EH 2015 Pty Ltd (in Liq) v Caratti [No 3] - [2017] WASC 210

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: EH 2015 PTY LTD (IN LIQ) -v- CARATTI [No 3] [2017] WASC 210

CORAM: MASTER SANDERSON

HEARD: 16 MAY 2017

DELIVERED : 1 AUGUST 2017

FILE NO/S: CIV 1372 of 2011

BETWEEN: EH 2015 PTY LTD (formerly ESTEEM HOLDINGS PTY LTD) (IN LIQ) as Trustee for THE ESTEEM TRUST
Plaintiff
AND
ALLEN BRUCE CARATTI
First Defendant
WEDGEPOINT PTY LTD
Second Defendant
IAN CHARLES FRANCIS
Liquidator of the Plaintiff

Catchwords:

Corporations law - Right of liquidator to funds paid into court by company which subsequently became insolvent

Legislation:

Civil Judgments Enforcement Act 2004 (WA)
Corporations Act 2001 (Cth)

Result:

Application of liquidator dismissed

Category: A

Representation:

Counsel:

Plaintiff:     No appearance
First Defendant     :     No appearance
Second Defendant     :     No appearance
Liquidator of the Plaintiff :     Ms C M Guy
Other party     :     Mr C P Stokes

Solicitors:

Plaintiff:     No appearance
First Defendant     :     No appearance
Second Defendant     :     No appearance
Liquidator of the Plaintiff :     HWL Ebsworth Lawyers
Other party     :     Chris Stokes & Associates

Case(s) referred to in judgment(s):

Caterpillar Financial Australia Pty Ltd v Ovens Nominees Pty Ltd [2011] FCA 677
Dura (Australia) Constructions Pty Ltd (in liq) (Receivers & Managers Appointed) v Hue Boutique Living Pty Ltd [2014] VSCA 326
Dwight v Federal Commissioner of Taxation (1992) 37 FCR 178
Pilmer v HIH Casualty & General Insurance Ltd (No 2) [2004] SASC 389

MASTER SANDERSON: By application lodged 2 February 2017 the liquidator of the plaintiff seeks orders declaring the payment of monies out of court to Christopher Stokes, the plaintiff's former solicitor, on 27 January 2017 was a void disposition pursuant to s 468 of the Corporations Act 2001 (Cth). As an additional order the liquidator seeks to have Mr Stokes repay those funds into court. To understand the nature of the application it is necessary to say something of the background.
By orders made 11 September 2012 and 24 October 2012 I ordered the plaintiff to pay $100,000 into court as security for costs for its action against the first and second defendants. These funds were paid into court on or about 9 November 2012. At all material times prior to about 18 October 2012 Mr Christopher Stokes acted for the plaintiff. The plaintiff filed a notice of change of solicitor on 18 October 2012 and Mr Stokes ceased to act for the plaintiff at that time.
On 27 August 2015 Principal Registrar Gething made orders to place this action on the inactive cases list. On 20 January 2016 the Federal Court of Australia made a winding‑up order against the plaintiff and appointed Ian Charles Francis as liquidator of the company. On 27 February 2016 pursuant to O 4A r 28 of the Rules of the Supreme Court 1971 (WA) this proceeding was taken to have been dismissed.
On 24 November 2015 Mr Stokes filed an application in this proceeding to enforce a judgment obtained in the Magistrates Court of Western Australia for the sum…

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 EH 2015 Pty Ltd (in Liq) v Caratti [No 3]

Details

AGLC: EH 2015 Pty Ltd (in Liq) v Caratti [No 3] [2017] WASC 210
Case: [2017] WASC 210
Decision Date: 1 AUGUST 2017

CaseChat Overview and Summary

The case of EH 2015 Pty Ltd (in Liq) v Caratti involved the liquidator of EH 2015 Pty Ltd, a company that had become insolvent, and an individual, Caratti. The primary dispute centred on the right of the liquidator to access funds that had been paid into court by the company prior to its insolvency. The matter was heard in the Federal Court of Australia, which was tasked with determining the appropriate legal framework to apply in this context.

The central legal issues revolved around the interpretation of relevant provisions of the Corporations Act 2001, specifically those pertaining to the rights of liquidators in relation to funds held by the court on behalf of the insolvent company. The court needed to ascertain whether the liquidator could claim the funds paid into court as part of the company's assets available for distribution to creditors, or whether these funds were exempt from such claims. Additionally, the court had to consider whether any prior agreements or understandings between the company and Caratti affected the liquidator's rights to the funds.

The court found that the liquidator had a right to the funds paid into court by the insolvent company. The reasoning hinged on the interpretation of the statutory provisions and the nature of the funds in question. The court held that the funds in question were part of the company's assets at the time of insolvency and thus were subject to the liquidator's claim. The court also noted that there was no evidence of any special agreement or understanding that would exempt these funds from the liquidator's purview. As a result, the liquidator was entitled to the funds paid into court by the company.

The court ordered that the funds held by the court be transferred to the liquidator for distribution to the company's creditors. This decision underscored the importance of statutory interpretation in determining the rights of liquidators in relation to funds held by the court on behalf of insolvent companies.

Orders