In the Matter of Stuart Bros Pty Ltd

[1995] FCA 153

LIMITED DISTRIBUTION ONLY

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    NG 3620 of 1994
  )
GENERAL DIVISION                 )

IN THE MATTER OF STUART BROS PTY LIMITED

Australian Company No. 003 783 499

STUART BROS PTY LIMITED

Applicant

CORAM: Burchett J.
PLACE: Sydney
DATE : 8 February 1995

REASONS FOR JUDGMENT

BURCHETT J.:

In this matter the bank seeks an order under s. 471B of the Corporations Law to enable it to take proceedings against the company, being in provisional liquidation, upon a basis which is both factually and legally extremely complex.  I do not think it is necessary to explore those complexities in detail at this stage; indeed, it is quite clear that all of the details have not been able to be put before me in evidence in support of this present application.  However, I think sufficient has been placed before me to satisfy the test which was stated by the Full Court in Vagrand Pty Limited (in liquidation) v Fielding (1993) 41 FCR 550 and, particularly, at 556.

The foundation of all the confusion appears to have been the fact that two companies within the same group, one of which was the company, both at different times bore the same name.  This situation appears to have led officers of the bank, and there is a great deal of evidence to establish that this happened, to believe that a security granted by another company was, in fact, the security granted (as the bank had required) by the company.  Not only that, but the auditors of the company checked the securities with the bank, and it seems plain that the company was made aware of the bank's understanding and, indeed, it is probable that officers of the company shared that understanding, which was (of course) a misunderstanding.

All this not only arose out of, but its continuance was plainly substantially contributed to by, the actions of the companies themselves in relation to changes of name; and it seems clear enough that it could be said, and said rather strongly, that there was some special obligation upon those responsible for the state of affairs to ensure that, in their dealings on behalf of their companies with others, what they had done did not lead to deception.  (Cf. Londish v. Gulf Pacific Pty Ltd (1993) 45 FCR 128.) If at a hearing the facts turn out to be as they presently, prima facie, appear to be, the correct analysis of the situation may perhaps be one dependent upon equitable doctrines of mutual mistake. Or, it may be, the correct analysis will look rather to issues dependent upon responsibility for the mistake, and to questions of estoppel or misrepresentation. I hasten to add there has been no suggestion of deliberate or fraudulent misrepresentation.
     However, I do not think that it is necessary for the purposes of this application, or even desirable, to attempt any sort of final analysis.  I think sufficient appears within the principles laid down in Vagrand to justify, and, indeed, to require, as a proper exercise of my discretion, the allowance of the application.  Accordingly, I do allow it.

I make an order in terms of para. 1 of the notice of motion, and I order that the costs of this present application be costs in the principal proceeding.

I further order that any order made by the Court in the proceeding to be instituted pursuant to the leave not be enforced without the leave of the Court.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.

Associate:

Date: 24 March 1995

Counsel for the Applicant:       R.S. McColl

Solicitors for the Applicant:        Dibbs, Crowther & Osborne

Counsel for the Respondent:      M. Watson

Solicitors for the Respondent:    Harper Watson

Date of hearing:                 8 February 1995