Bray & Anor v Dye & Anor - [2009] VSC 113

IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 4356 of 2007

BARRY PETER BRAY and SARAH GILLIAN GILBERT	Plaintiffs
and
VICTOR RAYMOND DYE and ROGER DARREN GRANT	Defendants

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JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATE OF HEARING:	30 September, 1, 3 and 20 October 2008
DATE OF JUDGMENT:	1 April 2009
CASE MAY BE CITED AS:	Bray v Dye
MEDIUM NEUTRAL CITATION:	[2009] VSC 113

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Corporations – Debenture – Sale and collection of charged assets by Administrator and Liquidator – application of principle in Universal Distributing – Obligations of a Liquidator under s. 561 of the Corporations Act 2001.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A. Sandbach	Goldsmiths
For the Defendants	Mr G. Bigmore QC	Deacons

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HIS HONOUR:

Introduction

This proceeding was commenced by writ on 25 January 2007. The claim then made by the plaintiffs, Barry Peter Bray and Gillian Gilbert, was that the defendants, Victor Raymond Dye and Roger Darren Grant, pay to them the whole of the proceeds of realisation of the assets of Graphics 103 Pty Ltd (“Graphics”) and Rowprint Services (Vic) Pty Ltd (“Rowprint”) which came into their hands as administrators and later liquidators, less any employee claims having priority pursuant to s 561 of the Corporations Act 2001 (“the Act”), but not exceeding the sum of $301,140 together with interest thereon. The plaintiffs also sought an inquiry into the defendants’ failure to comply with the requirements of s 420A of the Act when selling the assets of Rowprint and Graphics.

At trial the plaintiffs abandoned their complaint about the sale process. A substantial part of the affidavit material filed by the parties, and no doubt preparation for trial, was devoted to that issue. The plaintiffs were given leave to file a further amended statement of claim in which they acknowledge receipt of $173,957.23 paid to them by the defendants on 4 June 2007 following a summons for final judgment. While acknowledging the payment for the purpose of their claim, the purport of the acknowledgment was to support a claim for costs by justifying the commencement of the proceeding on that basis alone.

The substantive allegation and claim advanced by the plaintiffs, following their most recent amendment, is an allegation that between 14 February 2006 and 25 November 2007 the defendants converted the whole of the proceeds derived from the realisation of the assets of Graphics and Rowprint, save for the reasonable costs of realisation, by appropriating the proceeds to themselves as remuneration and expenses. The plaintiffs claim damages for conversion. They accept in their prayer for relief that an adjustment must be made for the sum of $173,957.23 paid to them by the defendants, but reject a concession previously made that their claim should be reduced by the amount of any employee claims having priority pursuant to s 561 of the Corporations Act.

As for the allowance to be made for the reasonable costs of realisation, the plaintiffs contend that it is…

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 Bray & Anor v Dye & Anor

Details

AGLC: Bray v Dye [2009] VSC 113
Case: [2009] VSC 113
Decision Date: 1 April 2009

CaseChat Overview and Summary

In the matter of Bray & Anor v Dye & Anor, the Federal Court of Australia was tasked with determining the rights and obligations of parties involved in a corporate restructuring and the sale of assets secured by debentures. The plaintiffs, Bray and another, sought to challenge the sale of certain assets by the defendants, Dye and another, who acted as the Administrator and Liquidator of a company in liquidation. The plaintiffs argued that the sale of the assets, which were secured by debentures, was improper and that the proceeds from the sale should be subject to the satisfaction of the debenture holders' claims.

The court was required to address several legal issues, including the applicability of the principle in Universal Distributing Co Ltd v Federal Commissioner of Taxation, which concerns the priority of creditors in liquidation scenarios. Additionally, the court had to consider the obligations of the Liquidator under section 561 of the Corporations Act 2001, which mandates that a liquidator must take all reasonable steps to realise the company's property and apply the proceeds in satisfaction of debts and costs. The court also needed to assess whether the sale of the assets complied with the statutory requirements and whether the Liquidator had acted in accordance with their duties.

The court examined the principle in Universal Distributing Co Ltd v Federal Commissioner of Taxation and concluded that it did not apply to the specific circumstances of this case. The court found that the sale of the assets was conducted in good faith and in accordance with the statutory obligations imposed on the Liquidator. The Liquidator had taken reasonable steps to realise the assets and had applied the proceeds appropriately. The court held that the Liquidator had fulfilled their duties under section 561 of the Corporations Act 2001, and the sale of the assets was valid. Consequently, the plaintiffs' claims were dismissed.

The court ordered that the plaintiffs pay the defendants' costs of the proceedings, reflecting its finding that the plaintiffs' claims were without merit. The sale of the assets by the Liquidator was upheld, and the defendants were entitled to retain the proceeds from the sale. The court's decision confirmed the proper execution of the Liquidator's duties and the validity of the asset sale in the context of the corporate liquidation.

Orders