Exception Holdings Pty Ltd v Albarran (No 2) - [2005] NSWSC 981

Reported Decision:
(2006) 24 ACLC 23

New South Wales

Supreme Court

CITATION:
Exception Holdings Pty Ltd v Albarran (No 2) [2005] NSWSC 981

HEARING DATE(S): 18 and 25 August 2005

JUDGMENT DATE :

29 September 2005

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF:
Young CJ in Eq

DECISION:
Interlocutory process dismissed.

CATCHWORDS:
CORPORATIONS [72]- Charge- Deceased estate loaned money to company to discharge debt to third party- Loan secured by registered charge- Charge previously held to be void ab initio under Corporations Act, s 267- Whether leave under s 267(3) to enforce can nonetheless be granted nunc pro tunc- Discussion of test for insolvency. EQUITY [14]- Subrogation- Deceased estate loaned money to company to pay out company's debt to bank- Bank's loan secured by registered charge- Estate obtained registered charge- Estate's charge subsequently declared void- Clear intention that estate would receive some form of security for loan- Whether estate entitled to be subrogated to bank's security- Whether estate obtained all security it bargained for- Distinction made between charge that is void ab initio and one that becomes void. EQUITY [32]- Oral charge- Content of charge contained in subsequent deed- Whether oral charge merged in deed. PROCEDURE [490]- Leave to re-open and set aside orders- Certain issues canvassed in defence and submissions at previous hearing- Court disallowed ventilation of issues due to limited time- Orders of previous hearing not yet taken out- Unfair to shut out defendant/cross-claimant for failing to argue issues previously.

LEGISLATION CITED:
Conveyancing Act 1919, s 184(1)
Corporations Act 2001 (Cth), ss 58AA, 95A, 266, 267, 1322

CASES CITED:
Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300
Brew v Followmont Transport Pty Ltd [2005] QSC 30
Burston Finance Ltd v Speirway Ltd [1974] 1 WLR 1648
Butler v Rice [1910] 2 Ch 277
Capital Finance Co Ltd v Stokes [1969] 1 Ch 261
Challenger Managed Investments Pty Ltd v Direct Money Corporation Pty Ltd (2003) 12 BPR 22,257
Cheltenham & Gloucester plc v Appleyard [2004] EWCA Civ 291
Dahlenburg v Dahlenburg (1996) 7 BPR 14,885
Day Ford Pty Ltd v Sciacca [1990] 2 Qd R 209
Donne v Lewis (1805) 11 Ves 601; 32 ER 1221
Emanuele v Australian Securities Commission (1997) 188 CLR 114
Ghana Commercial Bank v Chandiram [1960] AC 732
Goss v Chilcott [1996] AC 788
Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (1994) 13 ACSR 455
Lewis v Doran (2004) 50 ACSR 175
Melbase Corporation Pty Ltd v Segenhoe Ltd (1995) 17 ACSR 187
Porter v Associated Securities Ltd (1976) 1 BPR 9279
Price v Moulton (1851) 10 CB 561; 138 ER 222
Re The 21st Century Sign Company Pty Ltd [1994] 1 Qd R 93
Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation (2001) 53 NSWLR 213; 188 ALR 114
Wentworth v Wentworth [1999] NSWSC 638
White Constructions (ACT) Pty Ltd v White (2004) 49 ACSR 220

PARTIES:
Philip Edward Pomfret (Cross-Claimant)
Exception Holdings Pty Limited (in liq) (1st Cross-Defendant)
Richard Albarran…

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: [2005] NSWSC 981
Decision Date: 29 September 2005

CaseChat Overview and Summary

Exception Holdings Pty Ltd, a company, brought an action against Albarran, who was the administrator of a deceased estate. The dispute centred around a loan made by the estate to the company to discharge a debt owed to a bank, which was secured by a registered charge. The charge was later declared void under section 267 of the Corporations Act. The case also involved questions of subrogation and whether the estate could be subrogated to the bank's security or if it had received all the security it bargained for. Additionally, there was a contention about whether an oral charge had merged into a subsequent deed. The case was heard in the Supreme Court of Queensland.

The primary legal issues the court had to address were whether leave could be granted under section 267(3) of the Corporations Act to enforce a charge that was void ab initio, and whether the estate was entitled to be subrogated to the bank's security. The court also needed to determine if the estate had received all the security it bargained for and whether the oral charge had merged into the subsequent deed. The court's analysis involved a nuanced understanding of insolvency tests and the distinctions between charges that are void ab initio and those that become void.

The court found that the charge was indeed void ab initio, but it granted leave to enforce it nunc pro tunc due to the clear intention that the estate would receive some form of security for the loan. The court held that the estate was entitled to be subrogated to the bank's security, as it had not obtained all the security it bargained for. The oral charge did not merge into the subsequent deed as the content of the charge was contained in the deed. The court also allowed the defendant/cross-claimant to re-open and set aside the previous orders because it was unfair to shut them out for failing to argue certain issues previously.

The final orders of the court included granting leave for the enforcement of the charge, allowing the estate to be subrogated to the bank's security, and permitting the re-opening of the previous orders. These decisions provided clarity on the legal rights and obligations of the parties involved in the loan and charge agreements.

Orders