New South Wales Supreme Court CITATION : Fibre-Tek (Gold Coast) Pty Ltd (in liquidation) v Skye Bennett [2006] NSWSC 1100 HEARING DATE(S) : 16 October 2006 JUDGMENT DATE : 20 October 2006 JUDGMENT OF : Simpson J DECISION : Proceedings adjourned until 6 November 2006. CATCHWORDS : application for order for possession of real estate - whether application ought to be adjourned - s57 Legal Aid Commission Act 1987 - no appearance of defendant - prima facie entitlement to adjournment - onus on party resisting adjournment - special circumstances - title of property transferred to plaintiff - medical condition of defendant - defendant's need for legal advice and representation - mounting debt to mortgagee - defendant's application for legal aid refused - defendant appealled to Review Committee of Legal Aid Commission - orderly dissolution of non-functioning company - need for expedited hearing of Review Committee of Legal Aid Commission LEGISLATION CITED : Legal Aid Commission Act 1978 s57 CASES CITED : Fibre-Tek (Gold Coast) Pty Ltd (in Liq) v Bennett [2006] NSWSC 150 PARTIES : Fibre-Tek (Gold Coast) Pty Ltd (in liquidation) - Plaintiff Skye Bennett - Defendant FILE NUMBER(S) : SC 2006/13275 COUNSEL : J Doyle - Plaintiff SOLICITORS : Addisons Lawyers - Plaintiff IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DEFAMATION LIST SIMPSON J Friday 20 October 2006 2006/13275 Fibre-Tek (Gold Coast) Pty Ltd (in liquidation) v Skye Bennett JUDGMENT 1 HER HONOUR: The issue for present determination in these proceedings is whether, by the application of s57 of the Legal Aid Commission Act 1979, the substantive application otherwise listed for hearing ought to be adjourned. So to state the issue is to conceal the complexity of the history of the proceedings between the parties, and of the issues involved. I should state now that I regard the competing factors – those arguing in favour of an adjournment, and those arguing against – as finely balanced, indeed as finely balanced as I can recall seeing. Resolution of this dispute has not been made any easier by the fact that the defendant, who seeks the adjournment, has not appeared on the hearing, and has made her application, effectively, by facsimile. With that introduction I will attempt to outline the relevant circumstances. 2 It is convenient to begin by setting out, in full, s57 of the Legal Aid Commission Act: " 57 Adjournment of certain proceedings Where it appears to a court or tribunal, on any information before it: (a) that a party to any proceedings before the court or tribunal: (i) has appealed, in accordance with section 56, to a Legal Aid Review Committee and that the appeal has not been determined, or (ii) intends to appeal, in accordance with section 56, to a Legal Aid Review Committee and that such an appeal is competent, (b) that the appeal or intention to appeal is bona fide and not frivolous or vexatious or otherwise intended to improperly hinder or improperly delay the conduct of the proceedings, and (c) that there are no special circumstances that prevent it from doing so, the court or tribunal shall adjourn the proceedings to such date on such terms and conditions as it thinks fit." 3 The substantive proceedings were commenced by statement of claim filed on 10 July 2006 (not 10 July 2007, as appears in the "filed" stamp affixed to the document). The plaintiff, Fibre-Tek (Gold Coast) Pty Ltd (in liquidation), seeks against the defendant, named as Skye Bennett, a number of orders of which the principal is an order for possession of real estate, being property situated at 54 Bald Mountain Road, Limpinwood, premises in which the defendant presently lives. The defendant has not filed a defence to the statement of claim. She has, however, filed two affidavits from which the stance she adopts in relation to the claim may (not without considerable difficulty) be discerned. She has also forwarded, by facsimile, two letters to the court. 4 By notice of motion filed on 28 September 2006 the plaintiff sought, in effect, summary judgment. This is the substantive proceeding presently before the court. 5 This is not the first litigation between these parties, and it is the previous litigation that provides the foundation for the plaintiff's claim for possession of the land. It is therefore necessary to refer, in a little detail, to the previous litigation between the plaintiff and the defendant. 6 On 8 March 2006 Austin J delivered judgment (extempore) in those proceedings: Fibre-Tek (Gold Coast) Pty Ltd (in Liq) v Bennett [2006] NSWSC 150. It is to be noted that the defendant also did not appear on that hearing, and the plaintiff's application was dealt with ex-parte. (No criticism of the defendant in relation to her non-appearances ought to be read into this purely factual observation: the apparent reason for that circumstance will emerge in due course.) From the reasons for judgment given by Austin J, together with affidavit evidence and other material in the present proceedings, the following facts are disclosed. 7 Fibre-Tek (Gold Coast) Pty Ltd (to which I will refer as the plaintiff) was a subsidiary of Fibre-Tek Holdings Pty Ltd. In 1999 the directors of the plaintiff were Mr Peter Walker (also known as Jeff Curling or Jeff Bennett) and Mr Bernard Hilbert. A Mr Herman Lucas was the plaintiff's general manager and general financial controller. Mr Walker is the defendant's husband. 8 In 1999 the defendant purchased the property at Bald Mountain Road. The entirety of the funds for purchase, including the stamp duty, came directly or indirectly from the plaintiff. 9 On 17 August 2000 liquidators were appointed to wind up the plaintiff. In April 2001 the defendant granted a mortgage over the property, but this was discharged in May 2002. On the latter date she granted a further mortgage in favour of Sandhurst Trustees Ltd and that mortgage remains extant. As at 12 October 2006 payments under the mortgage were in arrears in an amount of just under $10,000, and the balance on the mortgage was $131,000 with another payment of almost $1,000 due on 15 October 2006. No payment under the mortgage had been received since 30 November 2005. 10 During the course of their investigation of the plaintiff's affairs, the liquidators discovered the purchase, and that the source of the funds for the purchase had been the plaintiff. They commenced the proceedings, to which I have already referred, which were the subject of the judgment of Austin J, seeking declarations that the directors had acted in breach of their fiduciary duty to the plaintiff and that the defendant held the title to the property on constructive trust for the plaintiff; and that the defendant transfer the title to the plaintiff and account to the plaintiff in respect of other sums they claimed to be owing by the defendant to the company. On 8 March 2006 Austin J made orders to that effect. 11 The defendant then moved the court for an order suspending the orders of Austin J, in order to give her an opportunity to consider her position, including whether or not she ought to seek to have the orders set aside. On 13 April 2006 Austin J refused that application: Fibre-Tek (Gold Coast) Pty Ltd (in liquidation) v Bennett , unreported, 13 April 2006. 12 The liquidators experienced great difficulty in making contact with the defendant in order to serve her with necessary documentation. Eventually, on 7 April 2006, Austin J made a further order, authorising the Registrar in Equity of the Supreme Court to execute the necessary transfers. This was done on 13 April 2006, and the property is now registered in the name of the plaintiff. 13 For some reason no application was made to Austin J for a writ of or order for possession, and no such order was made or writ issued in those proceedings. That explains the present separate proceedings for possession. 14 On 31 August 2006 the defendant filed an affidavit, affirmed on 25 August. The purpose of this affidavit is not clear. However, I was referred to it, and, given the absence of the defendant from the hearing, it was appropriate that I take its contents into account. 15 There are two presently significant aspects of the affidavit. The first concerns the defendant's state of health. She deposed that in July 2004 she was admitted to the Royal North Shore Hospital Emergency Ward and remained an inpatient of that hospital, or its affiliated rehabilitation centre, for approximately 16 months. Whilst there she contracted a disease (multi-resistant staph aureus, or MRSA, which she described as a "hospital superbug"). As a result, she deposed, she has sustained severe spinal injuries, has been rendered paraplegic, has sustained cognitive damage and is confined to a specially designed bed with very limited periods in a wheelchair. Her injuries made it impossible for her to attend court. She deposed, however, that she wished to attend court and defend the present action against her. 16 Her account of her medical condition was largely supported by a medical report annexed to the affidavit. This was a report of Dr Camilleri, a general practitioner, who considered the defendant incapable of assisting in any constructive manner in the preparation of her defence of the claim. 17 The second aspect of the affidavit concerned (or was, it seems, intended to concern) the substance of the claim by the plaintiff and the defendant's answer to it. The defendant deposed that, in January 2000, she had been approached by Mr Bernard Hilbert, who asked her if she would assist "Fibre-Tek" (the affidavit does not specify which Fibre-Tek company was intended to be referred to) in raising $550,000 by allowing the property to be used as security. She deposed that she agreed to this request, subject to certain conditions. The conditions were that she retain occupancy of the property, and that, in the event that "court actions to wind up Fibre-Tek" (again, which Fibre-Tek company is referred to is not specified), she be allowed "to purchase the debt relating to the property". She deposed "Fibre-Tek was placed in receivership or administration, so a buy back provision was inserted into the agreement", and that the terms of the agreement were accepted at a shareholders' meeting, and a copy of the agreement attached to the minutes. 18 Precisely what legal implications the defendant claims flow from these assertions is not evident. They are the subject of factual challenge on behalf of the plaintiff. In an affidavit sworn on 27 September 2006, Mr Damian Bender, the liquidator, deposed that he and his staff have conducted a thorough search of all the books and records of "Fibre-Tek" and that no record of any agreement between "Fibre-Tek" and the defendant of the kind claimed by the defendant are to be found. He observed that, prior to the filing of the affidavit of 25 August, the defendant had never made any such claims. 19 It is obviously not possible to resolve this factual dispute between the liquidator and the defendant. Indeed, I am not at all clear about its materiality to the proceedings. 20 On 5 October 2006 the defendant sent, by facsimile, two letters to the court. 21 In one of these she stated that she had applied for legal aid to defend the proceedings, been refused, and had lodged an appeal under s56 of the Legal Aid Commission Act. She requested an adjournment of the proceedings under s57 of the Act. In the other letter the defendant made some comments concerning the contents of the affidavit of Mr Bender. It is unnecessary to go further into the detail of these comments. 22 On 16 October 2006 the defendant forwarded to the court, by facsimile, a further affidavit (purportedly sworn on 14 October 2006). 23 She restated her account of her medical condition, and annexed additional medical (principally psychological) reports, which confirm that her condition is indeed parlous. She is 55 years of age. On 14 October a psychologist assessed her as displaying symptoms consistent with a diagnosis of depression secondary to medical complications, had lost a great deal of both physical and cognitive function, was marginally coping, and in need of psychological counselling. A clinical neuro-psychologist, in an undated report, considered that she would have difficulty accurately recalling events for the purpose of testifying in court. 24 The matter came before Johnson J on Friday 6 October, principally in respect of the defendant's s57 application. His Honour ordered that the matter be stood over until 16 October and gave directions for the filing of evidence in relation to the adjournment application. 25 S57 of the Act operates to entitle the defendant to an adjournment unless: + the appeal is incompetent; + the appeal is not bona fide or is frivolous or vexatious or is otherwise intended improperly to hinder or improperly delay the conduct of the proceedings; or + there are special circumstances that prevent the court granting the adjournment. 26 In my opinion, having regard to the terms of s57, the onus lies upon the party who opposes adjournment to establish one or more of the relevant circumstances that would justify refusal. 27 Here, the plaintiff accepts that the appeal is not incompetent, is bona fide, is not frivolous or vexatious or otherwise intended improperly to hinder or delay the conduct of the proceedings. The plaintiff has argued, however, that there are special circumstances that prevent an adjournment being granted. 28 There certainly are circumstances that speak against adjournment. There is the order of Austin J, pursuant to which the title to the property has been transferred to the plaintiff. The defendant occupies the property pursuant to no perceptible or identifiable legal right. No appeal against Austin J's orders has been filed. There is the mounting debt to the mortgagee, which is having the effect of diminishing the value of the asset. There are, no doubt, other creditors, whose rights will be adversely affected if possession is not granted to the plaintiff. And there is a general public interest in the orderly dissolution of a non-functioning company. It is difficult to see that the defendant has any valid or arguable defence to the plaintiff's claims. 29 Balanced against these considerations are the prima facie entitlement of the defendant to adjournment, unless that entitlement is displaced in one of the ways set out in s57; and her dire medical, including psychological, circumstances, which will make it difficult, if not impossible, for her to mount any defence that might be available to her. 30 It is the case, as is pointed out on behalf of the plaintiff, that the defendant's ill health does not in any way constitute or provide a defence or answer to the plaintiff's claim. Those circumstances are relevant because they enhance her claim to adjournment because they emphasise her need for legal advice and representation. They counterbalance the otherwise powerful consideration in favour of the plaintiff to which I have already referred. If the defendant's appeal to the Review Committee of the Legal Aid Commission is unsuccessful, however, the plaintiff's claim will have to proceed, even in the face of the defendant's medical condition. 31 On behalf of the plaintiff reliance was also placed upon what was said to be "the defendant's history of delay and evasion …". Reference was made to the history set out in the judgment of Austin J of 13 April 2006, recounting a number of instances of non-appearance by the defendant, failure to meet court timetables and obstacles placed in the way of effective service of documents. 32 In most cases this would be a circumstance of some force. However, in the light of the medical evidence, I think it avails the plaintiff little. 33 If it were within my power to direct the Review Committee of the Legal Aid Commission to expedite the hearing of the defendant's appeal, I would not hesitate to do so. However, that is clearly beyond the powers of this court. 34 I have concluded that the way in which justice can most nearly be achieved between the parties is to grant to the defendant a short adjournment, not necessarily continuing until the Legal Aid Commission has made its decision, but sufficient to give her (and, possibly, the plaintiff) the opportunity to urge expedition upon the Legal Aid Commission. 35 I adjourn the proceedings until 6 November 2006. The defendant (or those assisting her) should take whatever steps are available to her or them to press the need for expedition upon the Legal Aid Commission. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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