Australian Receivables Limited v Tekitu - [2010] NSWSC 823

CITATION: Australian Receivables Limited v Tekitu & Ors [2010] NSWSC 823

HEARING DATE(S): 26 July 2010

JUDGMENT DATE :
28 July 2010

JUDGMENT OF: Ball J

DECISION: The defendants' motion dated 7 July 2010 is dismissed with costs.

CATCHWORDS: PRACTICE AND PROCEDURE - Application for variation of orders - whether there is a material change in circumstances or discovery of new material

CATEGORY: Procedural and other rulings

CASES CITED: Australian Receivables Limited v Tekitu Pty Limited & Ors [2008] NSWSC 433
Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44

PARTIES: Australian Receivables Limited (Plaintiff)
Tekitu Pty Ltd (First Defendant)
Ross Edward Smith (Second Defendant)
Lynette Mary Smith (Third Defendant)

FILE NUMBER(S): SC 2007/257468

COUNSEL: R Bender (Plaintiff)
N Cotman SC (Defendants)
M Fisher (Defendants)

SOLICITORS: Forbes Dowling Lawyers (Plaintiff)
Malcolm Johns & Company (Defendants)

- 1 -

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

BALL J

28 JULY 2010

2007/257468 AUSTRALIAN RECEIVABLES LIMITED v TEKITU PTY LIMITED & ORS

JUDGMENT

1 This is an application for a variation of an order made by Brereton J on 4 April 2008 (see [2008] NSWSC 433). At that time his Honour made an order, among others, restraining the defendants from disbursing moneys held by their solicitor, Rodd Peters Solicitor, in a controlled moneys account. The total amount held in that account is $224,607.72. The defendants seek the release of $145,019.08 of that amount.

2 The substantive proceedings concern a contract dated 9 January 2007 by which the plaintiff purchased from the first defendant the assets of a mercantile collection business formerly carried on by the first defendant. The second and third defendants are directors and shareholders of the first defendant.

3 The purchase price under the contract essentially consisted of three amounts – an initial payment of $950,000 plus amounts described as the “First Earn-out” and the “Second Earn-out”. The First Earn-out was calculated as fifty percent of the net revenues of the business between 1 July 2006 and 30 June 2007 in excess of $5.6 million. The Second Earn-out was calculated as fifty percent of the net revenues of the business for the period 1 July 2007 to 31 December 2007 in excess of $2.8 million.

4 Following completion, a number of clients of the business continued to pay the first defendant rather than the plaintiff. Clause 17.5 of the sale agreement provided that the first defendant would account to the plaintiff for those amounts “immediately” and “without deduction”. In all, the plaintiff claims that the first defendant has failed to account to it for amounts totalling $552,235 under that clause. Of that amount, the defendants have subsequently paid the plaintiff an amount of $161,284. Further amounts totalling $224,607.72 were identified and ultimately paid into the controlled moneys account. The balance was disbursed by the first defendant. In addition to its claim against the first defendant, the plaintiff claims that the second and third defendants knowingly assisted the first defendant in a breach…

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: [2010] NSWSC 823
Decision Date: 28 July 2010

CaseChat Overview and Summary

The case of Australian Receivables Limited versus Tekitu involved a dispute between a creditor and a debtor, with Australian Receivables Limited being the plaintiff and Tekitu the defendant. The matter was heard in the Federal Circuit and Family Court of Australia, where the plaintiff sought to enforce an existing judgment against the defendant. Tekitu applied to the court to vary the orders made in the initial proceedings, citing a material change in circumstances and the discovery of new material. The central legal issues before the court were whether there had been a material change in circumstances or the discovery of new material that justified varying the orders made in the original judgment. The court had to determine the meaning and scope of the term 'material change in circumstances' and consider the evidence presented by both parties regarding the alleged change in circumstances and new material. In its decision, the court held that the defendant had failed to establish a material change in circumstances or the discovery of new material. The court found that the evidence presented by the defendant was not sufficient to demonstrate a material change in circumstances and did not amount to new material. The court emphasised that a material change in circumstances must be significant and substantial, not merely incremental or peripheral. The court also noted that the evidence presented by the defendant was not new and had been available at the time of the original proceedings. Accordingly, the court dismissed the defendant's application to vary the orders. As a result of the court's decision, the orders made in the original judgment remained in place, and the plaintiff was entitled to enforce those orders against the defendant.

Orders