Bloc (ACT) Pty Ltd v Crafted Capitol Pty Ltd (No 2)

[2021] ACTSC 85

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Bloc (ACT) Pty Ltd v Crafted Capitol Pty Ltd (No 2)

Citation:

[2021] ACTSC 85

Hearing Date:

30 April 2021

DecisionDate:

30 April 2021

Before:

Mossop J

Decision:

See [10]

Catchwords:

CORPORATIONS – WINDING UP – Application for an indefinite stay of winding up order made by the court – application made after orders had been entered – offer made by the defendants to pay outstanding judgment debt in full – winding up order is a final order – no statutory basis to discharge order identified – application dismissed

Legislation Cited:

Corporations Act 2001 (Cth), s 482

Cases Cited:

Davis v Insolvency and Trustee Service Australia (No 2) [2011] FCAFC 9; 190 FCR 437

Parties:

Bloc (ACT) Pty Ltd ( Plaintiff)

Crafted Capitol Pty Ltd ( First Defendant)

Crafted Central Pty Ltd (Second Defendant)

Representation:

Counsel

A Greinke ( Plaintiff)

P Walker SC ( Defendants)

Solicitors

Mills Oakley ( Plaintiff)

Terracon Legal ( Defendants)

File Number:

SC 79 of 2021

MOSSOP J:

1. I gave my judgment in this manner yesterday morning: see Bloc (ACT) Pty Ltd v Crafted Capitol Pty Ltd [2021] ACTSC 81. At the time that I delivered judgment and made orders counsel for the defendants, Mr Walker SC, sought a stay of those orders until 4:00pm this afternoon. The orders that I made have now been taken out.

1. By an application in proceeding filed today the defendants seek an extension of the stay until further order of the court.  They further seek variation of the freezing order made in relation to Crafted Central Pty Ltd (Crafted) so as to permit the whole of the outstanding judgment sum and interest to be paid to the plaintiff, Bloc (ACT) Pty Ltd (Bloc), and an amount of $200,000 to be paid into court pending quantification of a costs order that I made in favour of Bloc.  The purpose of the application is identified as being to then apply to the court for a permanent stay of the winding up or seeking orders for its dismissal.

1. Counsel for the defendants submitted that the stay of the court’s orders was interlocutory and hence able to be varied.  Further, he submitted that the liberty that was granted could be used to vary any of the court’s orders and not merely the freezing order which was made for the benefit of the liquidator.

1. Even before orders have been entered, there are significant limitations upon the capacity for the court to revisit the orders made: see the summary of the principles in Davis v Insolvency and Trustee Service Australia (No 2) [2011] FCAFC 9; 190 FCR 437 at [4] and [6]. The capacity of the court to vary its orders does not permit a party to relitigate issues which have been determined by the judgment. Nor does it permit a party to reopen its case so as to improve its evidentiary position with the hope of obtaining a different result. The position is even more restrictive where, as here, final orders have been entered.

1. In the present case, the orders for the winding up were final orders.  A temporary stay was put upon the operation of those orders without opposition.  Assuming that the stay is treated for these purposes as an interlocutory order, rather than a component of the final orders for the winding up of the company (a point which I do not decide), I do not consider that it is appropriate to grant any further stay of the orders.  The purpose of the stay appears to be to seek variation of final orders which have been entered which, in the absence of a statutory entitlement or other established exception, cannot be varied other than by consent.  Payment of the judgment sum, the non-payment of which led to the winding up proceedings, does not provide a proper basis upon which to discharge final orders of the court.  Therefore, insofar as the orders are sought in order to seek a stay or discharge of the final orders that the court has made, the application must be dismissed.

1. Counsel for the defendants then said that another entity, Crafted Holdings Pty Ltd, will bring an application under s 482 of the Corporations Act 2001 (Cth) to stay or terminate the winding up. In my view, that does not provide a proper basis for extending the stay (once again, not deciding whether or not the order is final or interlocutory). An application under s 482 of the Corporations Act can only be made after the winding up has taken effect. It is not obvious to me that a proposal by Central to pay the judgment debts of Crafted would be sufficient to warrant a termination of the winding up in circumstances where the solvency of Crafted Capitol Pty Ltd (Capitol) has not been otherwise established. In any event, any application made under s 482 of the Corporations Act can be dealt with after it is made.  No particular adverse consequences have been identified which would flow from that course, having regard to the fact that Capitol is not otherwise trading, has no staff and no assets.

1. Having regard to the approach that I have taken, it is not strictly necessary to deal with the defendants’ contention that the grant of liberty to apply would permit the variation of the orders generally.  However, I observe that it was my intention that the grant of liberty to apply in order 5 was in order to facilitate any contested application to vary the scope of the freezing order, something which was clearly interlocutory and a proper subject of a grant of liberty to apply.  It was not intended to provide a means whereby the final order for the winding up of the company might be discharged, other than pursuant to some specific statutory authority to do so.

1. I observe that the course now sought to be adopted by the defendants is one which it was open to them to adopt when the adjudication certificate was first registered.  Since then, incremental offers have been made which come closer to satisfying the judgment as if Capitol and Central were involved with a negotiation with the court which permitted their offer to be improved on each occasion when they perceived that the court might not accept their position, or the court had in fact rejected their position.  That is an approach which is clearly inconsistent with the finality of litigation. To now put forward the proposal that they do after judgment has been delivered, tends to reinforce the merits of having an independent party take control of Capitol. For those reasons, the application in proceeding filed today should be dismissed.

[Counsel for Bloc sought an order for costs of the application on an indemnity basis. The parties made submissions.]

1. Bloc has sought costs of the application on an indemnity basis. In my view, such an order is appropriate. That is essentially for the reasons given above. Namely, that the approach taken to the proceedings by Capitol and Central has been of the nature which I describe at [8]. I consider that it is appropriate that a party put in the position of Bloc be fully indemnified for costs incurred by an application brought on urgently in those circumstances.

1. The orders of the Court are:

1.     The application in proceeding filed today is dismissed.

2.     Crafted Capitol Pty Ltd and Crafted Central Pty Ltd pay Bloc (ACT) Pty Ltd’s costs of the application in proceeding filed today on an indemnity basis.

I certify that the preceding ten [10] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop.

Associate:

Date: 26 May 2021