Acqualounge Manly P/L v Barecall P/L - [2005] NSWSC 627

CITATION:
Acqualounge Manly P/L v Barecall P/L [2005] NSWSC 627

HEARING DATE(S): 22/06/05

JUDGMENT DATE :

23 June 2005

JUDGMENT OF:
White J

DECISION:
Application for interlocutory relief refused.

CATCHWORDS:
PRACTICE AND PROCEDURE - Interlocutory application for an injunction to restrain the defendant lessor from interfering with the plaintiff lessee's use or occupation of the leased premises - Notice of termination of lease served by leaving at premises early in the morning - Lessee placed in administration later that day - Locks changed by lessor - Serious question to be tried about whether defendant's possession is contrary to s 440C of Corporations Act - Undertaking as to damages offered only by company in administration - Whether legislature intended s 443B to confer on administrator a grace period of 7 days and no further undertaking should be required - Corporations Act s 440C, 441F, 443B - Held that the usual requirement to give an undertaking of some worth had not been displaced - Application refused.

LEGISLATION CITED:
Corporations Act 2001 (Cth)

CASES CITED:
Telaro Pty Ltd v Burns [2000] NSWSC 26
B&M Activities Pty Ltd v Perpetual Trustees Victoria Ltd (Young J, 7/9/98)
Re Java 452 Pty Ltd (Administrator Appointed); Permanent Trustee Australia Ltd v Stout (1999) 32 ACSR 507

PARTIES:
Acqualounge Manly Pty Limited
v
Barecall Pty Limited

FILE NUMBER(S):
SC 3591/05

COUNSEL:
Plaintiff: M Dawson
Defendant: B Rayment QC, A Lo Surdo

SOLICITORS:
Plaintiff: Gibsons Lawyers
Defendant:

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY JUDGE LIST

WHITE J

Thursday, 23 June 2005

3591/05 Acqualounge Manly Pty Limited v Barecall Pty Limited

JUDGMENT

1 HIS HONOUR: These proceedings concern possession of a property at 42 North Steyne, Manly of which the plaintiff is or was the lessee. The defendant is the owner of the property.

2 The sequence of events which has given rise to the proceedings is, in summary, that the plaintiff, it seems, was in default of payments of rent. The defendant claims that at about 6.30am on Monday 20 June it served a notice of termination of the plaintiff's lease by leaving the notice at the premises. At about 11am on that day, the sole director of the lessee, the plaintiff, resolved that the company be placed under the control of an administrator under Pt 5.3A of the Corporations Act 2001 (Cth). At about midnight on 20 June the defendant changed the locks to the premises. There is an issue as to whether the notice of termination was validly served and when it was served.

3 The plaintiff invokes s 440C of the Corporations Act which provides that:

"during the administration of a company the owner or lessor of property that is used or occupied by or is in possession of the company cannot take possession of the property or otherwise recover it except with the administrator's written consent or with the leave of the Court".

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.

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Details

Case: [2005] NSWSC 627
Decision Date: 23 June 2005

CaseChat Overview and Summary

The case between Acqualounge Manly P/L and Barecall P/L centred on an interlocutory application by the plaintiff lessee, Acqualounge Manly P/L, to restrain the defendant lessor, Barecall P/L, from interfering with its use or occupation of the leased premises. The matter was heard in the Supreme Court of New South Wales. The plaintiff had been served with a notice of termination of the lease by the defendant, which was left at the premises early in the morning. Later that day, the plaintiff company was placed in administration, and the defendant subsequently changed the locks on the premises. The plaintiff sought an injunction to prevent the defendant from further interfering with its occupation of the premises, arguing that the defendant's actions were contrary to section 440C of the Corporations Act.

The court had to determine whether the plaintiff, being a company in administration, was required to provide an undertaking as to damages, as typically expected under section 441F of the Corporations Act. Additionally, the court needed to ascertain if section 443B of the Corporations Act intended to confer a grace period of seven days on the administrator, thereby exempting them from the usual requirement of providing an undertaking of some worth. The central issue revolved around the interpretation of the statutory provisions and the legislative intent regarding the obligations of an administrator in such circumstances.

The court found that the usual requirement for an undertaking as to damages had not been displaced by section 443B of the Corporations Act. The court held that the statute did not confer a grace period of seven days on an administrator that exempted them from providing an undertaking of some worth. Consequently, since only the company in administration had offered an undertaking, the court was not satisfied that the plaintiff had fulfilled the necessary requirement for an undertaking as to damages. The application for an injunction was therefore refused.

The court's decision underscores the importance of fulfilling the statutory requirement of an undertaking as to damages in proceedings involving companies in administration. It clarified that the grace period provided by section 443B does not exempt an administrator from providing an undertaking, thus ensuring that the court's discretion to grant an injunction is exercised judiciously.

Orders