Owen-Pearse v Lander Land Company Pty Ltd

Federal Court of Australia|2018-12-20|Before: Smith J

Hardel Property Holdings Pty Ltd v Allmark Property Management Pty Ltd [2008] FCA 22 House of Tan Pty Ltd v Beachiris Pty Ltd (1996) 21 ACSR 527 Hunter Valley Developments Pty Ltd v Cohen, Minister for Home Affairs and Environment [1984] FCA 176; (1984) 3 FCR 344 HVAC Constructions (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd [2002] FCA 1638; (2002) 44 ACSR 169 In the matter of Huizhong Investment Group Pty Ltd [2018] NSWSC 390 Lemmen v Porcu [2013] FCA 1056 Luck v University of Southern Queensland [2018] FCAFC 102 Menzies v Paccar Financial Pty Ltd [2011] FCA 460 Merrill Lynch Equities (Australia) Ltd v Triangle Packing Case Pty Ltd [1999] FCA 810 Ramsay Health Care Australia Pty Ltd v Compton [2016] FCAFC 125; (2016) 247 FCR 387 Redglove Holdings Pty Ltd v GNE & Associates Pty Ltd [2001] NSWSC 867; (2001) 165 FLR 72 RH Mortgage Corporation Ltd v Kerry Ann Properties Pty Ltd [2011] NSWSC 298 Roberts v Wayne Roberts Concrete Constructions Pty Ltd [2004] NSWSC 734; (2004) 208 ALR 532 Rohanna Pty Ltd v Nu-Steel Homes Adelaide Pty Ltd [2013] WASC 109 Soundwave Festival Pty Ltd v Altered State (WA) Pty Ltd [2014] FCA 466 State Bank of New South Wales v Tela Pty Ltd (No 2) [2002] NSWSC 20; (2002) 188 ALR 702 Timms v Dellaplus Pty Ltd [2008] SASC 17; (2008) 99 SASR 578 Tony Innaimo Transport Pty Ltd v Skyroad Logistics Pty Ltd [2018] FCA 1134; (2018) 129 ACSR 224 Totev v Sfar [2008] FCAFC 35; (2008) 167 FCR 193 TS Recoveries Pty Ltd v Sea-Slip Marinas (Aust) Pty Ltd [2007] NSWSC 1074 United Capital Properties Pty Ltd v Handbury Asset Management Pty Ltd [2011] FCA 1075; (2011) 86 ACSR 161 Van Gorp v Davy [2016] FCA 1385 Vimblue Pty Ltd v Toweel trading as Carpenters Core Building [2009] NSWSC 494 Western Suburbs Electrical Supplies Pty Ltd v Russell Electrical Services Pty Ltd [1994] FCA 612; (1994) 14 ACSR 337 Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509 Wu v Li [2017] FCA 500

Sub-area: Corporations and Corporate Insolvency

Counsel for the Plaintiff: The Plaintiff appeared in person

21 December 2018 At [86], second line, 'a winding up application' has been amended to correctly state 'a winding up order'.

BETWEEN: WARREN VICTOR OWEN-PEARSE Plaintiff

AND: LANDER LAND COMPANY PTY LTD (ACN 165 538 296) Defendant

JUDGE: BANKS-SMITH J DATE OF ORDER: 20 DECEMBER 2018

Application for extension of time dismissed.
Costs reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BANKS-SMITH J: 1 The plaintiff, Mr Owen-Pearse, seeks review of a decision of a registrar of this Court to refuse his application brought under s 459P of the Corporations Act 2001 (Cth) to wind up the defendant company. The registrar refused the winding up application on the basis that the proceedings instigated by Mr Owen-Pearse comprised an abuse of process. 2 The review application was filed outside the prescribed 21 day period. Mr Owen-Pearse therefore requires an extension of time to bring the application. 3 This application has given rise to a number of issues. I have organised these reasons by first dealing with an overview of principles that relate to review applications and extensions of time. I then deal with the evidence. The most significant issue is then abuse of process in the context of Pt 5.4 of the Corporations Act. I then deal briefly with the company's alternative argument that it is able to prove solvency. Finally, I consider whether the usual six month time limit on determining a winding up application operates so as to render any review futile. These issues are addressed in the context of a consideration of the merits of a review on an application for an extension of time.

Overview 4 Although Mr Owen-Pearse is self-represented in this matter, he has considerable experience with the statutory demand regime. He has sought to rely upon statutory demands in two cases determined by the courts, and in both cases was unsuccessful: RH Mortgage Corporation Ltd v Kerry Ann Properties Pty Ltd [2011] NSWSC 298 (Barrett J); Rohanna Pty Ltd v Nu-Steel Homes Adelaide Pty Ltd [2013] WASC 109 (Sanderson M). In both cases, the Court found the circumstances of seeking to rely on the statutory demands comprised an abuse of process. 5 In this case, Mr Owen-Pearse asserted in a demand dated 16 January 2018 (Demand) an entitlement to an amount of $59,576 by way of 'interest and admin fees' on an underlying alleged claim for unpaid salary or consulting fees. The Demand is one of (at least) five separate and inconsistent statutory demands served on the company between May 2016 and January 2018 that relate to the same alleged debt or underlying claim. Some were issued by Mr Owen-Pearse and some by a company he controlled, Credex (PPSR) Management Pty Ltd (Credex). The company did not apply to set aside any of the statutory demands. Neither Mr Owen-Pearse nor Credex commenced a winding up application based on the other demands. 6 Mr Owen-Pearse commenced the winding up application on 27 February 2018. Various affidavits were filed and the registrar made an order on 3 April 2018 adjourning the application to 1 May 2018. An order was made on 1 May 2018 adjourning the application to 15 May 2018. A further order was made on 15 May 2018 directing service of an affidavit by Mr Owen-Pearse and adjourning the application to 22 May 2018. On that date the registrar heard the application and reserved his decision. The registrar published his decision on 27 August 2018. 7 The registrar found that the alleged debt was nothing more than 'some imperfectly articulated claim for damages', that Mr Owen-Pearse's case did not demonstrate an attempt to establish insolvency and that rather it appeared to comprise an attempt to extract moneys from the company in misguided proceedings. The registrar also found that there were defects in the application and formal requirements that were not met and, in the circumstances, he was not prepared to dispense with those requirements.

Statutory framework for review 8 Rule 16.1 of the Federal Court (Corporations) Rules 2000 (Cth) (Rules) provides relevantly: (1) For the purposes of paragraph 35A (1)(h) of the Federal Court of Australia Act 1976, if the Court or a Judge so directs, a Registrar may exercise a power of the Court: (a) under a provision of the Corporations Act mentioned in column 2, or a provision of these Rules mentioned in column 3, of an item in Part 1 of Schedule 2; … (2) A decision, direction or act of a Registrar made, given or done under these Rules, may be reviewed by the Court or a Judge. (3) An application for the review of a decision, direction or act of a Registrar made, given or done under these Rules, must be made within: (a) 21 days after the decision, direction or act complained of; or (b) any further time allowed by the Court. 9 Section 459P of the Corporations Act is included at item 48 in column 2 in Pt 1 of Sch 2 of the Rules. 10 Section 35A of the Federal Court of Australia Act 1976 (Cth) (FCA) provides: (1) Subject to subsection (2), the following powers of the Court may, if the Court or a Judge so directs, be exercised by a Registrar: … (g) the power to make an order exempting a party to proceedings in the Court from compliance with a provision of the Rules of Court; (h) a power of the Court prescribed by Rules of Court. (3) The provisions of this Act and the Rules of Court that relate to the exercise by the Court of a power that is, by virtue of subsection (1), exercisable by a Registrar apply in relation to an exercise of the power by a Registrar under this section as if references in those provisions to the Court were references to the Registrar. … (5) A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power. (6) The Court may, on application under subsection (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised. … (8) In this section, Registrar means the Registrar, a Deputy Registrar, a District Registrar or a Deputy District Registrar of the Court. 11 As noted above, Mr Owen-Pearse seeks the review of a decision of the registrar made 27 August 2018. The registrar's precise order was: 1. The application be dismissed. 2. The plaintiff is to pay the defendant's costs, to be assessed if not agreed. 3. The defendant have liberty to apply for a fixed costs order within 14 days. 12 By s 35A(5) of the FCA and r 16.1(3)(a) of the Rules, any application for review of the registrar's decision was required to be made by 18 September 2018 (21 days after 27 August 2018). 13 By interlocutory application dated 3 October 2018, Mr Owen-Pearse sought the following interlocutory orders: (1) I seek a review of the decision of [the registrar] on the 27th August 2018. (2) I seek leave to apply out of time for a review of the decision. (3) On three separate occasions I personally attended the front counter of the Federal Court requesting the procedural process and time frame required to instigate a Review. On the first occasion I was told to look on the court website. On the second occasion I was told they couldn't tell me as they don't give legal advice. On the third occasion I was referred to the Legal Aid representative's office. Further delays were incurred in obtaining an appointment time with the Legal Aid Representative.

Nature of review 14 A review is a rehearing de novo and the parties are not bound by or limited to the evidence that was before the registrar: Deputy Commissioner of Taxation v Australian Securities and Investments Commission [2013] FCA 623; (2013) 304 ALR 319 (Kenny J): [36] A review of a registrar's decision under s 35A of the Federal Court Act is by way of a hearing de novo in the sense that the parties may adduce fresh evidence as of right: see G & J Gears Australia Pty Ltd v Brobo Group Pty Ltd (2006) 229 ALR 638; [2006] FCA 330 at [55] per Kenny J; Mazukov v University of Tasmania [2004] FCAFC 159 at [24] per Kiefel, Weinberg and Stone JJ; and Cottrell v Wilcox [2001] FCA 866 at [8] per Sundberg, Emmett and Finkelstein JJ. Since the court may receive fresh evidence, it follows that the court may depart from the findings of fact made by the registrar. The hearing is a complete rehearing; and the judge is not fettered by the registrar's decision. The court is not, therefore, confined, to quote [counsel], to the "factual matrix as it stood when the application was made" to the registrar: see Harris v Caladine (1991) 172 CLR 84 at 164; 99 ALR 193 at 249-50; 14 Fam LR 593 at 644 per McHugh J. [37] In Callegher v Australian Securities and Investment Commission (2007) 239 ALR 749; 98 ALD 1; [2007] FCA 482 at [46] per Lander J succinctly explained the nature of a review by the court under s 35A(5) of the Federal Court Act as follows: The hearing … is a hearing de novo: Mazukov v University of Tasmania [2004] FCAFC 159; Pattison v Hadjimouratis (2006) 155 FCR 226; 236 ALR 1; [2006] FCAFC 153 … The right to review arises because the registrar has exercised the judicial power of the Commonwealth and, as such, is subject to the supervision of the court. The Registrar's orders are reviewable by hearing de novo: Harris v Caladine (1991) 172 CLR 84 at 124; 99 ALR 193 at 220; 14 Fam LR 593 at 617 … per Dawson J. A hearing de novo contemplates a complete rehearing. The moving party before the registrar has the responsibility of satisfying the court that the orders should have been made. The parties may adduce further evidence before the court and the rehearing is determined on the evidence put before the court which may include the evidence put before the registrar. The judge determines the rehearing without being fettered by the decision of the registrar: Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd [1980] VR 187. 15 Both Mr Owen-Pearse and the company filed additional affidavits for the purpose of the application before me.

Legal principles concerning applications for extension of time 16 Despite the terms of Mr Owen-Pearse's originating application (which refer to applying out of time) and despite having received the company's written submissions that addressed both the requirement for an extension of time and its opposition to an extension, Mr Owen-Pearse said when he appeared before me that he assumed he would be addressing only the review application. There was no evidence filed in support of the extension. The only information was that which was included in the application itself about seeking information from the registry and Legal Aid. I do not consider such information, unsupported by any evidence, satisfies Mr Owen-Pearse's obligation to explain his delay in bringing the review application. As an experienced self-represented litigant and having received the company's submissions, it must have been obvious to Mr Owen-Pearse that evidence was required in support of the extension of time. I also note that the orders made by the registrar on 27 August 2018 included an indorsement that any application for review must be made within 21 days. 17 The relevant considerations in deciding whether to grant an extension of time are: (a) the reasons for the delay - the Court must be satisfied that it is proper to grant an extension of time, noting that the prescribed period is not to be ignored; (b) any prejudice to the defendant, noting that the mere absence of prejudice is not enough to justify the grant of an extension; and (c) the merits of the application: Lemmen v Porcu [2013] FCA 1056 at [2] (Davies J); Hunter Valley Developments Pty Ltd v Cohen, Minister for Home Affairs and Environment [1984] FCA 186; (1984) 3 FCR 344 at 348-349 (Wilcox J); Deputy Commissioner of Taxation v Soiland (In Liq) [2010] FCA 168 at [16], [26] (Barker J); Deputy Commissioner of Taxation v Revolve Limited [2012] FCA 555 at [3], [7], [8] (Jacobson J). 18 The absence of evidence as to delay is unsatisfactory. However, regardless, the question of the merits of the substantive application in this case is to my mind determinative of the extension application. 19 At the hearing, Mr Owen-Pearse was in a position to fully address the merits of the review application, as was the company. Both had also filed written submissions addressing the merits.

The company 20 The affidavits on behalf of the company were sworn by Mr Laurence Pace. The following matters reflect his evidence. 21 The company is a private family company. It was incorporated in August 2013 and its sole director and shareholder at that time was Mr Charles Lander. According to public company records, Mr Lander was born in 1925. The company was incorporated for the purpose of acquiring land, developing it and selling it at a profit. In 2013 Mr Lander asked Mr Pace to assist him in raising finance against one of his properties. Mr Pace is a professional company director and also operates a business in partnership with Mr Lindsay Linfoot. Mr Pace was unable to secure finance for Mr Lander at that time due to Mr Lander's age. 22 Mr Pace has provided services to the company continuously since 2016. 23 Mr Lander died in January 2017 and Mrs Win Lander, his widow, and Mr Pace became the executors of Mr Lander's estate. Mrs Lander was born in 1938. She became a director of the company in March 2017 at a time when she was around 78 years old. Mr Pace became a director on 22 January 2018 in order to assist Mrs Lander. The estate remains the sole shareholder. 24 Mr Pace met Mr Owen-Pearse through Mr Pace's involvement in the company (there is some dispute on the evidence as to when that was, but nothing turns on it). According to Mr Pace, Mr Lander had told him that he (Mr Lander) met Mr Owen-Pearse in around 2010 and that he had performed odd jobs on Mr Lander's farm in return for room and board. During that period Mr Lander and Mr Owen-Pearse became friends and Mr Owen-Pearse had indicated that he wished to become involved in some of Mr Lander's business dealings. In around 2013 Mr Lander proposed to purchase a property referred to as 'Stennett Street' and Mr Owen-Pearse assisted Mr Lander to obtain finance and provided some plans to renovate the property. Mr Pace said that Mr Lander told him the agreement between him and Mr Owen-Pearse was that profit from the project would be equally shared once the Stennett Street project was complete. 25 Mr Pace also deposes to his concerns about a number of matters, including Mr Owen-Pearse's alleged use of funds of the company, proposed projects for which Mr Owen-Pearse suggested utilising Mr Lander's properties as security, loans he took from Mr Lander, and his suspicion that Mr Owen-Pearse was taking advantage of Mr Lander as Mr Lander was elderly and frail. Mr Pace also alleged that Mr Owen-Pearse physically assaulted him (Mr Pace). At one point (after Mr Owen-Pearse personally served the Demand on Mrs Lander), Mrs Lander obtained an interim violence restraining order against Mr Owen-Pearse. 26 Mr Owen-Pearse denies such allegations. It is neither necessary nor appropriate to attempt to resolve those disputed matters and I simply note that it is clear that the relationship between Mr Owen-Pearse on the one hand and Mrs Lander and Mr Pace on the other has been strained (to say the least) for some years, as was the relationship between Mr Owen-Pearse and Mr Lander before his death. 27 On 8 April 2016, at a time when Mr Lander was 90 years old, he signed a letter devolving complete authority over building and financial affairs of the company to Mr Owen-Pearse (8 April 2016 letter). The letter reads as follows: Authority to Act To Whom it May Concern Warren Owen-Pearse of [redacted], is and has been from inception on 28th August 2013 of Lander Land Company Pty. Ltd. the General Manager, who has my complete authority to manage the day to day affairs of this Company on it's and my behalf. This authority also extends to the project management of [Stennett Street], including all associated securities in all matters involving building and financial affairs of this property which is owned by Lander Land Company Pty. Ltd. As Trustee for the Lander Land Trust. All communications concerning the above company and related projects are to be directed to Warren either directly or through his management company as follows: Warren Owen-Pearse [email address redacted] [phone number redacted] Credex Management (PPSR) Management Pty. Ltd. [email address redacted] [phone number redacted] As General Manager, Warren is empowered to sign off on all matters on behalf of the above Company, Trusts, Property and Securities. 28 Mr Pace was concerned when he saw this letter, because despite ongoing communications with Mr Lander, he had never heard Mr Owen-Pearse described as a general manager and considered it odd that Mr Lander would give explicit financial control to another person. 29 On 15 April 2016 Mr Lander withdrew in writing the 8 April 2016 letter (withdrawal letter). The withdrawal letter was witnessed by an accountant. The withdrawal letter was provided to Mr Owen-Pearse by email and post. It is in the following terms: To Whom It May Concern 15/04/2016 Re - Lander Land Company Pty Ltd I refer to the letter dated 08/04/2016 which is attached. Within this letter I gave full authorisation to Warren Owen Pearse to act on behalf of the Lander Land Company in any capacity. I further appointed him as the General Manager of Lander Land Company Pty Ltd. I hereby revoke the attached letter and immediately cease the appointment of Warren Owen Pearse as "General Manager" of Lander Land Company Pty Ltd. Warren cannot act on behalf of Lander Land Company Pty Ltd in any capacity. Should the recipient of this letter have any doubt to the integrity of this letter, please call me on [redacted]. (original emphasis) 30 Mr Pace then assisted Mr Lander by investigating payments to or by Mr Owen-Pearse with respect to the Stennett Street project. It is not appropriate on this application to attempt to ascertain the veracity of allegations about those payments, save to acknowledge that the company asserts that it is owed money by Mr Owen-Pearse that exceeds the amount in the Demand. 31 One matter not in issue is that Mr Owen-Pearse arranged certain finance to develop the Stennett Street project and the company paid Credex the sum of $22,000, said to be for expenses in arranging the finance. Credex issued an invoice/work order to the company on 18 February 2014 ($20,000 + GST of $2000) and the invoice is indorsed as paid the following day. On the evidence before me, that is the only occasion on which a claim for payment by Mr Owen-Pearse or Credex was described, invoiced and evidenced by a document signed by Mr Lander or the company. Little is known about the role of Credex, but its letterhead describes it as 'The Bad Debt Equaliser'. 32 According to Mr Pace, the interest rate on the finance was 16% per annum and the Stennett Street project did not make a profit. 33 The relationship between Mr Lander and Mr Owen-Pearse deteriorated in April 2016 after the withdrawal letter. 34 On 4 May 2016 Mr Owen-Pearse served a statutory demand on the company claiming that Credex was owed $114,000 (first demand). The description of the debt was 'unpaid salary and employment entitlements as general manager of Lander Land Company Pty Ltd since its inception on 28 August 2013'. The debt was said to be due on 15 April 2016. 35 According to Mr Pace, the company had received no information or invoices detailing any such services, and in the 17 days between the withdrawal letter and the first demand there had been no claim made by or correspondence from Mr Owen-Pearse. 36 In June 2016 the company received a letter stating that Credex had purchased the alleged debt from Mr Owen-Pearse and that Credex was entitled to wind up the company. Mr Owen-Pearse emailed a copy of the letter to Mr Pace and Mr Linfoot and stated that his lawyer had said that all transactions now fall into the insolvent trading category. 37 On 12 December 2016 Mr Owen-Pearse wrote to Mr Lander acknowledging that there were differences to be settled between the parties and alluding to potential legal action. The letter reads: You are no doubt aware that I have tried to contact you on several occasions, since leaving your employment only to be stone walled by your associates, which has also included verbal & physical threats. It is my intention to conclude our dealings with a final meeting in which we agree to resolve our differences and settle them once and for all. However, knowing you as I do, I also expect you to ignore my process as shown by your past actions. Please dont confuse my generosity with stupidity and expect my serious claims you and your company to just disapeare. Should you fail to take advantage of my offer to discuss our differences I see no reason why I should not position you to talk to the Judge or Magistrate, or both on their terms, within the shortest time possible, as they are well experienced at getting to the truth when it comes to Low Tone situations. Please be aware should you not take advantage of my offer of a meeting prior to Christmas with or without your cooperation the day of reconing [sic - reckoning] is near. 38 As noted above, Mr Lander died the following month, in January 2017. 39 According to Mr Owen-Pearse, he sent a letter to Mrs Lander in February 2017. I will address that letter when summarising Mr Owen-Pearse's evidence. 40 On 11 April 2017 a second statutory demand was sent by Credex (second demand). The amount claimed had increased to $144,500 and was said to be for 'unpaid invoices for consultancy and management fees subject to terms of trade conditions'. The quantum is broken down as $114,000 plus 10 months interest ($28,500) plus 10 months 'monthly admin fee' ($2,000). Mr Pace said that to the best of his knowledge, none of Mr Lander, Mrs Lander, Mr Linfoot or the company received any invoices or details relating to consultancy or management services or fees mentioned in the second demand. 41 In around September 2017 Mr Owen-Pearse sent another statutory demand for payment (third demand) in which Mr Owen-Pearse is identified as the creditor and the claim is reduced to $114,000. The amount claimed was said to relate to 'unpaid invoices for consultancy and managerial services'. 42 I interpose that by an affidavit filed on the date of the hearing before the registrar, Mr Owen-Pearse attached an 'Assignment of Debt Deed' bearing the date 30 June 2017 that purports to assign a debt of $114,000 by way of 'unpaid invoices for consultancy and managerial services over three and a half years' from Credex to Mr Owen-Pearse. The deed does not purport to assign the accrued interest or fees referred to in the second demand. There is no evidence that the company was informed of the assignment. 43 On 9 January 2018 the company received a letter enclosing a statutory demand dated 10 October 2017 (fourth demand). The amount claimed by Mr Owen-Pearse was $114,000 said to be for 'unpaid invoices for consultancy and managerial services over a three and a half year period'. 44 In the covering letter, Mr Owen-Pearse refers to the fourth demand and says that the company is now legally presumed insolvent and that: Should this matter still be unresolved within Seven (7) days I shall proceed to issue a wind up application in the Federal Court to appoint a Liquidator to Lander Land Company Pty Ltd. Furthermore Caviets will be issued forthwith on all real estate, including [property] associated with the estate of Mr Charles Lander as the sole director and sole shareholder of Lander Land Company Pty Ltd. Subject to terms of trade clause 14 which has been effective from inception of this transaction. 45 The property referred to in the letter was owned by Mr Lander personally and at the time of the letter was registered in the name of Mrs Lander and Mr Pace as executors of his estate. 46 The 9 January 2018 letter was addressed to Mrs Lander and in addition to the fourth demand, included a copy of the 8 April 2016 letter (but not the withdrawal letter) and two certificates of title, including that for the property I have mentioned that was not owned by the company. Mr Owen-Pearce also attached a set of 'terms and conditions of trade'. 47 Mr Pace said to the best of his knowledge that was the first time that any director or employee of the company had seen any ostensible terms and conditions from Mr Owen-Pearse. 48 In mid to late January 2018 Mr Owen-Pearse served the Demand. As already noted, the amount claimed in the Demand is $59,576 and is said to relate to 'interest and admin fees on a debt which is due and payable of $114,000, which is subject to terms and trade conditions, on first of April 2016'. 49 Mr Pace was not appointed as a director until after the date of the Demand. However, he said that he had formed the view that Mr Owen-Pearse had no legitimate claim against the company and so he did not take any steps with respect to the demands. As the company had received so many statutory demands, he considered they were a 'bluff' and 'not a tool supported by legislation'. He said he did not appreciate at the time that in those circumstances the company needed to take steps to set aside the Demand. 50 In late February or early March 2018 Mr Owen-Pearse also provided to the company a statutory declaration sworn before a Landgate officer claiming a caveatable interest over a property owned by the company. The statutory declaration purports to claim an interest and a right to lodge a caveat under 'terms of trade issued on 28 August 2013'.

Evidence relied upon by Mr Owen-Pearse 51 In his primary affidavit before the registrar dated 11 May 2018, Mr Owen-Pearse described the asserted debt as follows: I performed management duties for Mr Lander, which included the formation of Lander Land Company & Lander Trust of which I was appointed General Manager, over a 4-year period and the documents relied upon to confirm this are as indicated in the above Index and are the annexures herein attached. 52 Mr Owen-Pearse asserted that the registrar had no regard to such documents. The fact that the registrar's reasons do not describe evidence in detail does not mean such evidence was not considered. For the purpose of considering the merits of the review application, I have had regard to all of the documents but I will address particular documents upon which Mr Owen-Pearse relied during the hearing before me. 53 Mr Owen-Pearse relies on a Credex work order dated 15 November 2013 and apparently signed by Mr Lander. This document was provided by a second affidavit (filed 22 May 2018). It is said to be a work order to arrange finance for the Stennett Street project and development. No details of price or payment are included. It attaches what appear to be pro forma 'terms and conditions' that are directed at the supply of goods (they include retention of title, delivery, returns etc) although they also refer to the supply of services. 54 Mr Owen-Pearse relies on an email from Mr Pace containing a proposed plan for the subdivision of property. It does not evidence the terms of any agreement as to work or payment. 55 Mr Owen-Pearse relies on a property valuation report dated 24 October 2013. It indicates that Mr Owen-Pearse instructed Garmony Property Consultants to undertake a report and valuation of a property in Matison Street, Southern River. It does not evidence the terms of any agreement as to work or payment. 56 Mr Owen-Pearse relies on an undated document headed 'Current Situation' which appears to be a file memo. It refers to the formation of a new trustee company which will operate bank accounts, with Mr Owen-Pearse to be the company director and secretary and funding to come from Mr Lander. The provenance of the document is unclear. There is no suggestion the proposal was given effect and it does not evidence the terms of any agreement or payment. 57 Mr Owen-Pearse relies on the invoice/work order issued by Credex for $22,000 referred to above. He also relies on a document purporting to be an invoice for services rendered dated 15 April 2016. It is undated and unsigned by Mr Lander, issued by Credex to the company, and said to be for: consultancy and management services provided 2 x 20 acre blocks sub-division project Stennett St project funding for church building donations services provided from 1-12-12 to 15-4-16 58 It claims a lump sum of $195,000 for those matters, then applies various credits including payment of the invoice of $20,000 and personal loans in the sum of $35,000, and claims a balance due of $114,000. There is no supporting documentation or itemisation of the $195,000 or the $114,000. The work order, with no indication that it was accepted or agreed to by the company and unsupported by documentary evidence, does not evidence any agreement with the company. 59 Mr Owen-Pearse also relies on a property valuation dated 15 October 2013 which is addressed to the company and is addressed 'Dear Warren'. It refers to a contract to purchase a property in Kenwick. Mr Owen-Pearse relies on it as indicating that he was in fact undertaking work for the company. Even if that were so, it says nothing about the terms and conditions of any agreement or payment as between Mr Owen-Pearse and the company. 60 Mr Owen-Pearse relies on a letter from Action Conveyancing with respect to a purchase in Eileen Street, Gosnells. The only link between the offer and Mr Owen-Pearse is that Mr Owen-Pearse's signature apparently appears on it. He relies on an undated bundle of drafting sketches for a proposed development at Stennett Street. Mr Owen-Pearse also relies on a costs plus construction contract which he has signed as a witness. Mr Owen-Pearse also relies on a fixed price contract dated 10 July 2015 which, again, he has signed as a witness. 61 None of those documents are probative of the agreed scope of any work that Mr Owen-Pearse might perform or, relevantly, any agreement as to the terms of any payment arrangement between Mr Owen-Pearse (or Credex) and the company. 62 Mr Owen-Pearse also relies on a letter dated 27 February 2017 from Mr Owen-Pearse to Mrs Lander. Relevantly, it reads as follows: I was saddend to hear of the passing of Charles. However that dosent alter the fact that his estate & or his company, Lander Land Company Pty. Ltd. (LLCo) owes a debt for the 3.5 years of Consulting & Management work that I did on his behalf through my management company Credex (PPSR) Management Pty. Ltd. (Credex) issued a Statutory Demand on LLCo on 21st Dec 2016 for the Due Debt of $114,000 Upon reciept of the Statutory Demand, at Law LLCo had 21 Days in which to do one of the following Three (3) Options. (A) Pay the Demanded Debt in Full. (B) Secure the Demanded Debt to Credex satisfaction. (C) Make Application in the appropriate Court to Set Aside the Demand. To date none of the above options have been instigated by LLCo & as a result LLCo is Deemed to be Insolvent at Law. Credex is now entitled to issue a Wind Up Application on LLCo in the Supreme Court to liquidate it as Credex believes LLCo is Insolvent & Furthermore will issue Caviets against all THREE Properties to Secure the Debts owed. As you are aware I have tried on many occasions, since leaving the Employment of Charles, to Settle our Disputes, only to be met with a Wall of Silience. Should I not receive communication from the Execetor of Charles's Estate within 48 hours ie by Midday on Thurs 2nd of March 2017, Credex will proceed with the Wind Up Application forthwith & issue Caviets on All properties that Credex/I did work on, this will only increase the costs. As you would be aware, whilst working for Charles, I was under his Strict Instruction "not to Discuss or Divuldge ANY information about his Business Dealings, with you. As you may not still be aware of the extent of the work I did for Charles & as a courtesy to you I have included copies of some paper work for your information. (original emphasis) 63 The letter also made a claim with respect to workers compensation and other matters that are not currently relevant. 64 Despite reference to it in the 27 February 2017 letter, there is no record of any statutory demand of 21 December 2016. Nor is it clear what 'paperwork' was provided. I will assume the paperwork comprised copy documents included behind the letter in the primary affidavit. The documents include the 8 April 2016 letter but not the withdrawal letter. They include the documents I have already addressed above and a small number of other documents of no persuasive relevance. None indicate or evidence any agreement as between Mr Owen-Pearse and the company or Mr Lander about the role of Mr Owen-Pearse, or any terms or conditions upon which he was to be paid. None itemise or provide any breakdown of the figures of $195,000 or $114,000. 65 At most, the documents indicate that Mr Owen-Pearse may have had some role in liaising with builders about plans or proposals, or corresponding with valuers, agents and with potential financiers potentially on behalf of the company or Mr Lander or in circumstances where he sought to involve Mr Lander or the company. 66 Absent any terms that reflect the nature of work to be undertaken and the price to be paid, there is no evidence of any agreement between the parties. There is nothing that properly shows that services were in fact provided in respect of which the claimed fees of $195,000 were allegedly payable. In the circumstances, I accept the company's submission that at most Mr Owen-Pearse might have some form of quantum meruit claim, but it is not a liquidated sum and there is no evidence to suggest it has been calculated or determined to be a reasonable reward for work done. It is not a 'debt' that is due and payable such that it could ordinarily be the subject of a statutory demand: Vimblue Pty Ltd v Toweel trading as Carpenters Core Building [2009] NSWSC 494 (Barrett J); United Capital Properties Pty Ltd v Handbury Asset Management Pty Ltd [2011] FCA 1075; (2011) 86 ACSR 161 at [2] (Stone J). The details of any such claim have never been sufficiently articulated. The mere fact that the Demand refers to interest and costs does not assist Mr Owen-Pearse in circumstances where the underlying claim upon which interest is alleged to be calculated has not been determined or assessed.

Summary of provisions 67 The statutory framework concerning the making of a winding up order by the Court in insolvency is contained in Pt 5.4 of the Corporations Act. It can be summarised as follows: (a) the Court is empowered, upon application made to it, to order that an insolvent company be wound up in insolvency: s 459A of the Corporations Act; (b) the Court has a wide discretion under s 459A which may be exercised on any ground not extraneous to the scope and purpose of the Corporations Act: Deputy Commissioner of Taxation v T.D. Preece Pty Ltd [2013] FCA 1365 at [18] (Griffiths J); (c) a person may serve on a company a statutory demand relating to a debt or debts above the statutory minimum: s 459E of the Corporations Act. Among other requirements, the demand must be accompanied by an affidavit that verifies that the debt is due and payable by the company; (d) where a winding up application has been made, and a company has failed to comply with a statutory demand (either by paying the debt or having the demand set aside) in the three months prior to the making of the application, the Court must assume that the company is insolvent: s 459C(2)(a) of the Corporations Act; (e) s 459G of the Corporations Act permits a company to apply to the Court to set aside a statutory demand served on it within 21 days after service of the demand and prescribes what the company must do within that 21 day period; (f) a creditor may apply to the Court for an order that a company be wound up in insolvency: s 459P(1)(b) of the Corporations Act; (g) where an application for winding up relies on a failure to comply with a statutory demand, a company may not without leave of the Court oppose the application for winding up on a ground that it relied upon, or could have relied upon, for the purposes of an application to have the statutory demand set aside: s 459S(1). The Court is not to grant leave unless it is satisfied that the ground is material to proving the company's solvency: s 459S(2); and (h) s 467 provides that on hearing a winding up application, even if a ground has been proved, the Court may dismiss the application or make another order that it thinks fit.

Abuse of process 68 The company did not apply to set aside the Demand under s 459G. Its failure to do so is to be viewed against the backdrop of the four preceding statutory demands served on it (none of which were relied upon by Mr Owen-Pearse), the fact another demand was referred to but not apparently served, the shifting identity of the nominated creditor in the demands, the shifting description of the underlying debt and the shifting quantum claimed. However, the company's inaction means that it was deemed insolvent at the time Mr Owen-Pearse brought the winding up application due to the operation of s 459C of the Corporations Act. 69 In most circumstances, the only matter which may relevantly be asserted by a company where there has been no application to set aside a demand is solvency, or displacement of the presumption of insolvency: State Bank of New South Wales v Tela Pty Ltd (No 2) [2002] NSWSC 20; (2002) 188 ALR 702 at [4] (Barrett J). 70 The company opposes any extension of time for a review. Subject to that caveat, the company's position is that the winding up application should be dismissed as an abuse of process. In the alternative, it contends that Mr Owen-Pearse should be permanently enjoined from continuing with the winding up proceedings. The company also contends that it is solvent. In the alternative to the abuse of process argument, it seeks leave under s 459S to challenge the existence of the debt. 71 There is no doubt that after the enactment of Pt 5.4 of the Corporations Act, the Court retains its power to control and prevent conduct that is an abuse of process. That was confirmed by Gummow J in David Grant & Co Pty Ltd (receivers appointed) v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265 at 279. 72 Section 459S does not preclude a challenge to a winding up application on the basis of abuse of process: Hardel Property Holdings Pty Ltd v Allmark Property Management Pty Ltd [2008] FCA 22 at [2] (Finn J); Roberts v Wayne Roberts Concrete Constructions Pty Ltd [2004] NSWSC 734; (2004) 208 ALR 532 at [53]-[56], [65] (Barrett J). 73 However, it is clear from the cases that abuse is more difficult to establish since the enactment of Pt 5.4: House of Tan Pty Ltd v Beachiris Pty Ltd (1996) 21 ACSR 527 at 529-530 (Brownie J); Redglove Holdings Pty Ltd v GNE & Associates Pty Ltd [2001] NSWSC 867; (2001) 165 FLR 72 at [26]-[29] (Palmer J); Tela at [13]-[14]; 2020 Construction Systems Pty Ltd v Dryka & Associates Pty Ltd [2010] WASC 22 at [57]-[61] (Beech J). 74 In Tela, Barrett J said as follows: [11] The scheme of the legislation makes it clear that a creditor who has duly served a statutory demand which remains unsatisfied for the relevant period has a right to seek winding up. In former times, it was regarded as an abuse of process for such an application to be pursued in circumstances where the debt was disputed or an off-setting claim existed. The rationale was that winding up proceedings were not the appropriate occasion for those matters to be addressed and that the threat of such proceedings, with their serious commercial consequences, involved resort to the particular remedy for a purpose regarded by the law as improper. All that has been changed by Pt 5.4. It is now abundantly clear that, unless the Division 3 process is employed by the company concerned to ventilate in advance, by way of opposition to the statutory demand, any claim it has about the existence or amount of the debt or any off-setting claim, it is perfectly legitimate for the creditor to proceed with a winding up application even though such a dispute or off-setting claim may in fact exist. 75 However, proceedings, including the issue of a statutory demand and the bringing of a winding up application, may involve an abuse of process if done for an extraneous or improper purpose. That will occur if the process is used to obtain some advantage for which it is not designed: Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509 at 526 (to which Gummow J referred in David Grant); Createc Pty Ltd v Design Signs Pty Ltd [2009] WASCA 85; (2009) 71 ACSR 602 at [47]-[50] (Martin CJ, Owen JA and Miller JA agreeing); Redglove Holdings at [26]-[28]; Tela at [10]; TS Recoveries Pty Ltd v Sea-Slip Marinas (Aust) Pty Ltd [2007] NSWSC 1074 at [17]-[19] (Barrett J). The Court may dismiss a winding up application as an abuse of process: House of Tan at 528. 76 The authorities also support the view that a winding up application may be an abuse of process within the 'second branch' identified in Fortuna Holdings Pty Ltd v Deputy Commissioner of Taxation [1978] VR 83 (McGarvie J) and approved by the Court of Appeal in Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd [2007] NSWCA 57; (2007) 69 NSWLR 374 (Beazley, Hodgson and Santow JJA), where a more suitable alternative remedy was available: RH Mortgage Corporation at [27]-[28]; In the matter of Huizhong Investment Group Pty Ltd [2018] NSWSC 390 at [27]-[33] (Black J). 77 There are other categories of abuse of process, and the categories are not closed: 2020 Construction Systems at [60]. 78 In this case, the company submitted that the use of the statutory demand procedures and reliance on the Demand to found a winding up application constitute an abuse of process in that the process was not instituted to seek to recover a genuine debt or pursue an orderly liquidation of the company, but to coerce the late Mr Lander and then Mrs Lander into making a payment to him. The company submits that in all the circumstances Mr Owen-Pearse's behaviour is indicative of using the Demand and winding up application as part of a bullying and intimidation strategy in circumstances where there is no obligation to pay the claimed debt. 79 The company refers in particular to the decision in RH Mortgage Corporation. In that case, a company of which Mr Owen-Pearse (then referred to as Mr Pearse) was the sole director, Kerry Ann Properties Pty Ltd, made claims against its financier. The financier had sold a property of the company under securities it held. Mr Owen-Pearse asserted an alleged 'breach of agreement' and claimed $412,000 arising out of the circumstances of the sale and allegedly being the value of the property sold. After listing the various matters said to support the debt, Barrett J said as follows: [23] On no conceivable basis did any of the matters referred to by Mr Pearse in his explanation of the basis of claim give rise to a debt. To the extent that statutory penalties or fines may be involved, any liability, if and when established, would entail a payment obligation owed to the Commonwealth or a State, not the defendant. To the extent that any wrong may have been done by the plaintiff in appointing a receiver, commencing legal proceedings, withdrawing a receiver, notifying the appointment of a receiver or failing to give a settlement figure, the wrong could only be of a contractual or tortious kind, so that any payment obligation of the plaintiff to the defendant could arise only by establishing a cause of action and proving actual damage. If the plaintiff were in due course found to be liable, it would be liable for damages, not debt. [24] On the material before the court, there was no rational basis on which the defendant could have believed, when it served the statutory demand, that a debt in the sum of $412,000 was owing due and payable by the plaintiff to the defendant. Mr Pearse made it clear in his letter that he did not hold any such belief. He referred to a "claim against your client for at least $412,000 (Four Hundred and twelve Thousand Dollars)". By using the words "claim" and "at least", Mr Pearse showed, first, that there was a claim as distinct from an entitlement to be paid and, second, that the relevant sum was not certain - in other words, that essential and fundamental elements of a debt were lacking. [25] The situation is thus one in which the defendant resorted to the statutory demand procedure for a purpose for which the law does not allow. The legislation works on the basis that a creditor to whom a debt is owing due and payable may seek, by serving a statutory demand, to achieve the benefit of a presumption of insolvency for the purposes of pursuing winding up proceedings. The legislation does not countenance the obtaining of the benefit of such a presumption by a person to whom a debt is not owing, due and payable by the company, who has no more than some imperfectly articulated claim for damages and who knows that the person's position is as just described. For such a person deliberately to resort to the statutory demand procedure in respect of such a claim, having made it clear to the company concerned that the claim is, to the person's knowledge, of that nature, is a perversion of the statutory process. … [27] The plaintiff would have succeeded in having the statutory demand set aside had it made a valid s 459G application. It did not make such an application. But in the circumstances of egregious misuse of the statutory demand procedure exhibited by the facts of this case (coupled with the circumstance that the defendant's claim obviously represents some form of retaliation for the plaintiff's having taken enforcement action under its security), any application by the defendant for winding up of the plaintiff relying on the plaintiff's failure to comply with the demand dated 24 December 2010 would be an abuse of the process of the court. This is because it would be within the "second branch" referred to by McGarvie J in Fortuna Holdings Pty Ltd v Deputy Commissioner of Taxation [1978] VR 83 and approved by the Court of Appeal as continuing to be applicable today in Australian Beverage Distributors Pty Ltd v Evans & Tait Premium Wines Pty Ltd [2007] NSWCA 57; (2007) 69 NSWLR 374, that is, where: due to the availability of the more suitable alternative remedy, the court hearing the petition would in the circumstances, in the exercise of its discretion, decline to make a winding up order, at least while the circumstances remain as they are at the time of the application for an injunction. [28] In this case, the "more suitable alternative remedy", while the defendant's claim remains in the form stated in Mr Pearse's letter, is that that claim should be determined and, if found proved, be quantified in appropriately constituted proceedings outside the ambit of the winding up provisions of the Corporations Act. 80 In this case, it is my view that Mr Owen-Pearse's winding up application on a review has no or no sufficient prospect of success to justify an extension. I consider the circumstances are such that the jurisdiction to dismiss the application would be invoked on the basis of abuse of process as the application has been pursued for an improper purpose. Further, in the circumstances the appropriate course was to commence proceedings and seek to establish a claim against the company in the usual way and abuse of process within the 'second branch' would be established. I consider a court on a hearing de novo would find that the use of the statutory demand procedure and reliance on the Demand to found a winding up application constitutes an abuse of process in that the process was not instituted to seek to recover a genuine debt or to pursue an orderly liquidation of the company, but to coerce by unreasonable intimidation the late Mr Lander and Mrs Lander or the company into making a payment to him. That is not an objective of an orderly liquidation process which assumes the company is insolvent and which is for the benefit of all creditors, a process that seeks to end the company's activities, see assets marshalled and the claims of creditors ascertained: TS Recoveries at [19]. 81 In coming to that view I have taken into account all the circumstances but in particular the following. 82 There is an absence of any evidence that supports Mr Owen-Pearse's claim that there is an underlying debt of $59,576 which is allegedly based on an underlying debt of $114,000. The claimed debt is not quantified, has not been assessed in any manner and there is a lack of any evidence of an agreement to pay such amounts. Further, some of the evidence casts doubts on the veracity of the basis claimed for payment: for example, the first demand claims entitlements as general manager since August 2013, but the 8 April 2016 letter purported to appoint Mr Owen-Pearse as general manager on 8 April 2016. 83 Mr Owen-Pearse's letter of 12 December 2016 makes it clear that he knew that he had only claims against Mr Lander or the company, and that there was a dispute between him and Mr Lander about such claims. The evidence before me provides no rational basis for him to consider that he had a quantified debt based on agreed terms that was in fact due. There was no evidence at all before me that explained how a debt in the sum claimed was comprised or justified. Despite that, he proceeded to issue statutory demands during a period extending over a year asserting a debt. 84 There is no suggestion in the evidence that the company lacked the financial capacity to pay the debt if the debt had not been disputed (a matter considered relevant in Createc at [57]). To the contrary, the evidence established that the approved $22,000 Credex invoice had been paid the day after it was issued, and that leaving aside Mr Owen-Pearse's claim, the company has no outstanding liabilities due and payable, a matter to which I return below. 85 It seems to me that the Demand and commencement of the winding up application were part of an armoury utilised to impose pressure upon Mr Lander and later Mrs Lander to make a payment. This included: (a) serving multiple and conflicting statutory demands claiming different sums by different creditors; (b) issuing those demands on elderly directors of the company without providing any useful information at all that explained the manner by which the sum claimed was calculated; (c) failing to explain which of Credex or Mr Owen-Pearse was a creditor for the claimed sum of $59,576 and how that amount was due, when the underlying debt of $114,000 was previously said to be due to Credex; (d) failing to do so despite sending letters to Mrs Lander and having the opportunity to provide such information; (e) providing only the 8 April 2016 letter to Mrs Lander and not the withdrawal letter: it can be inferred such step was taken to lead Mrs Lander to believe he was authorised to act as 'general manager' and so entitled to some type of payment; (f) utilising a threating tone in correspondence to Mr Lander - for example, his reference to the 'day of reckoning'; and (g) threatening to lodge a caveat over land that was owned personally by Mr Lander or his estate and was not company property.

Conclusion on merits 86 For the above reasons, if an extension of time were granted, I consider that Mr Owen-Pearse has no prospect of succeeding in obtaining a winding up order, and the registrar's decision would be affirmed. In the alternative to dismissal, an injunction may have issued refraining any further reliance on the winding up application. 87 I add that I am conscious of the limitations on the task of assessing the prospects of success of a review application when determining an extension of time application. In this case, it has been necessary to go into some detail in order to assess the merits of the review application and in circumstances where the outcome is a refusal of the extension.

Solvency 88 In the alternative to its abuse of process defence, the company asserts it is solvent. 89 It is open to the company to prove solvency taking into account s 459C(3) of the Corporations Act and without obtaining leave under s 459S, because solvency is not a ground on which it could have relied in an application to set aside the statutory demand: Deputy Commissioner of Taxation v 24 x 7 Direct Pty Ltd (No 2) [2012] FCA 157 at [10] (Gordon J). 90 The evidence provided by Mr Pace in his capacity as director of the company included special purpose financial reports for the period 1 July 2017 to 31 December 2017 and updated for the period 1 July 2017 to 7 March 2018, prepared by a firm of certified practising accountants, AS Turner & Associates Pty Ltd. 91 The balance sheet as at 31 December 2017 showed net assets of $845,082.60, including current assets of $777,131.22 and non-current assets of $67,951.38, including a claim against Mr Owen-Pearse for loans of $67,000. The main asset is described as 'WIP - Stennett St'. The balance sheet showed total liabilities of $1,587,961.29 made up of: (a) unsecured loan from Mr Lander - $1,357,946.66 (b) secured loan from ASF Custodians Pty Ltd - $230,014.63 92 On its face, those liabilities exceed assets by about $698,097.34. However, Mr Pace deposed to the terms of the unsecured loan from Mr Lander, and the fact that the loan is only repayable if and to the extent there are any profits made by the company. As the registrar noted, such terms are not unusual in closely held family companies. A letter from the executors of Mr Lander's estate confirmed that position, and by written agreement dated 5 June 2018 (which attached copies of the 7 March 2018 financial statements) (Loan Agreement) the estate and the company confirmed that the unsecured loan in the specified amount from Mr Lander was not repayable until a development of certain properties was completed, and if those properties could not be developed, then the debt would be forgiven. 93 The balance sheet as at 7 March 2018 showed net assets of $859,490.72, including current assets of $791,539.34 and non-current assets of $67,951.38, again including a claim against Mr Owen-Pearse for loans of $67,000. The balance sheet showed total liabilities of $1,610,753.72 made up of: (a) unsecured loans from Mr Pace and a company controlled by Mr Linfoot, Linsmith Investments Pty Ltd (Linsmith) - total $26,597.78 (b) non-current unsecured loan from Mr Lander - $1,354,141.31 (c) non-current secured loan from ASF Custodians Pty Ltd - $230,014.63 94 The terms of the loans from Mr Pace and Linsmith were confirmed by letters dated 27 March 2018 to be repayable only if profits are made by the company. The lenders agreed to forbear from demanding repayment unless the company has funds to pay the loans. 95 Letters to the company from each of the estate, Mr Pace and Mr Linfoot on behalf of Linsmith informed the company that they each opposed the winding up application. 96 By the date of the hearing before me, the secured loan to ASF Custodians had been repaid in full upon the sale of Stennett Street in May 2018, and the settlement statement indicated balance funds of $176,102.54 were paid to the company. The project referred to in the Loan Agreement was not completed. 97 The company submits that there are no debts due by the company, the company is a closely held family business and, as is not unusual in such circumstances, family and friends close to them have lent the company money on generous terms. The company submits the evidence shows that there are no debts that are due, overdue, or likely to be due in circumstances where the defendant could not pay them. The company has no employees and a small number of assets and liabilities. 98 There is no mention in the accounts of any liability due to Mr Owen-Pearse, but I have not overlooked that fact (see [84] above). 99 Mr Owen-Pearse sought to challenge the contended solvency by pointing to alleged breaches of the mortgage, alleged breaches of requirements of Mr Lander's will and assertions that there must be other liabilities that have not been disclosed. He asserted that nothing less than audited accounts would be sufficient evidence to establish solvency. Mr Owen-Pearse relied on the cases referred to by Weinberg J in Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728 at [44] and the proposition that a company must produce audited accounts that evidence solvency. 100 In Deputy Commissioner of Taxation v De Simone Consulting Pty Ltd [2007] FCA 548, Finkelstein J addressed that proposition as follows: [9] To put what I am about to say into its proper context I will set out the first three propositions that appear in the relevant part of Weinberg J's reasons. He said (at para 44): "The authorities which govern the operation of s 459G of the Corporations Law seem to me to establish the following propositions: • The respondent is presumed to be insolvent and as such bears the onus of proving its solvency: s 459C(2) and (3); • In order to discharge that onus the Court should ordinarily be presented with the "fullest and best" evidence of the financial position of the respondent. • Unaudited accounts and unverified claims of ownership or valuation are not ordinarily probative of solvency. Nor are bald assertions of solvency arising from a general review of the accounts, even if made by qualified accountants who have detailed knowledge of how those accounts were prepared." (citations omitted) [10] Let me say at once that I reject as unfounded the proposition that to discharge the onus established by s 459C(3) a company must produce audited accounts to prove solvency. The cases to which Weinberg J referred do not support the existence of such a rule. Nor does his decision. [11] The question whether a company is solvent involves both a question of law and a question of fact. … [12] A company that wishes to establish the fact of solvency in accordance with the meaning laid down by the judge must tender evidence for that purpose. … [13] It is contrary to basic rules of evidence to assert there is only one method of proving solvency, namely the production of audited accounts. … [14] The explanation to be given to the cases to which Weinberg J referred is this. There are many shaky companies in the marketplace. Applications are made to wind up some of them. Applications are also made to wind up solvent companies. In each case a representative can come along attempting to prove solvency to avoid a winding up. Judges will look with care at the evidence especially if the judge suspects the company is or may be in a weak financial position. Dependant upon the degree of doubt justified by the facts, a judge may say that the only evidence he will treat as probative is "the fullest and best" evidence available - the kind that in Commonwealth Bank of Australia v Begonia (1983) 11 ACSR 609 Hayne J said was often necessary although interesting enough, not in that case. In some instances this may be the company's audited accounts together with verified proof of both the ownership and value of the company's assets. On the other hand there will be many instances where proof of that sort is not required. In such cases there is no good reason to put the company to the time, trouble and expense of producing audited accounts. In the end it will all depend upon each particular fact of a case. 101 In Coates Hire Operations Pty Ltd v D-Link Homes Pty Ltd [2011] NSWSC 1279, White J considered that further verification of the financial accounts of the company could have been attempted but was nevertheless satisfied that the company was able to pay its debts as they became due and payable. His Honour took into account (at [66]) that ultimately the question of solvency is to be decided on the balance of probabilities, not beyond reasonable doubt. His Honour accepted the director's evidence that all trade creditors were paid. 102 In Deputy Commissioner of Taxation v Bayconnection Property Developments Pty Limited [2012] FCA 363, Robertson J in addressing the 'fullest and best' evidence requirement (as referred to in Ace Contractors) described it as a tool to be used, where appropriate, by the finder of fact to evaluate the balance of probabilities. His Honour accepted (at [61]) that in the case before him the company's evidence was not the 'fullest and best' but found that where the company had not been trading for some years and no other creditors had come forward, then on the balance of probabilities the company had no other third party creditors. 103 In my view, the company's submission that it is solvent would be accepted on a hearing de novo. 104 Mr Owen-Pearse's submissions as to the mortgage were speculative and not supported by any communications, demands or claims of breach on the part of the mortgagee. The mortgage was a reverse mortgage, payable upon demand and on certain conditions after Mr Lander's death. The assertion that terms of Mr Lander's will were not complied with are not relevant. 105 I accept that in many cases, a company may need to provide audited accounts to persuade the Court on the balance of probabilities that the company is not insolvent. I do not consider this is such a case. 106 On the basis of the evidence there is a sound case that the company is able to pay its debts as and when they fall due and has the financial support of Mr Pace, Mr Pace's partner Mr Linfoot and the estate through its executors. Leaving aside the claims of Mr Owen-Pearse, the company has no current liabilities, all unsecured loans are the subject of agreements that they are only repayable in certain circumstances that have not arisen and may not arise, each known liability has been addressed separately in Mr Pace's affidavit and it is apparent from the terms of forbearance that Mr Pace and Linsmith are willing to support the company, at least to the extent disclosed. Financial statements, although not verified, have been prepared by certified practising accountants. There is documentary evidence confirming the terms of repayment of the unsecured loans. There is no evidence of any other third party creditors and Mr Pace deposes to the absence of any other debts. 107 Whilst further evidence by way of verified or audited accounts could have been provided, I consider that taking into account the particular circumstances of the company, a court would nevertheless be satisfied as to the company's solvency.

Section 459S 108 Finally, and again in the alternative, the company seeks leave to rely on s 459S to the extent necessary. I accept that issue may have been relevant to assessing the merits of the substantive application, had I formed a different view as to abuse of process. The issue is not material to the outcome. Regardless, I am not satisfied that the claimed debt is material to the solvency of the company. The company has maintained throughout that it is solvent. It does not assert that the question of whether or not Mr Owen-Pearse's claim has substance is pivotal to its solvency. It does not suggest that if the claim were a valid debt, it could not pay the debt. 109 The proper approach to an application to challenge a debt under s 459S is established by a number of decisions of this Court, as collected by Griffiths J in Tony Innaimo Transport Pty Ltd v Skyroad Logistics Pty Ltd [2018] FCA 1134; (2018) 129 ACSR 224 at [5]-[7], and citing in particular the following remarks of Wigney J in Soundwave Festival Pty Ltd v Altered State (WA) Pty Ltd [2014] FCA 466: [36] There appears to be a dispute in the authorities concerning s 459S(2) about the appropriate test to be applied in determining whether the relevant ground (the dispute concerning the debt) is relevant to the solvency of the company seeking to oppose the winding up application. On the one hand, there are various authorities which are said to adopt a strict or narrow approach: HVAC Construction (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd [2002] FCA 1638; (2002) 44 ACSR 169 at [53]; Grant Thornton Services (NSW) Pty Limited v St. George Wholesale Distributors Pty Limited [2008] FCA 1777 at [19] (Grant Thornton); Deputy Commissioner of Taxation v Neo Rock Pty Limited [2009] FCA 129 at [9]; Perpetual Nominee Ltd v NA Investment Holdings Pty Ltd [2011] NSWSC 282. This approach is said to require an applicant for leave under s 459S to prove that for a dispute concerning the debt to be material, it must be "the difference between solvency and insolvency", or "pivotal", "crucial" or "determinative" of solvency. That would require proof that if the disputed debt exists then the company will be insolvent, and that if the debt does not exist then the company will be solvent. [37] On the other hand, there are authorities that are said to favour a broad or less strict approach: Radiancy (Sales) Pty Limited v Bimat Pty Limited [2007] NSWSC 962; (2007) 25 ACLC 1216 at [64]; Ewen Stewart at [31]-[48]. This approach is said to be that the disputed debt need not be determinative of the company's solvency. Rather, materiality will be established if there is evidence that the company would undoubtedly be insolvent if the debt was owed, as well as evidence that it "might be" solvent if the debt is not owed. In Ewen Stewart, White J put the test in the following terms (at [48]); In short, the existence or non-existence of the plaintiff's debt is not material to proving that the company is solvent where the company claims it is solvent, even if it owes the debt. It does not follow that all questions of a company's solvency are to be advanced to the stage at which leave is sought under s 459S, so that a company must then establish by the fullest and best evidence that it is solvent if it does not owe the disputed debt. A finding of the existence or non-existence of the debt will be pivotal to a decision on solvency at the s 459S stage, if the company might be found to be solvent if the debt does not exist. That would establish materiality for the purposes of s 459S(2). … [40] The additional observation that I would make is that, in my view, at the s 459S stage, the company that is seeking leave must adduce sufficient evidence concerning solvency to satisfy the Court that the existence or otherwise of the debt will be material to the conclusion as to the company's solvency - that is, that the existence or otherwise of the debt is relevant to, or has the capacity to influence, or have an effect on, that conclusion. If, at the s 459S stage, the company contends and intends to prove that it is solvent if it does not owe the disputed debt, it must lead evidence of its financial position which, if accepted, is capable of satisfying the Court of that fact. It is doubtful that the Court could be so satisfied on the basis of mere assertion. Nor should the Court be required to speculate about what evidence of solvency might be led at the final hearing of the winding up application. 110 In Tony Innaimo Transport, Griffiths J applied the narrow view (at [7]), following Perram J in Grant Thornton Services (NSW) Pty Ltd v St George Wholesale Distributors Pty Ltd [2008] FCA 1777 at [19]. I would also apply the narrow view. 111 Ordinarily an application to rely on s 459S is brought on an interlocutory basis before the hearing of the winding up application. That did not occur in this case. Be that as it may, the evidence does not expressly address the materiality of the debt claimed by the Demand to the question of solvency. It is not a particularly large sum and there is an asserted set-off. Surplus funds were apparently received from the Stennett Street sale. Further, there is third party support of the company, as already addressed. I am unable to conclude that such support would not have been extended to pay a legitimate debt in that sum. 112 Accordingly, if the company were limited to a defence that depended upon seeking to dispute Mr Owen-Pearse's claim under s 459S, I would decline leave on the basis that materiality is not established.

The time period for determination of the winding up application 113 This application was commenced outside the six month period during which winding up applications are to be determined. That fact raised a question also relevant to my consideration of the extension application: was the application futile in the sense that the only possible outcome was that the application would be dismissed? 114 Section 459R of the Corporations Act stipulates a period within which an order has to be made by the Court, as a condition of the power of the Court to make that order. It provides: (1) An application for a company to be wound up in insolvency is to be determined within 6 months after it is made. (2) The Court may by order extend the period within which an application must be determined, but only if: (a) the Court is satisfied that special circumstances justify the extension; and (b) the order is made within that period as prescribed by subsection (1), or as last extended under this subsection, as the case requires. (3) An application is, because of this subsection, dismissed if it is not determined as required by this section. (4) An order under subsection (2) may be made subject to conditions.

Position of the parties 115 The company relies upon Merrill Lynch Equities (Australia) Ltd v Triangle Packing Case Pty Ltd [1999] FCA 810 (Spender J) and submitted that as the time period under s 459R(1) has expired, it is not open to me to proceed to determine on a rehearing the winding up application. 116 Mr Owen-Pearse submitted that Merrill Lynch Equities was distinguishable and submitted that in any event the slip rule should be invoked to extend the time for determination of the winding up application on review. Mr Owen-Pearse submitted that due to the date of delivery of the registrar's orders and judgment, there was virtually no time for him to file an application for a review or have a review determined, and such a result was unjust. Mr Owen-Pearse suggested the registrar deliberately delayed delivery of judgment to stifle his ability to seek a review (a suggestion without any apparent foundation). 117 The parties (properly) did not contend that there was any role for s 1322 of the Corporations Act. It is established that s 1322 cannot be used to extend time for the determination of an application for winding up in circumstances where there has been a failure to comply with s 459R in respect of any extension of time sought: Merrill Lynch Equities at [14]; Timms v Dellaplus Pty Ltd [2008] SASC 17; (2008) 99 SASR 578 at [24] (Sulan J); DDB Needham Sydney Pty Ltd v Elyard Corporation Pty Ltd [1995] FCA 603; (1995) 131 ALR 213 at 217 (Sheppard J), upheld on appeal in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd [1995] FCA 943; (1995) 61 FCR 385 (Black CJ, Lockhart and Lindgren JJ).

Issues arising from Merrill Lynch Equities do not affect outcome 118 In Merrill Lynch Equities, a registrar ordered on 28 October 1998 that an application to wind up the respondent be dismissed. The registrar was not satisfied as to proof of service of the statutory demand. The application was filed on 22 June 1998, and therefore the application was required to be determined by 22 December 1998. The applicant sought review of the registrar's decision by notice of motion dated 18 November 1998, but the hearing did not take place until 16 June 1999. 119 Spender J held: [10] If, as is submitted by Mr Havin, counsel for Equities, there was a determination within the six months period of the application, being the determination by the Judicial Registrar on 28 October 1998, that determination was that the application for winding up be dismissed. What is sought by the application for review of the judicial registrar's decision is an order that Triangle be wound up. If the court on the review were to make that order, it would be a determination of the application of 22 June 1998 made outside the six months period required by s 459R(1). [11] In my opinion, the present application seeks the winding up of Triangle outside the period stipulated in s 459R(1) and no order has been made extending that period. To comply with s 459R(3), any review of the decision of the Judicial Registrar resulting in an order for the winding up of Triangle would have to have been completed by 22 December 1998. 120 Spender J found that there was an order dismissing the winding up application on 28 October 1998 and it was competent for the creditor to have that decision reviewed and a winding up order made, but it had to have occurred before 22 December 1998. His Honour held that it was not competent for the Court to make a winding up order on the application filed on 22 June 1998 and so the review application should be dismissed. 121 The decision is relevantly indistinguishable on the facts. Mr Owen-Pearse claimed it was distinguishable because no determination was made in Merrill Lynch Equities within the six month period, but that submission is not correct. In that case, as in this, a winding up application was considered and dismissed by a registrar within the six month period. Although the review process was commenced within the six month period in Merrill Lynch Equities, it was not determined within that period. 122 Merrill Lynch Equities is referred to in commentary in the insolvency field as authority for the proposition that winding up applications are to be dealt with within six months after being made or any period extended under s 459R(2), and that the time limit includes the determination of any appeal: Austin R and Black A, Austin & Black's Annotations to the Corporations Act (LexisNexis Australia) at [5.459R]; Gronow M, McPherson's Law of Company Liquidation (Thomson Lawbook Co) at [3.1800]; Robson K, Robson's Annotated Corporations Legislation (Thomson Reuters) at [459R.30] (although importantly, Merrill Lynch Equities concerns a review rather than an appeal). The decision does not appear to have been distinguished or doubted in subsequent case law. 123 A further example of the operation of the time restraint is provided in Western Suburbs Electrical Supplies Pty Ltd v Russell Electrical Services Pty Ltd [1994] FCA 612; (1994) 14 ACSR 337 (Lindgren J), a case in which a winding up order was made but set aside within the six month period, and the winding up application was then held to have been automatically dismissed under s 459R(3) when the six month period expired without any further determination. 124 There are three points to note arising out of Merrill Lynch Equities. 125 First, where a winding up application has been granted (as against dismissed) during the six month period and the Court on a review comes to the view that the application ought to be dismissed, it dismisses the application for review or affirms the initial decision of the registrar (see Cottrell v Nicholls (Trustee) in the matter of Cottrell (Bankrupt) [2004] FCA 102 at [16] (Allsop J)). The Court does not make an additional winding up order. The Court has held that in such a case, no issue arises despite a review being conducted outside the six month period. No issue arises as to possible non-compliance with s 459R(1): Deputy Commissioner of Taxation v Revolve Limited at [23]-[24]. 126 Second, it follows that an application of Merrill Lynch Equities may lead to a different result in circumstances where the registrar, exercising delegated power, declines to make a winding up order but such order is then sought on a review outside the six month period. It would be odd if the right to review is circumscribed by the result, such that an order affirming the registrar's decision or dismissing the application would not give rise to non-compliance with s 459R, but an order allowing the review and making a winding up order may be barred. 127 Third, whilst acknowledging there are differences in the wording of the respective provisions, in the bankruptcy context an argument similar to that relied upon by Spender J in Merrill Lynch Equities was rejected by the majority in Totev v Sfar [2008] FCAFC 35; (2008) 167 FCR 193. 128 Section 52(4) and (5) of the Bankruptcy Act 1966 (Cth) provides that: (4) A creditor's petition lapses at the expiration of: (a) subject to paragraph (b), the period of 12 months commencing on the date of presentation of the petition; or (b) if the Court makes an order under subsection (5) in relation to the petition--the period fixed by the order; unless, before the expiration of whichever of those periods is applicable, a sequestration order is made on the petition or the petition is dismissed or withdrawn. (5) The Court may, at any time before the expiration of the period of 12 months commencing on the date of presentation of a creditor's petition, if it considers it just and equitable to do so, upon such terms and conditions as it thinks fit, order that the period at the expiration of which the petition will lapse be such period, being a period exceeding 12 months and not exceeding 24 months, commencing on the date of presentation of the petition as is specified in the order. 129 In Totev v Sfar, the majority (Bennett and Cowdroy JJ) held that where a sequestration order was made before the expiration of the relevant period, s 52(4) was no bar to the Court making a sequestration order on the de novo hearing of an appeal from a sequestration order, notwithstanding that more than 24 months had elapsed since the filing of the petition. 130 Emmett J, in dissent, said as follows: [48] Nevertheless, the review hearing before the primary judge was a hearing de novo. That is to say, it must be regarded as a hearing of the petition on the basis that no sequestration order has been made. Otherwise, it could not be a hearing de novo. There had been no order extending the currency of the petition under s 52(5) prior to 15 December 2005, when the period of 12 months from the presentation of the petition had elapsed. Further, by the time that the petition had come before the primary judge for the second time, considerably more than 24 months had elapsed since the presentation of the petition. Thus, even if the primary judge embarked on a hearing of the petition de novo, following remitter by the Federal Court, his Honour could not have made a sequestration order. Accordingly, the second hearing could only have had one result, namely, that the petition be dismissed, since, by that time, the petition had lapsed. That was the only order that was open to the primary judge. 131 The majority formed a different view. Bennett J said: [54] Justice Emmett, at [48], identified a problem arising from the fact that no order extending the currency of the petition under s 52(5) of the Bankruptcy Act had been made prior to the period of 12 months from the presentation of the petition. On his Honour's view, by reason of s 52(4), the petition had lapsed. [55] There are two opposite approaches which might be taken to the resulting problem. [56] The first is to start with s 52(4) of the Bankruptcy Act which provides: A creditor's petition lapses at the expiration of: (a) subject to paragraph (b), the period of 12 months commencing on the date of presentation of the petition; or (b) if the Court makes an order under subsection (5) in relation to the petition - the period fixed by the order; unless, before the expiration of whichever of those periods is applicable, a sequestration order is made on the petition or the petition is dismissed or withdrawn. [original emphasis] [57] On this approach, a sequestration order was made before the expiration of the relevant period. The subsection is therefore no bar to the application of the law at the hearing de novo which may proceed to the making of a fresh sequestration order. [58] The second approach is to start, as did Emmett J, with r 20.03 of the Federal Magistrates Court Rules 2001 (Cth) ('the Federal Magistrates Court Rules') which provides that the review of an exercise of power by a registrar must proceed by way of a hearing de novo. As the hearing is de novo, it must proceed on the basis that no sequestration order has been made. As Emmett J pointed out at [48], the result is that the petition is "stale". It lapsed as more than 12 months had expired since the presentation of the petition. [59] The question is which of these approaches is correct. [60] It is apparent that the second approach gives rise to an anomaly. It is unlikely that the Legislature or the rule-making authority intended the result that an appeal from the correct making of a valid sequestration order within time would necessarily have to result in a decision to make no sequestration order, merely because the time between hearing and appeal was such as to render the appellate hearing more than 12 months after the date of the petition. The anomaly is well illustrated by the facts of this case. [61] One way of reading the provisions to avoid the anomaly is to read r 20.03 of the Federal Magistrates Court Rules as meaning that one proceeds as if no sequestration order had been made for all purposes except the application of s 52(4) of the Bankruptcy Act. The distinction between a de novo hearing and other forms of appeal concerns evidence and the relevance of the correctness of the order below. It is not concerned with time limits. Bearing in mind the possibility of reading the two provisions together in this manner and bearing in mind the anomalous result produced by the other construction, it appears to me that the first approach is to be preferred. [62] It follows that a sequestration order can be made on the de novo hearing of an appeal from a sequestration order notwithstanding that more than 24 months have elapsed since the filing of the petition. 132 The parties made no submissions as to whether by analogy with Totev v Sfar it could be argued that a determination was in fact made by the registrar in this case within time (to dismiss the application), and whether an exception to the operation of s 459R might be established: see also Menzies v Paccar Financial Pty Ltd [2011] FCA 460 at [58] (Bromberg J), citing Deputy Commissioner of Taxation v Clyne [1984] FCA 383; (1984) 4 FCR 156 (Toohey, Jenkinson and Wilcox JJ). 133 It seems to me that an argument by analogy with Totev v Sfar would have substance. It would protect the right of review under r 16 of the Rules and the 'constitutional imperative' that the exercise of delegated powers by a registrar be subject to review by a judge of the Court by way of hearing de novo: HVAC Constructions (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd [2002] FCA 1638; (2002) 44 ACSR 169 at [40]-[41] (French J); Van Gorp v Davy [2016] FCA 1385 (Farrell J). 134 However, whether or not Merrill Lynch Equities should be followed in the context of a review from a registrar's decision does not need to be determined on this application. 135 In the circumstances of this case, even had I granted an extension of time, I consider the application has no prospects of success, and so the inevitable result would have been that the registrar's order was simply affirmed or the application dismissed, an approach consistent with that in Deputy Commissioner of Taxation v Revolve Limited. Such an outcome would be permissible despite the decision being made outside the period prescribed by s 459R(1).

The slip rule 136 In light of my conclusion that s 459R(1) is of no relevance to the outcome, it is not necessary to determine Mr Owen-Pearse's submission that time should be extended by invocation of the slip rule. However, as the point was dealt with by the parties I will briefly address it. 137 There is no question that in some circumstances the effect of s 459R may be ameliorated by the slip rule: DDB Needham v Elyard at 223; Elyard v DDB Needham at 391-392. On the appeal in Elyard v DDB Needham, the Court accepted that the slip rule may be invoked 'where the proposed amendment is one upon which no real difference of opinion can exist' but said that it does not apply if the amendment is a matter of controversy and it does not extend to mistakes resulting from a deliberate decision (at 390-391 per Lockhart J, Black CJ agreeing). 138 The position is similar with respect to s 52 of the Bankruptcy Act, as discussed in Flint v Richard Busuttil & Co Pty Ltd [2013] FCAFC 131; (2013) 216 FCR 375 (Allsop CJ, Katzmann and Perry JJ); Ramsay Health Care Australia Pty Ltd v Compton [2016] FCAFC 125; (2016) 247 FCR 387 (Rares, Gleeson and Markovic JJ); and Luck v University of Southern Queensland [2018] FCAFC 102 (Logan, Mortimer and Charlesworth JJ). 139 Aspects of r 39.05 of the Federal Court Rules 2011 (Cth) reflect the slip rule. It provides as follows: The Court may vary or set aside a judgment or order after it has been entered if: (a) it was made in the absence of a party; or (b) it was obtained by fraud; or (c) it is interlocutory; or (d) it is an injunction or for the appointment of a receiver; or (e) it does not reflect the intention of the Court; or (f) the party in whose favour it was made consents; or (g) there is a clerical mistake in a judgment or order; or (h) there is an error arising in a judgment or order from an accidental slip or omission. 140 As to the invocation of r 39.05, Mr Owen-Pearse did not point to the particular limb relied upon, but as counsel for the company submitted, it would seem that the only limbs that could possibly be relevant are r 39.05(e), r 39.05(g) or r 39.05(h). 141 For the slip rule to apply, there must be a judgment or order in need of correction that was made within the prescribed time: Griffiths v Boral Resources (Qld) Pty Limited [2006] FCAFC 149; (2006) 154 FCR 554 at [33], [50] (Spender ACJ, Dowsett and Collier JJ); Flint at [34]-[35]. Mr Owen-Pearse did not articulate any particular order of the registrar that requires correction. 142 The registrar made five orders in total, as set out above at [6]. The 'order' which preceded the dismissal of the application was that of 22 May 2018 reserving the decision. The final order was that dismissing the application. 143 I will proceed on the assumption that Mr Owen-Pearse asserts that by the slip rule the 22 May 2018 order should be varied to include an extension of the period under s 459R to a date in the future which would permit any prospective review application to be brought and determined; or, alternatively, the final order dismissing the application should be corrected to extend the period.

The order of 22 May 2018 144 In Griffiths, the Full Court considered the effect of reserving judgment, and did not consider it was an order of adjournment or has any other particular significance. In that case, a creditor's petition had otherwise expired between the date of the hearing and the date of delivery of reasons. However, on the assumption that the step of reserving judgment comprised an order, their Honours said as follows: [68] Even assuming that the magistrate made an order on that date, we consider that the conditions precedent to the invocation of the slip rule did not arise. The only possible "error" would be the omission from the "order" of an extension pursuant to s 52 of the Bankruptcy Act. In that case it would be necessary to identify the accidental slip or omission which caused the error. The primary responsibility for making an application for such order rested upon the present respondent. Whether there was a slip or omission is a question of fact. In some cases, such as in Elyard, there may be direct evidence of an intention to make a relevant application, steps taken to bring about that result and a failure to carry the intention into effect. In other cases it may be possible to infer that such a step should have been taken, and that the failure to do so can properly be seen as an accidental slip or omission. Where the petition is likely to expire very shortly after the hearing, and prior to the preparation of a reserved judgment, such an inference may be available. [69] In the present case, the petition was presented on 11 September 2003 and heard on 11 November 2003. At the time at which judgment was reserved, almost ten months remained until the expiry of the petition. In those circumstances, it cannot be inferred that the respondent ought to have applied for an extension of time, and that the failure to do so was an accidental slip or omission. There is also no reason to infer that the magistrate then expected that the judgment would be reserved for such a lengthy period of time. It cannot be said that he committed any accidental slip or omission. It is most unlikely that with ten months to run, anybody would have anticipated that judgment might not be given within the lifetime of the petition. Perhaps, at some time prior to 11 September 2004, somebody should have realized that an extension might be necessary. Failure to take a step at that stage may have been a slip or omission, but no "error" in the "order" arose from it. 145 In Flint, where a petition was to lapse three months after the alleged order in respect of which the creditor sought to invoke the slip rule, their Honours said as follows: [38] …Thus, if there was an error on the part of either the representative of the creditor in not making the application for an extension on (or before) 29 August or in the federal magistrate not adverting to the question, it is not clear what course would probably have been taken and, a fortiori, not clear that an order would have been made at that time extending the life of the creditor's petition. 146 In Wu v Li [2017] FCA 500, Rares J considered circumstances where a trial judge, on hearing a creditor's petition, reserved his decision. The decision was reserved five months before the petition was due to lapse, and where there were no circumstances to suggest the matter would not be decided within that time. The decision was not delivered prior to the petition lapsing. His Honour noted, applying Flint, that the mere fact that a judge reserves on a creditor's petition cannot give rise to an expectation that an extension of time would automatically be granted. Further, his Honour noted that delay in the delivery of judgment does not indicate that a judge has made an accidental slip or omission at the time the proceedings were reserved, stating: [53] … the subsequent or unanticipated occurrence of new circumstances, or the oversight of a mere possibility, could not convert a rational and deliberate decision to reserve judgment, without considering the grant of an extension under s 52(5), into an accidental slip or omission that occurred on 3 May 2016 when his Honour reserved his decision. 147 Rares J also held that the 'order' reserving judgment was not an order to which the slip rule could apply. His Honour said: [66] … In my opinion, what his Honour recorded as "orders" on 3 May 2016 were not orders of a kind that were capable of being varied under r 39.05(h) or the slip rule. That is because neither "order" could have been the subject of any appeal. The act of reserving judgment and adjourning the proceedings to a date when reasons for judgment would be ready to be published and orders made was not the making of an order to which the slip rule could apply. Nor was the failure of Mr Kay to apply for, or his Honour to make, an order extending the period before which the petition would lapse an accidental slip or omission in the framing of the "order" recording the adjournment. [67] In my opinion, the "orders" made on 3 May 2016, or orders recorded, if either were an order, reflected all that his Honour intended to do. 148 I consider the above principles are applicable in this matter. 149 The act of reserving judgment on 22 May 2018 was not an order to which the slip rule would apply (Wu v Li). Regardless, in my view, the fact that the registrar reserved on the winding up application on 22 May 2018 does not give rise to an expectation that an extension of time under s 459R(2) would have been granted. Relevant issues would include the time pending until expiry of the six month period. In this case, there was some three months remaining until the period for determination lapsed. There is no evidence before me and no apparent reason as to why the registrar or the parties would have anticipated as at 22 May 2018 that the application would not have been determined in that period and no reason or obligation for the registrar to speculate as to whether there may be an application for a review of his decision and what might be required in order to accommodate any such review. The facts do not demonstrate that any accidental slip or omission was made.

The final order 150 Where the slip rule has been invoked in the context of s 459R, it has been in circumstances where the time period has elapsed before there has been any determination of the winding up application: for example, where the hearing of a winding up application has been adjourned to a date that expires after the six month period or where the application has been heard prior to expiry of the period, but judgment is not delivered until after it expires. 151 In this case, the application was determined within the six month period and there was no reason for the registrar to consider any extension of that period. The order dismissing the application brought about the exact result the registrar intended and was as reflected in his written reasons. The company submitted that it would be an odd result if a registrar were to anticipate and provide for an extension of time under s 459R whilst at the same time dismissing the same application. I accept that, based on the company's submissions, if an application had been brought at the time of the dismissal such application would not have been uncontroversial. It is by no means clear that an order dismissing and extending the life of the application would have been made. 152 Therefore, if s 459R had operated as a relevant bar, then I do not consider resort to the slip rule would have assisted Mr Owen-Pearse.

Vexatious proceedings order 153 Finally, I note that the company sought an order restraining Mr Owen-Pearse from instituting any winding up applications in this Court. It relies on, relevantly, the circumstances of this proceeding and also comments made about Mr Owen-Pearse's conduct in RH Mortgage Corporation Ltd and Rohanna Pty Ltd v Nu-Steel Homes Adelaide Pty Ltd. That is a substantive application and in light of the potential impact on Mr Owen-Pearse, I consider it should be dealt with separately if it is to be pursued, and with the benefit of further consideration by the parties.

Conclusion 154 It is my view that the substantive review application has no or no sufficient prospect of success to justify the grant of an extension of time. In those circumstances the application is dismissed. 155 I will invite submissions as to costs. I certify that the preceding one hundred and fifty-five (155) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Banks-Smith.

Federal Magistrates Court Rules 2001(Cth)

Corporations Act 2001(Cth)ss 459A, 459C, 459E, 459G, 459P, 459R, 459S, 467, 1322, Pt

At a glance

Court

Decision date

Before

Source

Judgment (29 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (74)

Cited By (5)