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Brown v DML Resources (No 3)

Brown v DML Resources (No 3)

Case [2001] NSWSC 719 29 August 2001

Winding Up & Liquidation

Natural Justice & Procedural Fairness

Limitation Periods

Insolvency Law

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Reported Decision:
(2002) 20 ACLC 510

New South Wales

Supreme Court

CITATION: Brown v DML Resources (No.3) [2001] NSWSC 719

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 3830/00

HEARING DATE(S): 24 July, 1 & 20 August 2001

JUDGMENT DATE:
29 August 2001

PARTIES :

Martin Russell Brown and Timothy James Cuming (P & R)
DML Resources Pty Limited (In liquidation) (D1)
DML Resources (WA) Pty Limited (In liquidation) (D2)
BP Australia Holdings Pty Ltd (A1)
BP Australia Pty Ltd (A2)

JUDGMENT OF: Austin J

COUNSEL : B Coles QC with M Ashhurst (A1 & A2)
C R Newlinds (P & R)

SOLICITORS: Carneys, Lawyers (A1 & A2)
Kemp Strang (P & R)

CATCHWORDS: CORPORATIONS - winding up of a company - liquidator's proceedings under s 588FF to challenge unfair preference - application for extension of time under s 588FF(3) - orders for extension of time made ex parte - orders subsequently set aside on application by a creditor for denial of natural justice - whether s 588FF(3) allows that creditor to be joined as a party outside the three year time limit PRACTICE AND PROCEDURE - ex parte order set aside as regards applicant for denial of natural justice - whether hearing may proceed inter parties without joinder of affected applicant as a defendant

LEGISLATION CITED: Corporations Law Act 2001 (Cth), ss 5E, 588FF, 1383, 1399, 1400, 1402
Corporations (Repeals, Consequentials and Transitionals) Act 2001 (Cth), ss 3, 6
Corporations Law, s 588FF
Corporations (Ancillary Provisions) Act 2001 (NSW), s 6

CASES CITED: Craig v Kanssen [1943] KB 257
Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231
Dahozo Pty Ltd v Oz-US Film Productions Pty Ltd (1997) 24 ACSR 739
Drinan v Hickey (1982) 11 NSWLR 744
Fernance v Nominal Defendant (1989) 17 NSWLR 710
Hoskins v Van Den-Braak (1988) 43 NSWLR 290
Hospital Products Ltd v United States Surgical Corporation (1985) 1 56CLR 41
Kioa v West (1995) 159 CLR 550
London Passenger Transport Board v Mosscrop [1942] AC 332
News Ltd v Australian Rugby Football League Ltd (1986) 64 FCR 410
Oates v Attorney-General (Cth) (1998) 156 ALR 1
Pegang Mining Co Ltd v Choong Sam (1969) 2 MLJ 52
Re Eastern Cleaning Services Pty Ltd (1978) 2 NSWLR 278
Stout v R A Wenham Builders Pty Ltd; Michilis Bros Pty Ltd (Third Party) [1980] 1 NSWLR 426
Wenham v General Credits Ltd (Supreme Court of New South Wales, 16 December 1988, unreported
Wentworth v Wentworth (executor of the estate of the Late GN Wentworth) [2000] NSWCA 350

DECISION: Ex parte orders set aside, with costs, as regards applicants. Submissions directed as to whether proceeding should now be dismissed

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

WEDNESDAY 29 AUGUST 2001

3830/00 - MARTIN RUSSELL BROWN & 1 OR v DML RESOURCES PTY LIMITED (IN LIQ) & 1 OR (NO.3)

JUDGMENT

1 HIS HONOUR: The plaintiffs are the liquidators of DML Resources Pty Ltd and DML Resources (WA) Pty Ltd (‘the…

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 Brown v DML Resources (No 3)

Details

AGLC: Brown v DML Resources (No 3) [2001] NSWSC 719
Case: [2001] NSWSC 719
Decision Date: 29 August 2001

CaseChat Overview and Summary

In Brown v DML Resources (No 3), the respondents, who were liquidators of a company, sought to challenge a transaction that they considered an unfair preference under section 588FF of the Corporations Act 2001 (Cth). The applicants, creditors of the company, were not initially joined as parties when the liquidators applied for an extension of time to bring their proceedings, and the orders were made ex parte. The applicants subsequently applied for the orders to be set aside on the ground that the liquidators had denied them natural justice by not joining them as parties. The central legal issue was whether the applicants could be joined as parties outside the three-year time limit specified in section 588FF(3) of the Act. The court also considered whether the proceedings could proceed inter partes without the applicants being joined as defendants.

The court found that the ex parte orders could be set aside because they denied the applicants procedural fairness. The court reasoned that the applicants were directly affected by the orders and had a legitimate interest in the proceedings. The court held that the liquidators had a duty to join the applicants as parties to ensure that all interested parties were given an opportunity to be heard. The court noted that section 588FF(3) did not preclude the possibility of joining a party outside the three-year time limit if it was in the interests of justice to do so. However, the court held that the liquidators had not demonstrated that it was in the interests of justice to proceed without joining the applicants as parties. The court held that the applicants had a right to be heard and that the proceedings could not proceed inter partes without their participation. The court set aside the ex parte orders and directed that the applicants be joined as parties.

Orders