Gore v Australian Gold Fields Nl (in Liq)
[2001] WASC 242
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: GORE -v- AUSTRALIAN GOLD FIELDS NL (IN LIQ) [2001] WASC 242
CORAM: MASTER SANDERSON
HEARD: 21 AUGUST 2001
DELIVERED : 7 SEPTEMBER 2001
FILE NO/S: COR 163 of 2001
BETWEEN: BRENDAN GORE
Plaintiff
AND
AUSTRALIAN GOLD FIELDS NL (IN LIQ) (ACN 009 132 361)
Defendant
Catchwords:
Corporations Law - Application for leave to proceed against company in liquidation - Rule against double proof - Turns on own facts
Legislation:
Corporations Law, s 471B
Result:
Leave granted
Category: B
Representation:
Counsel:
Plaintiff: Mr T J Carmody
Defendant: Mr M J De Leuil
Solicitors:
Plaintiff: Williams & Hughes
Defendant: Mallesons Stephen Jaques
Case(s) referred to in judgment(s):
Day and Dent Constructions Pty Ltd (In Liq) v North Australian Properties Pty Ltd (1982) 150 CLR 85
Rangewood Investments Pty Ltd v Hellyer (1998) 19 WAR 170
Re Melton; Milk v Towers [1918] 1 Ch 37
Vagrand Pty Ltd (In Liq) v Fielding (1993) 11 ACLC 411
Western Australia v Bond Corporation Holdings Ltd [1992] 8 ACSR 352
Case(s) also cited:
Barclays Bank Ltd v TOSG Trust Fund Ltd [1984] 1 AC 626
BHG Nominees v Ellis Young Investements (1998) 16 ACLC 1539
JJ Leonard Properties Pty Ltd v Leonard (WA) Pty Ltd (In Liq) (1987) 5 ACLC 565
Meehan v Stockmans Australian Cafe (Holdings) Pty Ltd (1996) 24 ACSR 123
Ogilvie-Grant v East (1983) 7 ACLR 559
Re Famatina Development Corporation [1914] 2 Ch 271
Re Fenton [1931] 1 Ch 85
Star v Silvia (1995) 36 NSWLR 685
MASTER SANDERSON: This is the plaintiff's originating process seeking leave to commence proceedings against the defendant, a company in liquidation. The application is brought under s 471B of the Corporations Act. The application raises a short and rather unusual point.
The facts are not in dispute. In or about February 1997 the plaintiff, in the course of his employment as company secretary of Australian Gold Fields NL ("AGF") and upon instruction, agreed to act as the basic cardholder of a corporate charge card issued by American Express International Inc ("AMEX") ("the AMEX charge card"). As the basic card holder, the plaintiff was jointly and severally liable with AGF for all amounts charged to the AMEX charge card and all supplementary AMEX charge cards. There were charge cards issued to other of AGF's employees and all amounts incurred on these cards were debited against the card issued to the plaintiff. There is no dispute between the plaintiff, AMEX and AGF that charges of $81,399.53 were incurred on the AMEX charge card by AGF's employees, nor is it in dispute that the amount was incurred solely for the benefit of AGF and in the normal course of business. This appears from an affidavit of the plaintiff sworn 22 May 2001 (par 10) and an affidavit of Michael Joseph Patrick Ryan, sworn 26 July 2001 (par 38). On 6 March 1998 AGF was placed into voluntary administration. On 25 November 1998 it was placed into liquidation. At the time AGF was placed in voluntary administration, the debt of $81,339.53 was outstanding and it has not subsequently been paid.
In Supreme Court Action CIV 1741 of 1999 the plaintiff in this application issued proceedings against AMEX seeking certain relief. The precise details of that action are not presently of concern. In those proceedings, AMEX counterclaimed for the sum still outstanding. On 20 January 1999 AMEX lodged a proof of debt in the winding‑up of the defendant in an amount of $81,399.53. That proof of debt has been admitted. The plaintiff lodged a proof of debt for the same amount. That proof of debt has been rejected.
If the plaintiff succeeds in his action against AMEX then he will have no debt to AMEX and that will be the end of the matter. If, however, his action is unsuccessful and the counterclaim by AMEX succeeds, then he will be liable to AMEX for the full $81,399.53, plus interest and costs. What the plaintiff seeks to do is join the defendant as a defendant to the counterclaim brought by AMEX and issue indemnity proceedings so that if he is found liable to AMEX, he can seek an indemnity from the defendant in this action. As yet, no payment has been paid by the liquidators of the defendant and there is no indication when such a payment might be paid. The plaintiff says if he is not able to join the defendant in the AMEX proceedings, judgment may be entered against him and he does not have the means to meet such a judgment. Moreover, it is the plaintiff's claim that his entitlement to be reimbursed by the defendant is in fact an entitlement to wages as that term is defined in s 9 of the Corporations Act. That being so, the plaintiff says he is entitled to be reimbursed by the defendant in priority pursuant to s 556(1) of the Corporations Act. Neither of these two claims is conceded by the liquidator. The plaintiff says it would be convenient to have all such questions determined in the context of the AMEX action and the counterclaim proceedings.
The defendant says that leave to commence proceedings ought not be granted. It was submitted that under s 471B of the Corporations Act the court must consider first whether the applicant's claim gives rise to a real or serious dispute and secondly, whether the balance of convenience favours the granting of leave: see Vagrand Pty Ltd (In Liq) v Fielding (1993) 11 ACLC 411 at 414. The prime submission of the defendant is that on the facts of this case there is no real or serious dispute between the parties.
The defendant's submissions can be summarised in this way. Properly considered, the plaintiff's case raises three questions. First, whether there is any obligation on the part of the defendant to indemnify the plaintiff against liability arising out of his agreement with AMEX. Secondly, if so, is the plaintiff entitled to priority because the expenses incurred fall within the definition of wages in s 9 of the Corporations Act. Thirdly, if the plaintiff is entitled to an indemnity, whether or not he is afforded priority, is he in any event prohibited from proving in the liquidation of the defendant by the rule against double proof. It is the defendant's position that it is quite clear that no matter what the answer might be to the first two questions, the plaintiff is precluded from proving in the liquidation by reason of the double proof rule and therefore no purpose would be served by the grant of leave.
The so‑called double proof rule is of long standing and is not to be doubted: see Day and Dent Constructions Pty Ltd (In Liq) v North Australian Properties Pty Ltd (1982) 150 CLR 85 per Mason J at 99 ‑ 102. The double proof rule itself was discussed in some detail by French J in Western Australia v Bond Corporation Holdings Ltd [1992] 8 ACSR 352 at 364 ‑ 367. An example of how the rule operates was provided by Swinfen Eady LJ in Re Melton; Milk v Towers [1918] 1 Ch 37 where (at 47 ‑ 48) his Lordship said:
"It may well be that technically there are two claims against the debtor in respect of the transaction and two separate liabilities of the debtor arising out of the transaction. One of these is the debtor's liability to the bank for the money that he owed. The other, which is a separate liability arising out of a contract of guarantee, is the debtor's liability to indemnify the sureties in respect of their liability to the principle creditor. Technically they are two separate liabilities, but in substance they are the same; and in respect of that liability there could not be a double proof against the estate. The creditor could not prove for the amount of the debt and the surety bring in a proof for part of the same amount as regard his liability for that part of the amount."
Of course the position is different if the surety has fully paid out the principle creditor. In this case, for instance, if the plaintiff were to make payment in full to AMEX, then he would have a right to lodge a proof of debt and no doubt that proof of debt would be accepted. Counsel for the defendant acknowledged this to be the case. But counsel went further and said unless and until the debt to AMEX was paid, the plaintiff would have no right to lodge a proof of debt because of the rule against double proof.
It is true that were a declaration to be made as sought by the plaintiff in the AMEX proceedings, nothing would change so far as the plaintiff's proof of debt was concerned. But it is possible that if it were determined that the plaintiff was entitled to payment from the defendant for any liability to AMEX in priority, that AMEX might withdraw their proof of debt. There is no evidence that they would do so. But there is at least the possibility. In the circumstances it is highly likely that a declaration would be made: see Rangewood Investments Pty Ltd v Hellyer (1998) 19 WAR 170. At the very least, the plaintiff is entitled to a determination of his rights as against the defendant with respect to the AMEX debt.
In the circumstances I am satisfied that leave ought be granted. I will hear the parties as to the precise form of the orders.
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