CGS and Co Pty Ltd v The Owners - Strata Plan No. 5290

The case before the court involved a dispute between CGS and Co Pty Ltd, a contractor, and the owners of Strata Plan No. 5290, concerning the assignment of a cause of action for payment. The dispute arose from a building contract that expressly forbade the assignment of the contract or any payment without prior written approval. When the contractor went into liquidation, the liquidator assigned a claim for payment to a third party without obtaining the necessary approval. The owners of the Strata Plan sought to invalidate the assignment on the grounds that it contravened the terms of the building contract. The liquidator, on the other hand, argued that the assignment was valid and enforceable.

The central legal issue before the court was whether the assignment of a claim for payment by a liquidator of a contractor, without the required approval, could have effect as an equitable assignment. The court was also required to consider whether the assignment took effect under section 477(2) of the Corporations Act, which provides that a disposition by a liquidator of a company that is being wound up has effect as if the company had not been in liquidation. The court had to balance the express prohibition on assignment in the building contract with the statutory provisions that govern the disposition of claims by liquidators.

The court held that while the assignment of the claim for payment by the liquidator did not have effect as an equitable assignment due to the express prohibition in the building contract, it nonetheless took effect under section 477(2) of the Corporations Act. The court found that the statutory provision rendered the contractual prohibition ineffective in the context of a liquidator's disposition of a claim for payment. The court emphasised that the statutory provision was designed to ensure that liquidators could effectively manage and dispose of the assets of a company in liquidation, and that the contractual prohibition could not stand in the way of this important statutory purpose. The court therefore held that the assignment by the liquidator was valid and enforceable.

The court made orders that the assignment of the claim for payment by the liquidator was valid and enforceable, and that the owners of Strata Plan No. 5290 were required to pay the assigned claim to the third party. The court also made orders that the third party was entitled to costs of the proceedings.