Hypec Electronics Pty Ltd (in liq) v Mead - [2003] NSWSC 934

No judgment structure available for this case.

CITATION: Hypec Electronics Pty Limited (in liq) v Mead & Ors [2003] NSWSC 934

HEARING DATE(S): 16/9/03-18/9/03 & 22/9/03

JUDGMENT DATE:
3 November 2003

JURISDICTION:
Equity

JUDGMENT OF: Campbell J

DECISION: Liquidator estopped, and precluded under principle in Ex parte James, from recovering four items of corporate property, until further order. Land in name of company associated with company directors held on trust for company in liquidation.

CATCHWORDS: CORPORATIONS - winding up - principle in Ex parte James - In re Condon (1874) LR 9 Ch App 609 - circumstances of application - circumstances when appropriate to direct liquidator not to collect corporate asset - how principle in Ex parte James fits with liquidator's duty under Corporations Act 2001 - ESTOPPEL - whether liquidator estopped from collecting corporate assets - appropriate remedy to meet "minimum equity" test - TRUSTS - resulting and constructive trusts - factual decision about whether purchase price of asset in name of Company "A" controlled by directors of Company "B" had been provided by Company "B"

LEGISLATION CITED: Bankruptcy Act 1869
Bankruptcy Act 1924
Companies Act 1938
Companies (NSW) Code
Corporations Act 2001 (Cth)
Corporations Law
Gaming Act 1835
Income Tax Assessment Act 1936
Long Service Leave Act 1955
Real Property Act 1900
Stamp Duties Act 1920

CASES CITED: ACCC v George Weston Foods Limited (2003) 198 ALR 592; [2003] FCA 601
Re Allied Glass Manufacturers Ltd (1936) 36 SR 409 SR (NSW)
In Re Associated Dominions Assurance Society Pty Ltd and the Life Insurance Act (1962) 109 CLR 516
Re Ayoub; Ex parte Silvia (1983) 67 FLR 144
In Re Banister; Broad v Munton (1879) 12 Ch D 131
In Re Berkeley Applegate (Investment Consultants) Ltd (in liquidation) Re; Harris v Conway [1989] 1 Ch 32
BL & GY International Co Ltd v Hypec Electronics Pty Ltd; Colin Anthony Mead v David Patrick Watson & Ors [2001] NSWSC 705; (2001) 164 FLR 268
BL & GY International Co Limited v Hypec Electronics Pty Ltd (in liquidation) & Ors [2001] NSWSC 841
BL & GY International Co Ltd v Hypec Electronics Pty Ltd & 2 Ors [2002] NSWSC 38
BL & GY International Co Ltd v Hypec Electronics Pty Ltd & 2 Ors [2002] NSWSC 575
Black Uhlans Incorporated v New South Wales Crime Commission [2002] NSWSC 1060
In Re Brown; Dixon v Brown (1886) 32 Ch D 597
Cadima Express Pty Ltd (in liq) v DCT (1999) 157 FLR 424; [1999] NSWSC 1143; 33 ACSR 527
Cadorange Pty Ltd (in liq) v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26
Re Application of Central Commodities Services Pty Ltd [1984] 1 NSWLR 25
Re Chemical Plastics Ltd (in liquidation) [1959] VR 570; [1959] ALR 1080
In Re Clark (a bankrupt); Ex parte the Trustee of the property of the bankrupt v Texaco Ltd [1975] 1 All ER 453; [1975] 1 WLR 559
In Re Clifton Place Garage Ltd [1970] 1 Ch 477
The Commonwealth of Australia v Verwayen (1990) 170 CLR 394
13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) (1999) 30 ACSR 377
In Re Craig & Sons; Ex Parte Hinchcliffe [1916] 2 KB 497
Depela Pty Ltd (in liq) v Lynch (1996) 19 ACSR 751
Dering v Earl of Winchelsea (1787) 1 Cox 318; 29 ER 1184
Downs Distributing Company Pty Ltd v Associated Blue Star Stores Pty Ltd (in liquidation) (1948) 76 CLR 463
Re Ebner; Ebner v Official Trustee in Bankruptcy [2003] FCA 73; (2003) 196 ALR 533
Else v Else (1871) LR 13 Eq 196
Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451
Re G A Listing & Maintenance Pty Ltd (1994) 15 ACSR 308
Re G B Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674; (1991) 5 ACSR 673
Giumelli v Giumelli (1999) 196 CLR 101
Government of India v Taylor [1955] AC 491
In Re Hallett's Estate; Knatchbull v Hallett (1880) 13 ChD 696
Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 36 FCR 557; (1992) 109 ALR 177; (1992) 8 ACSR 277
Ex parte James; In re Condon (1874) LR 9 Ch App 609
Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475
Re Modern Terrazzo Ltd (in liquidation) [1998] 1 NZLR 160
Nationwide News Pty Ltd v Samalot Enterprises Pty Ltd (No.2) (1986) 5 NSWLR 227
The Official Assignee of the Estate of Turnbull v Goldstein (1921) 29 CLR 377
Re Paddington Town Hall Centre Ltd (in liquidation) (1979) 41 FLR 239
R v Rugari [2001] NSWCCA 64; (2001) 122 A Crim R 1
R v Tower Hamlets London Borough Council; Ex parte Chetnik Developments Ltd [1988] 1 AC 858
Re Redman; Ex parte Official Receiver (1948) 16 ABC 90
In Re Regent Finance and Guarantee Corporation Ltd (1930) WN 84
In Re Rhodes; Ex parte Rhodes [1899] 2 QB 347
In Re Roberts; Official Receiver v Lincoln Investments Ltd (1976) 26 FLR 330
Re Sabri; Ex parte Brien v Sabri (1997) 137 FLR 165
Scott v Handley [1999] FCA 404; (1999) 58 ALD 373
Scranton's Trustee v Pearse [1922] 2 Ch 87
Re Securitibank Ltd (in liquidation) [1978] 1 NZLR 97
Shirlaw v Taylor (1991) 31 FCR 222
Ex parte Simmonds; In Re Carnac (1885) 16 QBD 308
Sinclair v Brougham [1914] AC 398
Star v Silvia (No.1) (1994) 12 ACLC 600
In Re Steane's (Bournemouth) Ltd [1950] 1 All ER 21
Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99; (1983) 7 ACLR 873
Sutters v Briggs [1922] 1 AC 1
In Re T H Knitwear (Wholesale) Ltd [1987] 1 WLR 371
In Re T H Knitwear (Wholesale) Ltd [1988] 1 Ch 275
In Re Thellusson; Ex parte Abdy [1919] 2 KB 735
In Re Trent and Humber Ship-Building Company (1869) LR 8 Eq 94
In re Tyler; Ex parte The Official Receiver [1907] 1 KB 865
Re Universal Distributing Company Limited (in liquidation) (1933) 48 CLR 171
Ex parte Villars; In Re Rogers (1874) LR 9 Ch App 432
Re Walsh; Ex parte Waters [1978] QdR 134
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
In Re Wenborn & Co [1905] 1 Ch 413
Re Wigzell; Ex parte Hart [1921] 2 KB 835
Yang v Hypec Electronics Pty Ltd (in liquidation) & 2 Ors [2003] NSWCA 181

PARTIES :
Hypec Electronics Pty Limited (in liquidation) - Plaintiff
Colin Anthony Mead - First Defendant
Lucy Guitar Mead - Second Defendant
Mei Chen Yang - Third Defendant
Lee Chen-Lien Yang - Fourth Defendant
Lamron Pty Limited - Fifth Defendant

FILE NUMBER(S): SC 1268/02; 1933/01

COUNSEL: PH Greenwood SC; TJ Norahan - Plaintiff
D Fagan SC; V Bedrossian - First Defendant
D Grieve QC; G O'Gorman - Second Defendant
K Ma, solicitor - Third, Fourth & Fifth Defendant

SOLICITORS: AR Conolly & Company - Plaintiff
Etheringtons - First Defendant
Lee Gan Solicitors - Second Defendant
Ma & Company - Third, Fourth & Fifth Defendant

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

CAMPBELL J

3 NOVEMBER 2003

1268/02 HYPEC ELECTRONICS PTY LIMITED (In Liquidation) v COLIN ANTHONY MEAD & ORS

1933/01 BL & GY INTERNATIONAL CO LIMITED v HYPEC ELECTRONICS PTY LIMITED

JUDGMENT

HIS HONOUR:

Nature of the Case

1 Hypec Electronics Pty Ltd (in liquidation) (“HE”) is a company which had a husband and wife as its sole shareholders and directors. Various assets were acquired in the name of the husband and wife, using money of HE. As well, some assets were acquired in the name of another company connected with the husband and wife, and in the name of the wife’s parents. The liquidator of HE, Mr Watson, seeks to recover those assets. The assets comprise 11 parcels of real estate, investments in 12 managed funds, a timeshare, and a 41-foot boat.

2 In large measure, the orders which the liquidator seeks are consented to. There is a dispute, however, about whether two particular blocks of land at Lisarow which were acquired in the name of a company, other than HE, associated with the husband and wife, were acquired using money of HE. There is also a dispute about whether the liquidator is precluded from obtaining an order for the transfer of four other items of real estate (or their proceeds of sale), either by the doctrine of estoppel, or by the principle in Ex parte James; In re Condon (1874) LR 9 Ch App 609 and section 477(6) Corporations Act 2001.

The Factual Background – Mr and Mrs Mead’s Relationship

3 Mr Colin Mead and Mrs Lucy Mead were married in 1982. For many years HE had Mr and Mrs Mead as its sole shareholders and directors. HE imported computers and computer components from Taiwan, and sold them in Australia. Mrs Mead had come from Taiwan. She was a 44% shareholder in a Taiwanese company called BL & GY International Co Limited (“BL”). Other shareholders in BL were members of her immediate family. Mr and Mrs Mead organised the affairs of HE so that he looked after its selling activities, and she looked after its financial affairs.

4 In 1996 Mr and Mrs Mead separated. HE has not traded since then.

5 At the time of separation Mr and Mrs Mead had significant assets in their joint names. In a judgment of the Family Court which was tendered before me without objection, Cohen J found that their jointly owned property was worth, very roughly, $8.5 million net: Mead v Mead Cohen J, 2 November 2001 paragraph [31]. That figure might be a typographical error, as the transcript before Cohen J records (page 4) a submission that there were properties worth about $3.5 million jointly owned by them. An affidavit of Mr Mead’s, also before Cohen J, puts the total value of 10 of the properties as $2.965 million, subject to mortgages of $974,000. The liquidator has identified a little over $4.29 million of funds of HE which was used by Mr and Mrs Mead for their own purposes, largely purchase of investments, over the period 1988 to 1997.

6 In March 1997 Mr Mead started proceedings in the Family Court for division of matrimonial property. Those proceedings are not yet concluded. The initiation of those proceedings marked the start of a complex series of litigious battles and legal manoeuvres between Mr Mead on one side, and Mrs Mead and companies and family members associated with her on the other.

The Factual Background – Previous Court Proceedings

7 On 17 September 1997 BL filed a Statement of Claim in the Common Law Division of the Supreme Court, and thereby commenced proceedings number 12674 of 1997 (“the Common Law Proceedings”) HE was one defendant; against it BL sought repayment of around $4.8 million of loans said to have been made between 30 June 1992 and 30 June 1996, plus interest. Both Mr and Mrs Mead were also joined as defendants on a number of alternative bases, which included negligence and breach of section 232 of the Corporations Law.

8 On 1 December 1997 Mr Mead filed a Defence in the Common Law Proceedings, relating to the claim made against him personally. By this time Mr Mead had been completely excluded from participation in the affairs of HE, and Mrs Mead had practical control of it. She did not file a Defence, either on her own behalf or on behalf of HE. In consequence, a default judgment was entered against HE on 4 December 1997, and against Mrs Mead on 6 January 1998. Mr Mead has a theory, the correctness of which it is unnecessary to decide on in these proceedings, that his wife and BL were acting in concert, one of their aims being that Mrs Mead would retain no assets in her own name which were capable of being divided in the proceedings in the Family Court.

9 On 9 November 1998 Cohen J, in the Family Court, ordered that the Family Court proceedings be stood over generally, with liberty to restore them once the Common Law Proceedings had been concluded.

10 On 1 March 1999 judgment was entered against Mr Mead in some proceedings which had been brought against him in the Local Court by Lamron Pty Ltd (“Lamron”). Lamron was by then under the control of interests associated with Mrs Mead. It had purchased from Citibank a mortgage debt which Mr and Mrs Mead owed, and sued them on that debt. On 4 March 1999 Mr Mead was served with a bankruptcy notice based on the judgment which had been obtained, three days earlier, in those Local Court proceedings. He was able to borrow some money, and paid that judgment debt in late March 1999.

11 In July 1999 Mrs Mead’s parents commenced proceedings against Mr and Mrs Mead in the District Court, seeking recovery of a loan alleged to be owed to a company connected with Mr and Mrs Mead, and of which they were guarantors. Those proceedings were struck out on 15 March 2000, when it was demonstrated that the loan had been repaid in 1996.

12 On 30 August 1999 in the Family Court, Judicial Registrar Johnston made an interim order, on Mrs Mead’s application, prohibiting both Mr and Mrs Mead from selling, transferring, encumbering, alienating or otherwise dealing with any real property in which they currently had an interest. That order also required Mr Mead to take all steps to prevent the Queensland land registry authorities from processing documentation which Mr Mead had lodged with them, seeking to sever the joint tenancy between Mr and Mrs Mead in five parcels of Queensland real estate. On 7 September 1999 Rose J in the Family Court extended those orders until further order.

13 On 13 February 2001 Mr Mead filed an application in the Family Court which sought variation of the orders of Rose J of 7 September 1999 to the extent necessary to enable some of the property which they jointly owned to be sold, and used by Mr Mead to fund the costs of the Common Law Proceedings and the Family Court proceedings.

14 Six days later, on 19 February 2001, BL served on HE a statutory demand, requiring payment of the judgment debt which had been entered against HE on 4 December 1997, plus interest. That statutory demand never came to the attention of Mr Mead; Mrs Mead did nothing about it.

15 On 26 March 2001 BL started winding up proceedings against HE, in proceedings 1933 of 2001 in the Equity Division of this Court. Mrs Mead did nothing to oppose those winding up proceedings, and on 7 May 2001 the Court appointed Mr David Watson as the Liquidator of HE.

16 On 20 July 2001 Mr Mead amended his application to the Family Court, so that the orders that it sought were variations of the order of Rose J of 7 September 1999 to the extent necessary to enable the carrying through of certain other orders which he sought. Those other orders were in substance:

A That Mr and Mrs Mead do everything necessary to sell four particular properties, namely,

(i) 102/300 Cortesloe Drive, Mermaid Waters, Queensland

(ii) 29 Quoin Island, Gladstone, Queensland

(iii) 37/3 Reid Avenue, Wentworthville, NSW, and

(iv) 53 and 53A Golden Orchard Drive, Airlie Beach, Queensland

B That the proceeds of sale be paid to a controlled money account of Mr Mead’s solicitor, and no more than 50% of it drawn upon for the purpose of paying Mr Mead’s legal costs in the Family Court proceedings, in Equity Division proceedings 1933 of 2001, and in the Common Law Proceedings.

C That Mrs Mead, as a director and shareholder of HE, execute a document appointing Mr Mead as agent of HE, for the purpose of defending the Common Law Proceedings, and prosecuting a cross claim by HE in those proceedings.

D That Mrs Mead execute a consent to the liquidator of HE authorising and requesting the liquidator to consent to an order of the Supreme Court authorising Mr Mead to defend and cross claim in the Common Law Proceedings.

“the Four Properties”

17 That application was listed in the Family Court on 23 July 2001, but was not reached on that day, and was stood over to 25 and 26 October 2001.

18 On 2 August 2001 Mr Mead started proceedings 3832 of 2001 in the Equity Division. Earlier, he had filed a Notice of Motion in the winding up proceedings, 1933 of 2001. Each sought the same relief, in substance. It was that Mr Mead be permitted:

· to act on behalf of HE in the Common Law Proceedings;

· to make application to set aside the default judgment entered against HE on 4 December 1997;

· to file a defence on behalf of HE if the judgment was set aside, and act on behalf of HE in prosecuting that defence;

· to make an application for leave for HE to file a cross claim in those proceedings against BL, Mrs Mead, and Grace Yang; and

· if leave was granted, to prosecute that cross claim to judgment.

19 By the time of making this application, Mr Mead had embarked upon an exercise of comparing what was shown in the books and records of HE concerning the state of account between HE and BL with information which he had been able to gather from documents obtained from the Customs Department about importations which HE had made from BL. That comparison exercise, though at that stage incomplete, led him to wish to assert that the true state of account was that BL owed money to HE, rather than the other way around. That was the substance of the cross-claim he wanted to file against BL. The intended cross claim against Mrs Mead was one which alleged breach of her fiduciary duties to HE concerning the transactions between BL and HE. The intended cross claim against Ms Yang was one which alleged knowing participation in those breaches of fiduciary duty.

20 Mr Mead had already filed in the Common Law Proceedings, in his own right, cross claims against Mrs Mead and Ms Yang, making similar allegations.

21 Mr Mead’s applications in the Equity Division were heard by Einstein J on 17 August 2001. Judgment in them was delivered on 21 August 2001: BL & GY International Co Ltd v Hypec Electronics Pty Ltd; Colin Anthony Mead v David Patrick Watson & Ors [2001] NSWSC 705; (2001) 164 FLR 268. By that time, the Common Law Proceedings had been fixed for hearing between 5 and 9 November 2001.

22 Einstein J granted Mr Mead the leave he sought, on condition that Mr Mead abandoned the cross claim filed in his own name in the Common Law Proceedings. His Honour noted an undertaking by Mr Mead to the liquidator that Mr Mead would indemnify the liquidator and HE itself in respect of any orders resulting from exercising the leave. On 27 August 2001, at the time of settling Short Minutes of Order to give effect to his reasons for decision, Einstein J stated that Mr Mead was not required to offer any security to support the indemnity, but that this would not prevent an application for security for costs being made.

23 On 19 September 2001 Mr Mead, exercising the leave which had been granted to him to act on behalf of HE, applied to Sully J in the Common Law Division of the Supreme Court of NSW, to set aside the default judgment against HE, and to file a Defence and Cross Claims on behalf of HE. In reasons for judgment delivered on 25 September 2001, Sully J granted the orders which Mr Mead sought: BL & GY International Co Limited v Hypec Electronics Pty Ltd (in liquidation) & Ors [2001] NSWSC 841.

24 On 4 October 2001 McClellan J heard motions brought by BL and Ms Yang seeking to strike out the defences of Mr Mead and of HE in the Common Law Proceedings, and to have HE provide security for the costs of its cross claims. On that same day, 4 October 2001, his Honour dismissed those motions.

25 On 25 and 26 October 2001 Cohen J, in the Family Court, heard Mr Mead’s application referred to at paragraph 16 above. His Honour delivered judgment on 2 November 2001, in substance granting the application, so as to permit $375,000 to become available from the proceeds of sale of the Four Properties to pay costs of Mr Mead.

26 On 5 November 2001 the hearing of the Common Law Proceedings commenced, before Mathews AJ. Though the matter had been set down for five hearing days, the hearing in fact extended over 15 hearing days, the last of which was 26 November 2001. There was one week-day in the period 5-26 November 2001 when no hearing occurred, but it is likely that the legal representatives of the parties did work on the case out of court on that day.

27 On 4 December 2001, the liquidator lodged caveats against seven items of real estate held in the joint names of Mr and Mrs Mead. This came to the attention of Mr Mead a few days later. The seven items of real estate included three of the Four Properties. On 11 February 2002 the liquidator lodged a caveat against the title of the fourth of the Four Properties.

28 Following upon the orders of Cohen J, two of the Four Properties, namely 37/3 Reid Avenue, Wentworthville and 102/300 Cortesloe Drive Mermaid Waters, were submitted to sale by auction, and sold. The liquidator and Mr Mead came to an agreement whereby, notwithstanding lodgement of caveats against the titles to those properties, the sales were completed, in January and February 2002, and the proceeds paid into Court. Those proceeds remain there today. The other two of the Four Properties remain unsold.

29 On 14 February 2002 Mathews AJ delivered her judgment: BL & GY International Co Ltd v Hypec Electronics Pty Ltd & 2 Ors [2002] NSWSC 38. She dismissed the claim which BL brought against HE and Mr Mead, and set aside the default judgment which BL had obtained against Mrs Mead and in lieu entered verdict for Mrs Mead on BL’s claim. HE failed in its cross claims against BL, Mrs Mead and Ms Yang.

30 Part of the reason why BL’s claim failed was because her Honour decided that she could not accept the oral evidence of Mrs Mead and Ms Yang (and a younger sister of Mrs Mead, Ms Chen), and the financial records of both BL and HE were unreliable. Her Honour’s judgment said, at [178]:

“In my opinion Lucy Mead and her two sisters, particularly Grace Yang, have shown themselves to be entirely lacking in credibility and plausibility. Lucy Mead has admitted falsifying Hypec’s records so as to conceal the misapplication of company funds. There is much to support the conclusion that she and her sisters have similarly falsified BL & GY’s records so as to support a false claim against Hypec. A motive for doing this is easy to find, as Mr Fagan has pointed out. Hypec had no funds to meet BL & GY’s judgment against it. Had the judgment not been set aside, recourse would almost certainly have been sought against Colin and Lucy Mead as directors. If successful, the properties in their joint names, which are now the subject of a property dispute in the Family Court, would presumably have been sold in order to meet BL & GY’s judgment.”

31 Her Honour dismissed the cross claims essentially because she was not persuaded that Mr Mead’s attempt to re-create the accounts between BL and HE, from customs and shipping documents, was accurate or complete. When HE could not prove that BL owed it money, the allegations that Mrs Mead had breached her fiduciary duty, and that Ms Yang had helped her to do so, also were not made out.

32 On 30 May 2002 the Commissioner of Taxation issued amended assessments of income tax to HE, relating to the years ended 30 June 1989 to 30 June 1994 inclusive. Those amended assessments together created a tax debt of the order of $1.4 million. The primary tax was $776,000, the balance, penalties and interest. The amended assessments arose from the liquidator having written, on 20 December 2000, to the Australian Taxation Office, informing it that his investigations had shown that the directors had improperly used company funds to acquire assets in their personal names, that in consequence the company’s profits had been understated and losses overstated, and as well each of Mr Mead and Mrs Mead had understated their personal income. Before that letter was sent to the Australian Taxation Office, the information which the liquidator made known to Mr Mead suggested that the taxation liability of HE was of the order of $200.

33 On 28 June 2002 Mathews AJ delivered a judgment on costs in the Common Law Proceedings: BL & GY International Co Ltd v Hypec Electronics Pty Ltd & 2 Ors [2002] NSWSC 575. She ordered BL and Ms Yang to pay the costs of Mr Mead on an indemnity basis, being the costs incurred for himself and for his conduct of the proceedings in the name of HE, in respect of the entire proceedings, including certain reserved costs.

34 On 26 May 2003 the Full Family Court dismissed an application by Mrs Mead for an extension of time within which to file an application for leave to appeal from the decision of Cohen J made on 2 November 2001.

35 On 27 August 2003 the Court of Appeal gave judgment on an appeal which Ms Yang brought against the costs decision of Mathews AJ: Yang v Hypec Electronics Pty Ltd (in liquidation) & 2 Ors [2003] NSWCA 181. While the formal order of the Court was that the appeal was allowed, it was allowed for the purpose of correctly identifying the source of power to make the order - Mathews AJ had proceeded on the basis that Ms Yang was a non-party, and therefore any costs order against her had to be one which could be justified under Part 52A rule 4(5). The Court of Appeal decided that, by virtue of being a defendant to the cross claim, and the trial of the action and the cross claims not having been separated, she was a party to the proceedings, so a costs order did not need to be one which could be justified under Part 52A rule 4(5). The substance of the costs order of Mathews AJ, requiring both BL and Ms Yang to pay the costs of the entire proceedings on an indemnity basis, was not altered by the Court of Appeal.

The Disputed Properties at Lisarow

36 Lamron is a company of which Mr and Mrs Mead became directors in March 1982. Lamron came to be the registered proprietor of a parcel of land located at Lot 3 Woodview Avenue Lisarow, and another property known as Lot 21 Woodview Avenue Lisarow. Lot 3 had a house constructed on it, and then was sold, with the sale settling on October 1996. Lot 21 had two houses constructed on it, and was subdivided into two lots each of which was then sold. Both those sales settled in February 1995.

37 Lamron is the fifth defendant in these proceedings. It accepts that the money used to pay for the construction of the three houses came from the assets of HE, and that in consequence HE has a proportionate beneficial interest in the proceeds of sale. It does not admit, however, that the purchase price of the land came from assets of HE.

38 Real Property Act transfers show that Lamron came to be the registered proprietor of Lots 3 and 21 at Lisarow pursuant to transfers each of which was dated 9 November 1992. Those transfers show that the price of each Lot was $68,000. A search of the certificates of title shows no mortgage having existed on either Lot, save for a mortgage on Lot 3 which was discharged on 17 November 1992. There is a real possibility that that was a mortgage of a prior registered proprietor, which was discharged upon registration of the transfer to Lamron.

39 There is no documentary evidence which shows from what source the purchase money for the two Lots was provided. The liquidator agreed, in cross-examination by the solicitor for Lamron, Mr Ma, that he had made comprehensive investigations in relation to the acquisitions and improvements to the Lisarow properties and the subsequent disposal of those properties. No explanation is put forward as to why he has not presented any documentary confirmation of the source of the money for the purchase of those properties. Concerning some other properties, the liquidator has put on evidence of asking solicitors who were involved in the purchase of the property to let him see their file relating to the purchase, and being told that the file was so old that it had been destroyed.

40 When the sale by Lamron of Lot 3 settled on 9 October 1996, the net proceeds received were $246,150.16. That amount was deposited into a bank account with the Commonwealth Bank, maintained in the name of “Hypec Technology Group Pty Ltd” (“HTG”). HTG is a different company to HE. HTG was incorporated on 23 July 1992. Mr and Mrs Mead were its directors from 24 July 1992 until 30 June 2002. Mr and Mrs Mead held the shares in it equally.

41 The sale in February 1995 of the two houses constructed on Lot 21 at Lisarow resulted in balances of $119,947.33, and $122,500 being payable upon settlement. Each of those amounts was deposited into the bank account of Lamron. Immediately following those amounts being deposited into the account of Lamron, cheques, in the amount of $88,000, and $110,000 were drawn on the account of Lamron, and paid into the Commonwealth Bank Account of HTG.

42 Mr Mead gave evidence, in an affidavit sworn 26 July 2001 and filed in the winding up proceedings, as follows:

“On 23 July 1992 we caused Hypec Technology Group Pty Ltd to be incorporated. It was my understanding and expectation that from that date Hypec Technology Group Pty Ltd would take over and conduct business.

However after 23 July 1992 Lucy Mead caused the Company [ie HE] to continue to purchase computers and equipment from BL & GY. The products were imported into Australia, consigned by BL & GY to the Company, and invoiced to “Hypec Electronics Pty Ltd T/A Hypec Technology Group”.

From 23 July 1992 dealings with Australian purchasers from our business were conducted in the name “Hypec Technology Group Pty Ltd.””

43 In an affidavit sworn in the Family Court proceedings on 12 February 2001, which was also in evidence before me, Mr Mead gave evidence,

“In 1992, we purchased two blocks of land at Lisarow, on the Central Coast, for $140,000. The purchase was in the name of Lamron. All payments were made by Hypec Technology.”

44 Mr Watson has given evidence, on which he was not cross-examined, that he had through his investigations verified that Hypec Technology was the trading name of HE. At some stage in 1992 the bank account of HE with the Commonwealth Bank of Australia changed its title, so that it came to be called “Hypec Technology Group Pty Ltd”. While there was a company called Hypec Technology Group Pty Ltd, all the transactions entered into by that company were accounted for in the accounts of HE.

45 Mr Mead gave evidence before me, in answer to cross-examination from Mr Greenwood SC, counsel for the liquidator, as follows:

46 After that evidence had been given, Mr Ma, solicitor for Lamron, further cross-examined Mr Mead. He gave evidence as follows:

47 I approach this evidence of Mr Mead with some caution, as his evidence suggested that he had only fragmentary scraps of knowledge about other real property acquisitions, but quite good knowledge about the source of funds for the Lisarow acquisition. However, it seems to me that his being called in to the Commonwealth Bank provides an explanation for this difference in extent of knowledge. His explanation, that HE would fund the purchase of the properties, and receive back the money it provided, while Lamron would keep the profit, provides an explanation for the way in which the sale proceeds of the Lisarow Lots were distributed. No possible source of the purchase price of the Lisarow properties, other than proceeds of the trading activities of HE, appeared from the evidence. In these circumstances I accept Mr Mead’s evidence concerning the source of funds for the Lisarow land.

48 In his affidavit, Mr Watson gave an opinion that probably all of the funds used to purchase and improve the two properties at Lisarow were funds of Hypec which were taken from the Company improperly by the creation of false book entries in the company’s accounting records.

49 The basis of that opinion is, essentially, some extracts from the affidavit of 13 February 2001 which Mr Mead swore in the Family Court proceedings, together with the fact that nothing in his investigation has suggested otherwise. Given the basis of the opinion, I place little weight upon it.

50 Though Mrs Mead had sworn an affidavit in the proceedings, at the hearing Mr Ma elected not to read it. Because she was the person who looked after the financial affairs of HE, she is a person likely to have personal knowledge of the source of the funds used to purchase the two Lots at Lisarow. While Mrs Mead ceased to be a director of Lamron on 7 February 2003, the present directors are members of her family, and there is no reason to believe that she was not a witness readily available to Lamron. She was in court throughout the hearing. The other evidence which I have set out, warrants an inference that the purchase price of the two Lisarow Lots came from funds of HE. Lamron’s failure to call Mrs Mead enables me to draw that inference more strongly.

51 I conclude that the purchase price of the two Lots at Lisarow came from the funds of HE. It is not disputed that the cost of constructing improvements on those Lots came from funds of HE, nor is it disputed that, if it were to be established that the purchase price of the land came from funds of HE, then the entire sale price of those Lots should be declared to be held upon trust for HE. To some extent the sale price of those Lots has already been repaid to HE, through the payments set out in paragraphs 40 and 41 above. What the making of the declarations which the liquidator seeks will do, will be to enable the liquidator to collect the part of the sale price not already repaid to HE, and to remove the possibility of a claim that the part of the proceeds of sale already repaid to HE was paid as a loan, rather than by way of a return of HE’s own money.

Factual Findings Relevant to the Estoppel/Ex Parte James Submissions

52 Mr Mead submits that the liquidator’s conduct disentitles him from laying claim to the Four Properties. That submission requires a closer examination of events in the period May to December 2001.

53 Mr Watson was appointed as liquidator of HE on 7 May 2001. At least by 6 June 2001 he was aware of the Common Law Proceedings – on 6 June 2001 Mr Mead’s solicitors, Etheringtons, wrote to Mr Watson, saying that the requirement that Mr Mead file a Defence in those proceedings meant that he needed extra time in which to supply Mr Watson with a Report As To Affairs.

54 On 12 June 2001 Etheringtons wrote to Mr Watson, enclosing a draft Notice of Motion and an unsworn copy of a draft affidavit by Mr Mead. Etheringtons told Mr Watson that they alleged that Mrs Mead and BL had been involved in a fraud against Mr Mead and the companies of which he had been a director and shareholder. Etheringtons sought the opportunity to demonstrate to Mr Watson that HE had never been insolvent, and that the debt resulting from the default judgment of 4 December 1997 was based on a fraud. Etheringtons asked that Mr Watson not take any further steps in the winding up of HE. In the course of the letter they said:

“The costs thus far incurred by Mr Mead have been enormous and will continue to mount in his attempt to unravel the fraud of Mrs Lucy Mead …”

55 On 2 July 2001 Etheringtons wrote to Mr Watson, saying that Mr Mead wanted to have HE make an application for BL’s judgment against it to be set aside, for leave to defend the Common Law Proceedings, and for leave to issue a cross-claim against BL. The cross-claim was explained as being, broadly, of the same type as the cross-claim which was eventually actually lodged. The letter enclosed the draft documentation on which that application was proposed to be made. It said that the fact that there was really no debt owing by HE to BL meant that Mr Mead had a basis for setting aside the winding up of the company, but that there would be no point in so doing, because the company would then be in deadlock, as Mr and Mrs Mead were equal shareholders. The letter offered Mr Mead’s indemnity to Mr Watson for any costs in the application to set aside the judgment and prosecute the cross-claim. The letter asked, again, that Mr Watson suspend work on the liquidation pending the hearing of the Notice of Motion.

56 A trial balance of HE as at 30 June 1998, produced by the external accountants of HE, showed as an asset a loan to Mr and Mrs Mead in the sum of $2,861,844. On 3 July 2001 Mr Watson wrote to Mr Mead, referring to this loan account, and saying that additional funds had been identified that had been used by the directors which did not appear to have been correctly allocated to the Directors’ Loan Account. He continued:

“At this stage and based on the source records reviewed, the debt listed in the balance sheet of $2,861,844 is due and payable. Further requests will be made for payment of the additional amounts in due course once confirmed.

Therefore it is requested that you contact this office on receipt of this letter to discuss repayment of the loan account.”

57 On 5 July Mr Mead’s solicitor at Etheringtons, Mr Dominello, spoke to Mr Watson’s solicitor, Mr Conolly. Mr Dominello told Mr Conolly that proceedings had been started in the Family Court seeking to set aside injunctions against matrimonial properties of Mr and Mrs Mead, to enable the sale of those properties for the purpose of Mr Mead funding the Common Law Proceedings. Mr Conolly wrote to Mr Dominello the next day confirming that telephone conversation, and requesting copies of counsel’s opinions which had been obtained by Mr Dominello.

58 On 12 July 2001 Etheringtons wrote to Mr Conolly, saying,

“Our client has an interim property application which is fixed for hearing before the Family Court on 23 and 24 July 2001. It is important to our client’s position in these proceedings that he has the position concerning his foreshadowed application finalised.

In light of the impending Family Court proceedings we propose to approach the Duty Judge in Equity next week with a view of hearing our client’s foreshadowed application. We will provide this letter and other correspondence to the court when seeking an order to abridge the time for service of our client’s foreshadowed motion.

… the proceedings referred to are the interim property proceedings which are fixed for hearing in the Family Court on 23 and 24 July 2001, which seek to, inter alia, set aside the injunction of Justice Rose. The injunction sought by Lucy Mead (the third defendant) was an attempt to restrain the sale of matrimonial property. Our client wishes to sell the matrimonial property to fund his defence and cross claim in these proceedings. At the hearing on 23 and 24 July 2001 our client will be seeking orders to set aside/vary the injunction to enable the funding of legal representation in the Supreme Court proceedings.”

59 On 19 July 2001 Etheringtons wrote to Mr Conolly, providing him with an Equity Division court process which was returnable on 30 July 2001. Etheringtons said that they intended to proceed with the hearing on the return date, and asked Mr Conolly to file and serve any material he wanted to rely on prior to the return date. That letter also enclosed an affidavit (of some 133 pages) which Mr Mead had sworn on 12 February 2001 in the Family Court proceedings. This affidavit is the principal affidavit on which Mr Mead relied in his application to Cohen J in October 2001. Etheringtons’ failure to provide that affidavit at an earlier time had excited some suspicion in the liquidator.

60 On 20 July 2001 Mr Watson wrote to Mr Mead complaining about various matters, and also saying, “In addition to the above it is requested that you contact this office in order to discuss the repayment of the directors’ loan account as detailed to you in my letter dated 3 July 2001.”

61 On 26 July 2001 Mr Mead swore an affidavit, in the winding up proceedings. It set out the position in the Family Court proceedings by saying:

“On 9 September 1997 Justice Rose in the Family Court made orders which had the effect of preventing me from selling any of the property in which I have an interest. A copy of the Orders of Justice Rose are annexed hereto and marked “G”.

On 13 February 2001 I commenced an application in the Family Court for an interim property order, to enable me to sell some of the property the subject of the injunctions to enable me to fund the costs of the Common Law proceedings and of the Family Court proceedings.

This application was listed for hearing in the Family Court at Sydney on 23 July 2001. Annexed and marked “H” is a copy of the orders sought in an amended application which was served on the wife’s solicitors on 20 July 2001 and which it proposed to litigate on 23 July 2001.

On 23 July 2001 my application for interim property orders was one of six matters listed but not reached in the Family Court at Sydney. At 4.30pm on that day, Justice Lawrie directed that it be referred to the Contested Matters List Clerk for allocation of a fresh date, because Judges of the Family Court were all engaged in a Judge’s Conference from Wednesday, 25 July 2001 to Friday, 27 July 2001 and would be unable to reach my matter (or any but one of the other matters listed on 23 July 2001) during that week.

My application for an interim property order has now been listed for hearing on 25 and 26 October 2001.”

62 Annexure H to that affidavit was the document which I have summarised in paragraph 16 above. That affidavit of Mr Mead’s was served on Mr Conolly’s firm under cover of a letter dated 7 August 2001.

63 On 27 July 2001 Mr Watson swore an affidavit in the winding up proceedings. It gave a general account on the progress of the liquidation, and included the following matters:

“4. I have not yet finalised my investigations or report into the financial position of Hypec. However, at the date of swearing this affidavit I have identified funds in the sum of $4,907,725 which at this stage in my opinion were funds properly belonging to Hypec but which were used by the Directors of Hypec for their own personal use during the period 1989 to 1997. Annexed hereto and marked with the letter “B” is a schedule of the funds so identified. Notwithstanding this, further investigations are continuing.

inter alia

(a) Payment of deposits on real property purchased in their joint names;

(b) Payment of mortgage instalments in respect of property registered in their joint names;

(c) Payment of invoices for construction of improvements to real property registered in their joint names;

(d) Payment of lease payments in respect of a 40’ boat in their joint names;

(e) Purchase of chattels such as furniture and homewares;

(f) Payments into an education fund for the benefit of the children of the directors;

(g) Payment of contributions to a private superannuation fund;

(h) Payments in respect of a personal investment portfolio.

6. It is my opinion as official liquidator of Hypec that the funds referred to in paragraph 4 above were funds properly belonging to Hypec. …

16. I am presently considering the legal avenues open to me as liquidator of Hypec to recover from the directors of Hypec:

(a) The amount of $2,861,844 owed to Hypec in respect of the Directors Loan Account; and

(b) The amount of $2,045,881 in additional Hypec funds which I have identified as being used by the Directors for their own use, together with any further monies (if any) so identified pending completion of my investigations.

17. My examination of the books and records of Hypec has not disclosed any minute or other record of any resolution authorising the Directors of Hypec to establish a Directors Loan Account or to draw the funds in the sum of $2,861,844 referred to in paragraph 16(a) above against such account. My examination of the books and records of Hypec also has not disclosed any minute or other record authorising the Directors of Hypec to utilise for their own purpose the additional Hypec funds in the sum of $2,045,881 referred to in paragraph 16(b) above.”

64 Annexure “B” to the affidavit was a document headed “Reconstruction of Directors’ Loan Account”, which identified various transfers of money from HE totalling $4,907,725.64, stating by reference to each transfer, the date of the transfer, the cheque number (or other means by which the transfer had occurred), the amount, the payee, and an asset related to that transfer. A reader would infer that what the liquidator was setting out was particularisation of assets of Mr and Mrs Mead whose acquisition had been financed by the money of HE, in consequence of which Mr and Mrs Mead owed HE the total amount that had been spent in this way.

65 The process which had been returnable on 30 July 2001 (paragraph 59 above), and a separate summons filed on 2 August 2001 in separate proceedings (summarised in paragraph 18 above) were the applications which came on for hearing before Einstein J on 17 August 2001.

66 At the hearing before Einstein J, Mr Mead’s affidavit of 26 July 2001 (paragraph 61 above), and Mr Watson’s affidavit of 27 July 2001 (paragraph 63 above) were read. As well, an affidavit of Mr Watson’s sworn 13 August 2001, was read. In it, Mr Watson explained that he was still seeking information from Mrs Mead, and from an expert who Mr Mead proposed to engage for the common law proceedings, Mr McEwen. Mr Watson said that until he had the benefit of the input from Mrs Mead and Mr McEwen he was not in a position to assess whether he would be prepared to cause HE to take any further part in the Common Law Proceedings. He asked for the court to give him a further week in which to conclude his investigations and consideration. Mr Watson’s affidavit continued:

“7. I can inform the Court that, if I am satisfied that there is a fair prospect on the evidence that Hypec will succeed in the defence and cross-claim proposed by Mr Mead or any other defence – and at this time I have not yet formed that view – provided Mr Mead pays all costs of preparation and conduct, and provides an effective indemnity for me as liquidator against any adverse costs order, I would be prepared to file a motion seeking to set aside judgment against Hypec in the Common Law Proceedings.

8. I take the view however that Mr Mead’s proposed provision of an indemnity for costs of the Common Law Proceedings contained in the letter from Etheringtons solicitors to myself dated 2 July 2001 (a true copy of which is annexed hereto and marked “A”) is unsatisfactory, at least in light of the matters contained at numbered paragraph 5 of page 2 of the letter from Etheringtons to my instructing solicitors dated 12 July 2001, a true copy of which is annexed hereto and marked “B”.

9. As set out in paragraphs 4-6 of My First Affidavit, I have an apprehension that the matrimonial property, which Mr Mead is said in Annexure B to be wishing to sell for the purpose of funding of the Common Law Proceedings may, in whole or in part, comprise assets properly belonging to Hypec. Upon this basis, Mr Mead would be offering to indemnify Hypec with its own monies. In any event, my current view is that I cannot accept as a likelihood that the Family Court will order sale of assets to permit Mr Mead to conduct the Common Law Proceedings.

10. I would not be prepared to take responsibility for the Common Law Proceedings on behalf of Hypec without a satisfactory indemnity for costs. If Mr Mead’s position were still as indicated by his solicitors in the letter being annexure B hereto, I would also apply for security for costs to support such indemnity.

11. As a result of the matters raised in My First Affidavit, and upon general principle, my current view is that in the event that I do not conduct the proceedings on behalf of Hypec, it would not be in the interests of Hypec and its members and creditors to allow Mr Mead to bring a defence or cross-claim in the Common Law Proceedings on behalf of Hypec.”

“Numbered paragraph 5 of page 2 of the letter from Etheringtons dated 12 July 2001”

“My First Affidavit”

67 At the hearing before Einstein J, Mr Fagan SC appeared for Mr Mead. Mr Fagan’s oral submissions (T.46) made clear that Mr Mead had on foot in the Family Court an interim property application to enable him to obtain a distribution of property, so that he could fund the Common Law Proceedings, but that he had not been able to get that application heard. That was one reason why Mr Mead was not able to offer security to the liquidator. Ms Sofroniou appeared at that hearing for the liquidator. The transcript records the following:

“FAGAN: I thought that Ms Sofroniou’s position was that the concession that he wasn’t in the position was accepted and that she was proceeding on the basis that that was something that she relied upon as bearing upon his ability to secure any undertaking as to costs in proceeding in the name of the company. Ms Sofroniou confirms that that’s the position.

SOFRONIOU: Yes.

HIS HONOUR: What was the proposition that I should have the transcript known?

FAGAN: That Ms Sofroniou accepts the position that the client is not in such a position as to be able to fund both sets of proceedings.

SOFRONIOU: I can confirm that the liquidator’s position is that no security is available to support any indemnity that’s been offered.”

68 By the time of the hearing before Einstein J, the Common Law Proceedings were already fixed to be heard commencing on 5 November 2001. Einstein J referred to that fact in his judgment. His Honour also recorded, at [26]:

“In February 2001, Mr Mead apparently filed an application in the Family Court for an interim property distribution to fund his legal costs of the Family Court and common law proceedings. The application as now amended is said to be for an order for sale of some of the jointly held real property to enable Mr Mead to use up to 50 percent of the proceeds for his costs in the Family Court and in the common law proceedings. That application was listed for hearing on 23 July 2001 but was not reached and was stood over to 25 and 26 October 2001 - only days prior to the hearing of the common law proceedings.”

“Mr Mead then submits that even if the Family Court should, on 25 October 2001, release some of the restrained matrimonial property to enable Mr Mead to pay his legal costs, funding yet another set of costs (for the liquidator to apply to set aside the default judgment against Hypec Electronics and to institute a cross-claim) would be prohibitive.”

69 Einstein J records a submission by the liquidator that “The liquidator has an apprehension that the monies proposed to be provided by way of indemnity might be the company’s monies in any event”.

70 Einstein J set out, at [82] Mr Mead’s financial position – he had income of $100 per week, his only liquid asset was $1,200 in the bank, and he had a debt of at least $350,000 to his lawyers for legal fees in the Family Court proceedings, the Common Law Proceedings, and the proceedings before Einstein J. This meant that Mr Mead was unable to provide the liquidator with a satisfactory indemnity for costs which the liquidator would incur if he were to run the Common Law Proceedings for HE. As the liquidator was not prepared to run those proceeds for HE without a satisfactory indemnity, the likelihood was that the liquidator would not run that litigation. On the material before his Honour, further consideration by Mr Watson of the merits of either the defence or the proposed cross-claim in the Common Law Proceedings was unlikely to change Mr Watson’s mind about being not prepared to run the Common Law Proceedings on behalf of Hypec. This was because it was a sufficient reason for Mr Watson not to undertake the litigation that he could not get a satisfactory indemnity for costs. There was therefore no point in giving Mr Watson further time to evaluate the merits of Mr Mead’s opposition to BL’s claim, or of the proposed cross-claims.

71 At [93], Einstein J said:

“Insofar as the question of the costs of Hypec Electronics in relation to the Common Law proceedings are concerned the fact is that the indemnity offered by Mr Mead ought not necessarily be regarded as worthless. On the evidence, Mr Mead's personal financial position is so tied up with the prospects of success by the company in the Common Law litigation and/or by the net result in the Family Court proceedings that the Court ought not infer that the indemnity is writ in water or worthless.”

72 Earlier, at [64] Einstein J had quoted from the judgment of Austin J in Cadima Express Pty Ltd (in liquidation) v DCT [1999] NSWSC 1143; (1999) 33 ACSR 527; (1999) 157 FLR 424 a passage which included:

Aliprandi v Griffith Vintners Pty Ltd

(in liq)

73 In other words, Einstein J was permitting Mr Mead to have the standing to run the Common Law Proceedings in the name of HE, knowing that any indemnity for costs which Mr Mead could offer the liquidator was of questionable value (though not necessarily worthless), but also knowing that permitting Mr Mead to bring the action in the name of the company would not result in the liquidator personally being liable for any costs if Mr Mead were to lose. His Honour also made the decision in circumstances where the evidence was that Mr Mead could proceed with the Common Law Proceedings, only if his application to the Family Court for access to some of the matrimonial assets succeeded.

74 On 7 September 2001, Etheringtons sent to Mr Watson a copy of the Notice of Motion which it had filed seeking to set aside BL’s default judgment. Etheringtons also sent to Mr Watson a copy of the letter which they had sent to the solicitors for BL, which said, inter alia:

“… it is imperative that this matter is dealt with on the first return date as this matter has been fixed for a five day hearing commencing 5 November 2001, and any delay associated with our client’s application may result in the hearing dates being vacated.”

75 This letter to Mr Watson must have gone astray, because on 17 September 2001 he wrote to Mr Dominello complaining about not being kept informed about progress in the application to set aside the judgment obtained against HE. By that time, he had carried out some further investigations of the state of account between HE and BL. Those investigations supported, he said, Mrs Mead’s contentions. His letter continued:

“… Contrary to Mr Mead’s claims my current view is that monies were never remitted to BL & GY and instead the funds were used for other purchases and in particular the purchases of real estate by Mr and Mrs Mead …

I believe that it is very likely that the proposed cross-claim is without substance.

Given the very substantive [sic] legal expense incurred by Mr Mead in qualifying for instance Mr McKewen’s report I find it extraordinary that actual bank statements and cheques have not been examined. In this circumstance and given my attached report if I was now asked to determine whether Hypec should apply to set aside the judgment I would firmly say no.”

76 On 18 September 2001 Mr Watson swore an affidavit, for filing in the Common Law Proceedings. It set out the then state of his investigations into the indebtedness between BL and HE, and concluded:

“I now wish to issue subpoenas for bank statements and original cheques, which records will determine whether payments have been made from Hypec to BL & GY at all, as contended for by Mr Mead, or in fact to other parties, in contradiction of his claim in this application. I also wish to complete my investigations as official liquidator, including taking whatever steps necessary to ascertain use of company funds by Mr and Mrs Mead, whether or not using BL & GY as a vehicle, and commencing proceedings if necessary. I accordingly request that this Honourable Court defer the determination of this application pending my examination of Hypec’s bank statements and cheques. Such a course may well shorten the hearing of the current application and provide the Court with objective evidence as to the true situation between Hypec and BL & GY.”

77 When the application to set aside the default judgment came on for hearing before Sully J on 19 September 2001 Ms Sofroniou, counsel for the liquidator, sought leave to appear for the liquidator. Mr Fagan SC, for HE (and authorised to appear for HE in this particular application by the terms of the order of Einstein J) opposed that application. Sully J refused the liquidator’s application for leave to appear.

78 On 21 September 2001 Etheringtons wrote to Mr Conolly, saying that the hearing before Sully J had concluded on 19 September 2001, that his Honour had reserved his decision, and stated that he would hand it down on or before Friday, 28 September 2001. The letter continued:

Corporations Act 2001

79 On 24 September 2001 Mr Conolly wrote to Etheringtons, saying that the liquidator would also consent to BL bringing an action against HE.

80 On 11 October 2001 Etheringtons wrote to Mr Conolly, confirming their previous advice that Sully J had set aside the default judgment on 25 September 2001, and reporting on directions given by McClellan J on 4 October 2001 for the further conduct of the Common Law Proceedings. Those directions confirmed that the matter was to be heard on 5 November 2001. The letter sought access, for the purposes of the trial, to documents of HE in possession of the liquidator.

81 Prior to the hearing of the Common Law Proceedings commencing, BL paid into Court $115,000 as security for the costs of HE and Mr Mead.

The Judgment of Cohen J

82 The judgment of Cohen J delivered on 2 November 2001 shows that the orders which were asked for, were ones contained in an Amended Application, filed on 22 October 2001. While that Amended Application is not in evidence, it appears from the account given in Cohen J’s judgment that it differed from the earlier application, which I have summarised at paragraph 16 above, in seeking an additional order permitting two additional properties to be mortgaged to raise money to meet Mr Mead’s legal costs.

83 The amount for which Mr Mead sought the ability to deal with matrimonial assets included $537,000 for past legal costs in the Supreme Court and the Family Court. Of that amount, a little under $120,000 related to solicitors costs of the Family Court proceedings, a little over $66,000 for barristers fees in the Family Court (total about $186,000 for the Family Court) a little over $210,000 related to solicitors costs of the Supreme Court and a bit under $133,000 to barristers fees in the Supreme Court (total about $343,000 for the Supreme Court). (These figures do not reconcile, but the general picture is clear enough.) Those figures did not include any interest which might have become payable on the unpaid costs. Nor did they include the fees of a barrister who had appeared in the Family Court on about 15 days, but who had not by that time rendered a memorandum of fees. The future costs were estimated at a little under $84,000 for the Supreme Court proceedings, and a little over $63,000 for the Family Court proceedings.

84 Cohen J refused to provide access to any assets for the purpose of securing future estimated Family Court costs. His Honour decided that the appropriate basis for arriving at a figure to include in an order was to provide funding for about half of the legal costs already accrued and quantified (in both Family Court and Supreme Court), and the whole of the estimated future Supreme Court costs. After taking into account that the past costs were likely to bear interest, his Honour arrived at the figure of $375,000. It appears that there was no need to mortgage properties, in addition to selling the Four Properties, to raise that $375,000. The substance of the orders made by Cohen J was:

(a) The earlier injunctions were discharged to the extent necessary to allow the rest of Cohen J’s orders to be given effect;

(b) the husband and wife were to do everything necessary to sell such of the Four Properties as was necessary to raise (after payment of costs incidental to the sale) $375,000;

(c) the net proceeds of each sale were to be paid to Mr Dominello to be held by him on trust in a controlled monies account, and applied

(i) first, to meet the husband’s future costs in the Common Law Proceedings;

(ii) second, to meet that part of the husband’s indebtedness for costs incurred at the date of the orders, including barristers’ fees on accounts not yet rendered, as should with the amount paid pursuant to (i) amount of $375,000.

The Trial Before Mathews AJ

85 An employee of the liquidator, and Mr Conolly, were present throughout the hearing of the Common Law Proceedings before Mathews AJ. At that trial Mr Mead and HE were represented by senior and junior counsel.

86 Because the time occupied by the hearing before Mathews AJ so substantially exceeded the time which had been estimated, the costs of Mr Mead of that hearing likewise exceeded the amount which had been estimated. The total costs of the Common Law Proceedings have not yet been assessed, but Mr Dominello estimates that they will be about $900,000. Mr Dominello estimates that the costs exceeded those which had been assumed by Cohen J in his judgment by $650,000 to $700,000. That might involve some overestimation on Mr Dominello’s part, as about $343,000 had been incurred in the Supreme Court by the time of Cohen J’s judgment (which would mean that the costs incurred after the time of Cohen J’s judgment in the Supreme Court were more of the order of $557,000). This topic was not gone into in enough detail for me to make a positive finding that Mr Dominello’s estimate is inaccurate – but even if the correct figure of costs incurred after Cohen J’s judgment is more like $557,000 than $650,000 to $700,000, it still well exceeds the $375,000 which the orders of Cohen J permitted to be applied first to meet future costs in the Common Law Proceedings.

87 Mr Hodgson, an employee of the liquidator, was called by BL in the hearing of the Common Law Proceedings before Mathews AJ. He gave an account of work he had done in the course of the liquidation, which included finding the loan of $2.861 million owed by Mr and Mrs Mead, contained in the trial balance of 30 June 1998, and of going on to seek to determine what was the true state of the directors’ loan account in relation to HE. He explained how further work led him to the conclusion that the true state of the directors’ loan account should have shown it as being $4,907,725.64. The position was then brought up to the date of questioning (which was 12 November 2001).

The Liquidator’s Knowledge of the Application to Cohen J

88 The liquidator filed an affidavit in the proceedings before me, which stated:

“I was not advised by Mr Mead or his legal representatives of the progress of the Family Court proceedings or of the outcome of Mr Mead’s application to set aside or vary the injunctions restraining the sale of the subject properties.

It was my understanding that the property proceedings in the Family Court between Mr and Mrs Mead had been stayed pending determination of the Supreme Court proceedings. It was my belief that the effect of the stay was that the properties held in the names of Colin and Lucy Mead could not be sold.

I understood from submissions made by counsel for Mr Mead to Einstein J on 17 August 2001 that Mr Mead had previously applied to the Family Court to have the injunctions varied or set aside but that that application had failed.

I did not consider it likely that a further application to the Family Court, based as I thought it was on submissions that had been made previously by Mr Mead and rejected, would be proceeded with.

I was not served with copies of the Family Court pleadings or supporting affidavits in relation to those proceedings and I would have expected to have been served if Mr Mead proceeded with his application, given that Mr Mead and his legal representatives had read my Reports, knew that I was investigating the ownership of the matrimonial property, and was aware that I had requested copies of the Family Court documentation.

Had I apprehended that Mr Mead would in fact pursue the application to the Family Court, I would have sought to intervene in those proceedings.

After the proceedings before Einstein J on 17 August 2001, my mind was not directed at all to any Family Court proceedings until about 14 December 2001 when I read an Affidavit of Victor Dominello sworn on that date.

Despite my written requests for copies of the pleadings, affidavits and other documentation in the Family Court proceedings, Mr Mead’s solicitors have failed to provide me with that material.

I was not advised of the orders made by Cohen J on 2 November 2001 until I was served with a copy of the Affidavit of Victor Dominello sworn 14 December 2001.

I was not informed that any of the subject properties had been listed for sale pursuant to those orders until I was served with a copy of the Affidavit of Victor Dominello sworn 14 December 2001.

Had I been aware of the orders, I would have had to consider making an urgent application to the Family Court and/or the Supreme Court to protect the Company’s interests in the properties.”

89 The liquidator’s statement that he was not provided with documentation in the Family Court proceedings is incorrect. He was provided with the affidavit which Mr Mead swore on 12 February 2001 on 19 July 2001 (paragraph 59 above), and on 7 August 2001 was informed of the date of the application to the Family Court, and provided with the application which was then the current one (paragraphs 61 and 62 above). Cross-examination of the liquidator also caused a different picture to emerge to that presented in his affidavit. At one time he said that from the beginning of October 2001 he “couldn’t be certain” that Mr Mead would make the application to the Family Court. Then he was taken to the last four of the paragraphs from Mr Mead’s affidavit of 26 July 2001 which I have quoted at paragraph 61 above. The following evidence was then given.

“Q. You were aware of all of that at the time when this affidavit was read in the proceedings before Justice Einstein, or shortly thereafter?
A. Yes.

Q. You knew from that, didn’t you, Mr Mead was in fact going to proceed with an application to the Family Court for that purpose which he had commenced in February which had been unable to get heard before the Family Court on 23 July and had been stood over to 25 October, correct?
A. That’s correct.

90 And at T.16.

“Q. You knew properties were the subject of competing claims between Mr and Mrs Mead down there [in the Family Court], didn’t you?
A. Yes.

Q. You knew in the meantime that the Family Court had them injuncted?
A. That’s correct.

Q. It was that injunction Mr Mead was trying to get varied to sell all of them to pay the costs of running this Supreme Court case?
A. That’s correct.

Mr Mead’s Understanding of the Liquidator’s Position

91 Mr Dominello gave evidence, which I accept, as follows:

“12. At the conclusion of the hearing before his Honour Mr Justice Einstein I did not understand the Liquidator to be asserting on behalf of Hypec any claim to any interest in any of the properties registered in the names of Lucy and Colin Mead. I did not understand that he asserted or intended to assert or pursue any claim of an interest which would interfere with the sale of such properties (if authorised by the Family Court) or with the application of the proceeds of sale to Mr Mead’s legal costs (including costs of acting in the name of the company, in the event of his Honour Mr Justice Einstein making the orders sought).

13. Although the Liquidator’s Affidavit of 13 August 2001 deposed to “an apprehension that the matrimonial property, which Mr Mead is … wishing to sell for the purpose of the funding of the Common Law Proceedings may, in whole or in part, comprise assets properly belonging to Hypec”, I understood this to be mentioned merely as a possibility by which the Liquidator sought to raise doubt regarding the value of an indemnity from Mr Mead to the Liquidator in respect of the Liquidator’s own costs.

14. In the application before his Honour Mr Justice Einstein the Liquidator did not tender any evidence to establish, even to a prima facie level, any equitable interest in the properties for which Mr Mead had applied to the Family Court for orders for sale. Nor did the Liquidator at that time apply for any declaration or order to prevent Mr Mead from realising the matrimonial properties, if he could obtain an order from the Family Court. Nor did the Liquidator or his solicitor give any indication to me of any intention to lodge caveats or otherwise to restrain dealings with the properties.

15. From those aspects of the position taken by the Liquidator before his Honour Mr Justice Einstein, I understood that he was leaving to the Family Court the decision as to whether the properties ought be sold for the purpose of raising legal funds and that he would abide the outcome of that application. I understood the Liquidator was acquiescing in Mr Mead’s utilisation of the proceeds of sale of the properties to fund the litigation which he would conduct on behalf of Hypec against BL & GY, if he should obtain the orders which he sought from Mr Justice Einstein and from the Family Court.

16. The Liquidator actively opposed Mr Mead’s application on behalf of Hypec before his Honour Mr Justice Einstein. If he intended to claim on behalf of Hypec the matrimonial properties, the sale of which was integral to Mr Mead litigating in the name of Hypec, then I would have expected him either:

16.1 to do so in that hearing or

16.2 to announce a firm intention to enforce such a claim as a reason why Mr Mead should not or could not act in the name of Hypec.

21. After Mr Justice Einstein had made his orders of 27 August 2001 and right through until 12 December 2001, my understanding of the Liquidator’s position in respect of the sale of the matrimonial properties for funding of the litigation against BL & GY remained unchanged from the position which had appeared to me in the hearing on 17 August 2001. Had I been put on notice that the Liquidator would oppose the sale of the matrimonial properties, notwithstanding the making of an order in the Family Court, and/or that he would assert a claim that Hypec had equitable interests which prevented the properties being sold or their proceeds being used for Mr Mead’s costs I would not have continued to perform legal work and/or to brief Counsel.

22. At all times in 2001 I was unaware of any source from which Mr Mead could fund the anticipated legal costs of the proceedings in the name of Hypec against BL & GY, apart from the sale of these matrimonial properties. Notwithstanding my assessment that the Cross Claim in the name of Hypec against BL & GY had good prospects of success, I was not prepared to continue legal work or to brief Counsel upon the expectation of being paid out of that source.

23. I did not know whether a judgment upon the Cross Claim against BL & GY could be satisfied by that company. Nor did I know whether Mr Mead would be able to recover his costs out of such a judgment, even if successful, since the judgement would be obtained for the benefit of Hypec and not for Mr Mead personally.

24. From 27 August 2001 I proceeded to carry out legal work in the Common Law Proceeding and to brief Counsel in that matter in the expectation that:

24.1 Mr Mead’s Family Court application for orders to sell the properties had good prospects of success and

24.2 that there was no competing claim in respect of the properties and no impediment to the proposed realizations if ordered by the Family Court.

29. At the time of undertaking legal work to oppose BL & GY’s applications to Mr Justice McClellan and when briefing Counsel for that purpose, my understanding of the Liquidator’s position remained as stated in paragraphs 12-16 and 21-23 above. I would not have undertaken the work associated with resisting that application of BL & GY, nor would I have briefed Counsel for the purpose, had I understood that the Liquidator intended to pursue a claim which would prevent the utilisation of the proceeds of sale of matrimonial properties for the legal costs incurred, regardless of the Family Court’s decision.

32. On 25 and 26 October 2001 Mr Mead’s application to the Family Court for orders that matrimonial properties be sold and the proceeds used for legal costs was heard. At the conclusion of that hearing, upon the basis of remarks from the Bench in discussion with Counsel, I considered that the application would succeed. The presiding Judge, Mr Justice Cohen, reserved his decision to 2 November 2001.

33. In the expectation that Justice Cohen would make an order favourable to Mr Mead for the sale of properties, and on the understanding that there was no impediment to such sale by reason of any competing claim from the Liquidator or anybody else, I proceeded after 26 October 2001 to brief Counsel to prepare and to carry out my own preparation for the hearing of the Common Law action between BL & GY and Hypec. …

37. I never received any notice that the Liquidator would make a claim in relation to any of the matrimonial properties which would prevent or impede their sale, or the application of the proceeds to legal costs, until the first notifications of the lodging of some of the Liquidator’s caveats were served upon Mr Mead on about 12 December 2001.

38. If I had been informed at an earlier time that the Liquidator claimed on behalf of Hypec an equitable interest in the matrimonial properties which he asserted should prevent them from being sold or their proceeds being applied to legal costs incurred by Mr Mead, then neither I nor my associate, Mr Steven Lamont, who has conduct of the Family Court proceedings for Mr Mead would have undertaken work in relation to the Interim Property Application unless and until the Liquidator’s said claims been determined. Nor would we have briefed Counsel to appear in those proceedings.”

92 Mr Dominello was aware, from at least the end of June 2001, that monies belonging to HE had probably been used to purchase various properties in the name of Mr and Mrs Mead. He knew, from around the time of the hearing before Einstein J, that the liquidator was investigating the question of whether all or any of those assets in the joint names properly belonged to Hypec. His understanding that there was such an investigation continued to the time that he became aware of the lodgement of the caveats. However his understanding was that the claim which the liquidator was actually making was that the diversion of the company’s money to purchase assets in the name of Mr and Mrs Mead resulted in Mr and Mrs Mead having an obligation to repay the money, not in the liquidator having a proprietary right to assets. He gave evidence as follows:

“Q. And you knew as well, did you not, very plainly, that the liquidator was asserting that many of those properties may well have been acquired with company funds and properly belong to the company?

Cadorange

171 Discussion of Ex parte James in appellate decisions of the High Court of Australia has not resulted in any principle being stated which governs the present case. There are only two such decisions. The first is The Official Assignee of the Estate of Turnbull v Goldstein (1921) 29 CLR 377. It concerned a moneylender who had lent money to a bankrupt before sequestration, and taken a security which did not comply with the moneylending legislation. After sequestration the moneylender seized and sold some of the secured property. The official assignee sought, and obtained from the court at first instance, an order that the moneylender pay to the official assignee the value of the property seized and sold. The Court imposed a condition that the moneylender should be admitted to prove as a creditor in the estate of the bankrupt in respect of the sum of money lent. The High Court held that no such condition should be imposed. It held that when the moneylending legislation made the taking of security by the moneylender in a way which did not comply with the requirements of the Act an offence, the money lent was not recoverable. Knox CJ and Rich J, at 386, referred to the long line of cases which had been expounded in In Re Wigzell, and said, at 386:

“It is sufficient to say that is difficult to extract from these cases any definite guide as to the circumstances in which the rule is applicable. But it is clear that the rule has never been applied to give effect to a transaction which is positively forbidden by law on pain of fine or imprisonment. It is, indeed, difficult to conceive how it can be the duty of the Court of Bankruptcy or of any Court to compel its officer to give effect to a transaction which the law declares to be wholly illegal and void.”

172 Higgins J, at 393-4 stated the principle as being:

“… that the trustee in bankruptcy is an officer of the Court, and that the Court ought to set an example to the world by paying back money to the person who is in justice entitled to it although it is not recoverable by any form of action.”

173 Higgins J said that the facts in Ex parte James, did not involve

James’

174 The second High Court appellate decision is Downs Distributing Company Pty Ltd v Associated Blue Star Stores Pty Ltd (in liquidation) (1948) 76 CLR 463. It involved an action to recover a preferential payment. The defendant had extended credit to the plaintiff after a representative of the plaintiff had said there would be no difficulty about payment in seven days. The trial judge held that the defendant did not come within the protective provision in section 95 Bankruptcy Act 1924, which protected the rights of a payee in good faith and for valuable consideration and in the ordinary course of business. The trial judge held that this protective provision did not apply because the defendant at least had reason to suspect that the plaintiff was insolvent and that the challenged transaction had the effect of giving preference over other creditors. The defendant argued that Ex parte James prevented the liquidator from recovering the preference, because the original purchase of goods by the plaintiff was fraudulent, as the plaintiff’s representative who said there would be no difficulty in paying for the goods in seven days knew the plaintiff had financial difficulties, and that if the liquidator were to succeed he would be obtaining an advantage from that fraud. Latham CJ dismissed the argument, at 476, on the basis that fraud had not been alleged and proved at the trial. Williams J discussed the rule at 481-483, and held that it was not applicable in that case because (at 482),

“… the cases as a whole appear to show that it is only in exceptional cases that the rule would be applied where the officer or his predecessor in office has not been personally concerned in the transaction.”

175 To recapitulate, the rule in Ex parte James has been applied many times to allow recovery from a liquidator or trustee in bankruptcy of money paid under a mistake of law: Ex parte James itself; In re Brown; Dixon v Brown (1886) 32 Ch D 597; Ex parte Simmonds; In re Carnac (1885) 16 QBD 308; In Re Rhodes; Ex parte Rhodes [1899] 2 QB 347; In re Craig & Sons; Ex parte Hinchliffe [1916] 2 KB 497; Re Paddington Town Hall Centre Limited (in liquidation) (1979) 41 FLR 239;

176 The mistake which triggered the application of Ex parte James in these cases has not always be in the mistake of the person who seeks recovery of the money. For example, in In re Craig & Sons; ex parte Hinchliffe [1916] 2 KB 497 the mistake was made by the sheriff, not by Hinchcliffe. And in In re Thellusson; Ex parte Abdy [1919] 2 KB 735 the mistake which was made by the payer was not a mistake of law but a mistake of fact, that the loan would actually achieve its intended purpose -- which, while it would give rise to a quasi-contractual right of recovery, would be one which would only be provable in a second bankruptcy.

177 As well, though, the rule in Ex parte James has also been applied in many circumstances outside the recovery of monies paid under mistake.

· The evidence in In re Tyler; Ex parte The Official Receiver [1907] 1 KB 865 did not go so far as to establish that the widow was making a mistake when she paid the premiums of life policy and interest on the loan -- it was the fact of her paying the premiums and interest, with the Trustee’s knowledge, and that the making of those payments enabled the policy monies eventually to be received, which made it inequitable for the trustee to refuse to pay her back the money she had spent.

· In Re Redmond; Ex parte Official Receiver (1948) 16 ABC 90 the creditors who had advanced money for paying the costs of the litigation which eventually swelled the bankrupt estate received back the costs they had paid, even though they were under no mistake in having advanced those costs -- at best, it could be said that they had a hope of receiving a preferential dividend in consequence of advancing the costs.

· In In Re Associated Dominions Assurance Society Pty Ltd and the Life Insurance Act (1962) 109 CLR 516 the liquidators had encouraged the general manager not to make application to the ordinary tribunals, and then themselves delayed in seeking the court's directions, and hence were precluded from relying on a limitation statute which might otherwise be available to them.

· In Re Securitibank Ltd (in liquidation) [1978] 1 NZLR 97, at 209-210 Barker J applied Ex parte James to direct a liquidator, faced with claims under bills of exchange where the holders of the bills had failed to give timely notice of dishonour, to waive failure to give that notice or any irregularity (in certain circumstances, and subject to a proviso not presently relevant).

· In Re Ebner; Ebner v Official Trustee in Bankruptcy [2003] FCA 73; (2003) 196 ALR 533 Finklestein J used the rule in Ex parte James as the basis for making a judicial estimate of the proportion of the household goods in the house where a bankrupt lived which had been purchased with funds contributed by the bankrupt’s wife, in circumstances where the evidence was extremely sparse.

178 Insofar as In Re T H Knitwear (Wholesale) Ltd [1987] 1 WLR 371 was decided, at 377, on the basis that Ex parte James could be applied only when there had been a mistake either of fact or law by reason of which the company's assets available for distribution had been increased, it is, in my respectful view, mistaken. The appeal (In Re R T Knitwear (Wholesale) Ltd [1988] 1 Ch 275 did not consider this point. (It turned on whether Ex parte James applied to a voluntary liquidation, and on whether there was in fact dishonourable conduct.)

179 Some assistance in understanding the principle in Ex parte James can be derived from seeing where it fits in a broader context of the law. When the Court had the function of winding up companies it was exercising a function which was in some respects not the function nowadays most readily seen as the function of courts, namely of determining the legal rights of parties. In some respects, the functions it was carrying out were administrative ones. The Chancery Court had a long history of carrying out such administrative functions. Some of those administrative functions arose from the delegation to the Chancery Court of aspects of the Royal prerogative. This gave the Court its parens patriae jurisdiction, which enabled it to decide everyday practical matters concerning the affairs of infants and lunatics who came under its care, such as deciding how the property of such people should be invested. One of the remedies which the Chancery Court granted was an order for the administration of an estate. There is no misnomer in the name of that remedy. The tasks which are carried out in the course of administering an estate can include ascertaining legal rights (as, for instance, when a will or trust instrument needs to be construed) but many of the tasks which the Chancery Court carried out when it made a decree for general administration of an estate were, rather, the sort of administrative tasks which are involved in managing any business enterprise. The Court had officers who assisted in carrying out those administrative tasks. For example, it had conveyancing counsel, who would investigate the title of lands to be sold by the Court, and draw the terms of the contract under which it was to be sold: Else v Else (1871) LR 13 Eq 196; In Re Banister; Broad v Munton (1879) 12 ChD 131. In Star v Silvia (No.1) (1994) 12 ACLC 600, at 604 Young J said:

CCA v Harvey

(liquidator of Timberlands Ltd

(in liq)

and

Equitable Forestry Services Pty Ltd (in liq))

180 In other situations where a public official exercises a power, it is common to find a duty that that power will be exercised fairly – examples are the principles of natural justice applicable to administrative decision-makers, the responsibilities of fairness of a Crown prosecutor (R v Rugari [2001] NSWCCA 64, at [43]-[52]; (2001) 122 A Crim R 1) and the expectation that the Crown will act as a model litigant. Concerning this latter matter, the authorities are collected by Spender, Finn and Weinberg JJ in Scott v Handley [1999] FCA 404; (1999) 58 ALD 373 at [43]-[44]:

Melbourne Steamship Co Ltd v Moorehead

“I am sometimes inclined to think that in some parts – not all – of the Commonwealth, the old-fashioned traditional, and almost instinctive, standard of fair play to be observed by the Crown in dealing with subjects, which I learned a very long time ago to regard as elementary, is either not known or thought out of date. I should be glad to think that I am mistaken.”

Yong v Minister for Immigration and Multicultural Affairs

Hughes Aircraft Systems International v Airservices Australia

SCI Operations Pty Ltd v Commonwealth of Australia

Director of Public Prosecutions (Cth) v Saxon

Kenny v State of South Australia

Logue v Shoalhaven Shire Council

P & C Cantarella Pty Ltd v Egg Marketing Board (NSW)

R v Tower Hamlets London Borough Council, Ex parte Chetnik Developments Ltd

ACCC v George Weston Foods Limited

181 It is no surprise that the Chancery Court regarded itself as under similar obligations to act, not just in accordance with the letter of the law, but fairly, in the way in which administrations conducted under its control were supervised. The connection between these general duties of public officials to act fairly and the rule in Ex parte James has been recognised in R v Tower Hamlets London Borough Council; Ex parte Chetnik Developments Ltd [1988] 1 AC 858, at 876, where Lord Bridge of Harwich said that the type of “equity” referred to by James LJ in Ex parte James was:

“… referring not to an equity enforceable in a suit or action, but to a moral principle which the court could expect to be observed by a public body such as a rating authority.”

182 The limits within which a court may exercise the principle in Ex parte James are influenced by the provisions of the Corporations Act 2001. Of particular relevance to Mr Mead’s claim in the present case, that the liquidator ought not collect the Four Properties even if he has a legal entitlement to them is the fact that section 478(1) provides:

“As soon as practicable after the Court orders that a company be wound up, the liquidator must:

(a) cause the company’s property to be collected and applied in discharging the company’s liabilities …”

Corporations Act

“Subject to this section, a liquidator of a company may:

(a) bring or defend any legal proceeding in the name and on behalf of the company …”

“The exercise by the liquidator of the powers conferred by this section is subject to the control of the Court, and any creditor or contributory, or ASIC, may apply to the Court with respect to any exercise or proposed exercise of any of those powers.”

183 In the present case, Mr Mead seeks to have the Court direct the liquidator, under 477(6) that he ought not continue with proceedings against Mr Mead to recover the Four Properties. Section 477(6) is incorporated by reference (“Subject to this section …”) in section 477(2). And section 477(2) is the present equivalent of section 377(2) of the Code, identified by Gummow J in Hartogen, and Young J in Star v Silvia (No.1) as the means by which Ex parte James now operates.

184 That the Court should have a power, which when exercised on the basis on which Ex parte James has in the past been applied by the courts, might result in certain property which is in truth the property of the company, not being recovered by it is not out of keeping with the structure of the Corporations Act 2001.

185 In addition to the extensive powers of the liquidator, in section 477, all being subject to the control of the Court, under section 477(6), the provisions of the Corporations Act 2001 which govern winding up by the Court contain many provisions which confer discretions on the Court which will have a significant effect on the assets which are divisible in a liquidation, and the creditors amongst whom the assets are divisible. Section 466(2) and (4) confers on the Court a power to order that the costs involved in obtaining the winding up order not be paid out of the assets of the company. Section 468(1) and (3) confers on the Court a power to decide that a disposition of property of the company after the commencement of the winding up is valid. Section 471B enables the Court to grant leave, on such terms as it thinks fit, for litigation to be brought against the company. The Court controls the remuneration of the liquidator, under section 473. Section 477(2B) enables the Court to approve a liquidator entering an agreement which might take more than three months to perform: Re G A Listing & Maintenance Pty Ltd (1994) 15 ACSR 308.

186 Under section 479(3) the Court can give directions to a liquidator concerning any particular matter arising in the winding up. Under section 480, the Court can release a liquidator even if not all of the property of the company has been realised, if realisation would needlessly protract the winding up. The Court has power, under section 482, to stay or terminate the winding up. Section 484 enables the Court to appoint a special manager, with such powers as the Court thinks fit – a power which if exercised can affect the costs of the liquidation significantly. Section 485 enables the Court to ignore claims by creditors who have not proved their debts or claims by a date which the Court fixes. Section 562A gives the Court discretionary power to decide how proceeds of reinsurance contracts should be applied, when an insurer is in liquidation. Section 564 enables the Court to give preferential treatment, in distribution of assets, to creditors who have provided certain kinds of financial support to the liquidator. Under section 568-568F the Court has significant discretionary powers concerning whether or not disclaimer of onerous property is permitted, and if so on what terms. Further, section 1318 and 1322(4)(c) have the effect that the Court can relieve a liquidator from a liability which he would otherwise have for not performing his duties correctly.

187 The proper scope of the considerations which a court can take into account in deciding that a liquidator ought not pursue certain litigation to recover a corporate asset, can be illustrated by the analogy of the scope of the court’s power to validate dispositions of company property made after the commencement of the liquidation. The analogy is a fairly close one, because not pursuing litigation to recover a corporate asset, and validating a disposition of company property made after the commencement of the liquidation each results in an asset which would otherwise be available for distribution amongst creditors not being available for that purpose. In Re Clifton Place Garage Ltd [1970] 1 Ch 477 involved a company which was placed into receivership after a petition to wind it up had been presented. The receivers, after being misled by the director of the company about its profitability, decided to keep trading. In fact the income which the receiver received was less than the expenses which he paid. The company was placed into liquidation, and the liquidator claimed from the receiver the amount of income which the receiver had received, and spent. The receiver sought to have his spending of the money (which was admittedly a disposition of the property of the company made after the commencement of the winding up) validated. Megarry J refused to validate it, because he thought the receiver had been unreasonable in making inadequate enquiries before resuming trading. That decision was overturned in the Court of Appeal. Harman LJ referred to the way the relevant section provided no criteria for the court to decide whether or not it would “otherwise order”. Megarry J had relied, at 482, on remarks of Vaisey J in In Re Steane’s (Bournemouth) Ltd [1950] 1 All ER 21, 25, concerning the criteria to apply in deciding whether to “otherwise order”, and validate a disposition of the company’s property made after commencement of the winding up:

“that each case must be dealt with on its own facts and particular circumstances (special regard being had to the question of the good faith and honest intention of the persons concerned), and that the court is free to act according to the judge’s opinion of what would be just and fair in each case.”

188 Harman LJ recorded, at 491, a submission that the principle in Ex parte James could provide guidance in exercise of the discretion to validate dispositions, but did not expressly rule on it. However, the judgment shows that a very broad approach was taken. Harman LJ said, at 491:

“otherwise”

Application of Ex Parte James to the Facts

189 In the present case, there is an important factor which is relevant to the application of Ex parte James, which is not taken into account by the factors which lead to an estoppel. It is that, by bearing the expenses of running the Common Law Proceedings, Mr Mead has conferred a very substantial benefit on the company in liquidation. He has established that it is not liable for the debt of BL. By the time of the hearing before Mathews AJ, the claim which BL made against HE, inclusive of interest, was of the order of $11 million. If BL’s claim had not been held to be without substance, the liquidation of HE would have resulted in a nil return to the shareholders. If, contrary to the judgment which he made at the time of the hearing before Einstein J and in the weeks thereafter, the liquidator had decided that he would run the Common Law Proceedings, he would have paid in legal costs not only the value of the Four Properties, but considerably more. Further, his costs in so doing would have been a first charge on the assets of HE. It is, it seems to me, not a proper exercise of the liquidator’s discretion to accept the benefit of the judgment which Mr Mead has obtained in HE’s name, while not accepting the burden of that part of the costs which Mr Mead claims in these proceedings. His attempt to do so, in the present proceedings, is, in my view, a clear case of pressing a claim which has no merit.

190 Counsel for the liquidator submits that the incurring of those expenses by Mr Mead was not necessary for HE to become freed of BL’s claim. He submits that, while the liquidator would have needed to take action to set aside the default judgment which BL had obtained, once that had been done it would have been open to the liquidator to call for proofs of debt, and reject BL’s proof. While that way of proceeding was theoretically open to the liquidator, I do not accept that there is any real likelihood that it is a course which he would have followed. As at 17 September 2001 his view was that “if I was now asked to determine whether Hypec should apply to set aside the judgment I would firmly say no.” (paragraph 75 above) His approach to the liquidation had, prior to the running of the Common Law Proceedings, been to tend to accept what Mrs Mead told him. His investigations were being funded by Ms Yang. One can readily infer that that funding was not likely to be continued if the liquidator took a stance contrary to the interests of BL. The liquidator had formed a view (which ultimately proved right) that Mr Mead’s proposed cross-claim lacked substance, and his scepticism extended to Mr Mead’s opposition to BL’s claim. In any event, the relevant question is, when the liquidator has in fact obtained the benefit of HE being freed from the BL claim, at Mr Mead’s expense, he ought be permitted to decline to have the company bear the expense, to the extent to which Mr Mead seeks it.

191 One way of checking whether a liquidator’s proposed action would contravene Ex parte James is to see whether the situation in which he is proposing to act is one which is, or is close to, a situation where an equity court would recognise a proprietary right, which the liquidator would infringe by his proposed course of action. Trustees, liquidators, and receivers were recognised by the equity court as being entitled to be paid their reasonable expenses from the fund, and as a first charge on the fund: Shirlaw v Taylor (1991) 31 FCR 222 at 228-231. The first charge of trustees, liquidators and receivers is for all their expenses and costs – and this could extend to the costs of seeking (including seeking unsuccessfully) to protect the fund from adverse claims, and thereby preserve it, as well as the cost of getting in assets which swelled the fund; In Re Trent and Humber Ship-Building Company (1869) LR 8 Eq 94; In Re Wenborn & Co [1905] 1 Ch 413; Re Application of Central Commodities Services Pty Ltd [1984] 1 NSWLR 25; Nationwide News Pty Ltd v Samalot Enterprises Pty Ltd (No.2) (1986) 5 NSWLR 227 at 230-231; 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) (1999) 30 ACSR 377 at 385. A solicitor who acted in proceedings which resulted in the setting aside of a security over a company’s assets and a person who funded such litigation, were accorded priority over all other expenses of a liquidation “since without the advances … and the services of [the solicitors] there would have been no assets available for distribution”: Re Allied Glass Manufacturers Ltd (1936) 36 SR (NSW) 409 at 424-425, 427; In Re Universal Distributing Company Limited (in liquidation) (1933) 48 CLR 171 Dixon J held that when a liquidator incurred expenses in realising assets which were the subject of a security, the liquidator’s expenses of realising those assets should be a charge upon the assets which he realised, notwithstanding the rights of the security-holder. In Sinclair v Brougham [1914] AC 398 at 445 Lord Parker of Waddington said that if an inquiry into the affairs of a building society in liquidation, which had made ultra vires borrowings, had been conducted, and it was “shewn that the debts due to the ordinary creditors had really been incurred, in preserving the bulk of assets in which the shareholders and lenders were alike interested, … it might be equitable that these debts should be paid first out of the fund.” In In Re Berkeley Applegate (Investment Consultants) Ltd (in liquidation), Re; Harris v Conway [1989] 1 Ch 32, Edward Nugee QC held that where work of a liquidator had been necessary for the administration of assets, legal title to which was invested in the company in liquidation, on trust for certain investors, the court could require the cost of that administration to be borne by the assets. This could happen even though the liquidator’s work had not added to the assets in any way. He pointed out, at 50 that:

Falcke v Scottish Imperial Insurance Co

“It is not even a case where the owner of the saved property requires the assistance of a court of equity … to get the property back.”

As a condition of giving effect to their equitable rights, the court has in my judgment a discretion to ensure that a proper allowance is made to the liquidator. His skill and labour may not have added directly to the value of the underlying assets in which the investors have equitable interests; but he has added to the estate in the sense of carrying out work which was necessary before the estate could be realised for the benefit of the investors. … if the liquidator had not done this work, it is inevitable that the work, or at all events a great deal of it, would have had to be done by someone else, and on an application to the court a receiver would have been appointed whose expenses and fees would necessarily have had to be borne by the trust assets. On the evidence before me, the beneficial interests of the investors could not have been established without some such investigation as has been carried out by the liquidator.

The allowance of fair compensation to the liquidator is in my judgment a proper application of the rule that he who seeks equity must do equity …

The authorities establish, in my judgment, a general principle that where a person seeks to enforce a claim to an equitable interest in property, the court has a discretion to require as a condition of giving effect to that equitable interest that an allowance be made for costs incurred and for skill and labour expended in connection with the administration of the property. It is a discretion which will be sparingly exercised; but factors which will operate in favour of its being exercised include the fact that, if the work had not been done by the person to whom the allowance is sought to be made, it would have had to be done either by the person entitled to the equitable interest … or by a receiver appointed by the court whose fees would have been borne by the trust property … and the fact that the work has been of substantial benefit to the trust property and to the persons interested in it in equity …”

192 On the ability of a liquidator to be paid, from assets held by the company on trust, for expenses involved in administering those assets see also Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99; 7 ACLR 873; Re G B Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674; 5 ACSR 673; 13 Coromandel Place Pty Ltd v C L Custodians Pty Ltd (in liq) (1999) 30 ACSR 377.

193 In conducting the Common Law Proceedings, Mr Mead was, of course, not actually a liquidator, but he was carrying out a task which would otherwise have been part of the liquidator’s responsibilities, in circumstances where the liquidator was unwilling to carry it out, and where Mr Mead had the Court’s permission to carry that task out in the name of the company. The analogy to the circumstances in which a lien for expenses incurred in protecting a fund has been recognised is extremely close.

194 Another way of checking whether the liquidator’s actions contravene Ex parte James is to look for analogies in the caselaw on Ex parte James itself. An analogy to the present case can be found in In Re Tyler, where the official receiver was not permitted to take the benefit of the insurance policy which he knew the widow had been keeping alive without reimbursing the widow for her expenses. Another analogy is in Re Redmond, where the creditors who had paid money towards costs were repaid their advance from the fund recovered. Another is Cadorange, where the account which Young J gave of it in Star v Silvia (No.1) (set out at paragraph 169 above) fits this case very well.

195 If the applicability of the principle in Ex parte James were to be tested by reference to the four “conditions” identified by Walton J in In Re Clarke (a bankrupt); Ex parte the Trustee of the property of the bankrupt v Texaco Ltd [1975] 1 WLR 559, as modified by Gummow J in Hartogen, the rule is applicable. There has been a form of enrichment of the assets of the company by Mr Mead. It has happened by Mr Mead being incidental in freeing the company from an enormous liability. Nor is Mr Mead in a position to submit an ordinary proof of debt for the expenses he has incurred in running the Common Law Proceedings. A sufficient reason for reaching this conclusion is that those expenses were incurred after the winding up of HE had commenced. The third “condition” is also satisfied, because it is, it seems to me, unfair that the liquidator should recover the proceeds of sale of the four identified properties when he has not only encouraged Mr Mead, by his inaction, to spend money in the belief that he (Mr Mead) would be able to have access to the Four Properties, but as well the liquidator has achieved significant benefits as a result of Mr Mead making that expenditure. I would reach that conclusion even if I were wrong in having concluded that the liquidator knew that Mr Mead and Mr Dominello were running the Common Law Proceedings in the belief that he would not object to them retaining the proceeds of the Four Properties to pay for the costs. The liquidator still knew that, by some means, the Common Law Proceedings were being paid for, and he has now received the benefit of their success in those proceedings, yet resists bearing the price at which that success was achieved.

196 Walton J’s fourth “condition” is not infringed by permitting Mr Mead to retain the Four Properties: the enrichment of the estate exceeds $375,000.

197 The exercise of the Ex parte James power in the present circumstances is also, in my view, supported by considering the power which the Court has under section 564 Corporations Act 2001. That section provides:

“Where in any winding up:

(a) property … has been protected or preserved by the payment of monies … by creditors …

the Court may make such orders as it deems just with respect to the distribution of that property … with a view to giving those creditors an advantage over others in consideration of the risk assumed by them.”

Ex parte James

198 For these reasons, the principle in Ex parte James prevents the liquidator from laying claim to the Four Properties.

Conditions on Relief

199 The relief which is appropriate to give effect to an estoppel is the minimum relief which would prevent the injustice arising by the person estopped departing from the assumption or expectation. The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 413, 429, 442-3, 487 and 501; Giumelli v Giumelli (1999) 196 CLR 101 at 113-14 [10] and 119 [31]; Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475 at 516-518. The detriment on which Mr Mead relies to make out his estoppel is incurring the costs of the Common Law Proceedings. If, at some time in the future, through the combined operation of the $115,000 security for costs, and the order for indemnity costs, he were to recover the actual costs incurred in running the Common Law Proceedings, the injustice arising from the liquidator’s disputing that the order of Cohen J entitles him to the Four Properties would be at an end. As I said earlier (paragraph 101 above) the likelihood of Mr Mead effecting that full recovery cannot at present be predicted with any accuracy. This is one of the situations where the Court is not able, at present, to make an order which will finally dispose of the rights of the parties. The estoppel which has been established entitles Mr Mead, in the first instance, to carry out the orders of Cohen J, by selling the Four Properties, and applying the proceeds of sale in payment of the costs of the Common Law Proceedings. I would grant that relief conditionally upon Mr Mead undertaking to the Court to inform the liquidator from time to time of the steps he is taking to enforce the costs order in the Common Law Proceedings, and the results of those steps, and undertaking to abide by any further order of the Court concerning refund of all or part of the proceeds of sale of the Four Properties. I would also reserve to the parties liberty to apply on 14 days notice in writing and reserve further consideration.

200 The considerations which give rise to application of the rule in Ex parte James leads to the same result. If, in exercise of rights of enforcement Mr Mead comes to have the whole of the costs of the Common Law Proceedings paid, the consideration underlying the exercise of the principle in Ex parte James in the present case – that the liquidator has received the benefit of the Common Law Proceedings, without paying the price which Mr Mead sustained in obtaining that benefit – will no longer apply. That situation can be catered for by the same undertakings as are appropriate to the estoppel remedy, coupled with liberty to apply and reserving further consideration.

Form of Orders

201 Generally, orders of the type claimed by the plaintiff in the Further Amended Statement of Claim should be made, except insofar as those orders relate to the Four Properties. However, as the orders claimed in the Further Amended Statement of Claim are drafted using terms which are defined in the body of the Statement of Claim, the drafting will need to be modified, so that the orders are self-contained. If the undertakings which I have identified in paragraph 67 above are forthcoming, the appropriate way to deal with the Four Properties would be by directing the liquidator to take no further action to recover the Four Properties or their proceeds of sale without further order of the Court. If this Court were to make an order of that kind, the order of Cohen J in the Family Court relating to the Four Properties would then operate unimpeded.

202 I direct the parties to bring in Short Minutes of Order to give effect to these reasons for judgment. At the time those Short Minutes of Order are brought in, any argument about costs can occur.

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Last Modified: 11/10/2003

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Hypec Electronics Pty Ltd (in liq) v Mead [2003] NSWSC 934

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BL & GY International Co Ltd v Hypec Electronics Pty Ltd [2001] NSWSC 705

BL and GY International Co. Limited v Hypec Electronics Pty Ltd (in liquidation) and ors. [2001] NSWSC 841

CITATION:	Hypec Electronics Pty Limited (in liq) v Mead & Ors [2003] NSWSC 934
HEARING DATE(S):	16/9/03-18/9/03 & 22/9/03
JUDGMENT DATE:	3 November 2003
JURISDICTION:	Equity
JUDGMENT OF:	Campbell J
DECISION:	Liquidator estopped, and precluded under principle in Ex parte James, from recovering four items of corporate property, until further order. Land in name of company associated with company directors held on trust for company in liquidation.
CATCHWORDS:	CORPORATIONS - winding up - principle in Ex parte James - In re Condon (1874) LR 9 Ch App 609 - circumstances of application - circumstances when appropriate to direct liquidator not to collect corporate asset - how principle in Ex parte James fits with liquidator's duty under Corporations Act 2001 - ESTOPPEL - whether liquidator estopped from collecting corporate assets - appropriate remedy to meet "minimum equity" test - TRUSTS - resulting and constructive trusts - factual decision about whether purchase price of asset in name of Company "A" controlled by directors of Company "B" had been provided by Company "B"
LEGISLATION CITED:	Bankruptcy Act 1869 Bankruptcy Act 1924 Companies Act 1938 Companies (NSW) Code Corporations Act 2001 (Cth) Corporations Law Gaming Act 1835 Income Tax Assessment Act 1936 Long Service Leave Act 1955 Real Property Act 1900 Stamp Duties Act 1920
CASES CITED:	ACCC v George Weston Foods Limited (2003) 198 ALR 592; [2003] FCA 601 Re Allied Glass Manufacturers Ltd (1936) 36 SR 409 SR (NSW) In Re Associated Dominions Assurance Society Pty Ltd and the Life Insurance Act (1962) 109 CLR 516 Re Ayoub; Ex parte Silvia (1983) 67 FLR 144 In Re Banister; Broad v Munton (1879) 12 Ch D 131 In Re Berkeley Applegate (Investment Consultants) Ltd (in liquidation) Re; Harris v Conway [1989] 1 Ch 32 BL & GY International Co Ltd v Hypec Electronics Pty Ltd; Colin Anthony Mead v David Patrick Watson & Ors [2001] NSWSC 705; (2001) 164 FLR 268 BL & GY International Co Limited v Hypec Electronics Pty Ltd (in liquidation) & Ors [2001] NSWSC 841 BL & GY International Co Ltd v Hypec Electronics Pty Ltd & 2 Ors [2002] NSWSC 38 BL & GY International Co Ltd v Hypec Electronics Pty Ltd & 2 Ors [2002] NSWSC 575 Black Uhlans Incorporated v New South Wales Crime Commission [2002] NSWSC 1060 In Re Brown; Dixon v Brown (1886) 32 Ch D 597 Cadima Express Pty Ltd (in liq) v DCT (1999) 157 FLR 424; [1999] NSWSC 1143; 33 ACSR 527 Cadorange Pty Ltd (in liq) v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 Re Application of Central Commodities Services Pty Ltd [1984] 1 NSWLR 25 Re Chemical Plastics Ltd (in liquidation) [1959] VR 570; [1959] ALR 1080 In Re Clark (a bankrupt); Ex parte the Trustee of the property of the bankrupt v Texaco Ltd [1975] 1 All ER 453; [1975] 1 WLR 559 In Re Clifton Place Garage Ltd [1970] 1 Ch 477 The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) (1999) 30 ACSR 377 In Re Craig & Sons; Ex Parte Hinchcliffe [1916] 2 KB 497 Depela Pty Ltd (in liq) v Lynch (1996) 19 ACSR 751 Dering v Earl of Winchelsea (1787) 1 Cox 318; 29 ER 1184 Downs Distributing Company Pty Ltd v Associated Blue Star Stores Pty Ltd (in liquidation) (1948) 76 CLR 463 Re Ebner; Ebner v Official Trustee in Bankruptcy [2003] FCA 73; (2003) 196 ALR 533 Else v Else (1871) LR 13 Eq 196 Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451 Re G A Listing & Maintenance Pty Ltd (1994) 15 ACSR 308 Re G B Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674; (1991) 5 ACSR 673 Giumelli v Giumelli (1999) 196 CLR 101 Government of India v Taylor [1955] AC 491 In Re Hallett's Estate; Knatchbull v Hallett (1880) 13 ChD 696 Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 36 FCR 557; (1992) 109 ALR 177; (1992) 8 ACSR 277 Ex parte James; In re Condon (1874) LR 9 Ch App 609 Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475 Re Modern Terrazzo Ltd (in liquidation) [1998] 1 NZLR 160 Nationwide News Pty Ltd v Samalot Enterprises Pty Ltd (No.2) (1986) 5 NSWLR 227 The Official Assignee of the Estate of Turnbull v Goldstein (1921) 29 CLR 377 Re Paddington Town Hall Centre Ltd (in liquidation) (1979) 41 FLR 239 R v Rugari [2001] NSWCCA 64; (2001) 122 A Crim R 1 R v Tower Hamlets London Borough Council; Ex parte Chetnik Developments Ltd [1988] 1 AC 858 Re Redman; Ex parte Official Receiver (1948) 16 ABC 90 In Re Regent Finance and Guarantee Corporation Ltd (1930) WN 84 In Re Rhodes; Ex parte Rhodes [1899] 2 QB 347 In Re Roberts; Official Receiver v Lincoln Investments Ltd (1976) 26 FLR 330 Re Sabri; Ex parte Brien v Sabri (1997) 137 FLR 165 Scott v Handley [1999] FCA 404; (1999) 58 ALD 373 Scranton's Trustee v Pearse [1922] 2 Ch 87 Re Securitibank Ltd (in liquidation) [1978] 1 NZLR 97 Shirlaw v Taylor (1991) 31 FCR 222 Ex parte Simmonds; In Re Carnac (1885) 16 QBD 308 Sinclair v Brougham [1914] AC 398 Star v Silvia (No.1) (1994) 12 ACLC 600 In Re Steane's (Bournemouth) Ltd [1950] 1 All ER 21 Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99; (1983) 7 ACLR 873 Sutters v Briggs [1922] 1 AC 1 In Re T H Knitwear (Wholesale) Ltd [1987] 1 WLR 371 In Re T H Knitwear (Wholesale) Ltd [1988] 1 Ch 275 In Re Thellusson; Ex parte Abdy [1919] 2 KB 735 In Re Trent and Humber Ship-Building Company (1869) LR 8 Eq 94 In re Tyler; Ex parte The Official Receiver [1907] 1 KB 865 Re Universal Distributing Company Limited (in liquidation) (1933) 48 CLR 171 Ex parte Villars; In Re Rogers (1874) LR 9 Ch App 432 Re Walsh; Ex parte Waters [1978] QdR 134 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 In Re Wenborn & Co [1905] 1 Ch 413 Re Wigzell; Ex parte Hart [1921] 2 KB 835 Yang v Hypec Electronics Pty Ltd (in liquidation) & 2 Ors [2003] NSWCA 181
PARTIES :	Hypec Electronics Pty Limited (in liquidation) - Plaintiff Colin Anthony Mead - First Defendant Lucy Guitar Mead - Second Defendant Mei Chen Yang - Third Defendant Lee Chen-Lien Yang - Fourth Defendant Lamron Pty Limited - Fifth Defendant
FILE NUMBER(S):	SC 1268/02; 1933/01
COUNSEL:	PH Greenwood SC; TJ Norahan - Plaintiff D Fagan SC; V Bedrossian - First Defendant D Grieve QC; G O'Gorman - Second Defendant K Ma, solicitor - Third, Fourth & Fifth Defendant
SOLICITORS:	AR Conolly & Company - Plaintiff Etheringtons - First Defendant Lee Gan Solicitors - Second Defendant Ma & Company - Third, Fourth & Fifth Defendant