mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: David Grant &amp; Co Pty Ltd (rec apptd) v Westpac Banking Corporation [1995] HCA 43 ; (1995) 184 CLR 265
Outcome: cited
This is an application brought by Hardel Property Holdings Pty Ltd ("Hardel Holdings") seeking interlocutory relief by way of an injunction to restrain Allmark Property Management Pty Ltd ("Allmark") from instituting proceedings for the winding up of Hardel Holdings on the basis of presumed insolvency, Hardel Holdings having failed to comply with the statutory demand: see s 459C, s 459Q and s 465A of the Corporations Act 2001 (Cth). Hardel Holdings previously applied to have the statutory demand set aside under s 459G of the Corporations Act claiming that it was not indebted to Allmark at all or else that there was a genuine dispute as to its indebtedness. That application was dismissed at the instigation of Hardel Holdings, it being acknowledged that the application had not been served within the time specified in s 459G. It was accepted that the period allowed for an application under s 459G could not be extended: see David Grant &amp; Co Pty Ltd (rec apptd) v Westpac Banking Corporation [1995] HCA 43 ; (1995) 184 CLR 265. 2 Ordinarily, if a company the subject of a statutory demand wishes to oppose a winding up order notwithstanding its failure to comply with it, it may apply to do so under s 459S of the Corporations Act . The statutory demand procedure created by Pt 5.4 of the Corporations Act does not, though, totally preclude an application for an injunction to restrain an abuse of process in the initiation or prosecution of winding up proceedings founded on non-compliance with statutory demand. As was said by Gummow J in David Grant at 279: "No doubt, in some circumstances, the new Pt 5.4 may appear to operate harshly. But that is a consequence of the legislative scheme which has been adopted to deal with perceived defects in the pre-existing procedure in relation to notices of demand. It also may transpire that a winding up application in respect of a solvent company is threatened or made for an improper purpose which amounts to an abuse of process in the technical sense of that term, as explained in Williams v Spautz [(1992) [1992] HCA 34 ; 174 CLR 509 at 518-522, 532-537]. However, in an appropriate case, injunctive relief may then be available to the company in a court of general equity jurisdiction."
Case: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57
Outcome: cited
The two main inquiries to be addressed in applications for interlocutory injunctive relief have recently been reiterated by the High Court in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 (see esp [65] ff) and need not be rehearsed at any length here. I would, though, note that the first inquiry "whether the applicant has made out a prima facie case" only requires the applicant to "show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial": ibid [65]. The necessary strength of that likelihood depends upon the nature of the right asserted by the applicant and the practical consequences likely to flow from the order sought: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; (1968) 118 CLR 618 at 622. I would add, as well, that, if I am satisfied that a prima facie case has been made out in this matter, the balance of convenience favours the grant of relief. The injury likely to be suffered by Hardel Holdings through its financing arrangements if an injunction was refused would outweigh the injury which Allmark would suffer in being held out of its statutory right. Damages would not adequately compensate Hardel Holdings if an injunction was refused and its right were injured. The final matter I should mention is that, while there is a clear conflict between Mr Harris and Mr Riggs as to the occurrence of conversations, etc between them and while there are serious imputations being made and denied, it is quite inappropriate for me on such an application to make, or to foreshadow, findings on credit.
Case: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; (1968) 118 CLR 618
Outcome: cited
The two main inquiries to be addressed in applications for interlocutory injunctive relief have recently been reiterated by the High Court in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 (see esp [65] ff) and need not be rehearsed at any length here. I would, though, note that the first inquiry "whether the applicant has made out a prima facie case" only requires the applicant to "show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial": ibid [65]. The necessary strength of that likelihood depends upon the nature of the right asserted by the applicant and the practical consequences likely to flow from the order sought: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; (1968) 118 CLR 618 at 622. I would add, as well, that, if I am satisfied that a prima facie case has been made out in this matter, the balance of convenience favours the grant of relief. The injury likely to be suffered by Hardel Holdings through its financing arrangements if an injunction was refused would outweigh the injury which Allmark would suffer in being held out of its statutory right. Damages would not adequately compensate Hardel Holdings if an injunction was refused and its right were injured. The final matter I should mention is that, while there is a clear conflict between Mr Harris and Mr Riggs as to the occurrence of conversations, etc between them and while there are serious imputations being made and denied, it is quite inappropriate for me on such an application to make, or to foreshadow, findings on credit.
Case: Braams Group Pty Ltd v Miric [2002] NSWCA 417 ; (2002) 44 ACSR 124
Outcome: cited
I have already indicated that the abuse of process procedure cannot properly be used as a collateral method of disputing the existence of a debt: see generally Braams Group Pty Ltd v Miric [2002] NSWCA 417 ; (2002) 44 ACSR 124. This said, I reiterate that Pt 5.4 of the Corporations Act does not preclude the allegation of an abuse of process where the abuse is alleged to be the institution of proceedings for an improper purpose. In this matter the plaintiff alleges such to be the case. For the purposes of making out a prima facie case of this, emphasis is placed upon three particular matters. 22 It is said, first, that there is evidence that should sufficiently satisfy me for present purposes of the likelihood that Allmark (through Mr Riggs) has instituted proceedings against Hardel Holdings in the knowledge that no debt was owed by it and/or that any alleged indebtedness arising out of the joint venture arrangement would be the indebtedness of Stanhope in any event. To the extent that this merely calls into question the existence of the debt, it alone would not satisfy me that a prima facie case of abuse of process has been made out. 23 The second matter relied upon relates to the genuineness of the nine invoices alleged to evidence the debt. There is on the evidence a serious issue raised here. The lack of any historical record of the alleged debt and the provenance of the alleged invoices do suggest there may well be a question as to the genuineness of the invoices. There is Ms Hentzschel's evidence that they were never received by the Hardel Group. Additionally, there is no evidence to demonstrate that project management services were in fact rendered in the period in respect of which the claims were made.
Case: Bidald Consulting v Miles Special Builders [2005] NSWSC 1235 ; (2005) 226 ALR 510
Outcome: referred to
my view, the power conferred on the Court by s 600B is an ample one which can be exercised by reference, not only to the interests of creditors, but also by reference to the public interest and commercial morality. A similar observation applies in relation to the power conferred on the Court by s 447A. Although Bidald Consulting v Miles Special Builders [2005] NSWSC 1235 ; (2005) 226 ALR 510 concerned an application to set aside under s 445D, I treat what Campbell J said in that case at [286] ff about the relevance of public interest considerations to the exercise of the Court's discretion as applicable, generally speaking, to the discretion under the two sections just mentioned. 3. The issue of termination of the DOCA and constitution of the Creditors' Fund The Administrators contend that the DOCA terminated on 21 June 2006 when the Creditors' Fund was fully exhausted: see s 445C(c) of the Act and cl 14.1(a) of the DOCA. As already observed, s 445C provides that a DOCA terminates when the first of three events identified in the section occurs, one of the events being "(c) if the deed specifies circumstances in which it is to terminate those circumstances exist". Clause 14.1(a) of the DOCA specified that the DOCA was to terminate "on the completion of the distribution of the whole Creditors' Fund in accordance with [the DOCA]". The Administrators say that the termination has two relevant effects. The first is that since the DOCA had no further scope for operation after 21 June 2006, from that time the Court lacked power to terminate it. I agree that if the DOCA terminated at that time, by the operation of s 445C(c) and cl 14.1(a), the Court no longer has power to terminate the DOCA under s 445D. The first reason is the general consideration that it would not be possible to terminate a DOCA that had already terminated. Second, s 445C makes it clear that a DOCA terminates when any one of the three events specified in the section first occurs, and one of those events is the making of an order under s 445D terminating the DOCA (para (a)), while another is that the DOCA specifies circumstances in which it is to terminate and those circumstances exist (para (c)). They are alternatives: if a DOCA terminates by reason of the operation of s 445C(c) and the existence of the circumstances specified in the DOCA as those in which it is to terminate, it is no longer possible for the Court to terminate it under s 445D.
Case: Blue Ring Pty Ltd v Landshore Pty Ltd (Subject to a Deed of Company Arrangement) [2006] WASC 245
Outcome: cited
question of the considerations that are relevant to a company administrator's exercise of a casting vote under reg 5.6.21 and of applications under s 600B to set aside a resolution passed on the casting vote has been considered in Re Bartlett Researched Securities Pty Ltd (Administrator Appointed) (1994) 12 ACSR 707 ( Bartlett ), Re Coaleen Pty Ltd (Administrator Appointed) (1999) 30 ACSR 200 ( Coaleen ), Re Martco Engineering Pty Ltd (Administrator Appointed); Deputy Commissioner of Taxation v Martco Engineering Pty Ltd (1999) 32 ACSR 487 , Cresvale Far East Ltd (in liq) v Cresvale Securities Ltd (2001) 37 ACSR 394 ( Cresvale ), Young v Sherman [2002] NSWCA 281 ; (2002) 170 FLR 86 , and Blue Ring Pty Ltd v Landshore Pty Ltd (Subject to a Deed of Company Arrangement) [2006] WASC 245 ( Blue Ring ). These authorities show that: (1) Good faith alone will not necessarily shield the resolution from a setting aside (or variation) under s 600B ( Cresvale 37 ACSR 394 at [111]); (2) A factor that may justify setting aside the resolution is a statement in or omission from the administrator's report under s 439A that is apt to have misled creditors when they cast their deliberative vote ( Blue Ring [2006] WASC 245) ; (3) Inadequacy and superficiality of an administrator's investigation of the company's business, property, affairs and financial circumstances, at least as disclosed by the evidence before the Court, may warrant a setting aside of the resolution ( Bartlett 12 ACSR 707 ; Cresvale 37 ACSR 394 at [113]); (4) There is no presumption in favour of the majority in value, although any large disproportion between the values of the debts of the numerical minority and the numerical majority will be a factor to be taken into account ( Coaleen 30 ACSR 200 ; Cresvale 37 ACSR 394 at [115]); and (5) Payment of a premium to the creditors who supported the DOCA but not to a dissident creditor will justify a setting aside by the court ( Young v Sherman [2002] NSWCA 281 ; 170 FLR 86).
Case: Cresvale Far East Ltd (in liq) v Cresvale Securities Ltd (2001) 37 ACSR 394
Outcome: referred to
question of the considerations that are relevant to a company administrator's exercise of a casting vote under reg 5.6.21 and of applications under s 600B to set aside a resolution passed on the casting vote has been considered in Re Bartlett Researched Securities Pty Ltd (Administrator Appointed) (1994) 12 ACSR 707 ( Bartlett ), Re Coaleen Pty Ltd (Administrator Appointed) (1999) 30 ACSR 200 ( Coaleen ), Re Martco Engineering Pty Ltd (Administrator Appointed); Deputy Commissioner of Taxation v Martco Engineering Pty Ltd (1999) 32 ACSR 487 , Cresvale Far East Ltd (in liq) v Cresvale Securities Ltd (2001) 37 ACSR 394 ( Cresvale ), Young v Sherman [2002] NSWCA 281 ; (2002) 170 FLR 86 , and Blue Ring Pty Ltd v Landshore Pty Ltd (Subject to a Deed of Company Arrangement) [2006] WASC 245 ( Blue Ring ). These authorities show that: (1) Good faith alone will not necessarily shield the resolution from a setting aside (or variation) under s 600B ( Cresvale 37 ACSR 394 at [111]); (2) A factor that may justify setting aside the resolution is a statement in or omission from the administrator's report under s 439A that is apt to have misled creditors when they cast their deliberative vote ( Blue Ring [2006] WASC 245) ; (3) Inadequacy and superficiality of an administrator's investigation of the company's business, property, affairs and financial circumstances, at least as disclosed by the evidence before the Court, may warrant a setting aside of the resolution ( Bartlett 12 ACSR 707 ; Cresvale 37 ACSR 394 at [113]); (4) There is no presumption in favour of the majority in value, although any large disproportion between the values of the debts of the numerical minority and the numerical majority will be a factor to be taken into account ( Coaleen 30 ACSR 200 ; Cresvale 37 ACSR 394 at [115]); and (5) Payment of a premium to the creditors who supported the DOCA but not to a dissident creditor will justify a setting aside by the court ( Young v Sherman [2002] NSWCA 281 ; 170 FLR 86).
Case: Deputy Commissioner of Taxation (Cth) v PDDAM Pty Ltd (1996) 19 ACSR 498
Outcome: referred to
in Deputy Commissioner of Taxation (Cth) v PDDAM Pty Ltd (1996) 19 ACSR 498 , Heerey J observed that the Harmer Report and the Explanatory Memorandum referred to above, indicated that the investigation was to be "a swift and practical one" (at 510). His Honour observed that Pt 5.3A assumed that the company was either trading while insolvent or was likely to be trading while insolvent within a predictable period of time, citing s 436A(1)(a). His Honour considered that it was self-evidently essential that such a state of affairs be brought to an end promptly, either by the execution of a DOCA or by a winding up. Heerey J observed (at 510) that "[t]he tight timeframes set for the convening of the first and second meetings of creditors are consistent with that need".
Case: Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 99 ; (2000) 34 ACSR 391
Outcome: referred to
Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 99 ; (2000) 34 ACSR 391 ( Portinex ), Austin J noted (at [125]) that it was "an unfortunate but unavoidable consequence of the scheme established by Pt 5.3A that the creditors must make their decision on the basis of information that is likely to be imperfect". After referring to Hagenvale 17 ACSR 139 , his Honour stated (at [126] [127]): [126] The balance between speed and accuracy is a delicate one. An administrator who accepts the company's information uncritically and without exercising judgment, cutting corners to complete the administration and receive his fee, will be treated harshly by the court, since the whole scheme of Pt 5.3A depends on the independence, competence, professionalism and hard work of the insolvency practitioners who accept appointments as voluntary administrators. [127] The distinction between an adequate preliminary investigation, leading to the conclusion that there are grounds for suspecting insolvent trading and unfair preferences but going no further, and an inadequate preliminary investigation which fails to assemble available information with respect to insolvent trading and unfair preferences, is a matter of degree. If the administrator has conducted an adequate preliminary investigation in accordance with the principles in the Hagenvale case, his obligation is to bring the results of the investigation to creditors so that they can decide what is to be done next. If the administrator's preliminary investigation has been adequate, he is entitled to decline to embark upon further substantial investigations unless funds are made available to cover his fees and expenses of doing so. As I think Austin J implied in Portinex [2000] NSWSC 99 ; 34 ACSR 391 , it must often be a difficult question for company administrators how far to go in their investigations and report. An administrator does not have the powers of a liquidator, and I do not understand Gillard J in Rugs Galore [1999] VSC 126 to have suggested that an administrator should be held to standards applicable to a liquidator. Much will depend on what comes to the administrator's notice in the course of his or her investigations, and how much will come to notice will be influenced by, among other considerations, the fact that he or she is not expected to conduct a moral crusade (see [210] ff below). It will often be appropriate, as Mr Hamilton did, to draw the creditors' attention to lines of inquiry that it would be open to a liquidator to pursue, to the likely cost of pursuing them, to the need for funding, and to the issue whether the prospective defendant would have the means to satisfy a judgment.
Case: Hagenvale Pty Ltd v Depela Pty Ltd (1995) 17 ACSR 139
Outcome: referred to
Hagenvale Pty Ltd v Depela Pty Ltd (1995) 17 ACSR 139 ( Hagenvale ), Cohen J stated in relation to Pt 5.3A (at 145 146 ): ... an administrator, constrained as he or she is by the time limits imposed under the Part, cannot carry out a detailed investigation of a company in the same way as can a liquidator, and accordingly the administrator's actions must be looked at in the light of that more restricted range of activities which are available to him [or her]. A further result, when dealing with a deed of company arrangement under Pt 5.3A , is that the amount of detailed information which would be given to creditors in a scheme of arrangement under s 411 of the Corporations Law is not available, again because of time restrictions and the need to have material sent to the creditors quickly. In Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 99 ; (2000) 34 ACSR 391 ( Portinex ), Austin J noted (at [125]) that it was "an unfortunate but unavoidable consequence of the scheme established by Pt 5.3A that the creditors must make their decision on the basis of information that is likely to be imperfect". After referring to Hagenvale 17 ACSR 139 , his Honour stated (at [126] [127]): [126] The balance between speed and accuracy is a delicate one. An administrator who accepts the company's information uncritically and without exercising judgment, cutting corners to complete the administration and receive his fee, will be treated harshly by the court, since the whole scheme of Pt 5.3A depends on the independence, competence, professionalism and hard work of the insolvency practitioners who accept appointments as voluntary administrators. [127] The distinction between an adequate preliminary investigation, leading to the conclusion that there are grounds for suspecting insolvent trading and unfair preferences but going no further, and an inadequate preliminary investigation which fails to assemble available information with respect to insolvent trading and unfair preferences, is a matter of degree. If the administrator has conducted an adequate preliminary investigation in accordance with the principles in the Hagenvale case, his obligation is to bring the results of the investigation to creditors so that they can decide what is to be done next. If the administrator's preliminary investigation has been adequate, he is entitled to decline to embark upon further substantial investigations unless funds are made available to cover his fees and expenses of doing so.
Case: Lewis v Doran [2004] NSWSC 608 ; (2004) 208 ALR 385
Outcome: cited
his submissions, Mr Hamilton explains why repaying part of its debt to Wyreach by funding the Parkwind DOCA was not necessarily "uncommercial". Whether there was a voidable unfair preference given by Wellnora to Wyreach would depend on whether Wellnora was insolvent at the time of the transaction (at 6 December 2004 or 11 January 2005). Consideration of that question would require consideration of the matters mentioned by Palmer J in Lewis v Doran [2004] NSWSC 608 ; (2004) 208 ALR 385. It would require a detailed and thorough investigation of the relationship and financial arrangements as between Wellnora and other companies within the Wyreach sub-group. Mr Hamilton was not in a position as company administrator to pursue those inquiries. Predictably, the DCT submits that this shows why a winding up and the appointment of a liquidator are desirable. However, in his Supplementary Report Mr Hamilton emphasised the need for funding to be provided to a liquidator and also the fact that it was unclear what assets would be available to satisfy a successful recovery action by a liquidator. Notwithstanding the specific mention of the need for a liquidator to be funded, Ms Kelly did not at the second meeting of creditors on 14 February 2006 say that the DCT was or even might be prepared to fund a recovery action. I accept the following submissions of the Administrators (paras 3.18, 3.19): 3.18 In summary, the evidence [of] Hamilton concerning this transaction, showed that he reported the following to creditors in the first report: (i) The Wyreach ledger needed further investigation: ... (ii) The Parkwind Transaction may constitute a loan or a preference: ... (iii) There is a question as to whether Parkwind has any assets: ... (iv) The full facts need to be established and further investigation carried out, the ability to recover the amounts, the legal fees involved and whether a public examination is justified and at what cost: ... (v) Liquidator would need to be fully indemnified: ... (vi) At the end of the day preferences are notoriously difficult to sustain: ... (vii) The good faith defence of the recipient of the fund Parkwind; (viii) The problems of related party funding and understandings. 3.19 In the Supplementary Report his analysis above was expanded, including as follows ... (i) A ledger adjustment in Wellnora's books shows a reduction in the intercompany debt owed by Wellnora to Wyreach for the $300,000 Wellnora paid to Parkwind; (ii) Hamilton obtained relevant documents surrounding the circumstances of the Parkwind DOCA and the payment by Wellnora, from its administrator G Woodgate; (iii) Books of a company are prima facie evidence of matters they record, so it might be inferred that Wyreach was a party to the transaction; (iv) The timings of the transaction need to be investigated; (v) The whole group of companies may need to be analysed to prove whether there was insolvency at a particular time; (vi) Creditor funding would be needed for the examination of directors; (vii) Even if a claim was successful, the recovery potential is unknown.