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115 Constitution Road Pty Ltd v Downey

115 Constitution Road Pty Ltd v Downey

Case [2008] NSWSC 997 23 September 2008

Statutory Demand

Trustee Authority

Insolvency Law

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Reported Decision:
220 FLR 216

New South Wales

Supreme Court

CITATION: 115 Constitution Road Pty Ltd v Alan Downey as Trustee for NBD Systems & Anor [2008] NSWSC 997

JUDGMENT DATE :
23 September 2008

JUDGMENT OF: Rein J

CATCHWORDS: Statutory demand signed by one trustee/creditor only where loan agreement with two trustees/creditors - affidavit accompanying demand silent on the issue of authority and no evidence as to delegated authority of trustee creditor who made the affidavit deposing to debt - demand set aside.

LEGISLATION CITED: Corporation Act

CASES CITED: Australian Workers Union v Bowen [No. 2] (1948) 77 CLR 601
Manzo v 555/255 Pitt St Pty Ltd. (1990) 21 NSWLR 1; (1990) 2 ACSR 809
Bentham Management Pty Ltd v Union Finance Pty Ltd [2007] SASC 42 BC 200700712
Catalyst Securities Pty Ltd v Pegg [20004] QSC 469
Indaba Pty Ltd v Home Building Society Limited [2000] WASC 38, 18 ACLC 335
Oshlack v Richmond River Council (1998) 193 CLR 72
Owners of Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404
Hoare Bros Pty Ltd v Deputy Federal Commissioner of Taxation (1995) 16 ACSR 213
Saferack Pty Ltd v Marketing Heads Australia Pty Ltd [2007] NSWSC 1143
Equus Corp Pty Ltd v Perpetual Trustee (WA) Ltd (1997) 25 ACSR 675, 16 ACLC 12
Meehan & Ors v Glazier Holdings Pty Ltd [2005] NSWCA 24
Spencer Constructions Pty Ltd v CRM Aldridge Pty Ltd
Kezarne Pty Ltd v Sydney Asbestos Removal Service Pty Ltd (t/a Royce Roofing Services) (1998) 29 ACSR 1
Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd (1996) 20 ACSR 746
Peel Valley Mushrooms Ltd v Corporate Investment Australia Funds Management Ltd (2000) NSWSC 958

PARTIES: 115 Constitution Road Pty Ltd (plaintiff)
Alan Downey and Debra Patrick as Trustees for the NBD Systems Super Fund (defendant)

FILE NUMBER(S): SC 3966/08

COUNSEL: MA Friedgut (plaintiff)
C Mobellan (defendant)

SOLICITORS: Levitt Robinson (plaintiff)
Rouse Lawyers (defendant)

- 13 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Rein J

Hearing: 15 September 2008
Judgment: 23 September 2008

103811/07 115 Constitution Road Pty Ltd v Alan Downey as Trustee for NBD Systems & Anor

JUDGMENT

1 Rein J: The plaintiff company entered into a loan agreement with “Alan Downey and Debra Patrick as Trustees of the NBD Systems Super Fund”.

2 Pursuant to clauses 1.1 and 2.2 of the agreement, the $25,000 lent was to be repaid by March 2006. It was not repaid and a demand was served on the company on 8 July 2008.

3 The demand, dated 8 July 2008, is signed by Alan Downey (“Downey”). It is not signed by Debra Patrick (“Patrick”).

4 The loan agreement contains no clause empowering Downey to act on behalf of Patrick.

5 The trust deed pursuant to which Downey and Patrick were appointed is before me. The only clause which is relied on to authorise Downey to act on behalf of both trustees is clause 8.11.

6 The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading 115 Constitution Road Pty Ltd v Downey

Details

AGLC: 115 Constitution Road Pty Ltd v Downey [2008] NSWSC 997
Case: [2008] NSWSC 997
Decision Date: 23 September 2008

CaseChat Overview and Summary

115 Constitution Road Pty Ltd sought to wind up Downey pursuant to section 461 of the Corporations Act 2001 (Cth). The basis for this application was a statutory demand signed by only one of the two trustees/creditors of a trust that was owed money by Downey. The other creditor was not a party to the winding up application. The demand was silent on the issue of authority, and there was no evidence as to whether the trustee/creditor who signed the demand had authority to do so on behalf of the other creditor.

The primary issue before the court was whether the statutory demand was valid. Specifically, the court had to determine whether the statutory demand signed by only one of the two trustees/creditors of the trust was sufficient to establish a debt owed by Downey to the trust. The court also had to consider whether the demand was valid in the absence of evidence as to the authority of the trustee/creditor who signed the demand.

The court held that the statutory demand was invalid because it was signed by only one of the two trustees/creditors of the trust. The court noted that the demand was silent on the issue of authority, and there was no evidence as to whether the trustee/creditor who signed the demand had authority to do so on behalf of the other creditor. The court held that the demand was therefore invalid, and the application for winding up was dismissed. The court found that the demand did not establish a debt owed by Downey to the trust, and the application was therefore dismissed with costs.

The court's decision in this case highlights the importance of ensuring that statutory demands are properly executed and that there is evidence as to the authority of the person signing the demand. In this case, the failure to provide evidence of authority resulted in the demand being set aside, and the application for winding up being dismissed.

Orders