In the matter of Walton Construction Pty Ltd (in liquidation)
[2014] NSWSC 1235
•01 September 2014
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Walton Construction Pty Ltd (in liquidation) [2014] NSWSC 1235 Hearing dates: Monday, 1 September 2014 Decision date: 01 September 2014 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Leave granted under s 471B to begin and proceed with application for special leave to appeal to High Court, and if special leave is granted any appeal
Catchwords: CORPORATIONS - winding up - winding up in insolvency - stay of proceedings and suspension of enforcement process - leave to begin application for special leave to appeal against company - whether leave under s 471B required - whether leave should extend to appeal Legislation Cited: (Cth) Corporations Act 2001, s 471B Cases Cited: Distinctive FX 9 Pty Limited v Statewide Developments Pty Limited [2012] NSWCA 393
In the matter of Featherston Resources Limited [2014] NSWSC 1139Category: Procedural and other rulings Parties: Illawarra Hotel Company Pty Ltd ACN 063 558 467 (applicant)
Walton Construction Pty Ltd (in liquidation) ACN 060 900 218 (respondent)Representation: Counsel:
H M Durham (applicant)
M R Gracie w D Neggo (respondent)
Solicitors:
Norbert Lipton & Co (applicant)
Crisp Legal (respondent)
File Number(s): 2014/228748
Judgment (ex tempore)
HIS HONOUR: Pursuant to an originating process filed on 4 August 2014, the plaintiff Illawarra Hotel Company Pty Limited seeks leave pursuant to (Cth) Corporations Act 2001, s 471B, nunc pro tunc, to commence and proceed with an application for special leave to appeal to the High Court of Australia and, in the event that leave is granted, with an appeal from a judgment given by the Court of Appeal in proceedings in this court between the parties. The defendant opposes the grant of leave in respect of the special leave application only on the basis that it is said to be unnecessary, and opposes the application in respect of any substantive appeal on the basis that it is premature.
So far as the necessity for a grant of leave in respect of the special leave application is concerned, were I left to my own devices I would, substantially for the reasons given in In the matter ofFeatherston Resources Limited [2014] NSWSC 1139 at [40]-[47], hold that an application for leave to appeal to the Court of Appeal or for special leave to appeal to the High Court of Australia was not itself a "proceeding against the company or its property" in the relevant sense, and that though the substantive appeal would require leave, the application for leave would not. However, in Distinctive FX 9 Pty Limited v Statewide Developments Pty Limited [2012] NSWCA 393, Beazley J, as her Honour the President then was, notwithstanding reservations expressed in a number of earlier authorities to which her Honour referred in paragraph [12] of that judgment, said (at [13]):
Notwithstanding the uncertainty expressed in these authorities, I am of the opinion that when regard is had to the Civil Procedure Act and the UCPR, the bringing of an appeal (or, I should add, a summons for leave to appeal) is the commencement of a proceeding for which leave is required pursuant to s 471B...
In the light of that judgment, the practice has arisen of applying for leave pursuant to s 471B in connection with applications for leave to appeal to the Court of Appeal, and it seems to me that despite the sui generis nature of special leave applications, for the purpose of deciding whether they constitute a proceeding against a company, they are in reality indistinguishable from an application for leave to appeal to the Court of Appeal.
In those circumstances, I ought to follow the approach taken by the President, bearing in mind that her Honour's judgment is serving as a guide to practitioners as to what is required in such circumstances, and that a prudent practitioner confronted with it would make an application for leave under s 471B. Accordingly, the better course is to proceed on the basis that leave under s 471B is required for the institution of an application for special leave to appeal against a company in liquidation. In a sense, the application for special leave to appeal is the commencement of a whole appellate process, the ultimate end of which is the grant of relief against the company in liquidation. In that respect, it is distinct from the type of application that I was contemplating in Featherston, in which the end result of the application for leave would be no more than a proceeding brought by the company in liquidation against third parties.
The defendants in these proceedings did not submit that, if I came to the conclusion that leave was required, leave should not be granted. One of the purposes, indeed perhaps the fundamental purpose, of requiring leave to be obtained for such proceedings is to ensure that a company in liquidation is not vexed by a multiplicity of unmeritorious claims. In the course of argument I have made some observations as to what, at least at first sight, seems a very difficult application for special leave to appeal. While, as with any summary of argument settled by Mr Walker SC, it does its best to elucidate a special leave question and reasons supporting it, I must say, with all respect, that it seems to me that it faces enormous hurdles - far greater than those which inevitably confront any special leave application.
It is quite conceivable that the court could decline leave under s 471B in such circumstances, if it was satisfied that the proceeding for which such leave was sought was hopeless. However, that submission has not been made by the defendant, and in those circumstances, I ought not too readily embrace it. In any event, the real jeopardy is that the defendant would be put to the costs of defending the special leave application. If the special leave application is unsuccessful, then almost inevitably the plaintiff will be ordered to pay the defendant's costs of that application, so the prejudice of permitting it to proceed is, in that sense, minimal.
So far as the substantive appeal is concerned, it seems to me utterly pointless to defer granting leave in respect of the appeal should special leave be granted. If the High Court were to grant special leave, then it is inconceivable that this court would not grant leave under s 471B. If the High Court were to refuse special leave, then the question would no longer arise. There seems to me absolutely no utility in requiring the parties to return to this court on another occasion to address that question.
The court orders that, pursuant to Corporations Act, s 471B, the plaintiff have leave nunc pro tunc to begin and proceed with an application for special leave to appeal to the High Court of Australia in the form of the application for special leave filed in proceedings S106 of 2014 in the High Court of Australia on 9 May 2014 and, in the event that special leave is granted, any appeal pursuant to that grant of leave.
The court further orders that the defendant pay the plaintiff's costs assessed in the sum of $4,000.
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Decision last updated: 08 December 2014
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