1 MASTER: This is the hearing of an interlocutory application which was made on 18 June 2001 which seeks to review an order by the Registrar which was made on 17 May 2001. The order related to the payment of costs when the Registrar ordered the defendant to pay the plaintiff's costs. The proceedings were winding up proceedings against the defendant company. They were effectively abandoned and dismissed on 17 May as the defendant produced evidence of solvency sufficient to satisfy the plaintiff. Earlier there had been a statutory demand in respect of which there was no application to set aside the payment. Thus, the presumption of insolvency applied.
2 The course of the proceedings before the Registrar appears to be somewhat unfortunate. The Registrar asked one or two questions when he was asked to deal with the question of costs and then apparently refused to receive a chronology from the defendant's counsel and heard no further submissions. What that led to was that the Registrar decided the question of costs without regard to an affidavit that had been filed specifically to deal with the question of costs and also without the chronology and the benefit of submissions that were intended to be made.
3 The evidence shows that there is far more that was relevant than the mere matters that the Registrar had regard to, namely whether the defendant had applied to set aside the statutory demand. It is unfortunate because there are further costs incurred in this appeal.
4 The plaintiff was a subcontractor on a building project at Kings Cross. According to the defendant it was the developer in respect of that project and it says that a company, Total Concepts Pty Ltd, was the builder. I will deal with some of the chronology of the relevant events before moving on to the matter.
5 By the end of the year 2000 there seemed to be disputes about work being carried on and also about the lack of payment. On 4 December there was some service of claims under the Building and Construction (Security of Payment) Act which the defendant ignored. If the view which it took of the contractual arrangements be right, then it was entitled to so ignore the claim.
6 On 8 December other proceedings were commenced in this Court - 4959/00 - that sought the return of building equipment and materials. In the course of those proceedings in an affidavit of 9 March 2000 Mr Davies, a director of the defendant, made it perfectly clear that the defendant was of the view that there were never any contractual arrangements between the plaintiff and the defendant for the supply of services or materials. Ultimately those proceedings were discontinued by consent and there seems to be therefore some difficulty in relying upon these disputes in relation to the present proceedings.
7 On 7 February the statutory demand was served on Mr Davies, a director of the company, and a copy sent by mail to the registered office. The copy sent by registered mail was returned as the office had been changed. Mr Davies apparently did not bother to look at the envelope which he was given and simply handed it on.
8 On 21 February the plaintiff filed and served a statement of liquidated claim in the District Court naming the present defendant as a defendant. The amount claimed included the debt referred to in the statutory demand. The time for compliance with the statutory demand expired on 28 February and no application was made to set it aside. The defendant started to do something in March. On 6 March in correspondence it said that it was going to apply to set aside the demand and allege a genuine dispute and that it proposed to defend in the District Court proceedings. Three days later it also set out the basis for suggesting that there was no debt due by the defendant and seeking to clarify the date on which the demand was served. It then made some statements which were to the effect that even if the time had expired, it intended to dispute the debt on the issue of the petition. It said that if the genuine dispute is found, they would seek an order for indemnity costs. That produced a response on the 14th saying that the demand was served on 7 February and the company was going to be wound up.
9 On 23 March the defendant's solicitors replied once again presenting the stance which it had set out before, namely, that there was a genuine dispute. This was irrelevant at this stage.
10 On 27 March the defendant sought further and better particulars of the District Court statement of claim.
11 On 12 April 2001 the application to wind up was lodged and it relied upon the failure to comply with the statutory demand.
12 On 26 April there was a letter in which the defendant sought an undertaking not to advertise, which was given, and raising the same matters it raised before.
13 On 27 April there was a response in which the plaintiff reiterated its position that the defendant had consistently refused to pay the plaintiff and also referred to the fact that the defendant consistently failed to suggest that the plaintiff's claims were in dispute. According to the correspondence and the affidavit, that was not correct. They had been disputed on several occasions.
14 The submissions for the defendant raised a number of matters which were put on the wide question of what were the appropriate considerations for ordering costs. They included reasons for the failure to apply to set aside the demand and the probably difficult question of whether or not it was ever going to be open to the defendant to assert a lack of standing to bring the proceedings. That difficulty probably arose because of the operation of 459 S and the fact that the actual amount of this debt was not relevant to solvency.
15 Importantly, they also raised the question as to whether there was an abuse of process by the issuing of parallel proceedings. As is perfectly apparent from the chronology, the proceedings to recover the same debt were filed on 21 February and were well advanced with detailed requests for particulars. A defence had not been filed by 12 April when the application to wind up was lodged in this Court.
16 There are a number of cases that deal with the principles in this respect. Importantly in Portfolio Projects Pty Ltd v Oakes Building Co Pty Ltd (1987) 5 ACLC 911 Needham J said:
"It seems to me to be an abuse of the process of this Court to make a claim for that sum of money that is included in the Common Law claim and seek to wind up the company in parallel proceedings in the Equity Division because of the failure to pay the plaintiff ... ".