Lewis v Nortex Pty Ltd

Judgment 1HIS HONOUR : On 23 February 2000 notices of motion were filed in proceedings number 3081 of 1997 (now 25260 of 1997) being the proceedings for the winding-up of Nortex Pty Ltd (in liquidation) ("Nortex"). 2The notices of motion were filed by Peter Lawrence Lewis and Nicolette Lee Lewis, Nortex Co Pty Ltd and Kation Pty Ltd. Each notice of motion was an appeal from a determination by the liquidator of Nortex of proofs of debt lodged by the three moving parties in the winding-up of Nortex. 3In the case of Peter Lawrence Lewis and Nicolette Lee Lewis, the notice of motion appealed against the liquidator's rejection of the proof of debt insofar as he rejected the proof to the extent of $119,477.10. In the case of Nortex Co Pty Ltd the appeal was in respect of the liquidator's rejection of that company's proof of debt to the extent of $16,251.07, and in the case of Kation Pty Ltd the appeal was in respect of rejection of the proof of debt to the extent of $314,640.49. 4The notices of motion were amended on 6 March 2000. As amended, the respondents to the notices of motion were the liquidator and Lamru Pty Ltd. 5From at least 2001, there has been extensive litigation in this court between Mr Lamb and Lamru Pty Ltd on the one hand, and Mr Lewis and Kation Pty Ltd on the other hand, involving the affairs of Nortex. 6I am told that from October 2001, proceedings including the appeals filed in February 2000 from the liquidator's rejection of proofs of debt, were referred to Hamilton J for case management. No orders were made for the appeal proceedings to be stayed, pending the determination of the balance of the litigation. However, no step was taken in the proceedings so far as appears in the evidence on this application. The evidence on this application is that affidavits in support of the appeals were not filed by the three appellants. 7The dispute between Kation and Mr Lewis on the one hand, and Lamru and Mr Lamb on the other hand, which also involved the liquidator, related, I am told, in part to loan account balances of Kation and Lamru. 8The main proceedings were heard in a trial which took over 100 sitting days before Hamilton J. His Honour gave judgment on 23 May 2006. During that time the appeals from the rejection of the proofs of debt were in abeyance, except to the extent, which has not clearly appeared on the materials before me, that questions relevant to those proofs of debt were to be determined in the hearing before Hamilton J. 9On 27 July 2006 various proceedings were listed before Palmer J. Matters with which his Honour dealt included that various cross-claims and claims in other proceedings, which had been stayed, should be pursued. In the course of the hearing on that day, a question was also raised in relation to the three statutory appeals from the liquidator's rejection of proofs of debt. 10On that occasion his Honour was told by counsel appearing for the three moving parties that he was instructed by his solicitor that the matter had been resolved in principle between 2002 and 2004, and that was a matter that was being dealt with between his solicitor and the solicitors for the liquidator. The transcript records his Honour saying: " The primary parties involved are certainly Mr Baird's clients [the three moving parties] and the liquidator, but consequentially, there is an effect to Mr Motbey's client [Lamru] . Would Mr Baird be able to write to the solicitors for the liquidator with a copy to Mr Motbey solicitors, say, within seven days making clear the position? I think I can see Mr Baird nodding. All right we will leave it on the basis that Mr Baird will communicate with the solicitors for the liquidator and Mr Motbey's clients within seven days and making clear the position with the statutory appeals and for the clients for whom he acts. " 11A letter for that purpose was not sent until 20 October 2006. Mr Baird (then of Kemp Strang) wrote to the solicitor for the liquidator, Mr Ryckmans of Abbott Tout. He recorded in the case of the appeal by Peter and Nicolette Lewis: "On 29 September 1997 Mr and Mrs Lewis lodged a Proof of Debt in the winding up of Nortex Pty Ltd in the sum of $120,650.60, principally for long service leave and annual holiday pay. The Liquidator by Notice of Rejection of Formal Proof of Debt or Claim dated 11 January 2000 allowed the Proof of Debt in the sum of $1,173.50 and stood it over pending further details to the extent of $119,477.10. On 23 February 2000 our clients appealed against this decision by way of Notice of Motion filed in the original winding up proceedings (No. ED3081 of 1997). The Notice of Motion was amended on 6 March 2000. On 28 August 2000 the Liquidator wrote to our clients setting out the basis upon which he was prepared to finalise the Proof of Debt and the Appeal, the contents of which are self-explanatory. The Liquidator stated his intention to admit Mr Lewis' Proof of Debt for the additional amount of $38,346.15 and that of Mrs Lewis for the additional amount of $2,784.45. The writer's recollection is that in about November 2000 and confirmed in about April 2002, in telephone conversations between the late Mr Somerset of your firm and the writer, the acceptance by our clients of this amended decision of the Liquidator was conveyed. It would accordingly seem that the Appeal in regard to this Proof of Debt has been resolved." 12In relation to the appeal by Nortex Co Pty Ltd, Mr Baird said that he had been instructed that there had been meetings and discussions between representatives of the liquidator and Mr Lewis directly at which he understood a resolution in principle was reached in relation to " substantiation issues ", that is to say, a requirement by the liquidator for Nortex Co Pty Ltd to substantiate the parts of the proof of debt which had been rejected. 13Mr Baird said that he had not been a party to those discussions, but asked Mr Ryckmans if he would review the liquidator's records and confirm whether or not the matter had been resolved. 14In relation to the appeal by Kation, Mr Baird stated that most of the issues in the appeal were resolved, the principal issue outstanding being a claim for legal costs of $70,881.33. Mr Baird said that that issue had been the subject of judgments given by Hamilton J on 29 November 2004 and 23 May 2006. This appeared to resolve the matters raised by the liquidator. 15In relation to an amended or updated list of claims submitted by Kation, Mr Baird said that he understood those matters had been subsequently discussed and resolved between the liquidator and Mr Lewis directly but would appreciate confirmation of that and as to the terms of the resolution reached. 16A copy of that letter was sent to the solicitors for Lamru. There was no response to the letter. 17So far as the evidence on this application reveals, nothing further was done in the appeals from the liquidator's rejection of the proofs of debt. 18There were appeals and cross-appeals from the judgments of Hamilton J to the Court of Appeal, and an application to the High Court for special leave to appeal from the Court of Appeal's orders. The application for special leave to appeal was refused by the High Court in July 2010. Orders to give effect to the Court of Appeal's determination were made on 23 July 2010. These orders included a declaration as to the balance of the loan account of Kation with Nortex as at the date of the commencement of the winding-up. 19On 24 August 2010, Lamru (which it will be recalled is a party to the appeals from the liquidator's rejection of proofs of debt) filed a notice of motion seeking orders that the appeals be dismissed for want of prosecution pursuant to r 12.7 of the Uniform Civil Procedure Rules. Application was also made that the appeal brought by Kation be summarily dismissed pursuant to r 13.4. In the alternative, Lamru sought directions for the progress of each appeal. 20Associate Justice Macready dealt with that application on 9 November 2010. According to the transcript of his Honour's reasons and the associate's record of proceedings, his Honour made orders in accordance with paragraphs 3, 5 and 7 of the notice of motion of 24 August 2010 namely: "3. An order that pursuant to UCPR 12.7 that the Statutory Appeal brought by Peter and Nicolette Lewis be dismissed for want of prosecution; ... 5. An order pursuant to UCPR 13.4 that the Statutory Appeal brought by Kation Pty Limited be summarily dismissed; and ... 7. ... directions for the progress of the Statutory Appeal brought by Nortex Co Pty Limited." 21At least the last order appears to be a typographical mistake. The case has been argued on the basis that his Honour also dismissed the statutory appeal brought by Nortex Co Pty Ltd pursuant to r 12.7 of the Uniform Civil Procedure Rules for want of prosecution. 22His Honour's reasons also suggest that the appeal brought by Kation was dismissed pursuant to r 12.7, and not pursuant to r 13.4. Again the hearing before me has been argued on that basis. 23Having said that, the notice of motion of 24 August 2010 only sought dismissal of the appeal brought by Kation pursuant to r 13.4. 24The primary judge gave short ex tempore reasons for the order ( In the matter of Nortex Pty Ltd , 9 November 2010, unreported, no medium neutral citation). After referring to part of the history of the matter, his Honour said: "What was required was that the appellants in those appeals were to advise their intentions in respect of unresolved statutory appeals by 3 August. That did not occur and, on 24 August, there was a reminder letter. A letter from Kemp [Strang] to Abbott Tout referred to the position regarding the appeals and seems to indicate that there might have been some acceptance or agreement about the disposition of the appeals. That request was made for the liquidator to have a look at his records and see if that might be in fact the situation. In fact what has happened is that although the request has been repeated the liquidator's stand simply put to the Court today is that if there had been any such agreement, it would have been acted upon long before now. Although there have been appeals to the Court of Appeal after the first instance judgment, even those appeals should have been resolved, apart from a few minor matters, by final orders in July of this year. I have case managed these proceedings and they have been before me a number of times. The final hearing of this particular matter has proceeded before me today. The Lewis interest[s] have suggested that the matters not be dismissed. Nothing is said about how the Lewis interests propose to proceed in this matter. Statements are made about it. There is no evidence of any agreement put forward. If there was an agreement then they would have had knowledge of it. If there was an agreement the matter could have been dealt with by agreement. It seems to me there is no willingness to pursue the appeals and, accordingly I make orders 3, 5 and 7 in the notice of motion of 24 August 2010." 25It appears that Lamru's notice of motion of 24 August 2010 was brought without its first having delivered a letter prior to the application suggesting a timetable for the prosecution of the appeals. So far as the evidence reveals, neither the appellants nor Lamru took any steps to progress the appeals, other than the appellants, by their solicitors Kemp Strang, enquiring of the liquidator as to whether the liquidator agreed that agreements had been made for the resolution of each of the appeals. 26After service of the notice of motion, the appellants' solicitors corresponded further with the solicitors for the liquidator. On 30 September 2010, the appellants' solicitors wrote to Mr Ryckmans asking to be advised as to the liquidator's position in respect of each of the proofs of debt. Mr Chapman of Toomey Pegg, the solicitors presently acting for the appellants, wrote: "With reference to the attached letter from Kemp Strang: