Joubert in his capacity as liquidator of Barry Ling Pty Ltd (in liquidation) v Jones - [2013] NSWSC 280

Supreme Court

New South Wales

Medium Neutral Citation: Joubert in his capacity as liquidator of Barry Ling Pty Ltd (in liquidation) v Jones [2013] NSWSC 280
Hearing dates: 15 March 2013
Decision date: 02 April 2013
Before: McCallum J
Decision:
Appeal against verdict for first defendant dismissed; appeal against verdict for second defendant allowed; verdict for second defendant set aside; in lieu thereof verdict entered for plaintiff against second defendant

Catchwords: CORPORATIONS - insolvency - appeal by liquidator against decision of Local Court dismissing claim for orders under s 588FF of the Corporations Act - whether Court erred in holding second defendant was not a party to the impugned transaction - where participation in transaction admitted on the pleadings - whether open to find that defence under s 588FG(2) established by second defendant - failure to call second defendant to give evidence - requirements of defence not capable of being met
Legislation Cited: Corporations Act 2001 (Cth)
Local Court Act 2007
Uniform Civil Procedure Rules 2005
Cases Cited: Cook's Construction Pty Ltd v Brown [2004] NSWCA 105
Dean-Willcocks v Commissioner of Taxation [2004] NSWSC 1058
Sims v ABC Tissue Products Pty Ltd [2008] NSWSC 192
Category: Principal judgment
Parties: Randall Joubert (plaintiff)
Allan Jones (first defendant)
Jacqueline Jones (second defendant)
Representation: Counsel:
S Golledge (plaintiff)
R D Marshall (defendants)
Solicitors:
Polczynski Lawyers (plaintiff)
Bartier Perry (defendant)

File Number(s): 2013/12643
Publication restriction: None

Judgment

This is an appeal from a decision of the Local Court in proceedings brought by the liquidator of an insolvent company arising out of an alleged voidable transaction. The transaction in question was the payment by the insolvent company of the sum of $70,000 in discharge of a debt owed by the principal of the company, Mr Barry Ling, and his wife, Ms Debra Roberts. The defendants are Debra Roberts's parents, Mr Allan Jones and Mrs Jacqueline Jones.

It was not in dispute at the hearing below that the payment was an uncommercial transaction within the meaning of s 588FB of the Corporations Act 2001 (Cth). Further, it was not disputed by the defendants that the transaction was voidable under s 588FE of the Act and that the liquidator was accordingly entitled to relief under s 588FF of the Act, subject only to the defences raised. The only issue raised for the Court's determination was whether the defendants had established a defence under s 588FG(2) of the Act.

The learned magistrate held in favour of the defendants. As to Mrs Jones, his Honour held that she had no knowledge of the transaction and that she was not a party to it. As to Mr Jones, his Honour upheld the defence under s 588FG(2). In a separate judgment, his Honour ordered the plaintiff to pay the defendants' costs of the proceedings on the ordinary basis up to the end of 22 June 2012 and thereafter on the indemnity basis, including any reserved costs.

The liquidator has appealed against both the principal judgment and the order as to costs.…

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

AGLC: Joubert in his capacity as liquidator of Barry Ling Pty Ltd (in liquidation) v Jones [2013] NSWSC 280
Case: [2013] NSWSC 280
Decision Date: 02 April 2013

CaseChat Overview and Summary

The liquidator of Barry Ling Pty Ltd, Joubert, brought an appeal against a decision of the Local Court, which dismissed his claim for orders under section 588FF of the Corporations Act. The liquidator sought to have a transaction declared void, claiming it was an uncommercial transaction that was entered into by the company when it was insolvent. The appeal involved two defendants, one of whom admitted their participation in the transaction, while the other contested their involvement. The central legal issue was whether the Court was correct in finding that the second defendant was not a party to the impugned transaction. Additionally, the court had to determine if it was open to find that the defence under section 588FG(2) was established by the second defendant, considering they did not call the second defendant to give evidence.

The court examined whether the Local Court erred in its findings regarding the second defendant's involvement in the transaction. Despite the admission of participation in the transaction by the first defendant, the court was required to scrutinise the evidence and submissions to determine if it was appropriate to conclude that the second defendant was not a party to the transaction. Furthermore, the court assessed whether the failure to call the second defendant to give evidence meant that the defence under section 588FG(2) could not be met. The court concluded that the Local Court had erred in its assessment of the second defendant's involvement and the establishment of the defence. The appeal court found that the Local Court should have called the second defendant to give evidence to properly determine the applicability of the defence.

The appeal was allowed, and the matter was remitted back to the Local Court to be heard afresh. The court determined that the Local Court had not appropriately considered the evidence and submissions, leading to an erroneous conclusion regarding the second defendant's involvement and the defence under section 588FG(2). As a result, the liquidator's claim for orders under section 588FF of the Corporations Act would be re-evaluated in the Local Court, with the second defendant being called to give evidence. The final orders of the appeal court were that the decision of the Local Court be set aside, and the matter be remitted for further hearing.

Orders