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[2001] WASC 249
defendant. Application to wind up Owston Nominees No 2 Pty Ltd dismissed; company to receive the costs of the application and any reserved costs; plaintiff free to issue another statutory demand for current...
Penrith City Council sought to wind up Owston Nominees on the basis of an unpaid statutory demand for rates. The company paid the full amount of the demand the day before the hearing. Master Bredmeyer held that although an applicant's entitlement to bring a s 459A application is fixed at filing, s 459A is discretionary and payment before hearing can be a decisive factor. Given the payment (including interest and costs) and the prejudice a winding up order could cause to refinancing, the court dismissed the winding up application and ordered costs for the company; the council may issue a new statutory demand for current rates.
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1,858 words · generated 15/07/2026
Penrith City Council applied to wind up Owston Nominees No 2 Pty Ltd (Owston), trustee for the Warren Anderson Family Trust, on grounds of insolvency following a statutory demand dated 8 December 2000 for unpaid rates. The statutory demand specified liabilities totalling $113,164.08, which included principal rates, $18,330.88 in interest and $5,534 for legal charges (see [1]). The winding up application proceeded in the Supreme Court of Western Australia, in chambers before Master Bredmeyer, with the hearing on 6 September 2001 and judgment delivered on 12 September 2001.
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Crucially, the day before the hearing the company tendered a bank cheque for the full amount of the statutory demand to the plaintiff's solicitor. The plaintiff informed the court it did not intend to accept the cheque and intended to return it, largely on the stated basis that if the company were ultimately wound up the payment would have to be returned as a preferential payment (para [2]). There was also another related winding up application (COR 130 of 2001) by a firm of solicitors in respect of fees, which had been adjourned sine die following an agreement to compromise the solicitor's claim (para [2]). The company was actively seeking refinancing, with two finance applications pending, one for $4.5 million (decision expected within two to three weeks) and another for $36 million (para [5]).
Master Bredmeyer declined to make a winding up order. He applied the well-established proposition that section 459A of the Corporations Law confers a discretion to order winding up, and that an applicant's status is determined at filing under s 459P(1), so payment after filing does not destroy the applicant's standing; however, payment after filing is a relevant circumstance in exercising the s 459A discretion (para [3]). Given the payment of the full demand (including interest and costs), and the potential injustice and commercial prejudice that a winding up order could cause to legitimate refinancing prospects, the Master dismissed the application and ordered that the company receive the costs of the application and any reserved costs (para [5]). He noted that the plaintiff remained free to issue another statutory demand for current rates outstanding (para [5]).
The decision rests on two legal pillars and an equitable evaluation.
First, the statutory framework. Section 459A is explicitly discretionary: it authorises the court to order a winding up but does not command it. Master Bredmeyer emphasised this textual point: "The use of the word 'may' gives a discretion" (para [3]). That phrasing frames the court's role as one of judgment rather than automaticity.
Second, the established treatment of statutory demands in the context of winding up applications. The Master followed the reasoning and result of Zeeman J in Deputy Commissioner of Taxation v Guy Holdings Pty Ltd and cited Re William Hockley Ltd for the proposition that an applicant's legal status to seek winding up is assessed as at filing under s 459P(1) (para [3]). That means an applicant who validly filed the application retains standing even if the company later pays the demand. However, the court is not compelled to grant winding up where subsequent events make such an order inappropriate.
Third, equitable and pragmatic considerations informed the exercise of the discretion. The company had paid the precise amount demanded, inclusive of interest and legal costs, thereby compensating the plaintiff to an extent. The Master expressly found it "would be most unjust to wind up this company in these circumstances" (para [5]). He factored in the real commercial consequences of winding up while refinance applications were pending, observations framed as practical concerns about unfair prejudice to legitimate business operations (para [5]). The combination of payment plus the risk of thwarting refinancing supported dismissal of the order.
Finally, the court addressed costs. Because it was the plaintiff's application that prompted the payment, the Master considered that the company should recover costs and any reserved costs (para [5]). He also left the plaintiff free to pursue fresh statutory demand proceedings for any current rates outstanding (para [5]), thus balancing the council's substantive remedy with protection against immediate and perhaps disproportionate consequences.
Before this judgment, the legal position on statutory demands and winding up proceedings was well-established: an applicant's entitlement to bring a winding up application is determined as at filing, and the court has a discretionary power under s 459A (the Master cited Zeeman J and Re William Hockley to this effect at para [3]). That positioning emphasises the separation between standing at filing and the court's subsequent discretionary power.
This judgment does not alter statutory provisions. Instead it applies them in a fact-sensitive way, reinforcing the principle that payment of the statutory demand after filing does not necessarily render the application unchallengeable in procedural standing terms, but it does permit the court to refuse a winding up order where justice, fairness and the particular facts demand it. The decision confirms two practical consequences:
Thus the "after" state is an applied reaffirmation: courts will look beyond technical entitlement at filing and weigh post-filing events, including settlement or payment, and consequences for the company's ongoing business proposals, in deciding whether to make a winding up order.
Passage (para [3]): "Section 459A of the Corporations Law provides that: '... the Court may order that an insolvent company be wound up in insolvency.' The use of the word 'may' gives a discretion."
Plain English: The law does not force the court to wind up a company just because it appears insolvent. The court can decide whether making a winding up order is appropriate in the circumstances.
Passage (para [3]): "The status of the applicant to seek a winding up order is unaffected by the payment of the amount the subject of the statutory demand. That status is to be determined as at the time when the application was filed (s 459P(1) ...). The question is whether it is appropriate to order that the respondent be wound up ... when ... the amount of the statutory demand has been met and there is no evidence as to what the actual financial position of the respondent might be."
Plain English: Whether the person who filed the winding up application had the right to do so depends on the position when they filed. If the company later pays the debt, that does not undo the filing, but the court must still decide whether, given the payment and uncertain finances, it makes sense to wind the company up.
Passage (para [5]): "I consider it would be most unjust to wind up this company in these circumstances. The debt ... has been paid in full. ... I consider it just that this application be dismissed."
Plain English: The judge decided that, because the council has now been paid and the company faces imminent legitimate business transactions, dissolving the company would be unfair. So the judge refused to wind the company up.
Passage (para [5]): "It is open to the plaintiff to issue another statutory demand immediately for the current rates outstanding. The application to wind up will be dismissed but I consider that the company should get the costs of the application and any reserved costs because it was the application which produced the payment."
Plain English: The council can try again with a fresh demand for any new debts, but the current case is dismissed and the company should be paid its legal costs because the council's action forced the company to pay.
This judgment is directly applicable where:
In those circumstances, the court is likely to treat the payment as a strong reason to decline to make a winding up order, particularly where the creditor can seek fresh statutory demands for any continuing or subsequently accruing debts.
This judgment itself cites and applies established authority (Deputy Commissioner of Taxation v Guy Holdings, Re William Hockley) for the propositions that s 459A is discretionary and that applicant status is fixed at filing (para [3]). The present decision applies those principles to an evident set of facts and reaches a straightforward discretionary outcome.
The judgment does not, within its text, record subsequent appellate treatment or subsequent authorities applying this precise decision. The Master expressly followed Zeeman J rather than purporting to create a novel rule. Accordingly, the decision is best read as an instance of applied discretion under s 459A consistent with earlier authorities rather than as a new binding precedent reshaping the landscape.
Grounded in this judgment, the following areas remain matters for further judicial development or clarification:
The weight to be attached to payment of a statutory demand in different factual matrices. Here payment included interest and costs and refinancing consequences were immediate; different fact settings, such as partial payment, disputed items, or payments subject to conditions, may warrant different discretionary outcomes (paras [2], [5]).
The significance of a creditor's refusal to accept payment before hearing. The plaintiff in this case said it would not accept the cheque because of concerns about preferential payment in winding up (para [2]). The judgment records that assertion but treats the payment itself as relevant. Future cases may need to clarify when a creditor's refusal to accept payment should be treated as an indication of a bona fide continuing dispute, or merely a tactical step.
The degree of evidence required as to the company's broader financial position if the statutory demand amount has been paid. The Master remarked there was "no evidence as to what the actual financial position of the respondent might be" (para [3]). When and how much financial disclosure is required to support or resist a discretionary winding up order remains an area for elaboration.
Interaction with other concurrent insolvency proceedings or compromises. The judgment noted another adjourned filing and a written agreement to pay a separate debt over 12 months (para [2]). How these parallel arrangements should affect a s 459A discretion in other cases may require more detailed guidance.
Those questions are logical extensions of the reasoning adopted by Master Bredmeyer, and will be matters for later courts to develop with fuller factual matrices and, potentially, appellate scrutiny.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION : PENRITH CITY COUNCIL -v- OWSTON NOMINEES NO 2 PTY LTD [2001] WASC 249
Corporations - Application to wind up based on unpaid statutory demand - Debt paid at last moment
Australian Mid-Eastern Club Ltd v Yassim (1989) 1 ACSR 399
1 MASTER BREDMEYER: This is an application by the plaintiff to wind up the defendant, Owston Nominees No 2 Pty Ltd ("Owston"), in insolvency. Owston is the trustee for the Warren Anderson Family Trust. The defendant's solicitor has just got off the record and I gave Mr Anderson leave to represent his company. The plaintiff's application to wind up is based on an unpaid statutory demand which issued against Owston on 8 December 2000. The demand is for unpaid rates on a number of properties. The rates are set out in a schedule to the demand which covers six pages. The rates total $113,164.08 and cover a period from November 1998 through to August 2000. The total debt includes $18,330.88 for interest and $5,534 for legal charges. It would appear from the statutory demand that a judgment has been obtained for these debts, so the total of the judgment debts, plus interest and costs now equals $113,164.08.
2 I am told that, yesterday, the defendant tendered to the plaintiff's solicitor, a bank cheque for the debt the subject of the statutory demand, namely $113,164.08. I am told that the plaintiff is not minded to accept this cheque and intends to return it, the reason being that if the company is wound up this money would have to be returned anyway as a preferential payment. What is the likelihood of the company being wound up otherwise than as a result of this application? In COR 130 of 2001 Skea Nelson & Hager v Owston Nominees No 2 Pty Ltd, the plaintiffs, who are a firm of solicitors, have brought an application to wind up the company for insolvency. The application is based on a statutory demand issued for legal fees. I am told by Mr Anderson that he has entered into a written agreement with the plaintiff in that action to pay the debt in a compromised figure in 12 months time. The application in that action is presently adjourned sine die. It was lodged on 24 April 2001.
3 Section 459A of the Corporations Law provides that:
"On an application under section 459P, the Court may order that an insolvent company be wound up in insolvency."
The use of the word "may" gives a discretion. I propose to follow the analysis and the result achieved by Zeeman J in Deputy Commissioner of Taxation v Guy Holdings Pty Ltd [1994] TASSC 126; (1994) 12 ACLC 966. I agree with the Judge at 969:
"The presumption that the respondent is insolvent does not require that the application be granted. The company being insolvent, s 459A authorises me, but does not require me to make an order that it be wound up in insolvency. There can be no doubt but that s 459A confers a discretion. ...
The status of the applicant to seek a winding up order is unaffected by the payment of the amount the subject of the statutory demand. That status is to be determined as at the time when the application was filed (s 459P(1) and see Re William Hockley Ltd [1962] 1 WLR 555). The question is whether it is appropriate to order that the respondent be wound up in insolvency when by s 459C(2) it is deemed to be insolvent but the amount of the statutory demand has been met and there is no evidence as to what the actual financial position of the respondent might be."
4 The plaintiff presses for a winding up because it says it has further rates outstanding of $54,875.03. I assume, from a reading of the statutory demand, that those are rates due and owing as from 1 September 2000.
5 I consider it would be most unjust to wind up this company in these circumstances. The debt, the subject of the statutory demand has been paid in full. That debt includes interest and legal costs which is some recompense to the plaintiff which has had to chase this company for payment of these debts. The company is seeking to obtain refinance and has two applications on foot; one, I am told, for $4.5 million from one lender and another for $36 million from another lender. An answer on the first and smaller of the two applications for finance is expected within two to three weeks. I have not seen the loan application documents, nor the requirements of the lender, but I can well imagine that the existence of a winding up application might well torpedo any attempt to get refinance. I consider it just that this application be dismissed. It is open to the plaintiff to issue another statutory demand immediately for the current rates outstanding. The application to wind up will be dismissed but I consider that the company should get the costs of the application and any reserved costs because it was the application which produced the payment.
Penrith City Council
Owston Nominees No 2 Pty Ltd [2001] WASC 249
Application to wind up Owston Nominees No 2 Pty Ltd dismissed; company to receive the costs of the application and any reserved costs; plaintiff free to issue another statutory demand for current rates outstanding (para 5).