(c) because the winding-up proceeding is an abuse of process.
ABD's Status as a Creditor when the Proceedings were Commenced
17 There is much to be said for Redrock's submission that notice of the assignment of the debt had not been given in accordance with s 12 of the Conveyancing Act 1919 (NSW) at the time the winding-up proceedings were commenced. Notice was not given in any of the ways contemplated by s 170 of the Conveyancing Act. Nor did the evidence establish that the notice of assignment was left at the company's registered office in accordance with s 109X(1)(a) of the Corporations Act 2001 (Cth). Mr Brooks deposed, without objection, that he was told by the receptionist of an office which bore the plaque "Tenant 1" that she thought Plus Consulting had occupied the office next door. Assuming that she was referring to the vacant suite next to her office (although Mr Brooks gave no evidence from which such an inference should be drawn) that evidence is insufficient to establish that the vacant office at which the document was left had been the registered office of Redrock.
18 It would not be appropriate to resolve this disputable question of fact on a summary application. In any event, ABD's standing to commence the winding-up proceedings does not depend upon whether there had been an effective legal assignment of the debt prior to the commencement of the proceedings. An equitable assignee of a debt is a creditor within the meaning of s 459P(1)(b) entitled to apply for a winding-up order (Re Steel Wing Co Ltd [1921] 1 Ch 349; Re Allebart Investments Pty Ltd (1969) 92 WN (NSW) 726; Rohan Trading Co Pty Ltd v Glengor Pastoral Co Pty Ltd [2003] NSWSC 1265 at [14]).
Consequences of Refusal of the Tender of Payment
19 Counsel for ABD submitted that a creditor need only have standing at the time it files the application for winding-up. He also submitted that a creditor who has brought a winding-up application can reject the tender of payment of the debt, and does not lose its status as a creditor, even if the debtor company remains ready to pay the debt and pays the full amount of the debt into Court.
20 Counsel for ABD also submitted that the issue of ABD's standing could not be determined on a summary basis because, if it had standing when proceedings were commenced, even if it does not maintain its status by having rejected the tender of payment of the debt, it will still have standing to obtain a winding-up order if it purchases another debt by the time the application is heard.
21 In Motor Terms Co Pty Ltd v Liberty Insurance Ltd (in liq) (1967) 116 CLR 177, Menzies J said (at 194-195):
"In the course of argument upon this appeal, reference was made to the consequence of a petitioning creditor being paid off between the presentation of the petition and the making of an order. That circumstance would not, in my opinion, put an end to the petition nor would it affect the jurisdiction of the court to hear and determine the petition although, of course, in such circumstances proceedings might not be continued and, if they were, the court could, in the exercise of its discretion, refuse to make a winding up order upon the petition of a person not then a creditor."
22 The payment off of a petitioning creditor does not preclude another creditor being substituted (Deputy Commissioner of Taxation v Sun Heating Pty Ltd [1983] 2 NSWLR 78; DMK Building Materials Pty Ltd v CB Baker Timbers Pty Ltd (1985) 2 NSWLR 711). In De Montfort v Southern Cross Exploration NL (1987) 17 NSWLR 468, Needham J said (at 470-471) that he was aware of no case in which a creditor who had issued a notice under s 364 of the Companies (NSW) Code, but had been paid out, was then entitled to continue the proceedings on the basis of other debts owed by the defendant to the plaintiff which had not been the subject of the notice. His Honour said (at 471):
" I should have thought that, while the effect of the s 364 notice
undoubtedly continues so as to allow another creditor to become substituted for the original plaintiff, that principle could not possibly apply to a case where it is the plaintiff itself who claims to continue the proceedings after being paid out the only amount which he has claimed in those proceedings. It would, I think, be quite unacceptable for a creditor to serve a notice upon a debtor specifying a sum in that notice, then, when the debtor failed to comply with that notice, take proceedings, be paid the full amount claimed, and then seek to wind the defendant up nonetheless.
Whether the principles relating to s 364 and the deemed insolvency of companies applies to such a situation or not, I would not, in the exercise of my discretion, permit the creditor to proceed with the claim for winding up in those circumstances. ... "
23 His Honour said that the principle stated by Menzies J in Motor Terms Co Pty Ltd v Liberty Insurance Ltd (in liq) and the principles stated in Deputy Commissioner of Taxation v Sun Heating Pty Ltd and DMK Building Materials Pty Ltd v CB Baker Timbers Pty Ltd applied to creditors who sought substitution.
24 The above passage quoted from De Montfort v Southern Cross Exploration NL was approved by Ipp JA (with whom Mason P agreed) in Braams Group Pty Ltd v Miric (2002) 171 FLR 449 at 461 [77]; (2002) 44 ACSR 124 at 135 [77]. A different view was taken by Zeeman J in Deputy Commissioner of Taxation v Guy Holdings Pty Ltd (1994) 116 FLR 314 at 319-320; (1994) 14 ACSR 580 at 585, and by Gyles J in Deputy Commissioner of Taxation v Visidet Pty Ltd [2005] FCA 830 at [5]-[6]. In both cases, the winding-up application was dismissed as a matter of discretion.
25 In Deputy Commissioner of Taxation v Barroleg Pty Ltd (1997) 25 ACSR 167, Young J (as his Honour then was) ordered an insolvent company to be wound up on the suit of a creditor where the company had tendered payment of the debt which had been the subject of a statutory demand some hours after the filing of the summons for winding-up, which tender was not accepted.
26 In Roberts v Wayne Roberts Concrete Constructions Pty Ltd (2004) 50 ACSR 204 at 208 [12], Barrett J said that if the debt claimed in the statutory demand is paid after the 21-day period has expired, it would not then be open to the plaintiff to maintain and pursue the winding-up application as it would cease to be a creditor. In Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd (2005) 54 ACSR 228, his Honour said that that proposition may have been too broadly expressed as it did not cater for the possibility that the plaintiff may have recaptured the status of creditor by the time the winding-up application is heard (at 231 [11]). In Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd, Barrett J said (at 232 [15]) that the matter of standing is to be judged initially at the time the winding-up application is initiated:
" Thereafter, the proceeding remains extant for the benefit of any creditor the court sees fit to allow to pursue it. If the only person seeking to pursue it by the time it eventually comes before the court for determination is the original plaintiff but that plaintiff is not then a creditor, the application will be dismissed. If any person who is a creditor at that time (whether the plaintiff or someone else) then has the ability and standing to press for the making of a winding-up order, the court will entertain the application and may make the order. But that outcome will not be capable of being seen to be the correct outcome until the time fixed for determination of the winding-up application has arrived. " (At 232 [15].)
27 Counsel for ABD submitted that tender, accompanied by payment into court, may be a defence to an action in debt, but it is only a defence in the sense that, by paying the money into court and proving the tender and the defendant's continued willingness to pay the debt since tender, the defendant may bar any claim for interest or damages after the tender, and the creditor will be liable to pay the debtor its costs of the action on the ground that the action should not have been brought. Tender itself does not discharge the debt (Chitty on Contracts, General Principles, 27th ed (1994) Sweet & Maxwell, London at [21-070]). This is an accurate statement of the effect of the defence of tender to an action in debt (Dixon v Clark (1848) 5 CB 365 at 377; 136 ER 919 at 923-924; Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 568).
28 Hence it was submitted that, as the current proceedings are not an action for the recovery of a debt, the refusal of the proffered tender, even where the proffered tender was accompanied by payment into court, does not affect the plaintiff's status as a creditor.
29 I do not accept that the principles relating to the defence of tender to an action for debt have no application to determining whether a creditor can obtain an order for winding-up if the company tenders payment of the debt and makes payment into court. In Australian Mid-Eastern Club Ltd v Yassim (1989) 1 ACSR 399, Meagher JA with whom Samuels and Priestley JJA agreed, said (at 403):
" If a valid tender be made, a refusal of that tender (whether for good or bad reason, or for no reason at all) does not eliminate the debt in question. The relationship of creditor and debtor still subsists. The tender is no answer to a claim for the debt unless (as did not happen here) there is a continued readiness to pay, coupled with an actual payment into court. "
30 In Alcatel Australia Ltd & Anor v PRB Holdings Pty Ltd (1998) 27 ACSR 708, Santow J (as his Honour then was) (at 713) summarised Meagher JA's conclusion as being that "a valid tender, though it may be proffered without admissions, must be unconditional; but valid or not, its refusal does not eliminate the debt in question, unless there be both readiness to pay and payment into court." The principle was stated in the same terms in Re Bond Corporation Holdings Ltd (1990) 1 ACSR 488 at 490.
31 However, I think counsel for ABD is correct in submitting that Meagher JA did not hold that a continued willingness to tender payment of the debt coupled with a payment into court eliminates the debt. That would not be consistent with the principles on which tender coupled with payment into court may be relied on as a defence to an action in debt: it is not because the debt is eliminated by tender and payment into court, but because the creditor cannot claim interest or damages and should not have his costs.
32 There are cases in which it has been held that a creditor was justified in refusing to accept proffered payment because the moneys paid would be liable to be disgorged if a winding-up order were made on the application of a substituted creditor (Australian Mid-Eastern Club Ltd v Yassim at 403; Occidental Life Insurance Company of Australia Ltd v Life Style Planners Pty Ltd (1992) 9 ACSR 171 at 172; but compare Nationwide v Franklins (2002) 20 ACLC 309 at 311 [8]-[9]; [2001] NSWSC 1120 at [8]-[9]).
33 It does not follow that the Court will make a winding-up order at the instance of a creditor who unreasonably refuses to accept payment. The better view of the authorities, particularly Motor Terms Co Pty Ltd v Liberty Insurance Ltd (in liq) per Menzies J at 194-195 and De Montfort v Southern Cross Exploration NL at 470-471, is that the Court's jurisdiction to wind up a company in insolvency is enlivened where the application is made by a person having the status of a creditor under s 459P(1)(b), and the Court is satisfied that the company is an insolvent company (s 459A). However, the power to make a winding-up order is discretionary. Where the winding-up application relies on the presumption of insolvency arising from non-compliance with a statutory demand, the Court may, in the exercise of its discretion, refuse to permit a creditor to proceed with a claim for winding-up where the debt claimed in the statutory demand has been paid, albeit that payment outside the allowed 21-day period does not oust the statutory presumption of insolvency (De Montfort v Southern Cross Exploration NL at 471; Braams Group Pty Ltd v Miric at 461 [77]-[79]; 135 [77]-[79]). Even if the winding-up application does not rely on a presumption of insolvency, a winding-up order may be refused as a matter of discretion if, at the time of the making of the winding-up order, the petitioner is not then a creditor (Motor Terms Co Pty Ltd v Liberty Insurance Ltd (in liq) at 194-195). Equally, the discretion could be exercised against an applicant who unreasonably refused to accept the proffered tender of the debt where the tender was accompanied by a payment into court. I prefer the view that, if a person has standing as a creditor at the time the application is made, the question whether a winding-up order will be made if the plaintiff is not a creditor at the time of the hearing is a matter of discretion rather than power.
34 It follows that an application for summary dismissal is not the appropriate vehicle for determining whether ABD's winding-up application should be dismissed on the ground of the proffered tender and payment into court. That conclusion also follows from the fact that it may be open to ABD to become a creditor by purchasing other undisputed debts of ABD prior to the hearing.
Abuse of Process
35 Counsel for Redrock submitted that the winding-up proceedings were an abuse of process because: