Global Metal Group Pty Ltd v Fineston Company Ltd

[2016] NSWSC 1044

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Global Metal Group Pty Ltd v Fineston Company Ltd [2016] NSWSC 1044
Hearing dates:	28 July 2016
Date of orders:	28 July 2016
Decision date:	28 July 2016
Jurisdiction:	Equity
Before:	Barrett AJA
Decision:	1.   Order that the proceedings be dismissed. 2.   Order that the plaintiff pay the defendant's costs of the proceedings
Catchwords:	PROCEDURE – where documents required by usual order for hearing not received by day preceding that appointed for hearing – inquiries by judge’s associate elicits information that plaintiff became subject to winding up after commencement of proceedings and that its solicitor has no instructions – letter addressed to judge then received direct from plaintiff’s liquidator asserting that the proceedings are stayed by s 471B and asking the judge whether the proceedings will be now discontinued – a pointless and unhelpful letter inappropriately sent – solicitor for plaintiff appears at hearing but has no instructions – no appearance by or for liquidator – solicitor for defendant seeks dismissal with costs – such orders made.
Legislation Cited:	Corporations Act 2001 (Cth) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Camden Council v Rafailidis (No 5) [2014] NSWLEC 85 Harrington v Newman [2016] QCA 187 Stanizzo v Badarne [2014] NSWSC 689 Tugrul v Tarrants Financial Consultants Pty Limited (in liquidation) [No 2] [2013] NSWSC 1971
Texts Cited:	"Chatting with Chambers" (2014) 88 ALJ 103
Category:	Principal judgment
Parties:	(P) Global Metal Group Pty Ltd (D) Fineston Company Ltd
Representation:	Solicitors: (P) Mr R Djundja of Jordan Djundja Lawyers (D) Mr D Turner of Norton Rose Fulbright Australia
File Number(s):	2016/89199
Publication restriction:	Nil

EX TEMPORE Judgment (REVISED)

1. BARRETT AJA: These proceedings were commenced by an originating process filed 22 March 2016 by Global Metal Group Pty Limited (which I shall call "Global"), through its solicitor Mr Jordan. By that originating process, Global made application under s 459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand served on it by the defendant, Fineston Company Limited. Mr Kim, solicitor, filed a notice of appearance for Fineston on 1 April 2016.

2. On 23 May 2016, the matter was listed for hearing today and the usual order for hearing was made. Yesterday, my associate emailed the solicitors on the record for Global and Fineston respectively noting that the documents required by the usual order for hearing had not been received.

3. Mr Jordan, the solicitor for Global, replied promptly that Global was in liquidation, that he had informed the liquidator of the court date today and that he had no instructions to appear but would do so as a matter of courtesy, if required.

4. Mr Kim, the solicitor for Fineston, also replied promptly saying that Global had gone into liquidation and that Mr AHJ Wily had been appointed liquidator. He also said that Fineston was seeking to instruct another solicitor in the matter.

5. At my request, the associate then emailed both solicitors saying that the matter would remain in today's list. Mr Mathas, solicitor, subsequently filed a notice of change of solicitor for Fineston.

6. Yesterday afternoon the following letter was received at my Chambers,

“Acting Justice Barrett

Supreme Court of New South Wales

Queens Square

SYDNEY NSW 2000

Dear Sir

RE:    GLOBAL METAL GROUP PTY LIMITED (IN LIQUIDATION)

ACN 091 926 582

2016/89199 in the matter of Fineston Company Ltd

I was appointed Liquidator of the abovenamed company on 20 June 2016. Formal notification of my appointment is attached for your information.

As you will be aware Section 471B of the Corporations Act provides for a stay of proceedings and suspension of enforcement process which provides that a person cannot begin or proceed with:

a)   a proceeding in a court against the company or in relation to property of the company; or

b)   enforcement process in relation to such property;

except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

Accordingly, in the current circumstances could you please confirm the above proceedings will be now be discontinued.

Should you have any further questions please do not hesitate to contact Nelson Huang of this office.

Yours faithfully

AHJ Wily

LIQUIDATOR"

7. A copy of Form 505 by which Mr Wily notified his appointment to ASIC was enclosed with the letter. The form refers unambiguously to creditors voluntary liquidation.

8. Mr Wily's letter is an extraordinary letter. Its principal purpose seems to have been to draw my attention to s 471B of the Corporations Act. But I was quite mystified by Mr Wily’s apparent belief that that section has some relevance to a case such as the present where a company which, as plaintiff, seeks an order setting aside a statutory demand with which it has been served subsequently becomes subject to voluntary winding up.

9. The opening words of s 471B are:

"While a company is being wound up in insolvency or by the Court".

10. Global is not a company that is being wound up in insolvency or by the Court. And even if Global had been such a company, the section would have caused to be stayed proceedings in a court against Global or in relation to its property and any enforcement process in relation to such property. Mr Wily's apparent assumption that an application under s 459G made by a company as plaintiff is a proceeding against the company or in relation to its property or involves enforcement process in relation to such property is unfathomable.

11. Perhaps it was in relation to s 500(2), rather than s 471B, that Mr Wily intended to refresh my memory. Section 500(2) at least deals with a company subject to voluntary winding up. But the stay it imposes is upon any, "action or other civil proceeding . . . against the company". There is nothing in that section either that causes it to affect a proceeding commenced by the company as plaintiff.

12. Then there is the penultimate paragraph of Mr Wily's letter in which he asks me to confirm that the s 459G application commenced by the company of which he is now the liquidator "will be now discontinued".

13. Discontinuance is something that lies in the hands of the plaintiff alone: see Uniform Civil Procedure Rules 2005 (NSW), r 12.1. Mr Wily is the liquidator or of Global. He has supplanted its directors so far as decision making for the company is concerned. I do not know why he asked me whether a process that lies entirely and exclusively in his own control will be implemented.

14. Having reached the last paragraph of the letter, I did not accept the invitation there set out, even though the questions I have outlined had arisen in my mind.

15. Mr Wily is a very experienced liquidator who, in the course of practising his profession, has acquired a close familiarity with court proceedings. He should have known that it was inappropriate to write the letter he did to the judge listed to hear a matter to which a company of which he is liquidator is a party. As to that, reference may be made to the item headed "Chatting with Chambers" (2014) 88 ALJ 103 referring to the observations of Kunc J in Tugrul v Tarrants Financial Consultants Pty Limited (in liquidation) (No 2) [2013] NSWSC 1971 (see also Stanizzo v Badarne [2014] NSWSC 689 and Camden Council v Rafailidis (No 5) [2014] NSWLEC 85).

16. Also, had Mr Wily reflected on the content of the letter for any length of time, he would inevitably have realised that nothing in it makes any sense. The letter was a pointless and unhelpful letter. It should not have been sent.

17. In the event, Mr Djundja, Mr Jordan’s partner, has appeared this morning, even though neither he nor Mr Jordan has any instructions from the plaintiff. Mr Turner, who is from Mr Mathas’ firm, has appeared for the defendant. Mr Turner's position is that, if, as Mr Wily’s letter seems to indicate, Mr Wily wishes to have Global discontinue the proceedings, then he should cause it to seek leave to do so on the basis stated in the rules, that is, that there be an order for costs in favour of the defendant. Alternatively, Mr Turner says, the proceedings should be dismissed with costs.

18. The circumstances of this case are very similar to those that came before the Queensland Court of Appeal last week in Harrington v Newman [2016] QCA 187. In that case, proceedings had been duly listed for hearing and the solicitor on the record for the appellant had no instructions that enabled him to proceed with the matter when it was called on. This was apparently because of the appellant's lack of funds but, as Morrison JA pointed out, not even a party in that situation may ignore the court processes. In those circumstances the appeal was dismissed with costs.

19. That is the appropriate outcome here also. Fineston will have to decide whether to lodge a proof of debt in the winding up of Global for the costs awarded to it and, if it does, Mr Wily will have to turn his mind to whether or not the liability for those costs involves a claim the circumstances giving rise to which occurred before what s 553(1) calls the "relevant date".

20. The orders are as follows:

1.   Order that the proceedings be dismissed.

2.   Order that the plaintiff pay the defendant's costs of the proceedings.

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Amendments

03 August 2016 - The ALJ citation in [15] and on the coverpage – now reads (2014) 88 ALJ 103

Decision last updated: 03 August 2016