In the matter of Ozone Manufacturing Pty Ltd [2011] NSWSC 1197

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Ozone Manufacturing Pty Ltd [2011] NSWSC 1197 Hearing dates: 11 October 2011 Decision date: 11 October 2011 Jurisdiction: Equity Division - Corporations List Before: Barrett J Decision: Order extending period for compliance with statutory demand Catchwords: CORPORATIONS - winding up - statutory demand - s 459G application dismissed when plaintiff did not appear - plaintiff now seeks urgently order for short extension of compliance period pending hearing of application to have dismissal order set aside - very short notice to defendant - defendant not present - short extension granted Legislation Cited: Corporations Act 2001 (Cth), ss 459F(2)(a), 459G Cases Cited: Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571 In the Matter of Kay Investment Holdings Pty Ltd [2011] NSWSC 1033 Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd [2008] NSWCA 38; (2008) 71 NSWLR 262 Category: Interlocutory applications Parties: Ozone Manufacturing Pty Limited - Plaintiff Toll North Pty Ltd t/as NQX Freight System - Defendant Representation: Mr E A Walker - Plaintiff Matthew Grew File Number(s): 2011/00285886

Judgment 1On 5 September 2011, the plaintiff filed an originating process embodying an application under s 459G of the Corporations Act 2001 (Cth) in respect of a statutory demand served on it by the defendant. The originating process was returnable on 4 October 2011 and, in the usual way, carried an endorsement of that return date. 2When the matter came before the court on 4 October 2011, there was no appearance for the plaintiff. A legal representative of the defendant appeared and submitted that the originating process should be dismissed. The court then made an order that it be dismissed with costs. 3The plaintiff by its counsel came before the court at 2.30 this afternoon and filed in court an interlocutory process seeking two substantive orders. The first is an order under s 459F(2)(a) extending the time for compliance with the statutory demand. The other is an order under rule 36.16 of the Uniform Civil Procedure Rules 2005 that the orders made by the court on 4 October 2011 be set aside. 4Having regard to s 459F(2), the time for compliance with the statutory demand will expire at the conclusion of today, unless extended. 5All that is sought today is an order extending until Monday next the time for compliance with the statutory demand, on the footing that the interlocutory process as a whole will then come back before the court. The plaintiff thus seeks a short extension of the compliance period so that its application for an order setting aside the orders of 4 October may be duly progressed. 6I expressed concern about the prospect of making an order under s 459F(2)(a) without the defendant having been given an opportunity to be heard. 7If no order is made by the court, the defendant will have, from the end of today, the benefit of a presumption of insolvency on the basis of which it may initiate winding-up proceedings. If the order the plaintiff seeks is made, that benefit will be denied to the defendant, at least until the end of next Monday. 8It is obvious, therefore, that the defendant has a clear and direct interest in the matter of the making of any order of extension under s 459F(2). That being so, the defendant is the beneficiary, in the particular context, of the audi alteram partem rule, such that denial of an opportunity to be heard would be a denial of natural justice, added to which any such order would be susceptible to being set aside virtually without question: Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571; Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd [2008] NSWCA 38; (2008) 71 NSWLR 262. 9The plaintiff points, however, to the fact that the defendant was put on notice of this application. At about 5pm yesterday, the plaintiff's solicitor emailed a letter to the defendant's solicitor, saying that he had instructions to seek to have the order of dismissal of 4 October vacated and that he expected to make the application today, not before 2pm. Consent to the setting aside of the dismissal order was sought. 10At about 11.20am today, the plaintiff's solicitor emailed another letter to the solicitor for the defendant attaching a copy of the orders the plaintiff proposed to seek and indicating that contact had been made with my associate, as a result of which the matter would be before the court at 2.30 today in Court 7C. It was stated in that letter that the plaintiff would seek today an extension of the time for compliance with the statutory demand until next Monday and for the matter to go into the Corporations List then. 11Some time after 11.20am and before 1pm today, the defendant's solicitors wrote to the plaintiff's solicitors, saying: "We acknowledge receipt of your most recent letter dated today and the mention listed for 2.30 this afternoon. Please urgently provide a copy of the interlocutory application and supporting affidavit of yourself which you propose to seek leave to file." 12At 1pm today, the plaintiff's solicitor emailed to the defendant's solicitors a letter enclosing the interlocutory process and affidavit as requested. 13It can thus be seen that this is not a matter in which the defendant has moved entirely without notice to the plaintiff. The notice, it is true, has been very short, but the letter from the plaintiff's solicitor does not appear to raise any objection on that ground. 14It may well be a matter for debate at a later time whether the defendant had such reasonable notice of the application brought before the court this afternoon as to satisfy the requirements of natural justice. I am prepared at this stage, however, to think that the balance of convenience justifies the short extension under s 459F(2)(a) that is sought; that is, an extension of a few days until Monday next. 15Of course, if the defendant thinks that that order is, for the kind of reason I foreshadowed, susceptible to being set aside virtually as a matter of course, then the defendant will no doubt take steps in that direction. 16I have considered the possibility of declining to make the short extending order and leaving the plaintiff to pursue, in the fullness of time, its application for an order setting aside the orders of 4 October 2011, in the expectation that the presumption of insolvency that would by then have arisen in the absence of an s 459F(2)(a) order would be reversed if the plaintiff were ultimately successful in that respect; see In the Matter of Kay Investment Holdings Pty Ltd [2011] NSWSC 1033 at [20] and following. 17On balance, the more constructive approach, and that I consider to be just, is to make the extending order for the short period indicated. 18I order pursuant to s 459F(2)(a) of the Corporations Act 2011 that the time for compliance with the creditors' statutory demand for payment of debt served on the plaintiff by the defendant and dated 8 August 2011 be extended up to and including 17 October 2011. 19I direct that the order be taken out forthwith. 20I direct that the interlocutory process stand over before the Corporations Judge at 9.30am on 17 October 2011.