Soil and Contracting Pty Ltd v Boban Pty Ltd [No 2] - [2014] WASC 418

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: SOIL AND CONTRACTING PTY LTD -v- BOBAN PTY LTD [No 2] [2014] WASC 418

CORAM: ACTING MASTER GETHING

HEARD: 30 OCTOBER 2014

DELIVERED : 30 OCTOBER 2014

FILE NO/S: COR 23 of 2014

BETWEEN: SOIL AND CONTRACTING PTY LTD
Plaintiff
AND
BOBAN PTY LTD
Defendant

FILE NO/S :COR 58 of 2014

BETWEEN :IAN RUSSELL LOCK as Joint and Several Administrator of PINEVIEW INVESTMENTS PTY LTD (ADMINISTRATORS APPOINTED)
Plaintiffs
AND
JOHN SHEAHAN as Joint and Several Administrator of PINEVIEW INVESTMENTS PTY LTD (ADMINISTRATORS APPOINTED)
Defendant

FILE NO/S :COR 59 of 2014

BETWEEN :IAN RUSSELL LOCK as Joint and Several Administrator of BOBAN PTY LTD (ADMINISTRATORS APPOINTED)
Plaintiff
AND
JOHN SHEAHAN as Joint and Several Administrator of BOBAN PTY LTD (ADMINISTRATORS APPOINTED)
Defendant

FILE NO/S :COR 60 of 2014

BETWEEN :ALLEN BRUCE CARATTI
Plaintiff
AND
BOBAN PTY LTD (ADMINISTRATORS APPOINTED)
First Defendant
PINEVIEW INVESTMENTS PTY LTD (ADMINISTRATORS APPOINTED)
Second Defendant
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Third Defendant
JAMIE KEVIN POLLOCK
Fourth Defendant
JOHN SHEAHAN AND IAN RUSSELL LOCK as Joint and Several Administrators of BOBAN PTY LTD
Fifth Defendant
JOHN SHEAHAN AND IAN RUSSELL LOCK as Joint and Several Administrators of PINEVIEW INVESTMENTS PTY LTD
Sixth Defendant

Catchwords:

Corporations Act 2001 (Cth) - Winding up - Extension of time within which application to be determined

Legislation:

Corporations Act 2001 (Cth), s 459R

Result:

Time within which application must be determined extended to 30 January 2015

Category: B

Representation:

COR 23 of 2014

Counsel:

Plaintiff: Mr N Dillon
Defendant: Mr S Vandongen SC & Mr J Scovell

Solicitors:

Plaintiff: Roe Legal Services
Defendant: Mills Oakley Lawyers (Vic)

COR 58 of 2014

Counsel:

Plaintiffs: Mr R Lilly
Defendant: Not applicable

Solicitors:

Plaintiffs: Johnson Winter & Slattery
Defendant: Not applicable

COR 59 of 2014

Counsel:

Plaintiff: Mr R Lilly
Defendant: Not applicable

Solicitors:

Plaintiff: Johnson Winter & Slattery
Defendant: Not applicable

COR 60 of 2014

Counsel:

Plaintiff:     Mr N Dillon
First Defendant             :     Mr R Lilly
Second Defendant         :     Mr R Lilly
Third Defendant           :     Mr S Vandongen SC & Mr J Scovell
Fourth Defendant          :     Mr S Vandongen SC & Mr J Scovell
Fifth Defendant            :     Mr R Lilly
Sixth Defendant            :     Mr R Lilly

Solicitors:

Plaintiff:     Roe Legal Services
First Defendant             :     Johnson Winter & Slattery
Second Defendant         :     Johnson Winter & Slattery
Third Defendant           :     Mills Oakley Lawyers
Fourth Defendant          :     Mills Oakley Lawyers
Fifth Defendant            :     Johnson Winter & Slattery
Sixth Defendant            :     Johnson Winter & Slattery

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

Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2008] HCA 9; (2008) 232 CLR 314
Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) [2011] HCA 18; (2011) 277 ALR 243
Expile Pty Ltd v Jabb's Excavations Pty Ltd (2002) 194 ALR 138
Soil and Contracting Pty Ltd v Boban Pty Ltd [2014] WASC 402
ACTING MASTER GETHING:
(This judgment was delivered extemporaneously on 30 October 2014 and has been edited from the transcript.)

By application filed 12 February 2014, Soil and Contracting Pty Ltd (SAC) sought to wind up Boban Pty Ltd (Boban) in insolvency, in particular due to Boban's failure to comply with a statutory demand (COR 23 of 2014). The amount claimed was $467,839.47 and is said to be for earthworks performed by SAC for Boban between 2003 and 2004.
On 5 August 2014 the winding up application was listed for trial for four days commencing 27 October 2014. At the 5 August 2014 hearing, no application was made to extend the six month time period limit within which the winding up application must be determined, set out in Corporations Act 2001 (Cth) (CA) s 459R. The effect of that omission was that the application must be taken to have been dismissed on 12 August 2014 by application of Corporations Act s 459R.
By application dated 24 October 2014 SAC sought an order pursuant to the slip rule to correct the orders made on 5 August 2014 to include an order extending the time within which the winding up application must be determined until 30 October 2014, the last day of the trial listed in those orders. I heard the extension application on 27 October 2014. It was opposed by Mr Allen Caratti. At the conclusion of argument I made the orders sought and stated that I would publish my reasons for doing so. I published them shortly prior to delivering these reasons with the citation Soil and Contracting Pty Ltd v Boban Pty Ltd [2014] WASC 402. Prior to delivering these reasons I gave counsel the opportunity to make submissions on the observations I made in relation to CA s 459R in those reasons.
On 24 October 2014 the Australian Taxation Office (ATO) lodged a claim with the administrator of Boban in the amount of $2.3 million. This, I am informed, came as a surprise to all parties. The existence of this claim has an obvious bearing on the solvency of Boban. Accordingly, at the request of counsel across the bar table, I adjourned the trial when the matter was before me on 27 October 2014. A date is yet to be set for the trial.
The orders that I made on 27 October 2014 amending the orders made by Master Sanderson on 5 August 2014 had the effect that the time within which the present application must be determined was extended to 30 October 2014. Accordingly, it was necessary for SAC to make a further application pursuant to CA s 459R(2) to extend the time within which the application must be determined. The application was again opposed by Mr Caratti.
The factual context of my earlier decision required me to place myself in the position of the parties and the master as at 5 August 2014. The decision that I am now called on to make takes its context from the facts as they are before me on 30 October 2014, freed of the constraints of the slip rule.
The relevant power in CA s 459R(2) is in narrow terms:
(1)An application for a company to be wound up in insolvency is to be determined within 6 months after it is made.
(2)The Court may by order extend the period within which an application must be determined, but only if:
(a)the Court is satisfied that special circumstances justify the extension; and
(b)the order is made within that period as prescribed by subsection (1), or as last extended under this subsection, as the case requires.
(3)An application is, because of this subsection, dismissed if it is not determined as required by this section.
(4)An order under subsection (2) may be made subject to conditions.
As the order is being sought on 30 October 2014, the requirement in CA s 459R(2)(b) is met.
An order under CA s 459R(2) 'may be made under that subsection if the Court is satisfied that special circumstances exist and justify the extension' (original emphasis): Expile Pty Ltd v Jabb's Excavations Pty Ltd (2002) 194 ALR 138 [6] (Hamilton J); Soil and Contracting [43]. Hamilton J had earlier observed that the 'essential meaning' of special 'is that it denotes a particular situation which can be regarded as distinguished from the ordinary or common runs of situations': Expile [5].
At [44] and [45] of my earlier decision I observed that the most significant surrounding circumstance was that the winding up application was one of four related applications listed for trial together. I have described these other applications in my earlier reasons. As I have noted, the core issue in dispute is whether Mr Caratti or Mr Jamie Pollock is entitled to control of Boban and a second company, Pineview Pty Ltd.
Within that core issue, perhaps the other significant issue is whether or not the debt relied on by SAC in its statutory demand is a genuine debt. If that debt falls away then, aside from the ATO, there does not appear to be any other creditors of Boban and the argument, as I understand it, is that Boban is essentially solvent. In my earlier decision I went on to observe that the present matter is a complex case with many lever arch volumes of affidavits and a projected trial length of four days.
In the argument before me on the present application, counsel for Mr Caratti submitted that, notwithstanding those matters, the present winding up application is still appropriately regarded as one that is in the ordinary or common runs of situation, rather than being special. I, however, remain of the view that I have expressed in my earlier reasons that the present case can be readily distinguished from an ordinary or common application to wind up a company in insolvency because of its complexity.
Counsel for Mr Caratti also referred to the history of the conduct of the proceedings, which I have summarised at [38] of my earlier decision. The history of the proceedings must now be viewed in the context of the ATO's claim: SAC's claim is, in a sense, swamped by the ATO's claim.
As counsel for Mr Caratti pointed out, it is not unusual and, indeed, it is invited and perhaps expected, that on a winding up application, following advertising, other creditors will come out of the woodwork. What takes this case out of the ordinary or common runs of situations is, firstly, the timing of the ATO's claim, being literally the eve of the listed trial well after the expiry of the initial six month period in CA s 459R, and, secondly, the amount of the ATO's claim in relation to the financial circumstances of Boban. It is clearly the case that, if the ATO's claim is substantiated, or even substantiated in a modest proportion, then in all likelihood Boban will be insolvent. As I understand the position, Boban has no assets, though it has tax losses which are said to be of value.
Another factor I am required to take into account is the likely length of time that this action is required to take for determination. In relation to this, it is common ground that there needs to be some form of external administrator to deal with the ATO's claim. Given the impact of the ATO's claim on Boban's solvency, it is difficult to see a scenario in which the winding up application can proceed at least until there is some level of clarity in relation to the position of the ATO.
The remaining issue I need to take into account is that CA s 459R is one of a number of sections in the CA which reflect the evident policy of pt 5.4 that there be a speedy resolution of an application to wind up in insolvency: Soil and Contracting [13]; Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) [2011] HCA 18; (2011) 277 ALR 243 [27] (Gummow, Heydon Crennan, Kiefel & Bell JJ); Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2008] HCA 9; (2008) 232 CLR 314 [17] ‑ [18] (Gleeson CJ, Hayne, Crennan & Kiefel JJ). The policy of speedy resolution is, as counsel for Mr Caratti pointed out, to ensure that a company does not have a live winding up application hanging over its head for an inordinate period of time. That policy has obvious merit where the company is operating. In the present case, Boban is not operating so the policy has less of an impact.
It seems to me that the policy of speedy resolution of winding up applications is at least on par with the policy that matters before the court are given sufficient time that they may be justly determined. And, in a sense, the balance between those two policies is reflected in the Rules of the Supreme Court 1971 (WA) O 1 r 4A and r 4B. In the present case it seems to me that the winding up application cannot be justly determined until such time as there is a level of further information in relation to the claim made by the ATO.
For these reasons I am satisfied, firstly, that special circumstances exist that take the present application outside the ordinary or common runs of situations and, secondly, that those circumstances justify an extension.
In terms of the timing of extension, as I have indicated, the driver seems to be the time taken for the ATO's position to be crystallised. I am of the preliminary view that I ought to extend the time within which the application must be determined to the end of January 2015 and, specifically, list a directions hearing before the master a week or so before that, so that the issue of the extension can be argued in its own right (and so there is no risk of a further slip or omission). I will hear counsel on this point and any other subsidiary issues.