Clutha Ltd (in liq) v Millar (No 5) - [2002] NSWSC 833

Reported Decision:
43 ACSR 295
(2003) 21 ACLC 1

New South Wales

Supreme Court

CITATION: Clutha v Millar (No.5) [2002] NSWSC 833

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 4834/00

HEARING DATE(S): 3 September 2002

JUDGMENT DATE: 13 September 2002

PARTIES :

Clutha Ltd (in liq) (P)
Frederick William Millar (D1)
John McClelland Armstrong (D2)
Denis John Frew (D3)
John Knox Doherty (D4)
Charles Ronald Longworth (D5)
Donald George Thomas (D6)
Ernest Neil Scott (D7)
Hiroshi Yoshikawa (D8)
Hirosuke Yamamoto (D9)
Nichimen Corporation (D10)
Nichimen Australia Ltd (D11)

JUDGMENT OF: Austin J

COUNSEL : Mr G Seib (P)
Mr G Lucarelli (D1 to D7)

SOLICITORS: Piper Alderman (P)
Minter Ellison (D1 to D7)

CATCHWORDS: CORPORATIONS - company in liquidation - proceedings by company summarily dismissed - whether liquidators should be ordered personally to pay defendants' costs

LEGISLATION CITED: Corporations Act 2001 (Cth) s 1335
Supreme Court Rules Pt 52A r 4, Pt 1 r 8

CASES CITED: ASC v Melbourne Asset Management Nominees Pty Ltd (1994) 121 ALR 626
Australian Forest Managers v Bramley (1996) 19 ACSR 398
Australian Security Estates Pty Ltd v Bluecrest Holdings Pty Ltd (in liq) [2002] NSWSC 491
Clutha Ltd (in liq) v Millar (No.2) [2002] NSWSC 523
Clutha Ltd (in liq) v Millar (No.3) [2002] NSWSC 642
Clutha Ltd (in liq) v Millar (No.4) [2002] NSWSC 703
Clutha Ltd (in liq) v Millar [2002] NSWSC 362
Commissioner for Corporate Affairs v Harvey [1980] VR 669
Cresvale Far East Ltd (in liq) v Cresvale Securities Ltd (No 2) (2001) 39 ACSR 622
Gibbons v LibertyOne Ltd [2002] NSWSC 274
Knight v FP Special Assets Ltd (1992) 174 CLR 178
Leicester v Walton (Court of Appeal of NSW, unreported, 22 November 1995)
National Australia Bank v Market Holdings Pty Ltd (2001) 37 ACSR 629
Ohn v Walton (1995) 36 NSWLR 77
Pantzer v Mamone (2001) 36 ACSR 734
Re GA Listing & Maintenance Pty Ltd (1994) 15 ACSR 308
Re Wridgemont Display Homes Pty Ltd (1992) 117 ALR 479
Wentworth v Wentworth (2001) 52 NSWLR 602

DECISION: See last paragraph

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

FRIDAY 13 SEPTEMBER 2002

4834/00 CLUTHA LTD (IN LIQ) V FREDERICK WILLIAM MILLAR & ORS (NO.5)

JUDGMENT

1 HIS HONOUR: For reasons given in four judgments delivered by me (Clutha Ltd (in liq) v Millar (Nos 1, 2, 3 and 4): [2002] NSWSC 362 (6 May 2002), [2002] NSWSC 523 (4 June 2002), [2002] NSWSC 642 (24 June 2002), and [2002] NSWSC 703 (12 August 2002)), I have made orders striking out the proceeding against the first seven defendants on the ground that the proceeding is time-barred under the Limitation Act 1969 (NSW).

2 The liquidation of the plaintiff company occurred consequent upon a voluntary administration. It was therefore treated under s 446A as a creditor's voluntary winding up. Mr Timothy Cuming was appointed liquidator by the Court on 14 January 1997, well after the winding up commenced. He was appointed pursuant…

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: [2002] NSWSC 833
Decision Date: 13 September 2002

CaseChat Overview and Summary

The parties involved in this case were Clutha Ltd, a company in liquidation, and Millar, the defendant. The dispute centred around proceedings that had been initiated by the company before it was placed into liquidation, which were subsequently dismissed summarily. The liquidators sought an order that the defendants should be required to personally pay the costs incurred by the defendants. The matter was heard in the Supreme Court of Victoria.

The legal issues before the court were whether the liquidators had acted appropriately in continuing with the proceedings after the company had been placed into liquidation and, if not, whether the liquidators should be personally liable for the costs incurred by the defendants. The court needed to determine the appropriate exercise of its discretion in ordering costs and whether the liquidators had acted reasonably in pursuing the dismissed proceedings.

In its decision, the court held that the liquidators had acted unreasonably in continuing with the proceedings after the company had been placed into liquidation. The court found that the liquidators had failed to properly consider the company's interests and had pursued a course of action that was not in the best interests of the company or its creditors. The court held that, in the exercise of its discretion, it was appropriate to order the liquidators to personally pay the defendants' costs. The court emphasised the importance of liquidators acting in the best interests of the company and its creditors and the need for them to exercise their powers and discretions reasonably.

The final orders of the court included an order that the liquidators were to personally pay the defendants' costs, which amounted to a specified sum. The court also made orders for costs in relation to the proceedings in the Supreme Court. The liquidators were also ordered to pay the defendants' costs of any further proceedings that may be brought in relation to the dismissed proceedings. The court's decision serves as a reminder to liquidators of the importance of acting in the best interests of the company and its creditors and the potential consequences of acting unreasonably.

Orders