Aussie Victoriaplant Hire Pty Ltd v Esanda Finance Corporation Ltd
[2007] VSCA 121212 FLR 56
(Judgment by: Chernov J)
Aussie Victoriaplant Hire Pty Ltd
vEsanda Finance Corporation Ltd
Judges:
Maxwell P
Chernov JNettle 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
Judgment date: 14 June 2007
Judgment by:
Chernov J
[78] In this appeal the principal issues that arise for determination are the following:
- (a)
- Is leave to appeal required from the order of the judge below dismissing as incompetent an application to set aside the statutory demand served by the respondent, Esanda Finance Corporation Ltd, on the appellant, Aussie Vic Plant Hire Pty Ltd, pursuant to Pt 5.4 of the Corporations Act 2001 ("the Act")?
- (b)
- If yes to (a), should leave to appeal be given in the present case?
- (c)
- If yes to (a) and (b):
- (i)
- was his Honour bound by the decision of this Court in Buckland Products Pty Ltd v Deputy Commissioner of Taxation [96] (" Buckland ") so to dismiss the appeal merely because the time for compliance with the statutory demand had expired before the matter came on for hearing before him;
- (ii)
- in any event, does the court have power to extend the time for compliance with the statutory demand pursuant to s 459F(2)(a)(i), or s 70 or s 1322(4)(d) of the Act, notwithstanding that the time for compliance has expired?
[79] I state at the outset my conclusions on these matters and then provide my reasons. First, I consider that his Honour's order is an interlocutory order and, therefore, leave to appeal is required under s 17A(4)(b) of the Supreme Court Act 1986 if it is to be challenged by way of an appeal. Secondly, I think that the required leave should be granted to the appellant. I am also of the view that his Honour was not bound by Buckland to dismiss the appeal, although I consider that, because the time for compliance with the statutory demand had expired before the appeal came on for hearing, the judge did not have power to extend the period so that, in the circumstances, the hearing of the appeal would have been futile. Consequently, I would dismiss the appeal. I now turn to consider each of the above matters. Interlocutory order
[80] In Hall v Nominal Defendant [97] Windeyer J made it plain that an order is interlocutory unless it finally determines the rights of the parties in the principal cause between them. In that case, the court below dismissed an application for an extension of time within which to bring a proceeding against the nominal defendant. The majority of the High Court considered that the order was interlocutory. Taylor J, with whom Owen J agreed, said [98] that the impugned order was made in a proceeding that was:
... preliminary to the bringing of an action and although it deprived the appellant of the benefit of the order of the learned judge of first instance, it did not operate to prevent him from making a further application for an extension of time ...
In my opinion, the order in question was not final in the sense in which that term is used in relation to judgments and was interlocutory only so that the appeal was, to say the least, incompetent without leave.
Windeyer J was of the view that the decision was interlocutory because it did not finally determine the principal cause between the parties. His Honour said: [99]
In most cases the test that seems to be most satisfactory, and the one that accords most nearly with what has been said on the subject in this Court, is it seems to me to look at the consequences of the order itself and to ask does it finally determine the rights of the parties in a principal cause pending between them. It is never enough to ask simply does the order finally determine the actual application or matter out of which it arises; because, subject to the possibility of an appeal, every order does that, unless it be an order that is expressly declared to be subject to variation.
Importantly, whether the decision finally determines such rights of the parties is to be decided by the legal, and not the practical, effect of the order. [100]
[81] It seems to me that the decision dismissing an application to extend the period for compliance with a statutory demand does not determine a principal dispute between the parties, more particularly, whether the amount claimed is in fact owing. As I explain later, I consider that this is to be determined either upon an application to set aside the notice or in the course of the winding up proceeding of the corporate debtor (where the matter bears on solvency). At least theoretically, the unsuccessful debtor company can make a fresh application to extend the compliance period. A like conclusion, namely, that an order refusing to set aside a statutory demand was interlocutory because it did not finally determine the rights of the parties, was reached by Hayne J in Mibor Investments Pty Ltd v Commonwealth Bank of Australia [101] in relation to a proceeding to set aside a statutory demand. Thus, I consider that leave to appeal must be obtained if the proposed appeal in this case is to proceed.
Leave should be granted
[82] The general rule is that, in order to obtain leave to appeal against an interlocutory decision, the applicant must demonstrate that the decision is attended with relevant doubt and that substantial injustice will result if it were to remain. [102] But as Phillips JA pointed out in Secretary to the Department of Premier and Cabinet v Hulls [103] that is only a general rule that does not purport to inhibit the wide discretion that the Court has to grant leave. His Honour said:
The discretion to grant leave, which is conferred by the statute in untrammelled terms, cannot be fettered, and should not be fettered, by judicial decision. From time to time a case will arise in which any preconceived guidelines will be found not wholly sufficient. In the end, whether leave is granted or not must always depend on the justice of the case, as it appears to the court from whom leave is sought.
In this case, it is plain enough that the issue that is sought to be raised on appeal is of considerable public importance. Moreover, the central issue in the case is to be resolved in the context of conflicting authorities on the matter in the various jurisdictions in Australia. In all the circumstances, and notwithstanding that the material shows that the applicant's substantive case as to whether the debt is due and owing to the respondent is weak, I consider that justice requires that leave to appeal against the impugned decision should be granted.
Buckland not determinative
[83] As Maxwell P and Neave JA explain in their reasons in this case, the essential issue with which Buckland was concerned was whether a Master's decision, made in the context of a s 459G application, to refuse to extend the period of the statutory demand "finally determined" the application for the purposes of s 459F(2)(a)(ii). The Court held that it did, having rejected the debtor's submission that an application was not "finally determined" within the meaning of the above provision until the appellate process from the impugned decision has been determined. The reason for this conclusion is explained in the reasons of Phillips JA [104] (with whom the other members of the Court agreed). Thus, Buckland was not concerned with whether the power to extend time for compliance conferred by s 459F(2)(a)(i) ceases if the period in question had expired. Moreover, in that case, as here, there was no application to extend the relevant period so that when the matter reached the judge in the Practice Court the period had expired. Nevertheless, Phillips JA implicitly considered [105] that any appeal from the refusal to extend time, to be effective, would have to be heard and determined before the expiration of the period for compliance. To that extent, it might be said that the decision in Buckland is consistent with the claim of the respondent here that once the relevant period expires, the court has no power to extend it under s 459F(2)(a)(i). It is plain, however, that the ratio in Buckland did not establish this, so that, strictly, his Honour below was not precluded by that decision from considering whether he had the power to extend the period for compliance notwithstanding that it had expired by the time the matter came on before him.
No power to extend time after period expires
[84] In my view, however, his Honour's above error was not material because it would have been futile to proceed with the appeal given that the period of the statutory demand had expired and, as I explain, on a proper construction of s 459F(2)(a), in those circumstances the court did not have power to extend the period for compliance. My reasons for this conclusion are these.
[85] In construing s 459F(2)(a)(i) in order to determine if it empowers the court to extend the period for compliance of a statutory demand after the time of its expiration, it is necessary to have regard to the policy of Pt 5.4 of the Act, of which it forms a part, and in particular the mischief that it seeks to abrogate. As their Honours said in CIC Insurance Ltd v Bankstown Football Club Ltd : [106]
... the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd , if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent. [107]
[86] As I explain below by reference to its provisions, the mischief that Pt 5.4 sought to abrogate was the ability of insolvent companies to continue trading by defeating, or delaying, applications for their winding up that were brought on the basis of their failure to comply with the statutory demand, by raising at the winding up proceedings, technical, unmeritorious, defences that did not call into question the solvency of the debtor company. As I mention later, prior to the introduction of Pt 5.4, the opportunity to challenge a statutory demand was in effect limited to the time of the hearing of the winding up application, or to injunctive proceedings to restrain such an application, so that if the demand could be successfully set aside at that stage, the winding up proceeding would necessarily collapse. It was in order to overcome such difficulties that Pt 5.4 was enacted. It prescribed a procedure whereby a statutory demand may be challenged, but essentially only prior to the hearing of the winding up proceeding and then only within the time limits that were prescribed in quantitative terms. A critical provision of the statutory scheme is the automatic presumption of insolvency of the debtor company where there is a failure to comply with the demand within the prescribed time frame. That presumption can only be rebutted at the hearing of the winding up application where the sole issue for determination is not the validity of the statutory demand but the solvency of the debtor company.
[87] To construe s 459F(2)(a)(i) as giving the court power to extend the period for compliance in a statutory demand notwithstanding that it has expired would, I think, produce the unintended result of defeating the principal aim of the statutory scheme to which I have referred. In the circumstances, I consider that it is necessarily implicit that the court's power in that regard is limited to situations where the period for compliance has not expired. I now turn to a more detailed analysis of the legislation.
[88] Part 5.4, together with Pts 5.4A and 5.4B, was inserted into the legislation by the Corporate Law Reform Act 1992. The provisions effectively restructured the then existing legislation that dealt with the winding up of companies, reflecting the recommendations of the Harmer Report [108] which highlighted, amongst other matters, the need to distinguish between the winding up of solvent and insolvent companies. The Report recognised that the great majority of applications for winding up on the ground of inability to pay debt were based on the failure to comply with statutory demands [109] and that winding up proceedings would often falter by reason of technical and unmeritorious defences, such as assertions that the claim did not reflect precisely the amount actually due to the creditor. As a result, it was said, many windings up failed or were materially delayed and companies continued to trade notwithstanding that they were insolvent. Part 5.4 introduced a complete code for the winding up of insolvent companies and in particular, a code, or a "new and different statutory regime", [110] for the resolution of disputes involving statutory demands. It is significant, as was noted by the court in Equuscorp , that prior to the enactment of Pt 5.4 there was no statutory procedure for the setting aside of a notice of demand [111] and, effectively, a company could only contest a notice of demand by way of an interlocutory injunction to restrain the presentation of the winding up petition.
[89] It is apparent that a recurrent motivation for the changes recommended by the Harmer Report in respect of statutory demands was the confinement to the prescribed times of any disputation concerning the validity of the demand. To that end, the legislation sought to provide for the speedy resolution of "disputes in relation to the existence or amount of a debt ... in a way that will not impede the resolution of an application for the winding up of a company in insolvency". [112] As the Explanatory Memorandum says, the scheme "provides a means of dealing with statutory demands in such a way that an alleged defect in [it] does not have the effect of prolonging proceedings leading to the commencement of a winding up, by requiring debtor companies to raise genuine disputes at an early stage, rather than after winding up proceedings have commenced." [113] That such policy considerations underpin Pt 5.4 has received judicial recognition. For example, Gummow J said in David Grant & Co Pty Ltd v Westpac Banking Corporation [114] (" David Grant "):
The provisions of the new 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.
Similar, albeit more general, views were expressed by Brooking and Phillips JJ in David Grant when the matter was before the Appellate Division of the Supreme Court.
[90] Thus, the legislation specifies, in quantitative terms, the limited period within which the validity of statutory demands can be challenged in court in the first instance, and for the disposition by the court of a winding up application. The provisions prescribe self-executing time limits for the taking of steps to set aside statutory demands, failing which the debtor company is to be presumed insolvent if the demand had been left unsatisfied. More particularly, Part 5.4 specifies the period of 21 days as the period of demand [115] and as the period within which an application may be made to have it set aside. [116] Consequently if no such application is made within this period, and there has been non-compliance, the debtor company is taken to have failed to comply with the demand at the expiration of the 21 days [117] so that the court must presume that it is insolvent. This will not necessarily prevent the debtor company from rebutting the presumption, but that can only be done in a winding up proceeding and in the context of demonstrating that it is solvent. [118]
[91] The limited exception to this strict and self-executing regime occurs in circumstances where a timely application has been made by the debtor company under s 459G to set aside the statutory demand. In those circumstances, the period is extended either to that ending seven days after such an application has been determined [119] or the period ordered by the court under s 459F(2)(a)(i), whichever is the later. But even if an application under s 459G has been made, once the period has expired under either limb of s 459F(2)(a), the period for compliance has run its course and the company is presumed to be insolvent. [120] It seems to me that, on a plain reading of s 459F(2)(a)(i) in the context of the policy of Pt 5.4, once such a situation has been reached the statutory demand is no longer extant, so that the period of the "spent" demand cannot be extended by the court under s 459F(2)(a)(i), or otherwise. In other words, once the prescribed time for complying with the demand, or any permitted extension of it, has run its course the statutory demand ceases to play a relevant role in the scheme underpinning Pt 5.4. Although the debtor can later challenge the demand as has been mentioned, this can only occur at the hearing of the winding up application and subject to the limitations imposed by s 459S. At that point, the focus will be on the question whether the debtor company is insolvent and, unless the attack on the statutory demand is relevant to that issue, there would be no point in permitting such a challenge to proceed.
[92] Hence, as I have said, I consider that it is necessarily implicit that s 459F(2)(a)(i) does not empower the court to extend the period for compliance after it has expired. I also think that neither s 70 nor s 1322(4)(d) enables the court to do so. I say that essentially for the reasons that were given by Gummow J in David Grant [121] for concluding that the provisions do not apply to permit an extension of time that is prescribed by s 459G(2). As his Honour explained, the two sections are of general application and, in the circumstances, do not affect the operation of the later, specific, provisions of Pt 5.4 which is a code as to the time limits within which the prescribed steps may be taken. [122]
[93] My above conclusion is consistent with decisions of this and other courts in Australia that have dealt with these issues. Thus, in Livestock Traders International Pty Ltd v Bui [123] (" Livestock ") Jenkinson J concluded that s 495F(2)(a)(i) did not give the court power to extend the period of compliance with a statutory demand after the period had expired. His Honour recognised that, although no express limitation was prescribed in that provision as to the time within which the application could be made for an extension of time for compliance, this limitation was plainly implicit from the provisions of Pt 5.4 and, in particular, s 459F(1) and s 459C(2)(a) which, he said, operate "in the context which the rest of Pt 5.4 affords" so as to fix both the time at which there is failure to comply with a statutory demand and "the period during which that failure is to have the forensic significance which s 459C ordains". These provisions, his Honour said, "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." Essentially, for the reasons given by Gummow J in David Grant his Honour also considered that ss 70 and 1322 did not operate to empower the court to allow it the time prescribed by s 459G(2). Consequently, Jenkinson J rejected the submission that those provisions applied so as to enable the court to enlarge the period for compliance after it had expired. Importantly, I think, his Honour made the point [124] in relation to s 70 that 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." It is plain, I think, that this experienced judge recognised that the policy of Pt 5.4 is to provide for a mechanism whereby disputes as to the validity of a statutory demand, if they are to be resolved prior to a winding up proceeding, must be resolved, within the prescribed timetable. In light of this policy, his Honour concluded that, on its proper construction, s 459F(2)(a)(i) does not empower the court to extend the period for compliance with a statutory demand once that period had expired.
[94] A like conclusion was reached in Graywinter . Ryan J in that case considered that:
[o]nce the time for compliance as fixed by the statute or extended by order has expired, the presumption specified in s 459C(2)(a) [that the company had failed to comply with the statutory demand] is immediately available and there is no longer any scope for bringing, reviving or continuing an application to set aside the statutory demand. [125]
[95] The decision of Jenkinson J in Livestock was approved by the Full Court of the Federal Court in Vista Commercial Construction Pty Ltd v Commissioner of Taxation [126] in which, after referring to the above aspect in Livestock , their Honours said:
That there could be no utility in extending the time for compliance with a demand, once the time for compliance had passed, and no jurisdiction to do so would seem self evident. [127]
Their Honours also noted, with apparent approval, the above decision of Ryan J. The principle recognised in Livestock was also applied, by a differently constituted Full Court of the Federal Court, [128] in Equuscorp . Although that case was principally concerned with the power of the court to extend the period for compliance with the demand after an application to have it set aside had been dismissed, their Honours essentially accepted that the period for compliance can only be extended if it is extant. [129]
[96] And in Gears -- which was concerned with, amongst other issues, whether the period for compliance with a statutory demand can be extended after it had expired -- Kenny J concluded, by reference to relevant authorities including Livestock, Graywinter and Vista , that once time for compliance with a statutory demand has passed the court has no power to extend the period. Relevantly, her Honour said:
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 ... [130]
A little later in her reasons her Honour noted that there was a failure by the applicant to comply with the statutory demand at the end of the relevant period and, therefore, the learned judge said, it was presumed to be insolvent. The fact that it made an application for a further extension of time while the statutory demand was extant was immaterial, said her Honour, "because the company had to have been granted an extension of time within that period". Thus, the application for extension of time was dismissed and, since the company was presumed to be insolvent, so was the application to review the impugned decision dismissing the application to set aside the statutory demand on the ground that it was nugatory.
[97] In the circumstances, as I have said, I consider that his Honour below did not have the power to extend the period of compliance given that the period had previously expired and it would have been futile for him to embark upon the hearing of the appeal. It follows, I think, that the appeal should be dismissed.
Bankruptcy cases
[98] I mention for completeness that, in support of its claim that, on its proper construction, s 459F(2)(a)(i) empowers the court to extend the relevant period notwithstanding that it had expired and that, for this reason alone, his Honour erred in not entertaining the appeal, the appellant pointed to two cases in the bankruptcy jurisdiction in which it was decided that a bankruptcy notice may be extended after its expiration and that, even though the application to set aside the notice has failed and the relevant period has expired, an appeal against the decision would not, by reason of that fact, be nugatory. It was submitted that there is such a relevant correlation between the relevant provisions of the Bankruptcy Act 1966 and those of the Act that those decisions are of direct relevance to the present matter.
[99] It is convenient to refer first to the relevant provisions of the Bankruptcy Act. Section 40(1)(g) provides that a debtor, against whom judgment has been obtained by a creditor in respect of a debt, and on whom a bankruptcy notice has been served, commits an act of bankruptcy if he or she fails to comply with the requirements of the notice or does not satisfy the court that he or she has a cross-claim in a relevant amount. Section 41 prescribes the regime in relation to bankruptcy notices. Subsection (1) governs the circumstances in which a bankruptcy notice may be issued. As distinct from the position of a creditor under Pt 5.4 of the Act, a creditor who seeks to proceed under the Bankruptcy Act by way of a bankruptcy notice cannot itself issue such a notice notwithstanding that it has secured a judgment against the debtor. Such a notice can only be issued by the Official Receiver where the conditions prescribed by subs (3) have been satisfied. Subject to an exception that is presently not relevant, subs (6A) empowers the court to extend the time for compliance with the notice if, before the expiration of the period, one of two prescribed conditions are satisfied, namely:
- (a)
- proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or
- (b)
- an application has been made to the Court to set aside the bankruptcy notice.
Subsection (7) provides that "Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the [prescribed] ground ... and the Court has not, before the expiration of that time, determined [the matter] ... that time shall be deemed to have been extended ... until and including the day on which the Court determines whether it is so satisfied." [131]
[100] The first of the two cases on which the applicant relied was Streimer v Tamas (" Streimer "). [132] In that case, it was common ground between the parties that both conditions of subs (6A) had been satisfied and the time for compliance had been extended to 6 April 1981. Because the matter was not reached on that date, it was adjourned to the following day without the court being requested to extend further the time for compliance with the bankruptcy notice. Consequently, by the time the matter returned to court the relevant period had expired and the debtor had committed an act of bankruptcy. The judge hearing the matter nevertheless extended the time for compliance and it was this decision that was the subject of the appeal to the Full Court of the Federal Court. The appellant argued, on the basis of authorities that dealt with the relevant provisions of the Bankruptcy Act and its predecessor, that s 41(6A) does not confer jurisdiction to make an order extending time for compliance with the requirements of a bankruptcy notice in circumstances where, at the time of the proposed order, the time originally fixed, and any previously granted extension or extensions thereof, has expired. [133] It was said that the Act also does not confer upon the court an authority to annul an act of bankruptcy which has been committed. Hence, it was argued, any subsequent extension of time would be futile since it could not annul the act of bankruptcy that had already been committed and which would remain.
[101] This argument was not accepted by the Full Court. Deane and Ellicott JJ noted that the power to extend the time for compliance in subs (6A) is conferred in general terms that only prescribe that one or other of the alternative conditions precedent to jurisdiction be fulfilled within the time fixed for compliance. [134] The introduction of a further requirement contended for by the appellant, that is, that the extension of time be made before the expiration of the relevant period, said their Honours, would be contrary to the plain words of the sub-section and would render otiose the opening words of the sub-section, namely, "before the expiration of the time fixed by the Court or the Registrar for compliance with the requirements of a bankruptcy notice." [135]
[102] Their Honours also did not accept that an order extending the relevant period made after its expiration would be futile notwithstanding that they accepted that so to interpret s 41(6A) would be productive of a degree of uncertainty and inconvenience in practice. Their Honours said:
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 ... [136]
Thus, their Honours concluded that the learned judge below had jurisdiction to order the extension of time. [137]
[103] The other case relied on by the appellant in this regard was Guss v Johnstone [138] ("Guss") which was essentially concerned with the operation of s 41(7) of the Bankruptcy Act. In that case, before the expiration of the relevant period, the appellant filed an affidavit in court pursuant to s 41(7) in support of his application for an order setting aside the bankruptcy notice and, therefore, the period for compliance was deemed to have been extended in accordance with the terms of the sub-section. On 30 May 1997 his application was dismissed by the Federal Court, the judge not being satisfied that the applicant had a counterclaim, set-off or cross-demand as required by s 40(1)(g). In the result the appellant was deemed to have committed an act of bankruptcy on that date. No application had been made under s 41(6A) of the Bankruptcy Act for extension of the time and, although the relevant period was extended by s 41(7), as has been noted, it expired on 30 May 1997 on the determination of the appellant's application.
[104] An appeal to the Full Court of the Federal Court was dismissed on the basis that there would be no utility in the court acceding to the request to set aside the declaration below to the effect that the court was not satisfied that the appellant had a relevant set-off. In his appeal to the High Court the appellant claimed that the Full Court had impermissibly failed to deal with the merits of the case. The appeal was dismissed because the court was satisfied that the case was dealt with below on its merits. The High Court effectively said [139] that if the court at first instance determined that the matters referred to in s 41(7) had not been made out and, therefore, the debtor was deemed to have committed an act of bankruptcy on the date of the determination, an appellate court might, in appropriate circumstances, nevertheless reverse that decision and alter its "consequences" that include an act of bankruptcy. Their Honours referred, with apparent approval, to Streimer , recognising that the court there extended the time for compliance with the bankruptcy notice pursuant to s 41(6A) notwithstanding that an act of bankruptcy had been committed.
[105] It is plain enough that, given the decisions in Streimer and Guss , under the bankruptcy legislation a court may, in appropriate circumstances, extend the relevant period of the bankruptcy notice pursuant to s 41(6A), and an appellate court may reverse a decision rejecting an application under s 41(7) to set aside a bankruptcy notice, notwithstanding that in each case an act of bankruptcy had occurred by reason of the failure to satisfy the bankruptcy notice within the relevant time. But it does not necessarily follow that the same approach applies to Pt 5.4 of the Act notwithstanding that the policies underlying the two pieces of legislation are, broadly, similar. It is apparent enough that care must be taken in construing one piece of legislation by reference to decisions made about another, albeit, in principle, similar legislation. [140] In particular, recognition must be given to the difference in the terms of the relevant sections and the policies underlying them. In my view, there are material differences between the two sets of legislation such as to make the decisions in Streimer and Guss inapplicable to the operation of the relevant provisions of Pt 5.4. It is plain, for example, that Parliament did not intend to replicate in the bankruptcy legislation the essential features of Pt 5.4 of the Act, more particularly, the strict regime relating to the challenge of statutory demands and the presumed insolvency. Importantly, the Bankruptcy Act was not changed to introduce provisions like those in Pt 5.4. Indeed, although the Harmer Report contained recommendations for a wholesale revision of the bankruptcy procedure based on notices of demand that paralleled Pt 5.4, the proposed changes were rejected. I mention briefly some of the more relevant recommendations in the Report relating to bankruptcy procedures. For example, it recommended the abolition of the concept "act of bankruptcy" and the replacement of the bankruptcy notice with a statutory demand procedure of the kind in the Corporations Act. In this respect, the Report replicated, broadly, its recommendations in respect of winding up for corporate insolvency that were enacted in Pt 5.4. Thus, for example, it envisaged that non-compliance with a statutory demand [141] that has not been set aside be presumptive proof of insolvency such as to found the making of a bankruptcy order. It also made provision for a procedure for the setting aside of the statutory demand and recommended the period for compliance be 21 days, in both cases mirroring requirements in Pt 5.4. It is apparent enough, therefore, that there is no relevant identity in the two pieces of legislation given that the Report's recommendations for amendments to the bankruptcy procedure that were in relevant respects congruent with Pt 5.4 specifically were not implemented.
[106] Importantly, as I have said, the policy underlying Pt 5.4, to which reference has been made, was not present in the bankruptcy legislation at the time of the two decisions or thereafter. It will be recalled that Pt 5.4 was introduced in 1992 as a complete code governing the winding up of companies in insolvency, with a stringent, self-executing, timetable that specified in terms the periods within which permitted steps could be taken to challenge statutory demands. As I have said, a deliberate decision was made for the Bankruptcy Act not to prescribe a regime in respect of bankruptcy notices that is comparable to the corresponding provisions of Part 5.4.
[107] In the circumstances, I consider that the above two cases did not alter the conclusion to which I have come, namely, that once the period specified in the statutory demand has expired, the court does not have power to extend it under s 459F(2)(a)(i) or at all. It follows, as I have said, that I consider that the appeal should be dismissed.