ACN 087 803 174 Pty Limited (Subject to Deed of Company Arrangement) formerly known as Madison Constructions (NSW) Pty Limited v Anthony and Robin Ferguson

[2004] NSWSC 1124

CITATION:	ACN 087 803 174 Pty Limited (Subject to Deed of Company Arrangement) formerly known as Madison Constructions (NSW) Pty Limited v Anthony and Robin Ferguson [2004] NSWSC 1124
HEARING DATE(S):	8/11/04
JUDGMENT DATE:	29 November 2004
JURISDICTION:	Equity Division Technology and Construction List
JUDGMENT OF:	Brownie AJ
DECISION:	Motion to dismiss summons dismissed
CATCHWORDS:	Construction of deed - No question of principle.
LEGISLATION CITED:	Conveyancing Act 1919 (NSW) Corporations Act 2001 (Cwth)
PARTIES :	ACN 087 803 174 Pty Limited (Subject to Deed of Company Arrangement) formerly known as Madison Constructions (NSW) Pty Limited (Plaintiff) Anthony and Robin Ferguson (Defendants)
FILE NUMBER(S):	SC 55031/03
COUNSEL:	Ms E Olsson SC, Mr M Walsh (Plaintiff) Mr R McKeand SC (Defendants)
SOLICITORS:	Meyer Clapham (Plaintiff) Holman Webb (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTION LIST

Brownie AJ

Monday 29 November 2004

55031/03 ACN 087 803 174 Pty Limited (subject to Deed of Company Arrangement) formerly known as Madison Constructions (NSW) Pty Limited v Anthony and Robin Ferguson

JUDGMENT

1 The parties have argued only paragraphs 1 and 2 of the further amended notice of motion dated 8 November 2004. By paragraph 1 of the motion the defendants seek a declaration that the plaintiff’s causes of action, mentioned in the summons, were assigned before the summons was filed, within the meaning of section 12 of the Conveyancing Act1919, and by paragraph 2 they seek an order the plaintiff’s claim be dismissed under Part 13 Rule 5, by reason of this assignment. It is agreed that the balance of the notice of motion is to be adjourned for later consideration.

2 To summarise a lengthy document very shortly, the summons asserts that the plaintiff and the defendants entered into a contract, pursuant to which the plaintiff was to construct a dwelling for the defendants. The plaintiff says that the defendants breached the terms of the contract, by failing to make certain payments, leading to the plaintiff rescinding the contract. On the plaintiff’s case, one of the results of the defendants’ breaches was that the plaintiff became insolvent, and an administrator was appointed pursuant to the provisions of section 436A of the Corporations Act 2001.

3 A Deed of Company Arrangement dated 11 March 2003 was executed, and the present questions depend, first, on the terms of that deed. The parties to the deed were the administrator, the company, and a director of the company.

4 After some formal matters, the deed provided in clause 3 for creditors of the plaintiff to lodge claims with the administrator. Clause 4 provided for the establishment of a litigation fund, that is a fund to be used for the purposes of the “Litigation”, as defined, meaning the present litigation against the defendants. Contributions to the fund were only to be made by “Litigation Creditors” as defined.

5 Clause 5.1 of the deed provided:

“The Litigation will be managed by the Administrator in his sole and absolute discretion.”

6 Clauses 5.2 and 5.3 provided that the administrator would have the power to abandon the litigation at any time, in his sole discretion, and upon that event the deed would terminate; and the deed limited the rights of litigation creditors to receive payments from the fund.

7 Clause 5.4 provided:

“After the execution of this Deed, all rights in the Litigation are assigned and vest in the Administrator in order to manage the Litigation.”

8 Clause 6 established a moratorium in respect of the rights of creditors against the plaintiff whilst the deed was in force, and clause 7 contained detailed provisions relating to the administration of the fund. The succeeding provisions of the deed are not said to be significant for present purposes.

9 The critical question at the moment is whether clause 5.4 constitutes an assignment of the rights of the plaintiff in the litigation against the defendants, or merely appoints the administrator of the plaintiff as the person to manage the litigation on behalf of the plaintiff. Neither construction seems to me to be particularly attractive, but the debate proceeded on the basis that one construction or the other must be correct.

10 The parties pointed to various pieces of evidence, said to indicate what the administrator had thought or at least had said on other occasions, and, at least by inference, what the plaintiff had thought or said. I put this aside, on the basis that none of it seems to me to be persuasive, by which I mean that none of the material relied upon conveys to me that anyone gave any real thought to the relevant question at any time before the present question was raised. I say this notwithstanding the bald statement in paragraph 5 of the affidavit of Mr Senatore, who did not attend for cross-examination, nor disclose what advice he had received, or how he came to the understanding of which he spoke.

11 The plaintiff submits that the last six words of clause 5.4 must be given effect, and that clause 5.4 needs to be read together with clause 5.1. This much seems correct, but I am not persuaded that further help can be obtained by a consideration of the role and function of deed administrators generally, since this particular deed appears to have been devised for a particular, quite individual purpose. The defendants submit that in clause 5.4 the word “After” should read “Upon”, and that the clause represents an almost classical expression of the assignment of rights. They say that the word “assign” must mean more than something merely giving a right of management.

12 The point was the subject of considerable exegesis but it appears to come down to a decision as to the meaning to be given to the few words quoted. In the end, I conclude that the words “in order to manage the litigation”, at the end of clause 5.4, qualify and limit the preceding words in that clause; and I consider that the words of clause 5.1 point in the same direction.

13 I dismiss paragraphs 1 and 2 of the notice of motion. Since the balance of the motion has yet to be argued, I reserve costs.

I certify that paragraphs 1 - 12
are a true copy of the reasons
for judgment herein of
the Hon. Acting Justice Brownie
given on 29 November 2004

___________________
Susan Piggott
Associate

Last Modified: 11/29/2004