Hoang Giet & Anor t/as Hong Ky Quality Meats v Poumeaton Enterprise Pty Ltd

[2006] NSWSC 1468

CITATION:	Hoang Giet & Anor trading as Hong Ky Quality Meats v Poumeaton Enterprise Pty Ltd [2006] NSWSC 1468
HEARING DATE(S):	27/10/06
JUDGMENT DATE :	27 October 2006
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	10/27/2006
DECISION:	1. Order that the amended interlocutory process filed in court on 20 October 2006 be dismissed; 2. Order that the applicant pay the defendant's costs of the interlocutory process; 3. No order as to costs as between the applicant and the plaintiff; 4. The exhibits may be returned.
CATCHWORDS:	Corporations - Winding-up - Application to terminate winding-up - Defendant company insolvent - Application refused - No question of principle.
LEGISLATION CITED:	Corporations Act 2001 (Cth) Uniform Civil Procedure Rules 2005 (NSW)
CASES CITED:	Double Bay Newspapers Pty Ltd v The Fitness Lounge Pty Limited (2006) 57 ACSR 131
PARTIES:	Hoang Giet & Anor t/as Hong Ky Quality Meats v Poumeaton Enterprise Pty Ltd
FILE NUMBER(S):	SC 4384/06
COUNSEL:	Applicant: D K Raphael Respondent: M Pesman Liquidator: D Robertson CBA Bank: N Manousaridis
SOLICITORS:	Applicant: N/A Respondent: Leonard Legal Liquidator: N/A CBA Bank: J M Lanser

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

WHITE J

Friday, 27 October 2006

4384/06 Hoang Giet & Anor t/as Hong Ky Quality Meats v Poumeaton Enterprise Pty Ltd

JUDGMENT

1 HIS HONOUR: The background to the present application is as set out in my reasons of 20 October 2006 for refusing a temporary stay of the winding-up. On that day, the applicant filed an amended interlocutory process seeking, in addition to an order under s 482 of the Corporations Act 2001 (Cth), an order pursuant to r 36.16(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW) to set aside the winding-up order. However, counsel for the applicant soon thereafter made it clear that it was only the application under s 482 of the Corporations Act which would be proceeded with.

2 For the reasons I gave in Double Bay Newspapers Pty Ltd v The Fitness Lounge Pty Limited (2006) 57 ACSR 131 on an application for permanent stay, or an order for terminating a winding-up pursuant to s 482 of the Act, it is incumbent upon the applicant to establish the company's solvency, and that is so even in circumstances where there was an irregularity in the obtaining of the winding-up. In that case, I said that the position could be different where the applicant sought to set aside a winding-up order was obtained through a fundamental irregularity.

3 The interlocutory process was stood over to today in order to allow the applicant further time to put on evidence of the company's solvency.

4 The applicant seeks a further adjournment of the interlocutory process for a month in order for that to be done. Counsel says that extensive affidavits have been received, particularly from the liquidator, only recently, and the applicant has not had the opportunity to deal with that evidence. However, it appears to me that so far as the application under s 482 of the Act is concerned, the application was brought prematurely. It will be necessary for the applicant to establish the company's solvency before an order under that section is made.

5 If the position is as outlined in the liquidator's affidavits, then, in order for the application to be successful, it will be incumbent upon the applicant to provide substantial funds to the defendant without the defendant’s incurring fresh liability to the provider of those funds.

6 It does not seem to me to be appropriate to further adjourn the application. I think that to do so is likely to increase the legal costs which the parties will incur.

7 In those circumstances, the applicant does not press for the relief sought in the amended interlocutory process.

8 That leaves the question of costs. Even though the application was only sought to be finally maintained pursuant to s 482 of the Act, the application for an order setting aside the winding-up order was properly brought. The applicant alleged that the winding-up order had been obtained in breach of an agreement made with the plaintiff. On the return of the interlocutory process, the plaintiffs’ counsel advised that the plaintiff could not support the order if the application to set it aside were persisted with.

9 The application resulted in the appearance of other creditors, in particular the Commonwealth Bank and CBFC Limited. They have appeared by solicitors and counsel. They have appeared because they intended to seek an order to be substituted as applicants for the winding-up of the defendant company if the winding-up order made on 17 October was set aside. In the result, it is not necessary for them to have persisted in that application, because a different order has been sought by the applicant.

10 I do not think in the circumstances it would be fair to the applicant to be compelled to pay the costs of the Commonwealth Bank and CBFC.

11 I will order that the applicant pay the costs of the defendant. The liquidator has certainly been put to substantial costs in the application.

12 The question then is whether, as the applicant seeks, I should order that the plaintiff pay the applicant's costs of the application. Had the application to set aside the winding-up order been persisted with, and had it been demonstrated, as appears prima facie to have been the case, that the order was effected by a fundamental irregularity, it is probable that I would have ordered that the plaintiff pay the applicant's costs of that part of the application, irrespective of what happened consequent upon the setting aside of the winding-up order. However, the application has not been persisted with. That is probably due to the applicant's recognition that, at the end of the day, he would, in any event, need to establish the company's solvency to avoid the company being wound up, even on the application of a substituted creditor. That probably reflects a realistic appreciation of the position and, in turn, indicates that even though the order was affected by an irregularity, the application was premature.

13 In the circumstances I propose to make no order for costs as between the applicant and the plaintiff.

14 I will reserve liberty to the defendant and to the Commonwealth Bank and CBFC Limited, if so advised, to seek an order for costs against the plaintiff. If any such application is made, it should be made by notice to the solicitors for the plaintiff and a copy to my associate, accompanied by written submissions in support of the application. If any such application is made, such notice should be given within seven days and provided to my associate within the same period. In that event, I direct the plaintiff to provide written submissions in response to the party making such an application with a copy to my associate within a further seven days.

15 Unless any party seeks an oral hearing in relation to the matter or I consider such an oral hearing is necessary, I will deal with any such application on the papers.

16 I order that the amended interlocutory process filed in court on 20 October 2006 be dismissed.

17 I order that the applicant pay the defendant's costs of the interlocutory process.

18 I make no order as to costs as between the applicant and the plaintiff.

19 The exhibits may be returned.

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