Pit N Portal Mining Services Pty Ltd v Investmet Limited - [2019] WASC 442

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   PIT N PORTAL MINING SERVICES PTY LTD -v- INVESTMET LIMITED [2019] WASC 442
CORAM:   MASTER SANDERSON
HEARD:   5 NOVEMBER 2019
DELIVERED          :   5 DECEMBER 2019
FILE NO/S:   COR 181 of 2019
BETWEEN:   PIT N PORTAL MINING SERVICES PTY LTD
Plaintiff

AND

INVESTMET LIMITED
Defendant

Catchwords:

Corporation law - Application to stay winding up proceedings in this court pending determination of winding up application in Federal Court - Principles

Legislation:

Corporations Act 2001 (Cth)

Result:

Defendant's interlocutory application dismissed

Category: A

Representation:

Counsel:

Plaintiff	:	Mr C K Pearce
Defendant	:	Mr M J Keating

Solicitors:

Plaintiff	:	Blackwall Legal LLP
Defendant	:	Williams & Hughes

Case(s) referred to in decision(s):

Beneficial Finance Corp Ltd v East Coast Printed Circuits Pty Ltd (1992) 7 ACSR 79
Deputy Commissioner of Taxation v Perpetual Nominees [2013] FCCA 930
Dewina Trading SDN BHD v Ion International Pty Ltd (1996) 141 ALR 317
Jebb ATF The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121
Rogers v The Queen (1994) 181 CLR 251

MASTER SANDERSON:

On 11 September 2019 the plaintiff filed an originating process seeking to wind up the defendant. The application was supported by an affidavit of Steven Edwin Versteegan affirmed 11 September 2019. Mr Versteegan says that as at 15 March 2019 the defendant was indebted to the plaintiff in the sum of $6 million. A statutory demand was issued. On 9 April 2019 the defendant made an application to set aside the statutory demand. On 18 June 2019 I dismissed that application. Accordingly there is a presumption of insolvency and it is on that basis the plaintiff seeks to wind up the defendant. On 30 October 2019 the defendant filed an interlocutory application seeking a stay of these proceedings until the completion of Federal Court proceedings WAD134/2019. The Federal Court proceedings are an application to wind up the defendant by a third party. These proceedings have been adjourned on nine occasions since 16 April 2016. It is common ground between the parties the plaintiff has not been consulted about any negotiation between the parties in the Federal Court proceedings. Further it does not have access to court documents filed in the Federal Court proceedings. A request to provide those documents from the defendant's solicitors has been ignored. The plaintiff has applied to be substituted as an applicant in the Federal Court proceedings under s 465B of the Corporations Act 2001 (Cth) (the Act). Because the Federal Court proceedings have not been resolved as between the third party and the defendant the plaintiff's application has not been considered. There is no indication when and how the matter will progress. In both the Federal Court proceedings and in the proceedings before this court it is the defendant's position that it is solvent. Given the presumption of insolvency consequent upon the failure to comply with the statutory demand it is for the defendant to establish that it is solvent.
The question I am asked to determine can be shortly stated. In circumstances where a winding up application is on foot in the Federal Court but is unresolved should the plaintiff be permitted to pursue a winding up application in this court.
The defendant's argument is that for the plaintiff to pursue its application in this court is an abuse of process. The defendant does not argue that the issuing of the winding up application was itself an abuse of process. Rather it is the pursuit of the application which is said to be an abuse of process. The defendant, by reference to the judgment of McHugh J in Rogers v The Queen (1994) 181 CLR 251 at 286 says that abuses generally arise when a party uses the court processes for an illegitimate purpose, in a manner which is unjustifiably oppressive to another party or in a manner bringing the administration of justice into disrepute. Although the categories are not closed, it was these three areas upon which the defendant focused.
Counsel also referred to the decision of Vaughan J in Jebb ATF The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121. Based upon this decision counsel submitted the general principles applicable to identifying and responding to an abuse of process are as follows:
(a)the doctrine is informed in part by considerations of finality and fairness: that a party should not be twice vexed by multiple proceedings deciding the same matter; and that the attendant duplication of court resources could lead the public to perceive the administration of justice is inefficient, careless of costs and profligate;
(b)the court's focus must be on matters of substance rather than form;
(c)the court must conduct an 'overall balancing of justice' sensitive to all the facts and circumstances; and
(d)the doctrine does not require identity or mutuality of parties between the earlier and later litigation nor does there need to be common control.
Pausing at this point it can be seen that this case does not fit neatly with any of the general principles outlined above. Clearly the instigation and pursuit of the winding up application is not for an illegitimate purpose. Nor is it unjustifiably oppressive to the defendant. A party wishing to pursue and wind up a corporation which is presumed to be insolvent can hardly be seen to act in a way which will bring the administration of justice into disrepute. There is no obvious duplication of effort required as between the Federal Court proceedings and the proceedings in this court. What the defendant must do is establish it is solvent – that is, it can pay its debts as and when they fall due. That is largely an accounting exercise and will probably be dependent upon evidence from an expert. It is hard to see how there can be any duplication of effort. Really, this case requires an 'overall balancing of justice'.
Counsel for the defendant relied heavily on a decision of Raphael J in Deputy Commissioner of Taxation v Perpetual Nominees [2013] FCCA 930. Before dealing with that case I should mention the decision of Young J in Beneficial Finance Corp Ltd v East Coast Printed Circuits Pty Ltd (1992) 7 ACSR 79. His Honour said (at 80):
Generally speaking, it is an abuse of process to have two claims before the court for the same relief. That principle is usually associated with the same person bringing more than one claim, but it seems to me that when one has a class right, such as the right to wind up a company for insolvency, it applies where there are two quasi representative actions to bring about the same result. Certainly over the years this court has never encouraged more than one petition and, indeed, the practice is that solicitors, before they file a summons for winding up, should search to see whether there is an existing summons on file. If there is, the new summons should not be filed, but the solicitor should attend on the return date of the process that is already before the court, watch carefully those proceedings and seek to be substituted if some “deal” is done with the petitioning creditor, or if otherwise the petition looks like it is going to fail.
Beneficial Finance Corp Ltd was decided before s 465B of the Corporations Law (as it then was) came into force. Nonetheless the principles outlined by his Honour hold good. In that case his Honour was talking about two applications both made in the same court. That situation is rather more straightforward than this case. But nonetheless the idea of two cases running in different courts, both looking at the same question, is at best unfortunate.
Turning then to the Perpetual Nominees decision, the issue was whether the court should permit a second bankruptcy petition to remain on foot against a respondent who was the subject of an earlier petition presented by the Deputy Commissioner of Taxation. Remarkably enough the petition presented by the Deputy Commissioner had been adjourned nine times. The Deputy Commissioner had issued the bankruptcy petition on 13 April 2012. Perpetual Nominees commenced its proceedings on 17 January 2013. As at the date of the hearing Perpetual Nominees had undertaken not to proceed with its petition while the Deputy Commissioner's petition remained on foot.
It can be seen that there are at least two significant differences between the Perpetual Nominees decision and this case. First, Raphael J was concerned with bankruptcy proceedings. It may be there are differences between the procedure in bankruptcy and procedures under the Act. However both counsel in this case were prepared to accept the principles were largely aligned. The main difference is that in the Perpetual Nominees case there were two petitions in the same court. While counsel for the defendant maintained that made no real difference to the principles underlying the decision, counsel for the plaintiff took the opposite view. He maintained the Perpetual Nominees decision was of little relevance because of this difference.
Judge Raphael undertook a review of the relevant authorities. One decision in particular is of importance. In Dewina Trading SDN BHD v Ion International Pty Ltd (1996) 141 ALR 317 an application came before Moore J for the winding up of Ion International Pty Ltd. The matter was disputed and his Honour reserved his judgment. Before that judgment was delivered a registrar of the Supreme Court of New South Wales made an order winding up the respondent on the application of a third party. Moore J then brought the matter back for further consideration. His Honour decided the company having been wound up, there was no utility in his making a further order. But nowhere in the judgment is it suggested it was in some way improper for proceedings to be issued in the Supreme Court or for a registrar of that court to make a winding up order.
The plaintiff's position is quite straightforward. It says it is entitled to bring an application in this court and to have the application determined on its merits. It says there is no prospect of inconsistent decisions because at present no decision is pending in the Federal Court. It points to the fact it could be frustrated indefinitely if these proceedings are stayed pending determination of the proceedings in the Federal Court. Moreover, it has no knowledge of and no way of acquiring any knowledge of the reasons why the matter is continually being adjourned in the Federal Court.
This case represents an unhappy situation. On balance, however, I am satisfied the plaintiff should be permitted to proceed in this court. It would have been possible for the defendant to apply to cross‑vest these proceedings to the Federal Court. That may have been the preferable course. But absence such an approach it is difficult to see why a party who properly commences proceedings and wishes to pursue those proceedings in this jurisdiction should be prevented from doing so because there are proceedings in the Federal Court which are at a standstill. This case represents an unfortunate outcome as a result of parallel jurisdictions. Be that as it may, I can see no basis for staying this action simply because Federal Court proceedings are on foot. If it had been the case that the matter had been heard in the Federal Court and a decision was reserved the position would be significantly different. But in the circumstances of this case I am satisfied the application for a stay ought be refused.
The defendant's interlocutory application will be dismissed. The defendant to pay the plaintiff's costs of the application, including any reserved costs, to be taxed if not agreed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson
5 DECEMBER 2019