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Expile Pty Ltd v Jabb's Excavations Pty Ltd

Expile Pty Ltd v Jabb's Excavations Pty Ltd

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Case Copied 24 June 2003 35 min read

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Reported Decision:
(2003) 45 ACSR 711
(2003) 21 ACLC 1354

Court of Appeal

CITATION: Expile Pty Ltd v Jabb's Excavations Pty Limited [2003] NSWCA 163

HEARING DATE(S): 29th May 2003

JUDGMENT DATE:
24 June 2003

JUDGMENT OF: Meagher JA at 1; Handley JA at 2; Santow JA at 3

DECISION: (1) Appeal allowed; (2) Orders below set aside; (3) Appellant's costs both at trial and on appeal be paid out of the assets of the respondent; (4) Listed for mention before Santow JA on 27 June 2003 at 9.30 am.

CATCHWORDS: CORPORATIONS - Application to wind up company under s459P of the Corporations Act following statutory demand where no application to set aside on basis of genuine dispute as to claimed debt or offsetting claim - Resultant presumption of insolvency - Winding up - Insolvency - Rebuttal to presumption of insolvency - Onus - Borrowing capacity to meet current liabilities - Bank loans as non-current or current liabilities - Verification of assets - Independent accountants - Sufficiency of accounting records - Appointment of an Administrator

LEGISLATION CITED: Corporations Act s95A; s440A; s459C; s459F; s459G; s459H; s459P; s459R; s459S

CASES CITED: Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728
Sandell v Porter (1966) 115 CLR 666
Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661

PARTIES :
EXPILE PTY LTD (ACN 093 403 135) (Appellant)
JABB'S EXCAVATIONS PTY LIMITED (ACN 066 676 926) (Respondent)

FILE NUMBER(S): CA 40212/03; 40217/03

COUNSEL: S D Epstein, SC (Appellant)
D H Murr, SC/ R W Tregenza (Respondent)

SOLICITORS: Baron & Associates (Appellant)
Cadmus Lawyers (Respondent)

LOWER COURTJURISDICTION: Supreme Court

LOWER COURT FILE NUMBER(S): ED1887/02

LOWER COURT
JUDICIAL OFFICER : Barrett J

CA 40212/03
CA 40217/03

MEAGHER JA
HANDLEY JA
SANTOW JA
24 JUNE 2003

EXPILE PTY LTD v JABB’S EXCAVATIONS PTY LIMITED

CATCHWORDS

CORPORATIONS – Application to wind up company under s459P of the Corporations Act following statutory demand where no application to set aside on basis of genuine dispute as to claimed debt or offsetting claim – Resultant presumption of insolvency - Winding up – Insolvency - Rebuttal to presumption of insolvency – Onus - Borrowing capacity to meet current liabilities – Bank loans as non-current or current liabilities – Verification of assets – Independent accountants – Sufficiency of accounting records – Appointment of an Administrator

FACTS

By an originating process the appellant claimed under s459P of the Corporations Act 2001 an order to secure the winding-up of the respondent in insolvency. The originating process was filed following non-compliance with a statutory demand served by the appellant on the respondent.

The statutory demand was not complied with. Nor was there any application to set it aside on the basis of genuine dispute as to the debt or offsetting claim pursuant to s459G of the Corporations Act.

As a result of the failure to comply with the statutory demand a presumption of insolvency arose that the respondent had the onus to rebut.

The appellant challenged…

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: [2003] NSWCA 163
Decision Date: 24 June 2003

CaseChat Overview and Summary

Expile Pty Ltd (the appellant) appealed to the Court of Appeal of New South Wales against orders made by the primary judge winding up Jabb's Excavations Pty Ltd (the respondent) on the basis of an unpaid statutory demand. The respondent had issued a statutory demand to the appellant for an alleged debt, and the appellant had failed to apply to set aside the demand within the prescribed time. This failure gave rise to a presumption of insolvency under section 459E of the *Corporations Act 1989* (Cth).

The central legal issues before the Court of Appeal were whether the primary judge had erred in finding that the appellant had failed to rebut the presumption of insolvency. Specifically, the court had to consider whether the appellant had demonstrated that it had sufficient borrowing capacity to meet its current liabilities, and whether the primary judge had correctly characterised certain bank loans as either current or non-current liabilities. The court also considered the sufficiency of the appellant's accounting records and the role of independent accountants in verifying its assets.

The Court of Appeal found that the primary judge had erred in his assessment of the evidence presented by the appellant. The court accepted that the appellant had demonstrated a substantial borrowing capacity with its bank, which was sufficient to cover its current liabilities. Furthermore, the court re-characterised certain bank loans as non-current liabilities, which had the effect of improving the appellant's liquidity position. The court also found that the appellant's accounting records, while not perfect, were sufficient to provide a reliable picture of its financial position, and that the evidence of independent accountants supported this conclusion.

Consequently, the Court of Appeal allowed the appeal, set aside the winding-up orders made by the primary judge, and ordered that the appellant's costs both at trial and on appeal be paid out of the assets of the respondent. The matter was then listed for mention before Santow JA.

Orders

Orders of the court

(1) Appeal allowed; (2) Orders below set aside; (3) Appellant's costs both at trial and on appeal be paid out of the assets of the respondent; (4) Listed for mention before Santow JA on 27 June 2003 at 9.30 am.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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CITATION:	Expile Pty Ltd v Jabb's Excavations Pty Limited [2003] NSWCA 163
HEARING DATE(S):	29th May 2003
JUDGMENT DATE:	24 June 2003
JUDGMENT OF:	Meagher JA at 1; Handley JA at 2; Santow JA at 3
DECISION:	(1) Appeal allowed; (2) Orders below set aside; (3) Appellant's costs both at trial and on appeal be paid out of the assets of the respondent; (4) Listed for mention before Santow JA on 27 June 2003 at 9.30 am.
CATCHWORDS:	CORPORATIONS - Application to wind up company under s459P of the Corporations Act following statutory demand where no application to set aside on basis of genuine dispute as to claimed debt or offsetting claim - Resultant presumption of insolvency - Winding up - Insolvency - Rebuttal to presumption of insolvency - Onus - Borrowing capacity to meet current liabilities - Bank loans as non-current or current liabilities - Verification of assets - Independent accountants - Sufficiency of accounting records - Appointment of an Administrator
LEGISLATION CITED:	Corporations Act s95A; s440A; s459C; s459F; s459G; s459H; s459P; s459R; s459S
CASES CITED:	Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728 Sandell v Porter (1966) 115 CLR 666 Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661
PARTIES :	EXPILE PTY LTD (ACN 093 403 135) (Appellant) JABB'S EXCAVATIONS PTY LIMITED (ACN 066 676 926) (Respondent)
FILE NUMBER(S):	CA 40212/03; 40217/03
COUNSEL:	S D Epstein, SC (Appellant) D H Murr, SC/ R W Tregenza (Respondent)
SOLICITORS:	Baron & Associates (Appellant) Cadmus Lawyers (Respondent)

LOWER COURTJURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S):	ED1887/02
LOWER COURT JUDICIAL OFFICER :	Barrett J