Gucce Holdings Pty Ltd v Bank of Queensland Limited

[2017] FCA 127

FEDERAL COURT OF AUSTRALIA

Gucce Holdings Pty Ltd v Bank of Queensland Limited [2017] FCA 127

Appeal from:	Application for leave to appeal:  Gucce Holdings Pty Ltd v Bank of Queensland Limited [2017] FCA 12
File number(s):	WAD 21 of 2017
Judge(s):	SIOPIS J
Date of judgment:	9 February 2017
Catchwords:	CORPORATIONS – statutory demand – application to extend time for compliance with a statutory demand pending hearing of an application for leave to appeal.
Date of hearing:	9 February 2017
Registry:	Western Australia
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Category:	Catchwords
Number of paragraphs:	15
Counsel for the Applicant:	Dr JT Schoombee
Solicitor for the Applicant:	Mr A Rumsley
Counsel for the Respondent:	Ms CA Petersen
Solicitor for the Respondent:	Lavan

ORDERS

WAD 21 of 2017

BETWEEN:

GUCCE HOLDINGS PTY LTD (ACN 099 191 714)

Applicant

AND:

BANK OF QUEENSLAND LIMITED

Respondent

JUDGE:	SIOPIS J
DATE OF ORDER:	9 FEBRUARY 2017

THE COURT ORDERS THAT:

1.The time for compliance with the statutory demand dated 16 December 2015, be extended pending determination of the application for leave to appeal.

2.By 13 February 2017, the applicant is to file and serve any amended grounds of appeal and any further affidavit evidence.

3.By 20 February 2017, the respondent is to file and serve any affidavit evidence in response.

4.By 3 March 2017, the applicant is to file and serve its submissions.

5.By 10 March 2017, the respondent is to file and serve its submissions.

6.The application be listed at 10.15 am on Friday, 17 March 2017.

7.The costs of today are reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

SIOPIS J:

1. This is an application for an extension of time to comply with a statutory demand dated 16 December 2015.  The time for compliance expires today and the matter is, therefore, urgent.  The applicant has also brought an application for leave to appeal against the decision of the primary judge dismissing its application to set aside the statutory demand.

2. The circumstances, very briefly, are the following.

3. The respondent, the Bank of Queensland Limited, served a statutory demand on the applicant, Gucce Holdings Pty Ltd.  The demand was in respect of a judgment debt for the balance of monies owing to the respondent by the applicant after the respondent, exercising its power of sale under a mortgage, had sold the applicant’s property.  The judgment was obtained in the Supreme Court of Western Australia.

4. The applicant applied in this Court to set aside the statutory demand.  One of the grounds on which the applicant relied was that it had an offsetting claim against the respondent.  The offsetting claim was founded on the allegation that the respondent had, through its receivers, sold the applicant’s properties the subject of a mortgage to the respondent, at under value.

5. The primary judge dismissed the applicant’s application to set aside the statutory demand.

6. The basis of the primary judge’s decision was essentially that there was not sufficiently probative evidence before the Court to quantify the amount of the offsetting debt nor to support an argument that the offsetting claim was a genuine claim.

7. At the time that the primary judge dismissed the application, his Honour also extended the time to comply with the statutory demand for 21 days, on the basis, as I understand it, that during that time, the applicant could appeal against the Court’s order, should the applicant so be minded.

8. On 3 February 2017, the applicant did in fact attempt to file at the Court’s Registry an application for leave to appeal the primary judge’s order dismissing its application.  However, the Registry apparently refused to accept the application and advised the applicant that this was because it could appeal as of right.  That advice, unfortunately, was misleading.  The consequence is that an application for leave to appeal has now been filed, but rather late in the day.

9. As mentioned, the upshot of this is that the period for compliance with the statutory demand expires later today, and this application was brought on urgently so that the time for compliance could be extended in order for the application for leave to appeal to be heard.

10. The respondent has had very little opportunity to respond to the application and has filed submissions which do not really meet the point which is made by the applicant in its submissions.  No criticism of the respondent is intended because of the short period of notice which was given to the respondent.

11. The main proposed ground of appeal, in the papers as they currently stand, appears to be a complaint that there were items of evidence before the primary judge going to the value of the properties sold, which supported its claim that there was a sale of the properties at under value.  The applicant says these items of evidence were not properly considered in the reasons for decision of the primary judge.  The first such item of evidence is a valuation of the properties which was provided to the respondent at its request by a valuer, Burgess Rawson.  The applicant also says that there was evidence before the primary judge of an offer, which was refused, to purchase the properties for an amount higher than the amount for which the receivers ultimately sold the property.

12. These are matters which will ultimately be explored in greater detail when the application for leave to appeal is heard.  However, on the basis of the applicant’s contentions, which, as I say, the respondent has not really had an opportunity to meet, I am satisfied that there is a sufficient basis to believe that leave to appeal may be granted once the parties have had an opportunity more fully to ventilate the issues.  On that basis, I am content to extend the time for compliance with the statutory demand pending the determination of the application for leave to appeal.

13. In my view, it is not appropriate, in these circumstances, to make any orders that, as a condition of extending the time for compliance with the statutory demand, the applicant pay the sum demanded into Court, or to the respondent on the basis of the undertaking from the respondent to repay it in the event that the appeal is successful.  This is because the execution processes in support of the enforcement of a judgment debt are available to the respondent in the Supreme Court of Western Australia.  However, the issue of a statutory demand is a different process and does not carry the same status of judgment.  The failure to comply with a statutory demand carries its own consequence, namely, the presumption of insolvency.

14. Accordingly, in my view, the process of appealing against an order refusing to set aside a statutory demand is different from the process whereby a party appeals after a judgment is entered against it and there is an apprehension that the party appealing against the judgment will dissipate its assets by the time the appeal is heard, thereby rendering the successful party’s judgment nugatory.

15. I will, accordingly, extend the time for compliance with the statutory demand until the determination of the application for leave to appeal and I will make directions for the hearing of that application.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.

Associate:

Dated:        20 February 2017