Kozlowski v JSBG Developments Pty Ltd [2010] NSWSC 1020

New South Wales Supreme Court

CITATION : Kozlowski v JSBG Developments Pty Ltd [2010] NSWSC 1020

HEARING DATE(S) : 31 August 2010

JUDGMENT DATE : 31 August 2010

JURISDICTION : Equity

JUDGMENT OF : White J

EX TEMPORE JUDGMENT DATE : 31 August 2010

DECISION : Application for adjournment refused.

CATCHWORDS : CORPORATIONS – application for adjournment of winding up proceedings and extension of time under Corporations Act 2001 (Cth), s 459R – application for adjournment refused –where plaintiff seeks order to wind up defendant for non-compliance with statutory demand – statutory demand required payment of judgment debt – basis of adjournment is pending appeal from unsuccessful application to set aside judgment debt – no evidence justifying orders under s 459R – application to set aside statutory demand did not raise genuine dispute about judgment debt – no application for leave under s 459S to oppose winding up application on ground of genuine dispute about judgment debt – public interest in matter proceeding on fixed date

LEGISLATION CITED : Corporations Act 2001 (Cth) Building and Construction Industry Payments Act 2004 (Qld)

CATEGORY : Procedural and other rulings

PARTIES : Plaintiff: Wlodzimierz Antoni Kozlowski Defendant: JSBG Developments Pty Ltd

FILE NUMBER(S) : SC 2010/114197

COUNSEL : Plaintiff: n/a Defendant: G McDonald

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WHITE J

Tuesday, 31 August 2010

2010/114197 Wlodzimierz Antoni Kozlowski v JSBG Developments Pty Ltd JUDGMENT 1 HIS HONOUR: This is an application to vacate a hearing date in proceedings listed for hearing before me tomorrow. The plaintiff, by originating process filed on 7 May 2010, seeks an order that the defendant be wound up. The originating process was returnable before the Registrar on 21 June 2010. By consent the proceedings were adjourned to 19 July 2010. On 19 July 2010, orders were made for the service by the plaintiff and the defendant of the affidavits to be relied on, and the proceedings were fixed for hearing. 2 On 30 August 2010, that is to say, two days before the date fixed for hearing, counsel for the defendant wrote to the Associate to the Corporations List Judge, Barrett J, stating that the parties had agreed to adjourn the matter and attached consent orders. The correspondence and consent orders were forwarded to me, and I arranged for the matter to be listed today if the parties were seeking to vacate the hearing date. The short minutes of order signed for each party provided: " 1 Adjourn Winding Up hearing until 15 November 2010 2 Extend time under Section 459R Corporations Act 2001 3 No orders as to costs " 3 Section 459R of the Corporations Act 2001 (Cth) requires applications for winding up to be determined within six months after the application is made. That period may be extended only if the Court is satisfied that special circumstances justify the extension. There was no evidence provided that would justify the making of the orders sought under s 459R. If the proceedings were adjourned until 15 November 2010, as is sought, without an extension of time under s 459R, the application would stand dismissed after 7 November 2010. 4 The parties do not have the right by their own agreement to adjourn the hearing. The effect of the adjournment would be that other litigants will be denied the opportunity of having their proceedings determined at the adjourned date. There is a public interest reflected in s 459R in the speedy determination of applications for the winding up of companies in insolvency. If the defendant is insolvent, it is in the public interest that it be wound up. 5 Only counsel for the defendant has appeared today. I have been provided with an email from counsel for the plaintiff to counsel for the defendant setting out the grounds upon which the plaintiff consents to the adjournment. 6 The winding up application is based upon the presumption of insolvency arising from non-compliance with a statutory demand. The statutory demand required payment of the sum of $817,251.31 described as a debt due under a judgment given in the Supreme Court of Queensland pursuant to the Building and Construction Industry Payments Act 2004 (Qld). It appears that an application was made last year to the Supreme Court of Queensland for a stay of execution of that judgment or to have the judgment set aside. 7 On 28 October 2009, Applegarth J gave judgment stating that the application to set aside the judgment was irregular because any such proceeding required the payment into court of security of the unpaid portion of the adjudicated amount pending the final decision in the proceedings. Applegarth J refused the application for a stay. 8 It seems that on 13 July 2010, Applegarth J dealt with a further application to set aside the judgment. That application was adjourned to a date to be fixed pending the payment into court of the unpaid portion of the adjudicated amount, namely, $817,251.31. 9 In his email to counsel for the defendant, counsel for the plaintiff stated that the reason the plaintiff consents to the adjournment is that an appeal is pending on the Queensland Court of Appeal in respect of the interlocutory decision of Applegarth J. Counsel states that if the appeal is successful, that will bring on the hearing of the application to set aside the judgment. I take it (and this was confirmed by counsel for the defendant) that the appeal is against the stipulation that moneys must be paid into court as a precondition to the determination of the application to set aside the judgment. It seems the contention will be that the judgment debt, which is the foundation of the statutory demand, ought to be set aside. 10 If there were a genuine claim on substantial grounds that the judgment debt should be set aside, it would have been open to the defendant on its application to set aside the statutory demand to have sought to have the demand set aside under s 459J(1)(b) of the Corporations Act. An application was made to set aside the statutory demand, but that was not a ground raised in the supporting affidavit. 11 Section 459S(1)(b) provides that the company may not, without leave, oppose the application for winding up in insolvency on a ground that the company could have relied upon for the purposes of an application to set aside the statutory demand, but did not so rely on. 12 No application had been made for leave under s 459S. Hence, it appears to me that it would not be open to the defendant on the hearing of the winding up application to oppose the application on the ground that there is a genuine dispute about the judgment debt. It follows that the reasons advanced in seeking an adjournment are not persuasive. 13 As I have said, there is a twofold public interest in the matter proceeding on the date fixed. That is partly the public interest in the prompt disposition of winding up applications, and partly the public interest in the administration of justice that other litigants not be adversely affected by granting the adjournment. 14 I refuse the application.