Livestock Traders International Pty Ltd v Thi Lam Bui & Anor [1996] FCA 876

CATCHWORDS Corporations - Companies - Winding up - Inability to pay debts - Statutory demand - Extension of period for compliance - No power to grant a further extension upon application made after expiration of the period specified in an order extending the period. Corporations Law - s.70, Part 5.4 LIVESTOCK TRADERS INTERNATIONAL PTY. LIMITED v. THI LAM BUI & VAN QUANG BUI

VG3005 of 1996 Jenkinson J. Melbourne 7 October, 1996

IN THE FEDERAL COURT OF AUSTRALIA ) VICTORIA DISTRICT REGISTRY ) No. VG3005 of 1996 GENERAL DIVISION ) BETWEEN: LIVESTOCK TRADERS INTERNATIONAL PTY. LIMITED Applicant AND: THI LAM BUI & VAN QUANG BUI Respondents CORAM: Jenkinson J. PLACE: Melbourne DATE: 7 October, 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The application for an order extending the period for compliance with the statutory demand be dismissed. 2. The application for an order setting aside the statutory demand be dismissed. 3. The applicant pay the respondents' costs of the proceeding. (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. VG3005 of 1996 GENERAL DIVISION ) BETWEEN: LIVESTOCK TRADERS INTERNATIONAL PTY. LIMITED Applicant AND: THI LAM BUI & VAN QUANG BUI Respondents CORAM: Jenkinson J. PLACE: Melbourne DATE: 7 October, 1996

REASONS FOR JUDGMENT

Review of a Deputy Registrar's order that an application to set aside a statutory demand be dismissed. On 22 May 1996 an application under Division 3 of Part 5.4 of the Corporations Law for an order setting aside a statutory demand served on the applicant by the respondents was dismissed by Deputy Registrar Wood. At that time, on the application of counsel for the applicant, the Deputy Registrar made the following order: "Pursuant to Section 459F(2)(a)(i) the period for compliance with the demand is extended to 14 days from the date of the decision." Section 459F of the Corporation Law provides: "(1)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. (2) 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." The order of extension made on 22 May is "the last such order", within the meaning of that phrase in sub-paragraph 459F(2)(a)(i). The powers exercised by the Deputy Registrar in the proceeding, including the power to extend the period for compliance with the demand, were conferred on him by a direction in writing dated 5 August 1994 of the Chief Justice, pursuant to s.35A(1)(h) of the Federal Court of Australia Act 1976 and Order 71 Rule 7(1)(a) and Item No. 38 in the Third Schedule of the Federal Court Rules. Sub-sections 35A(5) and 35A(6) of that Act provide: "(5)A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power. (6) The Court may, on application under subsection (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised." Sub-rules 7(3) and 7(4) of Order 71 provide: "(3)An application for the review of a decision, direction or act of a Registrar made, given or done under this Order, must be made within 21 days after the decision, direction or act complained of, or within such further time as the Court allows. (4) A decision or direction of a Registrar may be reviewed by the Court or a Judge." Within 21 days after the Deputy Registrar's decision, on 12 June 1996, an application for the review of the decision was filed. In addition to claims for an order setting aside the statutory demand and costs the application claimed: "Pursuant to s.459F(2)(a)(ii) the time for compliance with the Notice of Demand be extended until the hearing and determination of this review." Counsel for the respondents submitted that on the expiration of the period specified in the Deputy Registrar's order as the period for compliance with the demand, on 6 June 1996, the demand was still in effect and the applicant, not having complied with it, is taken to have failed to comply with it, by virtue of the operation of sub-section 459F(1) of the Corporations Law. The word "otherwise", in sub-paragraph 459F(2)(a)(ii), is a laconic expression of the condition that none of the conditions in the clause in sub-paragraph 459F(2)(a)(i) which is introduced by the word "if" has been fulfilled, it was submitted. One of those conditions having been fulfilled (that is, the making of the order extending the period for compliance on the application of the applicant) sub-paragraph 459F(1)(a)(ii) can have no operation, according to the submission. Counsel for the applicant based on the circumstance that sub-rule 7(3) of Order 71 allows a period of 21 days within which to apply for the review of a decision dismissing an application to set aside a statutory demand submissions that the order of dismissal by the Registrar ceases to have effect when the application for review is filed, that the order extending the period for compliance is to be treated, for the purposes of the application of s.459F, as not having had effect, that from the time of filing of the application for review the application for an order setting aside the statutory demand is again pending and the powers of extension of the period for compliance conferred by sub-paragraph 459F(2)(a)(i) are again enlivened. In the alternative, counsel for the applicant relied upon the power conferred by s.70 of the Corporations Law, which provides: "Where this Law confers power to extend the period for doing an act, an application for the exercise of the power may be made, and the power may be exercised, even if the period, or the period as last extended, as the case requires, has ended." I accept the submission of counsel for the respondents that once an exercise of the power to extend the period for compliance has occurred no operation is left to sub-paragraph 459F(2)(a)(ii). The use of the word "otherwise" in that sub-paragraph in my opinion compels that conclusion. The difficulty facing the submissions of counsel for the applicant is that acceptance of any of them would require a qualification of the operation of sub-section 459F(1) which its terms do not in my opinion admit. When a Registrar, or a Court on review, orders the setting aside of a statutory demand, s.459K ensures that sub-section 459F(1) will not operate until that order has been set aside. Section 459K provides: "A statutory demand has no effect while there is in force under section 459H or 459J an order setting aside the demand."