In the matter of 7 Steel Building Solutions Limited [2011] NSWSC 1191

Supreme Court New South Wales

Medium Neutral Citation: In the matter of 7 Steel Building Solutions Limited [2011] NSWSC 1191 Hearing dates: 11 October 2011 Decision date: 11 October 2011 Jurisdiction: Equity Division - Corporations List Before: Barrett J Decision: Dismissed with costs to be assessed on the indemnity basis Catchwords: CORPORATIONS - winding up - statutory demand - application for order setting aside - no appearance for plaintiff when matter called on for hearing - counsel sought leave to appear for plaintiff's directors - refused - defendant in liquidation when proceedings commenced and remains in liquidation - no attempt by plaintiff to seek leave to proceed - proceedings therefore doomed to fail - costs to be assessed on the indemnity basis Legislation Cited: Corporations Act 2001 (Cth), s 459G Category: Principal judgment Parties: 7 Steel Building Solutions Pty Limited - Plaintiff 7 Steel Distribution Pty Limited - Defendant Representation: No appearance - Plaintiff Mr J M White - Defendant Ellison Tillyard Callanan - Plaintiff Blake Dawson - Defendant File Number(s): 2011/00070071

Judgment 1I have dismissed these proceedings with costs. 2The plaintiff filed an originating process on 3 March 2011. Although the claim for relief in the originating process is somewhat anomalously framed, it is clear enough that the application intended to be made was one under s 459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand served on the plaintiff. 3There was no appearance for the plaintiff when the matter was called on for hearing. 4Mr Kabilafkas of counsel sought leave to appear for the directors of the plaintiff, stating that an administrator had been appointed last night. That leave was refused on the basis that directors are not proper parties to the s 459G application and do not otherwise have a sufficient interest. If the matter was to be progressed, it ought to have been progressed by the person having authority to act for the company, namely its administrator. 5There was no suggestion that the administrator intended to proceed. This is perhaps not surprising when it is remembered that the consequence of failure of the application is the creation of a presumption of insolvency which may be used as a basis for winding up of proceedings, and that the directors of the company, by their appointment of an administrator as recently as last night, have acknowledged that the company is insolvent or likely to become so. 6The dismissal of the proceedings with costs was a consequence of the plaintiff having not appeared to pursue its application. 7It is now put on behalf of the defendant that there should be an order that the costs be assessed on the indemnity basis. 8That submission pays attention to the fact that the defendant has been at all material times itself in liquidation, by which I mean that the defendant was in liquidation at the time the originating process was filed and has remained in that state. 9Despite that, the plaintiff never sought leave under s 471B of the Corporations Act either to commence the proceedings against the defendant or to continue them. Furthermore, the plaintiff did not make any move in that direction even after service of the defendant's counsel's submissions on 6 October clearly flagged that issue. 10There has thus always been an obstacle to the grant of the relief the plaintiff seeks - an obstacle that should have been obvious and which the plaintiff did not at any stage make any effort to surmount. 11In those circumstances, it can properly be said that the proceedings were doomed to fail from the start. That is a proper basis for the awarding of costs on the indemnity basis. 12I therefore order that the costs awarded to the defendant against the plaintiff be assessed on the indemnity basis.