Hypec v Mead

In *Hypec v Mead*, the New South Wales Court of Appeal considered a dispute concerning the proceeds of a sale of company property. The company, Hypec, was in liquidation, and its liquidator, Mr Mead, sought to recover funds derived from the sale of property that had been purchased with company money. These proceeds had been used to fund the legal defence of a director of Hypec, who was defending himself in proceedings brought by the liquidator.

The central legal issues before the Court of Appeal were whether the liquidator was estopped from recovering the proceeds of the sale, particularly in light of the rule in *Ex parte James*, and whether the director had been induced to act to his detriment by representations made by the liquidator. The Court also had to consider whether the rule in *Ex parte James*, which prevents a liquidator from recovering money paid under a mistake of law, extended to situations where the money was not paid under a mistake but was instead derived from the sale of company assets. Furthermore, the Court examined whether a party seeking to rely on estoppel needed to be "innocent" and whether arguments not raised at trial could be considered on appeal without causing prejudice.

The Court of Appeal ultimately dismissed the appeal. It reasoned that the rule in *Ex parte James* was not applicable in this instance because the funds in question were not paid by the liquidator under a mistake of law. Instead, the funds were derived from the sale of company property, and the liquidator was seeking to recover those proceeds. The Court found that the director had not been induced by the liquidator to sell the property or to use the proceeds for his legal defence. The Court also held that the director was not an "innocent" party in the context of the transaction.

Consequently, the appeal was dismissed. Liberty to apply was reserved concerning the costs of the appeal. In a related matter, a summons for an extension of time and leave to appeal was also dismissed, with similar liberty reserved regarding its costs.