Westend Asset Pty Ltd v Deputy Commissioner of Taxation

relevant law 7 Pursuant to s 459F(2) of the Act, the period for compliance with a statutory demand is: (a) if the company applies in accordance with section 459G for an order setting aside the demand: (i) if, on hearing the application under section 459G, or on an application by the company under this paragraph, the Court makes an order that extends the period for compliance with the demand - the period specified in the order, or in the last such order, as the case requires, as the period for such compliance; or (ii) otherwise - the period beginning on the day when the demand is served and ending 7 days after the application under section 459G is finally determined or otherwise disposed of; or (b) otherwise - 21 days after the demand is served.

plaintiff's submissions 8 In oral submissions at the hearing of the application, the plaintiff presented a two-stage submission. 9 First, the plaintiff submits that provided an application for an extension of time is filed before the expiration of the period fixed for compliance with a statutory demand, the Court has jurisdiction pursuant to s 459F(2)(a)(i) of the Act to extend the period for compliance until the date upon which a judgment on an appeal is given following the Court dismissing an application to set the statutory demand aside, even though the hearing of the application is after the expiration of the compliance period. In support of this submission, the plaintiff principally relies on two Federal Court decisions: Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1997) 25 ACSR 675 (Equuscorp), a unanimous decision of the Full Federal Court, and Graywinter Management Pty Ltd v Deputy Federal Commissioner of Taxation (1996) 22 ACSR 636 (Graywinter Management), a decision of Finn J. The plaintiff contends that an application for an extension of time within which to comply with the defendant's statutory demand was filed on 11 December 2012, being one day before the expiration of the period fixed for compliance with the demand and so the Court now has jurisdiction to make an order extending the compliance period. 10 While the plaintiff accepts that the period for compliance with the defendant's statutory demand has now expired, it submits that the Court has the power under s 23 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) to make a nunc pro tunc order extending the period for compliance with the defendant's statutory demand until the determination of the plaintiff's appeal from the judgment of Gilmour J. 11 As to the merits of the plaintiff's case, the plaintiff relies on the affidavit of Ms Cassandra Flanigan, an office assistant employed by the solicitors for the plaintiff. Ms Flanigan deposes that on 11 December 2012 at approximately 3:45pm she went to the Federal Court registry in Perth to file the originating application. She states that when at the registry she provided a letter to the registry officer from the solicitors for the plaintiff, requesting that the application be listed for hearing on an urgent basis. Ms Flanigan deposes that following an approximately 20-30 minute wait during which the request was apparently considered by a registrar of the Court, she was informed by the registry officer that the registrar had determined that the application was not urgent and thus that it would not be listed for hearing on an urgent basis. 12 The plaintiff submits that an application under s 459F(2)(a)(i) of the Act should be determined having regard to the prospects of success for the plaintiff and the balance of convenience: Energy Equity Corporation Ltd v Sinedie Pty Ltd [2002] WASCA 3 (Energy Equity) at [5], [11]. 13 The plaintiff contends that it has an arguable case in respect of its appeal on the basis that the relevant provisions of the Taxation Administration Act 1953 (Cth) were not considered in Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41; (2008) 237 CLR 473, a case cited by Gilmour J, and that its submissions on this case were not adequately considered by his Honour. 14 The plaintiff also contends that if an extension of time is not granted this will have the effect of rendering the plaintiff's appeal nugatory, as the plaintiff will be taken to have failed to comply with the statutory demand and thus the defendant will have a right to apply for the winding up of the plaintiff: Energy Equity at [9].

defendant's submissions 15 The defendant submits that the Court has no jurisdiction to extend the period for compliance with a statutory demand after the period has expired, whether or not the application for such an order was filed within the period: Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2008] HCA 3; (2008) 232 CLR 314 (Aussie Vic) at [3] and [24] (Gleeson CJ, Hayne, Crennan and Kiefel JJ). The defendant contends that the period for compliance with the defendant's statutory demand expired on 12 December 2012: Ketrim Pty Ltd v Jaeger Corporation Pty Ltd [2002] NSWSC 871; (2003) 21 ACLC 8 (Ketrim) at [18]-[20]; Buckland Products Pty Ltd v Deputy Commissioner of Taxation [2003] VSCA 85 (Buckland Products) at [9] (Phillips JA). 16 However, the defendant informs the Court that if the Court considers that it does have jurisdiction, then the defendant would not oppose the making of an order extending the period for compliance with the defendant's statutory demand in the terms sought.

consideration 17 It is settled that the Court has jurisdiction to extend the period for compliance with a statutory demand until the date upon which a judgment on an appeal is given following the Court dismissing an application to set the statutory demand aside: Equuscorp at 701. 18 The only point in contention between the parties is whether the Court has jurisdiction to extend the period for compliance with a statutory demand after the period has expired. The plaintiff submits that the Court does have jurisdiction, provided an application is made before the period expires. The defendant submits that the Court does not have jurisdiction once the period expires. 19 In Graywinter Management, a decision relied upon by the plaintiff, two companies, GM Pty Ltd (GM) and GP Pty Ltd (GP), were each served with statutory demands by the Deputy Commissioner of Taxation in respect of unremitted group tax. On 22 November 1996, following an application pursuant to s 459G(1) of the Corporations Law (which is identical to s 459G(1) of the Act), orders were made determining the amounts payable by GM and GP under the statutory demands and extending the time for compliance with them until 13 December 1996. The application before Finn J, which was heard and determined on 9 December 1996, was for a further extension of the time for compliance until 21 days after the hearing and determination of an appeal in a related proceeding. 20 His Honour, at 638, noted that in David Grant & Co Pty Limited v Westpac Banking Corporation (1995) 184 CLR 265 (David Grant) at 278, Gummow J (with whom all members of the High Court agreed) observed that an extension given under s 459F(2)(a) of the Corporations Law (which is identical to s 459F(2)(a) of the Act) may itself be extended on further application. Further, Finn J noted that "[t]his unqualified, but general, statement has been treated … as allowing extension applications for so long as the period for compliance has not expired." As such, his Honour considered that as the application for an extension of time had been made within the time for compliance, the Court had jurisdiction and the application needed to be considered on the merits. 21 The plaintiff contends that Graywinter Management is authority for its submission. However, notwithstanding later authority (to which I will shortly refer), it should be noted that in Graywinter Management both the application for an extension of the period for compliance and the order extending this period were made before the period expired. 22 The plaintiff also relies on Equuscorp. Equuscorp concerned an appeal from a decision regarding an application pursuant to s 459G(1) of the Corporations Law. On 12 May 1997, the primary judge made orders varying the relevant statutory demand. His Honour also ordered that the period for compliance with the statutory demand be extended to 2 June 1997 (the period would otherwise have expired on 19 May 1997, pursuant to s 459F(2)(a)(ii) of the Corporations Law). On 29 May 1997, upon the appellant's motion, the primary judge made a further order extending the period until the determination of the appeal. On appeal, this latter order was the subject of a cross-appeal on the ground that the primary judge had failed to specify a period when extending the time for compliance. The effect of the order, it was said, was to extend the statutory demand indefinitely rather than for a specified period. 23 The Full Court noted, at 701, that in Vista Commercial Construction Pty Ltd v Commissioner of Taxation (1997) 79 FCR 288 (Vista) the Full Court held that there is jurisdiction in an appropriate case to extend the time for compliance with a statutory demand after the court has determined to dismiss an application to set it aside. The Court in Equuscorp then held that the period of the extension was defined with precision by the order and, provided an application for an extension is brought before the expiry of the period fixed for compliance, that period can be further extended even if the s 459G application has been determined. Several cases were cited in support of this proposition, including Graywinter Management, Graywinter Properties Pty Ltd v Dyer (1996) 15 ACLC 302 (Graywinter Properties) and Livestock Traders International Pty Ltd v Bui (1996) 22 ACSR 51 (Livestock Traders). 24 However, it should again be noted that in Equuscorp the primary judge made orders extending the period for compliance with the statutory demand before the period expired. Similarly, in Vista the decision of the primary judge (which concerned a refusal to extend the period for compliance with a statutory demand), which was the subject of the appeal to the Full Court, was made before the period expired. 25 Further, in Livestock Traders, Jenkinson J refused an application to extend the time for compliance with a statutory demand after the s 459G proceeding had been completed on the ground that at the time the application was made the time for compliance had passed. Likewise, in Graywinter Properties, Ryan J held the Court had no power to extend the time for compliance with a statutory demand on the ground that by the time of the hearing the time for compliance had expired, notwithstanding that the application to extend time was made on the last day for compliance. 26 In Vista, at 296-297, both Livestock Traders and Graywinter Properties were referred to with apparent approval. 27 In my view, the weight of authority is directly in support of the defendant's submission. For example, in Ketrim, Campbell J in the Supreme Court of New South Wales commented, at [21] and [23], that: 21 … 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. … 23 When the time for compliance has passed … there is no jurisdiction for the court to extend the time. 28 In Buckland Products, a decision of the Court of Appeal of the Supreme Court of Victoria, Phillips JA (with whom Eames and Chernov JJA agreed) commented with respect to the relevant application, at [9], that: 9 [The] [a]pplication 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. 29 In G & J Gears Australia Pty Ltd [2006] FCA 330; (2006) 229 ALR 638, Kenny J held, at [49]-[50], that: [49] … the court can only make an order under s 459F(2)(a)(i) extending the time for compliance prior to the end of the period for compliance … The power to extend time after the end of the period for compliance would introduce a degree of uncertainty incompatible with the statutory regime: see also Buckland Products at [8] per Phillips JA. [50] Equuscorp is not authority to the contrary. Although a passage at 701 might be construed in this way, the references in this passage to some of the cases cited above make it clear that it is not to be so understood. 30 Finally, this issue also arose before the High Court in Aussie Vic. In Aussie Vic, the respondent served a statutory demand upon the appellant. A master of the Supreme Court of Victoria dismissed the application to set aside the statutory demand but ordered that the time for compliance with the demand be extended. The appellant then filed a notice of appeal. After the time fixed by the master as the time for compliance with the statutory demand had expired, but before the appeal had come on for hearing, the appellant applied for an order further extending the time for compliance. The application for a further extension and the appeal were dismissed by a judge of the Supreme Court and on appeal by the Court of Appeal. The issue on appeal to the High Court was whether the time for compliance with a statutory demand can be extended after it has expired. 31 A majority of the High Court (Gleeson CJ, Hayne, Crennan and Kiefel JJ) held that if the period for compliance with a statutory demand has expired the Act does not permit the making of an order extending the period for compliance. At [24] their Honours explained: 24 An order made after the time for compliance had expired, but which sought to extend the period for compliance, would not, in its terms, alter the fact that a failure to comply with the demand had then occurred. But that conclusion depends upon identifying that there was a failure to comply. Whether there has been a failure depends upon identifying the end of the period of compliance and the period of compliance is to be fixed in accordance with s 459F(2). The appellant's argument that an order extending the time for compliance with a statutory demand can be made after the period has expired can find no textual footing in s 459F(2). Although s 459F(2)(a)(i) refers to 'the last such order' extending the time for compliance with a statutory demand, that cannot include an order made after the period has expired. 32 The plaintiff submits that Aussie Vic can be distinguished on the basis that in that case the application to extend time was brought after a previous time fixed by the Court had expired. I do not agree that this is a relevant point upon which the present application can be distinguished from Aussie Vic. In my view, the weight of authority supports the defendant's submission that the Court has no jurisdiction to extend the period for compliance with the defendant's statutory demand after the period expired, which it did on 12 December 2012, being seven days after the plaintiff's application under s 459G was "finally determined or otherwise disposed of" by Gilmour J. 33 Based on this conclusion, the Court has no jurisdiction to grant the order sought and so there is no need to consider whether the Court should make an order on discretionary grounds.

conclusion and orders 34 For the reasons given, the application should be dismissed with costs. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.