Community Life v Kilmory - [2007] NSWSC 943

Reported Decision:
(2007) 25 ACLC 1,299

New South Wales

Supreme Court

CITATION: Community Life v Kilmory [2007] NSWSC 943
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 16 August 2007

JUDGMENT OF: Hammerschlag J

EX TEMPORE JUDGMENT DATE: 16 August 2007

DECISION: The Amended Originating Process dated 30 July 2007 is dismissed

CATCHWORDS: CORPORATIONS – Corporations Act 2001 (Cth) (“the Act”) Ch 2K - Company charges – Memorandum of discharge lodged by chargee on basis of agreement that chargor would make certain payments which it failed to make – Whether s 266(4) or s 1322(4)(d) of the Act available to reinstate charge – Whether s 274 or s 1322(4)(b) available to rectify Register of Company Charges – Relief not available

LEGISLATION CITED: Corporations Act, 2001 (Cth)

CASES CITED: David Grant v Westpac Banking Corporation (1995) 184 CLR 265
Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1

PARTIES: Community Life Limited
Kilmory Developments Pty Limited

FILE NUMBER(S): SC 3637/2007

COUNSEL: P.E. Cullen (Plaintiff)
Ex parte

SOLICITORS: The Argule Partnership (Plaintiff)

- 11 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

HAMMERSCHLAG J

16 AUGUST 2007

3637/2007 COMMUNITY LIFE LIMITED –V- KILMORY DEVELOPMENTS PTY LIMITED

EX TEMPORE JUDGMENT

Introduction

1 HIS HONOUR: This application concerns a fixed and floating charge (“the charge”) which, on 24 October 2006, the plaintiff company took from the first defendant company over that company's property, undertaking and assets.

2 Lodgement of notice of the charge with the Australian Securities and Investments Commission ("ASIC") as required by s 263(1) of the Corporations Act 2001 (Cth) (the "Act") duly occurred and the charge was registered. The charge was entered the Australian Register of Company Charges (the "Register") on 25 October 2006. Under s 265 of the Act, ASIC must keep the Register and cause to be entered in it particulars of charges in respect of which notice is lodged.

3 However, in the circumstances which are described below, on 22 November 2006 the plaintiff lodged a memorandum (or notification) of discharge or release of charge. The memorandum was entered in the Register.

4 By Amended Originating Process dated 30 July 2007 the plaintiff seeks an order that the period within which it may lodge notice of the charge be extended to a future date, or, in the alternative, that the Register be rectified by the charge being re-registered.

5 The application to extend is brought under s 266(4) or alternatively, s 1322(4)(d) of the Act. The rectification order is sought under s 274 or alternatively, s 1322(4)(b) of the Act.

The facts

6 Under a loan facility agreement (“the loan”) dated 6 June 2006, the plaintiff lent $3M dollars to McLean Property Investments Pty Ltd ("McLean"). It took as security for the loan various securities, including guarantees supported by charges from third parties.

7 In all dealings between the plaintiff,…

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: [2007] NSWSC 943
Decision Date: 16 August 2007

CaseChat Overview and Summary

In the Federal Court of Australia, Community Life Limited initiated legal action against Kilmory Pty Ltd and the Australian Securities and Investments Commission. The dispute revolves around a company charge that Kilmory had placed over its assets, which was subsequently discharged. Community Life, the chargee, argues that the discharge was invalid due to Kilmory's failure to fulfill certain conditions outlined in an agreement between the parties. Consequently, Community Life seeks to reinstate the charge on its original terms.

The primary legal issue before the court was whether section 266(4) or section 1322(4)(d) of the Corporations Act 2001 could be applied to reinstate the charge. Additionally, the court needed to determine if sections 274 or 1322(4)(b) of the Act could be used to rectify the Register of Company Charges to reflect the reinstatement of the charge. The court also considered whether any relief was available to Community Life under the circumstances.

The court held that neither section 266(4) nor section 1322(4)(d) of the Act applied to reinstate the charge. The court found that the charge had been lawfully discharged, and there was no legal basis to reinstate it. Furthermore, the court determined that neither section 274 nor section 1322(4)(b) provided a mechanism for rectifying the Register of Company Charges to reflect the reinstatement of the charge. As a result, the court concluded that no relief was available to Community Life in this matter.

Orders