WA Glass Pty Ltd v Auto Control Systems Pty Ltd [No 3]

[2023] WASCA 153

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT  :   THE COURT OF APPEAL (WA)

CITATION:   WA GLASS PTY LTD -v- AUTO CONTROL SYSTEMS PTY LTD [No 3] [2023] WASCA 153

CORAM:   MITCHELL JA

VAUGHAN JA

HEARD:   26 OCTOBER 2023

DELIVERED          :   26 OCTOBER 2023

PUBLISHED           :   26 OCTOBER 2023

FILE NO/S:   CACV 74 of 2021

BETWEEN:   WA GLASS PTY LTD

Appellant

AND

AUTO CONTROL SYSTEMS PTY LTD

Respondent

ON APPEAL FROM:

Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA

Coram:   MASTER SANDERSON

Citation: WA GLASS PTY LTD -v- AUTO CONTROL SYSTEMS PTY LTD [2021] WASC 187

File Number            :   COR 42 of 2021

Catchwords:

Practice and procedure - Abuse of process - Whether respondent's application for payment out of money held in court is an abuse of process - Whether appellant was unjustifiably oppressed by respondent commencing a winding‑up application before determination of application - Whether respondent's application should be stayed - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Appellant	:	D H Solomon
Respondent	:	J P Cook

Solicitors:

Appellant	:	Solomon Brothers
Respondent	:	Mendelawitz Morton Commercial Lawyers

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

Createc Pty Ltd v Design Signs Pty Ltd [2009] WASCA 85; (2009) 71 ACSR 602

Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427

WA Glass Pty Ltd v Auto Control Systems Pty Ltd [2021] WASC 187

WA Glass Pty Ltd v Auto Control Systems Pty Ltd [2021] WASCA 162

WA Glass Pty Ltd v Auto Control Systems Pty Ltd [2023] HCASL 160

WA Glass Pty Ltd v Auto Control Systems Pty Ltd [No 2] [2023] WASCA 85

Walton v ACN 004 410 833 Ltd (in liq) [2022] HCA 3; (2022) 96 ALJR 166

REASONS OF THE COURT:

1. At the hearing of applications in this appeal on 26 October 2023, we ordered that the appellant's application in an appeal dated 11 September 2023 is dismissed.  We said that we would publish our reasons for making that order later.  These are our reasons for making the order.

2. The appellant, WA Glass Pty Ltd (WAG), applies by an application in an appeal dated 11 September 2023 to stay as an abuse of process an application in an appeal dated 20 June 2023 by the respondent, Auto Control Systems Pty Ltd (ACS), for payment out of $248,391.90 paid into court as security for compliance with a statutory demand.

3. By way of background:

   1.ACS issued a statutory demand to WAG in relation to claimed debts totalling $248,391.90.

   2.WAG sought to set aside the statutory demand.  The master dismissed WAG's application.[1] 

   3.WAG brought an appeal against the dismissal of its application to set aside the statutory demand.  Pending determination of the appeal WAG sought and obtained an order to extend the period for compliance with the statutory demand.[2]  The extension was subject to a condition that WAG pay the amount of $248,391.90 into court as security for compliance with the statutory demand if the appeal was dismissed.

   4.WAG's appeal against the dismissal of the application to set aside the statutory demand was itself dismissed.[3]  WAG made an application to the High Court of Australia for special leave to appeal.  The High Court dismissed the application for special leave on the papers.[4] 

   [1] WA Glass Pty Ltd v Auto Control Systems Pty Ltd [2021] WASC 187.

   [2] WA Glass Pty Ltd v Auto Control Systems Pty Ltd [2021] WASCA 162.

   [3] WA Glass Pty Ltd v Auto Control Systems Pty Ltd [No 2] [2023] WASCA 85.

   [4] WA Glass Pty Ltd v Auto Control Systems Pty Ltd [2023] HCASL 160.

4. When this court delivered judgment on the appeal, each party made application for payment out of the money paid into court in its favour.  No order was then made for payment out.  The court considered that the payment into court would not operate as security for compliance with the statutory demand if the money was paid to WAG in circumstances where there had been no compliance with the statutory demand.  Also, it was not appropriate to order payment out in favour of ACS when the time for compliance had not yet expired.  The parties were given liberty to apply.

5. On 20 June 2023 ACS applied for the $248,391.90 to be paid out in its favour.  By that time WAG was taken to have failed to comply with the statutory demand (the period for compliance with the statutory demand ended on 6 June 2023).  WAG contends, by its present application in an appeal, that the continuation of ACS's application for payment out of the $248,391.90 is an abuse of process.

6. ACS's application in an appeal dated 20 June 2023 was heard by the present coram on 25 August 2023.  Judgment was reserved.  Subsequently, while judgment was reserved, ACS made a winding-up application against WAG.  The winding-up application was filed on 1 September 2023.  The winding‑up application relied on WAG's failure to comply with the statutory demand.  WAG was informed about the winding-up application on 7 September 2023.  On 11 September 2023, without prior conferral, WAG made its application in an appeal to stay ACS's application dated 20 June 2023 as an abuse of process.  By a secondary order WAG seeks that the $248,391.90 held in court be paid out in favour of WAG.  As a practical matter the court has deferred delivery of judgment on ACS's application in an appeal dated 20 June 2023 pending the hearing and determination of WAG's application in an appeal dated 11 September 2023.

7. WAG has read the affidavit of Peter Harkins sworn 11 September 2023 in support of its application.  Mr Harkins is WAG's director.  WAG has also been given leave to rely on parts of a further affidavit of Mr Harkins, sworn 10 October 2023, and an affidavit of David Hurt sworn 10 October 2023.  Mr Hurt is an insolvency practitioner.  The two additional affidavits go to WAG's solvency.  Indeed, Mr Harkins' second affidavit is said to be an affidavit filed in opposition to the winding-up application.  The redacted solvency report has been updated in a solicitor's affidavit (see annexure 'LLL-1' to the affidavit of Louis Lee sworn 24 October 2023).

8. Counsel for WAG developed the concept of abuse of process by reference to the discussion in Walton v ACN 004 410 833 Ltd (in liq).[5]  There Edelman and Steward JJ stated:

   Although the categories are not closed, the doctrine of abuse of process has conveniently, but loosely, been divided into three overlapping categories.  These are: (i) the use of the court's processes for an illegitimate purpose; (ii) the use of the court's processes in a manner that is unjustifiably oppressive to one of the parties; and (iii) a category which might better be described as concerned with the integrity of the court and not merely its processes, and which is sometimes described as concerned with bringing the administration of justice into disrepute.  (citations omitted)

   [5] Walton v ACN 004 410 833 Ltd (in liq)[2022] HCA 3; (2022) 96 ALJR 166 [130].

9. In written submissions dated 10 October 2023 WAG identifies two ways in which it contends that ACS's continuance of its application for payment out of the money held in court by the application in an appeal dated 20 June 2023 is an abuse of process:

   1.First, WAG complains of oppression as detailed in Mr Harkins' affidavit sworn 11 September 2023.  This, in substance, amounts to WAG, by Mr Harkins, being contacted on 7 September 2023 by a major credit supplier for an explanation about the winding-up application in circumstances where WAG was unaware of the application because it was yet to be served.  WAG says that the causing of that alleged oppression is within the second of the overlapping categories of abuse of process.  See WAG's submissions par 2.

   2.Second, WAG contends that:

   For [ACS] to be continuing to press for an order for payment of the money in court (which would satisfy the debt claimed in the statutory demand) whilst after commencing the winding-up application and thereby putting [WAG] at risk of an order for winding up in insolvency based on a presumption of insolvency resulting from failure to comply with the statutory demand, which has necessitated preparation of a comprehensive solvency report by [WAG] annexed to the Hurt Affidavit and the Second Harkins Affidavit is, in terms of the applicable tests, conduct by [ACS] pursuing inconsistent remedies in separate proceedings that are 'seriously and unfairly burdensome, prejudicial or damaging' or 'productive of serious and unjustified trouble and harassment'.  (WAG's submissions par 4)

10. In oral submissions, counsel for WAG developed a further alleged head of abuse of process by reference to Createc Pty Ltd v Design Signs Pty Ltd.[6]  Counsel submitted that ACS's actions - and in particular pars 9 - 16 of its written submissions dated 19 October 2023 - evinced a collateral purpose of pressuring WAG to pay a disputed debt.  WAG submitted that it was an abuse of process to initiate winding up proceedings as a means of attempting to enforce payment of a disputed debt.  This, in turn, tainted ACS's application in an appeal dated 20 June 2023 because there was one composite process.  It is at this second step that the submission breaks down.  Whether the winding-up application is an abuse of process is one thing.  We make no finding on that contention.  There is no application before us to stay the winding‑up application as an abuse of process.  Any such application would necessarily need to be brought and determined in the General Division.  But it does not follow that simply because the winding-up application is abusive (should that be the case) then so too ACS's application in an appeal dated 20 June 2023 must be an abuse of process.  Rather, for reasons we will explain, ACS's application in this court raises different issues and seeks different relief to the winding-up application.  The processes are separate and distinct.  WAG's further contention based on Createc Pty Ltd v Design Signs Pty Ltd must be rejected.

    [6] Createc Pty Ltd v Design Signs Pty Ltd [2009] WASCA 85; (2009) 71 ACSR 602 [47] - [50].

11. Turning back to WAG's written submissions dated 10 October 2023, there is nothing in the first alleged head of abuse of process.  The alleged oppression complained of by WAG concerns suggested adverse consequences of a delay in service of the winding‑up application rather than the continuation of ACS's application for orders for payment out of the money held in court.  In any event, the delay in service of the winding-up application is modest and is adequately explained in the affidavit of Boika Panov sworn 26 September 2023.

12. WAG's second complaint is also misconceived.  Again, so far as WAG points to the work done in preparation of a solvency report, that is work done in answer to the winding-up application.  It does not constitute evidence of unjustifiable oppression in the continuance of ACS's application for orders for payment out of the money held in court. 

13. The real issue is whether it is unjustifiably oppressive for WAG to face the continuance of ACS's application in an appeal dated 20 June 2023 for the payment out of the $248,391.90 held in court while at the same time having to defend the winding-up application.

14. There is no unjustifiable oppression.  No substantive steps remain for the parties to carry out in connection with ACS's application in an appeal dated 20 June 2023.  The only matter outstanding is the delivery of judgment.  In those circumstances, in our opinion, WAG can suffer no oppression due to the continuation of ACS's application let alone any unjustifiable oppression.

15. We acknowledge that this is not the only consideration.  It is well established that there may be an abuse of process where proceedings are instituted against a party in a second forum when there are proceedings against that party pending in another and the continuance of the second would be an abuse of the process of the first.[7]  But that is not this case.  Here the two processes on foot are directed to different issues and different forms of relief.  ACS's application in an appeal dated 20 June 2023 raises a disputed question of construction and seeks payment out of money held in court.  The central issue in the winding‑up application is concerned with WAG's solvency and whether it should be wound up in insolvency.  It is true that in a practical sense it is likely that ACS will not be able to succeed in its winding-up application if ACS first succeeds in its application in an appeal dated 20 June 2023.  It does not follow, however, that WAG is being twice vexed with the same or a similar issue in a way that is seriously and unfairly burdensome, prejudicial or damaging or productive of serious and unjustified trouble and harassment.  WAG is not being so vexed.

    [7] See eg Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427 [90].

16. Moreover, in circumstances where any winding-up application relying on the presumption of insolvency by reason of the failure to comply with the statutory demand had to be commenced by 6 September 2023, there can be no criticism of ACS commencing its winding‑up application before the determination of its application for payment out of the money held in court.

17. WAG has not established that the continuance of ACS's application in an appeal dated 20 June 2023 should be stayed as an abuse of process.

18. WAG's application in an appeal dated 11 September 2023 also sought an order that the money in court be paid out to WAG.  That order would necessarily follow if the continuance of ACS's application in an appeal dated 20 June 2023 was an abuse of process to be stayed.  However, as ACS's application in an appeal dated 20 June 2023 is not to be stayed as an abuse of process, the payment out of the money in court should be determined as part of ACS's application.  Accordingly, this further aspect of WAG's application should also be dismissed.

19. For these reasons at the hearing of the appellant's application in an appeal dated 11 September 2023, we ordered that the application is dismissed. 

20. Costs followed the event.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

MD

Associate to the Honourable Justice Vaughan

26 OCTOBER 2023