Complex Pty Limited v Auslat Properties Macquarie Waters Pty Limited; Auslat Properties Macquarie Waters Pty Limited v Complex Pty Limited & Anor

Supreme Court of NSW|2007-04-23|Before: Einstein J

CITATION : Complex Pty Limited v Auslat Properties Macquarie Waters Pty Limited; Auslat Properties Macquarie Waters Pty Limited v Complex Pty Limited & Anor [2007] NSWSC 435

HEARING DATE(S) : 23/04/07 JURISDICTION : Equity Division Technology and Construction List

CATCHWORDS : Practice and Procedure - Application for leave to amend - S440 D Corporations Act application for leave to proceed against company in administration - Principles which inform administration of a companies affairs

LEGISLATION CITED : Corporations Act 2001 (Cth) Building and Construction Industry Security of Payments Act 1999 (NSW)

Auburn Council v Austin Australia Pty Ltd (Administrators Appointed) [2004] NSWSC 141; [2007] NSWSC 130 Fielding v Vagrand Pty Ltd (in liq) (1992) 39 FCR 251 John Vouris Re; Epromotions Australia Pty Ltd v Relectronic-Remech Pty Ltd (In Liq) [2003] NSWSC 702 CASES CITED : Oceanic Life Ltd v Insurance and Retirement Planning Services Pty Ltd (in liq) (1993) 11 ACSR 516 Ogilvie-Grant v East (1983) 7 ACLR 669 Rowa Australia v Kalamazoo Logistics [2006] NSWSC 325 Vagrand Pty Ltd (in liq) v Fielding (1993) 41 FCR 550

Complex Pty Limited (Plaintiff 55068/06; First Defendant 55071/06) PARTIES : Auslat Properties Macquarie Waters Pty Limited (Defendant 55068/06; Plaintiff 55072/06) Helen Durham (Second Defendant 55071/06)

COUNSEL : Mr F Hicks (Plaintiff 55068/06; Defendant 55071/06) Mr M Christie (Defendant 55068/06; Plaintiff 55071/06)

SOLICITORS : Dutton Lawyers Plaintiff 55068/06; Defendant 55071/06) Gadens Lawyers (Defendant 55068/06; Plaintiff 55071/06)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY AND CONSTRUCTION LIST

Monday 23 April 2007 ex tempore Revised 2 May 2007

55068/06 Complex Pty Limited v Auslat Properties Macquarie Waters Pty Limited

55071/06 Auslat Properties Macquarie Waters Pty Limited v Complex Pty Limited & Anor JUDGMENT 1 There is before the Court a notice of motion brought by the plaintiff in proceedings 55071 of 2006 seeking an order that the plaintiff be granted leave to amend the amended summons and an order that the plaintiff be granted leave pursuant to section 440D of the Corporations Act 2001 to proceed with proceedings number 55071 of 2006. The application to amend the amended summons seeks to include a claim to a declaration that the plaintiff has an equitable lien upon the property of the first defendant to secure payment by the first defendant to the plaintiff of moneys referred to in paragraph 5 of the summons, that paragraph having read:

"An order for the repayment by the first defendant to the plaintiff of $415,349.27 which the plaintiff has paid to the first defendant arising out of or in connection with the determination and the judgment."

2 Both parties have relied upon affidavit evidence and each of the parties has furnished written submissions to the Court in support of their respective cases. 3 There is some history to the notice of motion and to the commencement of proceedings number 55071 of 2006 which is necessary to be travelled through in order to explain the Court's decision in relation to the motion. 4 The history of the project and the proceedings was generally, it seemed to me, reasonably efficiently outlined in the written submissions provided to the Court by Mr Hicks of Counsel who appears for Complex Pty Limited (Administrator appointed), [namely the defendant to these current proceedings]:

· To understand the position of the Administrator and Complex, it is necessary to consider the whole history of the project, the claims and the proceedings. · Complex seeks leave to refer and rely upon the affidavit of Blake Cannavo sworn 12 October 2006 in proceedings 55068 of 2006. · In or about September 2005, Complex was engaged by Auslat under a contract to undertake the construction of thirty (30) residential units and two commercial units as part of a development known as "Macquarie Waters" at the corner of Clarence and Munster Streets, Port Macquarie, in the state of New South Wales. · Work commenced in or about September 2005. · As noted at paragraph 11 of the adjudication determination of the second defendant the subject of these proceedings, the documentation issued by BMT & Associates, quantity surveyors for Auslat's financiers, indicates that 94% of the contract work had been completed as at 4 July 2006. · On or about 11 July 2006, Complex served a payment claim under the SOP Act for an amount of $678,994.02 (the "July payment claim"). · The July payment claim was the subject of an adjudication determination by the second defendant under the SOP Act dated 23 August 2006 (the "relevant determination"). It was determined that Complex was entitled to be paid the sum of $501,717.95. · Auslat failed or refused to pay the amount of the relevant determination. No application was made by Auslat in respect of the adjudication determination until the filing of the Summons in these proceedings on 23 October 2006. Importantly, as shall be addressed below, that Summons was only filed after Complex had commenced proceedings in respect of a subsequent payment claim. · On or about 28 August 2006, Auslat purported to issue a "Notice to Show Cause" under the contract. · On or about 4 September 2006, Complex responded the purported "Notice to Show Cause". · On or about 5 September 2006, judgment was entered by Complex in the District Court of New South Wales at Newcastle for the outstanding amount of $406,826.53 (the "judgment"), being the amount of the relevant determination (including the fees of the adjudicator) less the amount of $110,214.67 received on or about 18 August 2006. · On or about 7 September 2006, Complex suspended the works under the contract in circumstances where Auslat had failed or refused to pay the amount found to be payable by the relevant determination. · Subsequently, on or about 7 September 2006, Auslat purported to terminate the construction contract. · On or about 12 September 2006, Complex responded by: - asserting that the purported termination of the contract by Auslat was not valid and was itself a repudiation of the contract; and

electing to terminate the contract by rescission. · On or about 13 September 2006, Complex submitted a further payment claim under the SOP Act for an amount of $1,297,293.42 (the "September payment claim"). · The September payment claim encompassed: - further work undertaken since the July payment claim; and - unpaid amounts for works the subject of the July payment claim and the relevant determination. · Auslat did not serve any payment schedule in response to the September payment claim. · Complex received an amount of $149,860 in respect of the September payment claim on or about 4 October 2006, that amount being recovered by garnishee pursuant to the judgment. That is to say, Complex received payment by enforcement of the judgment in respect of the July payment claim that partially satisfied the September payment claim because the September payment claim incorporated the amounts outstanding by reference to the July payment claim and the relevant determination. · On 16 October 2006, Complex commenced proceedings in the Supreme Court of NSW (proceedings no. 55068 of 2006) for judgment upon its September payment claim pursuant to its statutory entitlements in circumstances where Auslat did not respond to the September payment claim by a payment schedule as required under the SOP Act. 5 The Court accepts the submission put by Complex, through Mr Hicks, namely that the 23 October application is seen to have been substantially defensive in that it was made as part of the answer raised by Auslat in respect of the obligation to pay for construction work the subject of the July payment claim, the relevant determination, the September payment claim and proceedings number 55068 of 2006. The judgment and payment.

6 It is also to be noted that on or about 5 September 2006 judgment was entered by Complex in the District Court at Newcastle for the outstanding amount of $406,826.53 in respect of the July payment claimant relevant determination. 7 It is also common ground that no application was made by Auslat in respect of the judgment entered, save for an application to pay by instalments, which application initially granted ex parte was subsequently refused on or about 15 November 2006 following evidence and submissions by the parties. 8 It is also common ground that there was no application for a stay on the judgment made in any proceedings. 9 It is common ground that the judgment has been discharged by payment. Mr Evan Economo in his affidavit includes a table at paragraph 14 which sets out the dates and amounts of payment, which amounts were paid following garnishee and refusal of the application to pay by instalments. The substantial proportion of the judgment, namely $254,850.97 was paid on or about 22 December 2006, approximately two months after the commencement of these proceedings and proceedings 55071 of 2006.

The administration and stay of proceedings 55068 of 2006 10 By orders made on 30 March 2007:

(a) Complex was to provide security for the costs of Auslat in proceedings no. 55068 of 2006 in the sum of $18,000;

(b) the security of $18,000 to be provided was to be effected by payment into Court by Complex by 5 April 2007;

(b) in the event that security was not provided, proceedings no 55068 of 2006 were and are stayed until Complex pays the sum of $18,000 into Court. 11 Complex was placed in administration under the Corporations Act (C'th) 2001 on 2 April 2007. The administrator is Paul Gidley of Ferrier Hodgson. As a result of the appointment of the Administrator, the amount of security was not paid into Court as required by the orders. 12 The administrator has held the initial creditors' meetings in Port Macquarie and Townsville in the week after Easter 2007. 13 The administrator is presently investigating and assessing the financial position of Complex and is seeking legal advice regarding the future conduct of proceedings no. 55068 of 2006. Obviously, subject to these analyses and advice, it is open to the creditors to resolve to pay the amount of security into Court and thereby enliven proceedings no. 55068 of 2006. The Corporations Act (Commonwealth) 2001 and the principles. 14 There was no serious issue taken at the Bar table about the principles which inform the administration of a company's affairs. In short: · Part 5.3A of the Corporations Act (C'th) 2001 is concerned with administration of a company's affairs. · Pursuant to section 435A, the object of part 5.3A of the Corporations Act (C'th) 2001 is to provide for the business, property and affairs of an insolvent company to be administered in a way that: (a) maximises the chances of the company, or as much as possible of its business, continuing in existence; or (b) if it is not possible for the company or its business to continue in existence, results in a better return for the company's creditors and members than would result from an immediate winding up of the company." · Pursuant to section 435C(2), the normal outcome of the administration of a company is that: (a) a deed of company arrangement is executed by both the company and the deed's administrator; (b) the company's creditors resolve under paragraph 439C(b) that the administration should end; or (c) the company's creditors resolve under paragraph 439C(c) that the company be wound up. · Pursuant to section 436E, the administrator must convene a meeting of the company's creditors within five business days after the administration begins, to decide whether there should be a committee of creditors, and if so, who are to be the committee's members, and to decide whether the administrator should be removed from office, and if so, who should be appointed in his or her place. · Pursuant to section 437A, the administrator has very wide powers concerning the company's affairs, being: (a) the control of the company's business, property and affairs; (b) the power to carry on that business and manage that property and those affairs; (c) the power to terminate or dispose of all or part of that business, and may dispose of any of that property; and (d) the administrator may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration. · The extensive nature of the administrator's powers is further addressed at section 442A, where, without limiting section 437A, it expressly provides that an administrator has the power to: (a) remove from office a director of the company; (b) appoint a person as such a director, whether to fill a vacancy or not; (c) execute a document, bring or defend proceedings, or do anything else, in the company's name and on its behalf; and (d) whatever else is necessary for the purposes of part 5.3A of the Corporations Act (C'th) 2001 . · Pursuant to section 438A, as soon as practicable after the administration of a company begins, the administrator must: (a) investigate the company's business, property, affairs and financial circumstances; and (b) form an opinion about each of the following matters: i. whether it would be in the interests of the company's creditors for the company to execute a deed of company arrangement; ii. whether it would be in the creditors' interests for the administration to end; iii. whether it would be in the creditors' interests for the company to be wound up. · Pursuant to section 439A, the administrator is to call a second meeting of creditors, which meeting is one intended by the legislation to be, at least usually, the meeting where the creditors deal with the outcome of the administrator's investigation, opinions and recommendations as to the creditors' interests. · To this end, section 439A(4) requires: (a) the notice given to a creditor under section 439A(3)(a) be accompanied by a copy of: i. a report by the administrator about the company's business, property, affairs and financial circumstances; ii. a statement setting out the administrator's opinion about each of the following matters: 1. whether it would be in the creditors' interests for the company to execute a deed of company arrangement;

whether it would be in the creditors' interests for the administration to end;

whether it would be in the creditors' interests for the company to be wound up; and his or her reasons for those opinions; and (b) if a deed of company arrangement is proposed, a statement setting out details of the proposed deed. · The conduct of the second creditors' meeting is dealt with by the following provisions: (a) section 439B(1) - at a meeting convened under section 439A, the administrator is to preside. (b) section 439B(2) - a meeting convened under section 439A may be adjourned from time to time, but cannot be adjourned to a day that is more than 60 days after the first day on which the meeting was held, even if no resolution under section 439C has been passed at the meeting; (c) section 439C - at a meeting convened under section 439A, the creditors may resolve: i. that the company execute a deed of company arrangement specified in the resolution (even if it differs from the proposed deed (if any) details of which accompanied the notice of meeting); ii. that the administration should end; or iii. that the company be wound up. 15 Likewise there was no serious issue taken at the Bar table in relation to the authorities which informed the proper approach to the policy of the Corporations Act insofar as administrators are concerned. Those authorities include the following. · In Auburn Council v Austin Australia Pty Ltd (Administrators Appointed) [2004] NSWSC 141, Bergin J observed at paragraph [24] that "the policy of the Corporations Act (C'th ) 2001 is to provide administrators with an immediate breathing space by the imposition of a stay on proceedings on foot at the time of the administration until leave is sought and possibly granted." · In John Vouris Re; Epromotions Australia Pty Ltd v Relectronic-Remech Pty Ltd (In Liq) [2003] NSWSC 702, at paragraphs [75] to [87] Campbell J set out an overview of the administration of a company under part 5.3A of the Corporations Law, which provisions are substantially replicated under the Corporations Act (C'th ) 2001. At paragraph [85], Campbell J stated that it was "[t]o give the administrator time to carry out his investigations, part of the purpose of which is that the creditors be put in a position to make a decision of the kind set out in section 439C", that significant restrictions are placed on: (a) winding up a company while it was in administration (section 440A);

(b) enforcing a charge on the company's property (section 440B);

(c) the owner or lessor of property that was used or occupied by the company taking possession of that property (section 440C); and

(d) litigation being begun or proceeded with against the company (section 440D); and

(e) on carrying out any enforcement process in relation to the property of the company (section 440F and 440G). · The principles as to leave were recently adumbrated in Auburn Council v Austin Australia Pty Limited (in liquidation) [2007] NSWSC 130, at paragraph [128] per Einstein J, where it was stated:

"Generally the principles which apply are to be found set out in Ford's Principles of Corporations Law co-authored by Professor HAJ Ford, Justice RP Austin and Professor IM Ramsay at [27.126]. The treatment of that subject includes the following propositions:

i. in circumstances where administrators/liquidators are appointed claimants lose the right to litigate in any court and receive instead a right to make a claim to be paid out of the estate;

ii. a stay is imposed to prevent harassment of the company in liquidation and to prevent its assets being wasted by unnecessary litigation;

iii. the court when granting leave to proceed against a company in administration/liquidation may impose conditions on the grant of such leave;

v. the term "proceeding" covers claims in both superior and inferior courts and will also include an arbitration;

vi. an applicant for leave to seek a remedy against the company who has a provable claim must persuade the court that there is some good reason on the balance of convenience why his or her claim against the company should be pursued by court action to judgment rather than by lodging a proof of debt with the liquidator;

vii. it is really a matter of which of two alternative procedures is more appropriate. In the circumstances Court action will normally carry the risk that the fund of company assets available to the creditors will be depleted by costs;

viii. on an application for leave the Court considers whether the claimant has a case involving a real dispute which is not futile and involve serious questions whether the action will impede orderly winding up and whether it will cause prejudice to the other creditors;

ix. the requirement that the case involve a real dispute is less strict than that the applicant should demonstrate a prima facie case;

x. there are many factors that the Court might consider, including the amount and seriousness of the claim, the degree of complexity of the legal and factual issues involved and importantly, the stage to which the proceedings, if already commenced, may have progressed [cf Ogilvie-Grant v East (1983) 7 ACLR 669 at 672]. [see generally Oceanic Life Ltd v Insurance and Retirement Planning Services Pty Ltd (in liq) (1993) 11 ACSR 516 at 522]. The respective contentions of the parties.

16 Mr Christie of counsel, who appears for Auslat, has supported the proposition that the leave sought to proceed against the administrators should be granted. He has relied in that regard upon a number of matters, including: · The proposition that the balance of convenience is a significant factor. · The proposition that the balance of convenience is strongly in favour of leave being granted. · Its submission that Auslat is a secured creditor which has an equitable lien upon the property of Complex by reason of the payment by Auslat of the adjudicated amount and the invalidity of the determination giving rise to the adjudicated amount. · Auslat's contention that by reason of the invalidity of the adjudication determination there has been a total failure of consideration and its submission that it retains an equitable proprietary interest in Complex's property. · Its submission that the primary relief sought by Auslat in the proceedings being a declaration that the determination is void may not be sought in any form and may not be sought in the administration or liquidation. · Its contention that Auslat is not seeking to ventilate the various final claims and debts between the parties in these proceedings either under the relevant construction contract or otherwise at law, but is simply seeking relief as a result of the payment of money to Complex in circumstances where on Auslat's case has no and never had any entitlement to be paid any such money under the Act. The defendant's submissions. 17 The defendant's submissions are that the interests of justice as between the parties and for the creditors, together with the balance of convenience, lead to the conclusion that leave should not be granted at the present time. The submissions of the defendant in this regard, which are accepted as of substance, are as follows: · The proceedings involving the September payment claim (no. 55068 of 2006) and the relevant determination (no. 55071 of 2006) have travelled together and were set down to be heard together on 26 and 27 April 2007. The proceedings travelled together because the parties accepted that they were intimately related. · A substantial submission of Complex that was to be made in respect of the proceedings concerning the relevant determination is that the whole proceedings are ultimately futile because, whatever the reasoning or approach of the adjudicator, Complex is entitled to be paid the same amounts for the same works pursuant to the statutory obligations of Auslat under the SOP Act in circumstances where Auslat did not respond to the September payment claim by any payment schedule. · Given that the proceedings in respect of the September payment claim were first in time, and have the capacity to render the proceedings about the relevant determination of August 2006 redundant, these proceedings were to be dealt with first at the hearing on 26 and 27 April 2007. · These matters are of importance in the context of the question of leave under section 440D of the Corporations Act (C'th) 2001 because Auslat must establish that it "has a case that involves a real dispute that is not futile and raises serious questions for decision" (per Austin J, Rowa Australia Pty Ltd v Kalamazoo Logistics Pty Ltd (in liq) [2006] NSWSC 325 (paragraph [9])). · As noted in Rowa Australia, this is the threshold for the granting of leave (also refer to the authorities noted by Austin J at paragraph [9], being Fielding v Vagrand Pty Ltd (in liq) (1992) 39 FCR 251, affirmed in Vagrand Pty Ltd (in liq) v Fielding (1993) 41 FCR 550)). · Auslat has not addressed itself to these matters in the evidence served in support of its application for leave. · At this time, proceedings 55068 of 2006 are stayed by an order pursuant to the provision of security for costs. The amount required to be furnished as security is $18,000. The amount was not paid into court by 5 April 2007 following the appointment of the administrator on 2 April 2007. · If the amount of security required to be furnished is provided, either by creditors or by contribution upon a resolution as to a deed of company arrangement passed at the second creditors' meeting pursuant to section 439 of the Corporations Act (C'th) 2001, proceedings 55068 of 2006 will no longer be stayed. · As noted above, proceedings no. 55068 of 2006 have the capacity to render proceedings no. 55071 of 2006 otiose, redundant or futile. · Should proceedings 55071 of 2001 be determined without reference to the matters raised by proceedings 55068 of 2001, there may be a substantial injustice or compromised outcome in terms of the claims between the parties and the position of the creditors of Complex. · There is no urgency or compelling reason why proceedings no. 55071 of 2006 should now be divorced from proceedings no. 55068 or heard on Thursday, 26 April 2007. Indeed, there is very good reason to conclude that to grant leave may provide an unfair advantage to Auslat, prejudice the creditors of Complex and circumvent the object and procedures under the Corporations Act (C'th) 2001. · Consistent with the principles and objects of the Corporations Law (C'th) 2001, these proceedings should be stayed or adjourned pending the second creditors' meeting pursuant to section 439 of the Corporations Law (C'th) 2001. · The creditors of Complex ought to be permitted the right to decide whether to enable Complex to continue in proceedings no. 55068 of 2006 by the provision of $18,000 as security for costs, as the outcome of these proceedings would then determine the utility or futility of proceedings no. 55071 of 2006. · In order to make that decision, it is essential that the administrator be permitted to conduct his enquiries and assessments, and report to creditors, in accordance with the relevant provisions of the Corporations Act (C'th) 2001. · This is particularly so where Auslat, by its Further Amended Summons, now seeks relief that would place it above or separate to all other unsecured creditors of Complex. · Moreover, the judgment in respect of the relevant determination has been satisfied and discharged. · Auslat has not commenced any proceedings seeking final or substantive relief in respect of any matter, dispute or claim arising out of or in connection with the contract, the works and the performance of either the contract or the works by Complex. In this regard, it is to be noted that it is now approximately seven (7) months since: (a) Auslat purported to terminate the construction contract; and

(b) judgment was entered for the amount outstanding by reference to the relevant determination. 18 It is reasonably clear that:

(a) advancing the proceedings as suggested by Auslat circumvents the objects and procedures under the Corporations Act (C'th) 2001 ;

(b) The Court infers that Auslat has no wish or intention to address the issues and claims between the parties on a final or substantive basis at least at the present time;

(c) the creditors of Complex may be disadvantaged if proceedings no. 55071 of 2006 are allowed to go ahead without reference to the relevant matters in proceedings no. 55068 of 2006;

(d) the court should be concerned that all matters as between the parties are determined together, particularly where the outcome of the proceedings first in time may render the proceedings second in time redundant or futile;

(e) the creditors should be permitted to decide, upon the assessment, report and recommendations of the administrator, as to whether to proceed with proceedings no. 55068 of 2006.

It may also be reasonably inferred that Auslat may obtain an unfair forensic or other advantage in the context of the claims and entitlements of the parties if proceedings no. 55071 of 2006 were to be determined without reference to the fact that Auslat is or may be liable to pay the same amounts for the same works as a result of a subsequent payment claim that was not answered by any payment schedule. Dealing with the matter. 19 At the end of the day the principled exercise of the relevant discretion is to deny to Auslat presently, an order giving it leave to proceed against Complex. The reasons why this is the principled exercise of the Court's discretion have already been squarely dealt with in the submissions put to the Court by Complex. Important amongst the general considerations and adding to the matters already set out it seems to me are the following considerations:

i. Both counsel have contended that likely, if both sets of proceedings were heard at the same time, the amount of court time would be unlikely to be more than a two day period.

ii. It is presumably certainly not out of the question that the list judge, depending upon the state of the list diary of fixtures, would be able to find a period of no more than two days certainly during the coming months if it eventuated that those days were needed. 20 It is very important it seems to me to avoid a circumstance where two obviously intimately interrelated pieces of litigation are bifurcated in terms of separate hearings. This is not only something which the Court strains against under the relevant provisions of the Uniform Civil Procedure Code and Act, but is also a commonsense consideration where a company in administration may be forced to litigate twice in situations where litigation is very expensive. 21 The proposition put by Auslat that it is a secured creditor and that there has been a total failure of consideration by reason of the payment by it of the adjudicated amount and the invalidity of the adjudication determination, [and that it thereupon retains an equitable proprietary interest in Complex's property] is by no means to be accepted without extraordinarily careful examination. The proposition is a complex one. It seeks to treat with underlying parameters of the proper approach to be taken to the relevant legislation. To the extent that Mr Christie has put forward that proposition as a mainstay in his submissions when contending that the equitable lien heavily favours a decision that the balance of convenience is in favour of Auslat, this is not immediately apparent to the Court. The proposition is simply too complex to be relied upon or taken as a given, although ultimately it may occur that there is substance in the proposition. 22 Next there is to be taken into account, as it seems to me, the real prejudice which Auslat may suffer if the Court vacates the hearing date now fixed for Thursday. The truth is that the only real suggestion of such prejudice which has come forward from Auslat is the contention that absent a hearing on Thursday of proceedings 55071 of 2006 vindicating Auslat's position in relation to the determination, it fears that the administrators may pay out by interim payment to creditors, funds in respect of which the proprietary interest may have been in Auslat. The Court put this concern to Mr Hicks who made quite clear that there would be no difficulty as he understood it, in an undertaking coming forward from the administrators to protect this position of Auslat. The transcript will record the precise terms of the proposed undertaking, but in general terms the undertaking would be that the administrators would not, without giving proper notice to Auslat, take any steps to denude the amounts held in the administration below those which are claimed by Auslat. The point of such an undertaking is to ensure that Auslat would have a proper opportunity to apply to the Court for injunctive relief in the event that any such payment, out by way of a partial distribution, was being envisaged. 23 To my mind, that is a very significant form of undertaking, which when one is looking at balance of convenience, favours the decision to vacate the Thursday hearing date presently. 24 Another condition which it seems to me should be imposed as a condition of vacating the hearing date on Thursday and the Court not presently proceeding to grant leave to proceed against the company in liquidation, is the power of the Court unilaterally to vary the order which had been made for security for costs. As I understand it, that order for the payment for security for costs was made on 30 March 2007 ordering payment of security in the sum of $18,000 and ordering a stay of proceedings 55068 of 2006 until such payment be made. As I understand the position, the order did not include any peremptory order such as that unless the $18,000 security amount be paid by a particular date, proceedings no 55068 of 2006 be automatically dismissed. To my mind, this Court having now the power to vary the original security for costs order by adding that parameter of automatic disposal, should proceed to do so. This then alleviates the difficulties which Mr Christie has referred to in his clients being unable to control the question of whether, if ever and on what date and timetable, the proceedings 55068 of 2006 may be reactivated. 25 To my mind the Court should [and I propose as a condition of the dismissal of the notice of motion insofar as the application to have leave to proceed is concerned] order that the defendant have four weeks from today in which to pay the security for costs funds and to order that in the absence of the defendant paying those funds within that period of time, proceedings no 55068 of 2006 stand automatically dismissed. The amount of money involved is very small in general terms concerning this litigation and I see no reason whatever why that measure of assistance to the Auslat parties should not come forward from the Court. 26 In those circumstances and for those reasons, the notice of motion will on the production of short minutes of order be resolved as follows: · The Court will stand over the application for the plaintiff to be granted leave to proceed with the proceedings to be re-engaged on a future occasion. · The Court will grant the plaintiff the leave to amend the amended summons in the form sought. · The Court will vacate the hearing date fixed for Thursday of this week. 27 All of these orders will only be made upon the formalisation of the undertaking from the administrators to which I have referred in relation to the giving of notice to Auslat and all of these orders will be conditioned upon the additional order to which I have referred giving the automatic dismissal of the proceedings 55068 of 2006 in the event of failure to pay within four weeks of today into court the security funds. 28 The short minutes should include costs of the motion being reserved, and a specific order that until finalisation of the costs situation with respect to the motion, each party is obliged to continue, as before, to jointly fund the external transcription of the hearing this morning. 29 The Court now vacates the Thursday hearing.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Building and Construction Industry Security of Payments Act 1999(NSW)

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