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Kassem v Zhang

Kassem v Zhang

Case [2008] NSWSC 1287 4 December 2008

Winding Up & Liquidation

Limitation Periods

Costs

Corporate Law & Governance

Insolvency Law

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CITATION: Kassem v Zhang [2008] NSWSC 1287

HEARING DATE(S): 01/12/08

JUDGMENT DATE :
4 December 2008

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: 1. Order that the plaintiffs’ interlocutory process filed on 6 November 2008 be dismissed.
2. Order that the originating process be dismissed.
3. Order that the plaintiffs pay the defendant’s costs of the whole proceedings.
4. Order that the plaintiffs not treat as within s 556(1)(a) or s 556(1)(dd) of the Corporations Act 2001 (Cth) costs for which they are liable under order 3, except costs of and incidental to the interlocutory process filed on 6 November 2008.

CATCHWORDS: CORPORATIONS - winding up - company in liquidation - liquidators commence proceedings claiming order for payment of money to company by reason of voidable transaction - proceedings commenced after expiration of s 588FF(3) limitation period - PROCEDURE - liquidators seek leave to amend - amendment to substitute company as plaintiff to pursue different cause of action based on same facts - whether such amendment within provisions with respect to amendment - CORPORATIONS - liquidators - personal liability for costs - costs "properly incurred" recoverable out of property of company - whether costs "properly incurred" where proceedings should have been seen to be doomed to fail

LEGISLATION CITED: Civil Procedure Act 2005, ss 64, 65
Corporations Act 2001 (Cth), ss 9, 556(1)(a), 556(1)(dd 588FF(1), (3),

CATEGORY: Principal judgment

CASES CITED: Agtrack (NT) Pty Ltd (t/a Spring Air) v Hatfield [2005] HCA 38; (2005) 223 CLR 251
Gordon v Tolcher [2006] HCA 62; (2006) 231 CLR 334
Greenwood v Papademetri [2007] NSWCA 221
Hughes v Pump House Hotel Co Ltd (No 2) [1902] 2 KB 485
Hypec Electronics Pty Ltd v Mead [2004] NSWSC 731; (2004) 61 NSWLR 169
Ivymere Pty Ltd v Cooloombla Pty Ltd (No 2) (unreported, NSWSC, 25 August 1997)
Knight v McCann-Erickson Pty Ltd (unreported, NSWSC, 26 August 1991)
McInnes v Wingecarribee Shire Council (1987) 10 NSWLR 660
Re Buena Vista Motors Pty Ltd [1971] 1 NSWLR 72
Re Silver Valley Mines (1882) 21 ChD 381
Rickard Constructions Pty Ltd v Moretti [2004] NSWSC 1041; (2004) 188 FLR 278
Rudolphy v Lightfoot [1999] HCA 61; (1999) 197 CLR 500
Silvia v Brodyn Pty Ltd[2007] NSWCA 55; (2007) 25 ACLC 382

PARTIES: Ozem Azzam Kassem and Daniel Peter Juratowitch as Liquidators for Delta Mortgage & Finance Pty Ltd - Plaintiffs
Oliver Zhang - Defendant

FILE NUMBER(S): SC 3285/08

COUNSEL: Mr G Lucarelli - Plaintiffs
Mr R A Parsons - Defendant

SOLICITORS:
Mills Oakley Lawyers - Plaintiffs
Lyon Lawyers - Defendant

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

BARRETT J

THURSDAY, 4 DECEMBER 2008

3285/08 OZEM AZZAM KASSEM & ANOR AS LIQUIDATORS FOR DELTA MORTGAGE FINANCE PTY LIMITED v OLIVER ZHANG

JUDGMENT

1 The plaintiffs are Mr Kassem and Mr Juratowich, the liquidators of Delta Mortgage Finance Pty Ltd. I shall refer to them as “the liquidators” and the company as “Delta”.

2 By their…

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 Kassem v Zhang

Details

AGLC: Kassem v Zhang [2008] NSWSC 1287
Case: [2008] NSWSC 1287
Decision Date: 4 December 2008

CaseChat Overview and Summary

In the Federal Court of Australia, Kassem v Zhang involved the liquidators of a company in liquidation who sought to recover payments made to a director under voidable transactions. The liquidators commenced proceedings against the director, Mr Zhang, claiming an order for the payment of money to the company. The claim was made after the expiration of the limitation period under section 588FF(3) of the Corporations Act 2001. The liquidators then sought leave to amend the proceedings to substitute the company as the plaintiff to pursue a different cause of action based on the same facts. The central legal issues were whether the amendment was permissible and whether the costs incurred by the liquidators, which appeared to be doomed to fail, could be considered "properly incurred" and thus recoverable from the company's property.

The court held that the amendment to substitute the company as the plaintiff was not permissible because it sought to pursue a different cause of action based on the same facts. The court determined that the amendment did not fall within the provisions permitting amendments in the Federal Court. Furthermore, the court found that the costs incurred by the liquidators, which seemed destined to fail, could not be considered "properly incurred" as they were not reasonably necessary to pursue a viable claim. Consequently, these costs were not recoverable from the company's property.

As a result, the court dismissed the liquidators' application for leave to amend and ruled that the costs incurred were not "properly incurred." The liquidators were not entitled to recover these costs from the company's property.

Orders