FEDERAL COURT OF AUSTRALIA

Westpoint Management Limited (in liq) (receivers and managers appointed) v Theobald, in the matter of Lanepoint Enterprises Pty Ltd (in liq) (receivers and managers appointed) [2012] FCA 686

IN THE MATTER OF LANEPOINT ENTERPRISES PTY LTD (IN LIQ) (RECEIVERS AND MANAGERS APPOINTED)

THE COURT ORDERS THAT:

1.    The interlocutory application filed by Bowesco Pty Ltd (ACN 008 915 357) on 23 March 2012 be dismissed.

2.    Bowesco Pty Ltd do pay the plaintiff’s costs of the interlocutory application, to be taxed if not agreed.

3.    The proceeding be listed for final hearing.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF LANEPOINT ENTERPRISES PTY LTD (IN LIQ) (RECEIVERS AND MANAGERS APPOINTED)

REASONS FOR JUDGMENT

Summary

1    On 14 May 2009, the Federal Court of Australia ordered the winding up of Lanepoint Enterprises Pty Ltd (receivers and managers appointed). That decision was successfully appealed to a Full Court of the Federal Court, but restored following further appeal to the High Court of Australia.

2    On 31 October 2011, the plaintiff lodged a proof of debt with the liquidator of the company for the amount of $10,299,565.10. When the liquidator indicated an inability to adjudicate the proof of debt, the plaintiff applied to the Federal Court for an order admitting the debt in full.

3    Before the plaintiff’s proceeding could be finalised, Bowesco Pty Ltd, which wholly owned Lanepoint Enterprises Pty Ltd in liquidation, applied to be heard in relation to the plaintiff’s application.

4    The Court rejected Bowesco’s application on the basis that, to allow it to challenge the debt would constitute an abuse of process.

5    The Court found that the existence and quantum of the debt was fully litigated in the earlier winding up proceeding and that Bowesco, even though a contributory of the company (in liquidation), should not now be permitted to relitigate the debt issue.

6    Accordingly, the application of Bowesco to be heard in the primary proceeding concerning admission of the proof of debt was dismissed with costs.

interlocutory application to be heard in proceeding

7    By originating process filed 14 December 2011 (the proceeding) the plaintiff seeks an order that the formal proof of debt submitted by it and dated 31 October 2011 be admitted in full by the defendant, the liquidator of Lanepoint Enterprises Pty Ltd (in liquidation) (receivers and managers appointed), which company I will refer to at times as “the company” or “Lanepoint”.

8    The plaintiff, as may be seen from the heading of this proceeding, is Westpoint Management Limited (ACN 074 148 431) (in liquidation) (receivers and managers appointed), which I may at times refer to as “Westpoint Management”, especially in its pre-receivership and pre-liquidation state.

9    Both the plaintiff and the company therefore are currently in liquidation (and have receivers and managers appointed).

10    By interlocutory application filed 23 March 2012, another company, Bowesco Pty Ltd (Bowesco) has applied, in relation to the proceeding, for an order that it be heard on the proof of debt issue without becoming a party to the proceeding, or that it have leave to intervene in the proceeding, or that it be joined in the proceeding as a second defendant.

11    Bowesco also seeks an order that the proceeding be stayed pending determination of the Supreme Court of Western Australia action CIV 1014 of 2011 or, in the alternative, that the forthcoming final hearing in the proceeding in this Court be vacated.

12    The plaintiff opposes Bowesco’s interlocutory application.

background

13    On 14 May 2009, this Court made an order appointing the defendant as liquidator of the company Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (Receiver and Manager Appointed) [No 2] [2009] FCA 493.

14    That decision was the subject of a successful appeal to the Full Court of this Court: Lanepoint Enterprises Pty Ltd (Receivers and Managers Appointed) v Australian Securities and Investments Commission [2010] FCAFC 49 (24 May 2010). However, the High Court of Australia subsequently upheld a further appeal and restored the decision of the primary judge (Gilmour J) appointing the defendant as liquidator of the company: see Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (Receivers and Managers appointed) [2011] HCA 18; (2011) 244 CLR 1 (1 June 2011).

15    On 31 October 2011, the plaintiff lodged a proof of debt with the defendant for the amount of $10,299,565.10. At the same time the plaintiff sent the defendant liquidator a letter requesting the proof of debt be adjudicated within 28 days, that is before 2 December 2011.

16    On 2 December 2011, the defendant sent the plaintiff’s solicitors a letter stating that he was unable to adjudicate the proof of debt due to:

(1)    his inability to access the plaintiff’s records; and

(2)    the lack of funding available in the liquidation with which to obtain a legal advice on the quantum of the plaintiff’s claim against the company and the company’s “counterclaims”.

17    On 14 December 2011, the plaintiff filed the originating process in the proceeding seeking the relief described above.

18    It should also be noted that the company, by writ of summons dated 6 January 2011, after the successful Full Court appeal but before its reversal by the High Court, commenced proceedings against the plaintiff and the present defendant, the liquidator, seeking amongst other things, damages for breach of contract, breach of duty, trespass and conversion, which action may be called “the Lanepoint claim”. Those proceedings are in Supreme Court of Western Australia action CIV 1041 of 2011, and are currently stayed.

19    On 23 March 2012, Bowesco filed the interlocutory application in this proceeding which is now before the Court.

20    Putting the matter generally, Bowesco is interested to contest the plaintiff’s application for admission of the proof of debt. Its interest in doing so arises from the fact that it owns all the shares in the company and as a shareholder is a “contributory” in this unlisted company under the definition in s 9 of the Corporations Act 2001 (Cth) (Corporations Act).

21    At the hearing of this application counsel for Bowesco suggest Bowesco was also a creditor of the company but no further materials to support this view were provided to the Court and so I act on the basis it is a contributory only.

bowesco’s submissions

22    Bowesco as a contributory says that if the proof of debt is admitted in the amount claimed or anything like it, or if the liquidator does not reject the proof, its interests will be affected.

23    Bowesco says that by its involvement in this proceeding it can:

    Controvert the plaintiff’s assertions.

    Provide valuable first-hand knowledge concerning relevant transactions.

    Identify relevant witnesses and documents to assist the Court to resolve the central proof issue.

24    Bowesco says it has already sought to resolve the “central issue” on behalf of the company in three ways:

(1)    It has sought to settle the issue by mediation or arbitration.

(2)    It has sought an assignment of the chose in action embodied in the current Supreme Court of Western Australia proceedings, from the liquidator, acknowledging that resolution of that proposal has been affected by the suggestion that any such assignment would create an asset captured by the plaintiff’s charge over the company leading to the liquidator’s request for considerable legal funds to determine its legal position and be indemnified.

(3)    By seeking to be involved in this proceeding.

25    Bowesco points to R 2.13 of the Federal Court (Corporations) Rules 2000 (Cth) (R 2.13) which provides the Court may grant leave to any person who is a creditor, contributory or officer of a corporation to be heard in a proceeding without becoming a party.

26    Bowesco says R 2.13 is an embodiment of the well established principle that no person’s rights, property or interests ought to be affected without having the opportunity to be heard in the relevant proceeding.

27    It says that as the sole shareholder of the company, it has a clear and real interest in the present litigation and is a person aggrieved with the decision or lack thereof by the liquidator under s 1321 of the Corporations Act.

28    Alternatively, under R 9.12 of the Federal Court Rules 2011 (Cth) (R 9.12), it has standing to apply to the Court for leave to intervene in the proceeding with such rights, privileges and liabilities as the Court might determine. In that regard, it notes that under R 9.12 the Court may have regard to:

(1)    whether the intervener’s contribution will be useful and different from the contribution of the parties to the proceeding (para (a)); and

(2)    any other matter that the Court considers relevant (para (c)).

29    Bowesco notes that the liquidator has not indicated any intention to participate in the proceedings or deal with the proof, nor to resolve the central issue on behalf of the company and the Court may infer that he does not intend to do so for at least the following reasons:

(1)    No appearance has been filed by him in the proceeding.

(2)    There has been no attendance for the defendant at the appointment held.

(3)    No active steps have been taken by the liquidator.

(4)    He has no money in his administration.

plaintiff’s submissions

30    On behalf of the plaintiff, attention is first drawn to reg 5.6.53 of the Corporations Regulations 2001 (Cth) which provides:

5.6.53    Time for liquidator to deal with proofs

(1)    A liquidator must, within:

(a)     28 days after receiving a request in writing from a creditor to do so; or

(b)     if ASIC allows — any further period;

in writing:

(c)     admit all or part of the formal proof of debt or claim submitted by the creditor; or

(d)     reject all or part of the formal proof of debt or claim; or

(e)     require further evidence in support of it.

Note The effect of regulation 5.6.11A is that if a recipient has, in accordance with that provision, nominated electronic means to receive notices, the notifier may give or send the notice mentioned in this subregulation by the nominated electronic means.

(2)     If the liquidator does not deal with a request under subregulation (1) in accordance with that subregulation, the creditor who submitted the proof may apply to the Court for a decision in respect of it.

(3)     If the liquidator gives notice in writing to a creditor that further evidence is required in support of the formal proof of debt or claim submitted by the creditor under subregulation (1), the period mentioned in that subregulation is taken not to have begun to run until the day on which the liquidator receives a sufficient written answer to his or her notice.

31    The plaintiff submits that the quantum and existence of the debt claimed in the proof of debt is not in question and accordingly the relief should be granted and that any positive defence to the proceedings by the defendant or a third party such as Bowesco ought to be struck out.

32    Accordingly, the plaintiff submits that Bowesco should not be granted leave to be heard or joined as a defendant or allowed in as an intervener.

33    Further, the plaintiff submits that there should be no stay of the proceeding because:

(1)    the Lanepoint proceeding is also an abuse of process;

(2)    to the extent that claims made in the Lanepoint proceeding are not an abuse of process they have insufficient connection with the current proceeding for a stay to be granted; and

(3)    in the alternative there is no basis for the Court to grant any stay.

34    The plaintiff says the validity and authenticity of documents relating to the proof of debt are not in dispute, including a loan agreement between the plaintiff and the company dated 10 May 2005, which is attached to the proof of debt, and drawdown notices pursuant to the loan agreement, also attached to the proof of debt.

35    The plaintiff submits that the only issue in dispute is the quantum of debt owed by the company to the plaintiff and in particular whether the “Kingdream transfer” and the “$2m run-around” should be taken into account – the proof of debt sum having been calculated without taking those transactions into account.

36    The plaintiff submits the Court should not permit any person to run a defence as to the quantum and existence of the debt which would gainsay the decision of the primary judge to appoint the liquidator where, at [70], his Honour stated:

I find that the Kingdream transfer and the $2m run-around were improper transactions put into effect to conceal the true position that Lanepoint was indebted to WIF in approximately $6.6m and to render it unlikely that WIF could recover those funds. I accept the submission of ASIC that they were ineffective transactions.

37    Thus the plaintiff submits that the debt owed by the company to the plaintiff is the proof of debt as claimed and that the Court should grant the relief.

38    As to abuse of process, the plaintiff says it may exist where a party seeks to relitigate an issue already decided. For a step in a proceeding to amount to an abuse by impermissible relitigation it is not necessary that one of res judicata, issue estoppel or Anshan estoppel be applicable.

39    As to the claim for stay of the current proceedings on the Lanepoint claim, the plaintiff says the Lanepoint claim is founded in part on the allegation that the quantum of the debt owing by the company to the plaintiff was $2,266,566.77, which amounts to a challenge to the quantum of the Westpoint Income Fund (WIF) debt. The plaintiff submits that for the same reasons advanced above, it is an abuse of process to permit any attempt by the company to challenge the WIF debt.

40    To the extent that other claims are made which do not rely on the quantum of that debt, the plaintiff submits those matters do not have sufficient connection with the current proceedings for any stay to be granted.

41    Further, the plaintiff submits there is no basis for granting a stay in any event, having regard to:

(1)    a liquidator’s duty to adjudicate a proof of debt is mandatory;

(2)    the purpose of reg 5.6.53(2) is for the Court to step into the defendant’s place and to make the decision the defendant was obliged to make; and

(3)    the plaintiff should not be put in a worse position due to the defendant’s failure to perform their statutory obligations. In other words, if the defendant had performed its statutory obligations he would have adjudicated the proof of debt by 2 December 2011 on the basis of the information before him at the time.

consideration

42    Rule 2.13 of the Federal Court (Corporations) Rules 2001 (Cth) provides as follows:

2.13    Leave to creditor, contributory or officer to be heard

(1)     The Court may grant leave to any person who is, or who claims to be:

(a)     a creditor, contributory or officer of a corporation; or

(b)     an officer of a creditor, or contributory, of a corporation; or

(c)     any other interested person;

to be heard in a proceeding without becoming a party to the proceeding.

(2)     If the Court considers that the attendance of a person to whom leave has been granted under subrule (1) has resulted in additional costs for any party, or the corporation, which should be borne by the person to whom leave was granted, the Court may:

(a)     direct that the person pay the costs; and

(b)     order that the person not be heard further in the proceeding until the costs are paid or secured to the Court’s satisfaction.

(3)     The Court may order that a person who is, or who claims to be, a creditor, contributory or officer of a corporation be added as a defendant to the proceeding.

(4)     The Court may grant leave to a person under subrule (1), or order that a person be added as a defendant to a proceeding under subrule (3):

(a)     on application by the person or a party to the proceeding; or

(b)     on the Court’s own initiative.

(5)     The Court may:

(a)     appoint a creditor or contributory to represent all or any class of the creditors or contributories on any question, or in relation to any proceeding, before the Court, at the expense of the corporation; and

(b)     remove any person so appointed.

43    There is no dispute between the parties that Bowesco is a contributory of the company. I proceed on the basis that the Court may, if the circumstances are appropriate, grant leave to Bowesco as a contributory of the corporation to be heard in the proceeding without becoming a party to the proceeding, pursuant to R 2.13(1)(a).

44    It is primarily pursuant to this rule that Bowesco seeks to be heard to raise its concerns on the proof of debt issue, although it also refers to the powers of the Court to allow a party to intervene or to be joined as a party, to which I will return.

45    Staying, however, with R 2.13, McKerracher J considered the application of this rule by reference to other authorities in Freehills, Re New Tel Ltd (in liq) ACN 009 068 955 [2008] FCA 762; (2008) 66 ACSR 311 (Freehills, Re New Tel). In that case an attempt was made by a third party (father of the proposed examinee under an examination summons) to be heard in relation to the ex parte application by the examiner relating to service of the examination summons out of the jurisdiction. That application to be heard was refused.

46    In Onefone Australia Pty Ltd v One.Tel Limited; Weston v Publishing and Broadcasting Limited [2007] NSWSC 1320, prospective defendants sought leave to be heard on a special purpose liquidators application to vary the function and powers he held and extend the time within which process could be served. Justice Barrett considered that there was a strong indication in the rules of the Court that a person named as a defendant in an unserved originating process is not intended to be heard on an application for extension of time within which service remains valid.

47    As to whether R 2.13(1) could be relied upon to obtain a right to be heard, Barrett J, at [22], noted that the capacity or status of a member or contributory may be rejected in the circumstances before him as insufficient. His Honour noted that the company was insolvent and its members had no tangible financial interest in the conduct of its winding up. The applicants did not, as members, stand apart from any other members of One.Tel, which was a listed public company presumably with thousands of shareholders.

48    In Pilarinos v Australian Securities and Investments Commission [2006] VSC 301, Gillard J refused an application by the State of Victoria under R 2.13 for leave to be heard in relation to an appeal from an order made in the Court dismissing an application made by three plaintiffs seeking reinstatement of a company that had been deregistered. His Honour, at [24]-[25], considered that the successful outcome of the application would not affect the rights or the interests of the State of Victoria and that the mere reinstatement of the company would not, of itself, prejudice or affect the rights of the State of Victoria.

49    In Freehills, Re New Tel, McKerracher J, having considered these authorities, concluded, at [48], that to grant the father of the proposed examinee the right to be heard on the matters before the Court would not finally affect the rights of the examinee as the matters were ex parte proceedings and the rights of the examinee would remain preserved until a later time.

50    In the present case, the situation is slightly different from those just discussed in that Bowesco, as the sole member of the company, is not a member of a publicly listed company and seeks to be heard on proof of a debt it wishes to dispute in circumstances in which the liquidator will not attend the hearing as a contradictor. If it were able to demonstrate that the debt sought to be proved does not exist or does not exist in the sum contended for then the financial health of the company would(?), on the face of it, be improved.

51    Before proceeding to consider the exercise of the power of the Court to grant leave to be heard under R 2.13, the powers of the Court under the other provisions that Bowesco relies upon may be noted. By R 9.05(1) of the Federal Court Rules 2011 (Cth), the Court may join a person as a party to a proceeding if that person ought to have been joined as a party or as a person by (b) is a person:

(i)     whose cooperation might be required to enforce a judgment; or

(ii)     whose joinder is necessary to ensure that each issue in dispute in the proceeding is able to be heard and finally determined; or

(iii)     who should be joined as a party in order to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings.

52    On the face of it R 9.05(1) is not particularly apposite to the present circumstances although arguably R 9.05(1)(b)(ii) enables Bowesco to contend that its joinder is “necessary” to deal with the proof of debt issue.

53    Finally, R 9.12 enables the Court to grant leave to a person to “intervene in a proceeding” with such rights, privileges and liabilities (including liabilities for costs) as may be determined by the Court. Rule 9.12(2) says that the Court may have regard to:

(a)     whether the intervener’s contribution will be useful and different from the contribution of the parties to the proceeding; and

(b)     whether the intervention might unreasonably interfere with the ability of the parties to conduct the proceeding as the parties wish; and

(c)     any other matter that the Court considers relevant.

54    In this case, Bowesco says that its contribution would be useful and different from that of any other party to the proceeding as it would seek to contradict the plaintiff’s position in relation to the debt proof of which is said to be in issue.

55    My view, if it is inappropriate for the Court to give leave to Bowesco to be heard in the proceeding under R 2.13 then it will be equally inappropriate to join Bowesco as a party or allow it to intervene in the proceeding.

56    The plaintiff in answer to the submission of Bowesco primarily contends that to allow Bowesco into the proceedings at this point on any basis would constitute an abuse of process. In this regard, the plaintiff does not suggest that to allow Bowesco to be heard in any capacity would constitute res judicata, or issue estoppel or that it would be impermissible as an Anshun estoppel.

57    The question of what was actually decided by the primary judge when the winding up order was made, as subsequently considered in the Full Court in the further appeal to the High Court, is what is primarily at issue between the parties on this interlocutory application.

58    On the one side, counsel for Bowesco urges that the primary judge only needed to determine whether the company was able to discharge the presumption of insolvency against it, and that the actual level of indebtedness was not in issue. With that characterisation of the determination of the primary judge on the winding up application, counsel for the plaintiff joins issue.

59    In my view, if it is clear from the nature of the proceeding and the determination made by the primary judge, then it would be an abuse of process for the Court to allow Bowesco, as a contributory of the company, to be heard in any capacity (whether as a contributory or by joinder or intervention) in this proceeding.

60    It is well recognised that the Court has the power to dismiss a proceeding as an abuse of process in circumstances which might also suggest that res judicata, issue estoppel or Anshun estoppel might be invoked as grounds for dismissal. In Dale v State of Western Australia [2011] FCAFC 46; (2011) 191 FCR 521 (Dale), at [112], the Full Court (Moore, North and Mansfield JJ) adopted what French J said in this regard in Spalla v St George Motor Finance Ltd (ACN 007 656 555) (No 6) [2004] FCA 1699 at [59]-[70]. The ultimate point of analysis endorsed by the Full Court is that the doctrines of res judicata, issue estoppel and Anshun estoppel do not exhaust the circumstances in which a proceeding may be regarded as amounting to an abuse of process by way of attempted relitigation of a determined dispute. The Full Court did not understand more recent decisions of the High Court concerning abuse of process to derogate from the force of this analysis. An application for special leave to appeal to the High Court against the decision of the Full Court in Dale was refused. On behalf of the three members of the Court who considered the special leave application (Hayne, Crennan and Kiefel JJ), Hayne J stated that, having regard to the facts and circumstances referred to by him, the applicants enjoyed insufficient prospects of success in an appeal against the finding that there was an abuse of process by reason of finding of fact in prior litigation: Dale v State of Western Australia [2011] HCA Trans 332 (9 December 2011). It is apparent from the transcript of this special leave application that the members of the High Court fully accepted that abuse of process is recognised as a separate and distinct basis upon which a proceeding may be dismissed in order to prevent relitigation of an issue.

61    I turn then to what was decided, and in what circumstances, in the primary proceeding before the primary judge. In this proceeding the Australian Securities and Investments Commission (ASIC) applied to wind up the company on the basis that the receivers had not retired and while they remained there was no prospect of paying any creditor other than the secured appointor. ASIC also submitted that the claim of the secured creditor, Westpoint Management, for its loan exceeded the aggregate value of the remaining assets of the company.

62    The primary judge, at [2], observed that the company was subject to a presumption of insolvency when receivers were appointed to it pursuant to a floating charge, under s 459C(2)(c) of the Corporations Act. At [4], the primary judge noted that the company opposed the application on the ground it was solvent and that it bore the onus of establishing its own solvency. In that regard, at [5], his Honour noted, amongst other things, that to discharge the onus the Court should ordinarily be presented with the “fullest and best” evidence of the financial circumstances of the respondent and that unaudited accounts and unverified claims of ownership or valuation are not ordinarily probative of solvency.

63    His Honour, at [9], noted that the background to the proceeding was uncontroversial. The company, Lanepoint, redeveloped the Regency Motel site on Great Eastern Highway, Rivervale in Western Australia. This was financed, in part, by secured funds obtained from Suncorp Metway Limited (Suncorp) and Westpoint Management Pty Ltd as the responsible entity for the Westpoint Income Fund (WIF). Westpoint Management was a related and associated company within the Westpoint Group and WIF was a managed investment scheme which raised funds from the public for use in relation to Westpoint Group projects.

64    His Honour further noted, at [13], that the Suncorp receivers’ appointment was continuing and that the receivers had paid the secured debt owed but awaited clearance from income tax obligations and a release from anticipated litigation before returning any surplus funds to Westpoint Management for the WIF as the next secured creditor.

65    The primary judge then dealt with the liability to WIF, an issue which he characterised as concerning the amount of the company’s indebtedness to Westpoint Management. His Honour noted, at [21], that the resolution of this issue, irrespective of the company’s indebtedness otherwise, would determine the application before him. He said it was common ground that the company had a facility with Westpoint Management, the responsible entity for the WIF by which Lanepoint received funding.

66    At [25], his Honour noted that the liquidator of WIF claimed that Lanepoint owed WIF approximately $6.6 million. At [26], his Honour noted that the company submitted there was credible evidence that the WIF liability could not possibly be $6.6 million or anything like it and pointed to the observation of Westpoint Management’s receiver, Mr Read, at [15] of his affidavit of 25 February 2008, that “I have not made an agreement on the amount and I have not made an agreement as to how that amount may be settled”. The company, therefore, submitted to the primary judge that the liability was somewhere between $0-$2.5 million. Accordingly, as the primary judge noted, at [27], the company submitted there was a genuine dispute as to the amount of the indebtedness to WIF.

67    I should note at the outset that the hearing in relation to the application before the primary judge on these issues appears to have occurred over some six or seven days between 25 March and 14 May 2009. At [28], the primary judge noted that a “great deal of evidence” was adduced in respect of the issues including detailed examination of, amongst others, Mr Carey, Ms Karen Carey and Mr Gregory Nairn on behalf of the Westpoint and Lanepoint interests. His Honour there expressly noted that:

No suggestion was made that there was other relevant evidence available going to the resolution of this question.

68    The primary judge dealt with the topic of “Reasoning on WIF liability” from [31]-[53]. At [53], his Honour made the following express finding:

I find that Lanepoint did draw down the WIF funds in the amount of $6.6 million and is obliged to repay those amounts. That amount will, of course, now be substantially more because of interest. This amount alone exceeds Lanepoint’s total assets of $5,729,937. The transactions in the form of the $2m run around and Kingdream transfers which purported to reduce or extinguish the amount of Lanepoint’s indebtedness to WIF were, I find, ineffective or liable to be set aside. These findings alone are sufficient to dispose of this application.

69    Then his Honour dealt with the topic of “Kingdream transfer and $2m run-around” from [54]-[77]. At [70], his Honour made the further express finding:

I find that the Kingdream transfer and the $2m run-around were improper transactions put into effect to conceal the true position that Lanepoint was indebted to WIF in approximately $6.6m and to render it unlikely that WIF could recover those funds. I accept the submission of ASIC that they were ineffective transactions.

70    Then his Honour dealt with the question whether the Kingdream transfer constituted an uncommercial transaction and unreasonable director-related transaction. Ultimately, at [86], the primary judge made the express finding:

I find for the above reasons that Lanepoint is indebted to Westpoint Management as the responsible entity for WIF in the amount of not less than $6.6m.

71    The submission made on behalf of the plaintiff is that this ultimate finding, having regard to what preceded it, was not simply a finding that there had been a failure to rebut the presumption of insolvency. With that submission, I agree.

72    In those circumstances, in answer to the primary submission put on behalf of Bowesco, the determination made by Gilmour J was not simply about whether the presumption of insolvency of the company had been rebutted. In order to deal with that legal issue, the question of the company’s indebtedness to Westpoint Management as the responsible entity for WIF in a very particular amount, having regard to particular transactions, was directly in issue. Evidence was led over a number of days concerning the particular transactions. The primary judge made findings about those transactions adverse to the interests of the company and to the advantage of Westpoint Management.

73    In all of those circumstances there is little or no room in the current proceeding for a party, such as Bowesco, as a contributory of the company, to enter the fray again to re-argue the transaction points that were canvassed in detail before the primary judge. It is not to the point either to say that fresh representations, analysis or “evidence” might be led about how those transactions should be viewed. Evidence was led about them and argument was addressed to the primary judge as to exactly how those transactions should be viewed, in respect of which his Honour made the express findings noted above.

74    In my view, and notwithstanding that Bowesco is a contributory of the company, it would be inappropriate to grant Bowesco leave to be heard in this proof of debt proceeding, or to consider joining it as a party or allowing it to intervene in the proceeding. To do so would enable the relitigation of issues plainly determined in the course of the proceeding before the primary judge as a result of which he finally ordered that the company be wound up in insolvency. To allow for those issues to be reagitated – in fact, relitigated – would constitute an abuse of process.

75    For these reasons, I would refuse the interlocutory application of Bowesco to be heard or joined as a party or treated as an intervenor or otherwise be permitted to be involved in some Court ordered mediation of the current application of the plaintiff. The reality is that the company is insolvent. The fact that Bowesco is a contributory is a relevant issue but, in the end, an incidental issue. The company is being wound up. The liquidator, albeit not in funds, has chosen not to be heard in relation to the proof of debt proceeding. However, the existence and quantum of the debt has already been the subject of extensive consideration and findings by the primary judge in the winding up proceeding. To allow Bowesco to enter the proceeding in any capacity at this point would simply be to permit Bowesco to relitigate the debt issue. This would in the circumstances constitute an abuse of process.

order

76    The Court orders that:

1.    The interlocutory application filed by Bowesco Pty Ltd (ACN 008 915 357) on 23 March 2012 be dismissed.

2.    Bowesco Pty Ltd do pay the plaintiff’s costs of the interlocutory application, to be taxed if not agreed.

3.    The proceeding be listed for final hearing.

Associate:

Dated:    28 June 2012