Uvanna Pty Ltd trading as Northwest Immigration Services & Anor v Tsang Chi Ming & Ors [1997] FCA 135 (17 February 1997)

PRACTICE AND PROCEDURE - Appeal against damages award - Application for adjournment - Administrator appointed for appellant company - Whether hearing of appeal without leave of Court would infringe s 440D(1) of the Corporations Law - Whether appeal a "proceeding in a court against the company" - Whether appeal a "proceeding ... in relation to any of (the company's property") - Discretionary aspects of adjournment application.

Corporations Law, s 440D(1)

No. NG.838 of 1996

UVANNA PTY LIMITED trading as NORTHWEST IMMIGRATION SERVICES

and LESLIE WILLIAM ALEXANDER

v TSANG CHI MING, YANG BI HUI, IP SHING OP, LIN QIANG, GU WEI KANG, KUANG OU ZHI, SHEN GU HAI, WEN MING WANG, WEI QUO QING, ZHANG WEI QING, LIAN YAO HAN, XIE XIAO JIA, CHU LAI WAH, HUANG SHU JUN, FENG MIN, YE XIA DONG, XU SHI FANG, ZHANG LIN XING

CORAM: WILCOX J

PLACE: SYDNEY

DATE: 17 FEBRUARY 1997

IN THE FEDERAL COURT OF AUSTRALIA )

) No. NG.838 of 1996

NEW SOUTH WALES DISTRICT REGISTRY )

)

GENERAL DIVISION )

BETWEEN: UVANNA PTY LIMITED trading as NORTHWEST IMMIGRATION SERVICES

First Applicant

and

LESLIE WILLIAM ALEXANDER

Second Applicant

AND: TSANG CHI MING,

YANG BI HUI,

IP SHING OP,

LIN QIANG,

GU WEI KANG,

KUANG OU ZHI,

SHEN GU HAI,

WEN MING WANG,

WEI QUO QING,

ZHANG WEI QING,

LIAN YAO HAN,

XIE XIAO JIA,

CHU LAI WAH,

HUANG SHU JUN,

FENG MIN,

YE XIA DONG,

XU SHI FANG,

ZHANG LIN XING

Respondents

CORAM: WILCOX J

PLACE: SYDNEY

DATE: 17 FEBRUARY 1997

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The notice of motion filed on 14 February 1997 be dismissed with costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )

) No. NG.838 of 1996

NEW SOUTH WALES DISTRICT REGISTRY )

)

GENERAL DIVISION )

BETWEEN: UVANNA PTY LIMITED trading as NORTHWEST IMMIGRATION SERVICES

First Applicant

and

LESLIE WILLIAM ALEXANDER

Second Applicant

AND: TSANG CHI MING,

YANG BI HUI,

IP SHING OP,

LIN QIANG,

GU WEI KANG,

KUANG OU ZHI,

SHEN GU HAI,

WEN MING WANG,

WEI QUO QING,

ZHANG WEI QING,

LIAN YAO HAN,

XIE XIAO JIA,

CHU LAI WAH,

HUANG SHU JUN,

FENG MIN,

YE XIA DONG,

XU SHI FANG,

ZHANG LIN XING

Respondents

CORAM: WILCOX J

PLACE: SYDNEY

DATE: 17 FEBRUARY 1997

EXTEMPORE REASONS FOR JUDGMENT

WILCOX J: Application has been made to the Court for postponement of the hearing of an appeal listed for next Thursday, 20 February. The applicants for postponement are the two appellants: Uvanna Pty Limited, trading as Northwest Immigration Services, and Leslie William Alexander. It appears they suffered judgment against them in decisions of Hill J handed down on 3 July 1996 and 26 September 1996. The actions were brought by 18 people who apparently complained of having been the victims of misleading conduct by the appellants. The total amount of awarded damages exceeds $400,000.

The appeal was handled in the usual way. It went before a Full Court call-over on 3 December and it was there listed for hearing on 20 February.

On 3 February 1997 the two directors of the appellant company attended a meeting at which they passed a number of resolutions. One was an expression of their opinion that the company is insolvent and an administrator should be appointed. A second resolution was that Antony de Vries be appointed as administrator of the company under Part 5.3A of the Corporations Law. Mr de Vries accepted this appointment. He subsequently advised the solicitor for the appellants that in his opinion the objectives of Part 5.3A would be better served if the appeal was postponed until after a creditors' meeting to be held not later than 2 March. It is apparently pursuant to this intimation that the present application has been brought.

Although the reference is to 2 March, the practical effect of the application, if successful, would be that the hearing of the appeal would be postponed for a period of about three months. It would not be possible for the Court to hear the matter before the May Full Court sittings.

The appellants (the applicants for the adjournment) have put no information before the Court as to their financial position. There is no material that assists the Court to make a judgment as to whether the respondents to the appeal (the successful applicants below) would be prejudiced in their chances of recovering the amount awarded to them if the appeal hearing were postponed until May but the appeal was ultimately unsuccessful.

The submission put by Mr Burchett, on behalf of the applicants, depends upon the proposition that this case is covered by s 440D(1) of the Corporations Law. That subsection reads:

"During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except:

(a) with the administrator's written consent; or

(b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes."

Subsection (2) says that:

"Subsection (1) does not apply to

(a) a criminal proceeding; or

(b) a prescribed proceeding."

This is not, of course, a criminal proceeding. Mr Burchett told me no regulations specifying the nature of a prescribed proceeding have yet been made. Accordingly, it seems that subs (2) is irrelevant to this application.

Mr Burchett's argument is that this is a "proceeding in a court" against Uvanna or, alternatively, is a proceeding in a court "in relation to any of its property". He says it would be a breach of the subsection to proceed with the appeal without the leave of the Court.

I do not accept this construction of s 440D(1). The relevant "proceeding", as Mr Burchett agrees, is the appeal. The appeal is not a "proceeding against the company"; rather it is a proceeding instituted by the company for its own benefit, in the hope of ridding itself of judgments entered against it. Nor do I think it is a proceeding "in relation to any of its property". It might perhaps be said, in a loose sense, that an appeal involving the question whether certain people are entitled to recover damages against a company affects the company's property; but I do not think that is a correct understanding of the application of subs (1). I think the relevant words were intended to refer to litigation over a property owned by the company - an item of property in relation to which it can prove title. As Mr Basten pointed out, this is consistent with the way in which the phrase "property of the company" is used in the two immediately preceding sections. It is not difficult to think of cases to which s 440D(1) might apply, if interpreted in this way: for example, injunctive proceedings and actions for specific performance. I do not think the words are apt to include a mere claim for damages, where the award of damages does not effect a charge against particular property.

Accordingly, I think the application is misconceived, to the extent that it is based upon s 440D(1).

Notwithstanding this, it seems appropriate for the Court to consider whether, as a matter of discretion, the appeal should proceed before a determination by the administrator of the company's financial position and a decision by creditors as to the course to be taken. In some cases, it will be convenient for a pending appeal to be adjourned until completion of such steps. I have in mind cases where an application for adjournment is made at an early stage of the appeal process, especially where the appeal will be protracted and expensive; and also cases where steps can be taken to satisfy the Court that the opposite party will not be prejudiced by the delay.

None of these situations exists in the present case. The appeal is listed to be heard three days hence. It is a one day appeal. The cost of the appeal books has already been incurred. Although the appellants have not yet provided an outline of their submissions, I am told the respondents' submissions are now complete and will be made available immediately after the expiration of this hearing. From the point of view of costs savings, there is little advantage in deferring consideration of the merits of the appeal.

Importantly to my mind, nothing has been said to allay concern that a further delay in the resolution of the appeal may prejudice the respondents. Mr Burchett told me from the bar table that, at an earlier stage, a Mareva injunction was granted, but I have no idea what has been the result of this order in terms of the assets of either of the appellants. I am not making any assumption that there has been a breach of the order, of course; but I do not know the nature or extent of their assets or what would be the effect of a delay, even with a Mareva injunction. Nor is there any proposal, for example, to pay money into Court or otherwise to secure the interests of the respondents. Whilst I can see there is some advantage to the appellants in delaying the hearing of the appeal, nothing is offered to offset any possible disadvantage suffered by the respondents.

Considering the matter as an exercise in discretion, I think the application for an adjournment should be refused. The motion for vacation of the hearing date will be dismissed.

I order that the notice of motion filed on 14 February 1997 be dismissed with costs.

I certify that this and the preceding six (6) pages

are a true copy of the Reasons for Judgment

of the Honourable Justice Wilcox.

Associate:

Dated: 17 February 1997

APPEARANCES

Counsel for the Applicant: S Burchett

Solicitors for the Applicant: Andrews Solicitors

Counsel for the Respondent: J Basten QC

Solicitors for the Respondent: Public Interest Advocacy Centre

Date of hearing: 17 February 1997