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Johnston v McGrath

Johnston v McGrath

Case [2008] NSWSC 639 25 June 2008

Winding Up & Liquidation

Appeal

Abuse of Process

Insolvency Law

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Reported Decision:

67 ACSR 169

New South Wales

Supreme Court

CITATION: Johnston v McGrath [2008] NSWSC 639

HEARING DATE(S): 01/04/06
Written submissions: 01/05/08, 27/05/08

JUDGMENT DATE :
25 June 2008

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Each appeal under s 1321 of the Corporations Act 2001 (Cth) brought in these proceedings is permanently stayed.

CATCHWORDS: CORPORATIONS - winding up - proof of debt or claim - appeal against liquidators' rejection of proof - where statement of claim proposed to be filed in appeal pleads basis of claim differing from basis stated in proof - whether statement of claim objectionable - where matter central to case sought to be pleaded on appeal was determined on the merits upon appeal against rejection of plaintiff's proof of debt in winding up of company's holding company - exactly the same factual and legal issues - whether pursuit of present appeal therefore represents abuse of process

LEGISLATION CITED: Corporations Act 2001 (Cth), ss 471B, 553(1), 1321
Corporations Law, ss 79, 219, 295(2)(d), 995, 1005
Fair Trading Act 1987. ss 42, 61, 68
Trade Practices Act 1974 (Cth), ss 52, 75B, 82(1)

CATEGORY: Principal judgment

CASES CITED: Australian Competition and Consumer Commission v Black on White Pty Ltd [2001] FCA 187; (2001) 110 FCR 1
Cleary v Jeans [2006] NSWCA 9; (2006) 65 NSWLR 355
I-Achieve Technology Ltd v Barton Capital Securities Pty Ltd [2001] NSWSC 1003
Johnston v McGrath [2005] NSWSC 1183; (2005) 195 FLR 101
Johnston v McGrath [2007] NSWCA 231
Johnston v McGrath [2008] HCA Trans 115
P Dawson Nominees Pty Ltd v Multiplex Ltd [2007] FCA 1061; (2007) 242 ALR 111
Port of Melbourne Authority v Anshun Pty Ltd [1980] HCA 41; (1981) 147 CLR 589
Re HIH Casualty and General Insurance Ltd [2006] NSWSC 485; (2006) 200 FLR 243 and [2006] NSWSC 504; (2006) 58 ACSR 1
Reichel v Magrath (1889) 14 App Cas 665
Re Jay-O-Bees Pty Ltd; Rosseau Pty Ltd v Jay-O-Bees Pty Ltd [2004] NSWSC 818; (2004) 50 ACSR 565
Rippon v Chilcotin Pty Ltd [2001] NSWCA 142; (2001) 53 NSWLR 198
Secretary for State for Trade and Industry v Bairstow [2004] Ch 1
State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aust Tort Rep 81-423
Tanning Research Laboratories Inc v O’Brien [1990] HCA 8; (1990) 169 CLR 332

PARTIES: Brian Alexander Johnston - Plaintiff
Anthony Gregory McGrath and Christopher John Honey in their capacities as liquidators of HIH Casualty and General Insurance Ltd, CIC Insurance Ltd, FAI Insurance Ltd, World Marine & General Insurance Pty Ltd, HIH Underwriting and Insurance (Australia) Pty Ltd and FAI General Insurance Company Ltd - Defendants
HIH Insurance Ltd (In Liq) - 2nd Defendant

FILE NUMBER(S): SC 4633/05

COUNSEL: Mr B V Dennis, Solicitor - Plaintiff
Mr J K Kirk - Defendants

SOLICITORS: Dennis & Company - Plaintiff
Blake Dawson - Defendants

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

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.

Continue reading Johnston v McGrath

Details

AGLC: Johnston v McGrath [2008] NSWSC 639
Case: [2008] NSWSC 639
Decision Date: 25 June 2008

CaseChat Overview and Summary

Johnston, the plaintiff, sought to appeal the decision of McGrath, the defendant liquidator, to reject a proof of debt in the winding up of a company. The dispute was heard in the Supreme Court of Queensland. The crux of the appeal was whether the statement of claim filed by the plaintiff in the appeal process contained an objectionable basis for the claim, differing from the basis stated in the initial proof of debt. The court had to determine if the plaintiff's attempt to plead a different basis in the statement of claim was permissible and whether such a pursuit constituted an abuse of process.

The primary legal issue before the court was whether the appeal was valid given that the statement of claim proposed to be filed in the appeal process differed from the basis stated in the original proof of debt. The court had to assess whether the central matter of the case, which had already been determined on the merits in a previous appeal against the rejection of the plaintiff's proof of debt in the winding up of the company's holding company, was being relitigated. The court needed to decide if the exact same factual and legal issues were being revisited in the current appeal, which would render the appeal an abuse of process.

The court held that the statement of claim was objectionable as it sought to plead a different basis for the claim compared to the one stated in the proof of debt. The court found that the central matter of the case had already been adjudicated on the merits in the previous appeal, and the same factual and legal issues were being raised again. Consequently, the court determined that the plaintiff's pursuit of the current appeal represented an abuse of process. As a result, the appeal was dismissed.

Orders