Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Limited

[2007] HCATrans 606

[2007] HCATrans 606

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M74 of 2007

B e t w e e n -

AUSSIE VIC PLANT HIRE PTY LTD

Applicant

and

ESANDA FINANCE CORPORATION LIMITED

Respondent

Application for special leave to appeal

HAYNE J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 5 OCTOBER 2007, AT 10.08 AM

Copyright in the High Court of Australia

MR J.M. SELIMI:   May it please the Court, I appear for the applicant.  (instructed by Starnet Legal Pty Ltd)

MR N.A. FRENKEL:   If the Court pleases, I appear on behalf of the respondent.  (instructed by Gadens Lawyers)

HAYNE J:   Both parties had indicated in their written outlines that they did not seek to supplement those outlines with oral argument.  Is that position now different?

MR SELIMI:   Not from our perspective, your Honour.

HAYNE J:   Yes.  Mr Frenkel?

MR FRENKEL:   Yes, your Honour.

HAYNE J:   Yes, Mr Frenkel.  You are respondent.  You go first.

MR FRENKEL:   Your Honours, it is submitted that the proceedings are not an inappropriate vehicle for special leave, for the four reasons set out in the summary of argument which I would seek to expand upon to a limited extent.  The first reason is that there is and was clearly in this proceeding no genuine dispute.  That is the underlying issue the subject of the proceeding.  The section 459F point is a threshold issue.  Of course we had to take the point because that was the law.  All of the unanimous authorities beginning in 1996 with Justice Jenkinson’s decision in Livestock were to the same effect – that the Court had no power once the time under section 459F(2)(a)(i) had expired and, in fact, the same situation applied in respect of section 459F(2)(a)(ii).  All of the authorities – the unanimous authorities – said that there is no power.  There was not one lone, dissenting voice.

When my learned friend brought his application in July last year before Justice Whelan, obviously we are in a situation where the court had to be informed about what the law was.  The law was, as Justice Whelan found he was bound to follow – the law was that there was no power.  The first voices of dissent have come in some of the judgments in this proceeding, albeit that the majority – the first voices of dissent at all since 1996 have come in the minority in this proceeding.  But the state of the law still remains ‑ ‑ ‑

CRENNAN J:   That was the main focus of your argument, was it not, in the courts below – the construction point?

MR FRENKEL:   Absolutely, that is right.  We did not argue the ‑ ‑ ‑

CRENNAN J:   The merits.

MR FRENKEL:   ‑ ‑ ‑ genuine dispute issue before Justice Whelan.  We never got there because his Honour accepted the threshold point.  Before the Court of Appeal, as my learned friend says in his summary, I think, all of the oral argument really related to section 459F.  But we did give extensive written submissions in relation to the genuine dispute issue.  The point of it is, your Honours – and I appreciate that it is one of the aspects of the appeal, not the only one – it takes five minutes at most to read the lone affidavit in support of the application to set aside the statutory demand of Mr Strangio.

Master Efthim read it and concluded there was no genuine dispute.  The honourable Justice Ashley in the Court of Appeal was the only judge of the five who made any reference to that issue.  His Honour in, if I might say, a very thorough summary of the evidence, concluded that it was hopeless.

So while in another proceeding another applicant might have a point that this Court would be attracted to in relation to section 459F, this proceeding and this applicant is not the right proceeding.  It is not an appropriate vehicle because there is no genuine dispute.  What will happen, your Honours, if the applicant is granted special leave and if the applicant succeeds on this appeal – obviously we resist both – but if that happens then the matter will be remitted back to Justice Whelan, presumably.  His Honour, with respect, will certainly find the same way that Master Efthim did on the genuine dispute issue, and then the applicant will use its appeal powers and its powers to seek stays and the proceedings will be delayed for another year.

The applicant is in a situation where it is clearly insolvent.  In defiance of a number of orders of Master Efthim it refused to provide any evidence of solvency.  There were nine different entities suing the applicant in the Supreme Court last year.  Can I summarise.  The applicant’s argument in relation to genuine dispute is this, in the lone affidavit in support there were ‑ ‑ ‑

HAYNE J:   Be it so.  Let it be assumed for the purpose of debate that you could demonstrate no genuine dispute, plain insolvency, winding up ex debito, the state of the law in Australia at the moment is as described by the majority in this specially assembled five‑member Court of Appeal of Victoria decision.  Is that right?

MR FRENKEL:   Yes.

HAYNE J:   Whether that should be the state of the law is a point about which that Court divided.  Is that right?

MR FRENKEL:   Yes.

HAYNE J:   Why should we not, in accordance with 35A of the Judiciary Act take it and deal with it and settle the law?  That is, why should the interests of the development of the law generally in this country take a place ahead of, in this case, the particular circumstances of these litigants?

MR FRENKEL:   The law is absolutely settled, your Honour.  There are dissenting voices.

HAYNE J:   The Court of Appeal divided.

MR FRENKEL:   I appreciate that, your Honour, but what we have is a decision of Justice Jenkinson in 1996 – Livestock – we have a decision of Justice Ryan, Greywinter; we have a decision of Justice Kenny as recently as 2006 in G & J Gears.  We have two differently constituted Full Federal Courts which have specifically made reference to and approved of those decisions.  This relates to the specific limb, the subject of this appeal, not the Buckland line of authorities which relate to the other subsection of 459F.

So we have an overwhelming unanimous set of authorities.  Then we come to this proceeding.  The majority has followed those authorities.  So when an application to set aside a statutory demand goes before a master or a registrar and then there is an appeal and then the time lapses after the period of time is extended, practitioners in Australia and companies in Australia are under no doubt on what the law is – there is no power.  If this Court considers that all of those authorities, including the majority decision in this proceeding are wrong, of course this Court is at liberty to change the law.  But there is no uncertainty as the position stands now.

If the decision had gone the other way in the Court of Appeal in this proceeding, there would be – again, there probably would not be uncertainty in the Supreme Court because everyone would be bound to follow that decision, and in the Federal Court there would be uncertainty.  But the fact is the majority dismissed the appeal.  So the law is absolutely clearly that there is no power.  The dissenting voices in this proceeding obviously were in the minority and their view is not the law.

Your Honours, in relation to the genuine dispute issue, let me just say this.  The two arguments that were raised by Mr Strangio were in relation to a $400,000 debt which was the subject of the statutory demand which my client lent to the applicant.  The reason the applicant said there is a genuine dispute is because, firstly, my client agreed not to enforce the debt, which is, with all due respect, ridiculous.  Secondly, the argument was that my client told other prospective financiers that the applicant was a bad credit risk.

Again, with all due respect, that is why we are here.  The applicant is clearly a bad credit risk.  As I said earlier, the applicant as at October last year was being pursued by nine separate entities in Victorian courts – other banks and nine other entities.  There were three supporting creditors on the winding‑up application brought by my client, two of which were defended judgments.  So the applicant is a serial debtor, if I can put it that way, clearly has refused to provide any evidence of solvency notwithstanding Master Efthim’s various orders, and has the most frivolous argument conceivable in this proceeding to found a genuine dispute.

CRENNAN J:   Getting back to the point of principle and the fact that this was all about an extension of time, if you look at application book 61, the decision of his Honour Justice Nettle at paragraph 124 – do you have that?

MR FRENKEL:   Yes, your Honour.

CRENNAN J:   At the bottom of the page there, his Honour expresses the view about what he considers to be the preferable construction and then, over the page, he makes the observation that Livestock Traders interpretation of the section has stood for some time.  He then says:

It follows, as I see it, that if the interpretation of the section is to be revisited, it is a matter for the High Court or Parliament -

raising, of course, the fact that this is a question of public importance.

MR FRENKEL:   In his Honour’s view it is.  I accept that there were dissenting views.  Justice Nettle would dismiss the appeal because of the pre‑existing authorities, but his Honour’s own view was that the line of authorities starting with Livestock were wrong.  They were his Honour’s views.  I appreciate that the section 459F point, given that there are now dissenting views, notwithstanding that there were not before this proceeding, might in other circumstances be a point that would be suitable for special leave.  But it is not suitable in this proceeding because the applicant is using the system, if I can phrase it that way, to delay being wound up.

The statutory demand was served in, I think, March last year.  The whole regime in Part 5.4 of the Corporations Act is for the speedy and orderly winding‑up of insolvent companies.  This proceeding sets a precedent.  The interlocutory orders that have been made in this proceeding

set a precedent.  It is disturbing of the entire system in respect of Part 5.4, with respect.  It would be different if there was an arguable genuine dispute, but there is no arguable genuine dispute.  It would be different if the applicant were solvent.

HAYNE J:   I think we understand that you place great emphasis on the point of no genuine dispute and no sufficient demonstration of solvency.  I think we have those points.

MR FRENKEL:   Can I just say in relation to the interests of justice as to whether the application should be granted also, aside from the interests of creditors, the three supporting creditors in relation to the winding‑up that supported my client’s winding‑up application and the general interests of the community for insolvent companies to be wound up, generally in the interests of justice, my client is clearly owed $400,000; there is clearly no genuine dispute, and this proceeding, in my submission, is not the appropriate vehicle.

HAYNE J:   Thank you, Mr Frenkel.  We need not trouble you, Mr Selimi, beyond this.  At page 100 of the application book there is the record of the undertakings that Mr Strangio had earlier given in relation to costs.  Those undertakings are still in force and there is no suggestion of their withdrawal, is there?

MR SELIMI:   Those undertakings are reaffirmed, your Honour.

HAYNE J:   Yes.  There will be a grant of special leave to appeal in this matter.  The matter is, I would have thought, subject to anything counsel may say, a day case, is it not, counsel?

MR SELIMI:   Probably half a day case.  It was dealt with in less than two hours below.

HAYNE J:   In the Court of Appeal?

MR SELIMI:   Yes.

HAYNE J:   Well, I think it may be a day or a little less than a day.

The Court will adjourn to reconstitute.

AT 10.24 AM THE MATTER WAS CONCLUDED