Ketrim Pty Limited v Jaeger Corporation Pty Ltd

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

5880/01 KETRIM PTY LIMITED v JAEGER CORPORATION PTY LIMITED JUDGMENT - Ex Tempore 1 HIS HONOUR: This application arises from a dispute between the plaintiff and the defendant which led to the plaintiff being served, on 20 November 2001, with a statutory demand for payment of a debt of $100,000. The plaintiff filed an originating process on 7 December 2001 seeking an order that the demand be set aside. That question was argued before a Master on 17 May 2002, and judgment was reserved. On 14 June 2002 the learned Master delivered a judgment in which he dismissed the plaintiff's application. Later in the day on 14 June 2002 an application was made to Master Macready for a stay. 2 Before continuing with this narrative, I should set out the statutory background against which the story is unfolding. S 459F of the Corporations Act 2001 (Cth) makes provision for when it is that a company is taken to have failed to comply with a statutory demand. 459F(1) provides: " [Failure to comply with demand] 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." 3 S 459F(2) provides: "[Period for compliance) 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." 4 The application which the Master decided was an application under s 459G. It in turn provides: "(1) [Application to set aside statutory demand] A company may apply to the Court for an order setting aside a statutory demand served on the company. (2) [Time limit on application] An application may only be made within 21 days after the demand is so served. (3) [Requirements for effective application] 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." 5 There is provision under s 459H for the court to be able to set aside a demand or to vary it and substitute a lesser amount for the amount demanded, where the Court is satisfied that there is a genuine dispute between the company and the respondent, or that the company has an offsetting claim. 459J sets out certain other circumstances in which the court can, or on application under s 459G set aside a demand. There is a mandatory provision in 459L that, "Unless the court makes, on an application under 459J an order under s 459H or s 459J the court is to dismiss the application." It was pursuant to s 459L that the Master, having declined to set aside the statutory demand (and reduction of the amount never having been an issue) dismissed the application. 6 When the application for a stay was made to the Master he adverted to the fact that he had already given judgment that morning, and had made an order that the proceedings be dismissed with costs. The Master noted that that order had the effect that the statutory demand would take effect within 7 days from that day. In saying that, the Master was clearly referring to section 459F(2)(a)(ii). The Master continued: "It is indicated that the plaintiff proposes to lodge an appeal and I have had an application for a stay. There are perhaps two alternative ways of approaching it. One is to give a stay pursuant to part 51A rule 8 or, alternatively, to extend the time for compliance under s 459F(2) of the Corporations Act. Given that I have in fact given judgment, there might be some question as to whether I have power now to do the second, [that is, extend the time for compliance], although I would not wish to decide that question without having heard argument. It may provide complications later on if there is to be an extension. In the circumstances I think it is preferable that there be a stay pending the finding of an appeal." 7 After some consideration for how long the stay should be granted, the Master continued: "Accordingly, I think it is appropriate that I stay my orders for 28 days, and if an appeal is lodged, thereafter for a further 14 days. That will allow consideration of an appeal and decision whether or not to seek a further stay before the duty judge. Accordingly, the orders that I make are that, the order made here in this morning is stayed for a period of 28 days from today. If within such period an appeal against those orders is instituted, the stay shall continue for 14 days thereafter, or the determination of the appeal, whichever is the earlier." 8 A notice of an appeal against the decision of the Master was lodged. That document was lodged on 11 July 2002. On 22 July 2002 Austin J, by consent, ordered that the Master's orders of 14 June 2002 be stayed until the determination of the appeal. 9 Under Part 60, rules 10 and 17 of the Supreme Court Rules, an appeal from the Master, concerning an order dismissing an application to set aside a statutory demand, is made to a single judge. On 13 September 2002 the appeal was heard before Young CJ in Eq. His Honour ordered that the appeal be dismissed with costs. 10 The application that is made before me today is an urgent one. The plaintiff wishes to further appeal, to the Court of Appeal. It has no appeal as of right from a decision such as that of Young CJ in Eq, but rather has the opportunity, under s 101(2)(p) of the Supreme Court Act 1970 to seek leave to appeal against that judgment. It is concerned that, unless an order is made today, more than seven days will have elapsed since the decision of Young CJ in Eq, and in consequence there might be no subject matter of any appeal to the Court of Appeal. 11 Today, the plaintiff seeks from me three orders. The first is an order restraining a defendant from commencing proceedings for the winding-up of the plaintiff. The second is an order extending the time for compliance with the statutory demand dated 14 November 2001 to a date in November 2002. The third is an order that the judgment of the Master dated 14 June 2002 be stayed until further order of the Court. The plaintiff offers, as a condition of those orders being made, that there be a condition that the plaintiff file and serve a summons for leave to appeal against the decision of Young CJ in Eq of 13 September 2002 on or before Friday of next week, 27 September 2002, and also that it pay into court the sum of $100,000 on or before 4pm tomorrow. The plaintiff also offers to submit to terms whereby that $100,000 is to be paid in satisfaction of the statutory demand if its application for leave to appeal is unsuccessful, or if its application for leave to appeal is successful, but the appeal fails. 12 The circumstance leading to the application for the first order, the injunction, is that there has been correspondence from the defendant's solicitors indicating an intention to file today an originating process seeking the winding up of the plaintiff, unless a bank cheque for the amount of the statutory demand is received. 13 The defendant contends that there is no point in granting any stay, and no power to grant an extension of the time for compliance of the statutory demand. 14 In my view, the defendant's contentions are right. 15 The decision of the High Court in David Grant & Co Pty Limited v Westpac Banking Corporation (1995) 184 CLR 265 makes clear that strict compliance with the time limits in the regime laid down by s 459F and 459G is required. 16 Once the time for compliance with a statutory demand has expired, there is no power retrospectively to extend that time for compliance. The period for compliance for a statutory demand is, under 459F(2)(a)(i) is one which can sometimes be set by the Court. It can be set by the Court in two circumstances, namely on the hearing of the application under s 459G ("first limb of s 459F(2)(a)(i)"), or in a separate application for extension of time which the company makes under s 459F(2)(a)(i) ("second limb" of s 459F(2)(a)(i)"). 17 The Full Federal Court in Vista Commercial Construction Pty Limited v Commissioner of Taxation (1997) 79 FCR 288 considered what counted as the "hearing" of an application under s 459G. The court (Burchett, Hill and Emmett JJ said) at 295, "In the context the word 'hearing' must mean that time during which the court embarks upon the hearing of evidence and expiring with the entry of an order of the court." 18 It is to be noted that the language of s 459F draws a distinction between the "hearing" of an application under s 459G, and the time when "the application under s 459G is finally determined or otherwise disposed of". What can count as the final determination of an application under s 459G has also been considered by the Full Federal Court in Vista. Their Honours said, at 297: "The seven-day period which is set by s 459F(2)(a) runs from the time of final determination or final disposition of the s 459G application. The words 'final determination' may, or may not cover the period of 21 days permitted for the lodging of an appeal under order 71 rule 7(3) of the Federal Court Rules 1979. Indeed they probably do..." 19 These remarks are inconsistent with any suggestion that the "final determination or final disposition" of the 459G application is when any appeals from an initial refusal of a judicial officer to extend the time for compliance have been heard, or the last of the rights of appeal have run out. 20 Further, were any other construction of "finally determined or otherwise disposed of" in s 459F(2)(a)(ii) to be adopted, it would mean that if there were to be an application to set aside a statutory demand, and an appeal were to be lodged in accordance with the court rules, then, automatically, the time for compliance with the statutory demand would not arise until seven days after (at least) the time when the last of the appeals had been decided. It seems to me inconsistent with the policy which underlies the sections that any such result should arise. 21 It is possible for an application for an extension of time for compliance, under the second limb of s 459F(2)(a)(i) to be made to cover the time when an appeal is awaiting determination: Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1997) 25 ACSR 675 at 701; Graywinter Management Pty Ltd v Deputy Commissioner of Taxation (1996) 22 ACSR 636. It is possible for an application to extend time for compliance to be granted even after the Court has decided to dismiss an application to set it aside: Vista, Equuscorp at 701.. In David Grant, at 277 Gummow J, with Brennan CJ and Gaudron, McHugh and Dawson J noted that an extension granted under this second limb of 459F may itself be extended on a further application under paragraph (a). Thus, the second limb of s 459F(2)(a)(i) confers a power which enables the Court, throughout the running of an appellate process, to grant such extensions as are appropriate from time to time, given the way in which an appellant is conducting or progressing an appeal, and any other relevant matters. But if an extension of time for compliance with a statutory demand is to be in place to cover an appeal against a decision refusing to set aside the statutory demand, that extension of time must be asked for, within the time when the statutory demand has still not expired, and granted within that time. For someone who has just lost an application to set aside a statutory demand to ask for, and be granted, a stay of the order dismissing the application to set aside is not the same thing as being granted an extension of time for compliance with the statutory demand. 22 It follows that, by reason of the Master not having made an order, on 14 June 2002, extending the time for compliance with the statutory demand, that the time for compliance with it has now run out. That is so whether the time for compliance with it is taken to be seven days after the Master's judgment, or whether, in accordance with the passage I have earlier quoted from Vista at 297, the time for lodging an appeal should be added onto those seven days. Either way, the time has passed. 23 When the time for compliance has passed, David Grant establishes that there is no jurisdiction for the court to extend the time. Further, when the time has passed there is no point in there being an appeal against the Master's judgment. In Livestock Traders International Pty Limited v Thi Lam Bui (1996) 22 ACSR 51; [1996] 876 FCA 1, Jenkinson J came to the conclusion that an application for review of a Deputy Registrar's order dismissing an application to set aside a statutory demand lacked subject matter, once the time for compliance for the statutory demand had passed. I respectfully agree with that view. To now decide whether the decision of the learned Master, or of the learned Chief Judge, was wrong, and for that reason whether the statutory demand should have been set aside, is to argue a question which is academic. 24 For these reasons, there is no occasion to restrain the presentation of a winding-up petition against the plaintiff, nor is there occasion to make an order extending the time for compliance, or further staying the judgment of the Master. The interlocutory application seeking those orders is dismissed. I order the plaintiff to pay the costs of the defendant. **********

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