Category Archives: Case by Case

3 things about Winding-Up Courtesy of Chen -v- College of Building

Posted on by

Notice of a genuine dispute is enough to set aside a Winding-Up Application despite the company apparently failing to meet the strict time requirements of the Statutory Demand.

In Chen v The College of Building Ltd [2015] ACTSC 248, Justice Penfold heard an appeal against the order of the Registrar setting aside a statutory demand despite evidence the statutory demand wasn’t complied with.

Mr Chen sent a statutory demand in December 2014 and the 21 day period for compliance or set aside expired, apparently before it was even received by the College in January 2015. In any event, the College replied on the day it claimed to receive the demand disputing the existence or validity of the debt, restating positions that evidence revealed were already disclosed to Mr Chen.

The chronology and general interactions between the parties are covered ad nauseam at [12] and [13].

3 things to take away from this decision:

  1. Late Provision of Evidence Isn’t Enough to Defeat a Set Aside Order (necessarily)
    The College had earlier raised challenges to the existence of the debt and prior to the appeal presented supplementary evidence relating primarily to the provision of mail collection over the Christmas break. This additional evidence arguably could have been presented to Mr Chen earlier but the Registrar had already dismissed the winding up application on the evidence available. Penfold J determined that this additional evidence was merely supplementary and not directly relevant to whether the application should be dismissed. In this vein the advice is, generally speaking, get as much of your evidence on as soon as possible, especially when the winding up of a company is at stake. But the fact that you haven’t put on every little scintilla of evidence won’t defeat your position provided the relevant evidence is already available (common sense right?).
  2. Don’t Appeal a Winding-Up Dismissal Without Good Reason
    Appealing the dismissal of a winding-up application requires the strategic nous of Von Clausewitz, which the Court doubted Mr Chen held [32]. In this instance the application was dismissed partially on the basis of there being a genuine dispute, something which the applicant admitted at appeal [30]. If a genuine dispute has been established then this is sufficient to have a statutory demand set aside. By the time the College filed it’s supplementary evidence it was already too late for Mr Chen to have the College wound up on the basis of failing to comply with the statutory demand as the Statutory Demand had reached its 3 month limit and couldn’t have been enforced in any event as it was now “stale”. The Court was understandably sceptical of the pursuit of the appeal and concluded that Chen probably only pursued it to improve his costs position…though how this would have accomplished this end was not clear. [23]
  3. Tactics Can’t Override the Existence of a Genuine Dispute
    The Court examined the apparent strategic positioning of Chen’s litigation:

(a)       the statutory demand was served in full knowledge that it was unjustified, and that Mr Chen would struggle to make out his claim in substantive litigation; and

(b)       it was served in the hope that:

(i)        the exigencies of the Christmas/New Year period would prevent the College responding to it appropriately;

(ii)       such a failure by the College would enable Mr Chen to threaten to seek the winding up of the College in insolvency; and

(iii)      such a threat would enable Mr Chen to negotiate a settlement of his dispute with the College without having to pursue the disputed debt, and establish it, in the courts in the usual way. [31]

The Court PROBABLY gave undue credit to the strategy of Mr Chen but the overall message was pretty clearly spelled out to the parties; strict reliance on the technical aspects of the law won’t generally defeat an otherwise readily defensible position

These extracts are merely reminders of a few things apparent in most areas of the law; in addition to the directly above semi-coloned point, the Court will (almost) always look more favourably on the party that appears more reasonable.

The aspects surrounding the Christmas shutdown do seem generous considering the apparent failure. The Court must have really held doubts regarding the service of the demand as the Corporations Act is intended to set a strict timeline sometimes with harsh outcomes and it is the responsibility of companies to ensure that they have adequate mail collection provisions in place and respond accordingly to statutory demands.

Sidebar: Despite the Legislature gazzumping the measurement of time from the Universe and International Meridian Conference and vesting it between the Legislation Act and the Court Procedures Rules, there seems to be a blackhole that surrounds the ACT practice concerning the Christmas “shutdown” and how the Court should consider notices presented over this time in spite of the (pretty easily understandable) rules in place. Perhaps its due to the extraordinary Public Service ACT practice of indulging in an excessive “shutdown”. Plus yes, I do mean blackhole in the most literal sense, in that time does seem to bend and become largely subjective and fungible the closer we get to the event horizon of the “shutdown”.

Court Overturns Tribunal Decision to Remove Firearms Licence from Domestic Violence Order Subject

Posted on by

In Singh -v- The Registrar of Firearms the Supreme Court has examined an apparent inconsistency between powers granted to Magistrates under the Domestic Violence and Protection Orders Act and the powers of the Registrar of Firearms to strip a Firearms Licence from someone who is the subject of a DVPO final order.

Background

Firstly let me cover myself by saying that Domestic Violence and Personal Protection Orders are not criminal offences. There is no finding of guilt. They are civil proceedings without the usual evidential burdens and there are numerous reasons they can be made. They do deal with some heavy stuff but frequently they are ludicrously overblown and often parties don’t fight them because the undertakings are mutual such as both parties agreeing they want nothing to do with each other. My personal go-to story is the neighbour who felt personally threatened by a tree growing over the fence and both parties agreed to trim the tree and stay 10 metres away from each other and only communicate through their lawyers. This counts as my disclaimer by the way.

Now, down to business.

Following the 1996 Port Arthur massacre, there was a review of firearms laws all over Australian and in the already relatively gun-safe ACT it took the guise of amendments to the Firearms Act to prevent someone applying for a licence if, in the last 10 years, they had been the subject of a gun control order. Under s57 of the DVPO act once a final order is made by a Magistrate, the subject’s Firearms Licence is automatically cancelled unless the Magistrate otherwise orders. s81 of the Firearms Act the Registrar of Firearms is able to cancel a licence under a number of pre-conditions including if the licensee is not suitable satisfied on reasonable grounds. Being the subject of a Domestic Violence Protection Order is arguably a reasonable ground to lose your firearms licence…but thats the entire point…arguably.

In Singh the Appellant had a final order made against him by the Magistrate who elected to grant an application to not strip the applicant of his licence. However, following the making of the final order the Registrar of Firearms, who is the ACT Deputy Chief Police Officer (Crime), Commander David Price, exercised his discretion to take away the licence of the Appellant.

Appeal Points

On appeal the Appellant raised dual issues of an absurd/unreasonable construction of the acts and an inconsistency in the reading of the acts.

On the point of absurd/unreasonable reading the Court found that there may be a “tension” between the acts but was able to rely on (the gift that keeps on giving) Eastman [2010] ACTCA 15 at [88]:

…the word “absurd”…mean[s] “(o)ut of harmony with reason or propriety; incongruous, inappropriate; unreasonable; ridiculous, silly”. The word “unreasonable” means “(n)ot endowed with reason; irrational … . Not based on or acting in accordance with reason or good sense”.

Neither Act can be described as such. Neither Act is internally absurd or unreasonable; any absurdity or unreasonableness arises from the tension between the Acts.

The Court found essentially that there was no absurd or unreasonable construction in the drafting of the acts. Under the Legislation Act, specifically ss138-140, an act must be interpreted by reading the act as a whole and preferring the interpretation which gives effect to the act.

Inconsistency

The Appellant raised the second point of the decision being inconsistent on the difference between a power specifically given to the Registrar versus the apparent guidance provided by the Magistrate.

On the point of inconsistency the court examined a number of authorities including the hansard from the passage of the bill from Mr Bill Stefaniak, then opposing the bill, who now sits on the ACAT, from which the appeal was based, stated:

I am aware that there are firearms enthusiasts who feel that the provisions [the precursor suitability provisions] are too stringent and could result in people having their weapons taken off them, for reasons that are not logically connected with their holding a firearms licence. I have some sympathy with these concerns. By way of hypothetical example, it seems unfair that someone who is a target pistol enthusiast and who perhaps stores their guns in an armoury at a firing range should automatically lose their licence if they had 10 years ago been subjected to an interim protection order and recently had their drivers licence suspended. But that is the automatic effect of [the precursor section].(Australian Capital Territory, Hansard, Legislative Assembly, 3 July 2008, 2754 (Dr Deb Foskey).

The Court’s conclusion of inconsistency included a few biting comments about the operations of the act and the need for the legislature to remedy the inconsistency:

52. Finally, it would be an unusual outcome if the considered decision of a judicial officer is to be rendered otiose by the virtually simultaneous mandatory action of an administrator.53. There is no relevant area in which the provisions can operate consistently. The Tribunal found (at [54]) that the relevant provisions of the DVPO Act were enacted after the relevant provisions of the Firearms Act. That finding was not challenged on the appeal. Therefore, there are strong grounds to conclude that the power granted to the Magistrates Court to make a non-cancellation order in specific cases was intended to repeal the mandatory but general cancellation effected by the Firearms Act.54. I accept that implied repeal leads to odd results, including the result that a licence that is saved by a non-cancellation order cannot be renewed because a renewal is treated as a new licence application and refusal of a new licence is mandatory under the Firearms Act.55. I support the recommendation of the Tribunal at [61] that “…legislative action [should] be taken to clarify the relationship between the DVPO Act and the Firearms Act where a PPO is made against the holder of a firearms licence.”

s