Distinctive FX 9 Pty Limited v Statewide Developments Pty Limited

Judgment 1HER HONOUR: The respondent has brought an application for security of the costs of an appeal brought by the appellant against a decision of Pembroke J. His Honour answered two separate questions in proceedings brought by the respondent for the removal of caveats lodged by the appellant over land of which the respondent was the registered proprietor: Statewide Developments Pty Ltd (in liquidation) (receivers and managers appointed) v Azure Property Group (Holdings) Pty Ltd [2012] NSWSC 616. The appellant had acted as a real estate agent in respect of the sale of the units and is owed a sum of approximately $1.6 M in commissions by the respondent. It had claimed a caveatable interest in the properties pursuant to an unregistered equitable charge arising from a charging clause in an agreement between the parties dated 22 April 2008. 2The separate questions related to the validity of the appointment of a new trustee of the respondent's secured lender. The respondent had been placed in liquidation by order made by Barrett J on 14 December 2011. Receivers and managers had been appointed to the respondent on 23 December 2011 by the trustees of the secured lender for the purposes of realising the lender's security. 3His Honour stated, at [4] of his judgment, that if the answers to the separate questions were "No", the appellant's attempts to upset the priority of the registered security interests would fail. His Honour had earlier noted, at [3], that if the registered security interests of the lenders had priority, there would be no surplus available for the appellant upon the sale of all of the assets. In that event, the mere existence of the appellant's equitable charge would not support the maintenance of the caveats. As his Honour answered both separate questions "No", orders were made for the withdrawal of the caveats. 4Although I heard argument on the application for security for costs, I raised a preliminary question whether the appeal was competent, given that the respondent was in liquidation. This raised the question as to the proper operation of the Corporations Act 2001 (Cth), s 471B, in respect of an appeal brought against a respondent which was the moving party in the original proceedings. 5I invited submissions from the parties on this issue. The respondent provided further submissions in response to this invitation. The appellant has not made any further submissions. 6There appears to be no authority directly on point. To the extent that there is any judicial comment on the question, I will deal with it below. The starting point, however, is with the Corporations Act, s 471B and provisions of the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005 (UCPR). 7The Corporations Act, s 471B provides: "471B Stay of proceedings and suspension of enforcement process While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with: (a) a proceeding in a court against the company or in relation to property of the company; or (b) enforcement process in relation to such property; except with the leave of the Court and in accordance with such terms (if any) as the Court imposes." 8"Originating process" is defined in the Civil Procedure Act, s 3(1) to mean "the process by which proceedings are commenced". The Civil Procedure Act, s 19(1) provides that, subject to the Act, "proceedings are to be commenced and carried on in the manner prescribed by rules of court". 9UCPR, Pt 6 regulates the commencement of proceedings. Rule 6.1(1) provides that except by the leave of the court, a party may not take any step in proceedings unless the party has filed the relevant initiating process. Rule 6.2(1) provides for the commencement of proceedings by the filing of initiating process. 10UCPR, Pt 51 applies to proceedings in the Court of Appeal. Rule 51.1(1) provides that Pt 51 "applies to any proceedings ... that are assigned to the Court of Appeal". Stated in general terms, appeals from a judgment in a Division of the Court are assigned to the Court of Appeal: Supreme Court Act 1970, s 101. Rule 51.1(3) provides that subject to Pt 51, the other provisions of the UCPR apply, "so far as applicable, to proceedings in the Court". Part 51, Div 4, deals with applications for leave to appeal. Division 1, r 51.2 is the interpretation provision for Pt 51. It provides: "... relevant originating process means: (a) if leave to appeal or cross-appeal is required - a summons seeking leave to appeal or a cross-summons seeking leave to cross-appeal, or (b) in any other case - a notice of appeal or cross-appeal." 11No question of leave arose in the proceedings brought at first instance, as those proceedings were prosecuted in the name of the respondent. In my opinion, however, the provisions of the Civil Procedure Act and the UCPR make it apparent that an appeal is a new proceeding. The proceeding is brought in a different court, namely, the Court of Appeal. Fresh originating process is required. Orders are made in the proceedings on the appeal, albeit that the orders may impact upon the orders made at first instance. 12In Skinner v Jeogla Pty Ltd & Ors [2001] NSWCA 15; 37 ACSR 106 Spigelman CJ observed in obiter remarks, at [17], that there was authority which suggested that the lodging of an appeal did not require leave: see Humber & Co v John Griffiths Cycle Company (1901) 85 LT 141; BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857. See also Keay McPherson: The Law of Company Liquidation, 4th ed, pp 246, 249. His Honour noted that those authorities were distinguishable but did not express a concluded view as to whether leave was required. Powell JA was inclined to the view that leave was not required. Ipp JA considered that the concession by the appellant that leave was required was readily arguable. Reference was also made to the question whether leave was required by Giles JA in Ingot Capital Investments Pty Ltd & Ors v Macquarie Equity Capital Markets Ltd & Ors [2007] NSWCA 338 in respect of the relevantly identical terms of the Corporations Law, s 500. His Honour also considered that it was unclear whether leave was required: see also Bevillesta Pty Ltd v D Tannous No 2 Pty Ltd [2010] NSWCA 277. 13Notwithstanding the uncertainty expressed in these authorities, I am of the opinion that when regard is had to the Civil Procedure Act and the UCPR, the bringing of an appeal (or, I should add, a summons for leave to appeal) is the commencement of a proceeding for which leave is required pursuant to s 471B. As no application for leave to proceed has been made, there is no power for the Court to deal with the application for security for costs. 14In those circumstances, I consider that I should declare the proceedings are stayed.