Golding v O'Ryan

Court of Appeal (NSW)|2019-10-18|Before: Bell P, Macfarlan JA, Gleeson JA, Hammerschlag J

Solicitors: Self-represented Applicants Chambers Russell Lawyers (First and Second Respondents) Corrs Chambers Westgarth (Third Respondent) File Number(s): 2019/313805 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity - Technology and Construction List Citation: [2019] NSWSC 1229 Date of Decision: 12 September 2019 Before: Hammerschlag J File Number(s): 2015/98239

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

BELL P: I agree with Macfarlan JA.
MACFARLAN JA: The active parties to these proceedings live in an old two storey, company title apartment building in Point Piper, Sydney. Mr and Mrs Golding occupy two apartments on the lower floor and Mr and Mrs O'Ryan occupy an apartment on the upper floor. The other apartment on the upper floor is occupied by the fourth defendant who has taken no part in these proceedings. The corporate owner of the building is the third respondent, whose share capital is owned by the building's occupants.
Disputes between the Goldings and the O'Ryans appear to have commenced in 2010 when Mr O'Ryan sent a memorandum to the Goldings setting out particulars of necessary repairs to, and maintenance of, the property. Ultimately, the O'Ryans commenced the present proceedings against the Goldings by way of summons filed in April 2015. The proceedings raised issues concerning nuisance and trespass, the proper administration of the company and necessary repairs to, and maintenance of, the property. On 23 October 2015 the parties entered into a Deed with a view to settling the proceedings. The Deed dealt, inter alia, with a proposed conversion of the company title to the property to strata title and with repairs and maintenance. It was expressed in general terms and left many matters for subsequent agreement and, as it transpired, disputation. As the parties still remain at loggerheads, the proceedings have not been settled.
Events that occurred in the period from October 2015 to December 2018 included dealings with the local council and attempts to agree on the terms of a building contract. No constructive or cooperative steps appear to have been taken thereafter before applications were made in the proceedings that led to Hammerschlag J ordering that the Company be wound up. Pursuant to leave granted by Hammerschlag J, the liquidators thereafter appointed themselves as administrators of the Company. This will enable them to impose levies on the Company's shareholders to raise funds for repairs and maintenance.
By summons filed on 8 October 2019 the Goldings sought leave to appeal to this Court from the winding up order of 12 September 2019 and sought a stay pending the hearing of the application. Leave to appeal is required from such an order: Supreme Court Act 1970 (NSW) s 101(2)(n). The Court granted expedition of the matter and fixed 18 October 2019 for the hearing of the application for leave and, concurrently, the appeal that would follow if leave were granted. The hearing proceeded on that day.
The Goldings' proposed Grounds of Appeal are as follows: "1 That Justice Hammerschlag was in error in making Orders on 12 September 2019 in that he did not hear complete evidence or submissions on the status of building works or strata conversion and what actions are still to be done to achieve those objectives (including those actions that require co-operation between the parties) or the interests of shareholders generally (noting, there are no other stakeholders in the activities of the Company from a public policy perspective). 2 That Justice Hammerschlag was in error in his decision of 12 September 2019 in that he referenced an exchange with the First Defendant at paragraph 16 of his decision (that he has described as constituting a concession) that presupposes that exchange occurred before the Orders were made, when the Orders were made before that exchange. 3 That Justice Hammerschlag was in error in not extending the stay of the Orders on 17 September 2019 in that he did not allow a real and substantial opportunity for the parties to negotiate a resolution of outstanding differences between them. 4 That Justice Hammerschlag was in error in permitting a voluntary administration procedure to be advanced for a solvent company following the time the Orders were made when the only reason to permit that procedure to be advanced arises from the costs and expenses of the joint liquidators of the Company."
During the hearing in this Court, Mr Jackman SC, who appeared for the Goldings, indicated that the procedural fairness point raised by Ground 1 was confined to a contention that the primary judge did not hear complete submissions on the topics described, and that the ground did not extend to a complaint concerning the exclusion of evidence.
As is apparent from the terms of the proposed Grounds of Appeal, in order to address them it is necessary to refer in more detail to the course of events before the primary judge.

The 6 September 2019 hearing

The presently relevant events at first instance commenced with the filing by the O'Ryans on 15 July 2019 of a notice of motion seeking the appointment of a receiver to the property of the Company, or alternatively specific performance of the Deed of 23 October 2015. The motion was fixed for hearing before Hammerschlag J on 6 September 2019.
In the course of the hearing on 6 September 2019, his Honour enquired of Mr Golding, who appeared for himself and Mrs Golding, why the appropriate relief was not that the Company be wound up. His Honour sought to explore whether the parties could resolve their differences, with the result that he stood the motion over for hearing on Thursday 12 September 2019. Pursuant to leave that his Honour granted, the O'Ryans amended their notice of motion to seek a winding up order in the alternative.

The 12 September 2019 hearing

At the 12 September 2019 hearing, Mr Corsaro SC, who appeared for the O'Ryans, read two affidavits and tendered five folders of exhibits to one of them. In response, Mr Golding read an affidavit of himself of 3 September 2019 and tendered the exhibits to that affidavit. Mr Golding also referred to written submissions that he had sent to his Honour's Chambers on the previous day. His Honour confirmed that he had received them and had looked at them. After a form of undertaking proposed by the O'Ryans was marked for identification, the parties proceeded to address his Honour. Having heard Mr Corsaro, his Honour indicated that he had in mind winding the company up. The following exchange then occurred between his Honour and Mr Golding: "HIS HONOUR: … You want to fight about it, you have been fighting since 2015, you can have it your own way. Mr Corsaro doesn't want me to wind it up either, I sense, reading between the lines, so his clients will be as equally unhappy as you, but this is entirely unworkable. If you people can't get on and you can't actually work something out to behave, all of you - and this is not directed at you; it is directed at everybody. If they can't behave like sensible and civilised human beings, the liquidator will just sell the property. The time has come. Finished. Over. FIRST DEFENDANT: My submission to your Honour would be that it would not be a just outcome. HIS HONOUR: What would be a just outcome; just to leave it as it is? FIRST DEFENDANT: For the parties to cooperate with each other and to have the work done. HIS HONOUR: I propose to wind this company up and I propose to stay the winding up until 2 o'clock today. And you can come to an arrangement between yourselves between now and 2 o'clock; and if you don't, the company is wound up. CORSARO: Thank you, your Honour. HIS HONOUR: Is there anything else that you want to say? FIRST DEFENDANT: Yes, your Honour. I submit that that would not be a just outcome. HIS HONOUR: Why? FIRST DEFENDANT: Because it would materially prejudice our interests as shareholders in the company by forcing a liquidation of the company at a-- HIS HONOUR: But you are in deadlock. It is unworkable. You obviously hate each other. Everybody hates everybody else's guts. FIRST DEFENDANT: I think that's-- HIS HONOUR: You can't live like this. It is a company title. It is old-fashioned. How long does it take to get a conversion through to strata? A day? FIRST DEFENDANT: Your Honour, I can take you to the evidence as to the fact that the parties have been cooperating-- HIS HONOUR: But this must happen every single day in the Eastern Suburbs. Luckily I don't live there. You have got the opportunity now. You can work it out with Mr Corsaro's clients. You can work it out. You can give proper undertakings that are agreed between the parties or I am going to wind it up. You can take your chances with the Court of Appeal if you want to. FIRST DEFENDANT: I would like the opportunity to make submissions, your Honour, on the evidence as to what has been happening over the last four years. HIS HONOUR: And what will that do; persuade me that you are in deadlock, that I should wind it up? FIRST DEFENDANT: No, that there is a course that can be pursued. HIS HONOUR: What is the course that you are proposing? What is it that you are going to do? FIRST DEFENDANT: Well, the difficulty, your Honour, is that since 5 December 2018 the plaintiffs have said that they wanted to resolve this through a court proceeding. HIS HONOUR: Yes. FIRST DEFENDANT: So for the last nine months there has been no cooperation and no contact with us until the commencement of the motion on 15 July. HIS HONOUR: But are you just proving to me that I should wind it up, Mr Golding? FIRST DEFENDANT: Well, as I-- HIS HONOUR: What do you want me to do? FIRST DEFENDANT: As indicated last Friday, your Honour, I am prepared to cooperate. For the last seven months, nine months, your Honour, there has been no contact between the parties pending this motion" (emphasis added).
After a discussion as to when a building contract for the repair and maintenance of work could be signed, his Honour pronounced a winding up order but stayed it until 2.05pm that day. After re-commencing at 2.00pm, he then stayed the winding up order until 12.45pm on the next day, 13 September 2019, after being told that some communications about the resolution of their disputes were occurring between the parties. In that context, the following exchange with Mr Golding occurred: "HIS HONOUR: By the way, I take it that you agree that the only reason why, if a winding up order is not to be made, is if the parties are able to reach some form of accommodation that allows this company to … survive in a manner which is logical and rational. Am I right? FIRST DEFENDANT: Yes, you are correct, your Honour."
His Honour then delivered an oral judgment which was made available in written form on 17 September 2019 ([2019] NSWSC 1229).
In that judgment, his Honour said that the parties were deadlocked and that their differences appeared to be "irresolvable" (at [11]). His Honour considered that "the only feasible solution was a winding up order, unless, contrary to lengthy history, the parties came to their senses and reached some accommodation which would enable the conversion to strata to occur and the building to be repaired" (at [15]). He said that this was "confirmed" by the exchange he had with Mr Golding which is quoted in [12] above. His Honour considered that the parties had had "more than adequate opportunity" to reach an agreement and that the Company should be wound up on the just and equitable basis provided for in s 461(1)(k) of the Corporations Act 2001 (Cth) (at [19]). He observed: "that a liquidator will be able to convert the company share title to strata title and, perhaps, preserve the substance of the parties' proprietary interests by, for example, distributing the strata units so created in specie. A liquidator would also have power (perhaps subject to the Court) to carry out what are obviously necessary repairs to a building falling into dilapidation. The building is in a highly desirable part of Sydney and no doubt very valuable."

The 13 September 2019 hearing

When told on 13 September 2019 that the parties were still communicating about a settlement, the primary judge extended the stay of the winding up order until 10.15am on 17 September 2019.

The 17 September 2019 hearing

On 17 September 2019 his Honour published in written form the ex tempore judgment he had given on 12 September 2019 (referred to at [13] above). The following interchange later occurred between his Honour and Mr Golding: "HIS HONOUR: You gave an unequivocal concession to the Court that the Company was inevitable that it be wound up unless you could come to an agreement and you have not come to an agreement. DEFENDANT: That is not my understanding."

The 3 October 2019 hearing

A notice of motion filed by the Goldings seeking a stay of the winding up order came before the primary judge on 27 September 2019 and was adjourned for hearing on 3 October 2019.
At the hearing his Honour referred to Mr Golding's description in his written submissions of his proposed grounds of appeal to the Court of Appeal against the winding up order made by his Honour. They were to the effect of those relied on before this Court (see [6] above). The following interchange then occurred: "HIS HONOUR: Now the reason why the winding-up order was made was because of a clear and unequivocal concession that you made which rendered it unnecessary to deal in great detail with the remainder of the evidence or submissions of the building works or strata conversion. You say that I erred in not hearing complete evidence or submissions on the status of the building works or strata conversions. What actions are to be done to achieve those objectives? Now the reason I didn't do that was because of the concession you made. You go on to say that 'I didn't hear complete evidence or receive submissions as to prejudice in making the orders to shareholders generally'. So one of the considerations I may take into account in granting or refusing a stay is my view of your prospects of appeal. Now in order to persuade me that you have any chance of success in an appeal you are going to have to now take me to the complete evidence and submissions on the status of the building works, to persuade me that notwithstanding your unequivocal concession, even if I granted a stay and you appealed, you had some prospect of success. So it's now incumbent upon you to take me to the complete evidence and submissions which you say I didn't take into account which would have made a difference and which would have perhaps on one view undermined the clear concession you made. FIRST DEFENDANT: Yes your Honour, I am more than happy to do so. HIS HONOUR: You have to do that. Start from scratch."
Both before and after this interchange occurred, Mr Golding made detailed submissions to his Honour and referred his Honour to a number of documents.
His Honour then delivered an ex tempore judgment dismissing the application for a stay ([2019] NSWSC 1349).
Having referred to Mr Golding's "agreement" quoted in [12] above, his Honour said the following in his judgment: "5 Golding does not suggest that the company is not deadlocked, although he repeatedly, but unconvincingly, referred to the possibility of a consensual resolution. I find that he is the obstacle to such a resolution. 6 Golding does not suggest that the building is not in need of repair, nor does he suggest that a building contract has not been prepared. 7 Because of the nature of his proposed complaint and even though his written submissions made no reference to his agreement, I have taken, perhaps unusually in a stay application, the course of hearing him on the full ambit of the evidentiary matters which he says I should have taken into account and giving him the opportunity to make further submissions as to whether the winding up was appropriate in the circumstances. 8 To that end I have had regard to affidavit evidence not before me on the hearing of the winding up application itself but which has been placed before me for the purposes of the stay application. 9 Golding's oral submissions took about two and a half hours. He recanvassed his written submissions of 11 September 2019 (incorrectly dated 18 September 2019) which were before the Court on the winding up application and to which I had regard. His references to evidence hardly, if at all, included anything not referred to in those submissions. He also provided further written submissions today. 10 The additional materials before the Court and Golding's submissions have served only to reinforce the conclusion that the winding up order was justified."

The 10 October 2019 hearing

On 10 October 2019 the primary judge granted approval to the liquidators to enter into a funding agreement, gave them leave to appoint themselves as administrators of the Company and made other related orders ([2019] NSWSC 1372).
When asked whether he accepted that he and the O'Ryans were "in deadlock", Mr Golding responded: "GOLDING: I accept we are in deadlock. The issue with the deadlock that arose at the end of last year is whether that should be resolved through discussion or should be resolved through litigation which was the O'Ryan's choice. HIS HONOUR: But you accept that you are and have been at least since then in deadlock? GOLDING: Objectively, yes."

The first proposed ground of appeal to this Court

This proposed ground (see [6] above) is in substance a complaint by the Goldings that the primary judge denied them procedural fairness by precluding them from making submissions on the matters referred to in the ground (the reference to "evidence" having, as I have noted at [7] above, been eschewed by the Goldings at the hearing in this Court).
The first point that needs to be made in response to this ground is that the Goldings had an opportunity, of which they availed themselves, to provide written submissions to the primary judge. There was no limit on the relevant topics with which the Goldings were entitled to deal in them.
The written submissions they provided on 11 September 2019 were 18 and a half pages in length and dealt in detail, inter alia, with the history of the disputes between the Goldings and O'Ryans. The so-described "General causes of delay" were dealt with over four pages. Headings to other submissions included "Draft building contract", "Additional fire order works", "Other building contractors", "Planning contractors", "Impact of threatened litigation", "Consequential submission on specific performance", "Unresolved issues concerning contracted works generally", "Driveway gates", and "Ficus vines".
These written submissions were supplied to his Honour the day before the hearing of 12 September 2019 and his Honour confirmed at the hearing on 12 September 2019 that he had had regard to them. He noted that also in his judgment of 3 October 2019 (at [9]).
In those circumstances, and particularly bearing in mind that the matter had been given an expedited hearing, his Honour was entitled to keep Mr Golding's oral submissions within a limited compass that avoided the repetition of matters that Mr Golding had already put to his Honour through his written submissions.
There were only two points recorded in the transcript at which Mr Golding said that he wished to say more than he did (see the emphasised portions of the transcript quoted in [11] above). The first occurred when he indicated that he could take his Honour "to the evidence as to the fact that the parties have been cooperating". The history of the dealings between the parties had however been fully described in Mr Golding's written submissions that his Honour had received and read. Moreover, even if Mr Golding's proposition as to co-operation was correct, it is difficult to see how demonstration of that fact could have assisted Mr Golding's case because even if there had been co-operation between the Goldings and O'Ryans in the past, it was plain that it had ceased.
On the second occasion Mr Golding indicated that he wanted the opportunity to make submissions "on the evidence as to what has been happening over the last four years". Again, this is a matter that had been fully canvassed in Mr Golding's written submissions and affidavit of 3 September 2019. Moreover, the primary judge was well justified in expressing real scepticism as to how such submissions could assist the Goldings by saying: "And what will that do: persuade me that you are in deadlock, that I should wind it up?"
The stark reality of the deadlock since at least late 2018 was confirmed by Mr Golding's concession on 10 October 2019 recorded at [23] above. Returning to the hearing on 12 September 2019, his Honour then questioned Mr Golding about his statement that "there is a course that can be pursued", to which Mr Golding gave no meaningful response except to indicate that the O'Ryans had declined to co-operate for the previous nine months.
In short, Mr Golding did not indicate to his Honour that there were any further oral submissions that he wished to make that might have been of assistance (and therefore of relevance) to the Goldings' case and which were not in any event already covered by their written submissions. On appeal his senior counsel in fact accepted that there was no reason to infer that Mr Golding would have said anything different to his written submissions of 11 September 2019 and his affidavit of 3 September 2019. In these circumstances, I do not consider that the Goldings were denied procedural fairness.

The second proposed ground of appeal to this Court

This proposed ground of appeal refers to the exchange between Mr Golding and his Honour quoted at [12] above.
Contrary to the proposed ground of appeal, the primary judge did not in his decision of 12 September 2019 erroneously proceed on the basis that the exchange occurred before he made the winding up order. Rather, his Honour said that his view that the "only feasible solution was a winding up order" was "confirmed by" the exchange (at [15]-[16]). This was neutral as to the point at which the exchange occurred. In any event, an exchange to a similar effect occurred before the winding up order was made (see the exchange commencing "[m]y submission to your Honour would be that it would not be a just outcome" referred to in [11] above). That exchange was in the context of considering what feasible alternative there was to winding up. The only alternative posited was co-operation but the prospect of that was remote at best.
It is true that some weeks later (at the hearing on 3 October 2019) his Honour appears to have remembered the sequence of events incorrectly but that is of no consequence as the bases upon which he made the winding up order on 12 September 2019 appear from the transcript and judgment of that date.

The third proposed ground of appeal to this Court

This proposed ground contends that on 17 September 2019 the primary judge erred in not extending the stay of the orders that he made on 12 September 2019 for the Company's winding up. In support, it is said that "he did not allow a real and substantial opportunity for the parties to negotiate a resolution of outstanding differences between them".
The assessment of whether the parties had had that opportunity was intrinsically a matter for his Honour's evaluative decision. This Court would intervene in relation to such an assessment only in the clearest of cases, particularly when the challenging party, as here, needs leave to appeal. This is not such a case. The evidence before his Honour and the conduct of the parties at the hearings before his Honour well justified his conclusion that the parties had had ample opportunity to resolve their differences. The soundness of his Honour's approach is illustrated by the fact that even though another month has passed since 17 September 2019, the parties are still in dispute.

The fourth proposed ground of appeal to this Court

At the hearing in this Court, the Goldings' senior counsel accepted that if they could not have the winding up order set aside, they would not be able to succeed under this fourth proposed ground of appeal. As they are not able to have the winding up order set aside, this ground need not be addressed.

CONCLUSION

As it is clear that the Goldings' four proposed grounds of appeal would fail if leave were granted, leave should be refused. The Goldings' application for leave to appeal should therefore be dismissed with costs.
GLEESON JA: I agree with Macfarlan JA.

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. Decision last updated: 25 October 2019

Supreme Court Act 1970(NSW)s 101(2)(n).

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