Zanjill Pty Ltd v Sydney Autolac Centre Pty Ltd Sandena Pty Ltd v Sydney Autolac Centre Pty Ltd

[1997] FCA 1445

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 3200 of 1997

BETWEEN:	ZANJILL PTY LIMITED APPLICANT
AND:	SYDNEY AUTOLAC CENTRE PTY LTD RESPONDENT

NG 3201 of 1997

BETWEEN:	SANDENA PTY LIMITED APPLICANT
AND:	SYDNEY AUTOLAC CENTRE PTY LTD RESPONDENT

JUDGE(S):	HILL J
DATE:	5 DECEMBER 1997
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Sydney Autolac Centre Pty Limited, the respondent in each proceedings, served upon each of Sandena Pty Limited and Zanjill Pty Limited statutory demands in accordance with s 459E of the Corporations Law (“the Law”) within the 21 day period referred to in s 459G(2). Application has been made to the Court by each debtor for an order setting aside the statutory demand addressed to it.

A considerable body of affidavit evidence has in the meantime been filed additional to the affidavits to which s 459G(3) refers. In other words, the application to set aside the statutory demands are hotly contested. The applicant in each application has applied to a Registrar of the Court to amend its application. The substance of the amendments is not of great significance for present purposes. Suffice it to say that in one case the amendment is designed to raise matters of form and in the other case not only matters of form but also the question of whether there is an offsetting claim for the purpose of s 459H of the Law.

The respondent to the proceedings seeks to argue that the affidavits filed in purported compliance with s 459G(3) are inadequate.  They have asked me to deal with that matter as a separate point.  I have declined to do so, largely because the matter has come before me as duty judge and time does not permit a detailed examination of the arguments which could be put in support of the view that affidavits in accordance with s 459G must contain certain minimum requirements.

The respondents object to the amendment of the applications submitting that the Court has no power to permit amendment.  They say also that as a matter of discretion the power should not be exercised.

The argument that the Court has no power is a short one. It is submitted that the time limit under s 459G(2) is mandatory and, indeed, it is. It is submitted also that the provisions of Part 5.4 of the Law are a code and should be interpreted as such so that while there is power, for example, under the Federal Court Rules to permit amendments of applications, those powers must give way to the explicit provisions of s 459G(2) and its place within the Part.

Reliance is placed upon a number of cases, including: Texel Pty Limited v The Commonwealth Bank (1993) 11 ACLC 1059; Holmark Construction Co Pty Limited v Kekatos (1994) 12 ACLC 400; De Pellegrin Pty Limited v Reinforced Earth Pty Limited (1994) 120 ALR 459 and reference is also made to CFC Corporation Pty Limited v Lanier (Australia) Pty Limited (1994) 12 ACLC 1.

Texel, a judgment of Hayne J, makes it clear that a failure to apply to the Court within the 21 day period referred to in s 459G(2) could not be cured by an order under s 1322(4)(d) of the Law extending the time for bringing an application.

The reasoning of Hayne J in Texel is to be found in the following passage upon which his Honour Santow J relied in Holmark Construction at 402:

“In my view the intent of Part 5.4 is clear.  It is to prescribe a scheme regulating the winding up of companies in insolvency and the whole of the statutory demand procedure: the making of such demands, their setting aside, their variation.

In those circumstances I do not consider that the general provisions of s1322 may be applied to extend the time so emphatically prescribed in s459G(2), even if, as I assume, s1322 is ordinarily to be given a wide construction.  The operation of the general provisions of s1322 would be repugnant to the special scheme enacted by Division 2 of Part 5.4 and in particular s459G(2).”

His Honour referred to a number of authorities to which reference need not here be made.

So in Holmark, there had been two demands.  Within 21 days from the first demand application was made to have it set aside.  No application was made in respect of the second demand in time but rather an attempt was made to amend the application to set aside the first demand so as to include an application for relief in respect of the second.  Santow J held that there was no power to do this and in so holding followed the judgment of his Honour, Hayne J.

The present case differs from each of the cases to which I have been referred.

In the present case, an application has been made to the Court within the 21 day period to set aside the demand. What is sought to be done here is to amend that application. The argument that there is no power proceeds upon the boss that the policy behind s 459G(2) of the Law is to ensure not only that a company having served the statutory demand would know within the 21 day period whether or not that demand is to be contested, but also precise details of the grounds upon which that contest is to proceed. In principle it is hard to see why such a policy would be adopted.

It is clear, having regard to the place which Part 5.4 has in the Law, that failure to comply with a statutory demand provides a presumption of insolvency and there are clear policy reasons why a creditor should know as soon as possible whether there is to be a contest in respect of the demand which the creditor has served. That policy reason does not, however, extend to amendments.

Analogies are of course always dangerous.  But there is some analogy between the present case and Yong Jun Quin v Minister for Immigration and Multicultural Affairs (1997) 14 ALR 695. In that case the Migration Act 1958 (Cth) required that a person desiring judicial review of a decision of the Immigration Review Tribunal had to commence proceedings within a certain time of being notified of the Tribunal's reasons, those proceedings requiring the Minister to be a party. Proceedings were in fact brought within the time but not naming the Minister and an application was made to amend the application so as to have the Minister as a party. A Full Court of this Court, comprising Beaumont, Burchett and Goldberg JJ, held that there was power to make such an amendment relying upon the Federal Court Rules, notwithstanding the express statutory requirement which was equally as mandatory as that in the present case.

In my view, it can be said here that as long as the application to set aside the demand has been brought in the 21 day period, the Court’s Rules then take over to the extent that in an appropriate case an amendment can be made to the application.  It may be, although I do not at the moment wish to decide the question, that all material of an evidentiary nature needed to support the amendment would have to be in the affidavit required to be filed under s 459G(3) or at least the bare bones of the evidentiary material.  If that were right, the amendment dealing purely with the form of the notice would still be authorised even if the amendments which raised the factual issues of a cross claim was not.

It was not suggested that there was any real prejudice to the respondents in permitting the application other than the prejudice which exists always when an amendment is sought, namely that it raises fresh matters that would otherwise not be argued.  There may be prejudice in that additional evidence may need to be filed.  No submissions were made to this end and a brief perusal of the file indicates that a great deal of material which could relate to the cross-claim is in any event already available to be read in evidence when the proceedings are ultimately heard.  A cost order could ovbiate that kind of prejudice in any event.

In these circumstances I am of the view that the Court has power to permit the amendments sought and should exercise that power.

The applicants should bear the costs of the application.  I order that the decision of the Registrar be set aside and direct that the applicants file amended applications by 4pm on Monday, 8 December 1997.

I would refer the matter to the Registrar to allocate to a Judge for hearing and advise the parties accordingly.  I also direct that the parties attend before a mediator at a time to be determined by the Registrar.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill

Associate:

Dated:             12 December 1997

Counsel for the Applicant:	I Mescher
Solicitor for the Applicant:	Lyon Lawfirm
Counsel for the Respondent:	P P Strasser
Solicitor for the Respondent:	Tribe, Conway & Co
Date of Hearing:	5 December 1997
Date of Judgment:	5 December 1997