Aussie Victoriaplant Hire Pty Ltd v Esanda Finance Corporation Ltd
[2007] VSCA 121212 FLR 56
(Judgment by: Nettle J)
Aussie Victoriaplant Hire Pty Ltd
vEsanda Finance Corporation Ltd
Judges:
Maxwell P
Chernov J
Nettle JAshley 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
Judgment date: 14 June 2007
Judgment by:
Nettle J
[108] I consider that the order dismissing the application to set aside the statutory demand was an interlocutory order. I also consider that there should be leave to appeal. But I would dismiss the appeal.
Interlocutory order
[109] This court held in Border Auto Wreckers (Wodonga) Pty Ltd v Strathdee [142] that the expression "a judgment or order in an interlocutory application" in s 17A(4)(b) of the Supreme Court Act 1986 is to be read as meaning "an interlocutory judgment or order". Consequently, the question of whether leave to appeal is required in this case is to be decided according to whether an order refusing to set aside a statutory demand finally disposes of the rights of the parties. [143]
[110] In A-Pak Plastics Pty Ltd v Merhone Pty Ltd [144] the New South Wales Court of Appeal held that an order setting aside a statutory demand was a final order. Their Honours reasoned that, because the only proceeding on foot between the parties was the application to set aside the demand, one was to treat the lis or issue between the parties as being whether the demand should be set aside; and, since the order setting aside the demand finally determined that issue, it was a final order.
[111] With respect, I agree that the order in A-Pak Plastics was a final order, although as it appears to me, not so much because the application was the only proceeding on foot between the parties as for the reason that once the order was made the rights and obligations the subject of the demand could not be revisited. [145] As is shown by the earlier decision of the New South Wales Court of Appeal in Dousi v Colgate Palmolive Pty Ltd , [146] the fact that an order may be the only order sought in a proceeding does not necessarily mean that the order is final. An interlocutory order may be sought and made in a proceeding in which the lis or sole issue is whether the order should be made. An application for pre-action discovery under r 32.05 and an application for extension of time under s 23A of the Limitation of Actions Act 1958 are commonplace examples. Despite the fact that such orders when made may finally determine the proceedings in which they are made, they are categorised as interlocutory orders because they involve no final adjudication of substantive rights. [147]
[112] In Mibor Investments Pty Ltd v Commonwealth Bank of Australia [148] Hayne J was concerned with the question of whether an application to set aside a statutory demand was an interlocutory proceeding within the meaning of r 43.03(2). He was not required to decide whether an order made pursuant to such an application was an interlocutory or final order within the meaning of s 17A(4)(b) of the Supreme Court Act. But his Honour observed that an order refusing to set aside a statutory demand was interlocutory because it did not finally determine the rights of the parties. As Hayne J put it, all that follows from a demand not being set aside is that the company has a further short period of time within which it must meet the demand or face a conclusion that it is presumed insolvent (unless it proves the contrary). With respect, I agree.
[113] In Infact Consulting Pty Ltd v Kyle House Pty Ltd [149] Barrett J of the New South Wales Supreme Court Equity Division held that because an order setting aside a statutory demand is a final order, it must follow that an order dismissing an application to set aside a statutory demand is a final order. But, with respect, that does not follow. As Windeyer J observed in Hall v Nominal Defendant , [150] an order in favour of one party to a dispute may finally determine the dispute between the parties whereas an order to opposite effect would not. For example, an order setting aside a jury's verdict and ordering a new trial is interlocutory but an order refusing a new trial is final.
[114] In Infact Consulting Barrett J also treated the decision of this court in Buckland Products Pty Ltd v Deputy Commissioner of Taxation of the Commonwealth of Australia [151] and the decision of the New South Wales Court of Appeal in Meehan v Glazier Holdings Pty Ltd [152] as support for the conclusion that an order refusing to set aside a statutory demand is a final order. But, again with respect, I do not think that is so.
[115] Buckland did not deal with the point as such. It simply assumed that leave was not required. And relevantly, all that it decided was that an order dismissing an application to set aside a statutory demand finally determines the application. In Meehan , the New South Wales Court of Appeal was concerned with an application under s 101(2)(p) of the Supreme Court Act 1970 (NSW) [153] for leave to appeal from an order setting aside a statutory demand. The question was whether the judge at first instance had erred in the exercise of discretion in holding that there was "some other reason" to set aside the demand. There was no need to consider the question of whether the order was final or interlocutory.
[116] Counsel for the respondent drew attention to Asian Century Holdings Inc v Fleuris Pty Ltd , [154] in which the Full Court of the Supreme Court of Western Australia followed A-Pak after referring to Hayne J's observations in Mibor . Counsel submitted that, because the court expressly considered Mibor , the decision was authority in addition to A-Pak that an order refusing an application to set aside a statutory demand is a final order. But I doubt that is so. As already observed, the decision in A-Pak goes no further than that an order setting aside a statutory demand is a final order. Strictly speaking, Asia Pacific is also authority only for that proposition. In his judgment in Asia Pacific [155] Kennedy J referred to an earlier case of Turner Equity Pty Ltd v Melvista Park Pty Ltd [156] in which Malcom CJ and Franklyn and Owen JJ took the view that an order of the Master refusing to set aside a statutory demand had finally disposed of the subject matter of the litigation. But, as Kennedy J said, it appeared from the judgment that the question of whether it was final or interlocutory for the purposes of appeal had not been argued.
[117] In my view, an order refusing an application to set aside a statutory demand is an interlocutory order. Theoretically, such an order would leave it open to the company to make a second application to set aside the demand. [157] Admittedly, there might not be time to make a second application. In that event, the order would not only determine the proceeding in which it was made but also, in a practical sense, that the demand should stand. But even so, the order would not be final, because it would not involve a final adjudication of substantive rights. [158] All that it would determine is that the company has a further short period of time within which it must meet the demand or face a conclusion that it is presumed insolvent.
Application to extend time after time has expired
[118] The natural and ordinary meaning of s 459F(2)(a)(i) of the Corporations Act 2001, as reinforced by s 70, is that an application to extend time for compliance with a statutory demand may be made under the section after the time for compliance has expired. The respondent, however, has put four points against that construction.
[119] The first is that it would be futile to extend time after time has expired because there is no power under the section or otherwise to annul the effect of the presumption of insolvency which arises upon the failure of a company to comply with a statutory demand within time. I do not accept that contention. In my view, the answer to it is mutatis mutandis the same as Deane and Ellicott JJ gave in Streimer v Tamas [159] (with respect to the cognate provisions of s 41(6A) of the Bankruptcy Act 1906 (Cth)):
We do not accept the proposition that, in the absence of an independent power to annul an act of bankruptcy, an order extending the time for compliance with the requirements of a bankruptcy notice would be futile if it were not made within the time initially fixed for compliance or some persisting extension thereof. The power conferred by s 41(6A) is a power to 'extend' the previous period of time. It is not a power to establish a new, distinct and independent period of time for compliance. The effect of an order extending the time for compliance, which is made after the expiry of the time originally fixed and any previous extension thereof, will be to enlarge the overall time allowed for compliance with the result that what would otherwise have constituted an act of bankruptcy no longer does (cf Esso Research & Engineering Co v Commissioner of Patents ) [160] . Ignoring any transitional problems where special considerations may be applicable, this does not mean that s 41(6A) operates so as retrospectively to divest rights to rely upon an act of bankruptcy which would otherwise exist. What s 41(6A) does is to modify, by the introduction of a contingency, the actual and potential rights and liabilities resulting from failure to comply with the requirements of a bankruptcy notice within the time allowed by the notice in a case where, within that time, one of the two conditions specified in the subsection has been fulfilled.
[120] The respondent's second point is that, if there were power to extend time after time had expired, there would be intolerable uncertainty as to the effect of a statutory demand and that, having regard to the history and objects of the Pt 5.4 of the Corporations Act 2001, such an outcome cannot possibly have been intended. I reject that argument too. In my view the answer to it is also to be found in what Deane and Ellicott JJ said in Streimer v Tamas (with respect to s 41(6A) of the Bankruptcy Act):
"It is true that to give, as we would, to the words which the Parliament has used their plain and full meaning may be productive of a degree of uncertainty and inconvenience in practice. If proceedings to set aside the relevant judgment or order have been instituted or an application to set aside the bankruptcy notice has been filed within the time limited for compliance with the requirements of the bankruptcy notice, there may remain doubt as to whether a subsequently granted extension of time will preclude a previous period of non-compliance, which has expired without extension, from constituting an act of bankruptcy. The creditor would, however, ordinarily be aware that proceedings to set the judgment aside had been instituted or that an application to set aside the bankruptcy notice had been filed. He would therefore be on notice that the time for compliance might be extended. In any event, any detriment suffered as a result of such uncertainty or inconvenience would be relevant on an application to extend time for compliance and may be a factor militating against the making of an order extending time. [161]
[121] The respondent's third point is an argument that the decision of the High Court in David Grant & Co Pty Ltd v Westpac Banking Corporation [162] established that the time limits imposed by Pt 5.4 of the Act permit of no extension. I do not think that is so. David Grant established that the time limit imposed by s 459G(2) is "an essential integer" of the right of application established by s 459G(1) or, to put it another way, that the time of making of the application is of "the essence of the provision". [163] Once such an application is made, the scheme of the Act appears to be that procedural regulation of the application, including the extension of time limits, is governed by the provisions of the Act, such as s 70, which apply generally to applications. [164]
[122] The final point concerns decisions of other courts as to whether time may be extended after time has expired and the objective of achieving consistency of approach in the interpretation of national legislation. I regard that as the most difficult point of the case. Contrary to my view of the way in which the legislation should be construed, there is a substantial body of decisions in this court and in the Federal Court in which it has been assumed or held that time cannot be extended after it has expired.
[123] It is apparent that most of those decisions are based on the reasoning of Jenkinson J in Livestock Traders International Pty Ltd v Thi Lam Vui & Van Quang Bui , [165] and Jenkinson J's reasoning was in turn based on his Honour's view that to allow time to be extended after it had expired would be productive of uncertainty of a kind that was inconsistent with the aim of Pt 5.4. For the reasons which I have given I reject that view. Nevertheless, the Livestock Traders interpretation of the legislation has stood now for more than ten years, and it is clear that the construction of a statute of doubtful meaning once laid down and accepted for a long period of time ought not to be altered unless one "could say positively that it was wrong and productive of inconvenience". [166] It is true that no other intermediate court of appeal has decided the question. The furthest any has gone is the dictum of the Full Federal Court in Equuscorp Pty Ltd v Perpetual Trustees WA Ltd . [167] But that was a considered dictum, and as appears from Australian Securities Commission v Marlborough Gold Mines Ltd [168] this court should follow such a dictum unless convinced that it is wrong. Finally, it is hardly clear that if this court now took a different view, other courts, particularly the Federal Court, would be prepared to follow.
[124] In all the circumstances, although I consider that the preferable construction of s 459F(2)(a)(i) is that an order extending time for compliance with a statutory demand may be made after time has expired, I am unable to say positively that the Livestock Traders interpretation of the section is wrong and productive of inconvenience. It follows, as I see it, that if the interpretation of the section is to be revisited, it is a matter for the High Court or Parliament.