John Lawrence Meyers v John Frederick Lord - [2006] NSWSC 1451

CITATION: John Lawrence Meyers v John Frederick Lord & Anor [2006] NSWSC 1451

HEARING DATE(S): 07/12/06

JUDGMENT DATE :
7 December 2006

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: White J

EX TEMPORE JUDGMENT DATE: 12/07/2006

DECISION: See paras 27-31 of judgment.

CATCHWORDS: MORTGAGES – Mortgages and charges generally – Remedies of chargee – Power of sale – Mode of exercise of power – Injunctions to restrain sale – Application by plaintiff to restrain first defendant from exercising power of sale pursuant to charge – First defendant was deed administrator under deed of company arrangement – Deed of company arrangement provided for sale of a company’s business and for the purchaser to grant a charge over its assets to secure payment of creditors under deed – First defendant took possession of charged assets – Whether charge secured any moneys – Challenge to mode of sale – No payment into Court – Whether damages an adequate remedy – Balance of convenience – Application for injunction refused.

LEGISLATION CITED: Corporations Act 2001 (Cth)
Industrial Relations Act 1996 (NSW)

CASES CITED: Harvey v McWatters (1948) 49 NSWSC 173
Inglis v Commonwealth Trading Bank of Australia (1971) 126 CLR 161
Parist Holdings v Perpetual Nominees Limited [2006] NSWSC 599

PARTIES: John Lawrence Meyers
v
John Frederick Lord & Anor

FILE NUMBER(S): SC 6188/06

COUNSEL: Plaintiff: L Tyndall
Defendants: E Muston
Liquidator: R Khoury

SOLICITORS: Plaintiff: Gibson Howlin Lawyers
Defendants: Turks Legal

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

WHITE J

Thursday, 7 December 2006

6188/06 John Lawrence Meyers v John Frederick Lord & Anor

JUDGMENT

1 HIS HONOUR: This is an application to restrain the first defendant, Mr Lord, from taking any further step to exercise a power of sale over the business and assets of the second defendant, SEPA Waste Water Treatment Pty Ltd (In Liquidation) (ACN 106 788 380) (“new SEPA”). Mr Lord claims to be entitled to sell the assets of new SEPA pursuant to a charge dated 26 March 2004 given by that company to him.

2 On 2 October 2003, Mr Lord was appointed administrator of a company called SEPA Waste Water Treatment Pty Ltd (ACN 502 096 529) (“old SEPA”). On 13 November 2003, Mr John Meyers, Mrs Margaret Meyers and Mrs Mary Minshull executed a Deed of Company Arrangement. The effect of the Deed was that new SEPA agreed to purchase the business of old SEPA. New SEPA agreed to make payment in full to the unsecured creditors of old SEPA in the amount of $440,243. The Deed of Company Arrangement records that the payment of unsecured creditors was to be guaranteed by a fixed and floating charge over the assets of new SEPA. Mr Lord was appointed as deed administrator.

3 The Deed of Charge provided that the secured moneys included all moneys, whether owing pursuant to the Deed of Company Arrangement or the agreement for the sale and purchase of the business of old SEPA, which might at any…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] NSWSC 1451
Decision Date: 07/12/2006

CaseChat Overview and Summary

In the matter of John Lawrence Meyers v John Frederick Lord, the dispute centred around the enforcement of a mortgage and the subsequent power of sale held by the defendant. The case was heard and determined in the Federal Court of Australia. Meyers sought to restrain Lord, who was acting as the deed administrator under a deed of company arrangement, from exercising the power of sale over certain charged assets. This power of sale was intended to secure the payment of creditors under the deed.

The central legal issue before the court was whether the charge held by Lord over the assets secured any moneys, thereby justifying the exercise of the power of sale. Additionally, the court had to consider the mode of sale, particularly given the absence of payment into court by Meyers. Another key aspect was the adequacy of damages as a remedy and the balance of convenience to be weighed in deciding whether to grant an injunction against the sale. The court found that the charge did indeed secure moneys, and while the mode of sale was challenged, it was not deemed a sufficient basis to warrant an injunction. Moreover, the court considered that damages would be an adequate remedy for any potential loss, and the balance of convenience favoured permitting the sale to proceed.

The Federal Court, in its judgment, determined that the application for an injunction to restrain Lord from exercising the power of sale should be refused. The court held that there was no basis to prevent the sale of the assets under the charge, as the charge secured moneys and the mode of sale, though challenged, did not reach the threshold for injunctive relief. The balance of convenience also favoured proceeding with the sale rather than halting it, and the availability of damages as a remedy further supported the decision.

Orders