Edenden v Bignell - [2008] NSWSC 666

CITATION: Edenden v Bignell [2008] NSWSC 666

HEARING DATE(S): 26/05/08

JUDGMENT DATE :
2 July 2008

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Order that originating process be struck out except as to core elements required by rule 2.3(3) of the Supreme Court (Corporations) Rules 1999. Orders that matter proceed on pleadings and stand dismissed if statement of claim not filed and served within 28 days.

CATCHWORDS: CORPORATIONS - winding up - insolvent trading - proposed action by creditor under s 588M(3) - need for leave under s 588T(2)(b) to commence such action - where threshold requirement previously established as to alleged debt of $57,917.51 - sufficiency of pleaded claim for leave under s 588T(2)(b) - much superfluous matter alleged - no clear specification of time at which alleged debt incurred - no statement of basis on which elements involving insolvency at time of incurring of debt are alleged

LEGISLATION CITED: Corporations Act 2001 (Cth), ss s 436A(1)(a), 471A, 588G, 588M(1)(a), (3), 588S, 588T(2)
Supreme Court (Corporations) Rules 1999, rules 2.2(1)(a), 2.2(3)

CATEGORY: Principal judgment

CASES CITED: Deputy Commissioner of Taxation v Clark [2003] NSWCA 91; (2003) 57 NSWLR 113
Edenden v Bignell [2007] NSWSC 1122
Re Origin Internet Solutions Pty Ltd (No 2) [2004] FCA 1354; (2001) 51 ACSR 163

PARTIES: Stephen Gary Edenden - First Plaintiff
Paula Anne Edenden - Second Plaintiff
Mark Alexander Bignell - First Defendant
Kathryn Margaret Bignell - Second Defendant
A J Bignell Pty Ltd - Third Defendant

FILE NUMBER(S): SC 3016/07

COUNSEL: Mr T O Bland - Plaintiffs
Mr J T Johnson - First and Second Defendants

SOLICITORS: Lindsay Brien - Plaintiffs
Yates Beaggi Lawyers - First and Second Defendants

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

BARRETT J

WEDNESDAY, 2 JULY 2008

3016/07 STEPHEN GARY EDENDEN & ANOR v MARK ALEXANDER BIGNELL & 2 ORS

JUDGMENT

1 On 10 October 2007, I ordered, giving reasons, that these proceedings be dismissed as to certain of the claims in the originating process and that others of those claims be struck out: see Edenden v Bignell [2007] NSWSC 1122.

2 On 16 October 2007, I ordered that the plaintiffs have leave to file an amended originating process in respect of a debt of $57,917.51, failing which the proceedings should stand dismissed.

3 On 2 November 2007, the plaintiffs filed an amended originating process in respect of the debt of $57,917.51. Correspondence between solicitors followed. The correspondence was initiated by the solicitors for the first and second defendants, Mr Bignell and Mrs Bignell. They wrote to the solicitors for the plaintiff. The third defendant, A J Bignell Pty Ltd (“AJB”) is in the course of being wound up. It appears that, while some of the letters passing between solicitors were copied to AJB’s solicitors, they did not otherwise participate in the correspondence.

4 The solicitors for Mr Bignell and Mrs Bignell made certain complaints about the amended originating process. The plaintiffs’ solicitors served a further…

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 Edenden v Bignell

Details

AGLC: Edenden v Bignell [2008] NSWSC 666
Case: [2008] NSWSC 666
Decision Date: 2 July 2008

CaseChat Overview and Summary

In the matter of Edenden v Bignell, the Federal Court was tasked with determining whether the plaintiff was entitled to leave to commence an action under section 588M(3) of the Corporations Act 2001 (Cth) for insolvent trading by one of the defendants. The plaintiff, Edenden, sought to recover a debt of $57,917.51 from the defendant, Bignell, who was a director of a company that had been wound up. The primary legal issue before the Court was whether the plaintiff’s pleaded claim for leave under section 588T(2)(b) of the Corporations Act was sufficient. Specifically, the Court needed to assess whether the claim contained a clear specification of the time at which the alleged debt was incurred and a statement of the basis on which the elements involving insolvency at the time of incurring the debt were alleged.

The Court found that the plaintiff’s claim contained much superfluous matter and lacked a clear specification of the time at which the alleged debt was incurred. Additionally, there was no statement of the basis on which the elements involving insolvency at the time of incurring the debt were alleged. The Court held that the pleaded claim did not meet the requirements for leave under section 588T(2)(b) of the Corporations Act. Consequently, the Court dismissed the plaintiff’s application for leave to commence an action for insolvent trading against the defendant.

As a result of the Court's findings, the plaintiff's application was dismissed, and leave to commence the action was denied. The Court emphasised the importance of specificity and clarity in pleadings when seeking leave to commence actions for insolvent trading, highlighting that the absence of a clear specification of the time at which the debt was incurred and a statement of the basis on which the elements of insolvency were alleged, rendered the plaintiff's claim insufficient.

Orders