Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd (No 2)

[2019] NSWCA 43

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd (No 2) [2019] NSWCA 43
Hearing dates:	27 July 2018
Date of orders:	14 March 2019
Decision date:	14 March 2019
Before:	Bathurst CJ at [1]; Leeming JA at [11]; Sackville AJA at [12]
Decision:	(1)   Appeal allowed. (2)   Order that the separate questions ordered by the primary judge on 11 September 2017 be answered as follows: Question 1: Was [the respondent’s] Originating Process and affidavit of Nicholas Bobos sworn 20 July 2017 supporting the application to set aside the statutory demand dated 15 May 2017 (Statutory Demand) served on the [the appellant] within the 21 day period after service on [the respondent] of the Statutory Demand, as required by section 459G of the Corporations Act 2001 (Cth)? Answer:   No Question 2:   Does the Court have jurisdiction to determine [the respondent’s] application to set aside the Statutory Demand? Answer:   No (3)   Order that the originating process filed by the respondent on 4 September 2017 be dismissed. (4)   Order that the respondent to pay the appellant’s costs of the proceedings in the Court below. (5)   Order that the appellant pay the respondent’s costs of the appeal.
Catchwords:	CIVIL PROCEDURE – Court of Appeal – leave to appeal – whether to revoke leave to appeal – application to set aside– application made outside the time prescribed by s 459G – Corporations Act 2001 (Cth)
Legislation Cited:	Corporations Act 2001 (Cth)
Cases Cited:	Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd [2018] NSWCA 270
Category:	Procedural and other rulings
Parties:	Chief Commissioner of State Revenue (appellant) Boss Constructions (NSW) Pty Ltd (respondent)
Representation:	Counsel: F Assaf with P Strickland (appellant) D Eardley (respondent)   Solicitors: Stacks Champion (appellant) No solicitor on record (respondent)
File Number(s):	2017/331468
Publication restriction:	Nil
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2017] NSWSC 1334 Date of Decision: 11 October 2017 Before: Brereton J File Number(s): 2017/221013

Judgment

1. BATHURST CJ: The proceedings the subject of this appeal essentially concerned the question of whether an application brought by the respondent under s 459G(1) of the Corporations Act 2001 (Cth) (the Act) was served within the time prescribed by s 459G(2). The application to set aside the demand was made on 20 July 2017. The appellant contended that the demand was served on 27 June 2017, in which case the application was made outside the prescribed period. The respondent, by contrast, contended that the demand was served on 29 June, in which case the application was within time.

2. The primary judge ordered separate questions directed to determining whether the application was served within the time prescribed by s 459G(2). He concluded that although the demand was served on 27 June, the appellant was estopped from disputing the demand was not served before 29 June 2017, and that the time for compliance did not expire until 20 July 2017. I have set out the separate questions and the orders made by the primary judge in my judgment of 16 November 2018.

3. On appeal, the appellant contended that an estoppel could not lie in the face of the provisions in s 459G(2) and s 459G(3) of the Act and thus, the application to set aside the demand was not made within the prescribed time. In the normal course, it would follow that the appeal would be allowed and the interlocutory process filed by the respondent be dismissed.

4. However, the Court pointed to the fact that because of the provisions of s 459C(2) of the Act the statutory demand would only have given rise to the presumption of insolvency if an application for winding-up was brought within 3 months after 12 July 2017 and there was no evidence that such an application had been made. The Court further pointed out that even if it had been made, it would have fallen to be determined within the 6-month period provided for by s 459R(1), which expired well before the time at which the appeal was heard: see Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd [2018] NSWCA 270 at [33]-[35].

5. In the circumstances, the Court directed the parties to file submissions as to whether the appropriate order was simply to revoke leave to appeal.

6. In submissions filed by the appellant which the respondent adopted, it was argued that leave should not be revoked but rather, the appeal should be allowed, the separate questions ordered by the primary judge (see [2018] NSWCA 270 at [4]) be answered ‘No’ and the interlocutory process filed by the respondent in the Court below be dismissed.

7. The principal submission relied upon by the appellant in support of such orders was that the combined effect of the order made by the primary judge and s 459F(2) created prejudice for the appellant because unless it could successfully appeal, it would have had to meet a “full blown hearing” on the respondent’s application to set aside the statutory demand in circumstances where this should have been unnecessary given the application was filed outside the time allowed by s 459G. This was the basis on which leave was given.

8. The appellant pointed to the fact that unless the separate questions were answered in the negative, the respondent’s interlocutory application under s 459G(1) would technically remain on foot and not having been disposed of, the time for compliance with the demand mandated by s 459F(2)(a)(i) or (ii) has not expired.

9. There is force in this argument and in those circumstances, the orders should be made. The effect of such orders is that it will be determined contrary to the finding of the primary judge that no valid application to set aside the statutory demand was made within time and the time for compliance expired on 21 July 2017. The consequence will be that as an application for a winding-up order was not made within 3 months of that date, the demand will be ineffective in any future winding-up proceedings were they to be brought. As it would follow, the respondent was unsuccessful at first instance. It should pay the cost of that hearing.

10. In the circumstances, I would make the following orders:

1. Appeal allowed.

2. Order that the separate questions ordered by the primary judge on 11 September 2017 be answered as follows:

Question 1: Was [the respondent’s] Originating Process and affidavit of Nicholas Bobos sworn 20 July 2017 supporting the application to set aside the statutory demand dated 15 May 2017 (Statutory Demand) served on the [the appellant] within the 21 day period after service on [the respondent] of the Statutory Demand, as required by section 459G of the Corporations Act 2001 (Cth)?

Answer:   No

Question 2:   Does the Court have jurisdiction to determine [the respondent’s] application to set aside the Statutory Demand?

Answer:   No

3. Order that the originating process filed by the respondent on 4 September 2017 be dismissed.

4. Order that the respondent to pay the appellant’s costs of the proceedings in the Court below.

5. Order that the appellant pay the respondent’s costs of the appeal.

11. LEEMING JA: I agree with Bathurst CJ.

12. SACKVILLE AJA: I agree with Bathurst CJ.

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Decision last updated: 14 March 2019