Hoy v RHM Industries Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Hoy v RHM Industries Pty Ltd [2023] FCA 115  

File number: ACD 43 of 2022
Judgment of: JACKMAN J
Date of judgment: 16 February 2023
Catchwords:

CORPORATIONS – winding up – winding up in insolvency – where defendant has not rebutted the presumption of insolvency – liquidator appointed

PRACTICE AND PROCEDURE – costs – whether non-party director should pay costs of winding up application – where director played an active role in the litigation – where director sought and was granted leave to appear on behalf of the company at the hearing – where director had an interest in the litigation

PRACTICE AND PROCEDURE – costs – whether company and non-party director should pay costs on the indemnity basis – where evidence was withdrawn just before the hearing – where plaintiff’s solicitors had expended time and resources to answer that evidence

Legislation:

Corporations Act 2001 (Cth) ss 95A, 459A, 459C, 459E, 459P, 459R, 466(2), 1335(2)

Evidence Act 1995 (Cth) s 91

Federal Court of Australia Act 1976 (Cth) s 43

Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) s 5

Federal Court Rules 2011 (Cth) r 4.1

Cases cited:

Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225

Consolidated Byrnes Holdings Limited v Hardel Investments Pty Limited (2009) 176 FCR 348

Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) (2012) 200 FCR 154

FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340

Hoy v Hurst-Meyers (No 2) [2022] ACTSC 58

Hoy v Hurst-Meyers (No 3) [2023] ACTSC 6

Hoy v Hurst-Meyers (No 4) [2023] ACTSC 17

Kalifair Pty Ltd v Digi-Tech (Australia) Limited (2002) 55 NSWLR 737

Kebaro Pty Ltd v Saunders [2003] FCAFC 5

Knight v FP Special Assets Ltd (1992) 174 CLR 178

Vanguard 2017 Pty Limited, in the matter of Modena Properties Pty Limited v Modena Properties Pty Limited (No 2) [2018] FCA 1461

Division: General Division
Registry: Australian Capital Territory
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 31
Date of hearing: 16 February 2023
Counsel for the Plaintiff: Ms A Costin
Solicitor for the Plaintiff: Elringtons Lawyers
Counsel for the Defendant: Mr R Hurst-Meyers appeared with leave on behalf of the Defendant

ORDERS

ACD 43 of 2022
BETWEEN:

GAVIN ROBERT HOY

Plaintiff

AND:

RHM INDUSTRIES PTY LTD

Defendant

ORDER MADE BY:

JACKMAN J

DATE OF ORDER:

16 FEBRUARY 2023

THE COURT ORDERS THAT:

1.The defendant, RHM Industries Pty Ltd, be wound up.

2.Michael Edward Slaven of Slaven Torline be appointed as liquidator of the defendant.

3.The defendant pay the plaintiff’s costs:

(a)assessed on a party/party basis up to 6 January 2023; and

(b)assessed on the indemnity basis on and from 6 January 2023.

4.Those costs be reimbursed out of the property of the defendant company pursuant to s 466(2) of the Corporations Act 2001 (Cth).

5.To the extent that the plaintiff’s costs under order 3 are not able to be reimbursed out…

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Details
Case
[2023] FCA 115
Decision Date

CaseChat Overview and Summary

The case of Hoy v RHM Industries Pty Ltd involved the plaintiff seeking the winding up of the defendant company, RHM Industries Pty Ltd, on the basis of insolvency. The matter was heard in the Federal Court of Australia. The plaintiff argued that the defendant had not rebutted the presumption of insolvency under the Corporations Act 2001 (Cth), thus warranting the appointment of a liquidator.

The primary legal issues for the court to address were whether the presumption of insolvency was validly rebutted and, if not, whether the costs associated with the winding up application should be borne by the defendant company and a non-party director, Ralph George Noel Nancy Hurst-Meyers, who actively participated in the litigation. The court also needed to determine the appropriate basis for cost assessment—whether on a party/party basis or the indemnity basis, especially given that some evidence was withdrawn just before the hearing.

The court found that the defendant had not successfully rebutted the presumption of insolvency, leading to the winding up of the company and the appointment of a liquidator. Regarding costs, the court ruled that the costs up to a certain date should be assessed on a party/party basis, while costs incurred from that date onwards should be assessed on the indemnity basis. This decision was influenced by the active role played by Mr Hurst-Meyers in the litigation and his interest in the proceedings. The court further ordered that the costs be reimbursed from the company’s property and, if insufficient, from Mr Hurst-Meyers personally.

The final orders included the winding up of RHM Industries Pty Ltd, the appointment of Michael Edward Slaven as liquidator, and specific directions on how the costs of the proceedings were to be paid, including provisions for reimbursement and personal liability for Mr Hurst-Meyers.

Orders

Orders of the court

1. The defendant, RHM Industries Pty Ltd, be wound up.

2. Michael Edward Slaven of Slaven Torline be appointed as liquidator of the defendant.

3. The defendant pay the plaintiff’s costs:

(a) assessed on a party/party basis up to 6 January 2023; and

(b) assessed on the indemnity basis on and from 6 January 2023.

4. Those costs be reimbursed out of the property of the defendant company pursuant to s 466(2) of the Corporations Act 2001 (Cth).

5. To the extent that the plaintiff’s costs under order 3 are not able to be reimbursed out of the property of the defendant company, the plaintiff’s costs be payable by Mr Ralph George Noel Nancy Hurst-Meyers personally.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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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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