Star Erections Pty Ltd v Southern Cross Medical & Surgical Pty Ltd [2001] NSWSC 961

New South Wales Supreme Court

CITATION : Star Erections Pty Ltd v Southern Cross Medical & Surgical Pty Ltd [2001] NSWSC 961 CURRENT JURISDICTION: Equity Division Corporations List FILE NUMBER(S) : SC 3797/01 HEARING DATE(S) : 17/10/01 JUDGMENT DATE : 17 October 2001

John Sheahan (Applicant Liquidator) PARTIES : Southern Cross Medical & Surgical Pty Ltd (Defendant Company) G E Syndication Pty Ltd (Supporting Creditor) JUDGMENT OF : Young CJ in Eq

G A Seib (Applicant Liquidator) COUNSEL : P Fordyce (S) (Defendant Company) Jarrod White (S) (Supporting Creditor) Piper Alderman (Applicant Liquidator) SOLICITORS : Morgan Lewis Alter (Defendant Company) Kemp Strang (Supporting Creditor) CATCHWORDS : CORPORATIONS [228]- Winding up order-Partially vacated on appeal by misunderstanding- How dealt with. LEGISLATION CITED : Corporations Act 2001, ss 459J and 471A Supreme Court Rules Pt 40 r 9 DECISION : Orders made.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST 3797 of 2001 YOUNG CJ in EQ

Wednesday 17 October 2001 STAR ERECTIONS PTY LTD v SOUTHERN CROSS MEDICAL & SURGICAL PTY LTD

Judgment 1 His Honour: This is a mess. That is the best way of describing what is before the Court in a neutral, accurate way. 2 There was a perfectly ordinary application to wind up the defendant, now the first appellant, which was granted by the Registrar on 25 September 2001, and Mr Sheahan was appointed liquidator. 3 On 4 October 2001, a Mr T appeared before the Duty Judge in this matter. The transcript says that Mr T appeared for the defendant, which is a little inconsistent with the way in which the heading appears in the transcript, which puts the parties the wrong way around and appears as follows: "T: By consent I hand up a notice of motion on appeal, affidavit and short minutes. It is an appeal from a winding-up order of the registrar. HIS HONOUR: I do not understand order 2. The order does not work. Would you go away and have another look at it? Stood over to 10 o'clock on Thursday 5 October 2001." 4 The Associate's page further records that Mr T appeared for the plaintiff and also mentions the matter for the defendant. There does not appear to have been any process before the learned Judge that day. 5 On the next day, the learned Judge initialled a document called "notice of motion of appeal" which was later filed in the Registry on the same day, whereby the company and a contributory appealed from the order winding it up on the main grounds that the purported statutory demand was not accompanied by an affidavit that qualified under s 459E of the Corporations Act 2001, and that the discretion of the Registrar miscarried in refusing an adjournment. 6 The Associate's page for that day again records Mr T as appearing for the appellants and mentioning it for the respondent. 7 The piece of paper which accompanied the Associate's page purports to have the signature of Mr A, solicitor, for the appellants and the facsimile signature of one Andrew Frank. Looking at the document one would think Andrew Frank represents an opposing party. The document, which has handwritten alterations which may well be his Honour's, ordered that the Registrar's orders be vacated and noted that the parties intended to enter into a deed of settlement with a view to the proceedings being dismissed, and the matter was stood over to 6 November 2001 before the Registrar. The notice of appeal was also stood over to that day. 8 On 15 October the applicant, John Sheahan, who had been appointed liquidator, applied for an order by way of interlocutory relief setting aside the orders made by the Duty Judge. 9 The orders made by the Duty Judge were duly passed and entered on 5 October. The only way in which the Court can set aside an order which has been passed and entered, apart from odd situations that occur under the slip rule, is by a separate suit in which either fraud, mistake, or other vitiating factor is alleged, or, alternatively, under Pt 40 r9 of the Supreme Court Rules, or under the inherent power of the Court. The power under Pt 40 r9 applies where an order is made in the absence of a party. 10 The editors of the Supreme Court Practice have put in a note 40.9.3A that there is no decision made as to what is covered by "absence of a party", that the question is really academic because if a party has deliberately refrained from participating in a hearing, then even though the order can be sought to be made in the party's absence, that wilful refusal to become involved would be a reason why the order would not, in fact, be made. 11 The problem in the instant case is that it would appear that the learned Judge was of the view that Mr T appeared for both parties. That is not supported by the transcript of the first day, although as I have said, that transcript is not particularly accurate in other respects. However, the transcript of the second day mentions Mr T mentioning the appearance of the respondent. 12 A whole series of situations may have occurred. Mr T may have genuinely believed he had the consent of the liquidator to do what he did. Mr T may have behaved in a fraudulent way, though one does not ordinarily impute that sort of conduct to a solicitor of this Court without some evidence. Or there may have been some other misunderstanding. It would appear nothing was actually served on the liquidator, and it would also seem the liquidator's head office is in South Australia though the address given in the order appointing him was Macquarie Place, Sydney, an office that may not be particularly well staffed. 13 The learned Judge obviously thought he was making an order in the absence of a party. I do not think that I have the facts to determine otherwise, and that must mean that there is no standing in the liquidator to make the present application because he is no longer the liquidator. 14 However, it is very peculiar that before an appeal is heard the winding up order is set aside, which defeats the whole purpose of the appeal, yet that has happened. 15 I should, at this juncture note a matter relating to the appeal itself. Mr Seib for the liquidator submitted that the first of these grounds of appeal was precluded by s 459J of the Corporations Act as it raised a matter which should have been taken into account in setting aside the statutory demand. 16 It seems to me that the only way out of this mess is to act as follows: