Walkers Grading Pty Ltd v Pavement Construction WA Pty Ltd

[2001] WASC 149

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   WALKERS GRADING PTY LTD -v- PAVEMENT CONSTRUCTION WA PTY LTD [2001] WASC 149

CORAM:   MASTER BREDMEYER

HEARD:   8 JUNE 2001

DELIVERED          :   11 JUNE 2001

FILE NO/S:   COR 64 of 2001

MATTER                :PAVEMENT CONSTRUCTION WA PTY LTD (ACN 089 553 024)

BETWEEN:   WALKERS GRADING PTY LTD (ACN 063 381 519)

Plaintiff

AND

PAVEMENT CONSTRUCTION WA PTY LTD (ACN 089 553 024)
Defendant

DRAKESWOOD PTY LTD
Third Party

Catchwords:

Winding up - Application to wind up - Substitution of applicant

Legislation:

Corporations Law, s 465B

Result:

Substitution allowed

Representation:

Counsel:

Plaintiff:     No appearance

Defendant:     Mr I Weldon

Third Party                   :     Mr P Reading

Solicitors:

Plaintiff:     No appearance

Defendant:     Bruce Havilah & Associates

Third Party                   :     Tottle Christensen

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

Deputy Commissioner of Taxation v Sun Heating Pty Ltd (1983) 1 ACLC 1141

DMK Building Materials Pty Ltd v C B Baker Timbers Pty Ltd (1985) 2 NSWLR 711

Southeast Water Ltd v Kitoria Pty Ltd (1996) 14 ACLC 1328

Case(s) also cited:

Nil

1. MASTER BREDMEYER:  This is an application by Drakeswood Pty Ltd to substitute as the plaintiff in this winding up case.  An affidavit has been filed in support giving evidence of the debt claimed by Drakeswood.  Drakeswood has not issued a statutory demand for that debt.  The plaintiff in this case brought the application to wind up the defendant company based on a dishonoured cheque for $10,034.15 which was the subject of a statutory demand which was not met.  The application to wind up was adjourned on a number of occasions to enable the debt to be paid, which was done.  The application was not dismissed.

2. Section 465B of the Corporations Law provides:

   "SECT 465B Substitution of applicants

   465B(1)  The Court may by order substitute, as applicant or applicants in an application under section 459P, 462 or 464 for a company to be wound up, a person or persons who might otherwise have so applied for the company to be wound up.

   (2)  The Court may only make an order if the Court thinks it appropriate to do so:

   (a)because the application is not being proceeded with diligently enough; or

   (b)for some other reason.

   (3)  The substituted applicant may be, or the substituted applicants may be or include, the person who was the applicant, or any of the persons who were the applicants, before the substitution.

   (4)  After an order is made, the application may proceed as if the substituted applicant or applicants had been the original applicant or applicants."

3. Obviously the Court has a discretion whether to allow a substitution or not.  Counsel for the defendant opposes substitution and relies on Southeast Water Ltd v Kitoria Pty Ltd (1996) 14 ACLC 1328, a decision of Ryan J of the Federal Court. Counsel for Drakeswood relies on Deputy Commissioner of Taxation v Sun Heating Pty Ltd (1983) 1 ACLC 1141, a decision of McLelland J of the New South Wales Supreme Court, and also on DMK Building Materials Pty Ltd v C B Baker Timbers Pty Ltd (1985) 2 NSWLR 711, a decision of Needham J. Counsel for Drakeswood urged me to allow the substitution and wind up the company. He proposes to rely on the deemed insolvency caused by the defendant's failure to comply with the statutory demand already mentioned.

4. I propose to allow the substitution.  It is commonly done and, in my experience, seldom without opposition.  I consider it is appropriate to avoid a multiplicity of proceedings.  If the defendant company is truly insolvent with a number of debts owing, it is not just that it stave off a winding up order by paying out the petitioning creditor.  Whether it is truly insolvent or not, of course, remains to be seen.  I propose to allow the substitution but I will not hear the winding up application at the same time.  It is necessary that the new plaintiff file an amended application to wind up and the matter be returned for hearing on another date.  I will dispense with the requirement to advertise the application.  I consider a readvertisement would serve no useful purpose.  The original application was advertised and that gave other creditors the opportunity of learning of it and attending to support or oppose the application.

5. Whether the new plaintiff can rely on the deemed insolvency caused by the defendant's default to comply with the earlier statutory demand, can be left for later argument.