C & E Enterprises v Olympia Diaries & Calendars Pty Ltd [1998] QCA 24

1 COURT OF APPEAL [1998] QCA 024 McPHERSON JA PINCUS JA MOYNIHAN J Appeal No 263 of 1998 C & E ENTERPRISES Appellant (ACN 050 403 384) (Applicant) and OLYMPIA DIARIES & CALENDARS PTY LTD Respondent (ACN 054 129 124) BRISBANE ..DATE 04/02/98 REASONS -- 1 of 6 -- 040298 T9/JR M/T COA3/98 2 REASONS PINCUS JA: This is an application for an extension of time within which to appeal against an order made by Mr Justice Derrington on 24 November 1997. On that date the Judge dismissed an application by the present applicant for an order under section 459G of the Corporations Law setting aside a statutory demand for a sum in the vicinity of $145,000. The demand related to a debt claimed by the respondent as to which the applicant asserted there was a genuine dispute and also a genuine claim, those expressions appearing in the definitions of "admitted amount" and "offsetting claim" in section 459H(5) of the Corporations Law. The time for appealing against His Honour's order expired 28 days after 24 November 1997, that is on 22 December 1997. There is evidence that the applicant's solicitor thought the appeal did not need to be lodged until after vacation, a notion which would have been dispelled by a glance at the relevant rule, Order 70 rule 4(2). The notice of motion seeking an extension of time is dated 12 January 1998. There is an affidavit from one Blakiston, the managing director of the respondent, saying that two or three days before Christmas 1997 one Pelling, a director of the applicant, told him, "I will be paying your account in full prior to the date of the winding-up order". That affidavit is uncontradicted. There is an affidavit by one Gillon, a director of the respondent, that two or three days before Christmas 1997 he had a telephone call from Blakiston in which Blakiston relayed to him the contents of his conversation with Pelling. Gillon says that he relied upon -- 2 of 6 -- 040298 T9/JR M/T COA3/98 3 REASONS there being no appeal lodged, together with the conversation with Blakiston, in making substantial financial commitments on behalf of the respondent and in particular one entered into on 7 January 1998. As it happens, it was on 5 January 1998, two days earlier, that the solicitor for the applicant discovered his mistake and briefed counsel to draw a notice of appeal. He did not, however, trouble to inform the other side of these circumstances. In the reasons of the primary judge, His Honour discussed in some detail the bases upon which the application before him was founded. The first was that Blakiston, whom I have mentioned, made some misleading statements and the judge described that as a totally contrived defence. The second, which His Honour described as a major dispute, related to the question as to whether the debt, the amount of which was apparently not in issue, became payable only when the applicant itself received payment from people who had bought goods from it. The judge rejected that point also and said that even if there was some basis for argument as to when payment should be made, there was clearly at least $17,000 presently due and payable. Next, the agreed interest rate, applicable to amounts unpaid, of 17½% was challenged on the basis it was a penalty and His Honour rejected that. Lastly, His Honour dealt with a claim that there was a breach of fiduciary duty by one Lowndes of which the respondent took advantage and that claim had the same fate. His Honour concluded that none of the grounds of the application before him had substance. -- 3 of 6 -- 040298 T9/JR M/T COA3/98 4 REASONS Although in a proper case an application for an extension of time within which to appeal could, without doubt, be refused if it was seen that the appeal would if pursued inevitably fail, the present is not a case of that kind. The impression one gains, however, from a reading of the reasons, is that the appellant would have difficulty in persuading a court to disagree with the conclusion at which Mr Justice Derrington arrived. It is impossible to say, merely from reading the reasons, that an attack on them would necessarily fail. I am, however, influenced by the circumstance, discussed in argument, that on the occasion which is mentioned by Mr Blakiston, shortly before Christmas last year, there was a positive promise to pay by 21 January 1998, which was the date of hearing of the winding-up application. The occurrence of that conversation suggests that, at least in the mind of the person who had the conversation, there was no real substance in the points which were raised before Mr Justice Derrington. Under the Corporations Law the applicant cannot, without leave of the Court, raise by way of resistance to a winding- up order the ground which failed before Mr Justice Derrington: section 459S(1); and that leave cannot be granted unless the Court is satisfied that the ground is material to proving solvency: section 459S(2). These provisions show the importance of the appeal from the applicant's point of view and show the likelihood that if the applicant cannot pay the amount of the demand, it will -- 4 of 6 -- 040298 T9/JR M/T COA3/98 5 REASONS be wound up. It is my opinion, then, that an extension should probably be granted were it not for the evidence of the conversations referred to above in which a promise was made to pay the debt and the evidence from the respondent that it subsequently acted upon the basis of that promise. It is my opinion, further, that those conversations provide sufficient justification, prima facie, to refuse the application for an extension and not only throw doubt, as I have mentioned, upon the genuineness of the claim and the dispute, but they also, whilst standing uncontradicted, provide evidence that there was a significant detriment incurred by the respondent on the basis of its (quite reasonable) assumption that there were going to be no appeal. In answer to those contentions, Mr Williams, for the applicant, offered an undertaking to pay any expenses incurred by the respondent as a result of its having incurred obligations on the assumption that there was going to be no appeal. I note, however, that under the provisions of the Corporations Law, as under the pre-existing law, there is a provision avoiding dispositions of property made after the commencement of a winding up and that is s.468(1). The provision is not, of course, absolute and the Court has a discretion to otherwise order, but prima facie, it would seem to me, any payment made in pursuance of the undertaking would be void. There is also the circumstance, as has been mentioned in argument, that if the company is in fact insolvent, the undertaking may not be worth much. -- 5 of 6 -- 040298 T9/JR M/T COA3/98 6 REASONS In the circumstances the overwhelming fact is, as it appears to me, that the time for appeal was allowed to expire; on the basis there was to be no appeal and that a promise to pay was made, the respondent incurred obligations. In these circumstances it is my view that it would be unjust to extend the time to appeal and I would refuse the application with costs. McPHERSON JA: I agree. MOYNIHAN J: So do I. McPHERSON JA: The order is that the application to extend the time within which to appeal is refused with costs. ----- -- 6 of 6 --