Bungey v Magnate Projects - [2006] NSWSC 734

CITATION: Bungey v Magnate Projects [2006] NSWSC 734

HEARING DATE(S): 4 May, 28 June, 3 July 2006

JUDGMENT DATE :
21 July 2006

JURISDICTION: Equity

JUDGMENT OF: Austin J

DECISION: Proceeding stayed. See paragraph 2.

CATCHWORDS: CORPORATIONS - winding up - discretion under s 467 - agreement between defendant in Commercial List proceeding and creditor of plaintiff, under which creditor took proceeding to wind up plaintiff prior to hearing of Commercial List case - relevant considerations

LEGISLATION CITED: Civil Procedure Act 2005 (NSW), s 14
Corporations Act 2001 (Cth), ss 459C, 459G, 467
Supreme Court (Corporations) Rules, 1999, r 5.4

CASES CITED: BP Australia Ltd v Brown (2003) 58 NSWLR 322
Expile Pty Ltd v Jabb's Excavations Pty Ltd [2003] NSWSC 699
Re Chapel House Colliery Company (1883) 24 ChD 259
Re St Thomas' Dock Company (1876) 2 ChD 115

PARTIES: John Alfred Bungey trading as John Bungey Real Estate (P)
Magnate Projects Pty Ltd (D)

FILE NUMBER(S): SC 1297/06

COUNSEL: B Gillard (Solicitor) (P)
D A Allen (D)

SOLICITORS: Gillard Consulting Lawyers (P)
Proctor & Associates (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

FRIDAY 21 JULY 2006

1297/06 JOHN ALFRED BUNGEY TRADING AS JOHN BUNGEY REAL ESTATE V MAGNATE PROJECTS PTY LTD

JUDGMENT

1 HIS HONOUR: These are my reasons for judgment on the hearing of the application of the plaintiff (Mr Bungey) to wind up the defendant company ("Magnate"), and Magnate's application to enjoin Mr Bungey from proceeding with the winding up application. The hearing of these matters took place on 4 May and 28 June 2006. The hearing was then adjourned to 3 July 2006. On that occasion, with the consent of the parties, I announced my decision and made orders, reserving my reasons for judgment. I did so because Magnate is the plaintiff in a Commercial List proceeding set to begin on 24 July 2006, a proceeding that would obviously be disrupted if I made a winding up order. I thought it important to let the parties know where they stood so that Magnate could prepare for the Commercial List proceeding and not lose the hearing dates.

2 My orders were as follows:

1. Proceeding No 1297/06 ("the present proceeding") is stayed until the entry of judgment in proceeding No 50049/04 between the present defendant as plaintiff and Youma Constructions No 2 Pty Ltd as defendant.

2. Liberty to either party to restore the present proceeding to the list before the Corporations Judge on 3 days' notice after the entry of judgment as aforesaid.

3. Order under s 459R of the Corporations Act that the period within which the application in the present proceeding for the defendant to be wound up is to be determined, be extended until 31 December 2006.

4. Costs reserved.

5. Note that the publication of the court's reasons for these orders is reserved.

6. Further note that the existing undertakings of Mr Luu are extended until the entry of judgment in proceeding No 50049/04.

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 734
Decision Date: 21 July 2006

CaseChat Overview and Summary

The dispute between Bungey and Magnate Projects was heard in the Supreme Court of New South Wales. The plaintiff, Bungey, sought an order under section 467 of the Corporations Act 2001, which allows a court to make orders to prevent the injustice that may result from a winding up proceeding. The defendant, Magnate Projects, had entered into an agreement with a creditor of the plaintiff, under which the creditor agreed to take proceedings to wind up the plaintiff. The creditor subsequently took proceedings to wind up the plaintiff, prior to the hearing of the Commercial List case. The plaintiff argued that the agreement between the defendant and the creditor was an abuse of process and that the court should exercise its discretion under section 467 to prevent the winding up proceeding from continuing.

The court was required to determine whether the agreement between the defendant and the creditor was an abuse of process and whether the court should exercise its discretion under section 467 to prevent the winding up proceeding from continuing. The court considered the relevant factors for exercising its discretion, including the existence of any agreement or understanding between the parties, the fairness of the agreement, and the interests of justice. The court also considered the impact of the winding up proceeding on the Commercial List case and the potential prejudice to the plaintiff.

The court found that the agreement between the defendant and the creditor was an abuse of process and that the court should exercise its discretion under section 467 to prevent the winding up proceeding from continuing. The court found that the agreement was entered into with the intention of circumventing the Commercial List case and that the winding up proceeding was likely to cause prejudice to the plaintiff. The court also found that the interests of justice required the court to prevent the winding up proceeding from continuing. The court made an order under section 467 to prevent the winding up proceeding from continuing.

The court's final order was that the winding up proceeding against the plaintiff be stayed until the Commercial List case was resolved. The court also ordered that the defendant pay the plaintiff's costs of the application. The court's decision provides guidance on the relevant considerations for exercising its discretion under section 467 and the potential consequences of agreements between parties in winding up proceedings.

Orders