Graywinter Properties Pty Ltd v Dyer
[1996] FCA 1001
•19 Nov 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) No VG 3223 of 1996
)
GENERAL DIVISION )
BETWEEN: GRAYWINTER PROPERTIES PTY LTD
ACN 051 373 570
(Applicant)
AND: ARTHUR JAMES DYER
(Respondent)
CORAM: Ryan J
DATE: 19 November 1996
PLACE: Melbourne
MINUTES OF ORDER
THE COURT ORDERS:
That the motion on notice dated 23 August 1996 be dismissed.
That, in the event that the applicant is wound up in an application relying on the present demand as varied by the order of Jenkinson J, the respondent's costs of this application form part of its costs in that winding up application, but that otherwise the applicant pay the respondent's costs of this motion to be taxed or as agreed.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) No VG 3224 of 1996
)
GENERAL DIVISION )
BETWEEN: GRAYWINTER INVESTMENTS PTY LTD
ACN 057 813 144
(Applicant)
AND: ARTHUR JAMES DYER
(Respondent)
CORAM: Ryan J
DATE: 19 November 1996
PLACE: Melbourne
MINUTES OF ORDER
THE COURT ORDERS:
That the motion on notice dated 23 August 1996 be dismissed.
That, in the event that the applicant is wound up in an application relying on the present demand as varied by the order of Jenkinson J, the respondent's costs of this application form part of its costs in that winding up application, but that otherwise the applicant pay the respondent's costs of this motion to be taxed or as agreed.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY )
)
GENERAL DIVISION )
No VG 3223 of 1996
BETWEEN: GRAYWINTER PROPERTIES PTY LTD
ACN 051 373 570
(Applicant)
AND: ARTHUR JAMES DYER
(Respondent)
No VG 3224 of 1996
BETWEEN: GRAYWINTER INVESTMENTS PTY LTD
ACN 057 813 144
(Applicant)
AND: ARTHUR JAMES DYER
(Respondent)
CORAM: Ryan J
DATE: 19 November 1996
PLACE: Melbourne
REASONS FOR JUDGMENT
RYAN J: The applicants each applied on 15 May 1996 under ss 459G and 459H of the Corporations Law to set aside a statutory demand dated 23 April 1996 served on each applicant on 24 April 1996. On 24 July 1996 Jenkinson J ordered:
The statutory demand dated 23 April 1996 be varied by substituting for the sum of $877,292.96 the sum of $794,994.
The Court declares that the demand has had effect as so varied as from when the demand was served on the applicant.
The date of compliance with the statutory demand as varied by this order be extended to 23 August 1996.
The applicant pay the respondent's costs of the application.
It is common ground that neither applicant complied by 23 August 1996 with the statutory demand as varied. However, each applicant applied by notice of motion issued on 23 August 1996 for:
An order pursuant to Order 35 rule 7(2)(c) of the Rules of Court setting aside the orders made on 24 July 1996.
Alternatively, an order pursuant to Order 35 rule 7(2)(c) of the Rules of Court varying the orders made on 24 July 1996.
Alternatively, an order pursuant to Order 3 rule 1 of the Rules of Court extending the time fixed by the orders made on 24 July 1996.
Alternatively, an order pursuant to s. 459F(2) of the Corporations Law extending the time fixed by the orders made on 24 July 1996.
In support of the motions it was contended by Mr Searle of Counsel for the applicants that there is power under various provisions in the Rules of this Court or under the Corporations Law to extend further the time for compliance fixed by the orders of Jenkinson J.
The time for compliance with a statutory demand is fixed by s.459F of the Corporations Law which provides:
If, as at the end of the period for compliance with a statutory demand, the demand is still in effect and the company has not complied with it, the company is taken to fail to comply with the demand at the end of that period.
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.
Section 459G in turn provides:
A company may apply to the Court for an order setting aside a statutory demand served on the company.
An application may only be made within 21 days after the demand is so served.
An application is made in accordance with this section only if, within those 21 days:
(a)an affidavit supporting the application is filed with the Court; and
(b)a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.
Mr Searle pointed first to O.35 r.7(2) which confers a discretion on the Court in these terms:
The Court, where it is not exercising its appellate or related jurisdiction under Division 2 of Part III of the Act, may if it thinks fit vary or set aside a judgment or order after the order has been entered where:
...
(c)the order is interlocutory;
Secondly, Counsel for the applicants relied on O.3 r.3 which provides:
The Court or a Judge may by order extend or abridge any time fixed by the Rules or by any judgment or order.
The Court or a Judge may extend time under sub-rule (1) either before or after the time expires and whether or not an application for the extension is made before the time expires.
Thirdly, attention was directed to s. 1322(4) of the Corporations Law which stipulates:
Subject to the following provisions of this section but without limiting the generality of any other provision of this Law, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
...
(d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Law or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court thinks fit.
Mr Nolan of Counsel for the respondent did not contend that it was fatal for the applicants that their notices of motion for a further extension of time had not been accompanied by affidavits in support when they were filed and served. However, he did contend that Jenkinson J's order of 24 July 1996 finally determined the applications to set aside the statutory demands by varying the amount and extending the time for compliance with the demands until 23 August 1996. It was argued by analogy with McLean v Australia and New Zealand Banking Group Ltd (1993) 42 FCR 300 that the original applications to set aside the statutory demands were no longer extant so that there was no basis for the Court's extending time beyond 23 August 1996 notwithstanding that notices of motion seeking such an extension had been filed on 23 August 1996 itself.
Mr Searle responded by pointing out that the word "application" is used in two different senses in s.459F(2)(a)(ii). The first use of that word, he suggested, refers to the substantive application under s.459G and the second refers to an application of an interlocutory kind made by the company for an extension of time pending the determination of the substantive application. The existence of that dichotomy may be conceded but, in my view, the power of the Court to extend time for compliance "on an application by the company" does not outlive the expiration of the time for compliance if that has already occurred in one of the ways contemplated by s.459F(2).
The Rules of this Court are made pursuant to a power conferred by s.59 of the Federal Court of Australia Act to make rules "making provision for or in relation to the practice and procedure to be followed by the Court ... and for or in relation to all matters and things incidental to any such practice or procedure, or necessary or convenient to be prescribed for the conduct of any business by the Court". In my opinion, the Rules should be construed narrowly to confine their application to procedural matters of that kind so that they do not curtail the substantive operation of statutory provisions like s.459F and s.459G of the Corporations Law. (See Craies on Statute Law 7th Edn. pp. 320-321 and the cases there cited.) In any event, I agree with the submission of Counsel for the respondent that the order of Jenkinson J of 24 July 1996 finally determined the application which had been
made to set aside each statutory demand. That order, therefore, was not interlocutory and no power to vary it is conferred by O.35 r.7(2). Moreover, the time for compliance was not "fixed" by that order although it specified a date which thereupon became the date "fixed" by s.459F(2). Accordingly, no power to extend it was conferred by O.3 r.3.
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 ANZ Bank (supra) 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 within the seven days which would otherwise apply by force of s.459F(2)(a)(ii). 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.
Section 459F derives the effect which, on my analysis, it has, as part of a code inserted in 1992 for the resolution of disputes arising from assertions of indebtedness made in statutory demands. It thus attracts the application of the principles explained as follows by Gummow J in David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 275:
Paragraph (a) of s 1322(4) confers upon the court a broad authority to declare that any proceeding purporting to have been instituted under the Law is not invalid by reason of any contravention of a provision of the Law. Again, par (d) confers upon the court a broad authority to extend the period for the taking of any step under the Law or any step in relation to a corporation. As a general precept, it is inappropriate to read provisions which confer jurisdiction or grant powers to a court by the making of implications or imposition of limitations not found in the express words of the legislative provision Owners of `Shin Kobe Maru' v Empire Shipping Co Inc (1994) 181 CLR 404 at 421. Here, however, by a later and more specific provision inserted in the Law by the 1992 Act, provision is made with respect to a particular class of application and there is attached a specific limitation as to the time within which an application may be made. The imposition of such a restriction is consistent with the scheme of the 1992 Act.
Accordingly, the time limits which I have spelled out of s.459F are not to be overridden by an exercise of the broad general authority conferred by s.1322(4)(d).
I am confirmed in the conclusion to which I have come by the reasoning of Jenkinson J in Livestock Traders International Pty Ltd v Thi Lam Bui & Van Quang Bui (unreported, 7 October 1996). In that case, a Deputy Registrar made an order on 22 May 1996 dismissing an application to set aside a statutory demand and extended the time for compliance with the demand "to 14 days from the date of the decision". On 12 June 1996, an application for review of the Deputy Registrar's decision was filed and the question arose whether, on the hearing of the application for review, there was power in the Court to extend further the time for compliance with the statutory demand. His Honour concluded that, once an exercise of the power to extend the period for compliance had occurred [and the extended period had expired], no operation was left to s.459F(2)(a)(ii). His Honour observed, at p. 9:
The statutory demand was still in effect at the end of the period for compliance and at that time the applicant was taken to fail to comply with the demand. Once that had happened, the application for an order setting aside the demand lacked subject matter, in my opinion.
My conclusion does not necessarily preclude the applicants from raising, at the hearing of any winding up petition, their contention that the consent orders of 24 July 1996 were procured by fraud, misrepresentation or other unconscionable conduct. Section 459S(1) of the Corporations Law provides:
In so far as an application for a company to be wound up in insolvency relies on a failure by the company to comply with a statutory demand, the company may not, without the leave of the Court, oppose the application on a ground:
(a)that the company relied on for the purposes of an application by it for the demand to be set aside; or
(b)that the company could have so relied on, but did not so rely on (whether it made such an application or not).
Since the fraud or misrepresentation on which the applicants seek to rely is said to have procured their consent to orders disposing of the applications to set aside the statutory demands, it follows that neither applicant could have relied on those matters for the purpose of the application itself for the demand to be set aside.
For these reasons the motions on notice dated 23 August 1996 must be dismissed. I shall order that, in the event that the applicants are wound up in applications relying on the present demands as varied by the order of Jenkinson J, the respondents' costs of these applications form part of their costs in those winding up applications, but that otherwise each applicant pay the respondent's costs of the respective motion to be taxed or as agreed.
I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment of his Honour Justice Ryan.
Associate:
Date:
Appearances in VG 3223/96 and VG 3224/96
Counsel for the Applicants : Mr P.K. Searle
Solicitors for the Applicants : Garrick Gray & Co
Counsel for the Respondents : Mr J.A. Nolan
Solicitors for the Respondents : Messrs Peter Eggleston & Associates
Date of Hearing : 11 September 1996
Date of Judgment : 19 November 1996
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