FEDERAL COURT OF AUSTRALIA
Badenoch Integrated Logging Pty Ltd v Bryant [2024] FCAFC 167
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Details
- Case
- [2024] FCAFC 167
- Decision Date
CaseChat Overview and Summary
In the matter of Badenoch Integrated Logging Pty Ltd v Bryant, the parties were engaged in a protracted legal dispute involving the winding up of a company and the recovery of alleged unfair preference payments. The case was heard in the Full Court of the Federal Court of Australia, which was reviewing a decision made by the primary judge in a previous proceeding. The legal issues that the court had to address included whether an extension order made under section 459R of the Corporations Act required a specific time frame within which an application to wind up in insolvency must be determined. The court also considered whether the primary judge had erred in refusing to modify the extension order to include a specific date using the slip rule. Furthermore, the court examined whether section 459R(3) dismissed the Liquidators' alternative application to wind up on other grounds under section 461(1)(c). Additionally, the court deliberated on whether it was appropriate for the Liquidators, as creditors, to apply to wind up a company under section 461(1)(c). The court also assessed whether the winding up proceeding was an abuse of process and whether it should have been dismissed for lack of prosecution.
The court's reasoning centred on the interpretation of the relevant sections of the Corporations Act and the circumstances of the case. The court held that the primary judge's refusal to dismiss the winding up proceeding for lack of prosecution was not erroneous, given the overall context of the lengthy litigation history. The court allowed the Liquidators' appeal on the first ground, which pertained to the interpretation of section 459R, but dismissed the appeal and cross-appeal on all other grounds, including the Liquidators' Notice of Contention. The court emphasised that there was no apparent reason why the Liquidators should not receive their costs for the appeal, but it provided an opportunity for the parties to submit written arguments on the question of costs if they disagreed on the allocation of costs.
The final orders of the court were that the appeal would be allowed, while the cross-appeal and the Liquidators' Notice of Contention would be dismissed. The parties were required to provide the court with any agreed orders regarding the costs of the appeal, cross-appeal, and Notice of Contention within seven days of the date of these orders. If the parties could not reach an agreement on costs, they were to file and serve written submissions not exceeding two pages on the question of costs by a specified deadline. Any decision regarding the costs of these appeals would be made based on the submitted papers.
The court's reasoning centred on the interpretation of the relevant sections of the Corporations Act and the circumstances of the case. The court held that the primary judge's refusal to dismiss the winding up proceeding for lack of prosecution was not erroneous, given the overall context of the lengthy litigation history. The court allowed the Liquidators' appeal on the first ground, which pertained to the interpretation of section 459R, but dismissed the appeal and cross-appeal on all other grounds, including the Liquidators' Notice of Contention. The court emphasised that there was no apparent reason why the Liquidators should not receive their costs for the appeal, but it provided an opportunity for the parties to submit written arguments on the question of costs if they disagreed on the allocation of costs.
The final orders of the court were that the appeal would be allowed, while the cross-appeal and the Liquidators' Notice of Contention would be dismissed. The parties were required to provide the court with any agreed orders regarding the costs of the appeal, cross-appeal, and Notice of Contention within seven days of the date of these orders. If the parties could not reach an agreement on costs, they were to file and serve written submissions not exceeding two pages on the question of costs by a specified deadline. Any decision regarding the costs of these appeals would be made based on the submitted papers.
Orders
Orders of the court
1. The appeal is allowed.
2. The cross-appeal and the notice of contention are dismissed.
3. Within seven days of the date of these orders the parties are to provide the Court with any agreed orders as to the costs of the appeal, cross appeal and notice of contention.
4. If the parties are unable to reach agreement as to costs, on or before 4:00pm on 23 December 2024 the parties are to file and serve written submissions not exceeding two pages to be prepared with 1.5 line spacing and 12-point font, on the question of costs.
5. Any question as to the costs of these appeals will be determined on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
For the reasons given below, the appeal should succeed on the Liquidators’ first ground and the appeal and cross-appeal should otherwise be dismissed, including the Liquidators’ Notice of Contention.BACKGROUND The plaintiffs below were appointed joint and several administrators of Gunns and its subsidiaries (jointly, Gunns) on 25 September 2012. They were appointed as Liquidators of Gunns on 5 March 2013: Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) v Badenoch Integrated Logging Pty Ltd (2020) 144 ACSR 423; [2020] FCA 713 at [13] (Davies J). On 21 September 2015, the Liquidators commenced a proceeding against Badenoch in this court (SAD 341 of 2015) seeking to recover alleged unfair preference payments received by Badenoch in the period between 30 March 2012 and 24 September 2012. The total amount claimed by the Liquidators as unfair preference payments was $3,360,876.16 (Primary Proceeding). Following a separate trial on the question of insolvency, the court determined that Gunns was insolvent on and from 30 March 2012: Bryant (Liquidator) v L.V. Dohnt & Co Pty Ltd, in the Matter of Gunns Limited (In Liq) (Receivers and Managers Appointed) [2018] FCA 238 (Davies J). On 27 May 2020, Davies J delivered judgment against Badenoch in the Primary Proceeding and, on 30 July 2020, final orders were made that Badenoch pay the Liquidators $2,072,832.04 in unfair preferences plus pre-judgment interest of $505,848.21: Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) v Badenoch Integrated Logging Pty Ltd (2020) 144 ACSR 423; [2020] FCA 713 (Davies J). Badenoch appealed to the Full Court and the Liquidators cross-appealed (SAD 121 of 2020) (Appeal Proceeding). The Full Court allowed the appeal in part and determined that, between 8 August 2012 and 24 September 2012, Badenoch received unfair preferences in the amount of $1,200,633.68: Badenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) (No 2) [2021] FCAFC 111 (Middleton, Charlesworth and Jackson JJ). The Liquidators obtained special leave to appeal from the High Court. Badenoch filed a notice of cross-appeal. On 8 February 2023, the High Court dismissed the appeal and the cross-appeal: Bryant v Badenoch Integrated Logging Pty Ltd (2023) 275 CLR 463; [2023] HCA 2 (Kiefel CJ, Gageler, Gordon, Edelman, Steward, Gleeson and Jagot JJ). We will return to the events surrounding the appeals to the Full Court and the High Court in due course. At this point we observe that Badenoch has not paid the judgment debt. Returning then to the events following the determination of the Primary Proceeding and the commencement of the Appeal Proceeding, on 13 November 2020, after judgment in the Primary Proceeding and after the Appeal Proceeding had commenced, the Liquidators issued a further proceeding in this court seeking orders that Badenoch be wound up in insolvency pursuant to s 459A, or alternatively, pursuant to s 461(1)(c) on the grounds that it had ceased trading for more than 12 months (Winding Up Proceeding).
Evidence
Evidence Before The Court
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Decision
Reasons for decision
The litigation between the parties has a long history. The decision of Davies J in the Primary Proceeding was published in May 2020. It was the subject of an appeal to the Full Court, an application for special leave and an appeal to the High Court, all of which were concluded by February 2023. A six month delay in the Winding Up Proceeding, in the overall context of the history of these proceedings, is hardly inordinate. In our view, there was no error in the primary judge’s refusal to dismiss the Winding Up Proceeding for want of prosecution. CONCLUSION For these reasons, we would allow the Liquidators’ appeal on the first ground and would otherwise dismiss the appeal and the cross-appeal, including the Liquidators’ Notice of Contention. There is no apparent reason why costs should not follow the event. We are therefore inclined to think that the Liquidators ought to have their costs of and incidental to the appeal. However, should any party seek an alternative order as to costs, they may make short written submissions on that question. Our orders will make provision for this accordingly.
Ratio Decidendi
Legal Principle Established
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