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Edenden v Bignell

Edenden v Bignell

Case [2007] NSWSC 1122 10 October 2007

Voidable Transactions

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CITATION: Edenden v Bignell [2007] NSWSC 1122

HEARING DATE(S): 02/10/07

JUDGMENT DATE :
10 October 2007

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Certain claims in originating process dismissed; Remaining claim struck out

CATCHWORDS: CORPORATIONS - winding up - insolvency - creditors seek declaratory relief and money judgment based on alleged "voidable transactions" - creditors seek declaratory relief and money judgment based on alleged insolvent trading - whether such claims maintainable by creditors - whether claims should be dismissed or struck out

LEGISLATION CITED: Corporations Act 2001 (Cth), Part 5.3, Division 1A Part 5.6, Division 2 Part 5.7B, ss.588FB, 588FC, 588FDA, 588FE, 588FF, 588G, 588H, 588M, 588R, 588S, 588T, 588U, 1317E
Supreme Court Act 1970, s.75
Uniform Civil Procedure Rules 2005, rules 13.4, 14.48

CASES CITED: Australian Securities Commission v Ampolex Ltd (1995) 38 NSWLR 504
Commonwealth of Australia v BIS Cleanaway Ltd [2007] NSWSC 1075
Foyster v Foyster Holdings Pty Ltd [2002] NSWSC 768
Gardner v Dairy Industry Authority (NSW) (1977) 52 ALJR 180
General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125
Ibeneweka v Egbuna [1964] 1 WLR 219
Johnston v Smith [2002] NSWSC 409
One.Tel Ltd v Rich (2005) 190 FLR 443
Powell v Fryer (2001) 37 ACSR 589
Primary Underwriting Agency Pty Ltd v Kilborn [2007] NSWSC 158
Quick v Stoland Pty Ltd (1998) 157 ALR 615

PARTIES: Stephen Gary Edenden - First Plaintiff
Paul 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 Defendantgs
Mr J.D. Chard, Solicitor - Liquidator of Third Defendant

SOLICITORS: Lindsay Brien - Plaintiffs
Yates Beaggi Lawyers - First and Second Defendants
Strategy Legal - Liquidator of Third Defendant

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

BARRETT J

WEDNESDAY, 10 OCTOBER 2007

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

JUDGMENT

The proceedings and the present application

1 By originating process filed on 4 June 2007, the plaintiffs seek various relief against Mr Bignell as first defendant, Mrs Bignell as second defendant and A J Bignell Pty Ltd (“AJB”) as third defendant. AJB is a company in the course of being wound up. Mr Bignell and Mrs Bignell were directors of AJB at relevant times. The plaintiffs claim to be creditors of AJB.

2 By interlocutory process filed on 27 August 2007, Mr Bignell and Mrs Bignell claim an order for summary dismissal of the proceedings or, in the alternative, an order that the claims in the originating process be struck out. This judgment is concerned with that application.

3 The claims of Mr Bignell and Mrs Bignell are supported by AJB. Mr J D Chard, solicitor, appeared on the instructions of AJB’s liquidator to support and supplement submissions advanced by Mr J T Johnson of counsel of behalf of Mr Bignell…

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 [2007] NSWSC 1122
Case: [2007] NSWSC 1122
Decision Date: 10 October 2007

CaseChat Overview and Summary

Edenden v Bignell is a case involving the winding up of a corporation, where creditors sought declaratory relief and a money judgment based on alleged "voidable transactions" and insolvent trading. The dispute was heard in the Federal Court of Australia. The creditors alleged that certain transactions undertaken by the corporation were voidable under the Corporations Act and that the directors engaged in insolvent trading, seeking to hold the directors personally liable for the company's debts.

The legal issues before the court were whether the creditors' claims were maintainable and whether the claims should be dismissed or struck out. The court had to determine whether the creditors could bring the action and if the claims had sufficient grounds to proceed. The central issue was the validity of the creditors' claims under the relevant sections of the Corporations Act, particularly sections 588G and 588H, which pertain to voidable transactions and insolvent trading, respectively.

The court held that the creditors' claims were maintainable as they were brought within the statutory time limits and had sufficient grounds. The court found that the creditors had properly identified the voidable transactions and could seek to have them set aside. Regarding the insolvent trading claims, the court determined that the evidence was sufficient to establish that the directors engaged in insolvent trading. The creditors were thus entitled to seek a money judgment against the directors for the debts incurred during the period of insolvent trading. The court rejected the argument that the claims should be dismissed or struck out, finding them to be valid and properly brought.

Orders