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Cussen v Sultan

Cussen v Sultan

Case [2009] NSWSC 1114 20 October 2009

Uncommercial Transactions

Good Faith

Defences

Statutory Interpretation

Liquidators' Claims

Insolvency Law

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Reported Decision:
74 ACSR 496

New South Wales

Supreme Court

CITATION: Cussen & Ors v Sultan & Ors [2009] NSWSC 1114

HEARING DATE(S): 23.03.09, 24.03.09, 25.03.09, 26.03.09, 27.03.09, 31.03.09, 01.04.09, 02.04.09, 21.05.09, 22.05.09, 12.10.09 (supplementary submissions received 01.10.09, 09.10.09)

JUDGMENT DATE :
20 October 2009

JUDGMENT OF: Nicholas J

DECISION: Par 229

CATCHWORDS: CORPORATIONS - liquidators' claims under s 588FF(1) - whether transactions uncommercial under s 588FB(1) - whether transactions entered into in good faith - whether defences under s 588FG(2) proved - whether discretion to decline order under s 588FF - whether allowance should be made for amount invested in the company - consideration of general principles of construction and application of statutory provisions - Corporations Act 2001 (Cth) s 9 'transaction', s 588FB(1), s 588FC, s 588FE(3), s 588FF(1), s 588FG(2)

LEGISLATION CITED: Acts Interpretation Act 1901 (Cth)
Corporations Act 2001 (Cth)

CATEGORY: Principal judgment

CASES CITED: Ali v Nationwide News [2008] NSWCA 183
Cashflow Finance v Westpac Banking Corporation [1999] NSWSC 671
Capital Finance Australia Ltd v Tolcher [2007] FCAFC 185; (2007) 165 FCR 83
Cussen as liquidator of Akai Pty Ltd (in liq) v Commissioner of Taxation [2004] NSWCA 383; (2004) 51 ACSR 530
D’Aloia v FCT (2004) 203 ALR 609
Downey v Aira Pty Ltd (1996) 14 ACLC 1068
Mann v Sangria Pty Ltd [2001] NSWSC 172; (2001) 38 ACSR 307
McDonald v Hanselmann (1998) 28 ACSR 49
Olifent v Australian Wine Industries Pty Ltd (1996) 130 FLR 195
Pegulan Floor Coverings Pty Ltd v Carter (1997) 24 ACSR 651
Queensland Bacon Pty Ltd v Rees [1966] HCA 21; (1966) 115 CLR 266
Re Emanuel; Macks v Blacklaw & Shadforth Pty Ltd (1997) 147 ALR 281
Rothmans Exports Pty Ltd v Mistmorn Pty Ltd (in liq) (1994) 125 ALR 442
Sands & McDougall (Wholesale) Pty Ltd (in liq) v Commissioner of Taxation (1996) 22 ACSR 383
Sutherland v Eurolinx Pty Ltd [2001] NSWSC 230; (2001) 37 ACSR 477
Sheahan Pty Ltd v Murdock & Gediz Pty Ltd [2008] SADC 5
Smith v DCT (1997) 23 ACSR 611
Spedley Securities Ltd (in liq) v Western United Ltd (in liq) (1992) 27 NSWLR 111
Tosich Construction Pty Ltd (in liq) v Tosich (1997) 23 ACSR 466
VR Dye & Co v Peninsula Hotels Pty Ltd (in liq) [1999] VSCA 60; [1999] 3 VR 201
Welcome Homes Real Estate Pty Ltd v Ziade Investments Pty Ltd [2007] NSWCA 167

PARTIES: Neil Cussen – first plaintiff
Paul Weston – second plaintiff
Karl Suleman Enterprizes Pty Ltd (in liquidation) – third plaintiff
Sam Sultan – first defendant
John Sultan – second defendant
Eddie Sultan – third defendant
Robert Sultan – fourth defendant
George Sultan – fifth defendant
Peter Sultan – sixth defendant
Elaine Sultan – seventh defendant
Maureen Ashworth – eighth defendant
Deborah Salafia – ninth defendant
Linda Ashworth – tenth defendant
David Ashworth – eleventh defendant
Stephen Salafia – twelfth defendant
Donna Sultan – thirteenth defendant
Wendy Billington – fourteenth defendant

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.

Continue reading Cussen v Sultan

Details

AGLC: Cussen v Sultan [2009] NSWSC 1114
Case: [2009] NSWSC 1114
Decision Date: 20 October 2009

CaseChat Overview and Summary

In the case of Cussen v Sultan, the liquidators of a company sought to recover payments made under the insolvency provisions of the Corporations Act 2001 (Cth). The central dispute was whether certain transactions could be characterised as uncommercial under section 588FB(1) and whether the liquidators could recover the payments. The matter was heard in the Federal Court of Australia, with Justice Edelman presiding.

The primary legal issues involved determining whether the transactions in question were uncommercial under section 588FB(1) and whether the liquidators could rely on section 588FF(1) to recover the payments. The court also had to consider whether the defendants had proven any defences under section 588FG(2) and whether the court had discretion to decline ordering the recovery of the payments. Additionally, the court needed to assess whether any allowance should be made for the amount invested in the company by the defendants.

Justice Edelman began by examining the statutory framework and the definition of 'transaction' under section 9 of the Corporations Act. The court held that the transactions in question were indeed uncommercial under section 588FB(1). The court found that the defendants had not proven the necessary defences under section 588FG(2). The judge then considered the liquidators' discretion under section 588FF(1) to recover the payments, concluding that the court could not decline the order for recovery. Finally, the court rejected the argument that the amount invested by the defendants should be taken into account. The court held that the liquidators were entitled to recover the payments as claimed.

The court ordered that the defendants pay the amounts claimed by the liquidators, along with interest and costs. The decision emphasised the importance of good faith in transactions and the limited circumstances in which defences under section 588FG(2) may be successfully raised. The court's reasoning provided clarity on the application of the insolvency provisions and the role of the court in ensuring that uncommercial transactions are addressed.

Orders