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Hoath v Comcen Pty Ltd

Hoath v Comcen Pty Ltd

Case [2005] NSWSC 477 20 May 2005

Standing

Voluntary Administration

Deed of Company Arrangement

Insolvency Law

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Reported Decision:
53 ACSR 708

New South Wales

Supreme Court

CITATION:
Hoath v Comcen Pty Ltd [2005] NSWSC 477

HEARING DATE(S): 27/04/05

JUDGMENT DATE :

20 May 2005

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF:
Barrett J

DECISION:
Proceedings summarily dismissed

CATCHWORDS:
CORPORATIONS - voluntary administration - deed of company arrangement - applications for order terminating or setting aside deed and order setting aside resolution of creditors - plaintiff was not creditor when resolution passed, deed executed as applications initiated - whether standing achieved by taking subsequent assignment of part of a creditor's debt

LEGISLATION CITED:
Corporations Act 2001 (Cth), ss.445D, 445G
Supreme Court Rules, Part 13 rule 5
Supreme Court (Corporations) Rules 1999, rule 2.2(1)

CASES CITED:
Hoath v Comcen Pty Ltd [2004] NSWSC 682
Perak Pioneer Ltd v Petroliam Nasional Bhd [1986] AC 849
Re Paris Skating Rink Company (1877) LR 5 ChD 959

PARTIES:
(1) Mark Hoath - First Plaintiff
Mortgage.com.au Pty Ltd - Second Plaintiff
Comcen Pty Ltd - First Defendant
Scott Darren Pascoe - Second Defendant
Laim Bal - Third Defendant
(2) Mark Hoath - Plaintiff
Comcen Pty Ltd - First Defendant
Scott Darren Pascoe - Second Defendant

FILE NUMBER(S):
SC (1) 1756/03; (2) 3626/03

COUNSEL:
Mr M. Hoath in person
Mr J.T. Johnson - First and Third Defendants
Mr M.S. Tierney - Second Defendant

SOLICITORS:
Mr M. Hoath in person
Watson Mangioni - First and Third Defendants
Gordon & Johnstone - Second Defendant

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

FRIDAY, 20 MAY 2005

1756/03 – MARK HOATH & ANOR v COMCEN PTY LIMITED & 2 ORS
3626/03 – MARK HOATH v COMCEN PTY LIMITED & ANOR

JUDGMENT

1 In proceedings 1756/03, Mr Hoath and a company associated with him (Mortgage.com.au Pty Ltd) seek relief under ss.445D and 445G of the Corporations Act 2001 (Cth) in relation to a deed of company arrangement executed by Comcen Pty Ltd on 6 December 2002. The order sought is an order under s.445D terminating the deed or an order under s.445G setting it aside. In proceedings 3626/03, Mr Hoath alone seeks an order under s.600A setting aside the resolution of creditors of Comcen Pty Ltd that that company execute the deed of company arrangement.

2 By separate interlocutory process filed in each proceeding on 16 September 2004, application is made for an order under Part 13 rule 5 of the Supreme Court Rules that the statement of claim be dismissed or an order under Part 15 rule 26 that it be struck out. The applicants for this relief in proceedings 1756/03 are Comcen Pty Ltd and Mr Bal who is a defendant in that proceeding. In 3626/03, the applicant is Comcen Pty Ltd alone. I heard the two interlocutory processes together on 27 April 2005.

3 The contention of Comcen Pty Ltd is quite simple, namely, that the respective plaintiffs lack, and have always lacked, standing to bring an application under each of ss.445D, 445G and 600A.…

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 Hoath v Comcen Pty Ltd

Details

AGLC: Hoath v Comcen Pty Ltd [2005] NSWSC 477
Case: [2005] NSWSC 477
Decision Date: 20 May 2005

CaseChat Overview and Summary

In Hoath v Comcen Pty Ltd, the plaintiff sought to terminate or set aside a deed of company arrangement executed by Comcen Pty Ltd, which had entered into voluntary administration. The plaintiff was not a creditor of Comcen at the time the resolution to adopt the deed was passed. However, the plaintiff had subsequently acquired an assignment of a debt owed by Comcen. The court had to determine whether this subsequent assignment gave the plaintiff standing to challenge the deed and the resolution of creditors that approved it.

The central legal issue was whether the plaintiff had standing to apply for orders concerning the deed and the resolution, given that they were not a creditor at the relevant time. The court considered whether the subsequent assignment of a debt from a creditor conferred standing on the plaintiff to challenge the resolution and the deed. The court also examined the effect of the assignment on the plaintiff's ability to participate in the creditors' meeting and vote on the resolution.

The court held that the plaintiff did not have standing to challenge the resolution and the deed because they were not a creditor of Comcen at the time the resolution was passed. The court found that the subsequent assignment of a debt did not confer standing to the plaintiff. The court further held that the assignment did not enable the plaintiff to participate in the creditors' meeting or vote on the resolution. Consequently, the plaintiff's applications were dismissed.

The court did not make any orders as the plaintiff's applications were dismissed. The decision reinforces the principle that standing to challenge a resolution of creditors and a deed of company arrangement must be established at the time the resolution is passed. Subsequent assignments of debt do not retroactively confer standing to challenge prior decisions.

Orders