Consideration
7 Both parties made oral submissions in this matter and Dromana filed detailed written submissions. I mean no disrespect in not outlining those submissions here. Given the state of authority binding on me or which as a matter of comity I consider I should follow, the issue raised before me is not open to serious contest.
8 The short point raised in this matter is whether Dromana's failure to comply with a stale statutory demand without more can found Mr Gryst's application to have it wound up in insolvency under Ch 5 Pt 5.4 of the Corporations Act. The provisions of that Part have been the subject of considerable judicial attention most recently by the High Court in Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2008) 243 ALR 207. To foreshadow what I have to say, central to the scheme of that Part is the device of the statutory demand the failure to comply with which, unless successfully challenged, gives rise both to a basis for winding up a company in insolvency and the s 459C(2)(a) presumption of insolvency.
9 By way of background s 459F and s 459G of the Act provide:
459F(1) If, as at the end of the period for compliance with a statutory demand, the demand is still in effect and the company has not complied with it, the company is taken to fail to comply with the demand at the end of that period.
459F(2) The period for compliance with a statutory demand is:
(a) if the company applies in accordance with section 459G for an order setting aside the demand:
(i) if, on hearing the application under section 459G, or on an application by the company under this paragraph, the Court makes an order that extends the period for compliance with the demand - the period specified in the order, or in the last such order, as the case requires, as the period for such compliance; or
(ii) otherwise - the period beginning on the day when the demand is served and ending 7 days after the application under section 459G is finally determined or otherwise disposed of; or
(b) otherwise - 21 days after the demand is served.
SECTION 459G COMPANY MAY APPLY
459G(1) A company may apply to the Court for an order setting aside a statutory demand served on the company.
459G(2) An application may only be made within 21 days after the demand is so served.
459G(3) An application is made in accordance with this section only if, within those 21 days:
(a) an affidavit supporting the application is filed with the Court; and
(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.
10 The two noteworthy aspects of these provisions for present purposes are, first, that the s 459F(2) period for compliance with a statutory demand turns in the first instance on whether or not a company has applied "in accordance with section 459G" to set aside the demand and, secondly, it will only have so applied in accordance with that section if it complies with the dual requirements of filing and service specified in s 459G(3)(a) and (b) within 21 days of the service of the demand.
11 It is now well settled that, if a s 459G application and affidavit are not filed and served within the time so specified, the Court has no power to extend the period for the making of such an application: see Aussie Vic Plant Hire at [3]; David Grant & Co Pty Limited (rec apptd) v Westpac Banking Corporation (1995) 184 CLR 265. In the present matter, the statutory demand was served on Dromana on 29 November 2007. The application to set it aside was filed in the Supreme Court of Victoria on 20 December 2007. It was not served on Mr Gryst until 21 December 2007. In consequence, that application was not one made "in accordance with section 459G" of the Act. The emphatic language of s 459G(3) admits of no other conclusion: see Pinn v Barroleg Pty Ltd (1997) 138 FLR 417; Deputy Commissioner of Taxation v Tixana Pty Ltd (2003) 202 ALR 401; Hardel Property Holdings Pty Ltd v Allmark Property Management Pty Ltd (2008) 26 ACLC 122 at [1]. While counsel for the plaintiff has sought to avoid this conclusion by recourse to "purposive legislation", the Parliament, in my view, has spoken on this matter with unmistakeable clarity.
12 The consequence of no application having been made in accordance with s 459G is that the time for compliance with the statutory demand was the 21 days specified by s 459F(2)(b). The date for compliance was, thus, 20 December 2007.
13 The date the s 459P winding up application was made was 10 June 2008. For the purposes of s 459C(2)(a) the presumption of insolvency could only arise if in the period three months prior to that date, i.e. on or after 10 March 2008, Dromana failed to comply with a statutory demand. Dromana did not fail to comply with the statutory demand during that period. In consequence, Mr Gryst cannot rely on the presumption of insolvency in prosecuting his winding up application as s 459C(2)(a) has not been enlivened in the circumstances: see Pinn v Barroleg Pty Ltd and Deputy Commissioner of Taxation v Tixana Pty Ltd with which decisions I respectfully agree.
14 I have already indicated that the plaintiff has not sought to rely upon any other basis for winding up Dromana than its failure to comply with the statutory demand. Shorn of the presumption of insolvency, that application has been so narrowly drawn as to be doomed to failure: see Ford's Principles of Corporations Law at [27.050]. While on a s 459P application the Court may order that an insolvent company be wound up in insolvency: see s 459A; there is no evidentiary basis before me that could suggest insolvency, other than the non-compliance itself. When viewed in the context of the affidavit evidence that has been filed in support of, and in opposition to, the present application, the position is no different. A serious dispute exists between the parties. But Dromana's insolvency is not suggested: cf Re Turf Enterprises Pty Ltd [1975] Qd R 266. Perhaps it was for this reason that counsel for Mr Gryst apparently accepted that the originating process as it stands could not succeed without the aid of the presumption. I am thus in the position of being satisfied in the circumstances that Mr Gryst has no reasonable prospect of successfully prosecuting his s 459P application.
15 I will in consequence order under s 31A(2) of the Federal Court of Australia Act that the originating process be dismissed. I have directed the parties to file and serve submissions relating to costs.
16 I would add that I have indicated that I would not at this late stage grant leave to amend the originating process to add other possible bases for winding up Dromana in insolvency: cf s 459B of the Corporations Act. Undoubtedly a serious dispute exists between the parties and on substantial grounds, as to Mr Gryst's claims and Dromana's offsetting claim against him. I seriously doubt whether proceedings for winding up in insolvency is an appropriate vehicle in which to resolve what appears to be no more than a commercial dispute: cf Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) (2004) 185 FLR 130 at [72] ff.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.