In the matter of Eastern Sydney Division Of General Practice Limited (Administrator Appointed) [2013] NSWSC 382

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Eastern Sydney Division Of General Practice Limited (Administrator Appointed) [2013] NSWSC 382 Hearing dates: 25 March 2013 Decision date: 25 March 2013 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Pursuant to r 21.13(1) of the (NSW) Civil Procedure Rules 2005, Plaintiff to pay Defendants $2,521.60 in connection with notice to produce dated 6 August 2012 and $2,403.70 in connection with notice to produce dated 29 August 2012 Proceedings otherwise dismissed with costs Catchwords: PROCEDURE - application for leave to discontinue - whether proceedings should be dismissed or discontinued

COSTS - where Plaintiff sought leave to discontinue proceedings - whether the court should depart from ordinary rule that Plaintiff pay Defendants' costs upon discontinuance Legislation Cited: (NSW) Civil Procedure Rules 2005 r 12.7, r 21.13 Category: Interlocutory applications Parties: RMG Partners Business Solutions Pty Limited (Plaintiff) Eastern Sydney Division of General Practice Ltd (Administrator Appointed) ACN 063 189 042 (First Defendant) G Woodgate (Second Defendant) Representation: Counsel: A Spencer (Plaintiff) B Koch (Defendants) Solicitors: JT Law (Plaintiff) Turks Legal (Defendants) File Number(s): 2012/ 238623

Judgment (ex tempore) 1HIS HONOUR: Before the Court are two interlocutory processes. It is convenient to deal first with the Defendants' interlocutory process filed 19 February 2013, which seeks the following relief: 1. Pursuant to r 12.7(1) of the (NSW) Civil Procedure Rules 2005 the proceedings be dismissed. 2. The Defendants' legal costs of the proceedings, including all previous costs orders and reserved costs orders and costs in complying with the notices to produce dated 6 and 29 August 2012 be paid by the Plaintiff as agreed or taxed. 3. Pursuant to r 21.13(1) of the (NSW) Civil Procedure Rules 2005, the Plaintiff pay the Defendants the amount of $2,521.60 in connection with the notice to produce dated 6 August 2012. 4. Pursuant to r 21.13(1) of the (NSW) Civil Procedure Rules 2005, the Plaintiff pay the Defendants the amount of $2,403.70 in connection with the notice to produce dated 29 August. 2As the Plaintiff, in any event, in its application seeks leave to discontinue the proceedings, and as the Defendants make no particular point about whether the proceedings should be discontinued or dismissed, probably little turns on which order is to be made, save that because the Plaintiff seeks leave to discontinue upon terms, and there is a dispute as to whether the terms proposed by the Plaintiff should be imposed, it may be simpler, at least if that term is not to be imposed, to dismiss the proceedings - since a grant of leave to discontinue imposes no obligation to discontinue. 3The Plaintiff no longer advances any argument in opposition to the relief sought in paragraphs 3 and 4 of the Defendants' interlocutory process, and so I will make the orders in paragraphs 3 and 4 of the Defendants' interlocutory process. 4In its interlocutory process, the Plaintiff seeks leave to discontinue and an "otherwise order" in respect of costs, to the effect that the Defendants pay the Plaintiff's costs of the proceedings up to and including the date of the second creditors meeting held on 9 August 2012, and the Plaintiff pay the Defendants' costs from that day onwards. 5The proceedings were instituted by the Plaintiff on 20 July 2012 by filing an originating process which sought, in substance, a review of the Second Defendant's decision as a voluntary administrator of the Plaintiff to reject four proxies lodged in respect of the first creditors meeting and to refuse to allow one creditor, Reid, to vote at that meeting. It is said that had those proxies been admitted and Reid been permitted to vote, a resolution to replace Mr Woodgate with another person as administrator, which was defeated by four votes to two, would instead have been carried. In fact, at a second creditors meeting on 9 August 2012 it was resolved that the company be wound up. The plaintiff submits that the application to review the liquidator's decision was thereby overtaken by events and rendered of no utility. 6Notwithstanding that contention, the Plaintiff did not then discontinue the proceedings, but when they first came before the Court on 20 August 2012, they were adjourned to 27 August. On that date, they were adjourned to 10 September, when leave was granted to amend the originating process and directions were made for pleadings and notices to produce and the proceedings adjourned to 19 November. On that date, further directions were made for pleadings and the filing of evidence, with the proceedings adjourned to 11 February 2013. 7The Plaintiff says that had the proceedings not been rendered futile, it was at least justified in instituting the proceedings. As I understand the Plaintiff's case and the Defendants' position, it is accepted that it was incorrect to disallow Mr Reid's vote and that he should have been admitted for a nominal amount at the first creditors meeting. This would not have had a significant impact on the votes by value, but at least potentially would have increased the votes in favour of an alternate administrator from two to three. 8So far as the four proxies are concerned, it is accepted that they were received after the 24-hour period before the commencement of the meeting that the notice of meeting had stipulated for receipt of proxies; indeed, it is accepted that they were received either at or immediately before the meeting. The Plaintiff's argument appears to be that, because another proxy from one Ms Adler which was also received later than that 24-hour period was nonetheless accepted and allowed to vote, the liquidator's discretion to reject the four received at or immediately prior to the meeting thereby miscarried. 9I am unable to accept this. There may be any number of reasons why a proxy received after the 24-hour period but sufficiently long before the meeting for the liquidator to investigate it and satisfy himself of its propriety could be accepted, while one received at or immediately before the meeting would not be. In other words, it seems to me that the acceptance of Ms Adler's proxy is no basis for concluding that the liquidator's discretion miscarried in respect of the other four. That was the only basis upon which, at least before me, it was put that it could be shown that the liquidator's discretion miscarried in that respect. 10In order to obtain an "otherwise order", the Plaintiff must show some good cause to depart from the ordinary consequences of discontinuance. In this case, if the Plaintiff had demonstrated a strong case that it would have succeeded, coupled with its application being rendered futile by supervening events, that might have sufficed. However, the first of those limbs is not established. I therefore do not think that a basis for an "otherwise order" is made. 11In those circumstances, unless the parties wish to say anything against it, it seems to me that the appropriate course is simply to dismiss the proceedings with costs. 12I therefore make Order 3 in the Defendants' interlocutory process; I make Order 4 in the Defendants' interlocutory process; and I order that the proceedings be otherwise dismissed with costs.