CCV Investments Pty Limited v PNTA Aviation Pty Limited

Judgment (ex tempore) 1HIS HONOUR: By interlocutory process filed on 9 April 2014, the applicants Titan National Pty Limited and Kathryn Wood-Weber, who hitherto have appeared in the proceedings as supporting creditors, apply pursuant to (Cth) Corporations Act 2001, s 465B, to be substituted as plaintiffs for the present plaintiff Wolfgang Weber and also, for an order pursuant to Corporations Act, s 459R(2), extending the period within which the application that the defendant Aquaqueen International Pty Limited be wound up in insolvency must be determined to 30 September 2014. 2Section 465B provides that the Court may by order substitute as applicants, in an application under s 459P that a company be wound up in insolvency, a person or persons who might otherwise have so applied for the company to be wound up but only if the Court thinks it appropriate to do so because the application has not been proceeded with diligently enough or for some other reason. Section 459R provides that an application for a company to be wound up in insolvency must be determined within six months after it is made, but that the Court may by order extend that period but only if the Court is satisfied that special circumstances justify the extension. 3The defendant has been represented in the proceedings before me, again, by its director Ms Penson, to whom I granted leave to appear, having regard to the circumstance that she was permitted to appear for the company in the related proceedings in the Court of Appeal and also in the proceedings before Black J. It should not be assumed this leave will continue indefinitely. There are reasons why the Court insists on companies being represented by lawyers, including that legal representation assists to ensure that attention is focused on the real issues that arise. 4The factual background to the present application, though somewhat lengthy, is not really controversial. I will summarise it as follows. 5The present proceedings arise out of litigation that commenced in the District Court of New South Wales in which Aquaqueen was the plaintiff and the present applicants and the present plaintiff Wolfgang Weber were the defendants. Those proceedings were heard by Williams DCJ, who on 6 June 2011 dismissed Aquaqueen's claim. On 24 June 2011 his Honour made an order that Aquaqueen and its director Ms Penson jointly and severally pay the costs of the first and second defendants in those proceedings, namely the present applicants, and on an indemnity basis from 26 February 2010, and also that, Aquaqueen pay the costs of the third defendant in those proceedings, the present plaintiff Mr Wolfgang Weber. 6Mr Weber obtained a certificate of assessment, which he had registered on 28 November 2012 thus procuring a judgment against Aquaqueen in the sum of $38,484.48. On 30 November 2012, he served a creditor's statutory demand on Aquaqueen for that sum. Aquaqueen made a series of applications in respect of that judgment. It had previously, by a motion filed in the District Court, unsuccessfully sought a stay of the orders made against it in the District Court. On 11 December 2012 Aquaqueen filed a motion in this Court seeking to have the judgment of 28 November 2012 set aside. On 17 December 2012 it applied pursuant to Corporations Act, s 459G, to have the statutory demand set aside. 7Those applications were heard by Garling J, who dismissed them on 5 September 2013 [see [2013] NSWSC 1181]. Notice of that judgment before it was delivered was not given to Aquaqueen, because of the use of an incorrect email address, and it was not until some days after the judgment had been delivered that Aquaqueen learnt that its application to set aside the statutory demand had been dismissed. Although there is some uncertainty as to just when Aquaqueen learnt of it, in the light of what has happened since that does not matter for present purposes. 8On 12 September 2013, that is to say seven days after the dismissal, the time for compliance with the creditor's statutory demand as extended by Corporations Act, s 459F, expired. Not having been complied with, a presumption that Aquaqueen was insolvent thereupon arose. 9Mr Weber on 2 October 2013 filed an originating process in these proceedings claiming an order that Aquaqueen be wound up in insolvency, relying on the presumption of insolvency arising from failure to comply with the creditor's statutory demand. Aquaqueen filed a notice of intention to appear and grounds of opposition on 11 November 2013. The present applicants, Titan and Ms Wood-Weber, filed a notice of intention to appear and, though it is on its face ambiguous, it must be inferred to support the winding up application, on 28 November 2013. They had, in the meantime, also proceeded to assessment of the costs orders made in their favour in the District Court. A certificate of assessment was issued by a costs assessor on 2 September 2013 in the sum of $111,416.95 and released by the Manager Costs Assessment on 1 October 2013. 10On 31 October 2013, Aquaqueen and Ms Penson, filed an application for a review of that assessment, and that application was referred to a review panel on or about 5 November 2013. The effect of the referral of the review application to a review panel, pursuant to (NSW) Legal Profession Act 2004, s 377, was that the operation of the costs assessor's determination was suspended. The review panel issued a certificate of determination of the review on 11 December 2013, which was released by the Manager Costs Assessment on 17 January 2014. The review panel affirmed the determination of the costs assessor, and ended the suspension of the costs assessor's determination pursuant to Legal Profession Act, s 377. 11In the meantime, on 5 December 2013, and notwithstanding that it would seem that the operation of the certificate was suspended at the time, the present applicants procured the assessor's certificate to be registered in the District Court, and a judgment of the District Court to issue conformably with the certificate. 12On 20 January 2014, Aquaqueen and Ms Penson filed in the District Court a summons by way of appeal from the decision of the review panel. That appeal has come before the Court on at least one if not two occasions so far. On at least one of those occasions, the respondents to the appeal, being the present applicants, did not appear. However, no stay has been granted by the District Court of the determination of the costs assessor or the review panel, and an appeal from a costs assessor or review panel's decision to the District Court does not operate as a stay, or suspension unless the court orders that there be a stay which at least so far it has not done. 13Meanwhile, Aquaqueen sought leave to appeal to the Court of Appeal from Garling J's decision. That appeal was dismissed by the Court of Appeal on 20 March 2014 [see [2014] NSWCA 101]. The originating process had by that time been before this Court on more than one occasion, and I had adjourned it until after the determination of the proceedings in the Court of Appeal to enable that application to be heard and determined in that Court. 14The application for leave to appeal having been unsuccessful, the originating process came before Black J for hearing on 25 March 2014. While many issues were raised in opposition to the winding up application, the principal issue of substance was, as it practically could only be in the circumstances, that of insolvency. His Honour concluded that Aquaqueen had failed to rebut the presumption of insolvency arising from non-compliance with the creditor's statutory demand, and accordingly, his Honour concluded that, all other requisite matters having been established by the plaintiff, a winding up order should be made. However, in order to afford Aquaqueen one last opportunity to do what it then said it would have done had it been given timely notice of Garling J's refusal to set aside the creditor's statutory demand, his Honour stayed the winding up order to enable Aquaqueen to pay the plaintiff's debt. His Honour said (at [28]): For these reasons, and subject to a significant qualification noted below, an order should be made winding up the company and appointing Mr Mark Hutchins and Mr Robert Kite who have consented to their appointment as its liquidators. The significant qualification is however that it seems to me that there is a case for staying that order for a short period to allow the company to discharge the debt by payment to Mr Weaver or his solicitors if it wishes to do so, so as to place it in the position that it would have been had it received notice of the judgment of Garling J on the day it was given and had the period permitted by s 459F of the Corporations Act to make such a payment after its application to set aside the statutory demand was dismissed. 15His Honour recorded that the plaintiff did not oppose the court taking such a course, and emphasised that the orders would take effect if the amount claimed was not paid to Mr Weaver or his solicitors within the period of the stay: In particular I have made those orders to reflect the opportunity which s 459F of the Corporations Act would have afforded to the company at the point of delivery of judgment by Garling J to make the payment of the amount claimed by the creditor which Ms Penson at one point in submissions suggested the company would have done had it received the email sending it the judgment. 16His Honour ultimately stayed the winding-up order until 11 April 2014. When giving judgment on 25 March, his Honour also made an order extending time for determination of the winding-up application to 30 April 2014. In that respect, his Honour simply said: I will also, for good order's sake, extend the time during which the winding-up application is to be determined to 30 April 2014 since the six month period specified in s 459R of the Corporations Act would otherwise expire in early April 2014. 17At the hearing before Black J on 25 March the applicants were represented initially, although not at the later part of the hearing. Ms Penson, on behalf of Aquaqueen, queried their standing and his Honour did not need to resolve it. In the latter part of the hearing, the solicitor appearing for the plaintiff sought to mention the appearance of the supporting creditors, and his Honour observed in the course of discussion and again in the judgment: I should add that the two supporting creditors who may be associated with Mr Weber, Titan National Pty Limited and Ms Wood-Weber, had filed a notice of intention to appear and the company disputed their right to appear. I should note for completeness that r 2.13 of the Supreme Court Corporation Rules authorises the Court to hear a creditor of a company in an application of this kind in an appropriate case. In any event the supporting creditors' solicitor was not able to be present to make submissions when the matter had to be adjourned to continue in the afternoon in a busy corporations list and I did not consider it necessary to determine the dispute as to the supporting creditors entitlement to appear when it would have made no difference to the outcome of the application. I note that Ms Van Munster sought to mention the supporting creditors' appearance in the course of the afternoon as she indicated she had been asked to do.