Exuma Pty Ltd v Cockburn Pty Ltd

[2000] WASC 166

EXUMA PTY LTD -v- COCKBURN PTY LTD [2000] WASC 166

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2000] WASC 166
Case No:	COR:75/2000	Heard:	10 & 17 MAY, 6 JUNE 2000
Coram:	MASTER BREDMEYER	Delivered:	20/06/00
No of pages:	4	Judgment Part:	1 of 1
Result:	Costs order made
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Parties:	EXUMA PTY LTD COCKBURN PTY LTD
Catchwords:	Costs Winding-up application Applicant's debt paid Effect on standing of applicant
Legislation:	Nil
Case References:	DMK Building Materials Pty Ltd v C B Baker Timbers Pty Ltd (1985) 2 NSWLR 711 Motor Terms Co Pty Ltd v Liberty Insurance Ltd (1967) 116 CLR 177 Nil

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : EXUMA PTY LTD -v- COCKBURN PTY LTD [2000] WASC 166 CORAM : MASTER BREDMEYER HEARD : 10 & 17 MAY, 6 JUNE 2000 DELIVERED : 20 JUNE 2000 FILE NO/S : COR 75 of 2000 MATTER : Section 459P of the Corporations Law BETWEEN : EXUMA PTY LTD

Applicant

AND

COCKBURN PTY LTD
Respondent

Catchwords:

Costs - Winding-up application - Applicant's debt paid - Effect on standing of applicant

Legislation:

Nil

Result:

Costs order made

(Page 2)

Representation:

Counsel:

Applicant : Mr I A Morison
Respondent : Mr P D C Robinson

Solicitors:

Applicant : Huston Partners
Respondent : Williams & Hughes

Case(s) referred to in judgment(s):

DMK Building Materials Pty Ltd v C B Baker Timbers Pty Ltd (1985) 2 NSWLR 711
Motor Terms Co Pty Ltd v Liberty Insurance Ltd (1967) 116 CLR 177

Case(s) also cited:

Nil

(Page 3)

1 MASTER BREDMEYER: This is a reserved decision on costs. On 10 May I made certain orders and the cost order was "costs of the application to date are awarded to the applicant to be taxed if not agreed". The application itself was adjourned to 17 May.

2 On 17 May 2000 I learned that the $85,000 debt, the basis of the winding-up application, had been paid. On that day I made the following orders:

1. Application dismissed.

2. The applicant to pay the company's costs of today on an 80 per cent basis, to be taxed if not agreed.

3 Shortly after that the solicitors for the applicant asked me to reconvene and recall my previous orders on the basis that the decision was given per incurium. I reconvened and heard further argument on 6 June 2000. The applicant's argument was that based on Motor Terms Co Pty Ltd v Liberty Insurance Ltd (1967) 116 CLR 177 at 194 - 195 and DMK Building Materials Pty Ltd v C B Baker Timbers Pty Ltd (1985) 2 NSWLR 711 that the applicant's standing is determined at the date of the application and not at the date of the hearing, and, whilst the court has a discretion to dismiss a winding-up application if the applicant has been paid out by the hearing, the applicant retains standing to pursue the application.

4 The applicant then argued that I ought, in the exercise of my discretion, to wind up the company on the basis that it was insolvent. It had borrowed the $85,000 to pay out the applicant from one of the directors and had thereby merely substituted a debt from one creditor to another. The company had only ever made losses and, had the director's not advanced the sum of $85,000, the company's proposal was to pay off that debt by monthly instalments of $5000 per month. There was no evidence of a certain and dependable line of credit and a solicitor's statement that the company had further credit available to it, including an overdraft facility, was a mere assertion and was vague. The company was not only presumptively insolvent but, on the available evidence, it was actually insolvent and should not be allowed to continue.

5 After considering those submissions I nevertheless decided in the exercise of my discretion to affirm my orders made on 17 May and gave brief oral reasons for doing so. I reserved on the question of costs. It was argued that both the costs of 17 May and 6 June should go to the applicant.

(Page 4)

6 Although I erred in law on 17 May in saying that the applicant company which had been paid its debt therefore lacked standing to continue with the winding-up application, I nevertheless later, in the exercise of my discretion, decided to affirm the orders made on that day. I consider that the costs of 17 May should not be altered and that the costs of the extra hearing on 6 June should follow the event. The applicant sought the further hearing and was ultimately unsuccessful in persuading me to come to a different conclusion on the merits of the case. I will order that the applicant do pay the respondent's costs of 6 June, to be taxed if not agreed.