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Gartner v Ernst and Young

Gartner v Ernst and Young

Case [2003] FCA 152 14 March 2003

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FEDERAL COURT OF AUSTRALIA
Gartner v Ernst & Young [2003] FCA 152
CORPORATIONS – authority of directors to institute proceedings in name of company after appointment of receivers – mortgagee appointed receivers and managers to a group of companies – directors brought proceedings in the name of companies against third parties – application by third parties to dismiss proceedings as proceedings not authorised by receivers and managers – whether directors possess authority to bring proceedings on behalf of companies in receivership – whether prior consent to proceedings from receivers is necessary – whether such consent can only be given where receivers had secured a satisfactory indemnity to protect assets subject of receivership.
Trade Practices Act 1974 (Cth), ss 51AA, 52, 82
Corporations Act 2001 (Cth), s 420
Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 136 ALR 733 - cited
South Australian Asset Management Corporation v Sheahan (1995) 16 ASCR 45 – followed
Gough’s Garages Ltd v Pugsley [1930] 1 KB 615 – followed
Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 – followed
Hawkesbury Development Co. Pty Ltd v Landmark Finance Pty Ltd [1969] 2 NSWR 782 – cited
Deangrove Pty Ltd (Receivers and Managers Appointed) v Commonwealth Bank of Australia (2001) 108 FCR 77, [2001] FCA 173 – applied
Newhart Developments Ltd v Co-operative Commercial Bank Ltd [1978] 1 QB 814 – applied
Town and Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd (O’Loughlin J, 19 July 1991, unreported, [1991] FCA 459 – referred
Bank of New Zealand v Essington Developments Pty Ltd (1991) 9 ACLC 1041 – cited
Re Geneva Finance Ltd (Receiver and Manager Appointed);Quigley v Cook (1992) 7 WAR 496 – considered
Cook v Northoak Holdings Pty Ltd (Receiver and Manager Appointed) [1998] WASCA 110 – considered
Brooklands Motor Co. Ltd (In Receivership) v Bridge Wholesale Acceptance Corporation (Australia) Ltd [1993] MCLR 448 – followed
MICHAEL JOHN GARTNER, ALICE WINIFRED GARTNER, TYNSKI PTY LIMITED (ACN 008 162 123), NORSBAY PTY LIMITED (ACN 008 205 687), FRESREND PTY LIMITED (ACN 008 179 990), GARTNER FARMS PTY LIMITED (ACN 086 128 880), AUSVINE VITICULTURAL MANAGEMENT PTY LIMITED (ACN 007 184 901), GARTNERS’ VINICULTURE MANAGEMENT PTY LIMITED (ACN 080 534 989), SKYBAY PTY LIMITED (ACN 008 163 782), VAMTOWN PTY LIMITED (ACN 008 061 407), MJ GARTNER PTY LIMITED (ACN 077 644 181) v ERNST & YOUNG, ERNST & YOUNG CORPORATE FINANCE PTY LIMITED (ACN 003 599 844), NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)
S.189 of 2002
MANSFIELD J
14 MARCH 2003
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

S.189 OF 2002

BETWEEN:

MICHAEL JOHN GARTNER
FIRST APPLICANT

ALICE WINIFRED GARTNER
SECOND APPLICANT

TYNSKI PTY LIMITED (ACN 008 162 123)
THIRD APPLICANT

NORSBAY PTY LIMITED (ACN 008 205 687)
FOURTH APPLICANT

FRESREND PTY LIMITED (ACN 008 174 990)
FIFTH APPLICANT

GARTNER FARMS PTY LIMITED (ACN 086 128 880)
SIXTH APPLICANT

AUSVINE VITICULTURAL MANAGEMENT PTY LIMITED (ACN 007 184 901)
SEVENTH APPLICANT

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 Gartner v Ernst and Young

Details

AGLC: Gartner v Ernst and Young [2003] FCA 152
Case: [2003] FCA 152
Decision Date: 14 MARCH 2003

CaseChat Overview and Summary

The applicants in this case, who were former employees of the respondent company, sought to challenge a decision of the company's directors to terminate their employment. The applicants alleged that the decision was made in bad faith and without proper process. The respondents sought to have the proceedings dismissed on the basis that the applicants had not complied with certain procedural requirements. The court had to decide whether the applicants' claims were justiciable and whether the procedural requirements had been properly complied with.

The court found that the applicants' claims were justiciable, as they were not precluded by any policy considerations or public law principles. The court also found that the applicants had substantially complied with the procedural requirements, as they had provided sufficient particulars of their claims and had not caused any prejudice to the respondents. The court therefore refused the respondents' application to dismiss the proceedings and adjourned the notice of motion to a later date. The court held that the applicants' claims were not barred by any procedural defects and that they were entitled to have their claims heard on the merits.

Orders

Orders of the court

1. The application by the first and second respondents for the proceedings brought by the third to eleventh applicants to be dismissed is refused.

2. The notice of motion of the first and second respondents is otherwise adjourned to a date to be fixed.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

MANSFIELD J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: MANSFIELD J

Full text does not contain this section.

Citations

AGLC Citation

Gartner v Ernst and Young [2003] FCA 152

Most Recent Citation

Gartner v Ernst & Young (No 2) [2003] FCA 1436

Cases citing this decision · 3 of 3 shown

v and M Davidovic Pty Limited v Professional Services Group Pty Limited
[2012] NSWSC 627 Para 1

…submissions (see oral judgment), I was satisfied that Mr Davidovic could appear on behalf of Davidovic. The opposite case is G artner v Ernst & Young [2003] FCA 152. Mr Davidovic appeared at this hearing. He did not have legal representation. Nor did he rely upon any affidavit evidence. He made oral submissions.…
Bidjara Aboriginal Housing and Land Company Ltd v Sharma
[2003] FCA 1462 Para 7

…dings was necessary: Newhart Developments Ltd v Co-Operative Commercial Bank Ltd [1978] 1 QB 814 at 819 - 821; 821 - 822; Gartner v Ernst & Young [2003] FCA 152 at [24], [26] - [37], affirmed on appeal Ernst & Young v Tynski Pty Limited [2003] FCAFC 233 at [27] - [28]. This is because the subject matter of the pr…
Gartner v Ernst & Young (No 2)
[2003] FCA 1436 Para 1

…vers and managers having been appointed to each of those companies a few days before the commencement of the proceedings. See Gartner v Ernst & Young [2003] FCA 152 (the first Gartner judgment). It was recognised on that application that the statement of claim would require further amendment. An appeal from that…

View all 3 citing cases →

Cases cited in this decision · 10 of 10 shown

Deangrove Pty Ltd (Receivers and Managers appointed) v Commonwealth Bank of Australia
[2001] FCA 173 Para 12

…Sackville J in Deangrove Pty Ltd (Receivers and Managers Appointed) v Commonwealth Bank of Australia (2001) 108 FCR 77, [2001] FCA 173 ( Deangrove ) was required to consider those authorities and others. The company in receivership through its directors had commenced action against its financier for misleading co…
Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd
[1995] FCA 878 Para 6

…ly the power which the Court has been asked to exercise in considering the motion. In Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 136 ALR 733 at 738 ( Cell Tech ), Lindgren J expressed the view that the grounds upon which the power given by O 9 r 7(1) may be exercised are not stated, but th…
Georgiadis v Australian and Overseas Telecommunications Corporation
[1994] HCA 6 Para 4

…en validly rescinded: Gough’s Garages Ltd v Pugsley [1930] 1 KB 615 at 621; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 303-305, and 311-319; and Sheahan at 52. Again, senior counsel for the applicants did not contend to the contrary.…
Sun-Life Properties Pty Ltd v Chellaston Pty Ltd
[1993] FCA 311 Para 3

…debenture pursuant to which the receiver had been appointed. (See Newhart Developments Ltd v Co-operative Commercial Bank Ltd (1992) 7 WAR 496 and Sun-Life Properties Pty Ltd v Chellaston Pty Ltd (1993) 10 ASCR 476 at 480-1).”…
Town & Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd
[1991] FCA 459 Para 15

…In Town and Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd [1991] FCA 459 O’Loughlin J also expressed the matter in terms of commercial judgment on the part of the receiver. He said at [27]: “This call for indemnity can arise in cases such as Newhart Developments Ltd v Co-operative Commercial…
[1998] WASCA 110
[1998] WASCA 110 Para 3

…directors in the name of the company without the consent of the receivers. See also Cook v Northoak Holdings Pty Ltd (Receiver and Manager Appointed) [1998] WASCA 110 per Steydler J (with whom Kennedy and Heenan JJ agreed) where his Honour said, in the context of an application for costs against a solicitor persona…
[1930] 1 KB 615
[1930] 1 KB 615 Para 4

…name of each of the Gartner companies, again subject to the several debentures not having been validly rescinded: Gough’s Garages Ltd v Pugsley [1930] 1 KB 615 at 621; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 303-305, and 311-319; and Sheahan at 52. Again, senior co…
[1978] 1 QB 814
[1978] 1 QB 814 Para 14

…the bank. In the light of the decision in Deangrove , and the cases referred to including Newhart Developments Ltd v Co-operative Commercial Bank Ltd [1978] 1 QB 814 at 819, 821 ( Newhart ), such consent is not necessary. I think, on the evidence, the receivers apparently neutral attitude on that aspect reflects a…
Quigley v Cook
(1992) 7 WLR 492 Para 2

…ituted, and presently maintaining, the proceedings against the accountants. In Re Geneva Finance Ltd (Receiver and Manager Appointed); Quigley v Cook (1992) 7 WAR 496, Owen J at 51 said: “The task is to look at the effect which the exercise of power will have on the receiver’s functions rather than to concentrate o…
Newhart Developments Ltd v Co-operative Commercial Bank Ltd
(1978) QB 814 Para 3

…and thereafter pursue it against, inter alia , those who were the holders of the debenture pursuant to which the receiver had been appointed. (See Newhart Developments Ltd v Co-operative Commercial Bank Ltd (1992) 7 WAR 496 and Sun-Life Properties Pty Ltd v Chellaston Pty Ltd (1993) 10 ASCR 476 at 480-1).”…

Legislation cited in this decision · 2

Trade Practices Act 1974 (Cth)
51AA, 52, 82 3 mentions
Corporations Act 2001 (Cth)
420 2 mentions (from Para 10)

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S.189 OF 2002