Mayfair Land Holdings Pty Ltd v Terafortis Ltd
[2025] VSC 241
•7 May 2025 ex tempore; revised 8 May 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2024 06344
IN THE MATTER OF MAYFAIR LAND HOLDINGS PTY LTD (ACN 622 038 635)
BETWEEN
| MAYFAIR LAND HOLDINGS PTY LTD (ACN 622 038 635) | Plaintiff |
| v | |
| TERAFORTIS LTD (COMPANY NUMBER 2083063) | Defendant |
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JUDGE: | Connock J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 7 May 2025 |
DATE OF JUDGMENT: | 7 May 2025 ex tempore; revised 8 May 2025 |
CASE MAY BE CITED AS: | Mayfair Land Holdings Pty Ltd v Terafortis Ltd |
MEDIUM NEUTRAL CITATION: | [2025] VSC 241 |
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CORPORATIONS — Extension of time to comply with statutory demand — Extension sought pending application for leave to appeal orders dismissing application to set aside statutory demand — Whether order should be made extending time for compliance with statutory demand — Corporations Act 2001 (Cth), s 459F — Further extension order sought — Time for compliance with statutory demand extended — General principles applicable to applications under s 459F(2)(a)(i) of the Corporations Act 2001 (Cth) — Time extension ultimately consented to — Whether extension order can be to the occurrence of a future event — Undertaking to prosecute application for leave to appeal with expedition.
PRACTICE AND PROCEDURE — Extension orders sought for filing and serving documents in support of application for leave to appeal — Written reasons for order the subject of application for leave to appeal not yet available — rr 64.05(1)(ab), 64.05(1)(c), and 64.35 of the Supreme Court (General Civil Procedure) Rules 2015 — Time for filing written case, list of authorities, and written reasons for decision extended.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | H Austin KC with J Penny | Velocity Legal |
| For the Defendant | C Jones | Robert James Lawyers |
HIS HONOUR:
Introduction and summary
By an order made on 16 April 2025 (Dismissal Order) Steffensen AsJ dismissed the plaintiff’s (plaintiff or Mayfair) application to set aside a statutory demand dated 31 October 2024 (Demand) served on it by the defendant (defendant or Terafortis). In so doing, Steffensen AsJ delivered oral reasons ex tempore and, upon an application by Mayfair, also made an order pursuant to s 459F(2)(a)(i) of the Corporations Act 2001 (Cth) (Act) extending the time for compliance with the Demand until 7 May 2025 (Extended Compliance Date).
Mayfair proposed to apply for leave to appeal the Dismissal Order but considered itself to be constrained in complying with its obligation to file all of the documents required to be filed with such an application because the transcribed reasons for the Dismissal Order (Dismissal Reasons) have not yet been provided to the parties, and are not expected to become available until shortly after 19 May 2025, when Steffensen AsJ returns from a period of overseas leave.[1] Given that the Extended Compliance Date of 7 May 2025 was then only a day or two away, Mayfair also proposed to seek from the Court of Appeal a further extension of time pursuant to s 459F(2)(a)(i) of the Act.
[1]Noting that the transcript of the oral reasons had not been made available to her Honour at the time her Honour’s leave commenced.
By email dated 5 May 2025, Mayfair sought guidance from the Court of Appeal registry as to whether the Court of Appeal would allow its proposed application for leave to appeal to be filed without being accompanied by Mayfair’s written case, list of authorities and a copy of the Dismissal Reasons, and as to whether the Court of Appeal was able to hold an urgent hearing on 6 or 7 May 2025 of an application to further extend the time for compliance with the Demand.
By an email to Mayfair’s solicitors later that day, the Court of Appeal registry gave guidance, suggesting that Mayfair proceed to file the documents that were ready for filing in respect of the application for leave to appeal, stating that such documents would be accepted for filing if they otherwise complied with the relevant rules and practice note. It was also stated that it was strongly recommended that the proposed application to further extend the time for compliance with the Demand be made immediately in the Practice Court of the Trial Division.
As things transpired, the matter was referred to me as Duty Judge in the Commercial Court. By interlocutory process filed on 6 May 2025, Mayfair sought an urgent order, pursuant to s 459F(2)(a)(i) of the Act, further extending the time for compliance with the Demand from 7 May 2025 until the day of the hearing in the Court of Appeal of Mayfair’s application for leave to appeal filed on 5 May 2025 (Appeal Leave Application). Mayfair also sought procedural orders extending the time for filing and serving the remaining documents required to be filed and served in support of the Appeal Leave Application, being Mayfair’s written case, its list of authorities, and the Dismissal Reasons (Remaining Appeal Documents).
For the reasons that follow I have concluded that:
(1)Mayfair should be granted a further extension of the time for compliance with the Demand until 30 June 2025; and
(2)procedural orders should be made extending the time for the filing and service of the Remaining Appeal Documents by the plaintiff until 4:00pm on 6 June 2025.
Material relied upon
The plaintiff relied upon two affidavits of its solicitor, Demian Walton, affirmed 2 May 2025 and 6 May 2025. Mayfair also relied upon written submissions dated 5 and 6 May 2025, which were supplemented by oral submissions made by senior counsel for Mayfair.[2]
[2]The 5 May 2025 written submissions were filed in the Court of Appeal in support of its extension of time applications in the Court of Appeal, but formed part of the materials exhibited to Mr Walton’s 6 May 2025 affidavit.
The defendant did not file any material or submissions in response, although the Court was assisted by the able oral submissions and observations of counsel for the defendant, Ms Jones.
Shortly after the hearing commenced the Court was informed by the parties that an agreed position regarding a fixed extension of time (then until 28 May 2025) had been reached, although it was accepted that this did not obviate the need for the Court to be satisfied that an extension order of the kind proposed should be made.
Background and evidence
The background to the application was referred to in the evidence and the written and oral submissions, which I read, heard and considered. Although it is not necessary to set out all of the background detail in the evidence, it is convenient to note that the matters deposed to by Mr Walton in his affidavits included the following.
On 25 November 2024, Mayfair filed an originating process in which it made an application under s 459G of the Act to set aside the Demand on the grounds of a genuine dispute as to the existence or amount of the alleged debt, pursuant to s 459H of that Act. Mayfair’s originating process was said to have been supported by an affidavit sworn by its director, Jiaheng Chan, dated 25 November 2024, with Terafortis filing an affidavit in opposition by its chief executive officer, Chang Loong Lee, dated 21 February 2025. I observe that the primary contention regarding the genuine dispute was that there was at least a plausible contention that the debt the subject of the Demand was the subject of what was described as a compromise agreement between the parties.
On 15 April 2025, Mayfair filed a proposed amended originating process and a supplementary outline of submissions seeking to rely also upon s 459J of the Act, which relates to setting aside a statutory demand ‘for some other reason’.[3]
[3]Which related to a contention in the alternative that it was unconscionable for Terafortis to have served the Demand in a context and in circumstances where negotiations were ongoing between the parties.
On 16 April 2025, Steffensen AsJ heard and determined Mayfair’s application, making orders (in summary):
(a) granting leave to Mayfair to amend its originating process;
(b) dismissing the amended originating process, with costs; and
(c) extending the time for compliance with the Demand until 7 May 2025.
The orders made by the Steffensen AsJ on 16 April 2025 were authenticated on 17 April 2025. As noted in paragraph A of the authenticated order:
The Court’s ruling and reasons for the following orders were given ex tempore and are recorded in the transcript of the proceeding.
On 22 April 2025 (following the Easter weekend) Mayfair’s solicitors ordered the transcript of the hearing on 16 April 2025.
On 23 April 2025, Mayfair filed the amended originating process pursuant to the leave granted by Steffensen AsJ on 16 April 2025.
On 23 April 2025, the transcript of the hearing on 16 April 2025 was received by Mayfair’s solicitors with the ruling omitted. On 23 April 2025, Mayfair’s solicitors sent an email to Steffensen AsJ’s chambers asking about her Honour’s reasons being released, in response to which Ms Rossi received an automated “out-of-office” reply. On 29 April 2025, the Associate to Steffensen AsJ, sent an email in reply to Ms Rossi stating “[u]nfortunately, a transcript of her Honour’s oral reasons cannot be distributed until Steffensen AsJ returns on 19 May 2025.”
On 5 May 2025, Mayfair filed the following applications in the Court of Appeal, in proceeding S EAPCI 2025 0054:
(a) Form 64A Application for leave to appeal from Steffensen AsJ’s Dismissal Order; and
(b) Form 64B Application seeking:
(i) various procedural extensions for the filing and service of the Remaining Appeal Documents; and
(ii) a further extension of time for compliance with the Demand until after the determination of the Appeal Leave Application (COA Demand Extension Application).
Because an application for a further extension of the time for compliance with the Demand could not be heard by the Court of Appeal on or before 7 May 2025, being the Extended Compliance Date, and consistent with the guidance from the Court of Appeal registry, Mayfair filed an interlocutory process seeking an urgent extension of the time for compliance with the Demand until the day of the hearing of Mayfair’s Appeal Leave Application, which was said to be necessary to ‘bridge’ the timing gap.
Mr Walton deposed that such an extension was said to be needed by Mayfair because, if the Demand was to expire at midnight on 7 May 2025, then both the Appeal Leave Application and the COA Demand Extension Application would be rendered nugatory. Mr Walton deposed that he was concerned that if the period for compliance with the Demand is not extended, Mayfair will suffer severe prejudice in that its Appeal Leave Application will be dismissed without consideration of the merits, and will otherwise be rendered nugatory, with Mayfair being presumed insolvent as at the end of 7 May 2025, on the very basis that it seeks to have displaced on appeal.
Mr Walton’s affidavit exhibited numerous documents, all of which I have read and considered, including: a Mayfair company search; the Demand; the COA Demand Extension Application; Mayfair’s Appeal Leave Application; the transcript of the hearing before Steffensen AsJ; and relevant correspondence with the chambers of Steffensen AsJ and the Court of Appeal registry.
I add that I informed the parties that, in light of enquiries I had made with Steffensen AsJ yesterday whilst she was overseas, the parties can expect to receive the Dismissal Reasons no later than 23 May 2025.
Plaintiff’s submissions
In its two sets of written submissions Mayfair addressed the background to the application, principles relating to the extension of time for compliance with statutory demands, Mayfair’s submissions regarding the reasons why it was contended a further extension of time ought to be ordered, and the need for consequential procedural extensions of time for the filing and service of the Remaining Appeal Documents. Although it is not necessary to recite all of the detail of the written submissions in these reasons, it may be noted that, with respect to the further extension application before this Court, Mayfair’s submissions included the following:
(1)Because the Court of Appeal is unable to hear Mayfair’s COA Demand Extension Application until a date after 7 May 2025, Mayfair seeks a further extension from this Court to bridge the period from 7 May 2025 until the date of the hearing of the Appeal Leave Application, at which time Mayfair can then pursue the COA Demand Extension Application.
(2)Mayfair has a reasonably arguable case for an application for leave to appeal, and on any appeal, as set out in its application for leave to appeal, but noting that Mayfair is presently unable to file its written case for the reasons previously mentioned.
(3)It was submitted that, in the circumstances, it was unnecessary and inappropriate for the Court to review the grounds of appeal in detail or reach specific views, but it was sufficient to conclude on the material before the Court that Mayfair had made out a reasonably arguable case for appeal.
(4)Mayfair’s Appeal Leave Application and any appeal will be rendered nugatory unless a further extension of time for compliance with the demand is granted. In this context, reference was made to various authorities, including well‑rehearsed cases such as Australian Beverage Distributors Pty Ltd v Cranswick Premium Wines Pty Ltd,[4] JEM Developments Pty Ltd v Hansen Yuncken Pty Ltd (JEM Developments),[5] Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (Grandview)[6] and Grocon Constructors (Vic) Pty Ltd v Dexus Funds Management Limited (Grocon Constructors).[7]
(5)It was clear that the weighing of the respective prejudice to the parties favoured Mayfair. It was submitted that the purpose of Mayfair’s Appeal Leave Application was to seek orders setting aside the statutory demand served by Terafortis, and it was observed that, unless the demand is set aside or the amount of the demand is paid, a presumption of insolvency will arise against Mayfair under s 459C(2)(a) of the Act. Mayfair submitted that if the period for compliance with the statutory demand is not further extended then Mayfair’s Appeal Leave Application, and any appeal, will be inutile and liable to be dismissed. In this context reference was also made to the observations of Whelan J in Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd.[8]
(6)It was submitted that, in contrast, Terafortis would not suffer prejudice. It was submitted that serving a statutory demand is not of itself a debt recovery action, and that any extension of time would merely deprive Terafortis of the benefit of the statutory presumption of insolvency in any subsequent winding up proceeding in respect of Mayfair. Whilst it was acknowledged that further delay may impact on the amount that Terafortis could recover in any later liquidation of Mayfair because it would in a practical sense ‘push back’ Mayfair’s relation‑back date (by reference to which it was said antecedent transactions could be challenged), it was submitted that these were legitimate but, in reality and substance, theoretical considerations at the present time.
(7)It was further submitted that the application for leave to appeal had been brought expeditiously and filed well before the expiry of the 28 day time limit for appealing, noting also that the Dismissal Order was ‘only’ made on 16 April 2025.
(8)Mayfair also informed the Court that it would proffer an undertaking to prosecute its Appeal Leave Application, and any appeal, with expedition, which undertaking was given to the Court on behalf of Mayfair by its senior counsel, Mr Austin KC.
(9)It was submitted that if an extension pursuant to s 459F(2)(a)(i) of the Act is not granted, Mayfair will suffer irreparable prejudice by being deemed insolvent, the Appeal Leave Application and any appeal of the Dismissal Order being rendered nugatory, and Mayfair being exposed to a winding up proceeding.
[4](2004) 50 ACSR 544 [5] (Barrett J).
[5](2006) 60 ACSR 393 [3].
[6](2018) 134 ACSR 318 [28]–[32] (Beazley P).
[7][2019] FCA 1168 [18] (Moshinsky J).
[8][2006] VSC 306 [8]–[9], said to be affirmed in Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2007) 212 FLR 56 and Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2008) 232 CLR 314.
As mentioned, during the course of the hearing, senior counsel for Mayfair informed the Court that a consent position had been reached regarding an extension until 28 May 2025 which, following exchanges with the Bench, later became 30 June 2025.
Defendant’s submissions
Following exchanges with the Bench, which the transcript will record, and after standing the matter down to enable further instructions to be obtained, counsel for the defendant informed the Court that the defendant consented to an extension date of 30 June 2025, also noting the plaintiff’s undertaking, and making submissions as to why it was unacceptable to have an open‑ended extension to what was said to be an unknown hearing date. The Court was also earlier informed that the defendant was content for the time for the filing and service by Mayfair of the Remaining Appeal Documents to be extended to 4:00pm on 6 June 2025, being 14 days after the latest date on which it is expected the Dismissal Reasons will be made available.
Principles and observations — Extensions pursuant to s 459F(2)(a)(i) of the Act
There was no relevant controversy between the parties regarding the principles applicable to applications for extensions of time to comply with a statutory demand. Relevant principles were summarised in Mayfair’s written submissions of 5 and 6 May 2025, and counsel for the defendant agreed with this summary. It is efficient and convenient to largely repeat some passages from these summaries as part of that which follows below.
By operation of s 459F(2)(a)(ii) of the Act, the dismissal of an unsuccessful application to set aside a statutory demand triggers a default extension of 7 days to the period for compliance with the demand. However, s 459F(2)(a)(i) empowers the Court to grant further extensions to the period for compliance. This commonly occurs where an unsuccessful applicant to set aside a statutory demand under s 459G of the Act seeks to appeal from the rejection of its application.[9]
[9]See for example Australian Beverage Distributors Pty Ltd v Cranswick Premium Wines Pty Ltd (2004) 50 ACSR 544; JEM Developments Pty Ltd v Hansen Yuncken Pty Ltd (2006) 60 ACSR 393.
The institution of an appeal (or an application for leave to appeal) against a decision dismissing an application to set aside a statutory demand will not operate as a stay of judgment. Where a company wishes to appeal against the dismissal of an application under s 459G it must apply and, indeed, continue to apply if necessary, for an extension of time within the last extension period until the last appeal is determined.[10]
[10]Buckland Products Pty Ltd v DCT [2001] VSC 286, [6] (Warren J); upheld on appeal in Buckland Products Pty Ltd v DCT [2003] VSCA 85.
If the last day for compliance passes without extension while the appeal is pending, the appeal is liable to be dismissed as ‘misconceived’.[11] The company will also be presumed to be insolvent by operation of s 459C(2)(a) of the Act and be susceptible to winding up proceedings. To avoid such consequences, s 459F(2)(a)(i) empowers the Court to make orders that extend the period for compliance with the statutory demand. The words of the section contemplate that multiple, successive extensions may be granted.[12]
[11]Buckland Products Pty Ltd v DCT [2001] VSC 286, [10], [12] (Warren J); Buckland Products Pty Ltd v DCT [2003] VSCA 85, [9]; Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2006] VSC 306, [8]–[9] (Whelan J); affirmed in Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2007) 212 FLR 56; Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2008) 232 CLR 314, [27].
[12]Buckland Products Pty Ltd v DCT [2001] VSC 286, [10] (Warren J). See also JEM Developments, [1]–[2] (Austin J).
An applicant is required to apply for an extension of time for compliance under s 459F(2) of the Act, and an applicant cannot avail itself of the curative powers in s 1322(4) of the Act.[13]
[13]David Grant and Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265, 278 (Gummow J, Brennan, Dawson, Gaudron and McHugh JJ agreeing); Ketrim Pty Ltd v Jaeger Corp Pty Ltd (2003) 21 ACLC 8.
A consequence of not complying with a statutory demand is that a Court must presume that the company is insolvent.[14] To avoid the consequence of presumed insolvency, s 459F(2)(a)(i) of the Act empowers the Court to make an order that extends the period for compliance with the statutory demand, subject to two qualifications. First, the Court will only have power under that section where the company itself ‘applies in accordance with section 459G’.[15] Second, the Court only has the power to make an extension order before the time for compliance has expired,[16] there being no power to extend the time retrospectively once it has expired.[17]
[14]Corporations Act 2001 (Cth), s 459C(2)(a).
[15]David Grant and Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265, 278 (Gummow J, Brennan, Dawson, Gaudron and McHugh JJ agreeing).
[16]Kenjad Pty Ltd v Anzius Holdings Pty Ltd [2020] VSCA 255, [10] (Hargrave and Sifris JJA); Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2008) 232 CLR 314, [27] (Gleeson CJ, Hayne, Crennan and Kiefel JJ).
[17]Ketrim Pty Ltd v Jaeger Corp Pty Ltd (2003) 21 ACLC 8, [16] (Campbell J).
An application for an extension of time for compliance pending an appeal is somewhat analogous to an application for a stay of execution pending appeal. Thus, in deciding an application for extension of time for compliance pending an appeal, the court must address three matters:[18]
[18]Australian Beverage Distributors, [5] (Barrett J); JEM Developments, [3] (Austin J); Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (2018) 134 ACSR 318, [28]–[32] (Beazley P); Grocon Constructors (Vic) Pty Ltd v Dexus Funds Management Limited [2019] FCA 1168, [18] (Moshinsky J).
(a) first, the general question of the prospects of success in the appeal and whether an arguable case has been shown;
(b) second, whether the appeal will be rendered nugatory unless the extension is granted; and
(c) third, the prejudice the respective parties will suffer in the alternative eventualities.
In Kenjad Pty Ltd v Anzius Holdings Pty Ltd[19] Hargrave and Sifris JJA succinctly addressed the operation of s 459F(2)(a)(i) of the Act as follows:
In order to avoid the consequence of presumed insolvency, s 459F(2)(a)(i) permits a court to make an order that extends the period for compliance with the statutory demand. However, the court only has power to make an extension order before the time for compliance has expired, in this case within seven days of 27 May 2020. There is no power for the Court to extend this seven day period. The applicant accepts that this is the effect of the decision of the High Court in Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Limited,[20] where the plurality concluded that: ‘if the period for compliance with a statutory demand has expired, the Act does not permit the making of an order extending the period for compliance’.[21]
[19][2020] VSCA 255, [10] (Hargrave and Sifris JJA).
[20](2008) 232 CLR 314.
[21]Ibid 327 [27] (Gleeson CJ, Hayne, Crennan and Kiefel JJ).
In Grocon Constructors, Moshinsky J addressed the principles applicable to applications for extensions of time under s 459F(2)(a)(i) of the Act by reference to the observations of Beazley P in Grandview.[22] In Grandview, Beazley P observed as follows regarding the applicable principles:
[22]Moshinsky J also noted the subsequent decision in that litigation: Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (No 2) [2018] NSWCA 341. See, in particular, [16]‑[18].
Consideration
Legal principles for granting an extension of time for compliance with a
statutory demand
[28] In Creata (Aust) Pty Ltd v Gary Adrian Faull, White JA, at [2], set out the well-established principles that the Court is to apply when determining an application under s 459F(2) for an extension of time for compliance with a statutory demand, where the application to set aside the statutory demand has been dismissed. The matters to be addressed by the Court are as follows:
(1) First, the general question of the prospects of success in the appeal and whether an arguable case has been shown;
(2) Second, whether the appeal will be rendered nugatory unless the extension is granted; and
(3) Third, as to the prejudice the respective parties will suffer in the alternative eventualities.
See also Australian Beverage Distributors Pty Ltd v Cranswick Premium Wines Pty Ltd (2004) 50 ACSR 544; [2004] NSWSC 877 (Australian Beverage Distributors Pty Ltd v Cranswick Premium Wines Pty Ltd) at [5] per Barrett J; Jem Developments Pty Ltd v Hansen Yuncken (2006) 60 ACSR 393; [2006] NSWSC 1378 (Jem Developments Pty Ltd v Hansen Yuncken Pty Ltd) and Australia Asia Minerals Ltd v Ball [2015] WASCA 251 at [21] per Murphy JA.
[29] White JA went on, at [5], to state:
“…in an appeal it is convenient to first consider the other two matters that need to be addressed: namely whether, if an extension is refused, an appeal would be rendered nugatory; and prejudice to the parties if an extension is either refused or granted.”
[30] In Australian Beverage Distributors Pty Ltd v Cranswick Premium Wines Pty Ltd, to which White JA referred, Barrett J, at [5], after identifying the three matters to which White JA referred, continued:
“Indeed, the application before me should, I think, be approached by close analogy with the case where a stay of execution is sought pending appeal. In that connection I refer to what was said by the Court of Appeal in Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737; [2002] NSWCA 383 at [18]:
‘Thus the relevant principles are analogous to those which govern the grant of interlocutory relief before trial to protect the status quo. The appellant must show that the appeal raises serious issues for the determination of the appellate court, and that there is a real risk that he will suffer prejudice or damage, if a stay is not granted, which will not be redressed by a successful appeal. This requirement will be satisfied if the appeal will be rendered abortive or nugatory unless a stay is granted. If these pre-conditions are established the Court will then consider the balance of convenience.’”
[31] His Honour pointed out, at [7], that unless an order for extension was made a presumption of insolvency would arise. He was satisfied that the plaintiff had raised a sufficiently arguable prima facie case “to warrant consideration of the other matters relevant to s 459F(2)(a)(i) extension by application of the analogy with a stay pending appeal”: see at [11]. Having concluded that an extension of time should be granted and the terms if any that should be imposed in granting an extension of time, his Honour rejected the defendant’s argument that the plaintiff should be required to pay the full amount of the demand into court. In this regard, Barrett J stated, at [16]:
“The plaintiff says that the defendant should not be given the form of priority or security that that would entail. I accept the plaintiff’s submission. This is, after all, not a debt recovery action. A company on which a statutory demand is served is in no sense required to comply with it. It may, if it wishes, allow the statutory presumption of insolvency to arise (by not paying the demanded sum) and, if a winding up application follows, seek to show that it is in fact in a solvent state so that a winding up order is not justified. The statutory demand process is no more than a process that defines where the burden of proof lies in winding up proceedings.”
[32] A similar point was made by Austin J in Jem Developments Pty Ltd v Hansen Yuncken Pty Ltd at [28]. His Honour, at [26], made another point relevant to the present matter, namely, the effect of the statutory provisions should an extension of time not be granted:
“… unless an extension order is made, the plaintiffs will have to choose between paying [the amount of the statutory demand] …and allowing their failure to comply with the demand to create…a presumption that they are insolvent, unless the contrary is proved. That presumption will probably be available to any creditor…who applies for winding up within the time stipulated by s 459C. In any such winding up proceeding, the relevant plaintiff (as defendant in the winding-up proceeding) will bear the burden of demonstrating solvency and will be subject to the restrictions contained in s 459S. These disadvantages will apply to the plaintiffs even if they succeed in their appeal, because under s 459C(2)(a) the presumption of insolvency arises if, during the defined period, the company fails ‘as defined by section 459F’ to comply with a statutory demand, and under s 459F(1) the company is taken to fail to comply with the demand at the end of the compliance period if the demand is still in effect and the company has not complied with it.”
With respect to appeals being rendered nugatory in this context, and the question of prejudice, Moshinsky J observed in part as follows in connection with the facts his Honour was considering in Grocon Constructors:
[22] The second matter is whether the appeal will be rendered nugatory unless an extension is granted. In relation to this matter, it is common ground that, in light of the decision of the High Court in Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2008) 232 CLR 314, any appeal will be rendered nugatory unless an extension is granted.
[23] The third matter is the prejudice the respective parties will suffer in the alternative eventualities. Starting with Grocon (Vic), it would suffer prejudice by reason of the fact that any appeal would be rendered nugatory. Further, in the event of non-compliance with the statutory demand, the statutory presumption of insolvency will arise against it. This may trigger defaults in various contracts to which Grocon (Vic) and other entities in the Grocon group are parties (although the evidence in this regard is not specific or definitive). Against this, it is true that the statutory presumption will not arise if Grocon (Vic) pays the relevant amount (which it accepts is due and payable).
[24] On the other hand, Dexus may suffer prejudice if an extension of time is granted. As set out above, there is no issue that the amounts totalling $13,910,008.99 are due and payable by Grocon (Vic), and that they were due by (at the latest) 31 December 2018. These amounts were payable under the Deed of Surrender. Any further delay may impact on the amount that Dexus could recover in any liquidation of Grocon, because it would (in a practical sense) push back Grocon’s relation-back date (by reference to which antecedent transactions could be challenged).
Consideration — Application for further extension of the time for compliance with the Demand
Having considered and taken into account the evidentiary material before the Court, the applicable principles and authorities earlier referred to, the written and oral submissions of the parties, and the consent position reached by the parties, I am satisfied that, in the circumstances as they currently exist, but noting the limited material before me, it is appropriate to further extend the date for compliance with the Demand to 30 June 2025. Given the matters already referred to above in these reasons, my reasons for so concluding can be briefly stated, noting also that the agreed position of the parties does not obviate the need for the Court to carry out its judicial function and obligation to consider the merits of the application by reference to the terms of the section, the applicable principles, and the evidence and submissions before the Court.
I should emphasise that this urgent application falls to be considered by reference only to the material currently before the Court, which in the particular circumstances of this case, is relevantly limited by reason of the absence at this stage of the Dismissal Reasons and Mayfair’s written case.
It is self‑evident that the absence of the Dismissal Reasons, the proposed written case, or any evidence regarding the substance of the same, limits the ability of the Court to form a view, on a fully informed basis, of the extent to which Mayfair has shown the existence of an arguable case for appeal. That said, the evidence before me includes the Appeal Leave Application, which sets out the proposed grounds of appeal (to which I refer but will not set out) and the transcript of the hearing before Steffensen AsJ, which I have read and considered.
Although the position may change when considered in the light of the Dismissal Reasons and Mayfair’s written case, it is sufficient for present purposes to observe that, on the material before me, I am satisfied that an arguable case has been shown in relation to the ground that there is a plausible contention requiring further investigation that the debt to which the Demand relates was the subject of a compromise agreement between the parties, and therefore a genuine dispute existed about the said debt being due and payable in the manner and time alleged by the Demand. That being so, it is neither necessary nor desirable for me to make any observation regarding the other proposed ground of appeal, noting also that the Appeal Leave Application will soon be considered by the Court of Appeal.
At the risk of repetition, and noting that the circumstances are less than ideal, it is not possible to say to what extent, if any, a different conclusion may have been reached had I been able to consider the issues in the light of the Dismissal Reasons and Mayfair’s written case.
Given that the law is clear that an extension of the time for compliance with a statutory demand cannot be made after the expiry of the time for compliance, or any extended time for compliance, it is in my view apparent that Mayfair’s Appeal Leave Application, the COA Demand Extension Application, and any appeal, will be rendered nugatory if a further extension of the time for compliance with the Demand is not granted. As was submitted, this is because the Extended Compliance Date expires at the end of today and, if it is not extended, the presumption of insolvency will apply to Mayfair by virtue of the operation of s 459C(2)(a) of the Act. That being so, the very object of the Appeal Leave Application, the COA Demand Extension Application, and any appeal, being to seek to set aside the Demand so as to prevent the statutory presumption of insolvency arising, and to prevent being exposed to the commencement of consequent winding up proceedings, will be defeated. Unsurprisingly, so much was not contested by counsel for Terafortis.[23]
[23]Although it was made clear that the defendant will likely wish to later contend that the Dismissal Reasons are such that any further extension application should fail because the appeal grounds will be demonstrated to be without merit.
It is also to be noted in this context that Mayfair’s constraints on further considering the Dismissal Reasons and preparing its written case do not result from any action or inaction on the part of any party.
With respect to prejudice, I accept that the existence of a presumption of insolvency in this case and the consequences referred to in the submissions would be material prejudice to Mayfair if a further extension order is not granted. Whilst it is, as Mayfair acknowledged, the case that any further extension will result in the relevant relation‑back day being altered than would otherwise be the case if a winding up order is ultimately made against Mayfair, whether considered alone or in combination with any one or more of the other circumstances, on the evidence before me I do not consider that this outweighs the prejudice to be suffered by Mayfair if the short further extension of time for compliance with the Demand is not granted to Mayfair. I note also that no additional evidence was filed, or submissions made, regarding particular prejudice to the defendant, although I also take into account that the application was brought on urgently with limited notice provided to the defendant.
Although I was initially minded to extend the compliance date to the date of the further hearing of the Appeal Leave Application, having regard to the authorities, the statutory regime in question, the absence of the written case and Dismissal Reasons, the currently unknown hearing date in the Court of Appeal, and Mayfair’s undertaking, in my view it is appropriate to make an extension order until only 30 June 2025. By then, the Remaining Appeal Documents will have been in the possession of the parties for a reasonable period, and Mayfair will have taken steps to seek to have its Appeal Leave Application and the COA Demand Extension Application listed for hearing prior to 30 June 2025, as indeed senior counsel for Mayfair informed the Court would occur. As was submitted, it is also appropriate to reserve liberty to apply.
Although it is of limited relevance given that I propose to extend the compliance date to the agreed fixed date of 30 June 2025, I note for completeness that, in my view, it is plain that the terms of s 459F(2)(a)(i) permit an extension to be granted by the Court to the date or day of the occurrence of a known future event, rather than a fixed or specified date. So much is permitted by the language of the section, and is also consistent with the express terms of s 459F(2)(a)(ii) of the Act which, in terms, refers to the happening of a future event; namely the final determination or disposal of a s 459G application. This conclusion is also consistent with orders made in numerous cases, including, for example, JEM Developments and Grandview, and is a conclusion which counsel for each of the parties submitted is correct.
In the circumstances I consider it appropriate to grant a further extension of the time for compliance with the Demand to 30 June 2025. In so doing I am cognisant of, and take into account, Mayfair’s undertaking to the Court to prosecute the Appeal Leave Application, and any appeal, with expedition.
Finally, it should be noted that although I have taken the consent position of the parties into account, on the material currently before the Court, no different result would have followed if this was put to one side.
Consideration — Procedural extension orders
Having ascertained that Steffensen AsJ returns to the Court from leave on 19 May 2025 and that the Dismissal Reasons will be provided no later than Friday 23 May 2025, the Court is in a position to address the procedural extensions required for the filing and service of the Remaining Appeal Documents. I also observe that (at least) the terms of r 64.05(1)(c) of the Rules give me the power to make such orders, noting that the 28 day period for instituting an appeal under r 64.05(1)(ab)(i) of the Rules has not expired. Consequently, and as was submitted by the parties to be appropriate, I propose to extend the time for filing and service of the Remaining Appeal Documents to 4:00pm on 6 June 2025.
Other matters
During the course of the hearing I raised with the parties the procedural question of whether Mayfair needed to file and serve a fresh Originating Process or whether it was sufficient to proceed with an Interlocutory Process in the existing proceeding. Each party submitted that the latter was sufficient, which I accept, noting also that there remain steps to be taken in this proceeding, namely the delivery of the written Dismissal Reasons.
Conclusion and proposed orders
As I have said, I have determined that an order should be made further extending the time for compliance with the Demand from 7 May 2025 until 30 June 2025, and also determined that procedural orders should be made extending the time within which the plaintiff is to file and serve the Remaining Appeal Documents to 4:00pm on 6 June 2025.
Subject to addressing the precise form of orders and the proposed agreed costs position with counsel for the parties, I propose to make orders to the following effect:
(1)Pursuant to s 459F(2)(a)(i) of the Corporations Act 2001 (Cth), the date for compliance with the defendant’s statutory demand dated 31 October 2024 is further extended from 7 May 2025 until 30 June 2025.
(2)The time within which the plaintiff is required to file and serve its written case, its list of authorities, and the Dismissal Reasons in the Appeal Leave Application is extended to 4:00pm on 6 June 2025.
After delivering my reasons ex tempore and addressing the precise form of the orders with counsel for the parties, authenticated orders were made in an agreed form on 7 May 2025 in the following terms:[24]
[24]The terms ‘Statutory Demand’, ‘Written Reasons’, and ‘Appeal Leave Application’ were defined terms in the ‘Other Matters’ section of the authenticated orders.
1.The extended date of 7 May 2025 for compliance with the Statutory Demand is further extended, pursuant to section 459F(2)(a)(i) of the Corporations Act 2001 (Cth), from 7 May 2025 to 30 June 2025.
2.The date by which the plaintiff is to file and serve its written case, list of authorities, and the Written Reasons, in support of the Appeal Leave Application, is extended to 4:00pm on 6 June 2025.
3.The costs of and incidental to the plaintiff’s application by Interlocutory Process filed on 6 May 2025, including the costs of the hearing on 7 May 2025, are reserved.
4.There is liberty to apply.
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