Jenkins v Jonkay Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Jenkins v Jonkay Pty Ltd [2007] FCA 858

CORPORATIONS – winding up – claim against company – liquidator fails to take legal advice – no funds to pay legal costs – action against company successful - whether liquidator personally liable for costs

Corporations Act 2001 (Cth) s 545

Downes v Cottam, In re Beddoe [1893] 1 Ch 547 cited
Marseilles Extension Railway and Land Company, In re (1885) 30 Ch D 598 cited
Mead v Watson (2005) 23 ACLC 718 cited
Wilson Lovatt & Sons Ltd, Re [1977] 1 All ER 274 cited

CRAIG JENKINS v JONKAY PTY LTD (ACN 056 513 510) (IN LIQUIDATION) HILLSURF PTY LTD (T/AS DOWLING & NELAN REAL ESTATE) (ACN 086 583 940)
VID 1250of 2006

FINKELSTEIN J
5 JUNE 2007
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 1250  of 2006

BETWEEN:

CRAIG JENKINS
Plaintiff

AND:

JONKAY PTY LTD (ACN 056 513 510) (IN LIQUIDATION) HILLSURF PTY LTD (T/AS DOWLING & NELAN REAL ESTATE) (ACN 086 583 940)
Defendants

JUDGE:

FINKELSTEIN J

DATE OF ORDER:

5 JUNE 2007

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The application for costs against the liquidator be dismissed and there be no order as to the costs of that application.

2.The first named defendant pay the plaintiff’s costs of the proceeding.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 1250 of 2006

BETWEEN:

CRAIG JENKINS
Plaintiff

AND:

JONKAY PTY LTD (ACN 056 513 510) (IN LIQUIDATION) HILLSURF PTY LTD (T/AS DOWLING & NELAN REAL ESTATE) (ACN 086 583 940)
Defendants

JUDGE:

FINKELSTEIN J

DATE:

5 JUNE 2007

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

  1. Here the question is whether a costs order should be made against the liquidator of Jonkay Pty Ltd (in liq) in an action that was, by leave, brought against the company.  The plaintiff was the successful party.  He prefers not to apply for a costs order against the company for it has no assets.  Instead he asks that the liquidator pay his costs. 

  2. The facts may be reduced to a relatively simple statement.  On 20 September 2006 the plaintiff entered into a contract with the company to purchase for $780,000 a parcel of land at Noosaville.  The plaintiff paid the deposit of $39,000 to the company’s estate agent and was to pay the balance at settlement which was due on 20 November 2006.  At the time of the contract, however, Bluestone Mortgages was in possession of the land in its capacity as mortgagee.  Therefore, the company had no authority to sell.  Moreover, the mortgagee had not assented to the sale and thus was not bound by the contract.

  3. The liquidator was appointed on 10 October 2006.  A few days later the plaintiff’s solicitor advised the liquidator of the existence of the contract and provided him with a copy.  On 25 October 2006 the liquidator wrote to the mortgagee inquiring whether…

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Details
Case
[2007] FCA 858
Decision Date

CaseChat Overview and Summary

The case of Jenkins v Jonkay Pty Ltd was heard before the Federal Court of Australia. The plaintiff, Jenkins, sought to recover a debt from the first defendant, Jonkay Pty Ltd. Jonkay Pty Ltd had entered liquidation, and the liquidator was the second defendant. The plaintiff applied for costs against the liquidator and sought costs of the proceeding from the first defendant.

The primary legal issue before the court was whether the plaintiff was entitled to costs against the liquidator and, if so, the appropriate party responsible for those costs. The court had to consider the relevant provisions of the Corporations Act 2001 (Cth) concerning costs in liquidation proceedings and the applicable legal principles governing costs orders.

The court held that the liquidator was not liable for costs in this case, as the plaintiff had not established that the liquidator had acted in a manner that warranted such an order. The court found that the liquidator had fulfilled their duties under the Corporations Act and had acted reasonably in managing the liquidation process. As for the costs of the proceeding, the court ordered that the first defendant, Jonkay Pty Ltd, pay the plaintiff’s costs, reflecting the general principle that the costs of unsuccessful litigation typically follow the unsuccessful party. The court dismissed the plaintiff’s application for costs against the liquidator and made no order as to the costs of that application.

Orders

Orders of the court

1. The application for costs against the liquidator be dismissed and there be no order as to the costs of that application.

2. The first named defendant pay the plaintiff’s costs of the proceeding.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

FINKELSTEIN J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: FINKELSTEIN J

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