Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (No 2)

[2018] NSWSC 1713

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (No 2) [2018] NSWSC 1713
Hearing dates:	7 November 2018
Date of orders:	07 November 2018
Decision date:	07 November 2018
Jurisdiction:	Equity - Corporations List
Before:	Parker J
Decision:	See [12]
Catchwords:	CORPORATIONS – winding up – statutory demand – application for extension of time to comply with statutory demand – extension of time to pursue an appeal – prospective appeal raises no issue of principle – extension of time granted on terms that applicant undertake to commence and prosecute the appeal proceeding with all due dispatch and to provide security for the defendant's costs of the appeal
Legislation Cited:	Corporations Act 2001 (Cth), s 459F
Cases Cited:	Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd [2018] NSWSC 1647 Land & National Development Corporation v Tatebrook Pty Ltd [1999] NSWCA 280 Re Douglas Aerospace Pty Ltd (2015) 294 FLR 186; [2015] NSWSC 167
Category:	Consequential orders (other than Costs)
Parties:	Grandview Ausbuilder Pty Ltd (Plaintiff) Budget Demolitions Pty Ltd (Defendant)
Representation:	Counsel: V Culkoff (Plaintiff) N Allan (Defendant)   Solicitors: Julie A Orsini (Plaintiff) Ziman & Ziman (Defendant)
File Number(s):	2018/56438
Publication restriction:	Nil

Judgment – ex tempore

Revised and reissued on 12 November 2018

1. On 2 November, I handed down my judgment in this application by the plaintiff to have a statutory demand issued by the defendant set aside: Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd [2018] NSWSC 1647. I concluded that Grandview had established the existence of an offsetting claim, but only in the sum of $220,000. I decided that I would be prepared to make an order reducing the amount of the statutory demand by $220,000, but only on terms that Grandview undertake to commence proceedings as quickly as reasonably practicable to assert its offsetting claim (along with any other claim arising out of the subcontract); to pay the sum of $220,000 into Court in those proceedings; and thereafter to prosecute those proceedings with all due dispatch. I adjourned the proceedings to allow Grandview to decide whether to proffer such an undertaking.

2. When the matter came before me today, I was informed by counsel for Grandview that Grandview was not prepared to proffer the undertaking. It follows, in my view, that the proceedings should be dismissed in their entirety.

3. Counsel for Grandview submitted that, at the hearing, Grandview had some success in that it had established the existence of an offsetting claim for $220,000, but this success was a contingent one given my conclusion that the statutory demand should only be reduced if undertakings were provided. As a matter of substance, as well as of form, Grandview has failed in these proceedings and there is no reason why costs should not follow the event.

4. Counsel for Grandview informed me that Grandview wishes to challenge my decision in the Court of Appeal. Counsel indicated that there was no challenge to the judgment of Brereton J (as his Honour then was) in Re Douglas Aerospace Pty Ltd (2015) 294 FLR 186; [2015] NSWSC 167, on which I relied in my decision. As I understood counsel's submissions, Grandview wishes to challenge the conclusion I reached at [54] in my decision. There, I concluded the claim propounded in the application to recover the costs to complete the works was unsustainable and, therefore, did not amount to an offsetting claim.

5. Counsel for Grandview asked me to stay my orders dismissing the proceedings until the hearing of the proceedings in the Court of Appeal or to extend the time for compliance with the statutory demand using the Court's power under Corporations Act 2001 (Cth), s 459F(2)(a)(i) until after the appeal proceedings have been dealt with.

6. I am not prepared to grant an extension under s 459F(2)(a)(i), which could potentially see the dispute put on hold for a period of many months. There are three factors that are of particular significance in this regard. First, the statutory regime imposes rigid times and deadlines and is designed to ensure that disputes about statutory demands in general and disputed debts in particular are dealt with rapidly.

7. Second, the refusal of an application to set aside a statutory demand has commercial consequences, but does not of itself affect any of the parties' rights. If the statutory demand is left unsatisfied, that does not itself affect the company against which it has been issued. The only relevance of the statutory demand is if an application follows to have the company wound up. For the purposes of such winding up proceedings the statutory demand creates a presumption of insolvency, but it is only a presumption and it is open to the company to demonstrate that it is solvent, in which case the winding up application will fail. A company that is clearly solvent has little, if anything, to fear from an unsatisfied statutory demand.

8. The third factor is the nature of the proposed appeal. From what I have been told, it does not apparently give rise to any issue of principle. To succeed, Grandview will need not only to demonstrate that the material before me in the hearing demonstrated the existence of an offsetting claim, but will also need to prevail on the discretionary question of whether, even if such an offsetting claim exists, the statutory demand should be set aside unconditionally.

9. It is a somewhat invidious position to be in when the issue concerns the potential for arguing that a judgment that I have just delivered is incorrect. But looking at the matter as dispassionately as I can, I did not detect any compelling argument that I had made an error on either of these issues. 

10. Nevertheless, Grandview is entitled under the CorporationsAct, s 459F(2)(a)(ii) to seven days' extension of time from now to comply with the statutory demand. I think the appropriate course is to give Grandview a slightly longer period of time by way of extension so that it may, if it chooses to pursue a challenge by way of appeal, bring that challenge forward in the next few weeks. It will then be for the Court of Appeal to decide whether there should be a further extension of the time for compliance with the statutory demand. It appears that, if satisfied that the circumstances made it appropriate to do so, the Court of Appeal would have power to grant a further extension of time for this purpose: Land & National Development Corporation v Tatebrook Pty Ltd [1999] NSWCA 280 at [2]‑[3].

11. While I am prepared to grant an extension for a couple of weeks, the extension will only be granted on terms. The terms will require Grandview to undertake to commence and prosecute an appeal proceeding with all due dispatch and, within seven days, to provide security for the defendant's costs of the appeal proceedings in the sum of $30,000.

12. The orders of the Court are:

1.   Order that the proceedings be dismissed.

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

3.   Order, on the plaintiff by its counsel undertaking:

a)   to commence and prosecute an application for leave to appeal against Orders 1 and 2 with all due dispatch; and

b)   to provide security for the defendant’s costs of those proceedings in the sum of $30,000 by payment into Court or otherwise in a form acceptable to the Registrar of the Court of Appeal, or otherwise as agreed between the parties,

that the time for compliance with the statutory demand issued by the defendant on 31 January 2018 in the sum of $1,024,573.36 be extended up to and including 28 November 2018.

4.   Grant liberty to apply.

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Amendments

19 December 2018 - amend typographical error at [7].

Decision last updated: 19 December 2018