Kation Pty Ltd v Lamru Pty Ltd

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New South Wales


Court of Appeal


CITATION: KATION PTY LTD v LAMRU PTY LTD; LEWIS v NORTEX PTY LTD (In liq) [2009] NSWCA 145
HEARING DATE(S): 27-30 October 2008
 
JUDGMENT DATE: 
12 June 2009
JUDGMENT OF: Allsop P at 1; Hodgson JA at 12; Basten JA at 36
DECISION:

(1) Grant leave to the appellants and cross-appellants to appeal with respect to the matters raised in their notices of appeal and cross-appeal filed in this Court so that all steps purportedly taken shall be treated as properly taken in the appeal and cross-appeal respectively.

(2) The appeal be dismissed.

(3) The cross-appeal be allowed in part and the orders made by the trial judge in matter nos 3081 of 1997 and 1750 of 2002 be varied so that:

(i) in order 1, the reference to order “3(iii)(d)” be amended to order “3(d)”;
(ii) in order 3 delete paragraphs (d)-(f) and in lieu thereof insert the following:“

(d) order that Lewis and Kation pay to Lamru:
(i) in respect of the 1995 financial year, $23,228, together with interest calculated from 30 June 1995;
(ii) in respect of the 1996 financial year, $40,650, together with interest calculated from 30 June 1996;
(iii) in respect of the 1997 financial year, $55,493, together with interest calculated from 30 June 1997;

(e) order that Lewis and Kation reconstitute the Nortex unit trust by paying into the trust fund:
(i) in respect of the 1996 financial year, an amount of $60,976, together with interest calculated from 30 June 1996;
(ii) in respect of the 1997 financial year, an amount of $83,240, together with interest calculated from 30 June 1997;

(f) in respect of the calculations of interest, the amount is calculated on the sum to which it relates at the rate specified in Schedule 5 to the Uniform Civil Procedure Rules 2005 and compounded on annual rests until payment.”

(4) In relation to order 4, set aside paragraph (b) and (c), and in lieu thereof insert:
“(b) declare that the amounts of the trust were erroneous by reason of the taking and selling of stock:
(i) by understating the value of stock at the end of the 1996 financial year by $210,000;
(ii) by understating the profits for the 1997 financial year by a further $150,000;

(c) order Lewis reconstitute the Nortex Trust Fund by paying into the Trust Fund sixty per cent of the amounts referred to in par (b), together with interest at the rates payable under Schedule of the Uniform Civil Procedure Rules 2005, calculated on 30 June in respect of each financial year, compounded at annual rests;

(d) order that Lewis pay to the liquidator to be placed in an interest-bearing account (if the liquidator and Lamru give written consent to the Court and to Lewis within seven days) or into Court (if they do not) forty per cent of the amount referred to in par (b), together with interest at the rates payable under Schedule 5 of the Uniform Civil Procedure…

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Details
Case
[2009] NSWCA 145
Decision Date

CaseChat Overview and Summary

This case involved an appeal and cross-appeal concerning a liquidator's actions and the winding up of a company. The parties were Kation Pty Ltd and others (appellants and cross-appellants) and Lamru Pty Ltd (respondent), the liquidator. The dispute centred on challenges to the liquidator's rejection of a proof of debt, the liquidator's accounts, and the liquidator's entitlement to costs. The proceedings were before the Court of Appeal of New South Wales.

The primary legal issues before the court included whether an *Anshun* estoppel applied to prevent the appellants from challenging the liquidator's accounts, whether the equitable defence of "unclean hands" barred the appellants from seeking relief, and whether the liquidator was entitled to costs given the nature of the proceedings and the appellants' active resistance. The court also considered issues relating to the application of specific accounting conventions, potential breaches of trust by the trustee, and the proper apportionment of trustee's costs.

The Court of Appeal reasoned that the appellants' challenge to the liquidator's accounts was not barred by *Anshun* estoppel, as the prior proceedings did not involve the same subject matter or a clear opportunity to litigate the current issues. However, the court found that the "unclean hands" defence was applicable, as the appellants had engaged in malpractice and dishonesty in preceding years, which was directly connected to the relief they sought. The court also determined that the liquidator was entitled to costs, despite the appellants' active opposition, due to the nature of the defence and the substantial costs incurred by the liquidator in defending the proceedings. The court applied principles of estoppel, equitable defences, and the law relating to liquidator's costs.

The Court of Appeal granted leave to appeal and cross-appeal, treating all steps taken as properly filed. However, the appeal itself was dismissed.

Orders

Orders of the court

(1) Grant leave to the appellants and cross-appellants to appeal with respect to the matters raised in their notices of appeal and cross-appeal filed in this Court so that all steps purportedly taken shall be treated as properly taken in the appeal and cross-appeal respectively. (2) The appeal be dismissed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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