Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2007] VSCA 121

Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2007] VSCA 121 | Case summary | Zoe

[5]

1 Esanda Finance Corporation Limited ("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]

[9]

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:

[21]

"...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 sub-s (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]

[26]

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 paragraph (a)(ii). No question arose under paragraph (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 paragraph (a)(i). No question arises under paragraph (a)(ii).

24 Here, as noted earlier, the Master did exercise the power conferred by paragraph (a)(i) to extend the time for compliance with the demand. Plainly enough, once an order has been made under paragraph (a)(i), the determination of when the time for compliance expires is governed exclusively by paragraph (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 paragraph (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 paragraph (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 paragraph (a)(i) is exercisable by the court--

[61]

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 paragraph (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 paragraph (a)(i) to extend the time for compliance, that consequence would have been undone. This follows from the words "the last such order" in paragraph (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 paragraph (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:

[67]

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 paragraph (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 Limited ("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:

[74]

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 Limited 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 -

[78]

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 paragraph (a)(ii). For the reasons we have already given, the "argument from uncertainty" does not apply to paragraph (a)(i), in view of the unambiguous language of s 70 and paragraph (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 paragraph (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.

[88]

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 Part 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]

[90]

86 As I explain below by reference to its provisions, the mischief that Part 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 Part 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 Part 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 Parts 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 Part 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 Part 5.4 has received judicial recognition. For example, Gummow J said in David Grant & Co Pty Ltd v Westpac Banking Corporation[114] ("David Grant"):

[92]

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 Part 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 Part 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 Part 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 Part 5.4 and, in particular, s 459F(1) and s 459C(2)(a) which, he said, operate "in the context which the rest of Part 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 Part 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:

[98]

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. Sub-section (1) governs the circumstances in which a bankruptcy notice may be issued. As distinct from the position of a creditor under Part 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 sub-s (3) have been satisfied. Subject to an exception that is presently not relevant, sub-s (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:

[100]

Sub-section (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 sub-s (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 sub-s (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:

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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 Part 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 Part 5.4. It is plain, for example, that Parliament did not intend to replicate in the bankruptcy legislation the essential features of Part 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 Part 5.4. Indeed, although the Harmer Report contained recommendations for a wholesale revision of the bankruptcy procedure based on notices of demand that paralleled Part 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 . In this respect, the Report replicated, broadly, its recommendations in respect of winding up for corporate insolvency that were enacted in Thus, for example, it envisaged that non-compliance with a statutory demand 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 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 specifically were not implemented.

106 Importantly, as I have said, the policy underlying Part 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 Part 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

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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 Rule 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 Rule 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)):

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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 Part 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 Part 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 Limited[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.

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125 I have had the advantage of reading in draft the reasons for judgment of the other members of the Court. I agree with their Honours that the order made by a judge of the Trial Division on 28 July 2006 was interlocutory in character. For the reasons which follow, all things being equal, I would refuse leave to appeal. But since that would yield the outcome that there was no majority view for any particular set of orders, I will join in orders that leave to appeal be granted, but that the appeal be dismissed.

An interlocutory order

126 The other members of the Court have concluded, and I agree, that the order made below was interlocutory, and that the observations made by Hayne J in Mibor Investments Pty Ltd v Commonwealth Bank of Australia[169] assist such a conclusion. It is true, as has been observed in authorities which have followed a different path, that the question in that case was whether an application to set aside a statutory demand was an "interlocutory application" for the purposes of rules relating to affidavits.[170] It is true also that Hayne J said that the answer to that question was not to be determined according to whether the order made on the application would be an "interlocutory judgment" within s 14(4)(b) of the Supreme Court Act 1986 (Vic). There might be different answers to those two questions in the one matter. But his Honour then held that the pertinent question was whether the application would determine the rights of the parties. All that the proceeding before him could do was to determine whether the demand could stand or not. There would be no final determination of any right even if the demand stood.

127 In Border Auto Wreckers (Wodonga) Pty Ltd v Strathdee[171] the Court of Appeal had to consider the meaning of the phrase "judgment or order of the court in an interlocutory application" in s 74(2D) of the County Court Act 1958 (Vic). That subsection, like s 17A(4)(b) of the Supreme Court Act - the latter of which replaced, in substance, the previous s 14(4) - was inserted by Act 109 of 1994. The Court determined that the reference to a judgment or order in an interlocutory application, both in s 74(2D) and s 17A(4)(b), was to be read as a reference to an interlocutory judgment or order. It seems to me that there would be less reason, in those circumstances, to differentiate between circumstances leading to a conclusion that an application was interlocutory and circumstances leading to a conclusion that a judgment or order made on such an application was interlocutory.

128 In the event, I consider that Mibor stands the more clearly for the proposition that an order refusing to set aside a statutory demand is an order falling within s 17A(4)(b). The decision should not be understood as going beyond that situation. In terms, Hayne J did not address the nature of an order setting aside a statutory demand - although his Honour's formulation of what is, and what is not, determined by an application to set aside a demand might lead to characterization of an order as interlocutory regardless in which form the order was made.

129 So to understand Mibor enables it to be distinguished from the decisions in A-Pak Plastics Pty Ltd v Merhone Pty Ltd[172] and Asian Century Holdings Inc v Fleuris Pty Ltd,[173] in each of which the statutory demand was set aside at first instance. But it must be acknowledged that the reasoning in A-Pak, in which the lis was characterized as the company's right to have the demand set aside, this being treated as a matter susceptible of a final order, would seem likely to yield a similar conclusion regardless whether the demand was or was not set aside by the impugned order. That was surely the approach of Doyle CJ in Keylink Physical Care Pty Ltd v Ergoline (Aust) Pty Ltd,[174] a case in which the demand was not set aside at first instance.

130 Upon the issue of principle, the decisions in Mibor and A-Pak may well prove to be irreconcilable; so that, depending upon which analysis is correct, an order should be regarded as interlocutory - or the converse - regardless whether a demand is set aside or sustained. Even so, the leading decisions are nominally reconcilable along the lines previously indicated; and for that reason, though doubtfully, I prefer an approach which holds that A-Pak and Asian Century are distinguishable from Mibor; and that Mibor should be preferred to Keylink, which extrapolated from A-Pak.

No substantial injustice

131 Reflecting much authority, Callaway JA said in King v Lintrose Nominees Pty Ltd[175] -

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132 In my opinion, there is a substantial point for consideration whether authorities have taken a wrong turn insofar as they have concluded that time for compliance with a statutory demand made under s 459E of the Corporations Act 2001 (Cth) ("the Act") cannot be extended under s 459F(2)(a)(i) of that Act once the period of compliance has ended; a fortiori when the period has come to an end after a right of appeal from refusal to set aside the demand has been invoked but the appeal has not yet been heard and determined. For that reason, I consider that Aussie Vic Plant Hire Pty Ltd ("Aussie" or "the company") has satisfied the first circumstance which must ordinarily be present in order that there should be grant of leave to appeal.

133 All thing being equal, however, I would hold that Aussie has not shown that substantial injustice would be caused if the impugned order was allowed to stand. That is for the reasons which follow.

134 The judge ordered that Aussie's appeal from the Master's order should be dismissed on the footing that it was incompetent. That deprived Aussie of the re-hearing de novo to which it would otherwise have been entitled. The judge also made a costs order adverse to Aussie. The effect of the dismissal of the appeal was that the time for compliance with the statutory demand remained at an end, with the consequences set out in s 459C(2)(a) of the Act, though subject to the "safety net" of s 459S.

135 Generally, in such circumstances, the party affected would establish that substantial injustice would be caused if the order producing that outcome was allowed to stand. But in this proceeding, in my opinion, if the judge was wrong about the effect of s 459F, Aussie was only deprived of the opportunity of advancing a hopeless contention that there was a genuine dispute about the existence or amount of the debts the subject of the demand; or that it had a genuine offsetting claim. To deprive Aussie of that opportunity would work no injustice, still less substantial injustice.

136 This court is equipped and is able to reach the conclusion which I have just expressed. It is to be remembered that, by Rule 77.05(7) of Chapter I, a party on appeal may -

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141 I turn to the affidavit material. It is necessary to review it in some detail - not to analyse it in an impermissible manner, but simply to illuminate the fact that there was nothing behind the façade erected by Aussie, this bespeaking absence of either a genuine dispute or of a genuine offsetting claim.

142 It is convenient to note some uncontroversial matters at the outset. First, Aussie was registered on 25 January 2002. Its business, as its name implies, was plant hire. The equipment which was the subject of the eleven offer to hire and chattel mortgage contracts with Esanda, those contracts having been entered into variously between 18 February 2002 and 8 February 2005, gives an indication of the kind of plant which was the subject of Aussie's business: earthmoving equipment and related vehicles.

143 Second, Mr Bruno Strangio was the sole director of Aussie, and its secretary. He was also its sole shareholder until his two shares were transferred to a company the registered office of which was Aussie's registered address. That company was referred to in an exhibited document as "the children's company".

144 By his affidavit sworn 3 April 2006, Mr Strangio deposed his belief that the statutory demand was defective. He listed five matters. All but the first of them took as its starting point an assumption that the demand was required to state matters which are not required to be stated by s 459E(2) of the Act. In any event, if there were any of the defects complained of, they were inconsequential,[182] because book, line and verse of the inadequacies complained of was addressed by exhibits to Mr Price's affidavit sworn 16 May 2006.

145 It may be the first of the alleged defects was present. The solicitor who signed the demand on Esanda's behalf did not identify himself as a partner in the solicitor's firm. But that error, if it existed, was also inconsequential. The solicitor, Mr Walsh, swore an affidavit in which he deposed to having been a partner at the pertinent time.

146 Mr Strangio then deposed a denial that Aussie was indebted to Esanda in the amount claimed.[183] The first basis of that denial was as follows:

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147 But that was no more than puffery. Three points should be made. First, exhibited to Mr Price's affidavit of 18 May 2006 were details of every payment made by Aussie on each of the 11 contracts. Second, confronted by that material, Mr Strangio did not put on a further affidavit seeking to contravene those details, or to suggest that he was in any way disabled from doing so. Indeed, his proposed further affidavit never saw the light of day. Third, also exhibited to Mr Price's affidavit were statements sent to Mr Strangio from time to time in the latter months of 2005. They detailed, inter alia, the amount of arrears on each contract. Also exhibited were note of discussions between Mr Price and Mr Strangio, and between Mr Price and Mr Nicolazzo. It is plain that at no time over that period of months did Mr Strangio dispute Esanda's statement as to the amount of arrears on each contract, the amount then due thereon, or the pertinent payout figure. Rather, from mid-September 2005, Mr Strangio was attempting to arrange re-financing through his finance brokers, apparently on the basis of figures supplied by Esanda.

148 Mr Strangio further deposed in his affidavit of 3 April 2006 that "when [Aussie] experienced difficulties in meeting its monthly payment obligations" he commenced negotiations with Mr Price "in and around November 2005". The negotiations, on Mr Strangio's account, involved him telling Mr Price that Aussie would be seeking to refinance its borrowings and pay out Esanda, Mr Price assuring him that he would provide an accurate payment history in response to any third party enquiries about Aussie, and Mr Price agreeing to provide Aussie with an indulgence in respect of further instalment payments "until the re-finance package came through."

149 Against the background of those negotiations, Mr Strangio deposed, he had been informed by Aussie's finance broker that a proposed new lender had contacted Esanda, and had been provided with "an entirely negative and false account of [Aussie's] payment history", Aussie being falsely described a "high risk debtor" which had been in default "for over a period of 6-8 months." It was this false picture, Mr Strangio deposed, which had caused the proposed new lender to decline to grant final approval of the re-finance package; and no other lender had been found. But for Esanda's conduct, Aussie "would have settled its accounts with [Esanda] on or about 30 November 2008."

150 In consequence, Mr Strangio deposed, he believed that there was a genuine dispute "as to whether [Esanda] had any right to terminate the relevant hire contracts and chattel mortgages." He believed that Esanda was "estopped and precluded from purporting to exercise its legal rights in light of its unconscionable conduct." In addition, he believed Aussie had a right to seek relief against Esanda for "defamation, misleading, deceptive and unconscionable conduct." He had instructed Aussie's solicitors to "file legal proceedings against [Esanda] arising out of its conduct."

151 Finally, Mr Strangio deposed to the solvency of Aussie, and to his belief that Aussie would be able to refinance its facilities once Esanda withdrew "its defamatory imputations" and undertook not to repeat them.

152 The blackguarding of Aussie by Esanda to which Mr Strangio deposed was at best second-hand hearsay. Neither the broker or the proposed lender were identified. Further, Mr Strangio's conclusion that the allegedly false picture painted by Esanda had caused the proposed lender to decline to re-finance Aussie was bald assertion, as was his statement that but for Esanda's conduct Aussie would have settled its accounts on or about 30 November 2005.

153 The wafer-thin character of this material was the subject of supplementation by the late-sworn affidavits of Messrs Tzouvelis and Nicolazzo. These gentlemen were at pertinent times directors of Consolidated Securities & Investments Ltd, an Oakleigh finance broker.

154 Mr Tzouvelis deposed that in mid December 2005 Ms Julie Fyffe, a representative of a company named Paramount, had informed him that Paramount had rejected Aussie's application for re-finance because of an adverse credit reference provided by Esanda. He had been informed, and believed, that "credit representatives" of Esanda had reported that Mr Strangio and his company had a very cloudy credit history, were high risk, and that Mr Strangio was dishonest and deceitful by hiding the equipment and refusing to return it. Ms Fyffe, according to Mr Tzouvelis, had informed him that she had been ordered not to assist "due to the fear of [Paramount] being black-banned by [Esanda] and other financial institutions."

155 Further according to Mr Tzouvelis, he had been unable to procure any other funds notwithstanding numerous applications. He believed that Esanda's adverse credit rating had "acted as a major impediment to obtain re-finance."

156 Mr Nicolazzo deposed that he had communicated with Mr Price in the period September to November 2005 - initially to tell him that he was lodging an application to re-finance, later to tell him that he was able to secure a re-finance package with Paramount Leasing Services subject to a satisfactory credit clearance for Aussie. But, he deposed, "due to an unsatisfactory credit report provided by [Esanda's] credit officers to Paramount [as described by Mr Tzouvelis], Paramount did not proceed with the refinance package."

157 Mr Nicolazzo, like Mr Tzouvelis, deposed also an inability to secure other refinance despite numerous applications; and to his belief that Esanda's credit reporting had "acted as a major impediment to obtain refinance to [Aussie]."

158 Apart from bold assertions by Messrs Tzouvelis and Nicolazzo as to their belief why numerous finance applications had been rejected, unsupported by any specification of the entities to which, and the times at which, application had been made and rejected, or by any statement as to the grounds for their belief, the affidavits of those gentlemen focused upon what was said to be Paramount's rejection of a refinance application on the basis of a very adverse credit report provided by Esanda. Keeping that assertion to the forefront, and also the matters deposed to by Mr Strangio,[184] I turn to the affidavits sworn by Esanda employees. The following matters are to be noted.

159 First, between 11 August 2005 and 8 December 2005 Mr Price wrote to Mr Strangio at least nine times concerning escalating total arrears on the 11 contracts.

160 Second, by 11 August 2005 there was already a substantial arrears on nine of the 11 contracts. Some contracts were about a month in arrears, another contract about two months in arrears, and another still many months in arrears.

161 Third, from 18 October 2005, though not in all instances, details of Aussie's position were sent to Mr Tzouvelis as well as to Mr Strangio and sometimes to "Jo"- presumably Joseph Nicolazzo.

162 Fourth, a fax sent by Mr Strangio to Mr Price dated 13 September 2005 shows that it was then that Mr Strangio first raised the issue of refinancing, and sought an indulgence with respect to arrears.

163 Fifth, a file note made by Mr Price on 26 September 2005 shows that he and Mr Nicolazzo first had contact on that day. Mr Nicolazzo advised him that refinancing would be sought from a "non-traditional" lender, because a "traditional" lender would not do a deal. He, Mr Nicolazzo, had all the information required, was reasonably confident of approval, and would know the situation by 28 September. If approved, he would expect settlement within 2 weeks.

164 Sixth, on 10 October the broker advised Mr Price, as the latter noted in a file note made that day, that refinancing had been approved in principle. The broker expected to have unconditional approval by 14 October, with settlement some time in the following week.

165 Seventh, on 21 October 2005, as recorded in a file note made by Mr Price, Mr Strangio advised him that final approval had been obtained. The broker also advised him that he had approval, and later said that settlement would be on 27 October.

166 Eighth, in truth there could not have been "final approval," for settlement did not take place on 27 October. The next recorded development is that Mr Nicolazzo emailed Mr Price on 29 November, saying that he had been advised that "the funder is settling tomorrow." He added that "unfortunately some lenders let you down when it comes to settlement times and time lines which are not met."

167 Ninth, Mr Price informed Mr Strangio on 8 November 2005 that the indulgence on payment of arrears would be extended only to 21 November. If the arrears were not cleaned up by then, Esanda required return of the equipment the subject of the contracts. So much was recorded by Mr Price in a file note made that day, and repeated in a letter of that date addressed to Mr Strangio.

168 Tenth, the file note further shows that on 7 November 2005 the broker advised Mr Price that Paramount required documents from Aussie confirming its ownership of unencumbered goods, and that Mr Strangio was sole director and shareholder. But this might be difficult because a company - said to be the "children's company" - was now the shareholder, it having a fixed and floating charge over the assets.

169 Eleventh, on 5 December Mr Strangio telephoned Mr Price to say that the deal appeared to have fallen through. He also refused to deliver up the equipment, which according to a note made by Mr Price he had agreed to do in a conversation on 1 December 2005. Those matters were recorded by Mr Price in a file note made that day.

170 Twelfth, the file note also shows that on 5 December 2005 Mr Strangio asserted that the lender was "reconsidering approval due to adverse credit references from financiers." He "believe(d) Esanda to blame". He was advised that "no one has contacted this office for a reference." Mr Price, I interpolate, deposed that in or about November 2005 he told Mr Strangio that, in accordance with ordinary practice, he would provide "accurate historical information to any third party who enquired about [Aussie]."

171 Thirteenth, Esanda's records show that on two occasions requests for a credit check were made by an entity known as "Profinance Limited". One was on 10 November 2005, one was on 20 December 2005. In each instance a report was provided, according to Mr Price, in accordance with guidelines established by a National Credit Reference Scheme. The persons who required the information respectively identified themselves as "Karen" and "David Morris".

172 Fifteenth, the two Esanda employees who responded to the credit check requests - Mr Orfanos and Ms Toh - deposed to responding in accordance with the protocol by providing a summary total of the outstanding balance payable, a summary of monthly repayments, and advice as to Aussie's credit rating. The last-mentioned was "slow", this indicating that on average it had accrued over 14 days of arrears in respect of its contractual obligations at the date of enquiry. According to Mr Price, it reflected a situation dated from at least June 2005 - an assertion supported by the historical payment statements exhibited to his affidavit.

173 The contemporaneous material makes it abundantly clear that a number of the key assertions made by Mr Strangio and his brokers are insupportable.

174 First, contrary to assurances, dating from 26 September 2005, that finance would soon be, or had been, arranged, there was never final approval of a refinancing package. The sequence of events bespeaks a continuing inability, long before any credit reference was sought from Esanda, to get such an approval.

175 Second, the only credit reference sought before 5 December 2005 - on which date Mr Strangio advised that the deal appeared to have fallen through - had been sought on 10 November 2005. But in the period between 10 November and 5 December the brokers had reported a problem to do with ownership of the equipment. Also in that period, the brokers had advised the settlement was to proceed - though it did not - on 30 November.

176 Third, Julie Fyffe of Paramount, referred to by Mr Tzouvelis and Mr Nicolazzo, evidently did not speak with an Esanda representative. The pertinent request had been made by "Karen" of Profinance; and the report had been made to it. Even if, which is opposed to the sequence of events, Paramount had decided to refuse to refinance the equipment simply because of an adverse credit reference, there is nothing to show that the content of the reference was other than Mr Orfanos deposed.

177 Fourth, the material in any event shows that Mr Orfanos was well-entitled to describe Aussie as a slow payer.

178 Fifth, Mr Tzouvelis deposed that Esanda had reported to Ms Fyffe that Mr Strangio was dishonest and deceitful by hiding the equipment and refusing to return it. But the only request for a reference which could relate to Paramount's rejection of Aussie's finance application was made on 10 November 2005; and it was not until 5 December 2005 that Mr Strangio refused to give up the equipment. The matter thus deposed to by Mr Tzouvelis was an impossibility.

179 Sixth, Mr Tzouvelis deposed that he was informed by Ms Fyffe "in or about mid December 2005" of the reason why Paramount had rejected the application for refinance. But that makes no sense when the application had been rejected early in December.

180 Seventh, Mr Strangio's assertion that Mr Price had offered, in effect, an open-ended indulgence is at odds with contemporaneous material.

181 To those consideration I should add, in considering whether a genuine dispute or genuine offsetting claim has been disclosed, that I put to one side Mr Strangio's assertions as to the legal consequences of Esanda's alleged misconduct - "defamation, misleading, deceptive and unconscionable conduct." It is, however, to be noted that, at least as at June 2006, the threatened "legal proceedings" had not eventuated.

182 I should also add that Mr Strangio's assertion that Aussie was solvent, unsupported by any financial records, sat ill with the company's increasing indebtedness to Esanda in the later half of 2006, and with statements made by Mr Strangio to Mr Price, file-noted by the latter, in which Mr Strangio described a falling-off in business and poor cash flow.

The operation of s 459F

183 In light of my conclusion, in the circumstances described, that leave to appeal should be granted, I should address, though briefly, the merits of the issue sought to be agitated.

184 In my opinion, for the reasons given by Maxwell P and Neave JA, and by Nettle JA, and notwithstanding the weighty considerations adverted to by Chernov JA, the proper construction of Part 5.4 of the Act should yield the result that a court has power under s 459F(2)(a)(i), in conjunction with s 70, to extend time for compliance, despite the last date for compliance having passed, in order that a right of appeal not be rendered nugatory.[185] That seems to me to be the ordinary meaning of the pertinent provisions. Further, as explained by their Honours, on close analysis there are very few authorities to the contrary; and such authorities, being decisions of single judges, involve departure from the relevant language of the statute.

185 To what their Honours have said, I would add two matters: First, Esanda laid considerable emphasis upon the contention that the purpose of Part 5.4 of the Act is to achieve a speedy disposition of demands for payment made on companies that are probably insolvent. But it cannot be said that the working-out of s 459F(2)(a)(i), even on the construction contended for by Esanda, will always produce a day certain in the near future at which the time for compliance will expire. In that connection, on any view, it is unlike the situations which result from the operation of s 459F(2)(b), and from the operation of s 459F(2)(a)(ii) as construed in Buckland Products Pty Ltd v Deputy Commissioner of Taxation.[186]

186 Second, s 459F(2)(a)(i) may be contrasted with s 459R(2)(b). The two provisions, inserted into the Act at the same time, differ significantly. In the case of s 459R, the legislature appears to have settled upon a form of words that would have the effect for which Esanda contended in respect of s 459F(2)(a)(i).

187 But what should be done? Despite the force of the matters adverted to by Maxwell P and Neave JA, in my opinion the proper course is that proposed by Nettle JA. The proliferation of authority, a little of it directly in point, most of it tangential, tells in favour of such an outcome. A similar outcome, of course, would necessarily follow from the analysis undertaken by Chernov JA, an analysis which calls in aid, but which is not necessarily dependent upon, the various authorities considered by his Honour and by the other members of the Court.

Order

188 In my opinion, the application for leave to appeal should be granted, but the appeal should be dismissed.

At a glance

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Judgment (123 paragraphs)

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Legislation Cited (6)

Cases Cited (41)