Graywinter Properties Pty Ltd v BMW Australia Finance Ltd

[1997] FCA 1139

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 568 of 1997

BETWEEN:

GRAYWINTER PROPERTIES PTY LTD (ACN 051 373 570)
First Applicant

GRAYWINTER MANAGEMENT PTY LTD (ACN 057 918 340)
Second Applicant

AUSTRALIAN INVESTMENT MANAGEMENT (HOLDINGS) PTY LTD (ACN 055 803 298)
Third Applicant

AND:

BMW AUSTRALIA FINANCE LIMITED
Respondent

JUDGE:	RYAN J
DATE:	23 OCTOBER 1997
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

On 15 September 1997 I ordered that the application to set aside each of the statutory demands made on the three applicants be dismissed.  I ordered, secondly, that the period for compliance with each of the statutory demands be extended to 6 October 1997.  A notice of appeal against the orders of 15 September 1997 has been filed on 6 October 1997.  On that very day the 21 days comprising the extended period fixed by my order for compliance for the statutory demand expired.  The applicant appellants have now moved for an order that the period of compliance with each of the statutory demands be extended to 21 days after the determination of the appeal.

The power to extend the period for compliance with a statutory demand is conferred by sub-s 459F(2) of the Corporations Law which provides:

(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.

I have been invited by Mr Searle of Counsel for the applicants to make what is, in effect, an interlocutory order further extending the time for compliance with the statutory demand in aid of the pending appeal. However, I have come to the clear view that my order of 15 September 1997 “finally determined” the application under s 459G as that expression is used in s 459F(2)(a)(ii). That view of the order, I consider, is consistent with the policy of the scheme of Pt 5.4 of the Corporations Law identified in David Grant and Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 of giving certainty of effect within a relatively short period to the service of a statutory demand and non-compliance with it.

That view also commended itself to Jenkinson J in Livestock Traders International Pty Ltd v Bui (1996) 22 ACSR 51 where his Honour said at 53:

But when an application for an order setting aside a statutory demand is dismissed by a registrar or by a judge or a Full Court of this court the demand will be “in effect”, even if there had been made before the order of dismissal an order setting aside the statutory demand, because s 459K denies the demand “effect” only “while”, that is during the period when, “there is in force under s 459H or 459J an order setting aside the demand”.  It might be argued that, if no order extending the time for compliance is at any time made, para 459F(2)(a)(ii) will operate to extend the period for compliance until seven days have elapsed after the period of 21 days limited by O 71 r 7(3) has expired, on the ground that an application under s 459G cannot be said to have been “finally determined or otherwise disposed of” until that period of 21 days has expired.  But no period is prescribed by or under s 35A(6) of the Federal Court of Australia Act 1976 (Cth) within which exercise by the court of its own motion of its power to review a registrar’s decision must be made. I am inclined to think that “the application is finally determined” when an order determining the application is made, notwithstanding that the order is, if made by a registrar, reviewable, and that the order is, if made by the court, subject to appeal.

I indicated in Graywinter Properties Pty Ltd v Dyer (1997) 15 ACLC 303, decided shortly after Jenkinson J’s judgment in Livestock Traders, my agreement with his Honour’s reasoning in that case.  The relevant passage from Graywinter Properties Pty Ltd v Dyer is in these terms:

I am not persuaded that the power given to the Court to extend time for compliance with a statutory demand is solely a grant in aid of the application to set aside the statutory demand as I held in McLean v Australia and New Zealand Banking Group Ltd (1993) 42 FCR 300 that the power to extend time for compliance with a bankruptcy notice was purely to facilitate the hearing and determination by the Court of a challenge to the bankruptcy notice. Under the Corporations Law, as apparently occurred in the present case, an extension of time may be granted after the Court has determined not to set aside the statutory demand because, eg, the Court considers that it would be unreasonable to require compliance with the statutory demand.  Nevertheless, for the reasons explained below, any order made on a second or subsequent application for an extension of time must be made before compliance with the notice has become impossible by expiration of either the 21 days stipulated by s.459F(2)(b) or the period as extended in one or other of the ways specified in s.459F(2)(a).

It is true that s.459F(2)(a)(i) by its reference to “the last such order” envisages that more than one order may be made extending the time for compliance with the statutory demand.  However, the scheme of the section requires, I consider, that the second or subsequent order be made during the time extended by the first order.  It is not sufficient merely for an application for the further extension to have been made during that time.  Once the time for compliance as fixed by the statute or extended by order has expired, the presumption specified in s.459C(2)(a) is immediately available and there is no longer any scope for bringing, reviving or continuing an application to set aside the statutory demand.

The views expressed by Jenkinson J in Livestock and myself in Dyer’s case were also adopted by Finn J in Graywinter Management Pty Ltd v The Deputy Commissioner of Taxation (1996) 22 ACSR 636 at 637. Indeed, but for those decisions, his Honour, it appears, would have been disposed to doubt the existence of a power to make an order extending time after an order has been made determining the application under s 459G. However, in the circumstances of this case where the application is concededly made after the order determining the application under s 459G, it is unnecessary for me to revisit that question.

For the reasons that I have indicated, I have concluded that there is no power to make the order sought and the application must be dismissed with costs.

I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan

Associate:

Dated:            23 October 1997

Counsel for the Applicant:	Mr P Searle
Solicitors for the Applicant:	Garrick Gray & Co
Counsel for the Respondent:	Mr J Simpson
Solicitors for the Respondent:	Mills Oakley
Date of Hearing:	23 October 1997
Date of Judgment:	23 October 1997