Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd & Anor

The trial judge's reasons on the application for summary dismissal of ABD's winding-up application against Evans & Tate 10 Although the Court has only granted leave to appeal on a limited basis in respect of the summary dismissal of the application to wind up Evans & Tate, ABD contends that his Honour's reasoning relating to that application is relevant to his determination of his decision in so far as it relates to the summary dismissal of the winding-up application in respect of Evans & Tate Premium Wines. Accordingly, it is necessary to consider his Honour's reasoning on the Evans & Tate application in some detail. 11 Relevantly, a party is entitled to bring an application to wind up a company if it is a creditor of the company. White J held that ABD's standing as a creditor of Evans & Tate could only be on one of two bases. First, as a beneficiary of certain convertible notes; or secondly, as a creditor of Evans & Tate Premium Wines, for whose debts Evans & Tate might become liable in the future pursuant to a Deed of Cross-Guarantee if Evans & Tate Premium Wines was wound up. On either basis ABD was a prospective or contingent creditor in relation to Evans & Tate. That finding is not challenged. As a contingent or prospective creditor, ABD required the leave of the Court to bring an application to wind up Evans & Tate: s 459P(2)(a). That leave had not been sought. His Honour found at [38] that the filing of the summons to wind up without first obtaining leave "was a serious abuse of the process of the Court". 12 ABD contends that the failure to first obtain the leave of the court was a procedural mistake and that there was no basis for a finding that it constituted a serious abuse of the processes of the court. It was submitted that his Honour's characterisation of the omission to obtain leave as an abuse coloured his approach to the matter generally in a way that was adverse to ABD. For myself, I would not have been satisfied that this omission was an abuse of the processes of the court. It was an omission that disentitled ABD to bring its application, which would thereby need to be struck out unless the Court retrospectively granted leave nunc pro tunc. However, the question of whether the omission was an abuse is a matter with which this Court need not be concerned. 13 His Honour then refused ABD's application for leave nunc pro tunc to bring the winding-up application against Evans & Tate and indicated that he would not grant leave prospectively for it to do so. He considered that it had no genuine interest to protect as a prospective creditor or as a contributory, noting that ABD had a miniscule holding of notes and shares which it had acquired when it knew of the Evans & Tate group's financial position and which his Honour considered were acquired to disrupt the group's affairs (see [44]). His Honour also considered that its claims as a contingent creditor, arising from the ABD proceedings against Evans & Tate Premium Wines, did not warrant leave being granted to bring the winding-up application. 14 His Honour earlier, at [13], had summarised the debtor/creditor position between ABD and Evans & Tate Premium Wines and concluded that ABD was a "net debtor" in relation to Evans & Tate Premium Wines, although his Honour recognised that if ABD was successful in establishing the whole of its claim in the District Court proceedings, it might end up as a net creditor. This was a reference to the fact that ABD had been successful in establishing as arguable only the sum of $84,000 of its alleged claim in the application to set aside the statutory demand, but had maintained its claim for the greater amount in the District Court proceedings. 15 As a net debtor, ABD would not have standing to bring the winding-up application. His Honour considered that in any event, there were other reasons why leave ought not to be granted to ABD, arising from its issuing of a press release prior to the time prescribed in the Supreme Court Rules for the publication of a winding-up application and from ABD's alleged improper purpose in instituting the winding-up proceedings. 16 His Honour was unimpressed by the evidence of Mr David James, ABD's general manager, who said that he was the person who gave instructions for the commencement of the proceedings and that he believed that because of the provisions of the Deed of Cross-Guarantee the parent company was responsible for the debts of its subsidiaries so he concluded that Evans & Tate was a debtor of ABD. His Honour said at [39] such ignorance did "not excuse or mitigate the seriousness of the abuse of process". He considered that it was an abuse of process to bring the winding-up application to recover a disputed debt when there were proceedings on foot to determine whether Evans & Tate Premium Wines was liable to ABD. This was a reference to the District Court proceedings. 17 His Honour also found it was an abuse of process to have prematurely published notice of the winding-up proceedings. This is a matter for separate consideration and is dealt with below.

Winding-up application against Evans & Tate Premium Wines 18 As against ABD, Evans & Tate Premium Wines sought to have the winding-up application against it summarily dismissed on relevantly, the following bases: first, on the basis that ABD was not a creditor; or, alternatively, on the basis that its claim as a creditor was disputed, given the application to stay the costs order. Secondly, the winding-up application was brought for an improper purpose. Thirdly, the premature publication constituted an abuse of process. The determination of those matters in favour of Evans & Tate Premium Wines constitute the issues on the appeal in so far as Evans & Tate Premium Wine's summary dismissal application is concerned.

Ground 1: Did the application to stay execution of the order for costs made by Palmer J deny ABD its standing as a creditor? 19 ABD filed its application to wind up Evans & Tate Premium Wines under the provisions of s 459P of the Corporations Act. That section provides: (1) Any one or more of the following may apply to the Court for a company to be wound up in insolvency:

… (b) a creditor (even if the creditor is a secured creditor or is only a contingent or prospective creditor) …" 20 Section 459A provides, relevantly: On an application under section 459P, the Court may order that an insolvent company be wound up in insolvency. 21 ABD claimed its entitlement under s 459P to bring a winding-up application under s 459A on the basis that it was a creditor pursuant to the order for costs made in its favour in the failed winding-up proceedings against it and the subsequent assessment of those costs in the amount of approximately $80,000. It submitted that as it was entitled to have the costs certificate filed as a judgment, there could be no question but that it was a creditor of Evans & Tate Premium Wines. 22 White J at [71] accepted that ABD was a creditor of Evans & Tate Premium Wines for the amount of costs assessed in the costs certificate at the time it filed the summons for winding-up. His Honour observed, however, that Evans & Tate Premium Wines had made an application to restrain the enforcement of the order for costs and considered that if a stay was ordered ABD would no longer be entitled to a debt "presently payable". His Honour observed that the court had power to restrain further proceedings on the costs order, either in its inherent jurisdiction or pursuant to s 135(1) of the Civil Procedure Act 2005 (NSW) (the Civil Procedure Act). ABD contends that this last finding was an error of law. This finding is the matter in issue on the appeal from the orders made in the stay proceedings and is considered below. 23 His Honour then stated at [72]: "The vice of ABD's winding-up application against ETPW is that even though, in my view, its current status as a creditor is not disputed on substantial grounds, its entitlement to retain that status is disputed on substantial grounds. Filing winding-up proceedings where the creditor's right to retain its status as a creditor, other than as a prospective or contingent creditor, is disputed on substantial grounds, is as much an abuse of process as where the existence of the debt is so disputed. As McLelland J said in L & D Audio Acoustics Pty Ltd v Pioneer Electronics Australia Pty Ltd (at 183), an abuse of process will arise, inter alia: 'if issues will arise in the winding up proceedings of a kind inappropriate for determination in such proceedings by a substantial contest as to the existence or enforceability of a debt relied on by the applicant, which should properly be resolved in separate proceedings brought for that purpose' (emphasis added)." 24 His Honour continued at [73]: "When the proceedings were filed there was a substantial dispute arising from proceedings 2760/06 as to the enforceability of the debt for costs. Filing winding-up proceedings in those circumstances on the basis of such a debt was an abuse of process." 25 ABD contends that the effect of his Honour's reasoning in these passages, namely that any restraint on the enforcement of the costs order denies the party to whom the debt is otherwise owed its status as a creditor, is erroneous. It further contends that in any event, his Honour was in error in finding that filing proceedings in circumstances where there was a substantial dispute as to the enforceability of the debt for costs constituted an abuse of process. In this regard, it was submitted that his Honour misunderstood what McLelland J had said in L & D Audio Acoustics Pty Ltd v Pioneer Electronics Australia Pty Ltd (1982) 7 ACLR 180 in the passage referred to above and, in any event, was a misapplication of the law as it relates to abuse of process.

Effect of restraint on enforcement of costs order 26 There is a body of authority that an order restraining the enforcement of a judgment debt does not alter the status of that debt as being one that is due and payable. 27 In Re Pollack; Ex parte Deputy Commissioner of Taxation (1991) 32 FCR 40, Pincus J stated at 51: "I have found no authority in support of the proposition that a stay of enforcement of a judgment produces the result that the debt ceases to be payable; surely the judgment creditor could, despite the stay of enforcement, plead the debt as a common law set-off." 28 In the same case, Gummow J stated at 56: "The debt may be payable by the debtor although the means of enforcement are denied to the creditor."

Gummow J said that a stay of enforcement did not of itself and without more deprive the judgment debt of its character as an obligation that is payable immediately. 29 In Re Hughes; Ex parte Westpac Banking Corporation [1997] FCA 1324 Merkel J pointed out that: "… a stay of execution relates solely to a stay in respect of the legal processes of enforcement which are available in respect of the judgment but does not, of itself, suspend or otherwise affect the validity or operation of the judgment." 30 In Re Hughes, Merkel J concluded that, notwithstanding that a stay of execution on the judgment and orders had been ordered, Westpac remained a creditor of Hughes in respect of a liquidated sum which was immediately payable, so that Westpac had the necessary standing to be substituted as a petitioning creditor in respect of a bankruptcy petition brought against Hughes by another creditor. 31 In Scope Data Systems Pty Ltd v BDO Nelson Parkhill (2003) 199 ALR 56; [2003] NSWSC 137 Barrett J, after referring to these authorities concluded that notwithstanding that a stay of execution had been ordered, a judgment debt remained "due and payable, such as to entitle a person to serve a statutory demand under s 459E of the Corporations Act". His Honour pointed out that the stay of execution did no more than preclude resort by the judgment creditor to remedies entailing execution of the judgment. The winding-up process does not involve the execution of judgment debts. It followed, in Barrett J's opinion, that the existence of a stay could not thereby "call into question the 'existence' of the judgment debt so as to be the source of which s 459H(1)(a) refers to as 'a genuine dispute … about the existence of' the debt" (emphasis added). (Section 459H relates to an application to set aside a statutory demand where there is a genuine dispute about the existence or amount of a debt to which the demand relates.) 32 In Alam v Quest Enterprises [2006] NSWSC 752 White J observed at [30] that it had been correctly submitted that "a stay of execution of the judgment, as distinct from a stay of the operation of the judgment, would not prevent the judgment debt from being due and payable". His Honour referred to Scope Data Systems Pty Ltd v BDO Nelson Parkhill at [10]-[16]; Re Hughes; and Re Pollack. 33 ABD contends, and in my opinion it is apparent, that White J's finding at [73] in this matter is in conflict with his decision in Alam v Quest Enterprises and with the authorities discussed above. His Honour's reasoning in Alam was based, inter alia, on Re Pollack. Re Pollack is a decision of the Full Court of the Federal Court and in accordance with principles of comity, this Court ought to follow it unless such decision is considered to be wrong: see Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485; [1993] HCA 15. 34 No submission was put to the Court that Re Pollack was wrong and, in my opinion, the decision is correct. As Pincus J explained, it would be strange if a judgment creditor could not plead a debt, the enforcement of which had been stayed, as a set-off. Other examples come to mind which underscore the proposition that a judgment debt, the enforcement of which has been stayed, remains payable. Thus, if a winding-up order or sequestration order was made on the application of some other creditor, it would also be strange if a debt the enforcement of which had been stayed, was not part of the indebtedness to be taken into account for purposes such as determining solvency, or for the purposes of determining the distribution to creditors. The view which I have taken is supported by the underlying purpose of a winding-up order, which is to prevent insolvent companies from trading. 35 Accordingly, I am of the opinion that White J erred in finding that if a stay of enforcement of the order for costs was made, ABD would cease to be entitled to a debt presently payable. 36 A separate question arises as to whether his Honour erred in finding that filing an application to wind-up in circumstances where there was a substantial dispute as to the enforceability of the debt, that dispute being whether or not the court will grant a stay of enforcement of the judgment for costs, was an abuse of process. In this regard, his Honour found that it would be an abuse of process to pursue a winding-up application "if there is a substantial ground for disputing either the existence or the enforceability of the debt relied upon by the applicant". His Honour referred to L & D Audio Acoustics. 37 ABD contends that his Honour erred in his understanding of L & D Audio Acoustics. It was submitted that when McLelland J referred to the "enforceability" of a debt, he was referring to matters that affected enforceability, such as a defence under the limitation period. 38 In my opinion, when McLelland J referred to the existence or "enforceability" of a debt, he was not referring to circumstances in which a stay of execution had been granted. If that is what his Honour meant, his view would not be consistent with the Re Pollack line of authority discussed above. Rather, I consider that his Honour was referring to circumstances where a cause of action is not maintainable such as is the position under some limitation statutes: see Limitation Act 1969 (NSW) s 14. For example, a debt may not be recovered because the cause of action to recover the debt is not maintainable as being outside the limitation period. 39 However, there may be a real dispute, for example, as to the date the debt arose or as to whether there had been an acknowledgement so as to revive the cause of action relating to the debt. Such disputes would fall within McLelland J's notion of there being a dispute as to the enforceability of a debt. Such matters go to the core of the indebtedness as between the creditor and debtor and are matters that the Court has consistently said are not appropriate for adjudication in a winding-up application. The position is different where there has been an adjudication. In such a case there is no dispute either as to the fact of or the amount of any indebtedness and it follows, and as the authorities to which I have referred establish, that the judgment creditor retains the status of a creditor. 40 If a stay of execution would not deprive ABD of its status as a creditor, a dispute as to whether such an order ought to be made could not deprive it of that status. Accordingly, even if there was on foot an application to stay enforcement of an order, in this case the costs order, I do not consider that that would mean that it would be an abuse of process for the creditor to file an application to wind up. As I have said, not only would any such order made on a stay application not deprive the creditor of its status as creditor, it would not affect the solvency position of the company. 41 Accordingly, given that a stay does not affect a party's status as a creditor, the fact that there was a pending application for a stay of enforcement of the costs order does not mean that the filing of a winding-up order of itself would amount to an abuse of process and his Honour erred in so finding.

Grounds 2, 3, 4 and 8: Was there any improper purpose/abuse of process in bringing and prosecuting the application to wind up Evans & Tate Premium Wines? 42 The trial judge made a number of findings as to ABD's improper purpose in bringing the proceedings. ABD contends that his Honour's findings of fact, that led him to conclude that there was an abuse of process, were erroneous. ABD further contends, as I have already indicated, that his Honour allowed findings that he had made against ABD as to abuse of process in relation to the application to wind up Evans & Tate, to affect his consideration of abuse of process in relation to the application to wind up Evans & Tate Premium Wines. ABD also contends that his Honour misapplied the law in relation to improper purpose constituting an abuse of process: see Williams & Ors v Spautz (1992) 174 CLR 509; [1992] HCA 34. 43 I have already referred to his Honour's finding at [73] that given Evans & Tate Premium Wine's application to stay enforcement of the costs order, there was a substantial dispute as the enforceability of the debt for costs and that to bring winding-up proceedings in that circumstance was an abuse of process. I have concluded that his Honour's determination in that regard was wrong. His Honour added that the abuse was exacerbated in circumstances where ABD's subjective intentions were either to deter Evans & Tate Premium Wines from proceeding with its claim to stay enforcement of the costs order, or to persuade a liquidator to pursue such a claim, or to retaliate against the claim having been brought. 44 His Honour found at [74] that ABD's witness, Mr James, had given instructions to commence the winding-up application "to recover the disputed claim to damages", which is a reference to the District Court proceedings. His Honour also referred to the evidence of Mr Brooks, and said that the intention of both Mr Brooks and Mr James should be attributed to the company. Mr Brooks, ABD's in-house legal counsel, said that his intention in having the winding-up proceedings initiated was because he believed the Evans & Tate companies were insolvent. He also gave evidence that he prepared the press release (considered in detail below) and forwarded a copy to a journalist from The West Australian newspaper. 45 Having regard to their respective 'intentions', his Honour concluded that: "[T]he purpose for which the proceedings [to wind up Evans & Tate Premium Wines] were instituted rendered the proceedings an abuse of process". 46 Each of the conclusions to which his Honour referred at [73] and [74], and the findings of fact that underlay those conclusions needs to be examined. Before doing so, it is necessary to consider the legal principles that apply in determining whether there has been an abuse of process.

Abuse of process as it applies to winding-up proceedings 47 Senior counsel for ABD submitted that his Honour erred in his approach in finding an improper purpose. Senior counsel submitted that such a finding can only be made on the basis of the principles stated by the High Court in Williams v Spautz. It was submitted that although his Honour referred to Williams v Spautz, he did not apply those principles and his finding in relation to abuse was erroneous in principle. In particular, it was submitted that in order for there to be an abuse of process it was necessary to find that proceedings had been commenced without an intention to prosecute them to finality, notwithstanding that the moving party has a prima facie case: see Mason CJ, Dawson, Toohey and McHugh JJ in their joint judgment at 521. The improper purpose must also be the predominant purpose of the moving party: see joint judgment at 526. For the reasons discussed below, it is not necessary to consider this last matter. 48 It was further submitted that the onus was on the party alleging abuse of process to establish the abuse, that the onus was "a heavy one" and that the power to grant a permanent stay was one that would only be exercised in exceptional circumstances: see Williams v Spautz joint judgment at 529. It was submitted that there was no evidence that ABD did not intend to prosecute the proceedings to a conclusion and accordingly there was no basis upon which to find abuse of process. 49 ABD's submission raises this controversy between the parties. Senior counsel for ABD contends that the findings made by his Honour were findings that ABD acted in abuse of the processes of the Court, so that the principles in Williams v Spautz applied. Senior counsel for the Evans & Tate companies submitted, however, that the "abuse of process" principles applied by his Honour and upon which the companies relied, was abuse of the winding-up process, not abuse of process per se. Senior counsel submitted that there was well-established authority to support the notion of abuse of the winding-up process. It was submitted that the Evans & Tate companies never sought to make out a case based on the principles in Williams v Spautz. 50 Senior counsel for the Evans & Tate companies accepted that Williams v Spautz is authority that there will be an abuse of process if a party commences proceedings with no intention of prosecuting those proceedings to finality. It followed, as senior counsel properly conceded, that, there being no evidence that ABD did not intend to prosecute to finality, the principles stated by the High Court in Williams v Spautz had no application. 51 However, they submit that his Honour's finding on abuse of process is not based on the principles stated by the High Court in Williams v Spautz. Rather, his Honour was applying the well-known principle of abuse of process as it relates to winding-up applications. They submit that the principles that apply in that circumstance are well-established: see, for example, Fortuna Holdings Pty Limited v Deputy Commissioner of Taxation [1978] VR 83; Re Jeff Reid Pty Ltd and the Companies Act (1980) 5 ACLR 28; Pacific Communication Rentals Pty Ltd v Walker (1993) 12 ASCR 287; Braams Group Pty Ltd v Miric (2002) 171 FLR 449; [2002] NSWCA 417; and State Bank of New South Wales v Tela (No 2) (2002) 188 ALR 702; [2002] NSWSC 20 per Barrett J. 52 In Fortuna Holdings McGarvie J was considering the principles that applied when a court was asked to restrain the presentation of a winding-up petition under the Companies Act 1961 (Vic). His Honour observed at 87 that when considering such application, the Court is exercising its inherent jurisdiction to prevent an abuse of process. His Honour observed that the courts have intervened where the presentation of the petition might cause irreparable damage to the company and that the authorities disclosed that that could occur in two distinct situations, which for convenience, his Honour referred to as the first and second branch of the principle. The 'first branch' applies where the application to wind up must fail, either as a matter of law or as a matter of fact, because of the absence of supporting evidence. He thus described the 'first branch' as applying where "the proposed [application] cannot succeed". 53 His Honour then dealt with the 'second branch'. He said that the second branch applied where there was a more suitable alternative means of resolving a disputed claim against the company sought to be wound up. In that case, his Honour acknowledged that it was possible that if the winding-up application was allowed to proceed, it might be successful. In such cases, the applicant to wind up might be able to present a legal entitlement to do so with a ground sufficient in law and with sufficient evidence to support the ground. His Honour said, however, at 93: "… due to the availability of the more suitable alternative remedy, the Court hearing the petition would in the circumstances, in the exercise of its discretion, decline to make a winding up order, at least while the circumstances remain as they are at the time of the application for an injunction ." (Emphasis added) 54 In Re Jeff Reid Pty Ltd McLelland J was dealing with a case where a company had failed to comply with a statutory demand under s 221(1)(b) of the Companies Act 1961 (NSW). His Honour observed that a failure to pay a debt on demand did not constitute "a neglect" to do so within the meaning of the legislation. His Honour considered that the existence of a counter claim based on substantial grounds for an amount equal to or exceeding the debt will generally be a reasonable cause for not paying the debt in accordance with the demand. That was so, regardless of any question of set-off. 55 In Pacific Communication Rentals Pty Ltd v Walker Brownie J, having noted that it had been established in Williams v Spautz that it was the duty of every court to protect itself against the abuse of its process, considered that in circumstances where a party served a statutory demand for the payment of a debt in circumstances where that party had retained the books of the plaintiff that were necessary to allow the other party to determine whether such debt was in fact due, it was appropriate to grant an injunction restraining the commencement of winding-up proceedings based upon that statutory demand. His Honour considered that the defendant's conduct was either an abuse of process or an attempted abuse of process and the plain purpose of his conduct was to coerce the plaintiff into meeting his claim under threat of winding-up proceedings without giving the plaintiff the opportunity to check the veracity of the claim. 56 The statutory demand procedure under the earlier versions of the companies legislation was very different from that which applies under the Corporations Act, and many of the cases of abuse of process in the winding-up context arose in circumstances where there had been a failure to pay pursuant to a statutory demand. Nonetheless, the Evans & Tate companies submit that there will be circumstances where the court considers it appropriate to grant an injunction or to grant a temporary stay of proceedings until the entire question of indebtedness of the companies has been determined and that in such circumstances, the principles stated in the earlier authorities still apply. 57 I agree that those principles still apply. The court retains a discretion to make an order in the circumstances discussed by McGarvie J in Fortuna Holdings under the 'second branch' or upon the basis referred to by McLelland J in Re Jeff Reid in a case where an application for winding-up has been brought in circumstances where the statutory demand procedure was not relied upon. The reference by Brownie J in Pacific Communication to Williams v Spautz was not intended to indicate that the principles stated by the High Court were those that applied. Rather, he was saying that Williams v Spautz is authority that the Court has an inherent jurisdiction to prevent an abuse of process. The circumstances in which he found abuse of process clearly indicate that he was applying the long standing principles that govern the court's exercise of discretion when dealing with a winding-up application.

Was there an abuse of process? 58 I have referred above to his Honour's finding that the intentions of Messrs James and Brooks in relation to the winding-up proceedings were to be attributed to ABD. His Honour had earlier found that the subjective intention of ABD in bringing the application to wind up was apparent from the press release Mr Brooks sent to The West Australian newspaper. His Honour (at [30]) quoted the first and second paragraphs of the press release which were in the following terms: "Today Australian Beverage Distributors Pty Ltd, a New South Wales wine distribution company, issued winding up proceedings in the Supreme Court of New South Wales against Evans & Tate Limited (ASX:ETW) and Evans & Tate Premium Wines Pty Ltd (formerly Cranswick Premium Wines).

Australian Beverage Distributors Pty Ltd has issued the winding up proceedings in response to Evans & Tate Premium Wines Pty Ltd refusing to pay costs orders arising from previous proceedings between the parties. Evans & Tate Premium Wines Pty Ltd are in separate proceedings seeking to restrain Australian Beverage Distributors Pty Ltd from enforcing those costs orders." 59 His Honour found at [47] that the second paragraph of the press release contained an admission that the winding-up applications had been brought against both Evans & Tate companies because Evans & Tate Premium Wines had applied to seek to restrain ABD from enforcing its costs order. His Honour reiterated this conclusion later at [73], where he said that the subjective intentions of ABD in bringing the winding-up application as against Evans & Tate Premium Wines was, as shown by the press release, either to deter Evans & Tate Premium Wines from proceeding with its claim to stay enforcement of the costs order, or to persuade a liquidator not to pursue such a claim, or to retaliate against the claim having been brought. 60 At [48] his Honour said: "In oral evidence, Mr James said that his purpose in giving instructions to commence the proceeding was because " they " had avoided paying what " they " owed him for the last three years, and that he didn't have any choice but to have them wound up. He added that he believed " them " to be hopelessly insolvent. Of course, ABD does have a choice. It has proceedings on foot which will determine whether ETPW is liable to pay any damages. It is an abuse of process to use the winding-up jurisdiction to seek to recover a disputed debt where the debt is disputed on substantial grounds. That is so even where the defendant company is insolvent ( Mann v Goldstein [1968] 1 WLR 1091 at 1098-1099). The press release issued by ABD, and Mr James' evidence demonstrate that the proceedings were brought for an improper purpose." 61 His Honour further found at [74] that Mr James' oral evidence revealed that he sought to use the winding-up jurisdiction "to recover the disputed claim to damages". This was a reference to the District Court proceedings as was the reference in [48] above, that there were proceedings on foot that would determine whether Evans & Tate Premium Wines had any liability to ABD to pay damages. 62 ABD contends that both findings are wrong. 63 It was submitted first that the press release could not, on any reading, amount to an admission, as found by his Honour at [47]. Nor was a finding open that by bringing the winding-up proceedings ABD must have hoped either to deter Evans & Tate Premium Wines from pressing its application to stay enforcement of the costs order, or hope that a liquidator could be persuaded not to pursue that claim as his Honour found. 64 The press release, by its express terms, stated two matters. The first was that ABD had issued winding-up proceedings because Evans & Tate Premium Wines had refused to pay a costs order. That statement was an accurate representation of the circumstances. The second statement was that Evans & Tate Premium Wines was seeking to restrain ABD from enforcing the costs order. That, likewise, was an accurate statement of the circumstances as they existed between the parties. The statements in combination would alert a reader to the fact that there was significant legal jostling between the parties in respect of the subject matter of those two paragraphs namely, the current position in relation to Evans & Tate Premium Wines' liability in respect of the costs order. 65 Such positioning is neither a novel nor surprising scenario and is frequently encountered in litigation, particularly commercial litigation. It may not necessarily lead to an amicable resolution of disputes to approach a matter in such a way, but that is not the Court's concern. Nor is the Court necessarily concerned with the tactical positioning of parties to litigation. The court's concern is with resolving legal disputes according to law. As part of that process, it will not permit its processes to be used for an improper purpose in the way that has been discussed above. The fact that opposing parties each take steps in legal proceedings to out-manoeuvre the other and/or to place itself in a more advantageous position than the other party does not, without more, constitute an abuse of process. It follows, in my opinion, that his Honour's conclusion as stated at both [47] and at [73] is not supported by the first two paragraphs of the terms of the press release to which his Honour referred. Rather, it was a statement as to the current litigious position between the parties. 66 His Honour also found that it was apparent from Mr James' oral evidence that he sought to use winding-up jurisdiction to recover the disputed claim to damages in the District Court proceedings. Mr James gave evidence before his Honour on 1 June 2006. He gave the following evidence: "Q. When the winding up proceedings were commenced, did you have a belief as to whether the publicly listed company was a debtor of Australian Beverage Distributors Pty Limited? A. Yes I did. I believe under the cross guarantee between the 20 entities and the lack of any financial information about individual entities that the parent companies are responsible for all creditors.

Q. What is your belief as to whether there is any real dispute between Evans and Tate, either company, and Australian Beverage Distributors Pty Limited in relation to the payment of the assessed costs resulting from Justice Palmer's costs order? A. There's absolutely no doubt in my mind that that money is owed plus more.

Q. Why did you give instructions to commence those proceedings? A. Because I believed I had no other cause of action as they're avoiding paying me what they owe me for the last three years. I don't have any other choice but to have them wound up. I believe they're hopelessly insolvent ."

(Emphases added) 67 There was no cross-examination of Mr James. 68 It was submitted that it was apparent from this answer, just as it was apparent from the press release, that the indebtedness that ABD relied upon in bringing the winding-up application related, not to the claimed indebtedness in the District Court proceedings, but to the outstanding order that ABD had for costs and that ABD was entitled to payment of that amount. 69 In my opinion, these challenges to his Honour's reasons are substantially correct. It is apparent from Mr James' cross-examination that he was primarily referring to the moneys owed under the costs orders. However, he also referred to a greater indebtedness, which undoubtedly related to the damages claim in the District Court proceedings. In his oral evidence, he was not asked about the finding in the statutory demand proceedings that ABD had only established a possible counter claim against Evans & Tate Premium Wines of a debt of approximately $84,000, not the amount of approximately $262,000 it claimed in the District Court proceedings. It is surprising that Mr James was not cross-examined at least about that. However, the absence of cross-examination may be explained by the fact that the incontrovertible evidence before his Honour was that only an amount of $84,000 had been accepted as the basis of a genuine dispute between the parties as to Evans & Tate Premium Wines' indebtedness to ABD in the statutory demand proceedings. 70 The question arises, therefore, whether there was evidence to support his Honour's finding at [74] that Mr James' purpose in bringing the winding-up application was to recover the disputed damages subject of the District Court proceedings and, if so, whether that was sufficient to find abuse of process. Having regard to what I have said about ABD's status as creditor, it had standing to bring the winding-up application. When Mr James gave his evidence that he believed that the Evans & Tate companies owed him the amount of costs subject of the costs certificate, he added a reference to the moneys that were claimed in the District Court proceedings. The indebtedness claimed in those proceedings is disputed. But he also added that he believed that the companies were hopelessly insolvent. His Honour did not refer to that part of Mr James' evidence. 71 It seems to me therefore that the relevant matters for his Honour's consideration were these: ABD had standing to bring the proceedings based on the costs order; there were District Court proceedings on foot in respect of a different debt; and there was Mr James' belief that the Evans & Tate companies were hopelessly insolvent. A question might properly be asked whether a person with an entitlement to bring an application to wind up should be required to desist from doing so, or be at risk of a finding of abuse of process, where there are other disputed claims between the parties. Thus if it be assumed for the purposes of the argument that the Evans & Tate companies are insolvent, then, if that approach is taken, ABD would be required to prosecute the District Court proceedings, and incur costs in doing so, that may never be recovered by reason of the insolvency. Is it therefore an abuse of process for it to rely upon its admitted status as creditor, otherwise prove insolvency and lodge a proof of debt in respect of the disputed claim? 72 The answer to that question would depend, at the least, upon the extent of insolvency. If proof of insolvency depended upon the disputed claim, then I am of the opinion that a court could exercise its discretion to stay or dismiss the winding-up application so as to allow the dispute in the other proceedings to be determined. If, however, the company was insolvent without taking the disputed debt into account, then the court would almost certainly be required to allow the winding-up application to proceed. 73 The question which arises therefore is what follows, having regard to his Honour's error in relation to the effect of the stay application and from the matters to which I have just referred. 74 In my opinion, one thing is clear, namely, that this was not a case where the principles stated by the High Court in Williams v Spautz apply. As I have said, however, the Evans & Tate companies did not seek to make out such a case and it is apparent that his Honour intended to apply the principles that relate to abuse of process in the context of winding-up applications. The Evans & Tate companies submit that on the application of those principles his Honour's discretion did not miscarry in granting the injunctions. 75 The first matter to consider relates to his Honour's finding as to ABD's subjective intention. ABD contend that his Honour erred in making such a finding as no case to that effect had been argued by the Evans & Tate companies. Mr Robb of senior counsel, who appeared for the respondents both in the Court below and in this Court, informed White J that no direct submission was to be made as to conscious improper purpose. 76 It is necessary to refer to the precise submission made to his Honour to determine whether his Honour's finding went beyond the case that the Evan & Tate companies sought to make. "His Honour: Will it be a ground of your claim for summary dismissal that you contend that I should find as a fact that these proceedings were brought and published through an improper purpose to cause damage to your clients through the press?

Robb: I am not in a position to make that allegation in a summary matter like this. What we do submit is that your Honour is entitled at the discretionary stage to take into account what has in fact happened. Basically I don't think I could actually make a direct submission of conscious improper purpose unless I was prepared to put that to certain witnesses in a contested sort of application, but we do nonetheless say that these facts speak for themselves.

His Honour: Are you saying that the relevance of this evidence is not that the plaintiff was peaked (sic) because its offer was rejected, but, rather, that I should infer that it is trying to drive down the price of the assets?

Robb: Yes. So I have stopped short of actually standing in your Honour's court and alleging conscious improper purpose, but what we do allege is close to that. What we say is in March and following there were those offers. Then the thousand notes were acquired by the trustee for the plaintiff after the notice of the calling of meeting on 14 June was published …" 77 The discussion thereafter included reference to matters which are not presently relevant, other than to note that the Evans & Tate companies contended before his Honour that actions taken by ABD were directed to driving down Evans & Tate's share price and when that was combined with the commencement of proceedings without leave and the advertisement of proceedings contrary to the publication rule, that was sufficient to establish an abuse of process. 78 The Evans & Tate companies contend that this was a case where the discretion was properly exercised because there was a dispute as to whether, once the District Court proceedings had been finalised, ABD would have been a net creditor. They further contend that his Honour's finding at [73], that there was a substantial dispute arising as to the enforceability of the debt for costs, was sufficient basis upon which to find, as his Honour did, that there was an abuse of process. It followed on this submission that it was not necessary in order to support his Honour's exercise of discretion to rely upon the exacerbation of the abuse, based upon his finding in respect of the subjective intentions of ABD which his Honour considered was revealed by the terms of the press release. The relevance of this last submission is, as I have already explained above, that the Evans & Tate companies did not seek to make a subjective case to that effect. 79 His Honour made two findings at [73]. The first related to the effect of the stay. I have already reached a conclusion that his Honour erred in relation to his finding as to the effect of a stay in respect of the enforcement of the costs judgment. On the conclusion I have reached that was not a proper basis upon which his Honour was entitled to exercise his discretion. 80 The second finding was that the subjective intention demonstrated by the press release was to deter Evans & Tate Premium Wines from pursuing that application, or to persuade a liquidator to desist from pursuing that claim or to retaliate against the claim being brought. I have already referred to these matters at [43] and [59]. In the first place, no case was made as to the subjective intentions of the Evans & Tate companies. More relevantly, however, I do not consider that his Honour's findings were a fair reflection of the press release. As I have said, there is no doubt that the press release indicated that the winding-up application was responsive to the bringing of the application for a stay of the costs order. However, as I have already explained, litigation is not a passive pastime. A litigious response may well be retaliatory. For example, the bringing of a cross-claim may be retaliatory. That does not make it abusive. In my opinion, his Honour erred in so finding. 81 The Evans & Tate companies also submitted that there remained a basis upon which his Honour was entitled to find abuse of process and thus grant injunctive relief to the companies because of the existence of the dispute as to the debt in the District Court proceedings, and the possibility that if ABD did not succeed in the total amount of its claim, it might be a net debtor rather than a net creditor. In this regard it was accepted that there was no question of legal or equitable set-off involved. 82 A similar question was considered by McLelland J in Re Jeff Reid. In that case, McLelland J stated at 31: "Notwithstanding what was said in Re Glenbawn Park Pty Ltd (1977) 2 ACLR 288, I seriously doubt whether the existence of an unliquidated counter-liability not amounting to a set-off in law or equity could affect a petitioner's status as a 'creditor' within the meaning of s 221(1)(b) of the Companies Act, although as is illustrated by that case it may justify the discretionary dismissal of a winding up petition … The distinction between a set-off and a counter-claim not amounting to a set-off and the differential consequences thereof are firmly established (see Hanak v Green [1958] 2 QB 9 and Calambos v McIntyre (1974) 5 ACTR 10). The discretionary power of the court to stay execution of a judgment to enforce a debt pending the determination of a cross-claim is not in my opinion sufficient to affect the existence of the debt. The circumstances that in such cases there is a complete discretion and that in no case short of a set-off in law or equity would there be an entitlement to a stay as of right, demonstrate the invalidity of any general proposition that an unliquidated counter-liability negates a debt or adversely affects the status of the person to whom it is owned as a 'creditor'". 83 It follows, in my opinion, from this discussion in Re Jeff Reid, as well as from the matters I have discussed above, that the basis on which the primary judge found an abuse of process was vitiated by error; and that while it would be open for a court to find an abuse of process in some cases where litigation is in progress concerning a cross-claim exceeding the debt, it would not do so unless it was (at least) satisfied that the bringing of winding-up proceedings was unreasonable and inappropriate in the circumstances. In all the circumstances of this case, including the extent of insolvency and likely cost of the District Court proceedings, this Court is not so satisfied.

Grounds 2(v), 5 and 6: Alleged breach of the publication rule 84 Once an application is made to wind up, certain procedural steps are required of the applicant. Relevantly, in relation to publication of the winding-up, those requirements are as follows. Section 465A of the Corporations Act provides that a person who applies under s 459P, as ABD did, for a company to be wound up must: "(a) lodge notice in the prescribed form that the application has been made; and

(b) within 14 days after the application is made, serve a copy of it on the company; and

(c) advertise the application as prescribed by the rules." 85 The lodgement referred to in s 465A(a) is with the Australian Securities and Investment Commission (ASIC). The relevant form is Form 509H of the Corporations Act Forms. 86 Section 470(1)(a) provides as follows: "(1) An applicant (other than ASIC) for the winding up of a company must: (a) lodge, not later than 10.30 am on the next business day after the filing of the application, notice of the filing of the application and of the date on which the application was filed …

… (c) if the application is withdrawn or dismissed - lodge, within 2 business days after the withdrawal or dismissal of the application, notice of the withdrawal or dismissal of the application and of the date on which the application was withdrawn or dismissed." 87 Rule 5.6 of the Supreme Court (Corporations) Rules 1999 (NSW) (the Corporations Rules) further provides: "5.6 Notice of application for winding up - Form 9 (1) Unless the Court otherwise orders, the plaintiff must publish a notice of the application for an order that a company be wound up.

(2) The notice must be: (a) in accordance with Form 9, and (b) published in accordance with rule 2.11: (i) at least 3 days after the originating process is served on the company, and (ii) at least 7 days before the date fixed for hearing of the application." 88 Rule 2.11 provides: "2.11 Publication of notices

If a rule requires a notice in relation to a body to be published in accordance with this rule, the notice must be published once in a daily newspaper circulating generally in the State or Territory where the body has its principal, or last known, place of business." 89 ABD submitted that it was apparent from the sections and rules requiring publication that there was a legislative policy that applications for winding-up be made public and that it was possible that that information would be within the public domain, in the sense of being on ASIC's register, for a period prior to the conclusion of the three day period. 90 The publication alleged to have been made in breach of the publication rule was the press release to which I have already referred. 91 The summons to wind up was filed and served on 24 May 2006. On the afternoon of 24 May 2006, Mr Brooks, whom it will be recalled was the in-house legal counsel for ABD, received a telephone call from a Julianne Sprague from The West Australian newspaper. Ms Sprague indicated to Mr Brooks that she had been following Evans & Tate for some time and she understood there had been an application made to have it wound up. Mr Brooks was not aware of the source of Ms Sprague's information, but assumed that it had been obtained from the websites of ASIC and the Australian Stock Exchange. 92 Following his discussion with her, Mr Brooks sent Ms Sprague the press release, the first two paragraphs of which are set out above. The press release also referred to ABD's contention that the Evans & Tate group was insolvent and set out a number of matters that were said to justify that conclusion. It also referred to defaults under the convertible notes trust deed and set out ABD's allegations as to why the report to noteholders was misleading. The press release concluded with the following paragraph: "Australian Beverage Distributors Pty Ltd expresses the opinion that the value of the shares in the Evans & Tate group are worthless as evidenced by the financial accounts. It believes that action should be taken now to prevent the further dissipation in the value of assets available to unsecured creditors. Creditors of the Evans & Tate group and noteholders are encouraged to appear at the proceedings before the New South Wales Supreme Court of Sydney when they are next returnable on 1 June 2006." 93 Mr Brooks said his purpose in forwarding the press release to Ms Sprague was to summarise his discussion with her. Ms Sprague wrote an article in The West Australian on 25 May 2006 which in part was in near identical terms to the above portion of the press release. 94 During the course of 25 May 2006, Mr Brooks was contacted by other journalists. He sent a copy of the press release to journalists from Fairfax and to a journalist from News Corporation. As White J observed at [32], there was then extensive publicity of the winding-up proceedings in the national press. 95 Mr Brooks stated in his affidavit that he did not ever intend to advertise the fact that the originating process had been lodged other than in accordance with the Corporations Rules. He stated, however, that he was not aware that those rules prohibited him from issuing the press release. 96 The essential question in relation to this ground is whether any publication by an applicant for winding-up other than that prescribed by legislation or the rules of court is impermissible. 97 His Honour at [33] considered whether the distribution of the press release had constituted a breach of the publication rule. He said at [53]: "… the implied restraint on publication of notice of the winding-up application is at least as broad as a restraint on advertising such an application. The purpose of the rule is to give a company the opportunity to take steps to prevent the damage which may be caused by the winding-up application becoming known. That purpose would be frustrated if it were open to an applicant for winding-up to publish notice of the application by means other than that provided for in the rule. The fact that a listed company may itself be under an obligation to publicise the application by the ASX does not affect the operation of the rule. The rule does not contain an exception for applications to wind up listed companies. Nor is it relevant that s 465A requires notice of the application to ASIC. It is a matter for ASIC when it chooses to publish such notices on its database." (emphasis added). 98 His Honour then considered the consequences that ought to flow in this case from his finding that there had been a breach of the rule. In considering that question, his Honour made findings as to ABD's intention in causing the premature publication. He said at [56]: "In this case, the premature publication was deliberate and calculated to cause harm to the defendants. It does not matter that Mr Brooks was approached by journalists. He did not content himself with answering their questions, but published a press release designed to give maximum publicity to the fact that winding-up proceedings had been brought; that ABD contended the companies were insolvent, and to encourage other creditors to support ABD's actions. This was at least as serious a breach of the rule as was the circulation of creditors in Re A Company No 001127 of 1992. " 99 His Honour rejected ABD's submission that the breach of the rule was a mere defect or irregularity within the meaning of s 467A of the Corporations Act. Rather, his Honour considered it was an abuse of the Court's process and that reason also was a ground for acceding to the respondents' applications to dismiss the winding-up applications summarily.

ABD's submission on the publication rule 100 ABD accepted that there was a line of first instance authority that established that any publication other than in accordance with rule 5.6 constituted a breach of that rule. ABD submitted, however, that those authorities were wrong and that the rule, by its express terms, specified what publication was required, but did not prohibit any other form of publication. ABD further submitted that, even if it had breached the rule, his Honour erred in failing to find that the premature publication was a defect or irregularity that could be cured under the provisions of s 460A of the Corporations Act.

Authorities on the publication rule 101 Rule 5.6 has a long pedigree. Except for the specification of time periods, or in some cases, no specification of a time period, there has been a rule relating to publication of the winding-up process since at least the end of the nineteenth century. There was a publication rule in the Companies Act 1889 (NSW), rule 2; the Companies Rules 1938 (NSW), rule 35(1); the Companies Rules 1967 (NSW), rule 49; the Supreme Court Rules 1970 (NSW); in respect of winding-up applications brought under the Companies Rules 1970 (NSW) Pt 80 r 18(4), and in respect of winding-up applications under s 364(1) of the Companies Code; and then in the Supreme Court (Corporations) Rules. 102 The rule, in whatever form it has taken, has been consistently interpreted so as to prohibit publication, other than in accordance with the rule. Thus, in Paterson v Hampton Interiors (1989) 7 ACLC 904, Needham AJ was dealing with Pt 80 r 18(4) of the Supreme Court Rules, which is relevantly in the same terms as rule 5.6. His Honour said at 905-6: "The purpose of that rule is well known, that is, in the knowledge that many applications for winding up of companies do involve disputed claims, the rule provides for an opportunity for the company said to be the debtor to make application for an injunction prior to the advertising of the lodgment of the summons.

The opportunity given to the company is justified by the damage which can accrue to a company which has had an advertisement placed in the paper and the Government Gazette that an alleged creditor is seeking to have that company wound up … That is the purpose of the rule … service of a summons after the advertising of the lodgment of that summons constitutes an abuse of process, bearing in mind particularly the purpose of r 18(4)." 103 In Re D R Electrical and Engineering Pty Ltd (1989) 7 ACLC 1,058 and Re Jazzamint Pty Ltd (1990) 8 ACLC 763, Senior Master Mahony of the Victorian Supreme Court held that the premature advertising and gazettal of the application to wind up should not in all circumstances bar the making of a winding-up order. In each of those cases, the Master held that the company was not prejudiced by the premature advertising. 104 McLelland J in Melcann Ltd v Marmlon Holdings Pty Ltd (1991) 4 ACSR 736 took the same approach. His Honour considered that the statement of Needham AJ in Paterson v Hampton Interiors, should not be regarded as justifying the dismissal of an application to wind up regardless of the circumstances. His Honour said at 737: "Where, as in the present case, the breach is shown to have been unintentional and inadvertent, the defendant shows no interest whatever in resisting the winding up application and there is no suggestion that the premature advertising has caused any harm, the Court may properly make the winding up order, notwithstanding the breach of Rule 18(4)."

His Honour agreed with the approach taken by Senior Master Mahony in Re D R Electrical and Engineering Pty Ltd. 105 Wilcox J in Dikwa Holdings Pty Ltd v Oakbury Pty Limited (1992) 36 FCR 274 discussed, inter alia, Paterson v Hampton Interiors and Re D R Electrical and Engineering Pty Ltd. His Honour considered that in circumstances where non-compliance with the rules caused no prejudice, it was proper for the court to dispense with compliance with the publication rules. 106 There are similar publication rules in England and they have been given the same interpretation as has been given to the local rules. Undoubtedly, the Australian authorities have followed the English authorities in that regard. Thus, in Re Signland Limited [1982] 2 All ER 609 it was said that the purpose of the rule was: "…(1) to give a company served with a winding-up petition the opportunity to discharge the debt in question, if it is disputed, before advertisement takes place, with all the necessarily potentially damaging consequences to the company, and (2) to enable the company, if it wishes to dispute the debt, to apply to the court to restrain advertisement." 107 The respondents submitted that rule 5.6 ought to be interpreted so as to give effect to its purpose as has been discussed in these cases and in particular by Needham AJ in Paterson v Hampton Interiors. 108 In my opinion, given that the publication rule has been a constant feature of the statutory winding-up process for over a century, and given that the rule has been re-enacted from time to time and applied to different legislative regimes relating to windings-up, it ought to be accepted that the legislature intended the rule to operate in the context of the law as it has been established by the authorities. For that reason I do not consider that this Court ought overrule over a century of precedent and practice without there being a clear legislative injunction to do so. The rule is, as White J properly characterised it, an implied restraint on publication in a statutory context which provides a specific regime for the publication of a winding-up application.

Irregularity within s 467A of the Corporations Act 109 ABD contends that even if there was such a rule that prohibited publication, his Honour should have treated it as an irregularity within s 467A of the Corporations Act. 110 His Honour found that the premature publication was both deliberate and calculated to cause harm to the respondents so as to justify summary dismissal of the winding-up application against Evans & Tate Premium Wines. Because of the premature publication, Evans & Tate Premium Wines submitted that it had no opportunity to protect itself by seeking appropriate injunctive relief, which it contended had been the subject of prior correspondence between the parties. 111 On 24 May 2006, Cowley Hearne, solicitors for the Evans & Tate companies, wrote to ABD's solicitors, drawing their attention to ABD's obligation under rule 5.6 "that any publication of [the winding-up application] cannot be made until three days after service of the originating process". They pointed out that at that stage they had not been served with a sealed copy of the winding-up application. They sought confirmation by 3pm that afternoon that ABD would comply with the regulatory obligations relating to advertising. They indicated that if their request was not met, an application would be made to the Supreme Court "seeking orders restraining any publication of the application [to wind up]". ABD's solicitors responded, but not in a way which White J considered responsive to Cowley Hearne's request. Cowley Hearne wrote again, on the same day, again seeking confirmation that ABD would comply with rule 5.6. 112 ABD's solicitors responded to this on 26 May 2006, stating: "On our instructions any 'publication' as required under the Corporations Act or regulations will be made in accordance with the Act or regulations.

We are unaware on what basis you have thought otherwise, unless you mistakenly were referring to the ASIC lodgment as a publication." 113 White J, at [57], considered that the premature publication was an additional ground warranting the summary dismissal of proceedings, subject only to whether it constituted a mere irregularity. His Honour had earlier referred to the decision of Mummery J in Re A Company 001127 of 1992 (1992) 10 ACLC 3,035 concerning rule 4.11 of the Insolvency Rules 1986 (UK). That rule is relevantly the same as rule 5.6, apart from the time limits specified and the manner of publication. Mummery J held that the petitioning creditor's conduct in notifying the company's creditors of the existence of the winding-up petition against the company in that case was a clear breach of the rules and the conduct was exacerbated by the petitioning creditor having given an assurance that the petition would not be advertised before the period specified in the rules. Mummery J, in those circumstances, concluded at 3,037 that the breach was: "… such a serious case of abuse of the Insolvency Rules and of the processes of the winding-up court that I should mark the Court's strong disapproval of actions of this kind by striking out the petition without investigating the merits of the petitioning creditor's argument that the points raised by the company in defence to the petition are specious". 114 His Honour found that there was nothing different in the language of rule 5.6 that required a different approach to that taken by Mummery J. 115 The Evans & Tate companies submitted that, as this case involved a premature publication which on his Honour's findings was deliberate and calculated to cause harm to the defendants, the summary dismissal of the winding-up application against Evans & Tate Premium Wines was justified. The premature publication had effectively denied it any opportunity to protect itself by seeking appropriate injunctive relief. 116 Evans & Tate Premium Wines also submitted that his Honour was correct at [59] in holding that this breach of the rules was not a mere defect or irregularity within the meaning of s 467A of the Corporations Act. ABD contends, however, that his Honour was in error in his construction of s 467A. That section relevantly 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 …

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)." 117 ABD contends that the section does not refer to something that is "merely" a defect or irregularity. Rather, the section provides that an application must not be dismissed merely because of a defect or irregularity. 118 In my opinion, ABD's construction is correct and his Honour erred in that regard. However, I am not satisfied that the error is one that would otherwise affect his Honour's conclusion. Section 467A requires that an application must not be dismissed merely because of a defect or irregularity "unless the court is satisfied that substantial injustice has been caused that cannot otherwise be remedied". Assuming that the issue of the press release was a defect or irregularity, his Honour found that ABD's conduct in breaching the publication rule was deliberate and of such a nature as to constitute an abuse of process. 119 In those circumstances, I am of the opinion that in the sense in which his Honour used abuse of process in this case, being deliberate conduct intended to cause harm, his Honour was in fact satisfied that substantial injustice had been caused and could not otherwise be remedied. In those circumstances, on that finding, it was open to his Honour to dismiss the proceedings. But in any event, I have considerable doubt whether the prior publication was a defect or irregularity, although it is not necessary to decide that question in this case.

Conclusion on breach of the publication rule 120 ABD principally based its submission in relation to whether the trial judge had erred in finding that the breach of the publication rule was an abuse of process on the alleged erroneous construction of the rule. I have rejected that argument. The appellant also submitted that it was a strange result and out of step with binding authority that a breach of a court rule could amount to an abuse of process and that in light of Williams v Spautz such a finding was wrong. Other than the submission in relation to defect or irregularity, ABD did not directly challenge the finding that the publication was deliberate and intended to harm the Evans & Tate companies. There is no doubt that the publication was deliberate. There is also no doubt that Mr Brooks had taken a view as to the operation of r 5.6. I have found that view to be erroneous. He said however that he did not know he was prohibited from publishing as he did and that he did not intend to cause harm. He was not cross-examined on that evidence. 121 Usually, a court will not make findings contrary to the uncontested evidence of a witness. However, in my opinion, the terms of the press release itself provided a, and probably the, basis for his Honour's finding. Although I have taken the view that there was nothing untoward in the first and second paragraphs of the press release, its sting was in the last paragraph, in which ABD expressed "the opinion that the value of the shares in the Evans & Tate group are worthless as evidenced by the financial accounts". 122 That statement could only have been intended to cause harm, even if it was accurate. And it must have caused harm. Mr Brooks' erroneous understanding of the law and his subjective state of mind could not overcome, in my opinion, the overwhelming objective effect of the press release. As his Honour said, the information in the press release was given widespread coverage in the press. His Honour's finding was thus clearly open to him. But in any event, I am of the opinion that it would be sufficient if the press release caused harm, or if the reasonable inference open to the Court was that it must have caused harm, for the Court to exercise its discretion to dismiss the application for breach of the publication rule.

Grounds 7, 8 and 9: Form of orders made by the trial judge 123 The trial judge made the following order at [82] against ABD in relation to the winding-up application brought against Evans & Tate: "In proceedings 2876/06, I order that the originating process be dismissed. I also order that the plaintiff by itself, its servants and agents be restrained from presenting a further application for winding-up of the first defendant based on the debt on which the application in the originating process filed on 24 May 2006 was based. I order that the plaintiff by itself, its servants and agents be restrained from presenting a further application to wind up the second defendant based on the debt on which the application in the originating process filed on 24 May 2006 was based. I will hear counsel on the question of costs in the winding-up proceedings." 124 The Evans & Tate companies concede that an order ought not to have been made in those terms, but should have been qualified in the manner indicated by his Honour at [76] of his judgment. In that paragraph, his Honour stated: "… I am of the view that the enforcement of the costs order should be stayed until the determination of the District Court proceedings or further order. It follows that ABD would not be entitled to file fresh winding-up proceedings without leave."

The Evans & Tate companies proffer the explanation that his Honour may have made a slip because the order he made was the one they had sought. 125 ABD contends, however, that the order ought not to have been made in any event because there was no abuse of process, for the reasons already discussed. Further, it submitted that the usual remedy for abuse of process is a stay of the action: see Sydney Appliances Pty Limited (in liq) v Robert Bosch (Australia) Pty Limited (2000) 33 ACSR 680; [2000] NSWSC 32; and Ridgeway v The Queen (1995) 184 CLR 19 at 74-75; [1994] HCA 33, where Gaudron J noted that: "… the powers to prevent an abuse of process have traditionally been seen as including a power to stay proceedings instituted for an improper purpose as well as proceedings that are frivolous, vexatious or oppressive." 126 In my opinion, the orders that a court may make when there is an abuse of process are not confined to a stay: see David Grant & Co Pty Limited (Receiver Appointed) v Westpac Banking Corporation (1995) 184 CLR 265; [1995] HCA 43; Fortuna Holdings; Re Jeff Reid. The Court may dismiss proceedings, and, in my opinion, may grant injunctions, although the terms of the injunctions must of course fit the circumstances. 127 In the present case, the orders made by his Honour were unwarranted, as is conceded by the Evans & Tate companies. The question is whether the orders ought to be limited in the way they now suggest or whether no orders at all ought to be made. ABD's submission is primarily advanced upon it being successful in establishing that there had been no abuse of process. The determination of this question depends in part at least on whether his Honour erred in staying the costs order. As I have indicated, I consider that his Honour could have dismissed the winding-up applications for breach of the publication rule.

Stay of the costs order 128 ABD contends that the order for a stay of the costs judgment was made without jurisdiction, or alternatively, his Honour's exercise of discretion in staying the judgment miscarried. 129 The trial judge dealt with the application to stay enforcement of the costs order at [77]-[81]. I will turn to his Honour's reasons shortly. Before doing so, it is necessary to refer briefly to the statutory process involved in obtaining a costs assessor's certificate relating to costs and of the statutory procedure involved in the registration of that certificate. 130 The assessment of costs and their recovery is now governed by the Legal Profession Act. Pursuant to s 353(1) of the Act, a person who is liable to be paid costs as a result of an order made by a court may apply to the Manager, Costs Assessment, for an assessment of the whole or part of those costs. The Manager, Costs Assessment, must refer each application for costs assessment to a costs assessor, to be dealt with under Pt 3.2 Div 11 of the Legal Profession Act: s 357. 131 Pursuant to s 367, a costs assessor is to determine an application for a costs assessment. The intention of the costs assessment provision is to provide a mechanism for the determination of the fair and reasonable costs claimed. Having made a determination of costs, the costs assessor is then to issue a certificate as to the determination: s 368. A costs assessor's determination is binding on all parties to the application, subject to review by a Review Panel: s 373, or an appeal to the Supreme Court as prescribed by ss 384 and 385. In this case, ABD applied for a review and the Review Panel then issued its certificate in accordance with s 378. 132 Pursuant to s 378(3), a Review Panel's certificate may be filed in a court of competent jurisdiction. Upon filing, it becomes a judgment of the court. By the time White J came to consider the matter, the Review Panel had assessed costs in the sum of $78,384.50 and had issued a certificate in that amount. However, the certificate had not been filed in the District Court and thus had not become a judgment of that Court. ABD have since construed his Honour's order as restraining them from doing so. 133 White J at [77] held: "The Court has jurisdiction to stay its own proceedings wherever the requirements of justice so demand. The jurisdiction is one to be exercised with caution. This jurisdiction extends to staying execution of judgments and orders. The jurisdiction is an inherent one and is, in any event, specified in wide terms in subs 135(1) of the Civil Procedure Act . The stay of execution of a judgment to give effect to a set-off between two judgment debts is but an instance of the control which the Court exercises over its own proceedings." 134 His Honour considered that justice required that the two certificates for costs (that is the one obtained by Evans & Tate Premium Wines for the costs orders in its favour and the one obtained by ABD) should be set off against each other and also, that ABD should not be entitled to enforce its costs order until it had paid its debt to Evans & Tate Premium Wines or until the District Court proceedings had been determined. His Honour continued at [79]: "On the materials before me, ABD owes more to ETPW than ETPW owes to it. Even though that is not sufficient to give rise to a set-off in equity, and even though a stay of execution is tantamount to allowing a set-off, the jurisdiction to stay execution of the order for costs does not depend on satisfaction of the requirements for establishing an equitable set-off. There is no reason to think that it should, as an equitable set-off extinguishes or reduces the debt, whereas a stay merely precludes enforcement of the debt for so long as the stay operates." 135 His Honour then concluded at [81] that: "… justice requires that further proceedings to execute the orders for costs in proceedings 6444/04 (the winding-up proceedings), and the orders for costs in proceedings 2021/04 (the proceedings to set aside the statutory demand), and on appeal in proceedings CA 40762/04, be stayed until the final determination of proceedings in the District Court at Newcastle (No. 7/2005), or further order. In proceedings 2760/06, I direct that counsel for the plaintiff bring in short minutes of order accordingly. I order that the defendant pay the plaintiff's costs of those proceedings." 136 In the original written submissions in this matter, ABD accepted that although the costs certificate had not been filed and thus had not in fact become a judgment, the parties had proceeded on the basis that the stay application should be determined as if it had already been registered. On that basis it contended that s 135 of the Civil Procedure Act was the only power that could have been engaged by the Evans & Tate companies to obtain a stay, and s 135 is clear in its terms that this Court would not have had power to stay execution of the judgment in the District Court. That section relevantly provides: "135 Directions as to enforcement

(1) The court may, by order, give directions with respect to the enforcement of its judgments and orders." 137 If the costs certificate had been filed and thus become a judgment of the District Court, then this submission would have been correct. However, ABD altered its position in its written submissions in reply and in its oral submissions and contended that the effect of the issue of a costs certificate was to deprive the Court that made the costs order of any power to make an order in relation to costs. This submission was undoubtedly made so that its submissions coincided with the fact that the costs certificate had not been filed. 138 Because the costs certificate had not been filed there was in fact no judgment in existence. Section 135 does not limit the Court's jurisdiction to making orders with respect to the enforcement of judgments. It extends to making orders in respect of enforcement of its orders, including an order that a person not take further action to enforce an order of the court. 139 ABD conceded that the Court had such jurisdiction up until the issue of the certificate but not thereafter. In my opinion, ABD's argument is not correct. At the time of the issue of the costs certificate, an order for the payment of an unspecified sum, being the costs order, is converted into an order for the payment of a sum that has been quantified. The party against whom the costs order was made can pay that sum. The party in whose favour the costs order is made can take steps to enforce payment by filing the judgment and then seek to execute the judgment. However, prior to that time, there is nothing in the assessment process, including the issue of a costs certificate, that deprives the court that made the order of its jurisdiction to order a stay of its own order. Indeed, such power is expressly conferred by s 135. 140 In any event, s 135 does not oust or delimit the inherent jurisdiction of the Court: Carr v Royal Exchange Assurance Corporation (1864) 5 B & S 941; Ellis v Scott [1964] 2 All ER 987. It has been held that a stay is available in a variety of circumstances, including where a defendant claims a right of set-off: In re A Debtor, No 21 of 1950 (No 2); Ex parte the Petitioning Creditors v The Debtor [1951] Ch 612; and where there is an outstanding cross-claim to be determined: Automatic Weighing Machine Co v Combined Weighing and Advertising Machine Co (1889) 58 LJ Ch 647 (but see now Uniform Civil Procedure Rules 2005 (NSW) rule 13.2); Re Jeff Reid, per McLelland J. 141 ABD next contended that if the court did have jurisdiction to order a stay, White J's exercise of the discretion to stay the order miscarried. It said that it had an assessed order for costs; that there was no cross-claim or set-off as against its order; that it had standing to bring a winding-up application, regardless of what order was made on the stay application; and that the costs order had come about in circumstances where the Evans & Tate companies had sought to wind it up and it had proved its solvency. 142 By contrast, it contended that the Evans & Tate companies were insolvent. It also submitted that in any event, as a creditor it was entitled to have the issue of solvency determined in the winding-up application. It will be recalled that ABD itself had to go through that process. It was submitted that there was no proper basis upon which the discretion ought to have been exercised against it and in favour of granting the stay. It was further submitted that it is clear that his Honour took into account his findings that ABD had acted in abuse of the court's processes in commencing the winding-up proceedings. 143 There is an undoubted power in the exercise of the court's discretion to grant a stay of the costs order, either under s 135 or in the court's inherent jurisdiction. It is apparent that his Honour considered that the winding-up proceedings ought to abide the final ascertainment of the net credit position between the parties. It appears that this view was significantly shaped by his Honour's view that ABD's conduct in seeking to prosecute the winding-up proceedings in circumstances where it was possible that ABD might end up a net debtor was an abuse of process. This view was fortified by the fact that there had been a finding by the court in the statutory demand proceedings, that ABD had only established that about one third of its alleged claim in the District Court proceedings was arguable. His Honour observed that nothing more had been advanced to make it appear more plausible that the claim to the whole amount could be established. 144 It would thus appear that his Honour's order was made to keep matters in 'neutral' between the parties until the total indebtedness between the parties is determined. However, his Honour made the order in circumstances where he had found that if a stay was ordered, ABD's status as a creditor would be affected. I have concluded that that is not the case. In my opinion, that is sufficient to demonstrate that his Honour's discretion miscarried. 145 There are also additional reasons why I consider his Honour's discretion miscarried. The costs order created a debt that was separate from any other indebtedness and was not available as a set off against any indebtedness owed by ABD. Neither the costs order nor the proceedings in which it was made was subject to any appeal process. The mere fact that there were other claims between the parties, some of which were disputed and some of which were not, was not sufficient in my opinion in all the circumstances of this case, including those referred to in para [83] above, to stay the enforcement of an order that created another indebtedness. As I have indicated, this is even the more so when, even if a stay was granted, the debt subject of the stay remains due and payable.

Conclusion 146 It follows that I consider that Orders 2 and 3 of his Honour's orders made in the summary dismissal proceedings should be set aside. I also consider that his Honour's orders made in the stay proceedings should be set aside. 147 The Court did not grant leave to appeal against the dismissal of the winding-up application as against Evans & Tate. His Honour's order dismissing that application therefore stands. 148 That leaves the question of the order to be made on the application to wind up Evans & Tate Premium Wines. As I have concluded that the finding made by his Honour in respect of ABD's breach of the publication rule was open to him, it follows that Order 1 made in the summary dismissal proceedings in respect of the winding-up application against Evans & Tate Premium Wines should not be disturbed. 149 That leaves the question of costs. His Honour ordered ABD to pay the costs of the summary dismissal proceedings on an indemnity basis and the costs of the stay proceedings. ABD has been successful in having Orders 2 and 3 of the summary dismissal proceedings set aside. It must follow that some other order for costs should be made in respect of those proceedings. In the normal course, as the Evans & Tate companies have only had limited success on that application, I would propose that ABD pay 50 per cent of the costs of those proceedings. However, the trial judge ordered costs to be paid on an indemnity basis. It is likely that that was because of his Honour's findings as to abuse of process. If that is so, the basis for the Order made by his Honour no longer exists because of this Court's determination. However, in case this is wrong and there is some other basis, I propose that the Evans & Tate companies have liberty to file written submissions to support the making of an indemnity costs order if they so choose. 150 ABD has also succeeded in having all of the Orders made in the stay proceedings set aside. That costs Order should also be set aside and an Order made that Evans & Tate Premium Wines pay ABD's costs of those proceedings. 151 The effect of my judgment is that ABD has been successful in respect of most aspects of the appeal but has not satisfied the Court that his Honour erred in dismissing the winding-up application in respect of Evans & Tate Premium Wines. It has satisfied the Court that his Honour erred in making orders on the stay application. In the circumstances I consider that ABD should have an order for 75 per cent of the costs of the appeal. 152 Accordingly, I would propose the following orders:

2. Set aside Orders 2, 3 and 4 made in proceedings SC 2876 of 2006;

3. Order the appellant to pay 50 per cent of the respondents' costs of proceedings SC 2876 of 2006 at first instance;

Direct the respondents to provide written submissions by 27 March 2007 if they seek that the costs ordered in Order 3 above be paid on an indemnity basis;

Set aside the Orders made in proceedings SC 2760 of 2006;

Order the first respondent to pay the appellant's costs of those proceedings at first instance;

Order the respondents to pay 75 per cent of the appellant's costs of the appeal

The parties are to bring in Short Minutes of Final Order. 153 HODGSON JA: I agree with Beazley JA. 154 SANTOW JA: I agree with Beazley JA. **********

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