CCV Investments Pty Limited v PNTA Aviation Pty Limited

18That was a reference to the circumstance that Ms Van Munster had said at transcript p 25 of 25 March, after his Honour had foreshadowed that he intended to stay the winding-up order: I mention the appearance of the supporting creditor, there is a supporting creditor in relation to this matter. I advised your Honour's Associate prior to the matter being put down on the last occasion.

19His Honour observed that the supporting creditor was not there, that there was a dispute as to their entitlement to appear and that there were enough complexities in the matter without hearing a debate as to the entitlement to appear of a supporting creditor who was not there. His Honour, as recorded in the passage from the judgment which I have referred to above, did not need at that stage to decide any issue concerning the supporting creditor. What is clear, however, is that it must have been evident to all that the supporting creditors were interested and active in the proceedings. 20On 28 March 2014, Aquaqueen and Ms Penson filed in the District Court proceedings amended notice of motion claiming a stay of the judgment arising from the certificates of assessment. So far as I can tell, that amended motion is returnable before the District Court tomorrow. 21Prior to 11 April, Aquaqueen tendered payment of the amount of the debt to the plaintiff's solicitors. As a result, the matter was re-listed before me on Aquaqueen's application to have the winding-up order set aside. On 9 April 2014, the matter was listed for that purpose and, by consent, I set aside the order that the defendant be wound up. On that occasion, the present applicants appeared and did not oppose the setting aside of the winding-up order, but indicated that they intended to apply to be substituted, as they have now done. I therefore made directions for the filing of the present interlocutory process, pursuant to which the matter comes before the Court today. 22As is apparent from s 465B, which I have set out above, on an application for substitution the Court is faced with three main issues. The first is whether the applicant is, in the words of the section, a person who might otherwise have so applied for the company to be wound up. The second is whether it is appropriate to make an order for substitution as referred to in subs (2). The third is a question of discretion: if the first two requirements are satisfied, whether, as a matter of discretion, such an order should be made. 23The issue as to whether the applicant for substitution might otherwise have applied for the company to be wound up is to be judged at the date on which the originating process claiming the winding-up order was filed: see Deputy Commissioner of Taxation and Sun Heating Pty Limited [1983] 2 NSWLR 78; (1983) 9 ACLR 314; and Bidald Consulting Pty Ltd and Miles Special Builders Pty Ltd (2005) 54 ACSR 228 where Barrett J, as his Honour then was, said (at [15]): The important point it seems to me is that in a case such as this involving a presumption of insolvency because of non compliance with a statutory demand the matter of standing as such is to be judged at the time the winding-up application is initiated Re William Hockley Ltd [1962] 1 WLR 555; [1962] 2 All ER 111. 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. 24Corporations Act, s 459P, confers standing to make an application for a company to be wound-up in insolvency on, relevantly, "(b) a creditor (even if the creditor is a secured creditor or is only a contingent or prospective creditor)". As I have said, the originating process for the winding-up order was filed on 2 October 2013, so that is the relevant date for ascertaining whether the present applicants would have had standing to apply for a winding up order. As at that date, they had the benefit of the costs orders made in their favour against Aquaqueen in the District Court proceedings. While those orders were originally for an unquantified amount, those amounts had been quantified by the certificate of assessment dated 2 September and released on 1 October 2014. As at 2 October 2013, therefore, the present applicants were creditors for a sum certain, being the amount certified in the certificate of assessment. The order of the District Court imposed the obligation to pay; the certificate of assessment quantified that obligation. Accordingly, the present applicants must be regarded as creditors as at 2 October 2013. 25It is true that the operation of the certificate was suspended between about 5 November 2013 (when the review application was filed) and until at least 11 December and perhaps 17 January 2014 (when the review determination was made and released respectively). Even so, that would leave the present applicants as the beneficiary of the costs order in the District Court, even if it would be regarded as unquantified during the period of suspension. In National Australia Bank Limited v Market Holdings Pty Limited (in liquidation) (2001) 37 ACSR 629, Young J, as his Honour then was, held (at [134]) that the beneficiary of an unquantified costs order was nonetheless a "contingent creditor" for the purposes of s 459P(a). Thus it seems to me that, even if the suspension meant that during the period of the suspension the status of the applicants was reduced to that of the contingent creditors, they nonetheless remained at least contingent creditors and, subject to a grant of leave, would have had standing to bring the proceedings. Once the suspension was removed by the review panel, any question of requiring leave evaporated. There was no requirement for leave as at the date the originating process was filed, since there was no suspension then in force and the amount of the costs had been quantified. 26It is of course well established that, as a matter of discretion, the Court will usually not make an order for substitution if the applicant's claimed debt is the subject of a bona fide dispute on substantial grounds: see CCV Investments Pty Limited v PNTA Aviation Pty Limited (1989) 18 NSWLR 295; South East Water Limited v Kitoria Pty Limited (1996) 21 ACSR 465; Tokich Holdings Pty Limited v Sheraton Constructions (NSW) Pty Limited [2004] NSWSC 527; In the matter C2C Investments Pty Limited [2012] NSWSC 1443, [22] and the cases there mentioned. 27It must be recognised that, at least in the context of s 459G, it has been accepted that where there is a judgment of a Court it is not open to argue that there is a genuine dispute as to an amount of a debt, even if an appeal is pending from that decision. Even if the view were taken that the application for review of the costs assessments certificate and the application to the District Court demonstrated that there was a dispute as to the quantum of the debt, there is no appeal from or application to set aside the original costs order of the District Court, and it cannot be doubted that there will, as a result of that, be some amount owing by Aquaqueen to the applicants. Accordingly, even if it were open to conclude that there were a genuine dispute as to the quantum of the applicants' debts, their status as creditors is not open to genuine dispute on substantial grounds. 28Aquaqueen's submissions and evidence have also referred to some offsetting costs orders in the District Court proceedings and amounts said to be due from the present applicants to Aquaqueen. The onus of establishing a genuine dispute on substantial grounds, even if it were available in the context where there is a judgment registered in the District Court, is on Aquaqueen. While it has pointed to amounts in the vicinity of between $10,000 and $20,000, Aquaqueen has not established that any setoff that it might have would approach extinguishing the amount of the applicants' debt. Accordingly, the first element of which I must be satisfied is established. 29The next question is whether it is appropriate to make an order for substitution, either because the application has not been proceeded diligently enough or for some other reason. As Barrett J observed in JPQS Pty Limited v Redfern Developments Pty Limited [2009] NSWSC 687, where the plaintiff no longer presses the winding up application because it has been paid off, it is almost inevitable that this issue must be resolved in favour of the applicant. Here, the plaintiff has been paid off and is no longer proceeding with the application. In those circumstances, the ground in s 464B(2)(a) is plainly satisfied. 30The final matter to be considered is the question of discretion, but as that is intertwined with the question of an extension of time and because there would be no utility in making a substitution order if the Court were not prepared to extend time for determination of the application, it is preferable to consider next the application for extension under s 459R. 31As I have said, s 459R(2) provides that the Court may extend the period within which an application for winding up an insolvency must be determined only if it is satisfied that special circumstances justify the extension. The concept of special circumstances in this context was considered by Hamilton J in Expile Pty Limited v Jabb's Excavations Pty Limited [2002] 194 ALR 138, (2002) NSWSC 851: [5] The word "special" is an ordinary English word. The relevant definition of it as used in the present context appears to me to be that given in the Macquarie Dictionary (3rd ed, 1997) as follows: "6 Distinguished or different from what is ordinary or usual: a special occasion" The thrust of that definition is that "special" is used in contradistinction to "ordinary" or "common". "Special circumstances" is an expression that has been used in other statutes. One must always bear in mind in an exercise of statutory interpretation that one is interpreting the particular words in the context of the particular statute. However, cases decided on other statutes, whilst they cannot govern the situation, indicate that, where "special circumstances" is used in contexts like the present, it is used in the sense of the definition which I have quoted from the Macquarie Dictionary. Its essential meaning is that it denotes a particular situation which can be regarded as distinguished from the ordinary or common runs of situations. It has been found to bear this meaning in a number of other statutory contexts of a widely varying nature: eg Re Norman (1886) 16 QBD 673 per Lopes LJ at 677; Re Hunter (A Bankrupt), Ex Parte Exclusive English Imports Ltd (In Liquidation) [1954] NZLR 747 per F B Adams J at 754; Clarks of Hove Ltd v Bankers' Union [1978] 1 WLR 1207 per Geoffrey Lane LJ at 1215; Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 per Wilcox J at 225; Lyon v Wilcox [1994] 3 NZLR 422 CA per Casey J at 431; Peninsula Watchdog Group (Inc) v Minister of Energy [1996] 2 NZLR 529 CA per Richardson P at 536. [6] The other thing that may be said about the meaning of the words "special circumstances" in this context is that there should be no exhaustive attempt to define or list the matters which may come within the rubric "special circumstances" as used here: Re Norman ibid; Springfield Nominees ibid. The discretion is a discretion to be exercised by the Judge on the view that he or she takes of all the circumstances of each case. Having said that, I should emphasise that one feature of s459R(2) is that an order may only be made under the subsection if the Court is satisfied that special circumstances exist and justify the extension. If no special circumstances exist, then that is an end of the matter. If there is nothing that can be characterised as special circumstances, the discretion cannot be exercised. If, however, special circumstances are found to exist, that does not compel or even necessarily authorise the exercise of the discretion. Those special circumstances must be found to justify the extension and whether or not an extension is granted is still within the general discretion of the Court, as emphasised by the word "may", which is the third word in s459R(2). 32See also Perpetual Nominees Limited v DY2 Pty Limited (2005) 56 ACSR 111; Re DIM Furniture Wholesale NSW Pty Limited (1998) 28 ACSR 407. The thrust of the reasoning in those cases, and in particular in Expile, is that "special" is used in contradistinction to "ordinary" or "common". Special circumstances need not be unique or extraordinary. Its essential meaning is that it denotes a particular situation which can be regarded as distinguished from the ordinary or common run of situations. There should be no exhaustive attempt to define or list the matters which may come within the rubric of the term. At least ordinarily, the relevant circumstances will relate to why it is that it has not been possible to determine the winding up application within the prescribed six month period. 33In this case, the answer to that question is straightforward. First, the proceedings were adjourned on the application of Aquaqueen to permit it to prosecute its application for leave to appeal to the Court of Appeal. Secondly, and perhaps most strikingly, a winding up order was made but then set aside when Aquaqueen ultimately paid out the petitioning creditor after the winding up order had been made. If those do not constitute special circumstances, I cannot conceive of a case that would. I am satisfied that there are special circumstances justifying the extension of the period within which the application for winding up must be determined. 34That leaves for consideration under both sections the question of discretion - that is to say, whether ,notwithstanding that ,grounds for making the orders are established, the Court should as a matter of discretion decline to do so. 35The most significant consideration in that respect is that Aquaqueen no doubt paid off the plaintiff's debt in the expectation that having done so, the winding up order would be set aside and the proceedings would be at an end. But while that is a significant consideration, however the expectation is more one which was really open to Aquaqueen, in circumstances where the interest of the supporting creditors had been manifest since November last year when they filed their notice of intention to appear, from their presence at the hearing before Black J, initially and from the circumstance that their ongoing interest was mentioned by the solicitor for the plaintiff at the conclusion of the hearing before his Honour. In essence, taking an objective view of what happened on that occasion, it would not have been reasonable to think that the supporting creditors would go away if the plaintiff were paid off. 36Moreover, the effect of making the substitution order would not necessarily be to make a winding up order. Aquaqueen will have the luxury of a second opportunity to rebut the presumption of insolvency, with the benefit of the judgment of Black J identifying the inadequacies of its attempt to do so on the last occasion. If Aquaqueen is indeed solvent, then it has an opportunity and judicial guidance as to what it needs to do to establish as much. If it is not solvent, then frankly it should be wound up. 37Next, the future course of the proceedings may well be influenced by what happens in connection with the District Court appeal. If the District Court does grant a stay of the costs determination - whether tomorrow or on some later occasion - that would as always be a very weighty consideration in this Court's decision as to whether or not the winding up application should be allowed to proceed, when the debt on which the petitioning creditor relies is a subject of a stay. Generally speaking, if a stay is in force the Court would not proceed to wind up the company. That course is not precluded to Aquaqueen by making an order for substitution. Even if a stay were not granted in the District Court, this Court often, though not invariably - adjourns winding up proceedings to permit an appeal from the underlying judgment to be resolved - just as it did when the application for leave to appeal was before the Court of Appeal. 38For all those reasons, it seems to me that the only proper exercise of discretion is in favour of making the orders sought. 39Accordingly, the Court orders that: (1)Pursuant to Corporations Act, s 465B, Titan National Pty Limited and Kathryn Wood-Weber be substituted as plaintiff. (2)Pursuant to Corporations Act, s 459R(2), the period within which the application initiated by the originating process herein must be determined be extended to 30 September 2014. (3)The defendant pay the applicant's costs of the interlocutory process. (4)The originating process be adjourned to 19 May 2014 at 9am in the Corporations Registrars list.

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