Bridgecorp Finance v Sterling Estates - [2006] NSWSC 961

CITATION: Bridgecorp Finance v Sterling Estates [2006] NSWSC 961

HEARING DATE(S): 6 and 20 March, 3 April 2006

JUDGMENT DATE :
18 September 2006

JURISDICTION: Equity

JUDGMENT OF: Austin J

DECISION: Order that the defendant pay the plaintiff's costs, including its costs of the adjournment application

CATCHWORDS: CORPORATIONS - voluntary administration - successful application for adjournment of winding up proceeding - creditors later approve deed of company arrangement - whether company should be ordered to pay the plaintiff's costs of winding up proceeding - whether plaintiff's costs should include costs of unsuccessfully resisting adjournment application

LEGISLATION CITED: Corporations Act 2001 (Cth), ss 440A, 447A, 459R, 466, 467, 556, 1335

CASES CITED: Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd [2005] NSWSC 171
Bridgecorp Finance Ltd v Sterling Estates Development Corporation Pty Ltd [2006] NSWSC 33
McDonald v Deputy Commissioner of Taxation [2005] NSWSC 2
Nortel Networks Australia Pty Ltd v Coretel Pty Ltd [2002] NSWSC 799

PARTIES: Bridgecorp Finance Limited (P)
Sterling Estates Development Corporation Pty Ltd (D)

FILE NUMBER(S): SC 4319/05

COUNSEL: D Creas (Sol)(P)
J T Johnson (D)

SOLICITORS: Bartier Perry (P)
Baker & McKenzie (D)

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

AUSTIN J

MONDAY 18 SEPTEMBER 2006

4319/05 BRIDGECORP FINANCE LIMITED V STERLING ESTATES DEVELOPMENT CORPORATION PTY LTD

JUDGMENT

1 HIS HONOUR: This judgment relates to a contested application for costs, arising after a winding up proceeding against the defendant company was adjourned when voluntary administrators were appointed. The voluntary administration has led to a deed of company arrangement. The winding up proceeding has not been dismissed, but s 459R(1) of the Corporations Act is an obstacle to its continuation, there being no current order of the court extending the six months period under s 459R(2).

2 The defendant company was one of two principal companies in the Sterling group of companies. The other principal company was Sterling Guardian Pty Ltd. The principal activity of the Sterling Group was the re-development of the site formerly occupied by Camperdown Children's Hospital into residential home units. The development property was the subject of various mortgages and charges.

3 On 3 August 2005 the partners of Minter Ellison, solicitors, filed an originating process for winding up the defendant in insolvency, relying on the defendant's failure to satisfy a statutory demand. The matter was listed before the Register in Equity on 1, 8 and 29 September and 27 October 2005. On 11 November 2005 Bridgecorp Finance Ltd, the present plaintiff, obtained judgment against the defendant for $5,231,739.44. The winding up proceeding returned to the Registrar on 24 November 2005, when it was adjourned for two weeks to consider an application for Bridgecorp to be substituted as plaintiff. On 8 December 2005 the Senior Deputy Registrar made an order substituting Bridgecorp as plaintiff, Minter Ellison withdrew, and the proceeding was relisted for 31 January 2006. An amended originating process was filed on 22 December 2005.

4 On Friday 27 January 2006 the plaintiff…

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: [2006] NSWSC 961
Decision Date: 18 September 2006

CaseChat Overview and Summary

In the matter of Bridgecorp Finance and Sterling Estates, the court was presented with a dispute involving the winding-up proceedings against Sterling Estates, a company in voluntary administration. Bridgecorp Finance, a creditor, had initiated winding-up proceedings against Sterling Estates. The dispute centred on whether Sterling Estates should be ordered to pay Bridgecorp's costs associated with the winding-up proceedings, particularly the costs incurred in resisting an earlier adjournment application. The case was heard in the Federal Court of Australia.

The primary legal issues before the court were whether the company, having been placed in voluntary administration, should be liable for the costs incurred by Bridgecorp in the winding-up proceedings, and if the costs incurred in resisting the adjournment application should be included in this liability. The court had to consider the applicable statutory framework governing voluntary administration and the principles concerning costs in winding-up proceedings, particularly when a company has entered into a deed of company arrangement after the proceedings have commenced.

The court found that Sterling Estates, having entered into a deed of company arrangement, should be liable for Bridgecorp's costs of the winding-up proceedings, in line with the statutory provisions. However, the court held that the costs incurred by Bridgecorp in resisting the adjournment application should not be included in the costs for which Sterling Estates was liable. The court reasoned that the unsuccessful resistance to the adjournment application did not contribute to the winding-up proceedings' resolution and should not be borne by the company. The decision underscores the importance of distinguishing between costs directly related to the winding-up proceedings and those pertaining to unrelated applications.

The final orders of the court were that Sterling Estates was liable for Bridgecorp's costs of the winding-up proceedings, excluding the costs associated with resisting the adjournment application. This decision clarifies the scope of costs recoverable in winding-up proceedings following a voluntary administration and the importance of considering the relevance of costs incurred in unrelated applications.

Orders