In the matter of A.S.P.E.C.T – Australasian South Pacific Educational & Commercial Training Incorporated Inc [2018] NSWSC 2048

Supreme Court New South Wales

Medium Neutral Citation: In the matter of A.S.P.E.C.T – Australasian South Pacific Educational & Commercial Training Incorporated Inc [2018] NSWSC 2048 Hearing dates: 7 August 2018 Date of orders: 07 August 2018 Decision date: 07 August 2018 Jurisdiction: Equity - Corporations List Before: Brereton J Decision: Application for adjournment refused. Defendant wound up and liquidator appointed. Catchwords: CORPORATIONS – winding up – grounds for winding up – appointment of liquidator. Legislation Cited: (NSW) Associations and Incorporations Act 2009, ss 63, 64 Cases Cited: My Peace Incorporated, In the matter of [2014] NSWSC 1906 Sandel v Porter (1966) 115 CLR 666 Category: Principal judgment Parties: Owners of Strata Plan 74910 (Plaintiff) A.S.P.E.C.T. Inc (Defendant) Representation: Counsel: P Afshar (Plaintiff) B Nazer (Solicitor) (Defendant)

Solicitors: Chambers Russell Lawyers (Plaintiff) Byron Associates (Defendant) File Number(s): 2018/089043

Judgment (ex tempore)

Adjournment Application 1. An application is made on behalf of the defendant A.S.P.E.C.T, or more fully Australasian South Pacific Educational & Commercial Training Incorporated Inc, for an adjournment of the hearing set down for today of proceedings for its winding up brought by the plaintiff Owners, Strata Plan 74910 by originating process filed on 20 March 2018. 2. The proceedings were set down for hearing by the Chief Judge in Equity at a directions hearing on 30 July 2018, in circumstances where the defendant was unrepresented. However the defendant was, in conformity with her Honour's direction, notified by e-mail that day of the fixture of the proceedings for final hearing today. 3. The prior history of the proceedings is also relevant. Having been instituted, as I have said, by originating process filed on 20 March 2018, they first came before the Court on 23 April 2018. On that day the defendant was represented by its public officer, and directions were made that it file and serve all evidence on which it intended to rely at the hearing by 11 May 2018, no further evidence to be relied on if not filed and served by that date. Provision was made for the applicant to serve evidence in reply by 18 May, and the proceedings were adjourned to 21 May with a view to allocation of a hearing date and, if appropriate, for mediation. 4. On 21 May, the defendant was again represented, this time by a person described as its paralegal consultant Ms Constantinidis. Black J noted that the matter was "settled in principle", and that Ms Constantinidis would be seeking legal advice as to the contents of the proposed deed of settlement, and stood the matter over to 18 June. On 18 June, the Court was informed by Mr Noble, who appeared for the plaintiff, that it had not been possible to make contact with the defendant over the last week or so, and that attempts to communicate had been unsuccessful. He sought that the matter be adjourned for two weeks, and Black J acceded to that application, adjourning the proceedings to 2 July 2018. 5. On 2 July, the defendant's public officer appeared and sought an adjournment for four weeks, to which the plaintiff acceded. However, Black J observed: Yes, well Miss Patania, I will stand the matter over for four weeks but it's been adjourned on several occasions. So in four weeks' time it will likely either have to have settled or it will have to go forward to a hearing. It can't continue to come back at regular intervals for a settlement that continues into the interminable future. 1. Ms Patania responded: I fully appreciate your position on this matter, however may I add to this that the defendant has been requesting this documentation since 2016 and has been denied access to it. So I have prepared for today your Honour a notice of motion requesting an actual subpoena to be issued to compel such. 1. His Honour replied: Ms Patania you've settled these proceedings or you haven't settled these proceedings. If you've settled these proceedings then it's time to implement settlement. If you haven't then it may be time to implement a hearing. You don't get to have both. Thank you. Is there anything further before I stand the matter over? 1. The proceedings were adjourned to 30 July "with a view to parties advising whether the matter has settled on a final basis or otherwise with a view to setting the matter down for hearing". 2. On 30 July the proceedings were listed before the Chief Judge. There was no appearance on behalf of the defendant. Although Mr Noble, for the plaintiff, expressed some hope that the matter might still be settled, it was not settled at that point. He estimated that the hearing would take half a day, and her Honour suggested that the Court would be available to hear the matter that Thursday - that is to say, Thursday of last week. The matter was again stood down to enable Mr Noble to endeavour to speak to the defendant, and he did so. Ms Patania conveyed her apologies to the Court, asserting that she was unwell and was going to supply a medical certificate. The Chief Judge noted that on 2 July Black J had told Ms Patania that the matter was either going to have to be settled or it would go forward to a hearing and could not come back at regular intervals for a settlement that continued into the interminable future. Her Honour offered hearing dates on Thursday or Friday, 2 or 3 August, but at Mr Noble's request deferred it until 7 August, and directed the plaintiff to notify the defendant that the matter was listed for hearing on 7 August before me. The evidence tendered before me today establishes that such e-mail notification was given at 3.09pm on Monday 30 July 2018. 3. The plaintiff is ready for hearing and wishes to proceed. The defendant's application for an adjournment was put essentially on the basis that Mr Nazer – who was retained only yesterday – is not presently in a position to argue the defence, having come into the matter so recently, and that there are arguable defences. 4. At first, application was made that the proceedings be "struck out". The legal basis upon which that contention was advanced is obscure. It was said that the proceedings should be struck out because the defendant acknowledges the debt and is prepared to pay it. The fact that the defendant acknowledges that it is indebted to the plaintiff is no reason for striking out proceedings for the winding up of the defendant on grounds that it is insolvent. Nor is the fact that a defendant says that it is prepared to pay, when it has not in fact paid, any reason for doing so. 5. Alternatively, it was submitted that the proceedings should be adjourned to enable the defendant to obtain access to and examine the various invoices upon which the debts which ultimately found the proceedings are claimed, and/or to sell or refinance the subject property in order to pay the debt. As to the first, the underlying debts are established for the purposes of these proceedings by judgments of the Local Court, one dating from 2013 and the other from 2016. There is no suggestion that any application has ever been made to set aside those judgments. There is no utility in adjourning proceedings in order to enable underlying invoices to be examined in those circumstances. 6. As to enabling the subject property to be sold or refinanced, there is no evidence as to what, if any, equity there is in the subject property. The title search of the subject strata unit discloses that it is subject to two caveats, although the amounts claimed under those caveats are unknown. The judgment debts – which, with interest, total about $49,000 - have been outstanding, in one case since 2013, and in the other since 2016. There is in evidence correspondence in which officers of the defendant have in effect indicated that the Association does not have the cash with which to pay the debt. The very fact that the debts have been outstanding for so long is a strong indication that that is so. The defendant has, by its officer, engaged in contentious correspondence with the plaintiff's lawyers as recently as July of this year. The circumstance that unless the case was settled it was going to proceed to hearing was made abundantly clear by Black J, and must have been clear last Monday when notification of today's hearing was given. 7. If there appeared to be any tenable defence, then the late retention of lawyers might still be of some significance, because one would not likely preclude the defendant from engaging lawyers to advance a tenable defence. But prima facie an unpaid creditor of an incorporated association is entitled to a winding up order, and no tenable defence to the allegation of insolvency has, at this stage, been articulated. I have, therefore, come to the conclusion that on the material presently before the Court it seems that acceding to an adjournment application would be a futility because no tenable defence has been identified. In those circumstances - and not lightly, bearing in mind the potential consequences for the defendant - it seems to me that the injustice to the plaintiff in acceding to the adjournment application would substantially outweigh the injustice to the defendant in declining it. 8. Accordingly the application for an adjournment or for striking out is refused.