Derwinto Pty Ltd (in liq) v Lewis - [2002] NSWSC 731

Reported Decision:
42 ACSR 645
(2002) 20 ACLC 1674

New South Wales

Supreme Court

CITATION: Derwinto v Lewis [2002] NSWSC 731

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 6032/01

HEARING DATE(S): 5 August 2002

JUDGMENT DATE: 20 August 2002

PARTIES :

Derwinto Pty Ltd (in liq) (P/R1)
Ronald Dean-Willcocks (P/R2)
Alan Edward Lewis (D1/A1)
James Alexander Shaw (D2/A2)

JUDGMENT OF: Austin J

COUNSEL : F P Carnovale (P/R)
R D Marshall (D/A)

SOLICITORS: Gillis Delaney Brown (P/R)
Bilbie Dan (D/A)

CATCHWORDS: CORPORATIONS - deed of company arrangement - proof of debt against company in administration - proof lodged for voting purposes relied on for purposes of distribution - whether deed can limit statutory right of appeal under s 1321 - considerations relevant to extension of time for appeal under Corporations Rule 14.1 - late submission of proof of debt - whether new proof of debt may be lodged which repeats claim made in a rejected proof - whether varied proof should be treated as a fresh proof - what constitutes rejection of a proof of debt - entitlement of proving creditor to participate in distribution

LEGISLATION CITED: Corporations Act 2001 (Cth) ss 444D, 444G, 447D, 588FB, 588FC, 588FF, 1321
Corporations Regulations Regs 5.6.11, 5.6.26, 5.6.47, 5.6.48, 5.6.54, 5.6.55, 5.6.56, 5.6.65
Corporations Rules r 14.1
Supreme Court Rules Pt 31

CASES CITED: Jackamarra v Krakouer (1998) 195 CLR 516
Kabushi Kaisha Universal v Aristocrat Leisure Industries Pty Ltd (1998) AIPC para 91-396
Re Deerhurst, ex parte Seaton (1891) 8 Morr 258
Re Estate of Knight (a bankrupt); Rocom International Pty Ltd (in liq) v Prentice [2002] FCA 604
Re General Rolling Stock Company (1872) LR Ch App 646
Re Lohrey; ex parte Dunlop-Perdriau Co Ltd (1931) 4 ABC 62
Re Magic Australia Pty Ltd (in liq) (1992) 7 ACSR 742
Re McMurdo; Penfield v McMurdo [1902] 2 Ch 684
Re Rhoades; ex parte Rhoades [1891] 1 QB 905
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514

DECISION: See paragraphs 55, 58, 64, 67 and 68. The other questions do not arise.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

TUESDAY 20 AUGUST 2002

6032/01 DERWINTO PTY LTD (IN LIQ) V ALAN EDWARD LEWIS & ANOR

JUDGMENT

1 HIS HONOUR: The defendants, who are the administrators of Geltrom Pty Ltd under a deed of company arrangement, have applied to the Court for directions under s 447D of the Corporations Act 2001 (Cth) with respect to proofs of debt lodged on behalf of the first plaintiff, Derwinto Pty Ltd (in liq). The second plaintiff, Ronald John Dean-Willcocks, is the present liquidator of Derwinto. He replaced John Edward Star by order of this Court made on 30 May 2002.

2 The application is made in a proceeding where Derwinto and Mr Dean-Willocks seek final relief under s 1321 of the Corporations Act, to reverse the rejection of its proof of debt in the administration of Geltrom.

Facts

3 During its corporate life Derwinto carried out…

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 731
Decision Date: 20 August 2002

CaseChat Overview and Summary

Derwinto Pty Ltd, in liquidation, sought to recover damages from Lewis for fraudulent conduct which contributed to its insolvency. The nature of the dispute was whether certain debts could be included in the distribution of the company's assets. The case was heard in the Supreme Court of New South Wales. The central legal issues were whether the deed of company arrangement could limit the statutory right of appeal under section 1321, the considerations relevant to extending the time for appeal under Corporations Rule 14.1, and the validity of late submissions of proofs of debt.

The court examined whether the deed could restrict the statutory right of appeal, finding that such restrictions are generally ineffective. It then assessed the extension of time for appeal under Corporations Rule 14.1, taking into account factors such as the creditor's diligence and the impact of the delay on other parties. The court ruled that a new proof of debt could not be lodged if it merely repeated a claim from a rejected proof, unless there were significant changes in circumstances. It clarified that a varied proof should not be treated as a fresh proof if it does not address the reasons for the initial rejection. The court also addressed what constitutes the rejection of a proof of debt and determined the entitlement of a creditor to participate in the distribution based on these findings.

The court's final orders were that the deed did not limit the statutory right of appeal, and the creditor was entitled to participate in the distribution despite the late submission of the proof of debt. The court granted an extension of time for the creditor to lodge a new proof of debt, provided it contained significant changes to address the previous rejection.

Orders