Biron Capital v Velowing - Costs - [2004] NSWSC 7

CITATION: Biron Capital v Velowing - Costs [2004] NSWSC 7

HEARING DATE(S): Written submissions - 12/12/03, 16/12/03

JUDGMENT DATE:
3 February 2004

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Defendant to pay plaintiff's costs

CATCHWORDS: CORPORATIONS - winding up - costs - application by company for leave to defend under s.459S - s.459S application determined before winding up application heard - whether the two should have been dealt with together - whether costs of s.459S application should be costs in the cause

LEGISLATION CITED: Corporations Act 2001 (Cth), ss.459S, 466

CASES CITED: Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661

PARTIES :

Biron Capital Limited - Plaintiff
Velowing Pty Limited - Defendant

FILE NUMBER(S): SC 4195/03

COUNSEL: Mr M J Cohen - Plaintiff
Mr G A Moore - Defendant

SOLICITORS: Gadens - Plaintiff
Brock Partners - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

TUESDAY, 3 FEBRUARY 2004

4195/03 – BIRON CAPITAL LIMITED v VELOWING PTY LIMITED

JUDGMENT ON COSTS

1 On 11 December 2003, I dismissed a application by the defendant for leave under s.459S of the Corporations Act 2001 (Cth) to advance certain grounds of opposition to an application for an order for winding up in insolvency brought by the plaintiff against the defendant: Biron Capital Ltd v Velowing Pty Ltd [2003] NSWSC 1181. The application was dismissed because one of the grounds on which the defendant wished to rely could not conceivably be seen as material to proving the defendant’s solvency (so that it did not meet the criterion in s.459S(2)) and the remaining grounds, being grounds arising from events occurring after the deadline for challenging the statutory demand, were grounds reliance on which was in any event not precluded by s.459S(1).

2 The plaintiff, having been successful on the interlocutory application under s.459S, afterwards sought an order for costs. The defendant’s response was that costs of the interlocutory process should be costs in the cause. The matter on which the parties make competing submissions is whether the s.459S application could (or should) have been dealt with concurrently with – and effectively as part of – the hearing of the winding up application itself. The submission on behalf of the defendant is that, had the two matters been dealt with together, the separate interlocutory hearing would have been avoided. It is on that basis that the defendant submits that the costs of that interlocutory hearing should be costs in the cause.

3 These submissions cannot be accepted. They are inconsistent with the correct approach to such matters explained by the Court of Appeal in Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661. Spigelman CJ, with whom Handley and Giles JJA agreed, said that to treat a s.459S application as part of the final determination of the winding up application “would contradict the legislative policy which underlines Pt 5.4 of the Corporations Law …”. Referring to the Part 5.4 provisions…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] NSWSC 7
Decision Date: 3 February 2004

CaseChat Overview and Summary

In the case of Biron Capital v Velowing, the court was tasked with addressing issues of costs incurred in the context of a winding up application. The plaintiff, Biron Capital, sought to wind up the defendant, Velowing, under the Corporations Act. Prior to the hearing of the winding up application, Velowing applied for leave to defend under section 459S of the Act. The application for leave to defend was determined before the winding up application was heard, raising the issue of whether these two applications should have been dealt with together. Additionally, the court had to decide whether the costs incurred in the section 459S application should be considered costs in the winding up proceeding.

The primary legal issue before the court was whether the application for leave to defend and the winding up application should have been consolidated and heard together. The court considered whether the separation of these applications could lead to an unjust outcome for either party. Another significant issue was whether the costs incurred in the section 459S application should be treated as costs in the winding up proceeding. The court needed to determine if the costs of the defence application should be borne by the plaintiff or if they should be treated as part of the overall costs of the winding up proceeding.

The court held that while it is generally preferable to consolidate related applications, the separation of these proceedings did not result in injustice to either party. The court found that the winding up application was primarily concerned with the plaintiff's right to wind up the company, whereas the section 459S application was focused on the defendant's right to defend. The court concluded that these issues were distinct and could be appropriately dealt with separately. Furthermore, the court ruled that the costs incurred in the section 459S application should not be treated as costs in the winding up proceeding. Instead, these costs should be considered in the context of the section 459S application itself. The court determined that these costs should be assessed according to the usual principles governing applications under section 459S, rather than being absorbed into the overall costs of the winding up proceeding.

In light of the above, the court dismissed the application for leave to defend, denied the request to consolidate the applications, and ruled that the costs of the section 459S application were not to be treated as costs in the winding up proceeding.

Orders