified in s 459(2)(a) which provides:

(2) The period for compliance with a statutory demand is:

(a)

if the company applies in accordance with section 459G for an order setting aside the demand:

(i)

if, on hearing the application under section 459G, or on an application by the company under this paragraph, the Court makes an order that extends the period for compliance with the demand -- the period specified in the order, or in the last such order, as the case requires, as the period for such compliance; or

(ii)

otherwise -- the period beginning on the day when the demand is served and ending 7 days after the application under section 459G is finally determined or otherwise disposed of; ...

[17] Under s 459G(2), the application to set aside a statutory demand "may only be made within 21 days after the demand is ... served". In David Grant , the High Court unanimously ruled that this 21 day period was not capable of extension. In the view of the Court, the effect of the words "may only" was:

to define the jurisdiction of the court by imposing a requirement as to time as an essential condition of the new right conferred by s 459G [to apply to set aside the demand]. An integer or element of the right created by s 459G is its exercise by application made within the time specified. ^[24]

The decision of the Court of Appeal in Buckland

[18] In Buckland , the company had made application, within time, to set aside a statutory demand served on it. As in the present case, the company's application was dismissed by a Master at first instance. An appeal to the Trial Division was dismissed on the ground that, by the time the appeal came on for hearing, the time for compliance with the demand had expired so that, without examination of the merits, the appeal had to fail. ^[25] The Court of Appeal upheld the decision of the Trial Division. ^[26]

[19] No order had been made extending the time for compliance under s 459F(2)(a)(i). (An earlier application for extension had been refused by a single judge). The period for compliance therefore expired on the date fixed by para (a)(ii), that is, seven days --

after the application under section 459G is finally determined or otherwise disposed of.

The question which the Court of Appeal had to decide was when the company's application under s 459G could be said to have been "finally determined". The Court agreed with the trial Judge that the application had been finally determined when it was dismissed by the Master. The Court rejected the company's submission that the application under s 459G could not be said to be "finally determined" within the meaning of paragraph (a)(ii) until the appeal from the Master to the judge had been finally determined.

[20] This conclusion was explained by Phillips JA ^[27] in the following terms:

... The concept that the determination of the Master is not final so long as it remains amenable to appeal, even an appeal as of right, introduces a significant qualification on what otherwise appears to me to be a fixed and certain regime prescribed by s 459F and s 459G. (As to the latter, see especially David Grant ). It would mean that a company, by exercising rights to appeal first to the judge and then from the judge to the Court of Appeal, might delay the characterisation of the Master's order as a final determination for more than a year and, at the end of the day, what then? If both appeals fail, the Master's order is then to be seen, at long last, as having been a final determination, but as at what date does that character attach? [Counsel for the company] found it difficult to give an answer that was wholly satisfactory and that is not surprising. For the regime prescribed by s 459F is relatively simple and straightforward and it does not admit of the construction of 'finally determined' that [counsel] was urging.

Application under s 459G to set aside the statutory demand was 'finally determined' within the meaning of 459F(2)(a)(ii) when the Master's order was made on 21 June 2001 and the fact that that order was liable to appeal was nothing to the point. If the company was wishing to appeal it could do so, but unless the appeal was heard and determined before the expiry of the period for compliance otherwise fixed, an extension of the time for compliance had to be obtained. Without it, there could be no point in the continued prosecution of the appeal, for, the period of compliance having ended before the appeal was heard and determined, the consequence prescribed by s 459F(1) attached, with all that followed under the statute . There can be no occasion, in my opinion, for adopting a construction of s 459F(2)(a)(ii) that would require that the consequence prescribed by subs (1), having once attached, should then be undone because of the exercise of some right of appeal. Once that consequence attached, it remained attached (as indeed Gummow J was disposed to suggest in David Grant , albeit in a slightly different context). ^[28]

[21] In dismissing Aussie's appeal in the present case, the Judge said:

I think I am bound by the decision in Buckland Products to find that this appeal must fail. The point is not whether an extension of time can or should be granted. The point is that the consequence provided for by s 459F(1) has already attached (to use the words of Phillips JA) and no order which I make can or should purport to undo that. ^[29]

His Honour went on to say that, even if an extension of time could have been granted consistently with the legislation, the court should not take that course because to do so would be "to alter the substantive rights of parties" and would be "an attempt to render undone something which has already been done". ^[30]

[22] The reference in Buckland -- adopted by the learned Judge -- to "the consequence prescribed by s 459F(1)" was a reference to the company being taken to have failed to comply with the statutory demand. Subsection (1) provides:

(1) If, as at the end of the period for compliance with a statutory demand, the demand is still in effect and the company has not complied with it, the company is taken to fail to comply with the demand at the end of that period.

The decision in Buckland , as applied by the Judge in the present case, was that once the company had been "taken to fail to comply with the demand", that consequence could not be "undone because of the exercise of some right of appeal". We will return to this issue in due course. ^[31]

[23] There is a critical difference between this case and Buckland . In Buckland , the Court was concerned with -- and only with -- the interpretation of para (a)(ii). No question arose under para (a)(i). There had been no extension of the time for compliance. ^[32] In the present case, we are concerned with -- and only with -- the interpretation of para (a)(i). No question arises under para (a)(ii).

[24] Here, as noted earlier, the Master did exercise the power conferred by para (a)(i) to extend the time for compliance with the demand. Plainly enough, once an order has been made under para (a)(i), the determination of when the time for compliance expires is governed exclusively by para (a)(i). Paragraph (a)(ii) has no application at all. That the paragraphs are mutually exclusive is clear from the use of the word "otherwise" at the commencement of para (a)(ii). This has been accepted since the decision of Jenkinson J in Livestock Traders International Pty Ltd v BUI (" Livestock Traders "). ^[33]

[25] This critical difference between the present case and Buckland has the consequence that the Court of Appeal in Buckland had no occasion to consider the question which arises here, namely, whether the power to extend time conferred by s 459F(2)(a)(i) ceases to be exercisable if the time for compliance has expired before the application for extension of time is heard and determined.

[26] Aussie contends that the power is exercisable notwithstanding the expiry of the time for compliance (whether or not previously extended). In our opinion, for the reasons which follow, that submission must be upheld.

[27] Although, as will appear, reliance was placed by Esanda on certain considerations adverted to by the court in Buckland , it is unnecessary for the disposition of this appeal to consider the correctness of the decision in Buckland . As the present case raises no question under para (a)(ii), there is no occasion for this court to reconsider Buckland , which was a decision on that paragraph alone.

The power to extend time

[28] As already noted, the power to extend the time for compliance conferred by para (a)(i) is exercisable by the court --

... on hearing the [company's] application under section 459G, or on an application by the company under this paragraph ...

As first pointed out by Jenkinson J in Livestock Traders , and accepted ever since, the phrase "the period specified ... in the last such order" in paragraph (a)(i) shows that the power to extend time is exercisable from time to time as occasion requires. ^[34] The High Court in David Grant noted that an extension effected by an order under paragraph (a)(i) "may itself be extended on further application". ^[35] Nor is there any doubt that the power is available to a court exercising an appellate function. ^[36]

[29] The critical question is whether the power to extend -- and further extend -- the period for compliance can be exercised after the time for compliance has expired. It has been held, in a series of single judge decisions to which we will refer, that it cannot. For reasons which follow, we respectfully consider that those decisions were wrong and should not be followed.

[30] The question is one of statutory construction, to be resolved by applying orthodox principles of construction. The paramount rule of construction, as the High Court has reaffirmed more than once recently, is that the words of the statute govern. ^[37] There is no substitute for giving attention to the precise terms in which the relevant provision is expressed. ^[38]

[31] Put shortly, the proposition that the power to extend the time for compliance is not exercisable once the period for compliance has expired (which we will for convenience call "the expiry rule") is incompatible with the words of the statute. The expiry rule:

(a)

requires the court to read into para (a)(i) words of limitation which Parliament did not use;

(b)

ignores s 70 of the Act, which when read with para (a)(i) produces the opposite result; and

(c)

misapplies the High Court's decision in David Grant .

We deal with these points in turn.

Impermissible to read in words

[32] First, the power conferred by para (a)(i) is not expressed to be subject to any limitation as to the time of its exercise. To read in words imposing a significant time limit on a power conferred in unqualified terms is to rewrite para (a)(i). To do so would exceed "the proper bounds of statutory interpretation". ^[39] As Lord Mersey said in the well-known passage from Thompson v Goold & Co ^[40] "[i]t is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do". ^[41]

[33] As the High Court said in David Grant itself:

As a general precept, it is inappropriate to read provisions which confer jurisdiction or grant powers to a court by the making of implications or imposition of limitations not found in the express words of the legislative provision. ^[42]

More recently, in Mansfield v Director of Public Prosecutions for Western Australia , ^[43] the High Court approved the following passage from the judgment of Gaudron J in Knight v FP Special Assets Ltd : ^[44]

It is contrary to long-established principle and wholly inappropriate that the grant of power to a court (including the conferral of jurisdiction) should be construed as subject to a limitation not appearing in the words of that grant. Save for a qualification which I shall later mention, a grant of power should be construed in accordance with ordinary principles and, thus, the words used should be given their full meaning unless there is something to indicate to the contrary.

[34] Not only is there no "clear necessity", but there are compelling reasons for not reading in a time limit. The implication of such a time limit conflicts with the clear policy of para 459F(2)(a), which is to extend the time for compliance in aid of the company's application to set aside the statutory demand. As the introductory words to para (a) make clear, it is only when such an application is on foot that the company may apply for an extension of time under para (a)(i). As the Full Federal Court said in Vista : ^[45]

[W]here the recipient of a demand bona fide believes there are grounds for setting aside the demand, and in consequence commences proceedings in the court to that end, the time for compliance is automatically extended until, at the earliest, seven days after the application to set aside the demand has been fully determined or dealt with. ^[46]

[35] The question before the Full Court in Vista was whether an extension of the time for compliance could be granted under (a)(i) even after the company's application to set aside the demand had been heard and rejected. The Court held that it could:

[T]here is no reason as a matter of language, or for that matter as a matter of policy, why an application could not be made at a time after the hearing, for example, after an appeal against a decision at first instance on the application to set aside the statutory demand had been decided adversely to an applicant.

In our view there is no reason why there should not be power in an appropriate case to extend the time for compliance after the Court had determined to dismiss an application to set aside a demand, and indeed every reason to construe the section as permitting such a course, provided that it is borne in mind that the purpose behind permitting an extension of time is not as such to permit the creditor to obtain time to pay the demand beyond that initially contemplated in the legislation of 21 days, but in the context that the company has instituted proceedings to set aside the demand on one or other of the grounds in s 459H or s 459J and that this application has in the result terminated adversely to the creditor. ^[47]

[36] Consistently with this policy, the power to extend time should also be exercisable in aid of any appeal from an adverse decision at first instance on the application to set aside. The decision of the Full Court in Vista established that the power was indeed exercisable in aid of an appeal. The power was there held to be available following a single judge's dismissal of an appeal from a Registrar, who had refused the company's application to set aside. ^[48] But, as the present case demonstrates, the expiry rule -- which reads a time limit into para (a)(i) -- operates to defeat that policy in a case where the time for compliance expires before the appeal is heard. In that event -- so his Honour found -- time could not, or should not, be extended and, hence, there was no utility in considering Aussie's appeal on its merits.

The application of s 70

[37] Secondly, and in any event, there is an express provision of the Act which, when applied to para (a)(i), produces precisely the opposite result. Section 70 of the Act provides as follows:

Where this Act confers power to extend the period for doing an act, an application for the exercise of the power may be made, and the power may be exercised, even if the period, or the period as last extended, as the case requires, has ended.

[38] Plainly, s 70 is capable of applying to para 459F(2)(a)(i), since the paragraph "confers power to extend the period for doing an act" viz the period for complying with a statutory demand. When s 70 is read with s 459F(2)(a)(i), it follows, as a straightforward matter of statutory construction, that the prior expiry of the period for compliance is no barrier either to:

•

the making of an application by the company for the exercise of the power to extend the period; or

•

the exercise by the Court of the power to extend, or further extend, the period.

[39] Esanda argues, however, that the application of s 70 to para (a)(i) is excluded as a matter of necessary implication. Reliance is placed on the High Court's decision in David Grant . It will be recalled that David Grant concerned the time fixed by s 459G(2) for the commencement of an application to set aside the statutory demand. The company sought to rely on s 70 as a source of power for an extension of the 21 day period fixed by that sub-section. The Court rejected that submission. Section 70 could not apply because --

... the [Corporations Act] does not confer a power to extend the period within which an application may be made under s 459G. ^[49]

[40] The vital point of distinction between David Grant and the present case is thus exposed. Whereas s 459G does not confer a power to extend time, para (a)(i) does confer such a power. The existence of that power in (a)(i) attracts the operation of s 70, just as the absence of such a power from s 459G precluded its application to that provision.

[41] Livestock Traders was the first case to lay down the expiry rule. Jenkinson J rejected an argument advanced by the company that s 70 allowed for the exercise of the power to extend time notwithstanding the prior expiry of the period. His Honour said:

No express 'specific limitation' is attached as to the time within which an applicant may make application under s 459F(2)(a)(i) for an extension of the time for compliance. But s 459F(1) and s 459C(2)(a) can in my opinion be seen, in the context which the rest of Pt 5.4 affords, to operate to fix both the time at which a company on which a statutory demand has been served is taken to fail to comply with the demand and the period during which that failure is to have the forensic significance which s 459C ordains ...

Like s 1322, s 70 is a general provision and s 459F is a later and more specific provision with respect to the definition and the extension of a period upon the expiration of which important legal consequences occur in the operation of what is said in the explanatory memorandum concerning the Bill for the 1992 Act to have been a complete code for the resolution of disputes involving statutory demands: see the David Grant case, at CLR 269-70. Section 459F and s 459C(2 )( a) premise unalterability of the time as at which a company is to be taken to have failed to comply with a statutory demand once the period for compliance has ended at a time when the demand is still in effect . If s 70 were to be allowed an operation in respect of the power of extension conferred by s 459F(2)(a)(i) uncertainty, after the end of the period for compliance, as to whether the presumption specified in s 459C(2)(a) was to be available would ensue. That presumption was described by the High Court in the David Grant case as 'an important element of the scheme of Part 5.4' (at CLR 278). My conclusion is that s 70 has no such an operation. ^[50]

[42] With great respect to his Honour, we consider that both the reasoning and the conclusion are erroneous. The analysis overlooks the critical distinction between s 459G and s 459F(2)(a)(i) to which we have referred, the former containing no power to extend time, the latter containing an express power to do so. It was simply not correct to posit -- as his Honour did -- that s 459F and s 459C(2)(a) "premise unalterability of the time as at which a company is to be taken to have failed to comply with a statutory demand once the period for compliance has ended at a time when the demand is still in effect". When s 459F(2)(a)(i) is read with s 70 -- as it must be -- it can be seen that the Act's premise is the alterability of that time.

[43] It is true, as his Honour pointed out, that s 70 is a general provision and that it pre-dated the enactment of s 459F, a more specific provision dealing with the time for compliance with a statutory demand. But, far from justifying a conclusion that s 459F is therefore to be regarded as unaffected by s 70, those circumstances entail the opposite conclusion. When a specific provision like s 459F(2)(a)(i), conferring a power to extend time, is inserted into an Act which already contains a general provision like s 70 dealing with powers to extend time, Parliament must be taken to understand and intend that the general rule established by s 70 will apply to the specific instance constituted by para (a)(i). This conclusion is inescapable once it is recognised that para (a)(i) confers a power of precisely the kind contemplated by s 70. Had it been Parliament's intention that s 70 should not apply to para (a)(i), express provision to that effect would have had to be made.

[44] In Graywinter Properties Pty Ltd v Dyer (" Graywinter Properties "), ^[51] Ryan J came to the same conclusion as Jenkinson J had in Livestock Traders . Having noted that para (a)(i) envisaged more than one order extending time, his Honour went on:

[T]he scheme of the section requires, I consider, that the second or subsequent order be made during the time extended by the first order. It is not sufficient merely for an application for the further extension to have been made during that time. Once the time for compliance as fixed by the statute or extended by order has expired, the presumption specified in s 459C(2)(a) is immediately available and there is no longer any scope for bringing, reviving or continuing an application to set aside the statutory demand. ^[52]

His Honour then set out a passage from David Grant dealing with s 1322(4), which had earlier been cited by Jenkinson J in Livestock Traders . ^[53] Without further analysis, his Honour then said:

Accordingly, the time limits which I have spelled out of s 459F are not to be overridden by an exercise of the broad general authority conferred by s 1322(4)(d). ^[54]

[45] It appears that his Honour's attention was not drawn to s 70 at all. With great respect, we consider his Honour's reasoning and conclusion to be incorrect, for the reasons already given. Paragraph 1322(4)(d) had also been relied on -- and rejected -- in David Grant . That provision confers on the court --

a broad authority to extend the period for the taking of any step under the [Act] or any step in relation to a corporation. ^[55]

In its summons before the judge seeking a further extension of the period for compliance, and again on the appeal, Aussie did rely on s 1322(4)(d). Such reliance is unnecessary in view of the applicability of s 70.

The argument from uncertainty

[46] Esanda relied heavily on considerations of commercial certainty, of the kind referred to by Jenkinson J in Livestock Traders and by this Court in Buckland . Counsel for Esanda submitted that, if the Aussie argument were correct, there would be a continuing state of uncertainty as to when the time for compliance with the statutory demand had come to an end. This, he argued, was directly contrary to the clear intent of Parliament, as expressed in Pt 5.4 of the Corporations Act and, more particularly in 459F(2), that there be certainty as to the expiry of the date for compliance with a statutory demand. Counsel referred to the fact that the provisions are based on recommendations in the Harmer Report, which were intended to limit a company's reliance on technical defects in a statutory demand in order to delay its involuntary winding up on the ground of insolvency. ^[56]

[47] To the extent that those recommendations could properly be brought to bear on the question of construction, ^[57] they do not support this contention. The Harmer Report recommended the adoption of a presumption of insolvency arising from failure to meet a statutory demand and recognised the need to:

avoid winding up proceedings against a company being dismissed for technical and minor defects when the company is clearly insolvent. ^[58]

But the Harmer Report also said that a company should be able to apply to set aside a statutory demand before the time for compliance expired and that, once an application was filed, the time for compliance should be extended for a fixed period or until such later time as the court determined. ^[59]

[48] The fact that a company can apply to set aside the demand within the period for compliance as extended -- or further extended -- by the court is already productive of some uncertainty as to when the time for compliance will expire. Interpreting s 459F(2)(a)(i) so as to allow the time to be extended after the period for compliance has expired will not add significantly to that uncertainty.

[49] In answer to Aussie's submission that the expiry rule had the unjust effect in the present case of denying the company its substantive right of appeal, counsel for Esanda drew attention to the recognition by the High Court in David Grant that Pt 5.4 might indeed operate harshly. The company had there emphasised:

... the drastic commercial consequences which may follow the issue of process for winding up and to the inability of a company, which for good reason had been late in filing or serving an application to set aside the statutory demand, to prevent the issue of that winding up process. The damage to the commercial reputation of the company in the meantime might not be answered by the eventual success of the company in defeating the application to wind it up as insolvent. ^[60]

The High Court disposed of the argument as follows:

No doubt, in some circumstances, the new Part 5.4 may appear to operate harshly. But that is a consequence of the legislative scheme which has been adopted to deal with perceived defects in the pre-existing procedure in relation to notices of demand. ^[61]

[50] Once again, in our view, the reliance on David Grant is misplaced. That case concerned the stringency of the time limit for making an application to set aside a statutory demand. As the High Court said, the clear policy of s 459G was that those challenges should be brought promptly. The decision in David Grant vindicated that policy. But, as counsel for Esanda properly conceded, the conclusion that s 70 had no application to s 459G was based not on any judicial view about the desirability of such applications being made promptly but, quite simply, on the absence from s 459G of a power to which s 70 could attach. That the consequences of the Court's having no power to extend the time under s 459G might seem harsh was, as Gummow J pointed out, simply the consequence of the legislative intention as reflected in the unambiguous language of s 459G.

[51] The present case involves different legislative provisions, equally unambiguous, which reflect a different legislative intention. Paragraph (a)(i) contains an express power to extend time, being a power of precisely the kind which engages s 70. Sections 459G and 459F were enacted at the same time. The difference in the statutory language means that Parliament must be taken to have intended that, while the time limit in s 459G was to be unalterable, the time for compliance with the statutory demand would be alterable at any time, once an application to set aside the statutory demand had been initiated within the time prescribed by s 459G.

The consequence for which s 459F(1) provides

[52] As noted earlier, this court in Buckland declined to adopt a construction of para (a)(ii):

that would require that the consequence prescribed by subs (1), having once attached, should then be undone because of the exercise of some right of appeal. Once that consequence attached, it remained attached ... ^[62]

Also noted earlier, it was this notion of the irreversible consequence that led his Honour to dismiss Aussie's appeal as incompetent.

[53] The construction which we consider must be given to para (a)(i) and s 70 does mean that the consequence prescribed by s 459F(1), having once attached, may subsequently be undone, because of an exercise of the power to extend the time for compliance. The present case can be used to illustrate this point. The time for compliance, as extended by the Master, expired on 4 July. At that point, the effect of s 459F(1) was that the company was taken to have failed to comply with the statutory demand. If, subsequently, in aid of the hearing of the appeal, the judge had exercised the power under para (a)(i) to extend the time for compliance, that consequence would have been undone. This follows from the words "the last such order" in para (a)(i). The putative order made by the judge would have been "the last such order" and the date fixed by that order would have become the relevant date for the purposes of s 459F(1).

[54] That this "undoing" may occur is simply the consequence of the operation which must be given to para (a)(i) when read with s 70. It is no function of this Court to decide whether the "undoing" of the s 459F(1) consequence is a good or a bad thing, when Parliament has enacted provisions which, unambiguously, enable that to occur. Were it necessary to decide, however, we would have thought that the "undoing" of the consequence was entirely unobjectionable, given that the putative extension of time enables the company to pursue its ordinary appeal rights in respect of its application to set aside the statutory demand.

[55] In Buckland , by contrast, the court was considering two competing interpretations of the phrase "finally determined", in (a)(ii), one narrower and one broader. The court preferred the narrower interpretation, so as to avoid the "undoing" of the s 459F(1) consequence. No such question arises in this case.

The efficacy of appeal

[56] Counsel for Aussie put at the forefront of his submissions an argument that, even if the time for compliance had expired and could not be extended, the company could not be denied a hearing of its appeal on the merits or -- if the appeal were successful -- the fruits of that success. That is, if on appeal the application to set aside the statutory demand succeeded, then the appeal court must be able to undo any consequences which had followed upon the failure of that application at first instance. Counsel for Aussie relied on the principle that a successful appellant is entitled to restitution, that is, to be restored to the position he would have been in had the correct decision been made at first instance. ^[63]

[57] Counsel for Aussie also relied on the decision of the High Court in Guss v Johnstone . ^[64] In that case, the judge at first instance had rejected the debtor's argument that he had a counter-claim, set-off or cross-demand, as referred to in s 40(1)(g) of the Bankruptcy Act. The effect of that decision was that an act of bankruptcy had been committed. The relevant question before the High Court was whether, the act of bankruptcy having occurred, there was any utility in an appellate court considering whether the primary judge's decision was correct. The Court unanimously held that there was utility:

It is true that there is no statutory grant of power to annul an act of bankruptcy, ^[65] or to extend the time for compliance with a bankruptcy notice other than in a case where the conditions of s 41(6A) have been satisfied. ^[66] Suppose, however, that it had been demonstrated to the Full Court that the decision at first instance was based upon an error of law, perhaps involving a misapprehension as to the test to be applied in considering whether the judge was satisfied within the terms of the statute. In such a case, the Full Court may well have set aside the declaration.

We are unable to accept that whenever, in a proceeding under s 40(1)(g) and s 41(7), a judge at first instance has determined that he or she is not satisfied of the matter referred to in s 41(7), and has declined to interfere with the process initiated by a creditor, no appellate reversal of that decision, whether by the Full Court or by this court, can alter the consequences of the decision. In a proper case it would have been within the power of the Full Court to set aside the declaration made by Sundberg J. The consequences for proceedings and events that had occurred in the meantime would vary with the circumstances, but they could include the same consequences as flowed from the order in Streimer v Tamas , ^[67] where the statutory power to extend time for compliance with a bankruptcy notice, given by s 41(6A), was exercised after an act of bankruptcy had been committed. ^[68]

[58] Given that the time for compliance can be extended under s 459F(2)(a)(i) notwithstanding its prior expiry, no similar question arises here. It must be said, however, that the High Court's strong affirmation of the efficacy of the appeal process, and in particular of the appeal court's capacity to undo the adverse consequences of an earlier decision shown on appeal to have been erroneous, is consistent with the conclusion we have reached.

The weight of contrary authority

[59] The written submission for Esanda contended that "the central question" in this appeal had been considered -- and decided adversely to Aussie -- by --

(a)

three judges of the Trial Division;

(b)

the Court of Appeal, twice;

(c)

four judges of the Federal Court at first instance;

(d)

the Full Federal Court; and

(e)

the New South Wales Supreme Court, on three separate occasions.

[60] According to Esanda's submission:

Every Judge who has considered the question has held that once an extended period of time delineated under s 459F(2)(a) has expired then the court has no jurisdiction to extend the period for compliance with a statutory demand served under the provisions of s 459E of the Corporations Act 2001.

[61] Were this submission accurate, the task confronting the court on this appeal would be considerably more difficult than it actually is. In particular, were there in truth multiple decisions of the Court of Appeal and of an appellate court of co-ordinate jurisdiction upholding the expiry rule, this Court could scarcely contemplate adopting any other view, however compelling the arguments might be. As Esanda correctly submitted, an intermediate appellate court should not depart from a decision of another intermediate appellate court in any area -- such as the Corporations Act -- where uniformity is desired, unless the court is convinced that the reasoning is plainly wrong. ^[69] The court should be especially reluctant to depart from earlier decisions of the same court. ^[70]

[62] But the submission is seriously inaccurate. A review of the authorities cited reveals that there are only four decisions -- all of single judges -- in which the question in issue on this appeal has been considered on its merits. The first two are the decisions to which we have already referred, of Jenkinson J in Livestock Traders and of Ryan J in Graywinter Properties . The other two -- of Hansen J in Burwood Retail Pty Ltd v Deputy Commissioner of Taxation (" Burwood Retail ") ^[71] and of Kenny J in G & J Gears Australia Pty Ltd v Brobo Group Pty Ltd (" G & J Gears ") ^[72] -- are, essentially, applications of the earlier two decisions.

[63] Crucially, there is no decision of an intermediate appellate court on the question. As we shall explain, there are references in decisions of the Full Federal Court to the single judge rulings, but this is the first occasion on which an intermediate appellate court has been called on to decide for itself whether or not the expiry rule is correct. No issue arises, therefore, of uniformity between intermediate appellate courts. ^[73]

[64] The other cases said to have decided this question did no such thing. The two decisions of the Victorian Court of Appeal relied on by Esanda -- Buckland and Burwood -- dealt only with the meaning of "finally determined" in (a)(ii). They said nothing about (a)(i). Nor did the present question arise in any of the three decisions of Barrett J in the New South Wales Supreme Court on which Esanda relies. Two were concerned only with (a)(ii). ^[74] In the third, Barrett J actually exercised the power under (a)(i) to extend the time for compliance, remarking that the Court of Appeal's decision in Buckland "starkly illustrated" that an appeal would be rendered nugatory unless an extension was granted. ^[75]

[65] Of the three judges of the Trial Division said to have decided this question adversely to the argument advanced by Aussie, one was the judge in the present case who, as we have noted, regarded himself as bound by Buckland to dismiss the company's appeal. As the reasons indicate, ^[76] his Honour did not regard it as necessary to decide whether the power to extend time was available.

[66] The others were Warren J in Buckland at first instance, ^[77] and Hansen J in Burwood Retail at first instance. ^[78] Warren J's decision concerned only para (a)(ii). No application for an extension of time had been made, either before the Master or to her Honour, ^[79] and her Honour's statement that "no extension may now be granted" ^[80] was obiter . Hansen J in Burwood Retail was principally concerned with the meaning of "finally determined" in (a)(ii), but it appears that an application for an extension of time under (a)(i) was sought in the alternative. ^[81] His Honour followed the decisions in Livestock Traders ^[82] and Graywinter Properties ^[83] in concluding that no extension of the time for compliance was possible, the time having already expired. ^[84]

[67] So far as appellate decisions are concerned, Esanda relied on the decision of the Full Federal Court in Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (" Equuscorp "). ^[85] It is quite clear, however, from the Full Court's reasons that the present question did not arise. At first instance, an order had been made under (a)(i), on the company's application, extending the time for compliance:

until the determination of the appeal by the Full Court of the Federal Court or as otherwise ordered by the Full Court ....

On appeal, that order was attacked on the ground that the judge had failed to specify a period when extending the time for compliance. The Full Court rejected the argument, holding that:

the period of the extension is defined with precision by the order. It runs from the date on which the order speaks ... until the date upon which this court gives judgment on the appeal. ^[86]

[68] The Full Court then made this statement:

Provided an application for an extension is brought before the expiry of the period fixed for compliance, that period can be further extended even if the s 459G application has been determined. ^[87]

The court cited Graywinter Properties, Livestock Traders and David Grant as authority for this proposition. But, as counsel for Esanda properly conceded, the Full Court had not been called on to consider the time limit question. What the Full Court said was an accurate recitation of what the earlier cases had held, but it did not reflect any consideration by the Full Court of the issue. As the High Court has made clear:

[W]here a proposition of law is incorporated into the reasoning of a particular court, that proposition, even if it forms part of the ratio decidendi, is not binding on later courts if the particular court merely assumed its correctness without argument. ^[88]

[69] The same may be said of the almost-contemporaneous decision of a differently-constituted Full Federal Court in Vista . ^[89] In that case, as noted earlier, the Full Court held that the power under (a)(i) to extend time could be exercised even after the application under s 459G (to set aside the statutory demand) had been finally disposed of, adversely to the company. Their Honours referred in passing to the decisions in Livestock Traders and Graywinter Properties , and noted the views expressed in those decisions (that the power to extend time could not be exercised after the time for compliance had expired). But -- as in Equuscorp -- the Full Court had no occasion to consider, and did not consider, that question. ^[90]

[70] Finally, we deal with the decisions of the four single judges of the Federal Court relied on by Esanda. Reference has already been made to Livestock Traders and to Graywinter Properties . The two other decisions were, respectively, those of Finn J in Graywinter Management Ltd v DCT (" Graywinter Management ") ^[91] and of Kenny J in G & J Gears . Finn J was not called on to decide the present question. His Honour was instead dealing with the same question as arose in Vista , namely, whether the power to extend time was exercisable notwithstanding that the application to set aside the statutory demand had already been heard and determined adversely to the company. His Honour held that the power was exercisable in those circumstances. ^[92] As in Equuscorp and Vista , his Honour noted the proposition from Livestock Traders and Graywinter Properties -- that the power to extend time was only exercisable "provided the application for an extension is brought before the effluxion of the period fixed for compliance". ^[93] But -- as in both those cases -- his Honour was not called on to consider, and did not consider, that question.

[71] In G & J Gears , Kenny J did deal with the present question. There was an application before her Honour under s 459G to set aside a statutory demand. This was a rehearing of an application to the Registrar of the Court (equivalent to a Master in this Court). The company had also made application for an extension of the time for compliance. Her Honour dismissed the application to extend time, holding that --

The Court has no power to extend the time for compliance with the statutory demand because the time for compliance has expired. G & J Gears is deemed to be insolvent because it has failed to comply with the demand within the time required, as extended by the registrar. A review of the registrar's decision is therefore nugatory. ^[94]

[72] Her Honour then set out a number of propositions which she described as "well-settled", as follows:

This limitation upon the power to extend time is implicit in the terms of ss 459F and 459C. Section 459F(1) operates to fix the time when a company on which a statutory demand has been served is taken to fail to comply with the demand. The significance of a failure to comply with a statutory demand is the subject of s 459C(2)(a), which provides that the Court must presume that a company is insolvent if, during or after the 3 months ending on the day when the application is made, the company fails to comply with the statutory demand. The effect of ss 459F(1) and 459C(2)(a) is that the Court can only make an order under s 459F(2)(a)(i) extending the time for compliance prior to the end of the period for compliance, ie, before the company is presumed to be insolvent. Within this period, an order extending the time can be made where a s 459G application has been rejected and that rejection is the subject of review or appeal. This is now well-settled ... As Jenkinson J said in Livestock Traders ... , ss 459F and 459C(2)(a) of the Corporations Law "premise unalterability of the time as at which a company is to be taken to have failed to comply with a statutory demand once the period for compliance has ended at a time when the demand is still in effect." This is equally true of the equivalent sections of the Corporations Act. The power to extend time after the end of the period for compliance would introduce a degree of uncertainty incompatible with the statutory regime: see also Buckland Products at [8] per Phillips JA. ^[95]

[73] For the proposition that the law was now "well-settled", her Honour relied on Vista, Graywinter Management, Graywinter Properties, Buckland, Shakespeares Pie and Australian Beverage . As already explained, of these decisions only Graywinter Properties stood as authority for the expiry rule.

[74] As regards the concluding reference to Buckland , her Honour was evidently applying to (a)(i) -- by analogy -- what the Court in Buckland had said about uncertainty when construing para (a)(ii). For the reasons we have already given, the "argument from uncertainty" does not apply to para (a)(i), in view of the unambiguous language of s 70 and para (a)(i).

Conclusion

[75] As Nettle JA points out, the Livestock Traders interpretation has stood for more than 10 years. Its correctness has been assumed, both at first instance and on appeal, throughout that period. For the reasons we have given, however, we consider that the interpretation is clearly wrong and should no longer be followed. It is an interpretation which can lead to injustice, as this case illustrates. There being no considered decision of an intermediate appellate court on the question, we regard ourselves as free -- indeed, bound -- to apply what we consider to be the correct interpretation.

[76] In our view, for the reasons we have given, the learned Judge did have power under para (a)(i), on the application made by Aussie, to extend the time for compliance with the statutory demand, notwithstanding that the time (as previously extended by the Master) had already expired. Moreover, in our opinion, that power should have been exercised in aid of the hearing de novo of the company's application to set aside the statutory demand. That is, as we have said, the purpose for which the power to extend time was evidently conferred.

[77] We would grant leave to appeal, and order that the appeal be treated as having been heard instanter and allowed. We would set aside his Honour's order dismissing Aussie's appeal and order instead that the time for compliance be extended until 21 days after the determination of the company's appeal, which we would remit to his Honour for hearing.