International Law

Winding up statutory demand dates are critical

In times of uncertainty, more company winding-up notices (statutory demands) are issued. Failure to comply results in a presumption of insolvency.

So the High Court's decision in Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Limited [2008] HCA 9 is timely.

The High Court decided that a court could not extend the time for compliance with a statutory demand under the Corporations Act if the time fixed by the Act had already expired.

A statutory demand is a demand served on a company under section 459E of the Corporations Act to pay a debt or debts within 21 days. Section 459F(2) provides that if the company applies pursuant to section 459G for an order to set aside the demand, a court may extend the period for compliance, and if no extension is ordered the period ends seven days after the application under section 459G is finally determined.

Aussie Vic applied to the Victorian Supreme Court for an order setting the demand from Esanda aside. On 20 June 2006, Master John Efthim dismissed the application to set aside the demand but ordered that the time for compliance be extended to 4 July 2006. Aussie Vic was entitled to appeal to a single judge of the trial division of the Supreme Court. After the extension fixed by Master Efthim had expired but before the appeal to a single judge had come on for hearing, Aussie Vic applied for another extension of time for compliance.

The issue went all the way to the High Court: no extensions could be given.

Full post as published by Australian Regulatory Compliance Review on March 27, 2008 (boomark / email).