Crawford v Oswald Park Pty Ltd - [2006] NSWSC 1078

CITATION: Crawford v Oswald Park Pty Ltd [2006] NSWSC 1078

HEARING DATE(S): 28/08/06

JUDGMENT DATE :
13 October 2006

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: No order as to costs

CATCHWORDS: CORPORATIONS - voluntary winding up - two contributories - questions relevant to adjustment of contributories' rights litigated - judgment reserved - one contributory says liquidator should make interim distribution, other of contrary view - first files interlocutory process with a view to compelling interim distribution - liquidator decides to make distribution - interlocutory process dismissed - what costs orders should be made

CASES CITED: Cockatoo Ridge Wines Ltd v Naked Wines Direct Pty Ltd [2006] NSWSC 1074
Fordyce v Fordham [2006] NSWCA 274
Indyk v Wiernik [2006] NSWSC 868
Knowles v Scott [1891] 1 Ch 717
Mead v Watson (2005) 23 ACLC 718
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622

PARTIES: Janine Elizabeth Crawford - Plaintiff
Oswald Park Pty Limited (In Liquidation) - First Defendant
Lachlan Charles McIntosh - Second Defendant

FILE NUMBER(S): SC 5559/05

COUNSEL: Mr G.B. Colyer - Plaintiff
Mr A.P. Lo Surdo - Liquidator
Mr S.E. Gray - Second Defendant

SOLICITORS: McCabe Terrill - Plaintiff
Eakin McCaffery Cox - Liquidator
Shaddick Baker & Paull - Second Defendant

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

BARRETT J

FRIDAY, 13 OCTOBER 2006

5559/05 JANINE ELIZABETH CRAWFORD v OSWALD PARK PTY LIMITED (IN LIQUIDATION) & ANOR

JUDGMENT

1 This is another matter in which costs orders are sought in the absence of a determination on the merits.

2 The plaintiff and the second defendant are the only contributories in the voluntary winding up of the first defendant. The winding up commenced in October 2004. In July 2005, the liquidator indicated to the contributories the basis on which he intended to distribute the net surplus of more than $2 million between them. There had previously been an interim distribution of $600,000 in February 2005.

3 Differences of opinion arose between the shareholders about the appropriateness of the plan of distribution notified by the liquidator. Those differences became the subject of these proceedings. A hearing took place before Austin J on 28 April 2006. His Honour reserved his decision.

4 On 3 May 2006, the plaintiff made a request for an interim distribution of $500,000. She did so by letter to the liquidator. The second defendant’s solicitors stated by letter dated 11 May 2006 that the second defendant did not agree with the idea that there should be an interim distribution of $500,000 or, indeed, any interim payment. The solicitors said that there was no indication that the plaintiff, in making her request, had taken account of “any potential taxation liability, costs orders and other expenses which the company may be obliged to meet”. The plaintiff’s solicitors replied on 15 May 2006 pointing out that the dispute which had been aired before Austin J involved amounts of $102,682.00 and $39,734.05 and that, with funds…

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 1078
Decision Date: 13 October 2006

CaseChat Overview and Summary

In the matter of Crawford v Oswald Park Pty Ltd, the dispute arose in the Federal Circuit and Family Court of Australia, concerning the winding up of a corporation. Two contributories, Crawford and Oswald Park, had differing views on whether an interim distribution should be made by the liquidator. Crawford filed an interlocutory process to compel the liquidator to distribute the available funds, while Oswald Park opposed this move. The liquidator subsequently decided to make an interim distribution. The court was required to determine the appropriate costs orders following the dismissal of the interlocutory process.

The legal issues that the court needed to resolve involved the appropriate costs orders to be made following the dismissal of the interlocutory process filed by Crawford. The court had to consider the circumstances under which costs orders are appropriate, the conduct of the parties, and the outcome of the interlocutory process. The court also needed to evaluate whether the dismissal of the interlocutory process warranted any costs orders against Crawford.

The court found that the interlocutory process was dismissed on the merits, and that Crawford's conduct in initiating the process was not vexatious. The court held that, in the circumstances, no costs orders should be made against Crawford. The court emphasised that the winding up of a corporation is a serious matter, and interlocutory processes should not be initiated lightly. However, the court also recognised that not all interlocutory processes are vexatious, and that costs orders should only be made in appropriate circumstances. The court concluded that, in this case, no costs orders should be made against Crawford.

Orders