In Re Another Day Pty Ltd

[1991] TASSC 73

Serial No 56/1991
List "A"

COURT:  SUPREME COURT OF TASMANIA

CITATION:              In re Another Day Pty Ltd [1991] TASSC 73; A56/1991

PARTIES:  ANOTHER DAY; In re

FILE NO/S:  CV 1/1991
DELIVERED ON:  5 August 1991
JUDGMENT OF:  Zeeman J

Judgment Number:  A56/1991
Number of paragraphs:  20

Serial No 56/1991
List "A"
File No CV 1/1991

IN RE ANOTHER DAY

REASONS FOR JUDGMENT  ZEEMAN J

5 August 1991

1. This is an application made by Scottish Pacific Business Finance Pty Ltd ("the applicant") that Another Day Pty Ltd ("the company") be wound up under the Corporations Law. The proceedings were commenced by original summons filed in the Equity Division of the Supreme Court of New South Wales on 16 April 1991, apparently in accordance with the provisions of the Supreme Court Rules 1970 (NSW). On 16 April 1991 the Supreme Court of New South Wales ordered pursuant to s44(2) of the Corporations (New South Wales) Act 1990 that the proceedings be transferred to this Court. It may be assumed that that order was made because the company was incorporated in Tasmania pursuant to the provisions of the now repealed Companies Act 1962 and has its registered office in Tasmania.

1. The first question is one which arises under s51 of the Corporations (Tasmania) Act 1990. The particular question which requires determination is whether the jurisdiction I am exercising is jurisdiction with respect to a matter arising under the Corporations Law of Tasmania or with respect to a matter arising under the Corporations Law of New South Wales. The applicant appears to have assumed that the jurisdiction invoked is in respect of a matter arising under the Corporations Law of New South Wales so that the procedure applying in the Supreme Court of New South Wales was governed by rules made under s51(1) of the Corporations (New South Wales) Act 1990, and so that I am required to exercise my jurisdiction applying those same rules by virtue of s51(3) of the Act. For the reasons which follow, I do not consider that to be correct, but rather that the jurisdiction exercised by the Supreme Court of New South Wales was conferred upon it by s42(1) of the Corporations (Tasmania) Act. It follows that by virtue of s51(3) of that Act, that court was required to apply the Rules of Court made under s51(1) of the Corporations (Tasmania) Act 1990 and I am required to apply those same rules. Those rules are contained in PtVI of the Rules of the Supreme Court as applied by the Rules of the Supreme Court (Corporations Law Transitional Provisions) 1991. By virtue of those rules the originating proceedings should have been by petition in the form set forth in Form 2 of Appendix T and satisfying the requirements of r12 of PtVI.

1. Section 460(1) of the Corporations Law of Tasmania provides that "[t]he Court may order the winding up of a company that is unable to pay its debts". Section 9 contains the following relevant definitions: "Court" means "the Federal Court, or the Supreme Court of this or any other jurisdiction, when exercising the jurisdiction of this jurisdiction"; "company" relevantly means "a company incorporated, or taken to be incorporated, under the Corporations Law of this jurisdiction"; and "jurisdiction" relevantly means "a State". The company was not incorporated under the Corporations Law of any jurisdiction. It was incorporated under the provisions of the now repealed Companies Act 1962 (Tas). It was therefore a company within the meaning of the Companies (Tasmania) Code. Consequently it is deemed to be registered as a company under Pt 2.2 Division 2 of the Corporations Law of Tasmania by virtue of s126(2) thereof and deemed to be incorporated in Tasmania by virtue of s76(1). It is a company within the definition of that term contained in s9 and liable to be wound up under s460. For the same reasons it is not a company within the definition contained in s9 of the Corporations Law of New South Wales. The jurisdiction to wind up the company being derived from the Corporations Law of Tasmania, such jurisdiction is conferred by s42(1) of the Corporations (Tasmania) Act 1990.

1. Notwithstanding the failure on the part of the applicant to comply with PtVI of the Rules of the Supreme Court, counsel for the applicant submitted that I should nevertheless make the orders sought. He sought to invoke the provisions of s1322 of the Corporations Law and in particular the provisions of s1322(4)(a) thereof. I do not consider that that provision is available to the applicant. It only relates to contraventions of a provision of the Corporations Law or a provision of the constitution of a corporation. The relevant requirement is contained in s51(3) of the Corporations (Tasmania) Act which does not form part of the Corporations Law as defined by s9 thereof. However, that is not fatal to the applicant's submission that it ought to be relieved from non–compliance with the rules. Rule 100(1) of Pt VI enables the court, by special order, to dispense with the observance of any direction or requirement contained in PtVI or a form prescribed in Appendix T. It is appropriate that I consider the relevant requirements of PtVI, the extent to which they have and have not been observed, and what has been done in lieu of compliance with any provision of those rules which has not been observed. I observe that counsel for the company did not make any submissions opposing the applicant's application to be relieved from compliance with the relevant requirements, although I specifically invited her to do so. I do not find it necessary to exercise any jurisdiction conferred by s467(3)(b) of the Corporations Law.

1. Part VI of the rules contains no express provision that an application for the winding up of a company must be made by way of petition to the court. That omission occurred because PtVI was enacted to prescribe the procedure to be adopted under the Companies Act 1962, which, by s221(1), provided that a company might be wound up under an order of the court on the petition of a person falling within one of certain categories. Accordingly, the rules proceed upon the basis that such proceedings will be instituted by petition (eg r10(2)(c) and rr38–44). The necessary implication to be drawn from the rules as they continue to apply is that the jurisdiction of the court to order the winding up of a company is to be invoked by petition. No petition was filed in this case. Nothing of significance turns on that. The form of originating procedure employed was one normally appropriate in the court in which the proceedings were instituted. No injustice would be caused if that requirement were to be dispensed with but if otherwise the purposive effect of a petition has been achieved. In such circumstances the consequential provisions of r11 are of no importance.

1. Rule 12 prescribes certain requirements as to the contents of a petition and for its verification by affidavit. The original summons sets forth the nature of the relief sought and so satisfies the requirement prescribed by r12(1)(a). The summons does not contain any of the allegations necessary in support of the application as required by r12(1)(b). For present purposes, the necessary allegations are that the company is in fact a company and that it is unable to pay its debts. As to the latter requirement, the applicant relies upon s460(2)(a). As to the former matter, the relevant material is deposed to or appears from the exhibit to the affidavit of Andrew Buckley sworn 20 February 1991. Incidentally that affidavit also contains the material required by paras.1, 2 and 3 of the form of petition contained in Appendix T. The reference in the body of the affidavit to the Companies Act 1961 is an obvious typographical error. Mr Buckley's affidavit sworn 4 July 1991 proves service of a demand on the part of the applicant that the company pay a debt of Dm9233.75, the affidavit of Hooman Zahrai sworn 1 July 1991 proves that up until the date of the swearing of that affidavit the debt demanded had not been paid, and the affidavit of Dianne Tubb sworn 8 July 1991 proves that at the time the demand was made the equivalent in Australian currency of the sum referred to in the demand far exceeded the sum of $1,000.00. The affidavit of Mr Zahrai is capable of proving that the debt claimed was in fact owing at the time that that affidavit was sworn, but that question requires further consideration. It follows that all the allegations referred to in r12(1)(b) required to be contained in the petition are in fact contained in those affidavits and therefore verified by those affidavits. Whilst the entire petition, including that part of it setting out the nature of the relief sought, is required by the rules to be verified by affidavit, the form of affidavit contained in Form 3 of Appendix T merely requires that the allegations in support of the petition be verified by affidavit. The allegations which ought to have been contained in a petition verified by affidavit are in fact contained in separate affidavits. The relevant allegations have not all been verified by the person referred to in r12(2)(a) but nothing turns on that.

1. Rules 12(4) and 14(1) require service of a petition and a copy of the verifying affidavit on the company. The affidavit of Andrew Buckley sworn 10 April 1991 proves service of the original summons on the company on 25 February 1991. The affidavit of Andrew Buckley sworn 15 April 1991 proves that on that day he served the company with his affidavit sworn 20 February 1991. The further affidavit of Andrew Buckley sworn 4 July 1991 proves that on that day he served a copy of the affidavit sworn by him earlier that day and to which I have earlier referred. It also proves that at the same time he served a copy of an affidavit of one Daniel Brittain, which itself was not read on the hearing of the application, but which substantially was to similar effect as the affidavit of Dianne Tubb which was read and as to the service of which I have no evidence. The affidavit of Andrew Buckley sworn 3 July 1991 proves that on that day he served a copy of Mr Zahrais affidavit. It might be thought some documents were served rather late, but no objection has been taken as to that. The practical result of the failure to comply with the rules as to service is that whereas the rules contemplate one petition containing all the relevant allegations of fact verified by one affidavit being served, the allegations are contained in several affidavits served over a period of time. In the absence of any claimed prejudice or other objection, this non–compliance ought to be waived. I observe that demands of the type referred to in s460(2)(a) are not required to be attended by any particular informality, so that a requirement to pay an amount expressed in a foreign currency is sufficient. In that respect, a demand of this nature needs to be distinguished from a bankruptcy notice which is attended by particularly stringent formal requirements and as to which it has been held that a demand to pay simpliciter in a foreign currency is not a compliance with the relevant statutory provision (ReIkin & Others; Ex parte Lamborghini Tractors of Australia Pty Ltd (1985) 58 ALR 759).

1. The applicant has complied with the provisions of r17.

1. Rule 39 contains provisions as to the advertising of a petition requiring it to be "gazetted and advertised" not less than 14 days before the hearing and setting forth requirements for the form of advertisement. If publication in the Mercury newspaper and the Tasmanian Government Gazette is sufficient compliance with this rule, then the applicant has complied by way of advertising the original summons. The question arises as to whether or not the application is required to be advertised in the Commonwealth of Australia Gazette. It was so advertised on 25 June 1991, but such advertisement appeared in the Gazette published 13 days before the hearing, that is one day later than permitted by r39(1). Counsel for the applicant referred me to ss10 and 13(5) of the Corporations (Tasmania) Act. Those sections relate to the interpretation of the Corporations Law, the Corporations Regulations and any instrument made, granted or issued under that Law or those Regulations. The rules are not instruments made, granted or issued either under the Corporations Law or the Corporations Regulations. They are made pursuant to the power conferred by s51(1) of the Corporations (Tasmania) Act. The non–application of the Acts Interpretation Act 1931 does not extend to the Act. I do not therefore need to consider whether in any event the rules would fall within the definition of "instrument" contained in s13(5) of the Act. Section 45 of the Acts Interpretation Act 1931 applies. I construe the requirement contained in r39(1) that a petition be "gazetted" as being a requirement that the advertisement in the form prescribed by r39(2) be published in the Tasmanian Government Gazette.

1. The requirements of r40 have been complied with.

1. The Deputy Registrar proceeded under r42 and a certificate was provided. It does not satisfy the requirements of r42(1) but it is appropriate to observe that the Deputy Registrar misconceived the nature of the matters which he was required to consider in that he proceeded upon an assumption that the court was exercising jurisdiction conferred by the Corporations (New South Wales) Act and therefore inter alia he gave consideration to whether the requirements of the New South Wales rules had been complied with. As I have independently considered whether or not the applicable rules have been complied with, I can readily dispense with the requirements of that rule. The imperative provisions of r42(2) must yield to the provisions of r100.

1. Subject to the matters raised by the company, I would make all necessary orders under r100 and grant the relief which has been sought. However, counsel for the company has submitted as follows:

(a)that upon the material before me it is not open to me to be satisfied that there exists a debt owing by the company to the applicant; or alternatively

(b)that the affidavit filed on behalf of the company disclosed that there is a bona fide dispute as to the existence of the debt on substantial grounds.

1. I can deal with the first submission very briefly. Counsel for the company submitted that there was an inconsistency between the description of the nature of the debt as it appeared in the demand for payment on the one hand and as it was referred to in a letter from the applicant to the company exhibited to the affidavit of Mr Markovitch on the other hand. In my view there is nothing in this point at all. The reference in that letter to "a guarantee" is plainly a reference to an obligation rather than to any precise legal relationship from which the obligation is said to arise. That reference, without more, does not derogate from the evidence which is capable of proving the existence of the relevant debt.

1. The other submission requires further consideration. Counsel read the affidavit of a director of the company, one Stefan Albert Markovitch, sworn 12 July 1991 with the exception of one sentence to which objection was taken and which objection I upheld. It appears from that affidavit and from affidavits read by the applicant that the subject debt arises as follows. In September 1990 the company purchased a quantity of compact discs from a German company, Line Music GmbH. The applicant was a party to a factoring arrangement with Line Music pursuant to which the benefit of the debt of the company to Line Music was assigned to the applicant. The company has failed to pay the applicant. In his affidavit, Mr Markovitch deposes to a number of matters which may be summarised as being an allegation that some of the goods invoiced were not received by the company and an allegation that other of the goods when received by the company were contained in packaging which had been damaged, affecting saleability to the extent of being unsaleable or only saleable at a reduced price. Whether the reduced price resulted in a loss to the company is not stated. More important are matters not deposed to in the affidavit. Mr Markovitch does not say how many of the compact discs invoiced were not received by the company, how many were damaged, how many were unsaleable, or how many were only capable of being sold at a reduced price, and if so, with what financial result. The affidavit is silent as to the terms of the contract with Line Music. In particular it does not state what were the terms as to the carriage of the goods (presumably from Germany to Australia) and as to when the risk in the goods passed. The deponent says that he complained to Line Music, maintaining that it was responsible for the non–delivery and damage to goods, but that it denied liability. The affidavit suggests no reason as to why Line Music might have been liable. Whilst Mr Markovitch certainly expressed the view that the debt was disputed, he has not suggested any legal basis upon which it could be argued that the debt was not due. Counsel for the company was unable to identify any legal basis for suggesting that the debt claimed to be owing was not owing either in its entirety or in part.

1. The following other matters need to be taken into account. The applicant relied upon the affidavit of Gary Mills sworn 10 July 1991. It was not sought to cross–examine Mr Mills nor did the company file any affidavit in reply to what is contained in the affidavit. In summary, Mr Mills deposed that he sent the relevant invoice to the company on 22 October 1990, that he spoke to the company's accounts department seeking payment of the debt on several occasions, that he was never advised that the debt was disputed and that he communicated with Mr Markovitch by facsimile transmission on 21 December 1990 when he complained that he had been unsuccessful in his attempts to contact Mr Markovitch and that Mr Markovitch had failed to return telephone calls. The picture obtained from this affidavit is of the company just not paying the debt and evading contact with the applicant. The applicant also relies on the affidavit of Mr Hughes sworn 10 July 1991. Again, there has been no affidavit in reply nor has it been sought to cross–examine Mr Hughes. He deposed to a number of telephone conversations with a Mr Sampson, who was described by counsel for the company during the course of her application for an adjournment to which I will refer, as the company's financial adviser. Mr Hughes deposed to one conversation with Mr Sampson when Mr Sampson sought an adjournment of the application for the winding up of the company "so that we can arrange a plan for repayment of your client's debt". Such a request was unusual to say the least if the debt was really in dispute. Finally, I mention the application made by the company for an adjournment when this matter initially came on before me on 8 July 1991 and when I in fact granted a short adjournment. The application was supported by the sworn evidence of Mr Markovitch and Mr Sampson. There was not the slightest suggestion in the material put before me in support of the application for an adjournment that the company disputed this debt in any way. Having regard to that material I need to consider whether I should determine on this application whether a bona fide dispute exists.

1. The relevant principles were expressed by Gibbs J. (as he then was) in In ReQBS Pty Ltd [1967] Qd R 218 at p225, in the following terms:

"... Of course a debt is not bona fide disputed simply because the respondent company says that it is disputed. The court hearing the petition can go into evidence to consider whether or not the dispute is bona fide, ie, whether the claim is disputed on some substantial ground (Re Welsh Brick Industries Ltd (1946) 2 All ER 197). It seems to me that in every case it becomes necessary for the court to exercise its discretion as to how far it will allow the question whether or not the dispute is bona fide to be explored. In some cases it may be very easy to decide this question on the petition and affidavits in reply. In other cases however it may be difficult to determine whether or not the dispute is bona fide without determining the merits of the dispute itself. In some such cases convenience may require that the court decide the question whether or not a debt exists, but in other such cases it may appear better to allow that question to be determined in other proceedings before the petition for winding up is heard. In the present case, on the material before me, I cannot say that the dispute is not bona fide. The question whether a payment constitutes a preference can often involve much evidence as to the facts and difficult questions of law. The parties before me consider that the hearing of this matter will not be short and this suggests that the dispute is not altogether without substance. To allow the matter to be further gone into on an adjourned hearing of this petition would tend needlessly to increase the costs. The question whether the payments were  preferences can conveniently be decided in the pending proceedings already instituted by the petitioner to determine that matter, whereas if the present petition were brought on for hearing there would fall for decision a number of other issues that will not arise if the petitioner fails in those pending proceedings. In my opinion, it would not be right to allow the hearing of this petition to proceed."

1. Those principles were approved by the Full Court of the Supreme Court of Victoria in Brinds Ltd v Offshore Oil NL (No 1) (1983) 10 ACLR 229. Consistently with such principles I conclude upon the material before me it is appropriate that I determine whether there exists a bona fide dispute. Upon the basis of that material I conclude that there is no such dispute. The company has done no more than merely say that the debt is disputed. The grounds asserted may or may not constitute a defence in law. Whether those grounds constitute a defence in law depends upon the existence of other facts. If those other facts exist then it may be assumed that they would be within the knowledge of the company. It has not put such facts before me. The facts giving rise to such a defence would have come to the knowledge of the company in about September 1990. The existence of such a defence was not asserted as against the applicant until Mr Markovitch swore his affidavit on 12 July 1991 i.e. the day upon which I heard the application. The company has ignored various requests for payment. When served with the application its financial adviser did not dispute the debt but rather sought time to pay.

1. Accordingly I conclude that I should exercise my discretion under r100 to the extent required to enable the applicant to be granted the relief sought by it and that it should have that relief.

1. I make the following orders:

1That the requirement to comply with the provisions of rr12, 14 and 42 of PtVI of the Rules of the Supreme Court and Forms 2 and 3 of Appendix T to those rules be dispensed with in relation to these proceedings.

2That the company be wound up.

3That Robert Edward John Tenbensel be liquidator of the company.

4That the costs of the applicant be taxed and when taxed paid in accordance with the provisions of the Corporations law of Tasmania.

1. I should not part from this matter without making one observation as to the costs of these proceedings. It is difficult to understand as to why the applicant's solicitors decided to proceed in the Supreme Court of New South Wales in accordance with the rules applying in that court. Taking that course has undoubtedly added greatly to the costs. Numerous affidavits have been filed and served. Had the proceedings been instituted as required, the only affidavits which would have required to be filed by the applicant would have been an affidavit verifying the petition, an affidavit of service and, in the circumstances of this case, the affidavits of Mr Mills and Mr Hughes to which I have referred. What would have been a simple matter and only requiring significant consideration on the issue of whether the debt was bona fide in dispute has turned into a complex matter which has led to the production of a large volume of documentation. I raise these matters so that they can be considered by the taxing officer when he comes to tax the applicant's costs and considers what costs were necessarily incurred.