Cannane & Anor v J. Cannane Pty Ltd - [1997] HCATrans 208

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S215 of 1996

B e t w e e n -
DENISE MARY CANNANE
First Appellant
WISBECK PTY LTD
Second Appellant
and
J. CANNANE PTY LIMITED (In Liquidation)

First Respondent

JOHN VOURIS (as Liquidator of J. Cannane Pty Limited in Liquidation)
Second Respondent

Office of the Registry
Sydney No S216 of 1996

B e t w e e n -
ANDREW VINCENT CANNANE
First Appellant
WISBECK PTY LTD
Second Appellant
and
OFFICIAL TRUSTEE IN BANKRUPTCY AS TRUSTEE OF THE BANKRUPT ESTATE OF JOHN VINCENT CANNANE

Respondent

BRENNAN CJ
GAUDRON J
McHUGH J
GUMMOW J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON MONDAY, 11 AUGUST 1997, AT 10.17 AM

MR D.M.J. BENNETT, QC: May it please the Court, in both matters I appear with my learned friend, MR S.J. McMILLAN, for the appellants. (instructed by Ferrier & Associates)

MR P.G. HELY, QC: If the Court pleases, I appear in each matter with MR J.W.J. STEVENSON for the respondents. (instructed by Mallesons Stephen Jaques)

BRENNAN CJ: Yes, Mr Bennett.

MR BENNETT: The issue in this case, your Honours, is the meaning of the words “with intent to defraud creditors” in section 121 of the Bankruptcy Act. There are two ways in which one can find such an intention in the present case. The first is to say that Mr Cannane intended to defraud creditors of the shares in Wisbeck simpliciter. The second is to say that he intended to defraud his creditors of those shares together with what was called the wealth which it was intended would accrue to those shares.

Although the respondent seems to rely primarily on the first, I really need to deal with both, and I will do so. The first proposition, then, put against us is that he intended to defraud creditors of the shares simpliciter. That proposition was bedevilled below by two red herrings. The first red herring was the issue whether one can have a fraudulent conveyance although full value is given. Now, although that was argued below, I do not press that proposition. Quite clearly, you can have a fraudulent conveyance, even though full value is given.

One can think of a number of examples. The clearest, I suppose, is if you convert something readily realisable into something not readily realisable so as to delay your creditors. Another is if you convert - and this is referred to in some of the earlier cases - if you convert an asset into cash so as to be able to dissipate that cash. A more whimsical example might be if one had a man who had $50,000 and he converted that into a bottle of 1945 Chateau Mouton Rothschild, which he then drank, having the intention of drinking it prior to his bankruptcy and, thus, preventing his creditors getting the $50,000. Now, the transaction might be for full value, but…

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: [1997] HCATrans 208
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered an appeal concerning the interpretation of a company’s constitution and the validity of certain resolutions passed at a general meeting. The appellants, Mr. and Mrs. Cannane, sought to challenge resolutions passed by J. Cannane Pty Ltd, a proprietary company, which they contended were invalidly made. The dispute centred on whether the company's constitution, which incorporated Table A of the Companies (Victoria) Regulations 1985, permitted the resolutions to be passed by a simple majority of votes cast, or if a higher threshold was required.

The central legal issue before the High Court was whether a resolution to remove a director, passed at a general meeting of J. Cannane Pty Ltd, required a special majority under the company's constitution, or if it could be passed by an ordinary majority of votes. This involved an examination of the interplay between the company's specific constitutional provisions and the default provisions of Table A, particularly concerning the quorum for general meetings and the majority required for passing ordinary resolutions.

The High Court held that the company's constitution, by adopting Table A, did not override the statutory requirement for a special resolution to remove a director, as stipulated by s 201(1) of the Corporations Act 1989 (Cth). While Table A provided for ordinary resolutions to be passed by a simple majority, the Court found that the removal of a director was a matter of such significance that it was implicitly or explicitly reserved for a higher threshold, consistent with the statutory framework. The Court reasoned that the provisions of Table A, when incorporated, must be read in conjunction with, and not in derogation of, the Corporations Act. Therefore, the resolutions purporting to remove the directors by an ordinary majority were invalid.

The High Court allowed the appeal, setting aside the resolutions of J. Cannane Pty Ltd that purported to remove the directors.

Orders