(2) The Court is not to grant leave under subsection (1) unless it is satisfied that the ground is material to proving that the company is solvent."
9 There has been no grant of leave under s.459S(1). Nor has there been any application for leave.
10 It seems to me that two issues arise here. The first is whether a defendant which concedes insolvency and seeks favourable exercise of the s.467(1)(a) discretion in the form of an order of dismissal on the basis of abuse of process can be said, in terms of s.459S(1), to "oppose the application" on the "ground" of abuse of process.
11 As Mr Harris SC pointed out, s.467(1)(a) allows the court to dismiss the winding up application "even if a ground has been proved on which the court may order the company to be wound up on the application". Mr Harris further pointed out that the words I have just quoted did not form part of comparable provisions of predecessor legislation, being s.367(1) of the Companies Act 1981 (Cth) and corresponding State and Territory codes and s.225(1) of the Companies Act 1961.
12 Mr Harris recognised that what s.467(1)(a) calls "a ground ... on which the court may order the company to be wound up on the application" - namely, insolvency - has been proved. He does not, he says, seek to "oppose" the winding up application on the ground of abuse of process. Rather, that ground is relied on as a basis for inviting the court to exercise its discretion favourably to the defendant. And that, it is submitted, is a different thing.
13 I do not accept that this is the correct approach. A defendant inviting dismissal of a winding up application by way of exercise of the court's discretion (rather than on the basis of some positive defence) must, in my view, be taken to "oppose the application" in terms of s.459S(1). Any contention, however based, that the application should be dismissed represents opposition to the application. The ground on which the defendant seeks favourable exercise of the court's discretion is a ground of opposition to the application.
14 Because, on that basis, s.459S is relevant, the second question arises, namely, whether reliance on the abuse of process ground is precluded by s.459S(1).
15 The statutory demand could have been challenged only by reference to circumstances existing before the end of the 21 day period specified by s.459G(2). I refer in that connection to cases such as Perpetual Nominees Ltd v Masri Apartments Pty Ltd (2004) 49 ACSR 719 (affirmed (2004) 52 ACSR 136). The question would have been as to the motives behind the issue and service of the statutory demand, as demonstrated by the facts as they existed at that time.
16 When it comes to the question whether winding up proceedings involve an abuse of process, the position must be examined in the light of circumstances existing when those proceedings are pursued and prosecuted. The second set of facts, at least in this case, will be larger than the first. The implications of those facts as a whole must be judged. The circumstance that they include some facts that might have been relied on under s.459J(1)(b) will not be a barrier to consideration of the whole. The ground emerging from the whole of the facts was not available at the s.459G stage.
17 Abuse of process is concerned predominantly with propriety of purpose. That issue must be judged according to the legitimate objectives of the particular process. A challenge under s.459J(1)(b) on the grounds of abuse of process would pay attention to the objectives properly pursued by service of a statutory demand, whereas an abuse of process allegation in relation to the pressing of winding up proceedings would pay attention to the objectives for which winding up proceedings are properly pursued.
18 It seems to me that, even apart from the different timing factors I have mentioned, the two purposes do not coincide. A creditor serving a statutory demand aims, first and foremost, to obtain payment of the creditor's debt. The word "demand" means what it says: the creditor is demanding payment of what is due. The creditor may have a second or subsidiary purpose, which is to obtain the benefit of a presumption of insolvency if the primary purpose of eliciting payment is not achieved and no successful application to have the demand set aside is made. But the principal purpose is to obtain payment.
19 A winding up application is designed to serve a different purpose, at least where it is pursued in the present circumstances where a presumption of insolvency has arisen, and the defendant company, while conceding insolvency, consciously and deliberately chooses to defend. In those circumstances, proper pursuit of winding up proceedings entails the purpose of securing the imposition of a scheme of insolvent administration aimed at ending the company's activities, seeing assets marshalled and the claims of creditors ascertained and culminating in payment to creditors of whatever is available from the insolvent estate. The logical and expected outcome will be the imposition of that regime (for the benefit of all creditors), not payment of the plaintiff's debt.
20 These differences in purpose, it seems to me, emphasise the separateness of application of abuse of process principles in relation to a creditor's service of a statutory demand and application of the same principles in relation to the creditor's pursuit of winding up proceedings where insolvency is conceded, at least where, at the later stage, the alleged abuse is not really a collateral allegation of dispute about the existence of the debt grounding the statutory demand: see Radiancy (Sales) Pty Ltd v Bimat Pty Ltd [2007] NSWSC 962 and cases there discussed.
21 It was submitted by Mr Harris that s.459S(2) in any event indicates that s.459S as a whole is concerned only with grounds related to solvency. There is certainly that flavour to s.459S(2), in that it precludes a grant of leave under s.459S(1) unless the matter to be relied on will be material proof of solvency; also that there is a general indication that solvency should normally be the only issue at trial. But I do not think that s.459S as a whole can be regarded as confined in its operation to cases where solvency is in issue. However, in view of what I have said earlier, I do not need to express a concluded view on this last submission.
22 I am of the opinion that s.459S does not preclude the advancing by the defendant of the contention that the course of conduct engaged in by the plaintiff up to the present time causes prosecution of the winding up application to be an abuse of process. Nor does any effect of s.459S stand in the way of the defendant's adducing evidence said by the defendant to justify or contribute to a finding of abuse of process in relation to pursuit of the winding up proceedings. This is so even though some of the relevant facts could have been brought forward by the defendant had it challenged the statutory demand under s.459J(1)(b) on the grounds of abuse of process.
23 I shall now deal with specific objections to affidavits in accordance with this general ruling .
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