NA Investment Holdings Pty Ltd v Perpetual Nominees Limited

[2010] NSWSC 373

CITATION:	N A Investments Holdings Pty Ltd v Perpetual Nominees Limited [2010] NSWSC 373
HEARING DATE(S):	28/04/10
JUDGMENT DATE :	28 April 2010
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
EX TEMPORE JUDGMENT DATE:	28 April 2010
DECISION:	Extension of time for compliance with statutory demand granted upon plaintiff's undertaking to prosecute appeal promptly.
CATCHWORDS:	CORPORATIONS - winding up - statutory demand - application for order setting aside statutory demand dismissed - application for extension of time for compliance with demand - where appeal proposed - relevant considerations discussed
LEGISLATION CITED:	Corporations Act 2001 (Cth), ss 459F(2)(a)(i), 459G, 459J(1)(b)
CATEGORY:	Principal judgment
CASES CITED:	Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corp Ltd [2008] HCA 9; (2008) 232 CLR 314 Australian Beverage Distributors Pty Ltd v Cranswick Premium Wines Pty Ltd [2004] NSWSC 877; (2004) 50 ACSR 544 Jem Developments Pty Ltd v Hansen Yuncken Pty Ltd [2006] NSWSC 1378; (2006) 60 ACSR 393
PARTIES:	N A Investments Holdings Pty Ltd - Plaintiff Perpetual Nominees Limited - Defendant
FILE NUMBER(S):	SC 2009/291026
COUNSEL:	Mr A Naryan - Plaintiff Mr R D Marshall - Defendant
SOLICITORS:	Argyle Lawyers - Plaintiff Middletons - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

WEDNESDAY 28 APRIL 2010

2009/291026 N A INVESTMENTS HOLDINGS PTY LTD v PERPETUAL NOMINEES LTD

JUDGMENT

1 The plaintiff makes an application under s 459F(2)(a)(i) of the Corporations Act 2001 (Cth) for an order extending the time for compliance with a statutory demand.

2 An application under s 459G for an order setting aside the statutory demand was heard by Macready AsJ on 16 March 2010. His Honour gave judgment on 8 April 2010 and dismissed the application.

3 The s 459G application was brought exclusively on the ground in s 459J(1)(b). Several matters were canvassed including, in particular, the correct construction of the contractual provision under which the relevant debt was said to arise, at being clause 11.18 of the restated facility agreement.

4 Macready AsJ held, in effect, that that provision, despite limitations expressed within it, created a debt and that no “other reason” within s 459J(1)(b) arose from the provision (including the aspect of it limiting or restricting the ability to bring "proceedings" or applying for a winding up order in order to recover any "shortfall"). The meaning of "shortfall" is, I accept, somewhat obscure in the context.

5 The plaintiff intends to seek leave to appeal (see Supreme Court Act 1970, s 101(2)(p)). Counsel for the plaintiff has today outlined bases on an appeal would be initiated. They go very largely to the construction of clause 11.18.

6 On an application of this kind, the matters to be taken into account are, first, the prospects of success in the appeal and whether an arguable case has been shown; second, whether the appeal will be rendered nugatory unless the extension is granted; and third, the prejudice the respective parties will suffer in the alternative eventualities. This was the approach taken in Australian Beverage Distributors Pty Ltd v Cranswick Premium Wines Pty Ltd [2004] NSWSC 877; (2004) 50 ACSR 544 and Jem Developments Pty Ltd v Hansen YunckenPty Ltd [2006] NSWSC 1378; (2006) 60 ACSR 393.

7 As to the first matter, the points already noted are sufficient to indicate that an arguable case exists or should be taken to exist for present purposes.

8 As to the second matter, the consequences made clear by the High Court in Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corp Ltd [2008] HCA 9; (2008) 232 CLR 314 establish that the appeal will be rendered nugatory unless the time for compliance with the statutory demand is extended.

9 This leaves the third matter, which is prejudice. The defendant, naturally enough, is concerned to be free to take all appropriate steps to protect its position with respect to the debt which, from the defendant's perspective, is owed to it by the plaintiff as guarantor not as a principal debtor. There is particular concern with the potential for the relation-back day for the purpose of any winding up that eventuates not be unduly extended and therefore not to allow the appeal process to become extended. To that end, the position taken by the defendant is that any extension of time for compliance should only be given in response to an undertaking given by the plaintiff to prosecute the appeal promptly. Such an undertaking has been proffered by the plaintiff through its counsel.

10 An extension should be granted but there is a question as to how long the extension should be. It is inappropriate that it should be open ended so as to match whatever time is taken for the appeal and antecedent application for leave to appeal to be disposed of. The better course – and that taken in Australian Beverage Distributors Pty Ltd v Cranswick Premium Wines Pty Ltd (above) – is for an extension to be granted sufficient to enable the appeal process to be commenced so that the matter may come under the control of the Court of Appeal which may address then the need for any further extension of the time for compliance.

11 Upon the plaintiff by its counsel giving to the court the undertaking in written form which I now initial and date, I order pursuant to s 459F(2)(a)(i) of the Corporations Act 2001 (Cth) that the time for compliance with the statutory demand dealt with by Macready AsJ in these proceedings be extended to and including Friday 18 June 2010.

12 I direct that the costs of the present application follow the costs of the appeal and if there is no determination of an appeal that the question of costs be reserved for further consideration.

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