FOOS -v- EUROTECH AUTOHAUS PTY LTD [2026] WASC 302

[2026] WASC 302 Page 1 JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA IN CHAMBERS CITATION : FOOS -v- EUROTECH AUTOHAUS PTY LTD [2026] WASC 302 CORAM : MASTER RUSSELL HEARD : ON THE PAPERS DELIVERED : 19 MARCH 2026 PUBLISHED : 28 JULY 2026 FILE NO/S : COR 116 of 2025 BETWEEN : ALEXANDER JOHN FOOS Plaintiff AND EUROTECH AUTOHAUS PTY LTD Defendant Catchwords: Practice and procedure - Costs - Appropriate cost orders - Where orders made to discontinue winding up application - Defendant ordered to pay plaintiff's costs of winding up application - Costs fixed - Turns on own facts Legislation: Supreme Court Act 1935 (WA) s 37 -- 1 of 11 -- [2026] WASC 302 Page 2 Result: Costs orders made Defendant to pay plaintiff's costs of winding up application Costs fixed Category: B Representation: Counsel: Plaintiff : No appearance Defendant : No appearance Solicitors: Plaintiff : Trinix Lawyers Defendant : Armeli & Molony Lawyers Case(s) referred to in decision(s): Commissioner of Taxation v Simionato Holdings Pty Ltd [1997] FCA 125; (1997) 15 ACLC 477 Commonwealth Bank of Australia v Begonia (1993) 11 ACLC 1075 Fresh Outdoor Carport and Pergola Pty Ltd v Style Group Construction Pty Ltd [2024] QSC 43 Future Invented Pty Ltd v Gebaut Environment Pty Ltd [2021] FCA 1034 Hughes v St Barbara Ltd [2011] WASCA 234 (S) Leslie v Howship Holdings Pty Ltd (1997) 15 ACLC 459 Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 Oshlack v Richmond River Council (1998) 193 CLR 72 Re Citic Commodity Trading Pty Ltd v JBL Enterprises (WA) Pty Ltd [1998] FCA 232 Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 Rhodium Australia Pty Ltd v Deputy Commissioner of Taxation [2012] FCAFC 17 Simatis v Walgenup Aboriginal Corporations [No 2] [2023] FCA 607 Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388 -- 2 of 11 -- [2026] WASC 302 Page 3 Taylor v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCA 1760 Travaglini v Raccuia [2012] FCA 620 Zeninvest Pty Ltd v Altus Development Pty Ltd [2019] VSC 363 -- 3 of 11 -- [2026] WASC 302 MASTER RUSSELL Page 4 MASTER RUSSELL: Overview 1 These reasons relate to the costs of the plaintiff's originating process for winding up of the defendant company (Application), which was discontinued by orders made on 30 October 2025. The Application sought orders for winding up pursuant to s 459P of the Corporations Act 2001 (Cth) on the basis the defendant had failed to comply with a statutory demand. 2 The defendant filed an appearance stating that it intended to oppose the winding up application on the grounds that it was solvent and the debt the subject of the statutory demand did not exist. 3 No application was made to set aside the statutory demand within 21 days of its service on the defendant under s 459G of the Corporations Act, and the defendant did not comply with the demand by paying the debt within that period. As such, the defendant was presumed to be insolvent by operation of s 459C(2)(a) of the Corporations Act and assumed the onus of rebutting that presumption by proving its solvency. 4 Orders were made for the defendant to file and serve affidavits in opposition to the Application, including expert evidence as to the defendant's solvency, by 23 October 2025. 5 On 29 October 2025, the day before the date fixed for the adjourned hearing of the Application, the defendant filed an affidavit of John Scott Thomson, a chartered accountant and director of JBC Corporate Pty Ltd, attaching an independent audit report dated 22 October 2025 that he had prepared on instructions from the defendant's lawyers for the purpose of the Application (Thomson Affidavit). 6 At the adjourned hearing on 30 October 2025, orders were made giving the plaintiff leave to discontinue the Application pursuant to r 5.8 of the Supreme Court (Corporations) (WA) Rules 2004 and that the Application be discontinued. 7 The parties were unable to agree in relation to the costs of the Application. They agreed that the costs of the Application be determined on the papers and each filed affidavits and submissions in relation to the costs of the Application. -- 4 of 11 -- [2026] WASC 302 MASTER RUSSELL Page 5 8 I determined the costs of the Application on the papers and made an order on 19 March 2026 that the defendant pay the plaintiff's costs of the Application fixed in the amount of $4,224 plus disbursements of $2,125. These are my reasons for the order made. The parties' respective positions in relation to costs Defendant's position 9 The defendant did not dispute that the plaintiff had issued a statutory demand, that the defendant did not take any steps to apply to set aside the statutory demand within 21 days of service, and that, as such, the defendant was presumed to be insolvent pursuant to s 459C(2)(a) of the Corporations Act. 10 The defendant submitted, in essence, that the plaintiff had information as to the defendant's solvency before commencing the Application and that the Application was an abuse of process because it was used for the purpose of debt collection, contrary to the regime set out in pt 5.4 of the Corporations Act. On that basis, the defendant submitted that the plaintiff should be ordered to pay the defendant's costs of the Application on an indemnity basis. Alternatively, the defendant sought an order that the plaintiff pay its costs of the Application 'pursuant to the relevant Court Scale of Costs' to be taxed if not agreed. 11 The defendant relied on an outline of submissions filed on 13 November 2025 and affidavits of: (a) Damian Eugene Molony sworn on 12 November 2025 and filed on 13 November 2025 (Molony Affidavit); and (b) David Anthony Lupica sworn on 15 December 2025 and filed on 19 December 2025 (Lupica Affidavit). 12 In summary, the defendant contended that, before the plaintiff filed the Application, the defendant had: (a) provided the plaintiff with a copy of its Statement of Cash Flows and its Profit and Loss Statement on 28 July 2025 (Financial Statements);1 and 1 Molony Affidavit [8] - [9], 'DEM-3', pages 16 - 18. -- 5 of 11 -- [2026] WASC 302 MASTER RUSSELL Page 6 (b) already quarantined the debt the subject of the plaintiff's statutory demand in a separate bank account (Quarantined Debt) and invited the plaintiff to commence District Court proceedings in lieu of commencing winding up proceedings.2 13 The defendant also advanced that, at all material times, the plaintiff was a party to a share sale agreement, which it was submitted had the effect of extinguishing any debt owed to him by the defendant.3 14 In respect of the debt the subject of the statutory demand being quarantined, the defendant referred to Fresh Outdoor Carport and Pergola Pty Ltd v Style Group Construction Pty Ltd,4 in which the respondent challenged the existence of a debt the subject of a statutory demand and adduced evidence of solvency after being served with a winding up application. In that case, in considering evidence of the respondent's solvency, Muir J referred, amongst other things, to an affidavit confirming receipt of an amount to be held in the respondent's lawyers' trust account or paid into court pending proceedings being commenced about the disputed debt. 15 There is no evidence in this case to indicate that any amount was held on trust in relation to the amount the subject of the statutory demand. Rather, the defendant's solicitors stated in an email to the plaintiff's solicitors that there were sufficient funds held in a separate bank account to satisfy the alleged debt claimed by the plaintiff, and asked whether the defendant agreeing to transfer the amount of the debt to the defendant's solicitors' trust account until resolution of the dispute would satisfy the plaintiff and avoid the then foreshadowed winding up application.5 Plaintiff's position 16 The plaintiff sought an order that the defendant pay his costs of the Application, fixed in the amount of $4,224 plus disbursements of $2,125, or to be taxed if not agreed. 17 The thrust of the plaintiff's submissions was that, despite requests, the defendant did not produce adequate forensic evidence as to the defendant's solvency, and it was the defendant's own inaction and 2 Molony Affidavit [4] - [5], [9], 'DEM-1', 'DEM-3'. 3 Molony Affidavit [12], 'DEM-7'; Lupica Affidavit [4] - [7], 'DAL-2'. 4 Fresh Outdoor Carport and Pergola Pty Ltd v Style Group Construction Pty Ltd [2024] QSC 43 [16], [32], [37] (Muir J). 5 Molony Affidavit [9], 'DEM-3', page 7. -- 6 of 11 -- [2026] WASC 302 MASTER RUSSELL Page 7 failure to provide sufficient evidence of solvency that resulted in the Application being commenced and the associated costs being incurred. The plaintiff submitted that he was entitled, in the circumstances, to commence the Application and should be entitled to his costs. 18 The plaintiff relied on an outline of submissions filed on 13 November 2025 and affidavits of: (a) Andrew James Foster sworn and filed on 29 October 2025 (Foster Affidavit); and (b) Alexander John Foos sworn on 17 November 2025 and filed on 9 December 2025 (Foos Affidavit). 19 The plaintiff refutes that he had knowledge of the defendant's solvency at the time of the Application, as contended by the defendant. His position is that the Financial Statements provided by the defendant were not supported by a balance sheet, nor any outline of current assets as against current liabilities required to establish the defendant's solvency.6 20 Further, in response to the financial materials provided in the Thomson Affidavit, the plaintiff noted that Mr Thomson's engagement did not constitute a statutory audit, nor a forensic or investigative engagement, and its scope was limited to a review and analytical testing of accounting records, management reports, and supporting documents made available by the defendant.7 He submitted that the defendant’s solvency remains an open question in the absence of expert forensic evidence, and the defendant bears the burden of discharging the presumption of insolvency by presenting the ‘fullest and best’ evidence of its financial position.8 21 As submitted by the plaintiff, unaudited accounts, unverified claims of ownership or valuation, and bald assertions of solvency arising from a general review of the defendant's accounts, even if by qualified accountants who have knowledge of those accounts, are not ordinarily probative of solvency.9 6 Foster Affidavit [4], 'AJF2', pages 6 - 10. 7 Thomson Affidavit [4], 'JST-1'. 8 Referring to Commonwealth Bank of Australia v Begonia (1993) 11 ACLC 1075, 1081 (Hayne J); Zeninvest Pty Ltd v Altus Development Pty Ltd [2019] VSC 363 [20] (Efthim AsJ). 9 See, for example, Commissioner of Taxation v Simionato Holdings Pty Ltd [1997] FCA 125; (1997) 15 ACLC 477 (Mansfield J); Re Citic Commodity Trading Pty Ltd v JBL Enterprises (WA) Pty Ltd [1998] FCA 232 (Heerey J); Leslie v Howship Holdings Pty Ltd (1997) 15 ACLC 459, 463 (Sackville J). -- 7 of 11 -- [2026] WASC 302 MASTER RUSSELL Page 8 22 The plaintiff submitted that, despite considerable opportunity to adduce evidence of solvency since the orders made in the Application on 21 August 2025: (a) the defendant did not do so; (b) the affidavits filed on 23 and 29 October 202510 did not adequately address that the Quarantined Debt is material to the defendant's solvency, nor that the core issue of establishing the defendant's solvency for the purposes of the Application; and (c) it was not until the filing of the Thomson Affidavit a day before the directions hearing on 30 October 2025 that the plaintiff could reach any informed view as to the merits of proceeding with the Application. The appropriate order as to costs Relevant principles relating to costs 23 The principles relating to costs are well established. Under s 37 of the Supreme Court Act 1935 (WA), the court has a wide discretion to award costs.11 However, the discretion is not unfettered and must be exercised judicially.12 24 There has been no substantive hearing on the merits of the Application or the defendant’s opposition to it. The matters that were in issue between the parties in relation to the statutory demand and in the Application have not been the subject of any hearing. Accordingly, the Application was resolved without any determination of the merits of either party's position. It is not necessary or appropriate in those circumstances to try and determine the Application hypothetically.13 25 In Simatis v Walgenup Aboriginal Corporations [No 2],14 Colvin J observed, in the context of a winding-up application, that where proceedings have been discontinued, there must be a good reason for the discontinuing party not to be ordered to pay the costs of the 10 The affidavit of David Anthony Lupica sworn and filed on 23 October 2025 attesting to the Quarantined Debt and the Thomson Affidavit. 11 See also Rules of the Supreme Court 1971 (WA) O 66 r 1(1). 12 Oshlack v Richmond River Council (1998) 193 CLR 72 [21] - [22]; Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 [24] - [25]; Hughes v St Barbara Ltd [2011] WASCA 234 (S) [5]; Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388 [48] - [50]. 13 Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 (Lai Qin), 624 - 625 (McHugh J). 14 Simatis v Walgenup Aboriginal Corporations [No 2] [2023] FCA 607 (Simatis). -- 8 of 11 -- [2026] WASC 302 MASTER RUSSELL Page 9 proceedings.15 His Honour observed that where both parties have acted reasonably in the proceedings, and the proceedings have been overtaken by settlement or a supervening event, it will usually be appropriate to make no order as to the costs of the proceedings.16 26 As observed by Cheeseman J in Future Invented Pty Ltd v Gebaut Environment Pty Ltd,17 the court may, in an appropriate case, make orders for costs even where there has been no hearing on the merits and the plaintiff no longer wishes to proceed with the action. An appropriate case to order costs for the plaintiff may include where the plaintiff has reasonably commenced a winding up application based on a failure to comply with a demand and the application is discontinued in light of new circumstances or evidence brought forward by the defendant.18 Is this an appropriate case to award the plaintiff costs? 27 Having considered the parties' respective submissions, I accept the plaintiff's submissions to the effect that the defendant did not provide evidence from which the plaintiff could reach an informed view as to the merits and commerciality of proceeding with the Application until 29 October 2025, the day before the adjourned directions hearing. 28 In the circumstances of this case, when viewed as a whole, I accept the plaintiff's submissions to the effect that the plaintiff has not acted unreasonably and should not be required to pay the defendant's costs or be denied his costs of the Application. 29 I was satisfied that this is an appropriate case to order costs in favour of the plaintiff on the basis the defendant did not act reasonably in the circumstances. The onus of rebutting the presumption of insolvency was the defendant's. The defendant did not provide adequate information or evidence from which the plaintiff could reach an informed view in respect of the defendant's solvency in response to the plaintiff's requests before the Application, or at an earlier stage of the proceedings. 15 Simatis [3], referring to Taylor v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCA 1760 [7] - [12] (Flick J). 16 Simatis [3], citing Lai Qin (624 - 625) and Travaglini v Raccuia [2012] FCA 620 [13] (McKerracher J). 17 Future Invented Pty Ltd v Gebaut Environment Pty Ltd [2021] FCA 1034 (Future Invented) [23] (Cheeseman J), citing Lai Qin (624). 18 Future Invented [23]. See also Rhodium Australia Pty Ltd v Deputy Commissioner of Taxation [2012] FCAFC 17. -- 9 of 11 -- [2026] WASC 302 MASTER RUSSELL Page 10 30 As stated, the Application was filed on 4 August 2025. Orders were made on 21 August 2025 granting leave for the parties to adduce expert evidence as to solvency, and for the defendant to file its evidence in opposition to the Application, including as to its solvency, by 23 October 2025. It was not until 29 October 2025 that the defendant filed the Thomson Affidavit, a day before the hearing listed on 30 October 2025. 31 As submitted on behalf of the plaintiff, Mr Thomson states in his report that his engagement did not constitute a statutory audit, was not part of a forensic or investigative engagement and its scope was limited to review and analytical testing of accounting records, management reports and supporting documents made available to him by the defendant. No positive assertion of the defendant's solvency is made. Upon receipt of the Thomson Affidavit and attached report, the plaintiff made a commercial decision not to proceed with the Application. 32 As noted, in circumstances where the defendant had failed to comply with a statutory demand, it was for the defendant to rebut the presumption of insolvency. I accept that the materials filed by the defendant up until 29 October 2025 were not conclusive and not such as to allow the plaintiff to confidently reach a conclusion as to the defendant's solvency or whether to proceed with the Application. 33 I agree with the plaintiff's submissions to the effect that, had he been provided with more substantial financial materials and the information in the Thomson Affidavit in a timelier manner, the costs incurred in bringing and proceeding with the Application may have been avoided. In my view, the plaintiff did not act unreasonably in commencing the Application and should recover his costs associated with doing so. 34 The plaintiff sought to have his costs fixed in the amount of $4,224. I was satisfied that it was reasonable to fix the costs in that amount. He also sought payment of disbursements of $2,125, which included the court fee payable to commence the Application, which is also appropriate. -- 10 of 11 -- [2026] WASC 302 MASTER RUSSELL Page 11 Conclusion and orders 35 For these reasons, I made an order in the terms sought by the plaintiff, as follows: 1. The defendant is to pay the plaintiff's costs of the Application fixed in the amount of $4,224 plus disbursements of $2,125. I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia. SC Associate to Master Russell 28 JULY 2026 -- 11 of 11 --