Mauntill Pty Limited v Cadoroll Pty Limited, Caldpost Pty Limited, Balescope Pty Limited, Southern Plumbing Supplies Pty Limited and Dr Anthony Griffin [1994] ACTSC 109; (1994) 15 ACSR 114; (1994) 123 ACTR 6 (24 October 1994)

SUPREME COURT OF THE ACT

MAUNTILL PTY LIMITED v. CADOROLL PTY LIMITED, CALDPOST PTY LIMITED, BALESCOPE
PTY LIMITED, SOUTHERN PLUMBING SUPPLIES PTY LIMITED and DR ANTHONY GRIFFIN
No. SC507 of 1994
Number of pages - 13
Corporations
[1994] ACTSC 109; (1994) 15 ACSR 114
(1994) 123 ACTR 6

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
HIGGINS J

CATCHWORDS

Corporations - debts - creditor's statutory demand - application to set aside - not within time limit prescribed - whether Court has power to cure that irregularity - consideration of conflicting authorities - preferred approach.

Corporations Law, ss.109X, 219, 220, 429, 459F, 459G, 459H, 459J, 459S, 467A, 1322
Acts Interpretation Act 1901 (Cth), s.36

Texel Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACSR 535

CFC Corp Pty Ltd v Lanier (Australia) Pty Ltd (1993) 11 ACSR 772
Re Cavetina Pty Ltd (1994) 12 ACLC 44
De Pellegrin Pty Ltd v Reinforced Earth Pty Ltd [1994] FCA 964; (1994) 120 ALR 459
Pacific Communication Rentals Pty Ltd v Walker (1993) 12 ACSR 287
L and D Audio Acoustics Pty Ltd v Pioneer Electronic Australia Pty Ltd

(1982) 7 ACLR 180, 181; 1 ACLC 537, 538

Bartex Fabrics Pty Ltd v Phillips Fox (1994) 13 ACSR 667
Cavetina Pty Ltd v Synthetic Dyeworks Industries Pty Ltd (Court of Appeal,

Supreme Court, Queensland, 22.8.94, Macrossan CJ, McPherson and Demack JJ, unreported)
Citizens Investments Pty Ltd v Murphy (Supreme Court, Queensland, 12.9.94, unreported)

HEARING

CANBERRA, 2 September 1994
24:10:1994

Counsel for the Applicant: Mr M Emmerig

Instructing solicitors: Blake Dawson Waldron

Counsel for the Respondents: Ms A Pert

Instructing solicitors: Minter Ellison Morris Fletcher

ORDER

The Court declares that:
1. The plaintiff's application is not rendered incompetent by
reason of its non-compliance with the time limits prescribed
by s.459G of the Corporations Law.

DECISION

HIGGINS J The applicant, by notice dated 5 August 1994, seeks to set aside a creditors statutory demand upon the ground that it does not to comply with s.219 of the Corporations Law. It also seeks a declaration that, pursuant to s.459H(1)(a), there is a genuine dispute concerning the existence or quantum of the alleged debt and orders setting aside the statutory demand pursuant to s.459G and/or s.459J. The respondents are the creditors on whose behalf the statutory demand was delivered. They have taken the preliminary point that the applicant is out of time, this application being made more than 21 days after delivery of the statutory demand.

2. The statutory demand was served on 14 July 1994 at about 4.41pm, allegedly at the registered office of the applicant. Section 459F(2)(b) of the Corporations Law provides that in any case, other than one in which a company has applied pursuant to s.459G to set aside the statutory demand, the period for compliance with the statutory demand notice is "within 21 days after the demand is served". The application was filed and served on the 22nd day after the date of delivery of the statutory demand.

3. Section 459G provides:

(1) A company may apply to the Court for an order setting
aside a statutory demand served on the company.
(2) An application may only be made within 21 days after the
demand is so served.
(3) An application is made in accordance with this section only
if, within those 21 days:
(a) an affidavit supporting the application is filed with the
Court; and
(b) a copy of the application, and a copy of the supporting
affidavit, are served on the person who served the demand on
the company.

4. If a company fails to comply with a statutory demand, then an application may be made for the winding up of the company relying upon the failure to comply with the notice.

5. Section 459S is relevant in relation to such an application. It provides:

(1) In so far as an application for a company to be wound
up in insolvency relies on a failure by the company to comply
with a statutory demand, the company may not, without the leave
of the Court, oppose the application on a ground:
(a) that the company relied on for the purposes of an application
by it for the demand to be set aside; or
(b) that the company could have so relied on, but did not so rely
on (whether it made such an application or not).
(2) The Court is not to grant leave under subsection (1) unless
it is satisfied that the ground is material to proving that the
company is solvent.

6. Section 429H provides:

(1) This section applies where, on an application under section
459G, the Court is satisfied of either or both of the following:
(a) that there is a genuine dispute between the company and the
respondent about the existence or amount of a debt to which the
demand relates;
(b) that the company has an offsetting claim.
(2) The Court must calculate the substantiated amount of the
demand in accordance with the formula:
Admitted total - Offsetting total
where:
"Admitted total" means:
(a) the admitted amount of the debt; or
(b) the total of the respective admitted amounts of the debts;
as the case requires, to which the demand relates;
"Offsetting total" means:
(a) if the Court is satisfied that the company has only one
offsetting claim - the amount of that claim; or
(b) if the Court is satisfied that the company has 2 or more
offsetting claims - the total of the amounts of those claims; or
(c) otherwise - a nil amount.
(3) If the substantiated amount is less than the statutory
minimum, the Court must, by order, set aside the demand.
(4) If the substantiated amount is at least as great as the
statutory minimum, the Court may make an order:
(a) varying the demand as specified in the order; and
(b) declaring the demand to have had effect, as so varied, as
from when the demand was served on the company.
(5) In this section:
"admitted amount", in relation to a debt, means:
(a) if the Court is satisfied that there is a genuine dispute
between the company and the respondent about the existence of
the debt - a nil amount; or
(b) if the Court is satisfied that there is a genuine dispute
between the company and the respondent about the amount of the
debt - so much of that amount as the Court is satisfied is not
the subject of such a dispute; or
(c) otherwise - the amount of the debt;
"offsetting claim" means a genuine claim that the company has
against the respondent by way of counterclaim, set-off or
cross-demand (even if it does not arise out of the same
transaction or circumstances as a debt to which the demand
relates);
"respondent" means the person who served the demand on the
company.
(6) This section has effect subject to section 459J.

7. For the purposes of the present application, it is unnecessary to consider the "substantiated amount" of the debt demanded. Even in the absence of a favourable calculation under s.459H, it is possible for a company to obtain an order setting aside the notice pursuant to s.459J. That section provides:

(1) On an application under section 459G, the Court may by
order set aside the demand if it is satisfied that:
(a) because of a defect in the demand, substantial injustice will
be caused unless the demand is set aside; or
(b) there is some other reason why the demand should be set aside.
(2) Except as provided in subsection (1), the Court must not set
aside a statutory demand merely because of a defect.

8. Subsection (2) is substantially repeated, in general terms, in s.467A.

9. The applicant contends that s.1322 is relevant. The relevant parts of that section provide as follows:

(1) In this section, unless the contrary intention appears:
(a) a reference to a proceeding under this Law is a reference to
any proceeding whether a legal proceeding or not; and
(b) a reference to a procedural irregularity includes a reference
to:
(i) the absence of a quorum at a meeting of a corporation, at a
meeting of directors or creditors of a corporation or at a joint
meeting of creditors and members of a corporation; and
(ii) a defect, irregularity or deficiency of notice or time.
(2) A proceeding under this Law is not invalidated because of
any procedural irregularity unless the Court is of the opinion
that the irregularity has caused or may cause substantial
injustice that cannot be remedied by any order of the Court and
by order declares the proceeding to be invalid.
...
(4) Subject to the following provisions of this section but
without limiting the generality of any other provision of this
Law, the Court may, on application by any interested person, make
all or any of the following orders, either unconditionally or
subject to such conditions as the Court imposes:
(a) an order declaring that any act, matter or thing purporting
to have been done, or any proceeding purporting to have been
instituted or taken, under this Law or in relation to a
corporation is not invalid by reason of any contravention of a
provision of this Law or a provision of the constitution of a
corporation;
(b) an order directing the rectification of any register kept
by the Commission under this Law;
(c) an order relieving a person in whole or in part from any
civil liability in respect of a contravention or failure of a
kind referred to in paragraph (a);
(d) an order extending the period for doing any act, matter or
thing or instituting or taking any proceeding under this Law
or in relation to a corporation (including an order extending a
period where the period concerned ended before the application
for the order was made) or abridging the period for doing such an
act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court
thinks fit.
...
(6) The Court shall not make an order under this section unless
it is satisfied:
(a) in the case of an order referred to in paragraph (4)(a):
(i) that the act, matter or thing, or the proceeding, referred
to in that paragraph is essentially of a procedural nature;
(ii) that the person or persons concerned in or party to the
contravention or failure acted honestly; or
(iii) that it is in the public interest that the order be made;
(b) in the case of an order referred to in paragraph (4)(c) -
that the person subject to the civil liability concerned acted
honestly; and
(c) in every case - that no substantial injustice has been or
is likely to be caused to any person.

10. The applicant submits that insofar as its application under s.459G is or may be irregular, the Court has power to cure that irregularity pursuant to s.1322(4)(d). It is common ground that the respondents would suffer no unfair prejudice by reason of the exercise of such a power. It is contended by the applicant that it would otherwise suffer substantial injustice.

11. For the purposes of determining the preliminary objection taken by the respondents, I express no view as to whether an order should be made under s.1322(4)(d). The question for determination now is simply whether it is open to the Court to make such an order.

12. It is necessary to make such a ruling only if such an order would be necessary to enable the application to be considered on its merits.

An application is to be made within 21 days
13. The event which triggers the commencement of the time limited under s.459G is service of "the demand". The affidavit of Mr Wales, sworn 15 July 1994, is defective in that it fails either to identify the "registered office" at which service was effected or to establish, if the address referred to on the notice annexed to the affidavit was the address to which the notice was delivered, that such address was indeed that of the registered office of the company.

14. Section 459E refers to a demand notice being "served". Section 220 permits a number of modes of service of documents upon a company. Leaving a document at the registered office is a statutorily permissible method of service (s.220(1)). Section 220(2) prescribes the means by which the location of the registered office is to be ascertained.

15. Accordingly, it has not been proved that this application is out of time. Nevertheless, I will assume for the purposes of ruling upon this objection that the defective affidavit evidence as to service is capable of being rectified.

16. Section 36 of the Acts Interpretation Act 1901 (Cth) is relevant. It provides:

(1) Where in an Act any period of time, dating from a given day,
act, or event, is prescribed or allowed for any purpose, the
time shall, unless the contrary intention appears, be reckoned
exclusive of such day or of the day of such act or event.
...

17. It follows that the period of 21 days must be reckoned not from 14 July 1994 but from 15 July 1994. Even so, the period of 21 days would have expired at midnight on 4 August 1994.

18. The statutory period allowed for making an application to set aside the demand notice, assuming it to have been valid, expired prior to this application being made.

Does the Court have power to extend the time for making an application under s.459G?
19. Since s.459G came into effect on 23 June 1993, there have been several decisions concerning its construction. There have been differences of opinion on the question now raised by the respondents.

20. In Texel Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACSR 535, the applicant had failed to apply to set aside a demand notice within the 21 day period. That failure had resulted from the oversight of its solicitor. Haynes J, Supreme Court of Victoria, noted the "emphatic" terms of s.459G and, at 538, rejected the proposition that s.1322 enabled extension of the time limited by s.459G in the following terms:

If Parliament intends (as it clearly does) that Div 3 of
Pt 5.4 is to be a code, then so be it. I acknowledge that the
scheme as I have construed it is one that may be said to be
capable of harsh operation. One need point only to the facts of
this case in which the company is in the position it is because
of a slip by its legal adviser. Further, to take one other
example, s.459G(3) requires service of documents within 21 days
of the party giving the demand, wherever that party is and
whether that party can be shown to be avoiding service or not.
Yet it is clear that parliament intends that the 21 day period
should be absolute and intends that the only "safety net" to be
provided to a company against failure to comply with s.459G
should be s.459S. Whether, as the explanatory memorandum
suggests, that accords with "the commercial justice of the
matter" is for parliament not the court to say.

21. It must be said that the explanatory memorandum accompanying the 1993 amendments focused more on the need to avoid the invalidation of demand notices by reason of technical objections to the form of the notice rather than upon the substantive issue of the testing of the indebtedness of the alleged debtor company. In that context, the explanatory memorandum refers to Div 3 of Pt 5.4 as "a complete code for the resolution of disputes involving statutory demands".

22. Of course, Div 3 of Pt 5.4 is not a "complete" code. For example, it does not define "service" for the purposes of Division 2 or Division 3. It says nothing as to whether an application may be amended after it is served pursuant to s.459G(3).

23. Texel, supra, was considered by Mildren J, Supreme Court of the Northern Territory, in CFC Corp Pty Ltd v Lanier (Australia) Pty Ltd (1993) 11 ACSR 772. His Honour found that the recipient of the demand notice had filed an application to set it aside within 21 days. However, due to its solicitors' oversight, service of the documents referred to in s.459G(3) was not effected within that time. The plaintiff sought an order pursuant to s.1322(4)(d) extending the time limited for service.

24. His Honour distinguished Texel, commenting that it would be "a strange result" if proceedings validly commenced became a nullity by reason of non-compliance with s.459G(3). His Honour held, at 774, that failure to serve documents in compliance with s.459G(3) was "a mere irregularity which could be waived by the defendant". On the date of filing of the application and affidavit in support, copies had been faxed to the defendant's solicitors. That was not service authorised either by rules of court or the Corporations Law, but it did notify the defendant of the making of the application and of the factual material in support of it within the 21 day period. Accordingly, it was open to the court, in his Honour's opinion, to waive that irregularity.

25. The purport of the language used in s.459G(3) is, however, that an application is not validly made unless served in accordance with its terms. The wording, as Haynes J noted, is "emphatic". There is no difference in the language requiring the filing of the application and that requiring service of a copy thereof and of the affidavit in support within 21 days.

26. In Re Cavetina Pty Ltd (1994) 12 ACLC 44, Derrington J, Supreme Court of Queensland, was faced with a situation where the application to set aside the demand notice was filed within time. Copies of the documents referred to in s.459G(3) were posted the same day. That meant, inevitably, that service was not validly effected until two days later. It was outside of the 21 day time limit. His Honour granted a request to extend time for service pursuant to s.1322. He did not regard the emphatic language of s.459G(3) as excluding the exercise of powers available under s.1322.

27. His Honour said at 45:

The only argument that learned counsel for the respondent
seriously raises is a proposition that the limitation required
by s.459G is not amendable to any extension by the Court because
of the use of the word "only" in its context. However, the use
of that word is made necessary by the way in which the limitation
is expressed for without it the limitation would not be fully
and exclusively expressed as a limitation at all.
Consequentially there is no reason to feel that the use of that
word is in some ambiguous way designed to diminish the power of
the Court to grant an extension of time where the justice of the
case demands it. Moreover, it would be difficult to understand
any good reason why such an impediment to justice by the grant
of an extension of time in a suitable case should be intended.
Consequentially, the power of the Court to extend time is not
removed by that provision, and the power may therefore be
exercised in this case, there being no good reason why the
extension should not be granted subject to appropriate
conditions as to costs and any other consequential factors.

28. It does not appear that his Honour's attention was drawn either to Texel or CFC Corp, supra.

29. In De Pellegrin Pty Ltd v Reinforced Earth Pty Ltd [1994] FCA 964; (1994) 120 ALR 459, the applicant, after receipt of a demand notice, had filed an application within the time limited by s.459G, but had failed to comply with s.459G(3). The applicant served the documents on the 22nd day.

30. In that case, Olney J acknowledged that the matter before him was indistinguishable from Re Cavetina. His Honour distinguished CFC Corp on the basis that, in that case, "service" had been effected within time, albeit irregularly. In his Honour's opinion, s.109X(2)(b) of the Corporations Law preserved the power of a court to authorise service otherwise than as provided by s.109X.

31. His Honour concluded that the interpretive approach adopted by Haynes J was "preferable" and stated at 464:

This is not a case in which it can be said that there has been
an irregularity in the service of the application which could be
cured as in CFC Corp. In this case no attempt to effect service
was made until after the prescribed time had expired. There
simply had been no service, regular or irregular, within time. It
may well be that in an appropriate case the court could treat the
mere posting of the application within time as sufficient service,
but that case is not this case and I express no concluded view.

The application was, therefore, struck out as incompetent.

32. It is clear that his Honour saw no distinction between compliance with s.459G(2) and compliance with s.459G(3). His Honour plainly considered that compliance with both provisions was essential to the competence of an application under s.459G. However, it is not clear why, if s.1322 does not qualify the strict time limit laid down by 459G(2), the term "served" used in s.459G(3) can be qualified so as to include a mode of service not authorised by s.109X(1) or by any other law or rule of court.

33. A different approach was taken by Brownie J in Pacific Communication Rentals Pty Ltd v Walker (1993) 12 ACSR 287. In that case, the defendant, a former employee of the plaintiff, served a statutory demand for allegedly outstanding remuneration. He asserted a lien over the books and records of the plaintiff in order to secure payment of the alleged debt. Without necessarily rejecting the view expressed by Haynes J in Texel, his Honour held that it was, nevertheless, open to the Court to restrain the defendant from proceeding upon the demand notice by reason of it being an abuse of process for him to do so. He adopted, with apparent approval, the test in relation to abuse of process formulated by McLelland J in L and D Audio Acoustics Pty Ltd v Pioneer Electronic Australia Pty Ltd (1982) 7 ACLR 180, 181; 1 ACLC 537, 538. His Honour explained that test, at 289, in the following terms:

... proceedings by an alleged creditor to wind up a company on
the ground that it is unable to pay its debts will ordinarily be
an abuse of process in three types of cases: (1) if the
proceedings will fail, because the applicant will not be able to
prove that he is a creditor, or will not be able to prove that
the company is insolvent; (2) if the application is made for
some improper purpose, for example to coerce the company into
paying the alleged debt, without affording the company a
reasonable opportunity to ascertain or have it established that
the debt is not properly payable; or (3) if issues will arise
of a kind not appropriate to be determined in winding up
proceedings, for example substantial issues as to the existence
of the supposed debt.

34. His Honour noted that proceedings based on the first and third grounds might well be now dealt with within the "code". He concluded, however, that at least some situations falling within the second category would justify an order staying proceedings as an abuse of process although such a case would be "likely to be very rare indeed". Nevertheless, the situation before his Honour was, in his opinion, such a case. An order restraining the defendant from proceeding further on the demand notice was made accordingly.

35. More recently, Young J considered the issue in Bartex Fabrics Pty Ltd v Phillips Fox (1994) 13 ACSR 667. The plaintiff had proposed a public float of its undertaking. It was apparently a prosperous company. The defendants were engaged as its solicitors for the purpose of arranging the public float. The plaintiff decided not to proceed with the float after some preparatory legal work had been done. There was then a dispute as to the reasonableness of the defendants' memorandum of fees.

36. The defendants served a demand notice claiming payment of the fees they had rendered. An application to set it aside was filed on the 21st day after service of the demand notice. The documents referred to in s.459G(3) were, however, not served until the following day.

37. His Honour noted at 674:

Courts throughout Australia have considered on about half a
dozen occasions whether time under s.459G can be extended.
There are decisions both ways.

38. The view adopted by Haynes J was, in his Honour's view, unsatisfactory. The view that s.459S is the only "safety net" for recipients of demand notices who have failed to comply with s.459G was rejected. Section 459S could only be utilised after a summons for winding up had been presented. His Honour commented at 675:

...if that is so then there is no way that a company that is
one day late, but is completely solvent can prevent the issue of
a winding up summons. The issue of such a summons may have very
drastic commercial consequences. For instance, it may trigger
rights in mortgagees to call up the whole of the principal of
mortgages, or it may cause the crystallisation of floating
charges. It is really not much of a safety net if because the
company is one day late, it may, with the leave of a court, be
allowed to defend a winding up summons and show that it has
$12.7m worth of shareholders' funds, yet be completely ruined
because secured creditors have been able to accelerate payment
of their debts and all this without the petitioner being
responsible at all for the damage to the company.

39. His Honour did not, however, find it necessary to determine whether s.1322 qualified s.459G. He held that s.467A enabled the defects in the application to be remedied. That section provides:

An application under Part 5.4 or 5.4A must not be dismissed
merely because of one or more of the following:
(a) in any case - a defect or irregularity in connection with
the application;
(b) in the case of an application for a company to be wound up
in insolvency - a defect in a statutory demand;
unless the Court is satisfied that substantial injustice has been
caused that cannot otherwise be remedied (for example, by an
adjournment or an order for costs).

40. Failure to serve an application under s.459G at the appropriate time was, in his Honour's opinion, at 676, "a defect or irregularity within 467A of the Law".

41. His Honour also observed, at 677:

Although s.459G says that the application is made when the
application is both filed and served, in my view there is still
a valid application before the court and the failure to serve
is as much a defect as if by mistake a court clerk had failed
to actually file the document on the 21st day or some other
technicality had got in the way of a perfect application being
filed and served. It may be that if the application is not made
at all within 21 days the defendant does not waive that fault that
one does not get a defect within s.467A and one is forced back to
one or other of the constructions of ss459G and 1322 in the
decided cases to which I have already adverted. However, that
problem can remain for another day.

42. A submission was put also that an application under s.459J might be made whether or not the application under s.459G was made "in accordance with" s.459G. His Honour tentatively endorsed that view, although noting that it was not necessary for him to so decide.

43. The continued existence of an abuse of process power, as asserted in Pacific Communications, supra, was, albeit obiter, expressly acknowledged by Young J.

44. It is difficult to see why the time limit imposed for filing an application should be unqualifiedly mandatory, whereas the time limits imposed for service of documents under s.459G(3) may be extended or failure to conform to them ignored.

45. There is, however, more recent authority. The case of Re Cavetina went on appeal to the Court of Appeal (Q).

46. In that case, sub nomine Cavetina Pty Ltd v Synthetic Dyeworks Industries Pty Ltd, Court of Appeal, Supreme Court, Queensland, 11.8.94, Macrossan CJ, McPherson and Demack JJ, unreported, the Chief Justice, with whom Demack J agreed, held that s.459G did not exclude the power to extend time conferred by s.1322. His Honour considered that the language of s.459S was, in itself, inconsistent with an inflexible policy in relation to applications pursuant to s.459G, at 7:

... of channelling exclusively into early applications to set
aside statutory demands everything that it is open to a resisting
company to raise on that issue.

47. McPherson J dissented. His Honour regarded the use of the word "only" in s.459G(2) and (3) as excluding any other provision which, otherwise, would permit an extension of time for complying therewith.

48. The majority, however, considered that the word "only" was intended merely to emphasise the proposition that an application to set aside a statutory demand could only be made as of right if s.459G(2) and (3) had been complied with. It is clear from s.1322 that an extension of time will not be granted merely because, had it been made in time, an application under s.459G might have succeeded.

49. The Court of Appeal decision was followed by Williams J in Citizens Investments Pty Ltd v Murphy, Supreme Court, Queensland, 12.9.94, unreported. In that case, the applications were not filed, nor were the documents referred to in s.459G(3) served within 21 days. The applicant was at least 14 days out of time. His Honour was of the view that the applications should be heard on their merits. They were then dismissed.

50. In Cavetina, supra, Macrossan CJ considered that s.467A was not the appropriate source of power to cure a failure to comply with the time limits prescribed by s.459G(3). For an application under s.459G(2) to be valid, in his Honour's opinion, time for filing or service of documents must first have been extended pursuant to s.1322.

51. There seems little doubt that a recipient of a demand notice would be subjected to "substantial injustice" if, notwithstanding it had a strong case under s.459H to set aside the notice it was, nevertheless required to submit to the commercial risk involved in being a respondent to a winding-up application. The term "substantial injustice" appears in a number of provisions. Defects in the demand notice must be ignored unless "substantial injustice" could not otherwise be avoided: s.467A. Section 459J empowers the setting aside of a defective demand notice if "substantial injustice" would otherwise be caused notwithstanding that the grounds referred to in s.459H are not made out.

52. The terms in which s.459J and s.467A are expressed demonstrate that repetition is not an unknown phenomenon in the Corporations Law. It is not necessary to strain the language of either s.459J or s.467A in order to carve out rigid but artificial boundaries between the two sections. Their intention is clear. "Substantial injustice" is to be avoided and technical defects ignored.

53. Section 1322 does a number of things. Section 1322(1)(b)(ii) defines a deficiency in meeting time limits as a "procedural irregularity". It declares, s.1322(2):

A proceeding under this Law is not invalidated because of any
procedural irregularity unless the Court is of the opinion that
the irregularity has caused or may cause substantial injustice
that cannot be remedied by any order of the Court and by order
declares the proceeding to be invalid.

Again there is reference to the concept of "substantial injustice". Section 1322(4) expressly gives power to override the consequences of non-compliance even if, but for the exercise of such power, the proceeding in question would otherwise have been invalid.

54. The power created by s.1322 cannot be exercised unless it is in the public interest to do so and no "substantial injustice" is thereby occasioned to any party: s.1322(6).

55. There is no doubt that the making of an application within a particular time is a procedural requirement. The service of documents within a particular time period is also a procedural requirement.

56. It seems to me that the approach taken by the Court of Appeal (Q) in Cavetina is to be preferred. I respectfully decline to follow either Texel or De Pellegrin.

57. In my view, therefore, s.459G confers upon a company the right to apply to set aside a demand notice. That right is unqualified otherwise than by reference to s.459H or s.459J if the application is made in conformity with s.459G(3). If it does not so conform, then such an applicant company has only s.459S to fall back on to avoid the consequences of an unsatisfied demand notice unless:

. to proceed with a winding up application in reliance on the
failure to comply with the demand notice would be an abuse of
process; or
. to extend time for making an application under s.459G(1), in
the case of an honest failure to apply in time, would be in the
public interest provided that it does not cause substantial
injustice to any other person so to do.

58. I note there is not likely to be any practical difference between a case where further proceedings upon a demand notice would be an abuse of process and a case where refusal of an application to extend time to comply with s.459G would create substantial injustice.

59. It is unlikely that the legislature intended that there should be no opportunity for a solvent, even prosperous, company, to both reject an unmeritorious demand and avoid the potentially ruinous consequences of the advertisement of a winding up application, merely because of a procedural failure or misunderstanding. The emphatic language of s.459G(2) and (3) indicates an intention that the time limits imposed should be strictly complied with and that a company which has failed so to comply should have to meet a stringent test in order to be placed back on the same footing as a company which had complied with those time limits.

60. It follows that the present application is not incompetent and I rule accordingly.

61. I will hear the parties as to any consequential orders or directions.