Centric Group Pty Ltd v Oxford Construction Pty Ltd

[2018] NSWSC 1808

Supreme Court

New South Wales

Medium Neutral Citation:

Centric Group Pty Ltd v Oxford Construction Pty Ltd [2018] NSWSC 1808

Hearing dates:

22 November 2018

Date of orders:

22 November 2018

Decision date:

22 November 2018

Jurisdiction:

Equity - Corporations List

Before:

Parker J

Decision:

See [13]

Catchwords:

CORPORATIONS – winding up – winding up in insolvency – failure to comply with a statutory demand – no evidence to rebut presumption of insolvency

  CORPORATIONS – winding up – where company represented in proceedings by director – whether the director of a company can defend winding up proceedings – leave of the Court required – leave not granted in circumstances where the director does not understand the real issues in dispute

Legislation Cited:

Building and Construction Industry Security of Payment Act 1999 (NSW)
Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth), ss 459P, 459Q

Category:

Principal judgment

Parties:

Centric Group Pty Ltd (Plaintiff)
Oxford Construction Pty Ltd (Defendant)

Representation:

Counsel:
N Notley/T Harris-Roxas (Plaintiff)

 

Solicitors:
D Edwards
J Merewether (interested creditor)

  Alleged authorised director:
R Huang

File Number(s):

2018/204078

Publication restriction:

Nil

Judgment – EX TEMPORE

Revised and reissued 23 November 2018

1. This is an application to have the defendant company, Oxford Construction Pty Ltd (to which I refer as “the Company”), wound up in insolvency. The application is based on failure to comply with a statutory demand issued in June 2018. The statutory demand, in turn, claims monies owed pursuant to an adjudication certificate (issued, I assume, pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW)) which is dated May 2018.

2. The application is undefended. The circumstances in which that happened are as follows.

3. The Company was formerly represented by Mr Darren Edwards, solicitor, of Edwards Kirby Lawyers. The application was prepared for hearing in the usual way and was fixed for final hearing by the Court by Black J on 8 October 2018. Two days ago, Mr Edwards contacted the Court indicating that he wished to withdraw from acting in the proceedings. Mr Edwards had, in fact, filed a Notice of Ceasing to Act, but the notice was filed less than the 28 days required by the Rules before the hearing to make it effective, and therefore leave was required. Yesterday, I heard an application by Mr Edwards for leave to withdraw, and refused it.

4. Overnight, the Court received an email communication from Mr Robert Huang who apparently is a director of the defendant. Mr Huang's email stated that he had terminated Mr Edwards' retainer. The email went on to say that Mr Huang would be appearing for the company at today’s hearing and that an interpreter would be required.

5. This morning, a response was sent on behalf of the Court pointing out to Mr Huang that under the Rules, a company must be represented by a solicitor unless the Court grants permission for an unqualified person to represent the company; that if Mr Huang wished to represent the company, he would need to apply for permission; that any such application needed to be supported by evidence; and that if Mr Huang wished to have an interpreter present, that was a matter for him to arrange.

6. When the matter was called before the Court at 10:00 am today, Mr Edwards appeared. He confirmed his instructions had been terminated. In those circumstances, I considered that I had no alternative but to allow him to withdraw, since he had no ability to represent the Company in circumstances where his retainer had been terminated and he had accepted the termination.

7. Mr Huang then made an oral presentation to the Court in which he sought permission to represent the Company. Mr Huang tendered a number of documents. There was no real evidence in support of the application. As best I could understand Mr Huang, it appeared that his complaint was that the debt claimed in the statutory demand had never been owing in the first place. He complained (in a way which I did not find easy to follow) about Mr Edwards' conduct of the proceedings on the Company's behalf. The impression I received was that the complaint was that Mr Edwards had not pursued the allegation that the debt was disputed and instead focused on the question of whether the Company was solvent. I should say that in the course of preparing the case for hearing, affidavits and expert reports were filed and served on behalf of the Company and in reply by the plaintiff.

8. The rule that a company must be represented by a legal practitioner plays an important part in the efficient and just disposal of the Court's business. By ensuring that the company's case in proceedings is presented by a qualified person, it ensures that the conduct of the case is subject to ethical sanctions which require that the case be conducted responsibly and in accordance with the requirements of the Civil Procedure Act 2005 (NSW). The present case is an illustration of why the rule is important. It appeared to me from Mr Huang's presentation that he did not understand that, under the Corporations Act, the time limit for challenging a statutory demand is strict and cannot be extended, no matter what excuse is offered for failing to challenge during the period allowed by statute.

9. If I am correct in assuming that the complaint against Mr Edwards was that he focused on solvency rather than attempting to challenge the statutory demand out of time, then the complaint was quite misconceived. If Mr Huang was pressing Mr Edwards to make a complaint about the underlying debt which did not bear on solvency, then Mr Edwards was acting in accordance with his ethical obligations in refusing to conduct the Company's case on a hopeless basis.

10. Nothing that Mr Huang said to me left me with any confidence that he has a proper understanding of the way the law in this area works, or that he could be trusted to confine the Company's case to relevant issues. Mr Huang was present in Court when I refused Mr Edwards' application yesterday. In the course of refusing the application, I made it clear that the main reason for doing so was that to accede to the application would inevitably result either in an application by Mr Huang as an unqualified person to conduct the Company's defence, or an adjournment, or perhaps both. Mr Huang cannot have been in any doubt of the Court's position.

11. While I understand Mr Huang’s frustration, as I explained to him in the course of his argument, neither the Court nor any of the legal practitioners who are charged with administering the law in this case is entitled to depart from the clearly expressed provisions of the Corporations Act. To invite the Court to do so would be a recipe for chaos. It would lead to the disruption of the despatch of the Court's business, to the detriment of litigants who do conduct their case in accordance with the Rules and by reference to arguable issues of fact or law. It was for these reasons that I refused Mr Huang's application to represent the company.

12. The evidence before the Court establishes that the requirements of s 459Q and the formal requirements of the rules have been complied with. The plaintiff has established that it is entitled to have the Company wound up in insolvency. I will make orders in the usual form for the winding up of the Company and for the appointment of a liquidator.

13. The Orders of the Court are:

1.   I decline to permit Mr Huang to represent Oxford Construction Pty Ltd (“the Company”).

2.   I order that the Company be wound up in insolvency under Corporations Act 2001 (Cth), 459P.

3.   I order that Leon Lee of Morton’s Solvency Accountants be appointed as liquidator of the Company.

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Decision last updated: 23 November 2018