Shakespeares Pie Co Australia Pty Ltd v Multipye Pty Ltd

CATCHWORDS : CORPORATIONS - whether application for extension of time for compliance with statutory demand is out of time - meaning of "finally determined or otherwise disposed of" - irrelevant that appeal available

LEGISLATION CITED : Corporations Act 2001 (Cth), ss.459F(1)(a)(i), (2)(a)(ii), 459S, 465C

Buckland Products Pty Ltd v Deputy Commissioner of Taxation [2003] VSCA 85 David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 CASES CITED : Ketrim Pty Limited v Jaeger Corporation (2002) 21 ACLC 8 Livestock Traders International Pty Ltd v BUI (unreported, FCA, Jenkinson J, 7 October 1996) Meehan v Glazier Holdings Pty Ltd (2005) 53 ACSR 229

Shakespeares Pie Co Australia Pty Limited - Plaintiff PARTIES : Multipye Pty Limited - Defendant

Mr N.J. Kidd - Plaintiff COUNSEL : Mr R.D. Newell - Defendant

PricewaterhouseCoopers Legal - Plaintiff SOLICITORS : L.C. Muriniti & Associates - Defendant

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

4979/05 SHAKESPEARES PIE CO AUSTRALIA PTY LIMITED v MULTIPYE PTY LIMITED

1 I heard on 7 November the application of the defendant for orders in terms of its interlocutory process filed on 3 November 2005, that is, an order staying the winding up application against it pending determination of an appeal against the decision of Macready AsJ dismissing the defendant's application for an order setting aside the relevant statutory demand; and an order under s.459S of the Corporations Act 2001 (Cth) for leave to defend the winding up application on grounds that were (or could have been) relied on in challenging the statutory demand. 2 The order of dismissal was made by Macready AsJ on 11 August 2005. 3 At the conclusion of the hearing on 7 November, I ordered that written submissions be filed in three stages. Two of those stages have been completed. It remains for the defendant, as applicant, to file submissions in reply. 4 In the meantime, however, the defendant has made this morning an oral application for leave to amend the interlocutory process. To describe that as coming at the eleventh hour would be an understatement. The amendment would involve the addition of a claim for an order that time for compliance with the statutory demand be extended until determination of an appeal from the decision of Macready AsJ, or further order. A holding summons has been filed in the Court of Appeal. 5 It has been submitted on behalf of the plaintiff that the new relief sought is untenable, in that the prospects of obtaining an order extending time in the way envisaged are hopeless, with the result that the application for leave to amend should be dismissed. Reference is made to the statutory scheme and, in particular, to s.459F(2)(a)(ii), which says that the time for compliance with a statutory demand, in circumstances of the present kind, expires seven days after the application for an order setting the statutory demand aside "is finally determined or otherwise disposed of". 6 The defendant says that that event of final determination or final disposition should be seen as not having occurred while ever there remains an opportunity to appeal. It is submitted on the defendant's behalf that an observation in Livestock Traders International Pty Ltd v BUI (unreported, FCA, Jenkinson J, 7 October 1996) leaves open the possibility that a s.459G application is not "finally determined" until all possibility of appeal has passed. 7 The application for leave to amend is based squarely on that proposition. The proposition is, however, one that has been directly addressed in subsequent cases and decisively rejected. I was taken to the judgment of Campbell J in Ketrim Pty Limited v Jaeger Corporation (2002) 21 ACLC 8 where the matter is dealt with in paragraphs 20 to 22 as follows: "20 Further, were any other construction of 'finally determined or otherwise disposed of' in s 459F(2)(a)(ii) to be adopted, it would mean that if there were to be an application to set aside a statutory demand, and an appeal were to be lodged in accordance with the court rules, then, automatically, the time for compliance with the statutory demand would not arise until seven days after (at least) the time when the last of the appeals had been decided. It seems to me inconsistent with the policy which underlies the sections that any such result should arise.

21 It is possible for an application for an extension of time for compliance, under the second limb of s 459F(2)(a)(i) to be made to cover the time when an appeal is awaiting determination: Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1997) 25 ACSR 675 at 701; Graywinter Management Pty Ltd v Deputy Commissioner of Taxation (1996) 22 ACSR 636. It is possible for an application to extend time for compliance to be granted even after the Court has decided to dismiss an application to set it aside: Vista, Equuscorp at 701.. In David Grant , at 277 Gummow J, with Brennan CJ and Gaudron, McHugh and Dawson J noted that an extension granted under this second limb of 459F may itself be extended on a further application under paragraph (a). Thus, the second limb of s 459F(2)(a)(i) confers a power which enables the Court, throughout the running of an appellate process, to grant such extensions as are appropriate from time to time, given the way in which an appellant is conducting or progressing an appeal, and any other relevant matters. But if an extension of time for compliance with a statutory demand is to be in place to cover an appeal against a decision refusing to set aside the statutory demand, that extension of time must be asked for, within the time when the statutory demand has still not expired, and granted within that time. For someone who has just lost an application to set aside a statutory demand to ask for, and be granted, a stay of the order dismissing the application to set aside is not the same thing as being granted an extension of time for compliance with the statutory demand.

22 It follows that, by reason of the Master not having made an order, on 14 June 2002, extending the time for compliance with the statutory demand, that the time for compliance with it has now run out. That is so whether the time for compliance with it is taken to be seven days after the Master's judgment, or whether, in accordance with the passage I have earlier quoted from Vista at 297, the time for lodging an appeal should be added onto those seven days. Either way, the time has passed." 8 His Honour's observations support the view that an application for an extension of time at this point would be hopeless. That view is strengthened and consolidated by the decision of the Victorian Court of Appeal in Buckland Products Pty Ltd v Deputy Commissioner of Taxation [2003] VSCA 85. I quote paragraphs 6 to 9 of the judgment of Phillips JA (with whom Chernov and Eames JJA concurred): "[6] Mr Guss has now repeated to us the submission that was made below and rejected with regard to the proper construction of the phrase 'finally determined'. He made a valiant attempt to persuade us that the application under s 459F was not 'finally determined' so long as it remained subject to appeal. In so submitting he made it clear that he was not concerned with an appeal that could be brought by extending time or granting leave; he was referring only to an appeal brought as of right and within the time laid down for appeal; and, moreover, he stressed, an appeal which, as in the case of an appeal from Master to judge, was by way of hearing de novo. However, in such a case, he argued, the determination of the Master could not be regarded as final in any relevant sense.

[7] So far as this last is concerned, that the appeal was by way of hearing de novo, I do not regard it as a relevant consideration. That the appeal from the Master to the judge is to be heard de novo, albeit on the evidence before the Master unless leave is given to adduce further evidence, does not mean that the Master's order is of no consequence. Of course it may be set aside on appeal, but unless and until it is set aside it is final and conclusive, as Warren, J herself observed.

[8] As to the other aspect, that the Master's order was subject to appeal, again I am not persuaded. The concept that the determination of the Master is not final so long as it remains amenable to appeal, even an appeal as of right, introduces a significant qualification on what otherwise appears to me to be a fixed and certain regime prescribed by s 459F and s 459G. (As to the latter, see especially David Grant & Co Pty Ltd (receiver appointed) v Westpac Banking Corp 1 . ) It would mean that a company, by exercising rights to appeal first to the judge and then from the judge to the Court of Appeal, might delay the characterisation of the Master's order as a final determination for more than a year and, at the end of the day, what then? If both appeals fail, the Master's order is then to be seen, at long last, as having been a final determination, but as at what date does that character attach? Mr Guss found it difficult to give an answer that was wholly satisfactory and that is not surprising. For the regime prescribed by s 459F is relatively simple and straightforward and it does not admit of the construction of 'finally determined' that Mr Guss was urging.

[9] Application under s 459G to set aside the statutory demand was "finally determined" within the meaning of 459F(2)(a)(ii) when the Master's order was made on 21 June 2001 and the fact that that order was liable to appeal was nothing to the point. If the company was wishing to appeal it could do so, but unless the appeal was heard and determined before the expiry of the period for compliance otherwise fixed, an extension of the time for compliance had to be obtained. Without it, there could be no point in the continued prosecution of the appeal, for, the period of compliance having ended before the appeal was heard and determined, the consequence prescribed by s 459F(1) attached, with all that followed under the statute. There can be no occasion, in my opinion, for adopting a construction of s 459F(2)(a)(ii) that would require that the consequence prescribed by subs (1), having once attached, should then be undone because of the exercise of some right of appeal. Once that consequence attached, it remained attached (as indeed Gummow, J was disposed to suggest in David Grant, albeit in a slightly different context)." 9 That position has been accepted in this State. In Meehan v Glazier Holdings Pty Ltd (2005) 53 ACSR 229, a decision of the Court of Appeal of this Court, Young CJ in Eq said, at paragraph 64: "The consistent ruling of courts has been that 'final determination' under s.459F occurs when the master or judge at first instance gives his or her decision: Buckland Products Pty Ltd v DCT [2003] VSCA 85."

10 In all these cases the possibility of appeal, or the potentiality for appeal, was before the court. 11 In the light of, particularly, the decision of the Victorian Court of Appeal in Buckland Products (and the point that it makes regarding the nature and purpose of the statutory scheme, as explained in David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265) and the observations of Campbell J towards the end of paragraph 21 in Ketrim, I regard as hopeless the prospects of the defendant's succeeding, at this point, upon an application for an extension of time under s.459F(1)(a)(i). Section 459F(2)(a)(ii) has already operated and there is no scope for that somehow to be reversed by an order under s.459F(1)(a)(i). As a result, the application to amend in that respect will be dismissed. 12 There is a second leg to the amendment application. The defendant seeks leave under s.465C to amend its stated grounds of opposition to the winding up application by recasting or expanding the basis on which the offsetting claim of $125,000 is said to be available. The desire is to add a component referring to the plaintiff's having been knowingly concerned in a breach of trust. 13 As I see it, that really involves nothing new, except categorisation. It has been made clear that no further evidence would be led. The court may grant leave to expand the grounds of opposition and I see this as an appropriate case for doing so as nothing really new will be involved. That part of the application to amend will accordingly be acceded to. The parties will settle a minute of order to give effect to this last part of my decision. 14 The defendant will file its submissions in reply and any further submissions about the $125,000 item and its new basis by Monday next. Any submissions of the plaintiff respondent in relation to the new configuration of the $125,000 item will be filed within two days thereafter.

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