Diamond Head Pastoral Pty Ltd, Re [1993] QSC 294

'¥? \.\ ~~ ·111 State RepOrting Bureau ~-L.:.fr..ill .• TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION MACKENZIE J No 214 of 1993 IN THE MATTER OF THE CORPORATIONS LAW IN THE MATTER OF DIAMOND HEAD PASTORAL PTY LTD (ACN 009 752 649) No 215 of 1993 IN THE MATTER OF THE CORPORATIONS LAW IN THE MATTER OF DIAMOND HEAD PROPERTIES PTY LTD (ACN 009 727 673) BRISBANE .. DATE 15/09/93 .. JUDGMENT R~E') ;,;::.i~~~~~D''' r..,·,., o21 tiO I 3 t' ..... -- 1 of 11 -- 150993 gc (Mackenzie J) HIS HONOUR: The order that I make in each of the matters is that the application in each case is dismissed with costs to be taxed. I publish my reasons. JUDGMENT 2 10 20 () 30 40 50 60 "-------- -- 2 of 11 -- <'" ' ~\g . ? "t(~ State Reporting Bureau ~-\ .. ~£1.i1L. TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION MACKENZIE J No 214 of 1993 IN THE MATTER OF THE CORPORATIONS LAW IN THE MATTER OF DIAMOND HEAD PASTORAL PTY LTD (ACN 009 752 649) No 215 of 1993 \ · IN THE MATTER OF THE CORPORATIONS LAW I IN THE MATTER OF DIAMOND HEAD PROPERTIES PTY LTD (ACN 009 727 673) BRISBANE .. DATE 21/09/93 .. JUDGMENT 1 -- 3 of 11 -- 210993 dfc (Mackenzie J) HIS HONOUR: AGC's application was made as a substituted creditor to wind up the two respondents as guarantors of obligations of an associated company, Diamond Head Pty Ltd. Diamond head Pty Ltd had defaulted under a security given in favour of the applicant and at the time when the application was heard a sale by tender of a parcel of land at Broadbeach was under way, but uncompleted. In a very real sense the applicant won the battle, but lost the war when the matter was originally before me. The respondents raised three particular matters as grounds upon which the winding up should not be ordered. Firstly there was a breach of Section 85 of the Property Law Act, the allegation being that amongst other things the tender process had been compromised by certain valuation evidence that had been put in in the application to wind the companies up. Secondly, it was alleged that there was a breach of the Trade Practices Act. Third~y it was alleged that there was economic duress. I rejected these as a basis for resisting winding up, but the basis upon which the matter was decided against the applicant was concerned with the sufficiency of the evidence in other respects. The only valuation of the land was 14 months old. The accounts of the company were not current. There was some evidence that the valuation that was 14 months old probably did not reflect the market value because of recent sales. On the evidence I was not satisfied that an actual insolvency had been proved or that having regard to the status of the JUDGMENT 2 10 20 30 40 50 60 -- 4 of 11 -- 210993 dfc (Mackenzie J) applicant as a contingent or prospective creditor it was sufficiently established that there would necessarily be a debt owing once the process of sale by tender had been completed. The evidence of the financial state of the companies apart from the contentious debt was also, as I have said, not current. Such evidence as there was suggested that the companies were in a low state of activity at the time of the application and not defaulting on trade debts which fell due. The basis upon which personal assistance from Mrs Cleland to achieve this was not teased out in the evidence. There is ample authority for the proposition that before an order is formally entered the judge who made the order can reconsider it if there is sufficient reason to do so. Examples of the statement of principle can be found in Re Harrison's Share under a Settlement (1955) Chancery 260, Smith v. Bar Association of New South Wales (1992) 108 ALR 55 especially at page 60, and Autodesk Inc. v. Dyason (No 2) (1992-3) 176 CLR 300 .. A concise statement of the position is also to be found in Re AMIEU ex parte Ferguson (1986) 67 ALR 491 especially at 692.where Toohey J, having stated the principle that a superior Court of justice has full power to rehear or review a case until judgment is drawn up, passed and 10 20 30 40 50 entered, went on to say that a question of more concern is the delineation of criteria according to which the Court may re-open a hearing and, of course, the ultimate question whether the facts of the present case meet those criteria. JUDGMENT 3 60 -- 5 of 11 -- 210993 dfc (Mackenzie J) The question then, it seems to me, is whether the criteria for re-opening the matter at the late stage of proceedings that these proceedings have reached have been satisfied. It has been foreshadowed that an affidavit or affidavits will be read which prove the following matters: the tender process for the sale of the Broadbeach land has been completed; the 10 highest cash unconditional tender was for $8.6 million; the tender was considerably in excess of the applicant's most current valuation at $7.5 million; the applicant entered into the contract for the sale of land to the tenderer at $8.6 20 million; a caveat based on allegations of breaches of Section 85 of the Property Law Act was removed upon the basis that there was no serious question to be tried and that on 10 September 1993 the contract of sale was completed. 30 In the AMIEU case Toohey J said the following: "In situations where a hearing has concluded but judgment C has been reserved and not delivered it has been said that · fresh evidence should be admitted only when it is so material that the interests of Justice require it, theevidence if believed would most probably affect the result, the evidence could not by reasonable diligence 40 have been discovered before, and perhaps that no prejudice would ensue to the other party by reason of the introduction of the evidence so late." That statement, of course, .refers to the situation where the judgment is reserved and the reasons have not been delivered. It seems to me certainly no easier, and probably more difficult~to persuade a Court to re-open the matter at a later stage of the proceedings after the reasons have been given. It is plain on the evidence that would be led that the JUDGMENT 4 50 60 -- 6 of 11 -- 210993 dfc (Mackenzie J) applicant would have been entitled to winding~p orders, but the evidence was not before me. It is true that the outcome of the tender process was not known when the matter was heard. As against that no convincing reason why current valuation evidence was not put in before me was advanced, and there was no application to re-open in the time when the decision was reserved. There was no application at the hearing to adjourn the matter once the quantum of the debt was plainly in issue, by which I mean the existence of the debt, and it might be thought that in a real sense the applicant chose to proceed on 10 20 the state of the evidence at the time of the hearing. I raise those matters.not by way of criticism but simply to state as objectively as I can the situation as it was when the reasons for judgment were delivered. It is trite to say that things become much clearer with the benefit of hindsight and that the situation could easily have been cured by either calling further evidence at the hearing or applying to re-open before the reasons were delivered. The tension between the matters to which I have referred and the insolvency of the companies which is now apparent, and which in retrospect must have existed at the time of the hearing on the evidence that has been foreshadowed, has to be resolved. The hurdle that the applicant must overcome is that 30 40 50 it really seeks to introduce fresh evidence to repair the deficiency in the evidence after the reasons for judgment have explained the basis upon which the original evidence was deficient. In Smith v. The New South Wales Bar Association it is indicated that the power to re-open is discretionary. JUDGMENT 5 60 -- 7 of 11 -- 210993 dfc (Mackenzie J) Where reasons for judgment are given the power is only exercised if there is some matter calling for a review. Where there is a right of appeal the Court may be more reluctant to open the hearing. If the application is made to re-open on the basis of new or additi6nal ~vidence being available the reason why the evidence was not called at the hearing is relevant, and if a deliberate decision has been taken not to call the evidence,ordinarily that will tell decisively against the application to re-open. JUDGMENT 6 ----------------- 1 • 10 20 30 c~ --I 40 50 60 -- 8 of 11 -- 210993 kmm (Mackenzie J) Smith also seems to suggest that different considerations may apply, depending on whether the case is simply one in which the hearing is complete or one in which reasons for judgment have been delivered. In the latter case it is said that principles for allowing fresh evidence on appeal may provide a 10 useful guide. It is, I suppose, painfully obvious that had the application been made while judgment was reserved to call further evidence a stronger case for the exercise of the discretion could have been made out. In view of the right to bring a fresh application based on the evidence foreshadowed 20 today,any basis for claiming embarrassment or prejudice on the part of the respondents would have been flimsy. The evidence consisted of matters that could not at that time have been answered given what was, in effect, a concession of insolvency if the debt of the order claimed was owing. Although the attempt to establish grounds upon which the winding-up may have been resisted appeared to be insubstantial to me, and at least in one respect also to Mr Justice de Jersey, the situation has been further complicated by the issue of a writ seeking to set aside the securities at this point. However, I do not consider that that is a critical factor in the decision that I am to reach. The stark truth of the matter is that the application was made 30 40 50 after delivery of reasons for judgment which reflected my view of the evidence as it stood at all material times when it was under consideration. The difficulty for the applicant lies in the reluctance to reopen where other avenues are open, such as an appeal or a new application. While the evidence of the 7 JUDGMENT 60 -- 9 of 11 -- 210993 kmm (Mackenzie J) outcome of the tender process was not known, there is at least a view open that the applicant chose to proceed on the evidence that it had. It did not seek to adjourn the matter once the question of the existence of an amount owing had been raised and it did not provide current valuation evidence when 10 the respondents relied on the proposition that the previous valuation which had been revealed in the proceedings put an artificial cap on the tender process , It seems also from the affidavit material that the applicant would have to concede that at about the time when the application was heard 20 the fresh valuation of 7 million or a little more was available. Those circumstances, it seems to me, bring the matter nearer to a case of choosing to conduct the hearing .on the available evidence 30 rather than waiting the short time until the evidence which is now sought to be called became available. That evidence consisted of the valuation and the outcome of the tender process. 40 A situation like this obviously does not give one any pleasure but, unfortunate as the result may be, I think that it is inevitable that it would have to be conceded that I would be going beyond anything that is said in the cases if I were to allow the application to be reopened at this stage. As has 50 been pointed out, the relevant date of the winding-up does have effect in respect of people other than the direct parties, and in all of the circumstances I have come to the conclusion that the proper application of principle requires the application to be dismissed. 60 JUDGMENT ' l' -- 10 of 11 -- 210993 kmm (Mackenzie J) My order will be that the application is dismissed. Costs of the application will be paid by the applicant to the respondents in each case. JUDGMENT 10 20 30 40 50 60 -- 11 of 11 --