Plaintiff v Defendant

2 Orders were last made in these proceedings on 5 December 2019. The Companies were ordered to file material relating to solvency by close of business on 10 December 2019. A further guillotine-type order of the same date precluded the Companies from filing that material after 10 December 2019 without leave. This was the latest of a number of extensions which I or other Judicial Officers of this Court have granted the Companies to file their evidence. The orders of 5 December 2019 were not complied with. No persuasive reason was given.

3 The proceedings had been fixed, by previous orders made on 15 November 2019, for trial on 11, 12, 13, 16 and 19 December 2019 on all issues. Although extensions of time for the filing of affidavits relating to solvency were given at that time and as referred to below, the trial dates were not vacated. On 12 December 2019, the proceedings came on before me for a directions hearing. It was anticipated that evidence of solvency would have been filed. The purpose of the directions hearing was to determine whether the plaintiffs needed to respond to the evidence of solvency and if so whether this would affect the trial from proceeding on the remaining allotted dates. All parties anticipated or assumed that it would proceed.

4 The material, not having been filed., caused Senior Counsel for the Companies to submit that the trial should preferably commence early in the new year and that the Companies be permitted to file evidence of solvency. The submission was rejected. If the extension was granted, and the material filed, the plaintiffs would have required time to consider the material, and if necessary, put on financial evidence of their own, (as well as prepare for any cross-examination). The submission, if acceded to, would have required vacating the trial until at least February 2020, which is a most undesirable course in the circumstances.

5 For the reasons that follow, the proceedings will proceed to trial on 16 December 2019.[2] The Companies have not been 'shut out' from presenting their case, as Senior Counsel put it. The Companies have been provided with multiple indulgences, extensions and adjournments, many of which, could rightly have been refused. At a certain point there can be no further delays. The flagrant attitude exhibited by the Companies to this litigation, and associated lack of any cogent reason for such extension and adjournment, justifies this all the more so. In modern litigation, there is strong public interest in favour of the efficient utilisation of the Court's resources. There is a further public interest in the prompt determination of winding up proceedings, as to avoid the risk of a company which may be insolvent from incurring liabilities which it is unlikely to satisfy. The trial, in each case, will proceed on all issues, on 16 December 2019. A review of the procedural history and the cases makes for an entirely compelling case for there to be no further indulgences and no further delays.

6 In Civil Procedure Victoria, the learned authors state:[3]

The consideration of an application for an adjournment may involve the assessment of competing claims by litigants in other cases awaiting hearing in the list and of the importance for the proper working of the listing system in the court of adherence to dates fixed for hearing. ... That is especially the case of a proceeding in a special list such as the Commercial Court where an adjournment might impede the efficient operation of the list to the detriment of other litigants. ... In granting an adjournment "the judge of a busy court is [also] entitled to consider the effect of an adjournment on court resources and the competing claims by litigants in other cases awaiting hearing ... as well as the interests of the parties":

Notwithstanding the imperative to dispose of cases expeditiously that underlies the case management system, justice is the paramount consideration. Courts should be astute to ensure that expediency is not permitted to usurp justice by refusing to grant an adjournment at the instance of a party if that will significantly interfere with the ability of that party to present his or her case effectively: ... There are, however, limits to the exercise of discretion in favour of an adjournment, for instance, where an adjournment may be sought to enable an amendment of a pleading at trial. The court may need to take account of any delinquency of the litigant seeking the adjournment, the reason for the adjournment, the effect not just on the parties to the proceeding but on other parties to litigation before the court and the prejudice to the other party; ... In Aon, the High Court critically reviewed Queensland v J L Holdings Pty Ltd, above, in light of rules changes and changed attitudes to case management principles, confining its application to its particular facts and the rules of court then in application. For discussion of the relevance of the overarching purpose under the Civil Procedure Act 2010 in relation to applications for adjournment, (citations omitted and emphasis added)

7 In Eaton v ISS Catering Services Pty Ltd, the Court of Appeal (Neave JA, Hargrave and Dixon AJJA) said:[4]

In the past, appellate courts more readily accepted that an adjournment should be granted if its refusal would prevent a party making out his or her case. That predisposition must now be qualified in light of the importance which is now accorded to case management principles, following the High Court's decision in AON, the subsequent enactment of the Civil Procedure Act 2010, and the further authorities mentioned below. Although the "overarching purpose" of the Act and the rules includes the fair and just resolution of disputes, it also includes the efficient and timely resolution of disputes. So parties cannot casually ignore case management orders or directions. (emphasis added)

8 While Aon Risk Services Australia Ltd v Australian National University (Aon), [5] concerned an application for an amendment, the principles stated are nonetheless applicable, because that application would have resulted in adjourning or vacating the trial. In that case, ANU was engaged in litigation with its insurers, and insurance broker, Aon. ANU reached a settlement with the insurers during the course of the trial of the proceeding. It sought an adjournment of the trial and foreshadowed an application for leave to amend that claim to allege that, under a different contract for services, Aon had been obliged to ascertain and declare correct values to the insurers and provide certain advices to ANU regarding insurance. At first instance, Gray J granted leave to amend on the basis the ANU sought to raise real triable issues and the objectives stated in the Court Procedures Rules 2006 (ACT), of the minimisation of delay and cost of proceedings. An appeal by Aon was dismissed by a majority of the Court of Appeal. An appeal was then allowed by the High Court.

9 Gummow, Hayne, Crennan, Kiefel and Bell JJ said:[6]

Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a "just resolution" is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs.

In the past it has more readily been assumed that an order for the costs occasioned by the amendment would overcome injustice to the amending party's opponent. ... The modern view is that even an order for indemnity costs may not always undo the prejudice a party suffers by late amendment. In the present case it is difficult to see that such an order could be sufficient compensation, given that AON would be required to again defend litigation which was, effectively, to be commenced afresh.

The views expressed by Lord Griffiths in Ketteman v Hansel Properties Ltd, that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants, are also now generally accepted. In Bomanite Pty Ltd v Slatex Corporation Aust Pty Ltd, French J said of Bowen LJ's statements in Cropper v Smith:

... That may well have been so at one time, but it is no longer true today ... Non-compensable inconvenience and stress on individuals are significant elements of modern litigation. Costs recoverable even on an indemnity basis will not compensate for time lost and duplication incurred where litigation is delayed or corrective orders necessary.

...

An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in JL Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases. On the contrary, the statements are not consonant with this court's earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future.

A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate.

In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings.

Rule 21 of the Court Procedures Rules recognises the purposes of case management by the courts. It recognises that delay and costs are undesirable and that delay has deleterious effects, not only upon the party to the proceedings in question, but to other litigants. The Rule's objectives, as to the timely disposal of cases and the limitation of cost, were to be applied in considering ANU's application for amendment. It was significant that the effect of its delay in applying would be that a trial was lost and litigation substantially recommenced. ... (emphasis added)

In the proper exercise of the primary judge's discretion, the applications for adjournment and amendment were not to be considered solely by reference to whether any prejudice to AON could be compensated by costs. Both the primary judge and the Court of Appeal should have taken into account that, whatever costs are ordered, there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system. Given its nature, the circumstances in which it was sought, and the lack of a satisfactory explanation for seeking it, the amendment to ANU's statement of claim should not have been allowed. The discretion of the primary judge miscarried. (emphasis added)

...

The discretion is exercised in the context of the common law adversarial system as qualified by changing practice. But that is not a system which today permits disregard of undue delay. Undue delay can undermine confidence in the rule of law. To that extent its avoidance, based upon a proper regard for the interests of the parties, transcends those interests. Another factor which relates to the interests of the parties but transcends them is the waste of public resources and the inefficiency occasioned by the need to revisit interlocutory processes, vacate trial dates, or adjourn trials either because of non-compliance with court timetables or, as in this case, because of a late and deliberate tactical change by one party in the direction of its conduct of the litigation. These are matters which, even under the Australian versions of the Judicature Act system, unaffected by the sequelae of the civil procedure reforms of 1998 in the United Kingdom, are to be regarded as both relevant and mandatory considerations in the exercise of the discretion conferred by rules such as r 502.

Recognition of the public interest in the administration of civil justice procedures in Australia and the United Kingdom pre-dates the Woolf Report and its attendant reforms. In Dawson (t/as Goodvibes Yachts) v Deputy Commissioner of Taxation, King CJ acknowledged the responsibility of judges to ensure, "so far as possible and subject to overriding considerations of justice", that the limited resources which the State commits to the administration of justice are not wasted by the failure of parties to adhere to trial dates of which they have had proper notice. In a late amendment case considered by the House of Lords in 1987, there was a marked departure from the approach of Bowen LJ in Cropper. Lord Griffiths required that judges considering amendments weigh in the balance:

... the pressure on the courts caused by the great increase in litigation and the consequent necessity that, in the interests of the whole community, legal business should be conducted efficiently.

The same indulgence could not be shown towards the negligent conduct of litigation as might have been possible in a "more leisured age". That approach was followed by Sheppard J in a revenue case heard in the Federal Court. And in the New South Wales Court of Appeal in GSA Industries, Samuels JA said that:

... the emollient effect of an order for costs as a panacea may now be consigned to the Aladdin's cave which Lord Reid rejected as one of the fairy tales in which we no longer believe.

The approach reflected in these authorities was applied by a majority of the Full Court of the Federal Court in Bomanite Pty Ltd v Slatex Corp Aust Pty Ltd.

...

It might be thought a truism that "case management principles" should not supplant the objective of doing justice between the parties according to law. Accepting that proposition, JL Holdings cannot be taken as authority for the view that waste of public resources and undue delay, with the concomitant strain and uncertainty imposed on litigants, should not be taken into account in the exercise of interlocutory discretions of the kind conferred by r 502. Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification, whether they be for adjournment, for amendments giving rise to adjournment, or for vacation of fixed trial dates resulting in the resetting of interlocutory processes. (emphasis added).

11 Furthermore, as Gummow, Heydon, Crennan, Kiefel and Bell JJ said in Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) the 'evident policy of [Part 5.4 of the Act] is that there be a speedy resolution of applications to wind up in insolvency'.[8] It has long been recognised that there is a particularly forceful public interest in favour of 'determining applications to wind up insolvent companies promptly and avoid[ing] injustices that may be caused by the continued trading of such companies.'[9] At this point in time, the presumption of insolvency operates in relation to each of the Companies. The very crux of the issue is that no evidence, other than assertion, has been adduced to displace that position. This public policy has all the more strength, given that the Companies are (or Kornucopia at the very least) tenants in a substantial number of properties in the Docklands area. They will continue to accrue rental liabilities.

12 It is necessary to set out the procedural history of this litigation, in order to gain an appreciation of the numerous extensions, adjournments and indulgences which have been granted on the Companies' numerous applications. When one gets to the end of this chronology, the decision is obvious and compelling.

13 On 21 June 2019, Chen filed an originating process seeking orders winding up Kornucopia in insolvency pursuant to s 459P of the Corporations Act 2001 (Cth) (the Act). On 10 July 2019, Madgwicks filed originating processes seeking orders winding up each of Efektiv and AGV in insolvency.

14 The Kornucopia proceeding came before Hetyey JR on 24 July 2019. Hetyey JR permitted Shivesh Kuksal (Kuksal) to address the Court on behalf of Kornucopia, even though Hetyey JR was not required to permit that.[10] Kuksal intimated that evidence of solvency had not yet been filed, but would be forthcoming if the Court were prepared to grant an adjournment:

Mr Kuksal: Also, alternatively, we would again like to proof solvency because he is indisputably solvent. [sic]

Hetyey JR: Have you got any material before the court today on the question of solvency?

Mr Kuksal: We didn't think that it would be necessary. We were advised that the offer of payment should be, you know, final as to indulge the court's discretion. In the event that the court still finds it necessary to go on with the proceedings, we would then seek an adjournment to put solvency.

Hetyey JR: Thank you. All right. Mr Hager. Is any of that news to you?

Mr Hager: A lot of it is and a lot of it is inaccurate. ...

... I can't respond to this today and I think that if we are going to have a fight about all of this, it should be done properly and on that basis, perhaps, they should have a couple of weeks to or a week or a couple of weeks to put on their material. We should have - and I think that material should be supported by some submissions which would assist you and me and then there should be a time for us to put on any material in reply.

... And I think their material, if it is going to deal with this question of solvency, it should deal with that. It should deal with all of these issues.

15 Hetyey JR acceded to the submission requesting an adjournment, and the following orders were made:

(a) By 4pm on 14 August 2019, Kornucopia was to file and serve an application for leave under s 459S of the Act, together with any affidavit in support, and any affidavit on which it desires to rely, including as to solvency on 14 August 2019. This included its materials relating to solvency.

(b) The proceeding was fixed for hearing before Randall AsJ on 11 September 2019.

16 The Efektiv and AGV proceedings came before Hetyey JR on 7 August 2019. The following orders were made:

(a) By 4pm on 4 September 2019, Efektiv and AGV to file and serve an application for leave under s 459S of the Act, together with any affidavit in support, and any affidavit on which it desires to rely. This included its materials relating to solvency.

(b) The proceeding was fixed for hearing before Randall AsJ on 25 September 2019.

17 Those orders were not complied with by any of the Companies, and as noted, material as to solvency remains outstanding.

18 Various affidavits were filed in each proceeding, deposing to the fact that audited accounts were being prepared:

(a) on 10 September 2019, Kornucopia filed an affidavit of Vjekoslav Fak, a registered company auditor and director of Mischel & Co Pty Ltd, who affirmed to undertaking the audit for Kornucopia. The affidavit states:

[4] The engagement to audit the accounts of Kornucopia Pty Ltd started on Thursday, 15th August 2019.

[5] Based on current estimates and review of the work involved, I estimate the engagement will end on Friday, 20th September 2019.

(b) on 11 September 2019, Kornucopia filed an affidavit of Andrew Alabakis (Alabakis), a chartered accountant who works at Magnus Advisory and (in his previous position, at BDO) oversaw Kornucopia's tax return for the financial year of 2017 to 2018. Magnus Advisory is engaged to provide an audit for the financial year of 2018 to 2019. The affidavit exhibits a copy of the financial statements for that period. The affidavit states as follows:

[6] Kornucopia Pty Ltd's next lodgement (for 2018-19) is not due until end of May 2020.

[7] In order to assist with the evidentiary requirements in the Proceeding, we had to undertake a large volume of unscheduled and unanticipated accounting work. Although there is no statutory or regulatory obligation for an audit, we have especially organised for an audit process to be undertaken.

[8] Based on my familiarity with Kornucopia Pty Ltd's Draft Management Accounts, the entity had a gross revenue in excess of $3,000,000; a gross profit in excess of $1,250,000 and a net profit in excess of $500,000 for the financial year 2018-2019.

[9] Kornucopia Pty Ltd has accounts are [sic] currently undergoing the aforementioned audit process and the auditor's estimated completion date is 20th September 2019.

(c) on 24 September 2019, each of Efektiv and AGV filed an affidavit of Alabakis, which states as follows

[4] [AGV and Efektiv's] next lodgement (for 2018-19) is not currently due.

[5] In order to assist with the evidentiary requirements in the Proceeding, we had to undertake a large volume of unscheduled and unanticipated accounting work much in advance of any regulatory requirements.

[6] We expect to finalise the Financial Accounts for [AGV and Efektiv] by 15th October 2019.

[7] Although there is no statutory or regulatory obligation for an audit, [AGV and Efektiv] has especially organised for an audit process to be undertaken by Mischel & Co.

[8] Mischel & Co has commenced the audit process and will conclude shortly after the firm's accounts are settled by us.

(d) on 9 October 2019, each of Efektiv and AGV filed an affidavit of Alabakis, directed to each of Companies' application under s 459S. Those affidavits state as follows:

[6] [AGV and Efektiv] has traded profitably since its commenced [sic] trade and has consistently had positive cashflow.

[7] [They have] regularly met [their] payment obligations and I am not aware of any concerns, present or past, around its liquidity or solvency.

[8] The management of [AGV and Efektiv] have recently advised me regarding an insolvency proceeding against [AGV and Efektiv] brought on by Madgwicks based on a statutory demand...

...

[10] Based on my understanding of [AGV and Efektiv's] draft management accounts, were [AGV or Efektiv] obliged to pay this amount presently, it may not be able to maintain solvency.

[11] There is otherwise no reasonable concern for [AGV or Efektiv's] solvency and it continues to maintain a healthy cashflow.

The affidavits in each of the AGV and Efektiv proceedings affirmed by Alabakis did not contain any exhibits.

19 It is worth noting that no date was given (by Alabakis or otherwise) as to when audited accounts of AGV or Efektiv would be finished. The date given only related to the unaudited financial accounts. Further, the Companies have not, at any point, raised these affidavits before me. Not once has a renewed timeline for the completion of the audited accounts been given. Rather, it has only ever been said that the material (whether it is these accounts or some other evidence of solvency - this has never been confirmed before me) would be forthcoming 'soon'.

20 The Kornucopia proceeding next came before Randall AsJ on 11 September 2019. The former Counsel for the Companies referred to the two affidavits filed in that proceeding and referred to above. The following was said:

Mr Fary Then on 10 September, Mr Fack, an auditor has sworn an affidavit concerning preparation of some audited accounts.

Randall AsJ: I haven't read that.

Mr Fary: He says that he needs until 20 September to do the audited accounts so that task is underway. ... Well, just a couple points there. There is no 459S application because there could not be in this case. The company has gross income of $3m last year and gross profit of over a million dollars, so a $12,000 debt is hardly going to be material, whatever test one applies. The defence of solvency will be an absolute defence of solvency. So that's the first issue.

...

Mr Fary: There's an affidavit of Mr Alebakis, who is my client's accountant, sworn 11 September 2019. ... Now he says he's been overseeing the preparation of Kornucopia's financial accounts for approximately one and a half years as the firm's account manager at BDO and since then as part of Magnus Advisory.

And then if you turn over to the end he just summarises some of the key data. ... He also exhibits a copy of the financial accounts for the last financial year and if you turn over you'll see in respect of the balance sheet, just looking at the current ratio, you've got current assets of 448,000 against total current liabilities of 154,200. And total assets of 825,000 against net assets of 582,000. ...

Randall AsJ: Have we got anything for current or not?

Mr Fary: No, we don't have anything more current than that. He's talking 'Based on my familiarity with the draft management accounts, the entity had a gross revenue in excess of 3 million, gross profit in excess of 1.25, a net profit in excess of 500 for the - that's for the current financial year.

Randall AsJ: ...There's nothing about the current, is there?

Mr Fary: Let me just get there. As I understand, the business company is receiving rental income. So the issue of coverage of liabilities such as the $12,000 claimed by Mr Chen, that will require some consideration of the cash flow.

In any event, what this seeks to demonstrate is that the process of obtaining audited accounts is not just a hollow time wasting exercise, that there is a real reason to think that the audited accounts will demonstrate solvency of the company.

Randall AsJ: Can I warn you, I won't accept just the accounts by themselves. I want material that goes towards the entries. So if it's cash in bank, I want bank statements, if it's property, I want something more than just a reference in the accounts.

Mr Fary: My instructing solicitors have heard you and will address those matters. ...

...

21 At the behest of Kornucopia, that proceeding was adjourned, as material had been filed after 14 August 2019, the date provided for by the orders of Hetyey JR:

Randall AsJ: Now, do you need to rely on material filed after 14 August?

Mr Fary: Yes, I do. I can't -

Randall AsJ: Is there any reason why - any explanation why it wasn't filed before 14 August?

Mr Fary: There's none given in the material itself. ...

Randall AsJ: Well, you've heard that the plaintiff requires an adjournment if you're going to rely on it.

Mr Fary: Yes, I have heard that.

...

Randall AsJ: ...Mr Hager, do you persist with your application for an adjournment?

Mr Hager: We do, sir. I haven't seen any of this material about solvency. The submissions I haven't read. They were served an hour ago. There's an affidavit of Mr ... Alebakis.

...

Randall AsJ: All right. When are we going off to?

...

Mr Fary: Well, the only hard deadline from our perspective is the indication from Mr Fack that the audited account will be ready by the 20th of this month.

Randall AsJ: All right. ...But you will have to get your accounts done well before the 20th, though.

Mr Fary: I can only go on what's in Mr Fack's affidavit and he says the 20th, so we can stick - I can commit to the date of the 20th for the provision of the audited accounts, but I don't have any basis to think that Mr Fack -

Randall AsJ: I'm not going to hear it on the 23rd if the accounts have only been produced on the 20th. ... there's got to be time for the plaintiff to consider them, and there might be a further adjournment if they want to deal with any issue on them.

...

I will require material to be filed by a particular date and I'm going to put in other matters, if it's not filed on that date I probably won't have regard to it.

...

I want in other matters that, in the event that it's not compliant with the order as to service material, any such later affidavit shall not be relied upon except by leave.

22 At the conclusion of that hearing, on 11 September 2019 Randall AsJ made orders:

(a) By 4pm on Kornucopia was to file and serve any further affidavits on 12 October 2019.

(b) The proceeding was fixed for the hearing of all issues before me on 12 November 2019.

23 His Honour also noted in 'Other matters', that 'In the event there is non-compliance regarding filing material, any such material shall not be relied upon except by leave of the court.'

24 Various materials had also not been filed in the Efektiv or AGV proceedings, which next came before Randall AsJ on 25 September 2019. Other materials had been filed late by the Companies, which resulted in the need to adjourn those proceedings:

Randall AsJ: There were orders made, both judicial registrar on 7 August Required any application for leave under 459S together with any further affidavits by 4 September.

Mr Williams QC: Yes. I have an affidavit sworn by my instructor this morning in which he deposes to having misconceived that order and having imagined that he until this week to file all of his material. He misconceived that, as he says, and I can take Your Honour to the affidavit if you wish, he says he misconceived it on the basis that he understood that the affidavits referred to in that order meant any affidavits in support of the proposed 459 application.

Randall AsJ: Otherwise leave wasn't given to file any further affidavit material.

Mr Williams QC: That's right, but nor was it prohibited. He therefore assumed, wrongly, that he had until this week to do so and he has been generating affidavits this week.

Randall AsJ: I understand some came in at an ungodly hour this morning.

Mr Williams QC: I saw them as the same ungodly hour, I think, Your Honour. So I find myself in a situation where I have affidavits upon which I would like to rely, including in the Efektiv matter on the question of service of the demand which I can't rely on because my learned friend has only just seen them, if he's seen them at all. The court has only just seen them if its seen them at all.

...

No, that was only done this morning in the early hours so I find myself in a situation of wishing to ask for an adjournment of Efektiv matter so that I can rely on those matters. In relation to the Avant-Garde matter, I find myself in a situation where I have the material I would need to argue the service point because the service point is different in the two cases.

...

Your Honour, I know that it's not ideal, but I do find myself with circumstances where I don't have the material I need to rely on to defend the proceedings.

25 It is particularly apt to set out the following assurance given by Senior Counsel for the Companies:

Randall AsJ: Yes. Well, two weeks for material.

Mr Williams QC: And to be clear, Your Honour, I'm in no doubt and because of me being in no doubt, my client is in no doubt, that means all of the material it wants to rely on.

Randall AsJ: Well, it was quite clear in the previous order.

26 The following day, on 26 September 2019, his Honour made orders:

(a) By 4pm on 9 October 2019, 'and not otherwise without leave of the Court', Efektiv and AGV were to file and serve any application for leave under s 459S of the Act, and any further affidavits upon which it intends to rely upon in reply.

(b) The proceeding was fixed for the hearing of all issues before me on 12 November 2019.

(c) The further hearing of the proceedings be adjourned to 12 November 2019 before me.

(d) Efektiv and AGV pay Madgwicks costs of and incidental to the adjournment.

27 It should be noted, that like the Kornucopia proceeding, his Honour made a guillotine order which would require AGV and Efektiv to seek leave for the filing of any materials filed out of time.

28 All three proceedings were then re-allocated to me. A flurry of activity and urgent applications soon followed and have consumed much of the last two months of the sitting term.

29 On 14 October 2019, the Companies sought to file an urgent application seeking a declaration that the originating process in the Kornucopia proceeding was invalid.[11]

30 Rather than immediately setting down the proposed urgent application, I required the parties to attend for a directions hearing, which was held on 24 October 2019, to consider whether it could be dealt with alongside issues of, inter alia, service, abuse of process, s 459S and insolvency, at the final hearing which was set down for trial on 12 November 2019.

31 At the hearing of 24 October 2019, the following exchange was had with Senior Counsel for the Companies:

Sifris J: Have you put on material relating to solvency?

Mr Williams QC: We have put on some material.

Sifris J: Yes.

Mr Williams QC: There is an issue in relation to the Kornucopia matter, as to how that material is - first of all, we had - we've had difficulty with filing, which goes to my instructor having been shut out of RedCrest for a period, for reasons which I think - I don't fully understand, but apparently, it happens. But material, including material as to solvency, has been filed.

I think it's fair to say that in relation to Efektiv and Avant-Garde, we would be seeking at - in due course - or now, if you want to hear it - leave to file further material because we can only rely on further material with leave in relation to the audited accounts of those companies when they are available, which we expect to be shortly.

We think it's appropriate that that evidence should be before the court. And so, as soon as it's ready, we'll serve it and seek leave to rely on it, or Your Honour could, presumably, without seeing it in advance, which you might not find very attractive, give leave in advance for it to be filed. But in all of the matters, there has been some evidence of insolvency - sorry - our solvency filed.

32 On 25 October 2019, that is, the following day, I handed down a ruling:

(a) It was resolved that we would retain the hearing date of 12 November, and if necessary, reserve a second day, 13 November. On those dates two preliminary matters would be heard, consisting of service of the statutory demands in each of the three proceedings, and the technical defect referred to above in the Kornucopia proceedings.[12]

(b) As the Companies were, at that point, in default of the orders requiring the filing of material made by Randall AsJ, I decided to leave the requirement that they seek leave as a precondition to the filing of any further affidavits. I said:

...the order in relation to the filing of affidavits on all issues: I will not disturb that order, and the parties will be expected to comply with that order, in each case.

There will be no further affidavits or submissions, other than those contemplated by the order of Associate Justice Randall in each of the cases, without leave. Any request should be made to my associates, and comprise a short paragraph. If the request is longer than a paragraph, I will not read it. I repeat: if the request is longer than a short paragraph, I will not read it.

Any request for leave to file submissions or affidavits should be short, for the third time. If there are several pages of an email, which is argumentative, I will tear it up or just simply not have any regard to it whatsoever ...

33 The hearing of the two preliminary issues proceeded on 12 and 13 November 2019. On 15 November 2019, I handed down the result of the application, (with reasons published on 19 November 2019) where I found:[13]

(a) service by post of the three statutory demands had been effective on the Companies; and that the Companies had failed to rebut the presumption of service arising pursuant to s 29(1) of the Acts Interpretation Act 1901 (Cth);

(b) in the case of Efektiv and AGV, there had also been informal service by email of the statutory demands to a director or officer of the relevant company; and

(c) in the case of Kornucopia, I was obliged not to dismiss the originating process, by virtue of s 467A of the Corporations Act 2001 (Cth) (the Act), because of the defects in connection with the application.

34 The following exchange occurred with Senior Counsel for the Companies:

Sifris J: Well, what about - it would mean - I'm not sure to what extent the parties have filed affidavits on the remaining matters. There should have been substantial compliance with that anyway.

Mr Williams QC: There has, although we would certainly seek to take the opportunity that Your Honour has indicated to file some further material, I would expect.

35 At the conclusion of that hearing, on 15 November 2019, I ordered:

(a) By 4pm on 25 November 2019, the parties shall file and exchange any further affidavits on which they intend to rely.

(b) By 4pm on 2 December 2019, the parties shall file and exchange any responsive affidavits on which they intend to rely.

(c) The proceeding be set down for trial on 11, 12, 13, 16 and 19 December 2019.

36 On 25 November 2019, by an email to my Chambers, the solicitor for the Companies, Naveen Raghavan (Raghavan), foreshadowed that he had been instructed to bring an application seeking my recusal on the grounds of apprehended bias. This related to inquiries made by my Chambers into the volume of litigation the Companies were engaged in and various statements which, it was contended, gave rise to a reasonable apprehension of bias.[14]

37 I directed that the application would be heard on 29 November 2019. The Companies' summonses, submissions and affidavit in support were to be filed by 10am on 27 November 2019.

38 That direction was not complied with. On 27 November 2019, my Senior Associate sent an email to Raghavan enquiring when the materials would be filed. Raghavan responded as follows:

My apologies for the delayed response. We will be in a position to have all material filed with the Court first thing tomorrow morning (if not overnight). Unfortunately, our current workload will not permit any earlier filing.

39 The timetable was adjusted, so as to permit the materials to be filed and exchanged by 9am on 28 November 2019. The materials were not filed. Rather, on that day, Raghavan sent an email to my Chambers as follows:

Dear Associates,

Unfortunately, my chronic health issues have not permitted me to keep up with my work obligations, despite their urgency. In due consideration of the Court's scarce time, the Defendants' obligations to promptly address their apprehension of bias and Senior Counsel's limited availability, I have tried my best to ensure the Defendants were able to properly present their application to His Honour tomorrow, however, I have not been able to deliver all relevant material to Senior Counsel, thus, considerably impeding their ability to fairly represent the Defendants' application.

Therefore, I must regrettably request His Honour to adjourn the matter to ensure both Mr Daryl Williams, who will be presenting the Defendants' application, and the Court have been properly and timely equipped to do justice to the matter. I will be grateful if His Honour could consider the availability of Mr Williams next week in rescheduling the matter. Mr Williams is available on Monday afternoon, all of Tuesday and Wednesday afternoon.

I am sincerely apologetic for the inconvenience this will present to His Honour and the Court's resources, Mr Williams, the Defendants and my colleagues representing the other parties.

40 Consequently, I adjourned the application to 3 December 2019, with materials to be filed by 2 December 2019. I also directed:[15]

Until the hearing and determination of the application, the parties should continue to comply with his Honour's Orders of 22 November 2019.[16]

41 On 2 December 2019, the Companies filed the applications seeking my recusal for apprehended bias. Given the urgency of the matter (the trial was due to commence on 11 December 2019) the bias applications were heard on 3 December 2019.

42 At this hearing, there was another instance of material having been filed at the very commencement of a hearing, taking the plaintiffs and Court by surprise. The hearing of the bias application commenced on 3 December 2019 at 9:30am, and at 9:14am the Companies filed an affidavit affirmed by Kuksal.

43 On 5 December 2019, I dismissed the bias application in each matter. Reasons were delivered on 9 December 2019.[17]

44 A directions hearing followed the handing down of judgment on 5 December 2019. Senior Counsel for the Companies alluded that material relevant to Kornucopia's solvency would be forthcoming:

Mr Williams QC: ... But the material that's outstanding is solvency material.

Sifris J: So why can't that be done by Monday [9 December 2019] 4 pm? I mean, are there not balance sheets, financial statements or - you've been aware that the material is required

Mr Williams QC: Yes.

Sifris J: to meet the application - I know you've been distracted, but presumably someone's given some thought to the type of material required and

Mr Williams QC: They have, but not enough, to be frank, Your Honour.

Sifris J: So when are you able to put in an affidavit...[o]r affidavits.

Mr Williams QC: We could put in material on Monday, Your Honour, but my concern is that it wouldn't be material that was fully considered and settled. We could - if Your Honour was minded to allow us until the end of next week, that would certainly enable us to do it properly.

45 Senior Counsel for the Companies pressed that an extension be granted to Friday, 13 December 2019. However, it was clear that 'if the affidavits are by the end of next week, it's unlikely that we will have a trial this year then.' The plaintiffs objected to the filing of the material on the Friday, and instead submitted that the material should be filed earlier in the week. A solicitor acting for Madgwicks, Ms McNamara, put Madgwicks' position as follows:

Ms McNamara: Your Honour, we have worked very hard at complying with timetable. We filed an affidavit of Mr Kennedy in both Efektiv and Avant-Garde.

Sifris J: Yes.

Ms McNamara: Our submissions are nearly ready to file. I think that if the defendant companies file solvency material, it is possibly unlikely that we will not file affidavit material in response but we will rather serve notices for cross-examination. So from our perspective, we feel that we're not far off being ready for trial.

I can whip up a court book and I think that - I don't see - the defendants have had quite a long time to put together this solvency material - they're either solvent or they're not - and I think that that material can be filed by 2 December - oh, not 2 December - by this coming Monday and we can proceed to trial on Wednesday and I don't see that counsel should be inconvenienced from our point of view.

I've briefed counsel. He's made himself available. He has juggled our commitments to accommodate Madgwicks in this trial and he would not be available in January, he would only be available in February and that's our position, Your Honour.

46 Senior Counsel for the Companies obtained oral instructions at some point of the hearing in Court from Kuksal, and subsequently, the Companies sought to make an oral stay application, pending the Companies seeking leave to appeal from my decision not to recuse myself.

47 The matter was stood down for a period while I considered the application, but it was ultimately refused. As far as I am aware, no application has been made to the Court of Appeal seeking leave to appeal or a stay of the trial. Furthermore, I, yet again, granted an extension of time to enable the Companies to file their material, extending the time for compliance to Tuesday, 10 December 2019. I gave a ruling, which is appropriate to set out here:

The first matter, dealing with the stay, I am not prepared to grant a stay. Any stay should be sought from the Court of Appeal. Regarding the existing orders and any extension thereof and the trial date, it is important to balance the interests of all the parties, including the interests of the court. There are powerful reasons against any extension. The reason why these matters are generally required to be dealt with in six months is obvious.

It is in the interests of all parties and the public that matters of this kind be dealt with expeditiously and within that timeframe. The originating process and all issues were to be dealt with on 25 September and all material was required to be in by then, that is two and a half months ago, both in relation to any 459S application and solvency. The timetable was extended on 15 November and was required to be complied with notwithstanding the recusal application.

The date for compliance was 25 November, namely 10 days after the date of the order. It is now a further 10 days after the due date and a further nine or 10 days is sought to next Friday in order to file the necessary affidavits or the desired affidavits. The plaintiffs are ready to proceed and can put together a court book and submissions reasonably quickly. Those are the reasons against any extension.

I am less sympathetic to the defendants; however, I will not shut them out. Although they were required to continue to comply with the timetable regarding trial orders, there was, they say, a need to, in effect, devote time and resources to the recusal application. It was a serious application and they were entitled to make it despite the result. They should be given some extra time.

The length of time must take into account the factors referred and the fact that preparation of what I will call the remaining affidavits on the part of the defendants should be well underway. A further factor is that we have, in fact, dealt with a part of the case, namely, the issues the subject of the earlier judgment which may or may not be appealed or leave to appeal sought.

So I propose to extend the time in order 1 of the orders of 15 November 2019 but not beyond Tuesday the 10th at 4 pm. If the affidavits are not filed by Tuesday, the 10th, 4 pm, no later than 4 pm, there will be an order that no further affidavits be permit without leave. We will then adjourn the directions hearing until Thursday the 12th at 10 am which was the date that was scheduled for the trial, and deal with the matters then.

The matters that I refer to are: (1), a decision by the plaintiffs as to whether they wish to respond to the material to be filed by 4 pm on Tuesday. If they do wish to respond, they should indicate what material they propose to file and how long it will take and to discussion issues such as the court book and submissions and any other trial-type matters.

So given that extension, the trial will not start on the 11th but rather on the 12th there will be a directions hearing in order to determine whether the trial continue on the 16th or start on the 16th, which is the following Monday, and we will retain those dates, namely 16 to 19 for the purpose of trial if, indeed, the trial is to proceed, which will depend on the view taken by the plaintiffs to the material filed by the defendants.

The scenarios that may well happen are: Thursday next week plaintiffs have looked at the material, they do not desire to file any further material. The parties will have Friday and the weekend to prepare court books, submissions and we will start the trial on Monday, that is the 13th. That is in the interests of all parties and the court.

...

The other scenario is that the plaintiffs wish to respond to the material and require several days to do so, in which event, and, unfortunately, the trial will not start this year, and doing the best we can, during the standing the matter, I have reserved - the court is not available in January but the first day back in the new year is 3 February, the Monday.

...A minor indulgence to the defendants is justified for the reasons given and the matter will be reassessed on Thursday.

I am anxious to start the trial the following Monday, even if it ends up being part-heard until 3 February. If we could finish the trial, so much the better but a lot depends on the view taken by the plaintiffs to the material or any material whether as to solvency or in two of the cases 459S is filed by the defendants.

(a) The time for compliance for the filing of affidavits was extended, such that by 4pm on Tuesday, 10 December 2019, the parties were to file further affidavits on which they intend to rely.

(b) The Companies were and are not permitted to file any further affidavits after 4pm on Tuesday, 10 December 2019 without leave of the Court.

(c) The proceeding is adjourned to 10am on Thursday 12 December for further trial directions.

49 Therefore, the following summary shall suffice, insofar as the events prior to the week commencing 9 December 2019 are concerned:

(a) Affidavits as to s 459S and solvency were due in Kornucopia on 14 August 2019, and in Efektiv and AGV on 4 September 2019.

(b) The time for filing affidavits in Kornucopia was extended to 12 October 2019, and in Efektiv and AGV was extended to 9 October 2019.

(c) The time for filing affidavits in all three proceedings was extended to 25 November 2019.

(d) The time for filing affidavits in all three proceedings was extended to 10 December 2019.

50 Accordingly, the Companies were to file any evidence pertaining to their solvency by 4pm on 10 December 2019, failing which they would be precluded from doing so without leave.

51 Nonetheless, no materials were filed. The Court did not hear from the Companies at any stage during the week, that is until the day of the directions hearing, on 12 December 2019.

52 The directions hearing was listed for 10am on Thursday, 12 December 2019. At 9:49am on the same day, Raghavan sent an email to my Chambers, attaching an unsealed affidavit (without exhibits) which is set out as follows:

[4] I have had, until now, the exclusive responsibility for the management of the current proceeding on behalf of the Defendant.

[5] I suffer from an ongoing medical condition that over the course of the last two years, has affected me and continues to affect me with rare onsets of debilitating symptoms. These onsets can limit my functionality, although generally for short periods of time. On occasion, my condition can incapacitate me for an extended duration.

[6] In the week commencing Monday, 11 November 2019, I began feeling generally unwell. Despite this, I continued to undertake my ongoing responsibilities at RM Legal Consultants due to the urgent nature of the proceedings under my care.

[7] For the last few weeks, my health condition has deteriorated significantly. I have been frequently incapacitated for weeks at a time, on account of my illness. This has significantly compromised my ability to materially work on the matters entrusted to my care .

[8] On Monday, 9 December 2019, Counsel for the Defendant, Mr Daryl Williams QC, sent me a draft of the confidentiality undertaking we had agreed to provide to the solicitor for Plaintiff in relation to the solvency evidence of the Defendant.

[9] On Tuesday, 10 December 2019, the Defendant provided me with material related to its financial accounts which it wanted to submit as solvency evidence in the current proceeding.

[10] However, my health condition, did not permit me to prepare and file the documents to submit the solvency evidence in the current proceeding.

[11] In light of my recent continued inability to reliably meet the obligations of my work, yesterday, 11 December 2019, I met with the management of the Defendant to advise them that I ought not to have sole carriage of the present proceeding on the Defendant's behalf, until I am able to recover. I also requested an urgent leave for work to tend to my medical problems.

[12] If this Honourable Court requires evidence of my longstanding medical condition, I undertake to provide the same.

[13] I acted in good faith and did my best to file the documentation as soon as possible. The delay in filing the documentation was not the fault of the Defendant and it should not be prejudiced because of the unfortunate circumstances which have transpired.

53 Raghavan did not appear at the hearing. This affidavit (which is self-evidently entirely objectionable, unsupported and inadequate) caught all parties to the proceeding (as well as the Court and Senior Counsel for the Companies) by surprise.[18]

54 At the hearing, Senior Counsel for the Companies made an oral submission that the trial should preferably commence early in the new year and that the Companies be permitted to file evidence of solvency. Senior Counsel conveyed that the accounts had been audited, and despite his best efforts in advising the Companies, evidence from the Companies' directors backing up those accounts had not been prepared. It was submitted that the date be extended for solvency evidence, to a date which would enable the Companies to get another solicitor on board. This left the Court with two choices:

(a) To refix the trial date for next year as submitted and presumably in those circumstances, provide a further extension of time for the Companies to file the materials referred to;[19] or

(b) To proceed with the hearing of the application on all issues as contemplated.

55 Not surprisingly, and in the circumstances, I selected the latter option. Counsel for Madgwicks put the position succinctly:

The defendants in each case never quite seem to accord or meet Your Honour's timetable, and again this morning we have the situation of illness, not supported by any medical evidence whatsoever in accordance with - in a sense of exhibits, and that the solicitor concerned deposes that he's had this debilitating illness for the last two years and has been feeling unwell since 11 November.

There's been ample time for the defendant's to obtain other legal representation. They've been fully aware of all the timetables that Your Honour has set. In fact, they've asked for those timetables, and to some degree and, in my submission, they have thumbed their nose at Your Honour's fair timetables, and, as illustrated by this eleventh hour affidavit that's been produced this morning.

[1] I will assume familiarity with In the matter of Kornucopia Pty Ltd (No 1) [2019] VSC 756 and In the matter of Kornucopia Pty Ltd (No 2) [2019] VSC 802. Defined terms bear the same meanings. Given the urgency by which these reasons have been prepared, transcript references have been omitted.

[2] On 12 December 2019, I gave a brief ruling on this matter. I advised the parties that I reserved the right to amend that ruling. On reflection, it became apparent to me that it would be preferable to prepare written reasons.

[3] LexisNexis Australia, _Civil Procedure Victoria (_online at 12 December 2019) [I 49.03.15].

[4] [2013] VSCA 361; (2013) 42 VR 635 [47] (Neave JA, Hargrave and Dixon AJJA).

[6] (2009) 239 CLR 175, 213-4 [98]-[100], 217-8 [111]-[114] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

[7] (2009) 239 CLR 175, 182 [5], 189-92 [24]-[30] (French CJ).

[8] [2011] HCA 18; (2011) 244 CLR 1, 13-4 [27] (Gummow, Heydon , Crennan , Kiefel and Bell JJ).

[9] Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd (2018) 98 NSWLR 473, 480-1 [28] (Bathurst CJ).

[10] Kuksal is not the director of Kornucopia, but rather describes himself as its 'beneficial owner'. In other words, he is the owner of the shares in the company through a series of companies and trusts. It is not necessary to go into the details of that. See Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 1.17(1); Worldwide Enterprises Pty Ltd v Silberman 26 VR 595 [35]-[38]. See also Transcript at T31:17-23.

[11] I ultimately found that it was not invalid: In the matter of Kornucopia Pty Ltd (No 1) [2019] VSC 756.

[12] It should be observed that the trial was split for the benefit of the Companies. I accepted Senior Counsel's submission that these issues were 'valve' or 'threshold-type' issues, which if determined in their favour, may have disposed of the proceedings. Therefore, it was resolved that they be split, for the possibility that the Companies not face a winding up application longer than may strictly be needed.

[13] In the Matter of Kornucopia Pty Ltd (No 1) [2019] VSC 756.

[14] That application was dismissed: In the matter of Kornucopia Pty Ltd (No 2) [2019] VSC 802.

[15] Nonetheless, the Companies did not file materials relating to solvency. The Companies said that their attention had been distracted by the bias application and the urgency thereof. However, that is not a legitimate reason for non-compliance, in light of the circumstances and history of this proceeding. A party must bear the consequences of any default with orders in the substantive proceeding and final hearing, if they are ultimately unsuccessful on an interlocutory application which they bring.

[16] This should read '15 November 2019'. The orders were authenticated on 15 November 2019.

[17] In the matter of Kornucopia Pty Ltd (No 2) [2019] VSC 802.

[18] As I said at the hearing: 'It is unsatisfactory to not have any evidence and to not approach the court before the due date for the evidence with some material. I mean, normally you might not have the best and fullest evidence but there's always some evidence of the financial position of the company in circumstances where the deeming position has kicked in.'

[19] This proceeding was re-allocated to me from the Associate Judge's Chambers, largely due to the workload involved. It first came before me in mid-October. Since then, this is the third set of written reasons delivered, each within a week of the relevant interlocutory hearing. Since the proceeding's re-allocation, I have been unable to take on other trial commitments within the Court, and indeed have deferred other matters to later dates or to other Judges of this Court. As Aon points out, that is more than undesirable for a Judge in a List-system. That state of affairs cannot extend to the new year. Other matters have been set down for trial. Those litigants are equally entitled to their day in Court. Those matters should and will not be vacated or adjourned. Yet, adjourning this matter may make that inevitable. I repeat, that should and will not occur.