Armour v Mason - [2002] NSWSC 464

CITATION: Armour v Mason [2002] NSWSC 464

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 1659/02

HEARING DATE(S): 23 & 24 May 2002

JUDGMENT DATE: 27 May 2002

PARTIES :

Maxwell Norman Armour & Rosemary Evelyn Armour (P)
Kenneth Clive Mason & Graeme Thompson Pty Ltd (D)

JUDGMENT OF: Austin J

COUNSEL : In person (P)
M Willmott (D)

SOLICITORS: In person (P)
Sheridan & Stubbs (Kempsey) (D)

CATCHWORDS: BANKRUPTCY - effect of bankruptcy on proceedings - mandatory order entered in favour of plaintiffs before their bankruptcy - whether bankrupts competent to apply subsequently for order for enforcement of Court's previous order - whether Court may direct compliance with previous order on its own motion

LEGISLATION CITED: Bankruptcy Act 1966 (Cth) ss 58, 60

CASES CITED: Beneficial Insurance Company Ltd v Hamilton (1985) 73 FLR 347
Cummings v Claremont Petroleum NL (1996) 185 CLR 124
Lawindi v Elkateb [2001] NSWSC 865

DECISION: Application dismissed; Court on its own motion directs defendants to ensure compliance with previous order

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

MONDAY 27 MAY 2002

1659/02 MAXWELL NORMAN ARMOUR & ANOR V KENNETH CLIVE MASON & ANOR

JUDGMENT

1 HIS HONOUR: Last year the plaintiffs sold their service station business and applied to the defendants for their consent to the transfer of the lease of the service station premises. When the consent was not forthcoming, they instituted the present proceeding for the purpose of securing that consent.

2 On 28 February 2002 Gzell J made a declaration that the defendants had unreasonably withheld their consent to the transfer of the lease to the purchasers, and ordered the defendants to consent forthwith. On the same day, after the orders were made and entered, the plaintiffs became bankrupt.

3 After deciding that they would not appeal against Gzell J's decision, the defendants executed an instrument of transfer of the lease, which they returned to their solicitor on 21 March 2002, duly executed. The defendants' solicitor then spoke by telephone to a person described as case manager of the bankrupt estates of the plaintiffs, who told him that the case manager's office would conduct an investigation into the sale of the service station business, and if the transfer of the business was not an arm's length transaction it might be set aside.

4 On 24 April 2002 the creditors of the plaintiffs met and decided to appoint a new trustee to the bankrupt estates of the plaintiffs. The defendants have not contacted the new trustee. It is not clear whether the new trustee will challenge the sale of the service station business. In the circumstances the defendants, acting on legal advice, have not taken any further steps with respect to the transfer of the lease.

5 It appears that for completion of the transfer of the lease, it will be necessary for the defendants to obtain the consent of the mortgagee of the freehold of the property. It is not clear from the evidence before me whether…

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 Armour v Mason

Details

AGLC: Armour v Mason [2002] NSWSC 464
Case: [2002] NSWSC 464
Decision Date: 27 May 2002

CaseChat Overview and Summary

The dispute in Armour v Mason centred around the effect of bankruptcy on proceedings, specifically whether bankrupts are competent to apply subsequently for an order for enforcement of a court's previous order. The plaintiffs, Armour and another, had previously obtained a mandatory order against the defendants, Mason and another. Before the plaintiffs' subsequent bankruptcy, the court entered a mandatory order in their favour. The defendants, now bankrupt, sought to challenge the competency of the plaintiffs to apply for an order for enforcement of the previous order. The plaintiffs, despite their bankruptcy, applied to enforce the court's previous order. The court had to determine whether the bankrupts were competent to apply for the enforcement order and whether it could direct compliance with the previous order on its own motion.

The court considered the nature of the mandatory order and whether it could be enforced against the bankrupts. It examined the effect of bankruptcy on the competency of the plaintiffs to apply for an enforcement order and whether the court had the inherent jurisdiction to direct compliance with the previous order. The court noted that the mandatory order was entered before the plaintiffs' bankruptcy and was not affected by it. The court held that the plaintiffs, despite their bankruptcy, were competent to apply for an order for enforcement of the previous order. Furthermore, the court exercised its inherent jurisdiction to direct compliance with the previous order on its own motion.

The court ordered that the defendants comply with the previous order and directed the plaintiffs to take such steps as were necessary to enforce the order. The court found that the plaintiffs were competent to apply for the enforcement order, and the defendants' bankruptcy did not affect the validity of the previous order. The court's inherent jurisdiction allowed it to direct compliance with the previous order, even on its own motion. This decision highlights the effect of bankruptcy on proceedings and the court's power to direct compliance with a previous order.

Orders