Vink v Tuckwell [2008] VSCA 204

Court of Appeal (Vic)|2008-10-14|Before: WARREN CJ and HARGRAVE AJA

CORPORATIONS - Creditors' voluntary liquidation - Application under s 536(1)(b) of the Corporations Act 2001 (Cth) for an inquiry into the conduct of the liquidator - Application dismissed - Application for leave to appeal against dismissal - Whether leave to appeal required - Leave to appeal required - Application for leave to appeal dismissed - Recommendation that law be amended to limit standing to complain under s 536 to those with an interest in the liquidation - Corporations Act 2001 (Cth), s 536; Supreme Court Act 1986 (Vic),

1 I invite Hargrave AJA to deliver the first judgment.

2 Corporate Interior Constructions Pty Ltd (in liquidation) ("CIC") is being wound up under a creditors' voluntary winding up. Colin Tuckwell ("Mr Tuckwell") is the liquidator. CIC had been the corporate vehicle by which Thomas Van Oosterom and his wife, Ani Van Oosterom, had conducted a corporate fit-out business. CIC acted as trustee for the Van Oosterom Family Trust. The business was very successful. Unfortunately, Mr and Mrs Van Oosterom's marriage failed and they separated. They sought to come to an agreement about the division of the family property with Mr Van Oosterom keeping the business. However, shortly after the separation the business also failed. CIC called in Mr Tuckwell as an administrator and the creditors resolved to put the company into liquidation.

3 The liquidator took proceedings against both Mr Van Oosterom and his wife (now known as Ani Linton) to recover moneys purportedly due under a loan account with CIC.

4 Shortly after CIC went into liquidation, Mr Vink began to assist Ms Linton in her defence of the liquidator's claim. He has no other interest in CIC. Ms Linton has now resolved all her issues with the liquidator. However, Mr Vink made complaints to the court with respect to the conduct of Mr Tuckwell in connection with the performance of his duties as liquidator of CIC under s 536 of the Corporations Act 2001 ("the Act"). Mr Vink applied for an inquiry under s 536. The two main complaints related to the alleged failure of Mr Tuckwell to investigate and pursue Mr Van Oosterom and his alleged improper pursuit of Ms Linton in getting in the assets of CIC.

5 In Vink v Tuckwell (No 2)[1] the trial judge found that the complaints made by Mr Vink did not warrant an inquiry under s 536 of the Act and dismissed Mr Vink's application.

6 Section 536 of the Act is in the following terms:

(a) it appears to the Court or to ASIC that a liquidator has not faithfully performed or is not faithfully performing his or her duties or has not observed or is not observing:

(ii) a requirement of this Act, of the regulations or the rules; or

(b) a complaint is made to the Court or to ASIC by any person with respect to the conduct of a liquidator in connection with the performance of his or her duties;

the Court or ASIC, as the case may be, may inquire into the matter and, where the Court or ASIC so inquires, the Court may take such action as it thinks fit.

ASIC may report to the Court any matter that in its opinion is a misfeasance, neglect or omission on the part of the liquidator and the Court may order the liquidator to make good any loss that the estate of the company has sustained thereby and may make such other order or orders as it thinks fit.

The Court may at any time require a liquidator to answer any inquiry in relation to the winding up and may examine the liquidator or any other person on oath concerning the winding up and may direct an investigation to be made of the books of the liquidator.

(1) A complaint to the Court under paragraph 536(1)(b) of the Corporations Act must be made -

(a) in the case of a winding up by the Court - by filing an interlocutory process seeking an inquiry; and

(b) in the case of a voluntary winding up - by filing an originating process seeking an inquiry.

(1) Unless the Court otherwise directs, an originating process, or interlocutory process, must be supported by an affidavit stating the facts in support of the process.

9 In accordance with the rules referred to, Mr Vink's application for an inquiry was made by filing an originating process supported by an affidavit purporting to state the facts in support of the process. Although the trial judge struck out many paragraphs of the affidavit, and further affidavit material was filed, some of which was also struck out, the trial judge nevertheless treated the struck out portions as submissions made by Mr Vink.

10 Mr Vink represented himself in the proceedings before the trial judge and before this Court.

11 The procedural history of Mr Vink's application is fully set out by the trial judge in his three reserved judgments.[2]

12 Mr Vink has applied for leave to appeal from the orders made by the trial judge dismissing his application under s 536 of the Act. Alternatively, if leave to appeal is not required, Mr Vink seeks an order extending the date for the filing of a notice of appeal to the date of the hearing of his summons. Mr Vink filed an outline of submissions and affidavit material in support of his application prior to the hearing. At the commencement of his oral argument, he handed up substantial further written submissions. The Court adjourned to consider these further submissions and, after hearing oral argument from Mr Vink, decided to dismiss Mr Vink's application with costs, with reasons to be published the following day. These are those reasons.

13 The first issue is whether or not Mr Vink requires leave to appeal from the orders made by the trial judge. In my view, he does. This is because the order dismissing Mr Vink's application for an inquiry under s 536 was an interlocutory order.

14 Whether a judgment or order is final or interlocutory depends upon the nature of the judgment or order, not the nature of the application made to the Court.[3] In determining whether a judgment or order is final or interlocutory, the Court must have regard to the legal rather than the practical effect of the judgment or order.[4] Whether a judgment or order is final or interlocutory depends upon the answer to the question: Does the judgment or order, as made, finally dispose of the rights of the parties?[5] If it does, it is final. If it does not, it is interlocutory.

15 In Carr v Finance Corporation of Australia, the High Court considered whether an order refusing to set aside a default judgment finally disposed of the rights of the parties to the proceeding. It was held that the order did not finally dispose of the rights of the parties, and was thus interlocutory, because it was open to the disappointed defendant to apply again to have the judgment set aside.[6]

16 Gibbs CJ and Mason J (as he then was) each gave consideration to the fact that the likelihood of a second application being successful may, on the facts of a particular case, be more theoretical than real and, accordingly, the practical effect of the order may be to preclude a defendant from making another application to set aside the default judgment. However, each of them reinforced the principle that it is the legal, and not practical, effect of the judgment or order which is sought to be appealed from which is decisive.

The choice for the Court is whether it should continue to adopt the traditional classification of orders of this kind as interlocutory because there is the right to make another application and because the order does not deal directly with the rights in contest in the action or whether it should now classify such orders as final when their practical effect is to shut out the defendant from contesting the default judgment.

Although the second alternative has some attractions, it has the disadvantage that the character of the order (whether it be final or interlocutory) could not be determined on its face, but could only be ascertained after an examination of the grounds on which the application to set aside was made, the grounds on which it was refused and the formation of a judgment as to the impact of the grounds of refusal on the prospects of bringing a second application. The adoption of this approach would bring yet a further complication to the complexities which already bedevil the existence of appeals as of right to this Court.

The prospect that there could be a steady stream of appeals to this Court from orders on applications to set aside default judgments, if the character of a final order be conceded to them, is by no means an inviting prospect. Even so, I would not shrink from making that concession if it be correct in law so to do, in order to do justice to the parties. However, for the reasons already given, I do not consider it to be a correct approach. It goes without saying, that the unsuccessful party can, in an appropriate case, apply for and obtain special leave to appeal.[7]

The rigour of the rule that the legal effect of the judgment is decisive may of course be mitigated by the exercise of the Court's power to grant special leave to appeal.[8]

19 In my view, by parity of reasoning, the order made by the trial judge dismissing the application for an inquiry should be characterised as interlocutory and not final. There is nothing in the Act to indicate that the dismissal of an application for an inquiry under s 536 should act as a bar to a second application. This approach is supported by decisions of the Court of Appeal in this State and in New South Wales.

20 In Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd,[9] the Court of Appeal in this State (comprised of Maxwell P, Chernov, Nettle, Ashley and Neave JJA) held that an order dismissing an application under s 459G of the Corporations Act to set aside a statutory demand served pursuant to Pt 5.4 of the Corporations Act was interlocutory because another application could, at least in theory, be made.

In my view, an order refusing an application to set aside a statutory demand is an interlocutory order. Theoretically, such an order would leave it open to the company to make a second application to set aside the demand. Admittedly, there might not be time to make a second application. In that event, the order would not only determine the proceeding in which it was made but also, in a practical sense, that the demand should stand. But even so, the order would not be final, because it would not involve a final adjudication of substantive rights. All that it would determine is that the company has a further short period of time within which it must meet the demand or face a conclusion that it is presumed insolvent. [10]

22 In Debis Financial Services (Aust) Pty Ltd v Allied Bellambi Collieries Pty Ltd (rec appt),[11] the New South Wales Court of Appeal held that an order under s 441D of the Corporations Act restraining the enforcement of a charge by a creditor was an interlocutory order.

23 Priestley JA (with whom Handley and Powell JJA agreed) stated:

Whether or not that submission [that leave to appeal was not necessary as the orders below were final] is correct is governed in this court by the rule established in two High Court decisions: Licul v Corney...and Carr v Finance Corp of Australia Ltd...That rule has been applied in New South Wales, sometimes reluctantly, but of necessity consistently: see eg A Hudson Pty Ltd v Legal and General Life of Australia Ltd..., and most recently, in the reported decisions, R v Cheng...In Cheng Spigelman CJ succinctly stated the rule as being that "the relevant test of an interlocutory judgment is on legal effect rather than practicality."

In my opinion when the orders which may be made under the relevant sections in Pt 5.3A are considered in light of the foregoing rule, it is clear that the orders made by Hamilton J...did not finally establish the legal rights of the parties...As a matter of legality, it was in my opinion possible for either Debis or the administrator, during the currency of the administration, to make further applications...which could have resulted in an alteration of the orders already made by Hamilton J. Whether any such application may have succeeded would have depended on the facts as they stood at the time when it was made. As a matter of practicality it may be there was little likelihood of any material alteration in the facts in the relatively short period the administration had yet to run, at the time of Hamilton J's orders. However, Licul and Carr make it clear that this is not the test. As a matter of law, the orders were not, in my opinion, final ones.[12]

24 Of course, the Court retains the power to grant leave to appeal in appropriate cases.

25 In order to succeed in an application for leave to appeal from an interlocutory judgment or order, the applicant must satisfy the Court of two things. First, that the judgment or order is attended with sufficient doubt to warrant it being reconsidered on appeal. Second, that substantial injustice will be caused to the applicant if the judgment or order is allowed to stand.[13] In considering each element, the fact that the decision which is sought to be appealed from involved the exercise of judicial discretion is a relevant consideration.[14] This is especially so in considering the first element of sufficient doubt. Whether a discretionary decision is final or interlocutory, this Court will not set it aside simply because it might have exercised its discretion differently if it was in the trial judge's position. It must be shown that the judge below made an error in the exercise of discretion by acting on a wrong principle, allowing extraneous or irrelevant matters into account, mistaking the facts or failing to take a material consideration into account.[15] This is an important matter in this case where the decision of the judge below to refuse an order for an inquiry was discretionary in nature, as are most of the procedural complaints raised by Mr Vink in respect of the conduct of the trial.

26 In his proposed amended notice of appeal, Mr Vink seeks to raise, in many and various ways, allegations that he was denied natural justice. There is no merit in any of these proposed grounds. The various rulings and three detailed reserved judgments given by the trial judge record the procedural history of the application which he determined. Reading the rulings, reasons and transcript of proceedings as a whole, I am satisfied that Mr Vink was given ample notice of, and time to consider, all of the grounds upon which Mr Tuckwell relied in defence to the application made against him, including detailed objections to Mr Vink's affidavit material. Mr Vink was not taken by surprise at any time.

27 In particular, Mr Vink contends that he was denied natural justice when the trial judge refused him leave to introduce further evidence on the first day of the hearing. I do not accept this was the case. Mr Vink was given ample opportunity to put his evidence before the Court in admissible form. He knew what was required. Dodds-Streeton J (as she then was) referred to the deficiencies in 2007 when her Honour was managing the case. Further, the trial judge gave full reasons explaining the deficiencies when he struck out certain paragraphs of the affidavit material sought to be relied upon by Mr Vink during the course of the hearing of Mr Tuckwell's summary dismissal application.

28 In these circumstances, and having regard to the serious nature of the allegations which Mr Vink was endeavouring to pursue against Mr Tuckwell, and the lack of any evidence to support those allegations, it was open to the trial judge, in the exercise of his discretion, to refuse Mr Vink leave to rely upon further affidavit material on the first day of the trial. If leave to rely upon the further evidence had been given, this would have led to an adjournment which, as the trial judge said, would have been a "gross injustice" to Mr Tuckwell and denied him procedural fairness.

29 Further, it was relevant to the exercise of discretion in this regard that Mr Vink has no legal or personal interest in the liquidation of CIC. He is an outsider who is seeking to intermeddle in its affairs, in circumstances where none of those who have an actual interest in the liquidation of CIC, nor ASIC, seek an inquiry into the liquidation.

30 Finally, in considering whether the decision of the trial judge to refuse leave to rely upon further evidence is attended with sufficient doubt to warrant the granting of leave to appeal, it must be remembered that the decision is not only a discretionary one, but also one which relates to a matter of practice and procedure. The Court is usually reluctant to grant leave to appeal in respect of such matters.[16]

31 Mr Vink also seeks to raise an issue of apprehended bias. He contends in his proposed amended notice of appeal that an objective bystander would have apprehended that the trial judge was biased because he made statements during the course of the hearings which indicated that he did not consider Mr Vink to be an appropriate applicant and that he had prejudged the application. There is no merit in these contentions.

32 The trial judge considered the summary dismissal application in detail. He dismissed it, even though he was of the opinion that the principal application would "very likely fail". This indicates that the trial judge had an open mind and was prepared to give Mr Vink the opportunity to present his case. That is what happened. During the course of the hearing, the trial judge made a number of statements which indicated that he was exasperated with the way in which Mr Vink was conducting the trial. In circumstances where Mr Vink was making very serious allegations against Mr Tuckwell, without any factual foundation, that exasperation was entirely understandable. However, it falls far short of objective conduct from which a fair-minded observer with knowledge of the objective material facts might entertain a reasonable apprehension that the trial judge was not bringing an impartial and unprejudiced mind to the resolution of the matters before the Court.[17]

33 Next, Mr Vink seeks to contend that the trial judge misinterpreted s 536 of the Act, and thus misapplied it. Mr Vink submitted that the trial judge wrongly held that, in order to fall within s 536, Mr Vink was required to establish a prima facie case that the liquidator had not faithfully performed his duties or had not or was not observing a requirement of the Act or of regulations or rules made thereunder. This proposed ground of appeal is misconceived. The trial judge did not misinterpret s 536 as Mr Vink contends. To the contrary, the trial judge considered all of the relevant authorities and concluded that s 536 requires the complainant to establish a prima facie case "that there is something which requires inquiry."[18] There is no error in such an approach. It is in accordance with established authority.[19]

34 Next, Mr Vink sought to attack many of the factual findings made by the trial judge. I am not satisfied that any of these attacks are justified.

35 Finally, Mr Vink sought to contend that the trial judge gave inadequate reasons for his decision. Once again, there is no merit in this contention. The trial judge gave full and careful reasons for all of the conclusions reached by him. Those conclusions well support the course which he took in dismissing Mr Vink's application.

36 In summary, the order dismissing Mr Vink's application is not attended by sufficient doubt to warrant the grant of leave to appeal. The reasons for judgment are lengthy and carefully considered. I see no error of legal principle or in the application of the relevant legal principles. Further, the trial judge made it clear that, even if he had been satisfied that there was sufficient evidence before the Court to establish a prima facie case that there is something about the conduct of the liquidation by Mr Tuckwell which requires inquiry, he would nevertheless have dismissed the application in the exercise of his discretion. The reasons which he gave in this regard are in my view compelling.[20]

37 Further and in any event, I am satisfied that no substantial injustice would be occasioned to Mr Vink if the order sought to be appealed from was allowed to stand. Mr Vink has no association whatsoever with CIC or its liquidation. He is not a creditor, debtor, shareholder, employee or otherwise interested in the affairs of CIC in a legal sense. His only connection with CIC is that his former de facto partner, Ms Linton, was closely involved in CIC and its liquidation. Furthermore, apart from what he described as "personal devastation" arising from the refusal of his application after he had committed six years of his life to investigating the conduct of the liquidation, in none of his complaints does Mr Vink assert that he is aggrieved in any way by the actions of Mr Tuckwell. I reject Mr Vink's assertion that it was in the public interest for him to pursue his application because he is an experienced "corporate person" who believes that the conduct of the liquidation of CIC is "untoward". It cannot be said that it is in the public interest that leave to appeal be given. None of the parties actually involved in CIC or its liquidation are seeking an inquiry under s 536 of the Act. Nor does ASIC seek to take any action in connection with the liquidation of CIC.

38 On the other hand, there would be grave injustice to Mr Tuckwell if Mr Vink were granted leave to appeal. As the trial judge noted, there has already been great injustice against Mr Tuckwell by reason of Mr Vink making serious and unsubstantiated allegations of misconduct against him in this proceeding, including unsubstantiated accusations of dishonesty.[21] That situation should not be allowed to continue.

39 Mr Vink also seeks leave to appeal in respect of costs orders made against him by the trial judge. Mr Vink complains that the trial judge erred in ordering that he pay 60 per cent of Mr Tuckwell's costs of the application by Mr Tuckwell to summarily dismiss Mr Vink's application under s 536 of the Act. Further, Mr Vink asserts that the trial judge was wrong to order that he pay those costs on an indemnity basis.

40 The costs orders made by the trial judge were discretionary orders. They were the subject of a separate considered judgment.[22] Although Mr Tuckwell's application for summary dismissal was dismissed, the trial judge nevertheless formed the view that, in his discretion, Mr Vink should pay 60 per cent of Mr Tuckwell's costs of the application. In exercising his discretion, the trial judge gave detailed consideration to the relevant legislation, rules of court and authorities which sanction, in exceptional cases, a court depriving a successful party of all or part of that party's costs.[23] I can see no error of principle in the reasons given by the trial judge in this regard.

41 Nor can I see any error in the manner in which the trial judge applied those principles in the circumstances of the application for summary dismissal which was considered by him. The principal reason that the trial judge ordered that Mr Vink pay 60 per cent of Mr Tuckwell's costs was because approximately that proportion of the hearing of Mr Tuckwell's summary dismissal application was wasted in considering, and ruling as inadmissible, almost all of the evidence relied upon by Mr Vink at that hearing. This was in circumstances where, as a result of an earlier ruling given by Dodds-Streeton J in the proceeding, Mr Vink should have known that the affidavit material in the form put forward by him was inadmissible.

42 As to the order that Mr Vink pay 60 per cent of Mr Tuckwell's costs of the summary dismissal application on an indemnity basis, the trial judge carefully considered the authorities establishing the relevant principles concerning indemnity costs generally; and the separate question as to whether it is appropriate to order indemnity costs against a litigant in person such as Mr Vink.[24]

43 I see no error by the trial judge in his application of these principles to the circumstances of this case. Indeed, I would support the conclusions reached by the trial judge. For the reasons stated, with which I agree, the trial judge found that Mr Vink engaged in conduct which lengthened the hearing time by relying upon affidavit material which he knew or ought to have known was inadmissible,[25] and upon the conduct of Mr Vink in making serious allegations of misconduct, dishonesty or fraud against Mr Tuckwell without any reasonable basis for doing so.[26] In these circumstances, the trial judge had ample grounds upon which to exercise his discretion to order that Mr Vink pay 60per cent of Mr Tuckwell's costs of the summary dismissal application. Accordingly, the decision of the trial judge that Mr Vink pay 60 per cent of Mr Tuckwell's costs of the summary dismissal application on an indemnity basis is not attended by sufficient doubt to warrant the granting of leave to appeal.

44 For the above reasons, Mr Vink's application for leave to appeal should be dismissed with costs.

45 Finally, before disposing of the application, I note that the issue of whether the trial judge was correct in applying a number of single judge decisions, which give the words "any person" in s 536 their literal meaning,[27] has not been the subject of argument before this Court. I would reserve consideration of that question to a case where both parties are represented and the Court has the benefit of full argument. However, assuming the correctness of the decision of the trial judge on this issue, I would add my support to the comments made by the trial judge about the desirability of amending the Act so as to limit the persons who may complain to the Court under s 536 to those who have an interest in the liquidation. I respectfully adopt the following statements by the trial judge in this regard:

There seems little public utility in allowing a person with no interest in the liquidation to make serious and unfounded allegations against a liquidator. In my view, it is unjust that a professional man or woman can be accused of misconduct under the protection of legal privilege where the complainant is not subject to the ethical rules that lawyers are subject to. A lawyer is not permitted to make allegations of fraud or dishonesty unless he or she is satisfied reasonable grounds exist to make such an allegation. Mr Vink was not bound by such rules of professional conduct. In my opinion, this was unfair to Mr Tuckwell and should not be permitted. If the complainant had an interest in the liquidation the risk of this happening would be significantly reduced.

In any event, I see little public benefit in permitting a person who has no interest in the liquidation making complaints about it. One need not go pass this case to demonstrate the point. I would have thought that ASIC is ideally placed to vet complaints made by persons not interested in the liquidation. If ASIC considers that matters complained of have merit it has more than enough powers to deal with them.[28]

47 The order of the Court is that the application for leave to appeal be dismissed with costs.

[2] Vink v Tuckwell [2008] VSC 100, [1] - [24]; Vink v Tuckwell (No 2) [2008] VSC 206, [32] - [46]; Vink v Tuckwell (No 3) [2008] VSC 316, [5] - [28].

[3] Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246, 253-4.

[10] Ibid [117] (citations omitted); see also [5]-[13] per Maxwell P and Neave JA, [81] per Chernov JA, [126]-[130] per Ashley JA.

[13] Niemann v Electronic Industries Ltd [1978] VicRp 44; [1978] VR 431, 433.

[15] House v R [1936] HCA 40; (1936) 55 CLR 499, 504-5.

[16] In Re Will of Gilbert (dec'd) (1946) 46 SR (NSW) 318, 323; Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 176-7.

[17] For example, Livesey v New South Wales Bar Association [1983] HCA 17; (1983) 151 CLR 288.

[18] Vink v Tuckwell (No 2) [2008] VSC 206, [108].

[19] For example, Richmond Sales Pty Ltd (In liq) v Robert McDermott [2006] FCA 52; (2006) 56 ACSR 323, 331; Re Glowind Pty Ltd (In liq), Takchi v Parbery [2003] NSWSC 1190; (2003) 48 ACSR 456, 465; Beuhaus Pyrmont Pty Ltd (In liq) [2006] NSWSC 752, [4].

[20] Vink v Tuckwell (No 2) [2008] VSC 206, [181]-[183].

[22] Vink v Tuckwell (No 3) [2008] VSC 316.

[24] Ibid [60], [61], [104]-[107].

[27] Vink v Tuckwell [2008] VSC 100, [90]-[97].

[28] Vink v Tuckwell (No 2) [2008] VSC 206 at [186]- [187].

Court (Corporations) Rules 2003

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